<PAGE>
As filed with the Securities Exchange Commission on June 15, 1999
Registration No. 333-77253
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
TOKHEIM CORPORATION
(Exact name of registrant as specified in its charter)
---------------
Indiana 3580 35-0712500
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
10501 Corporate Drive
Fort Wayne, IN 46845
(219) 470-4600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Copy to:
Douglas K. Pinner Chairman of the William R. Kunkel Skadden, Arps, Slate,
Board, President and Chief Executive Meagher & Flom (Illinois)
Officer 10501 Corporate Drive Fort 333 West Wacker Drive Chicago, IL 60606
Wayne, IN 46845 (219) 470-4600 (312) 407-0700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
<TABLE>
<CAPTION>
Jurisdiction Primary Standard I.R.S. Employer
of Industrial Classification Identification
Exact Name of Additional Registrants Incorporation Code Number Number
------------------------------------ ------------- ------------------------- ---------------
<S> <C> <C> <C>
Envirotronic Systems, Inc.* Indiana 3823 35-1753684
Gasboy International, Inc. Pennsylvania 3586 23-1265426
P.O. Box 309, Lansdale, PA 19664
(215) 855-4631
Management Solutions, Inc. Colorado 3824 84-1007527
5351 S. Roslyn St., Suite 200, Greenwood Village, CO 80111
(303) 773-9300
Sunbelt Hose & Petroleum Equipment, Inc.* Georgia 5084 35-1682561
Tokheim Automation Corporation* Texas 5084 76-0261484
Tokheim Equipment Corporation* Delaware 3586 36-4250806
Tokheim Investment Corp.* Texas 6726 74-2137031
Tokheim RPS, LLC* Delaware 6726 36-5250803
Tokheim Services LLC* Indiana 6726 36-4260132
</TABLE>
*Address and telephone of principal executive offices are the same as those of
Tokheim Corporation.
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
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<PAGE>
TOKHEIM CORPORATION
CROSS REFERENCE SHEET
<TABLE>
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Form S-4 Item Location in Prospectus
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<S> <C>
A. INFORMATION ABOUT THE
TRANSACTION
Item 1:Forepart Of Registration
Statement And
Outside Front Cover Page Of
Prospectus................... Outside Front Cover Page
Item 2:Inside Front And Outside
Back Cover Pages Inside Front Cover Page; Outside Back Cover
Of Prospectus................ Page
Item 3:Risk Factors, Ratio Of
Earnings To Fixed Prospectus Summary; Risk Factors; Unaudited
Charges, And Other Pro Forma Consolidated Condensed Financial
Information.................. Statements; Selected Financial Data of
Tokheim Corporation and Subsidiaries;
Selected Financial Data of the RPS Division
Item 4:Terms Of The Transaction.... Prospectus Summary; The Exchange Offer;
Important United States Federal Income Tax
Considerations; The Transactions;
Description of the Exchange Notes; Plan of
Distribution
Item 5:Pro Forma Financial Prospectus Summary; Unaudited Pro Forma
Information.................. Consolidated Condensed Financial
Statements; Selected Financial Data of
Tokheim Corporation and Subsidiaries;
Selected Financial Data of the RPS Division
Item 6:Material Contacts With The
Company Being
Acquired..................... Not Applicable
Item 7:Additional Information
Required For
Reoffering By Persons And
Parties Deemed
to Be Underwriters........... Not Applicable
Item 8:Interests Of Named Experts
And Counsel.................. Not Applicable
Item 9:Disclosure Of Commission
Position On
Indemnification For
Securities Act Liabilities... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
Item 10:Information With Respect To Summary; Unaudited Pro Forma Consolidated
S-3 Registrants.............. Condensed Financial Statements
Item 11:Incorporation Of Certain
Information By
Reference.................... Information Incorporated by Reference
Item 12:Information With Respect To
S-2 Or S-3
Registrants.................. Not Applicable
Item 13:Incorporation Of Certain
Information By
Reference.................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form S-4 Item Location in Prospectus
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<S> <C>
Item 14:Information With Respect To
Registrants Other Than S-3 Or S-2
Registrants.......................... Not Applicable
C. INFORMATION ABOUT THE COMPANY
BEING ACQUIRED
Item 15:Information With Respect To S-3
Companies............................ Not Applicable
Item 16:Information With Respect To S-2 Or
S-3 Companies........................ Not Applicable
Item 17:Information With Respect To
Companies Other Than S-3 Or S-2
Companies............................ Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
Item 18:Information If Proxies, Consents Or
Authorizations Are To Be Solicited... Not Applicable
Item 19:Information If Proxies, Consents Or
Authorizations Are Not To Be
Solicited............................ Management; Principal Shareholders
</TABLE>
<PAGE>
Prospectus
[LOGO OF TOKHEIM CORPORATION]
Tokheim Corporation
Exchange offer for
$123,000,000 and (Euro)75,000,000
11 3/8% senior 11 3/8% senior
subordinated notes subordinated notes
due 2008 due 2008
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Terms of the Exchange Offer
. The exchange offer expires at . Your exchange of outstanding
5:00 p.m. New York City time for notes for exchange notes will not
the outstanding dollar notes and be a taxable exchange for U.S.
at 5:00 p.m., London time for the federal income tax purposes.
outstanding euro notes, on
, 1999, unless we extend
the expiration date. . The terms of the exchange notes
and the outstanding notes are
substantially identical, except
for transfer restrictions,
. We will exchange all outstanding registration rights and
notes that you validly tender and liquidated damages that apply to
do not validly withdraw. the outstanding notes.
. You may withdraw tenders of
outstanding notes any time prior . There is no existing market for
to the expiration of the exchange the exchange notes, and we do not
offer. currently intend to apply for
their listing on any securities
exchange.
. The exchange offer is not subject
to any condition, other than that
it not violate applicable law or
any applicable interpretation of
the staff of the Securities and
Exchange Commission.
. We will not receive any proceeds
from the exchange offer.
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For a discussion of factors that you should consider before exchanging your
outstanding notes, see "Risk Factors" beginning on page 15.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
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, 1999
<PAGE>
This prospectus incorporates by reference documents that are not contained
in or delivered with the prospectus. These documents are available without
charge upon request to Tokheim Corporation, 10501 Corporate Drive, Fort Wayne,
IN, 46845, Attention: Executive Vice President, Finance and Administration and
Chief Financial Officer, telephone number (219) 470-4600. To ensure timely
delivery of the documents, any request should be made by , 1999.
----------------
Table of Contents
<TABLE>
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Page
----
<S> <C>
Summary................................................................... 1
Risk Factors.............................................................. 15
Risks associated with debt financing.................................... 15
Risks associated with the operation of the business..................... 18
Risks associated with government regulation............................. 22
Risks associated with the exchange offer................................ 22
Forward-Looking Statements................................................ 24
Exchange Rates............................................................ 24
The Exchange Offer........................................................ 25
The Transactions.......................................................... 34
Sources and Uses of Funds................................................. 36
Capitalization............................................................ 37
Unaudited Pro Forma Consolidated Condensed Financial Statements........... 38
Selected Financial Data of Tokheim Corporation and Subsidiaries .......... 45
Selected Financial Data of the RPS Division............................... 47
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 48
Business.................................................................. 58
Management................................................................ 71
Principal Shareholders.................................................... 73
Description of Other Indebtedness......................................... 75
Description of the Warrants............................................... 78
Description of the Exchange Notes......................................... 79
Important United States Federal Income Tax Considerations................. 118
Plan of Distribution...................................................... 123
Legal Matters............................................................. 124
Independent Accountants................................................... 124
General Listing Information............................................... 125
Where You Can Find More Information....................................... 126
Information Incorporated by Reference..................................... 126
Index to Financial Statements............................................. F-1
</TABLE>
i
<PAGE>
Summary
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes the terms of the notes we are offering, as well as business
and detailed financial information. We encourage you to read this prospectus in
its entirety. In this prospectus, "Tokheim" refers to Tokheim Corporation and
its subsidiaries after our acquisition of the RPS division of Schlumberger
Limited unless otherwise indicated. The market share and other data contained
in this prospectus relating to the petroleum dispenser and related industries,
both in the United States and internationally, have been derived from industry
and other sources available to us. While we believe that our estimates derived
from these sources, including as to market share data, are reasonable, we
cannot ensure their accuracy.
The exchange offer
On January 29, 1999, we privately placed $123.0 million of 11 3/8% senior
subordinated notes due 2008 and (Euro)75.0 million of 11 3/8% senior
subordinated notes due 2008. We sold the outstanding notes to several initial
purchasers--BT Alex. Brown, Credit Lyonnais Securities, First Chicago Capital
Markets, Inc., Gleacher NatWest International, ABN AMRO Incorporated,
PaineWebber Incorporated and Schroder & Co. Inc. These initial purchasers then
sold the outstanding notes to institutional investors.
Simultaneously with the private placement, the subsidiary guarantors and
Tokheim Corporation entered into two registration rights agreements with the
initial purchasers of the outstanding notes, one agreement for the notes issued
in dollars and one for the notes issued in euros. Under these registration
rights agreements, we must deliver this prospectus to you and must complete
this exchange offer on or before August 12, 1999. If this exchange offer does
not take place on or before August 12, 1999, we must pay liquidated damages to
the holders of the outstanding notes until this exchange offer is completed.
The outstanding notes are, and the exchange notes that we are offering with
this prospectus will be, guaranteed by all of our existing and future U.S.
subsidiaries. These guarantees are made on a senior subordinated basis with
guarantees that are unsecured and subordinated to existing and future senior
debt of such subsidiaries.
You may exchange your outstanding notes for exchange notes, which have
substantially identical terms. The exchange offer satisfies your rights under
the registration rights agreements. After the exchange offer is over, you will
not be entitled to any exchange or registration rights with respect to your
outstanding notes, except under limited circumstances.
We believe that holders may resell the exchange notes without complying with
the registration and prospectus delivery provisions of the Securities Act of
1933 if various conditions are met.
Summary of the exchange offer
The exchange offer.......... We are offering to exchange:
. $123.0 million total principal
amount of 11 3/8% senior
subordinated exchange notes which
have been registered under the
Securities Act, for your outstanding
11 3/8% senior subordinated dollar
notes; and
1
<PAGE>
. (Euro)75.0 million total principal
amount of 11 3/8% senior
subordinated exchange notes, which
have been registered under the
Securities Act, for your outstanding
11 3/8% senior subordinated euro
notes.
To exchange your outstanding notes, you
must properly tender them, and we must
accept them. We will exchange all
outstanding notes that you validly tender
and do not validly withdraw.
Resales.......................... We believe that you can offer for resale,
resell and otherwise transfer the exchange
notes without complying with the
registration and prospectus delivery
requirements of the Securities Act if:
. you acquire the exchange notes in
the ordinary course of your
business;
. you are not participating, do not
intend to participate, and have no
arrangement or understanding with
any person to participate, in the
distribution of the exchange notes;
and
. you are not an "affiliate" of ours,
as defined in Rule 405 of the
Securities Act.
By executing the letter of transmittal, or
by agreeing to the terms of the letter of
transmittal, you represent to us that each
of these conditions is satisfied. If any of
these conditions is not satisfied and you
transfer any exchange note without
delivering a proper prospectus or without
qualifying for a registration exemption,
you may incur liability under the
Securities Act. We do not assume or
indemnify you against this liability.
If a broker-dealer acquires exchange notes
for its own account in exchange for
outstanding notes, and it acquired the
outstanding notes through market-making or
other trading activities, the broker-dealer
must acknowledge that it will deliver a
proper prospectus when any exchange notes
are transferred. A broker-dealer may use
this prospectus for an offer to resell, a
resale or other retransfer of the exchange
notes.
Expiration date.................. The exchange offer expires at 5:00 p.m.,
New York City time for the outstanding
dollar notes and at 5:00 p.m., London time
for the outstanding euro notes, on
, 1999, unless we extend the
expiration date.
Conditions to the exchange The exchange offer is subject to customary
offer........................... conditions, some of which we may waive.
2
<PAGE>
Procedures for tendering We issued the outstanding notes as global
outstanding notes.......... securities.
When the outstanding dollar notes were
issued, we deposited them with U.S. Bank
Trust National Association, as custodian.
U.S. Bank issued a certificateless
depositary interest in the outstanding
dollar notes, which represents a 100%
interest in the outstanding dollar notes,
to DTC. Beneficial interests in the
outstanding dollar notes, which are held by
direct or indirect participants in DTC
through the certificateless depositary
interest, are shown on records maintained
in book-entry form by DTC.
When the outstanding euro notes were
issued, we deposited them with Midland Bank
plc, HSBC Issuer Services, as common
depositary for the Euroclear System and
Cedel Bank. Security entitlements with
respect to the outstanding euro notes are
shown on records maintained in book-entry
form by Euroclear, Cedel Bank or your
securities intermediary.
If you wish to accept the exchange offer,
you must take the following steps, unless
you use an agent's message in connection
with a book-entry transfer:
. complete and sign the letter of
transmittal or a facsimile thereof,
in accordance with the instructions
contained in this prospectus and the
letter of transmittal, and
. mail or deliver the letter of
transmittal, together with the
outstanding notes and any other
required documents, to the
appropriate exchange agent at the
addresses set forth in this
prospectus and in the letter of
transmittal.
These documents must be delivered before
5:00 p.m., New York City time in the case
of outstanding dollar notes, or 5:00 p.m.,
London time in the case of outstanding euro
notes on the expiration date.
Do not send letters of transmittal and
certificates representing outstanding notes
to us or to DTC or to Euroclear or Cedel
Bank. Send these documents only to the
appropriate exchange agent.
Special procedures for If:
beneficial owners..........
. you beneficially own outstanding
notes,
. these notes are registered in the
name of a broker, dealer, commercial
bank, trust company or other
nominee, and
. you wish to tender your outstanding
notes in the exchange offer,
3
<PAGE>
please contact the registered holder as
soon as possible and instruct it to tender
on your behalf and comply with our
instructions set forth elsewhere in this
prospectus.
Guaranteed delivery procedures
for outstanding notes......
If you wish to tender your outstanding
notes, and:
. time will not permit you to deliver
your required documents to the
appropriate exchange agent by the
expiration date, or
. you cannot complete the procedure
for book-entry transfer on time, or
. you cannot deliver certificates for
registered notes on time,
you may tender your outstanding notes
pursuant to the procedures described in the
section entitled "The Exchange Offer" under
the heading "Procedures for tendering
outstanding notes--Guaranteed Delivery."
Withdrawal rights........... You may withdraw the tender of your
outstanding dollar notes at any time before
5:00 p.m., New York City time or your
outstanding euro notes at any time before
5:00 p.m., London time, on , 1999, unless
we extend the expiration date.
Appraisal or dissenters' rights.. You do not have any appraisal or
dissenters' rights in the exchange offer.
If you do not tender your outstanding notes
or we reject your tender, you will not be
entitled to any further registration rights
under the registration rights agreements,
except under limited circumstances.
However, your notes will remain outstanding
and entitled to the benefits of the
indentures.
U.S. federal income tax Your exchange of outstanding notes for
considerations............. exchange notes is not a taxable exchange
for United States federal income tax
purposes. You will not recognize any
taxable gain or loss or any interest income
as a result of the exchange.
Use of proceeds............. We will not receive any proceeds from the
issuance of the exchange notes. We will pay
the expenses of the exchange offer.
Exchange agents............. U.S. Bank Trust National Association is
serving as the exchange agent for the
outstanding dollar notes in the exchange
offer. Midland Bank plc, HSBC Issuer
Services is serving as the exchange agent
for the outstanding euro notes in the
exchange offer. The addresses, telephone
numbers and facsimile numbers of the
exchange agents are listed in the section
of this prospectus entitled "The Exchange
Offer" under the heading "Exchange agents"
and in the letter of transmittal.
4
<PAGE>
Summary of terms of the exchange notes
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes, except that the exchange notes will be registered
under the Securities Act. As a result, the exchange notes will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damage provisions contained in the outstanding notes. The exchange
notes represent the same debt as the outstanding notes. Both the outstanding
notes and the exchange notes are governed by the same indentures, and each
indenture is governed by New York law.
August 1, 2008.
Maturity date...............
Interest rate............... 11 3/8% per year, calculated using a 360-
day year.
Interest payment dates...... February 1 and August 1.
Ranking.......................... The exchange notes will:
. be unsecured senior subordinated
obligations of Tokheim;
. rank junior to our existing and
future senior debt, including our
obligations under our credit
agreement;
. rank equally in right of payment
with any of our other senior
subordinated obligations; and
. rank senior to all of our junior
subordinated indebtedness, including
the junior subordinated notes issued
to Schlumberger.
As of February 28, 1999, on a pro forma
basis for the issuance of the outstanding
notes and the application of the proceeds
from the issuance, we had approximately
$212.4 million of senior debt outstanding.
Substantially all of this senior debt was
secured by our assets and the assets of
several of our subsidiaries.
Guarantees.......................
All of our existing and future U.S.
subsidiaries will guarantee the exchange
notes. These guarantees will be made on a
senior subordinated basis with guarantees
that are unsecured and subordinated to the
existing and future senior debt of these
subsidiaries. Our existing U.S.
subsidiaries are: Envirotronic Systems,
Inc.; Gasboy International, Inc.;
Management Solutions, Inc.; Sunbelt Hose &
Petroleum Equipment, Inc.; Tokheim
Automation Corporation; Tokheim Equipment
Corporation; Tokheim Investment Corp.;
Tokheim RPS, LLC; and Tokheim Services LLC.
5
<PAGE>
Optional redemption......... Except as described in the next section, we
cannot redeem the exchange notes until
February 1, 2004. After February 1, 2004,
we may redeem some or all of the notes at
the redemption prices listed in the
"Description of the Exchange Notes" section
of this prospectus under the heading
"Optional redemption," plus accrued and
unpaid interest.
Optional redemption after public
equity offerings...........
At any time, and from time to time, before
February 1, 2002, we can choose to redeem
up to a total of 35% of the original
principal amount of each series of exchange
notes with money that we raise in one or
more public equity offerings. If we choose
to redeem exchange notes:
. we must redeem them within 120 days
of completing the public equity
offering,
. we must pay 111.375% of the face
amount of the exchange notes we are
redeeming plus interest, and
. at least 55% of the original
principal amount of the series of
exchange notes we are redeeming must
remain outstanding afterwards.
Change of control........... If a change of control of Tokheim occurs,
you will have the right to require us to
repurchase all of the outstanding exchange
notes that you hold at a price equal to
101% of their face amount plus accrued and
unpaid interest to the date of repurchase.
We might not be able to pay you the
required price for exchange notes you
present to us at the time of a change of
control of Tokheim because:
. we might not have enough funds at
that time; or
. the terms of our senior debt may
prevent us from repaying the
exchange notes.
Covenants................... The indentures that govern the outstanding
notes, and that will govern the exchange
notes, contain covenants for your benefit
that, among other things, limit our
ability, and the ability of most of our
subsidiaries, to:
. incur additional debt;
. pay dividends on capital stock,
repurchase capital stock or make
other restricted payments;
. make investments;
. create liens on our assets to secure
debt;
. enter into transactions with
affiliates;
. merge or consolidate with another
company; and
. transfer and sell assets.
These covenants are subject to a number of
important limitations and exceptions.
6
<PAGE>
Asset sale proceeds......... If we or our subsidiaries sell our assets,
we generally must either invest the net
cash proceeds from these sales in our
business within a period of time, prepay
senior debt or make an offer to purchase a
principal amount of the exchange notes
equal to the excess net cash proceeds. The
purchase price of the exchange notes will
be 100% of their principal amount, plus
accrued and unpaid interest.
Trustee, paying and transfer
agent and registrar........
U.S. Bank Trust National Association.
Luxembourg paying and transfer Bankers Trust Luxembourg S.A., if the
agent...................... exchange notes are listed on the Luxembourg
Stock Exchange.
London paying agent and common
depositary.................
Midland Bank plc, HSBC Issuer Services.
Use of proceeds............. We will not receive any cash proceeds in
the exchange offer.
Form of the exchange notes.. The dollar-denominated exchange notes will
be represented by one or more securities in
registered, global form deposited with U.S.
Bank, as custodian for DTC. The euro-
denominated exchange notes will be
represented by one or more securities in
registered, global form, deposited with
Midland Bank plc, HSBC Issuer Services as
common depositary for Euroclear and Cedel
Bank. You will not receive notes in
certificated form unless one of the events
described in the section of this prospectus
entitled "Description of the Exchange
Notes" under the heading "Form of exchange
notes, clearance and settlement--
Certificated notes" occurs. Instead:
. beneficial interests in the dollar-
denominated exchange notes will be
shown on, and transfers of these
interests will be effected only
through, records that DTC maintains
in book-entry form with respect to
its participants; and
. security entitlements with respect
to the euro-denominated exchange
notes will be shown on, and
transfers of these entitlements will
be effected only through, records
that Euroclear, Cedel Bank or your
securities intermediary maintain in
book-entry form.
Absence of a public market for
the exchange notes.........
While the outstanding dollar notes are
presently eligible for trading in the
PORTAL market of the NASD by qualified
institutional buyers, there is no existing
market for the exchange notes. The initial
purchasers of the outstanding notes have
advised us that they currently intend to
make a market in the exchange notes
following
7
<PAGE>
the exchange offer, but they are not obligated to do so. Furthermore, any
market-making may be discontinued at any time without notice. We do not
currently intend to apply for a listing of the exchange notes on any securities
exchange. We do not know if an active public market for the exchange notes will
develop or, if developed, will continue. If an active public market does not
develop or is not maintained, the market price and liquidity of the exchange
notes may be adversely affected. We cannot assure you of the liquidity of any
markets that may develop for the exchange notes, of your ability to sell your
exchange notes, or of the price at which you would be able to sell your
exchange notes.
Tokheim
General
As a result of our acquisition of the petroleum dispenser business of Sofitam
S.A. in September 1996 and the RPS division in September 1998, we are the
largest global competitor in the petroleum dispenser business. We have an
estimated 37% share of the world market. We have the ability to provide both
products and services to customers in over 80 countries.
We are the largest supplier of petroleum dispensing systems in Europe,
Africa, Canada and Mexico, and one of the largest suppliers in the United
States. We also have established operations in Asia and Latin America.
Our products
We manufacture and service electronic and mechanical petroleum dispensing
systems. These systems include petroleum dispensers and pumps, retail
automation systems, including point-of-sale systems, dispenser payment or "pay-
at-the-pump" terminals, replacement parts and upgrade kits.
Our services
We believe that Tokheim offers superior customer service and support. In
western Europe and Africa, we provide support through our extensive, Company-
direct service organization. Throughout the rest of the world, service is
provided through authorized service representatives and distributors. Customer
service includes the installation, maintenance, certification and calibration
of, and technical support for, petroleum dispensers, pumps, electronic hardware
and software systems. We offer 24-hour, seven day-per-week support by telephone
and over the Internet via our FASRLINK(TM) help desk to authorized service
representatives, distributors and customers in major markets.
Our industry and customers
Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations. These owners include major oil companies, national
oil companies, independent owners operating under a major oil company brand, or
jobbers, independent oil companies, convenience store stations, hypermarkets
and other retailers. Petroleum dispensing systems are also sold to commercial
customers. As a result of industry consolidation, we estimate that the top
three manufacturers of petroleum dispensing equipment account for approximately
75% of worldwide annual sales. We estimate that the combined annual sales of
the top five manufacturers in our industry is approximately $2 billion.
In 1998, approximately 88% of our sales were to retail owners, such as Arco,
BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell, SuperAmerica, Total and
their affiliated jobbers, and approximately 12% of our sales were to commercial
customers, such as Federal Express, United Parcel Service, Penske Corporation
and municipalities.
8
<PAGE>
The acquisition of the RPS division
On September 30, 1998, we completed the acquisition of the RPS division for a
price equal to $330.0 million in cash, notes, and warrants. Of the $330.0
million purchase price, $100.0 million was paid in cash borrowed under the
terms of a credit agreement with a consortium of banks including $22.5 million
from our 12.5% of senior notes due 2005. The seller note portion of the
purchase price consisted of $40.0 million in ten year, 12.0% junior
subordinated payment-in-kind notes issued to Schlumberger and $170.0 million in
12.0% senior subordinated notes due January 29, 1999, issued to Schlumberger.
The remaining $20.0 million of the purchase price was paid with common stock
warrants exercisable for five years, beginning January 30, 1999 to purchase, at
a nominal price, 2,526,923 shares of Tokheim's common stock. The 12.0% senior
subordinated notes, along with the senior notes, were repaid on January 29,
1999 with the proceeds from the sale of the outstanding notes.
Risk factors
See the section entitled "Risk Factors," beginning on page 15, for a
discussion of important factors that you should consider before deciding
whether to participate in the exchange offer.
Principal executive office
Tokheim was formed in 1901 and our principal executive offices are located at
10501 Corporate Drive, Fort Wayne, Indiana 46845. Our telephone number is (219)
470-4600.
9
<PAGE>
Summary Unaudited Pro Forma Consolidated Financial Data
(dollars in thousands)
The following table sets forth summary unaudited pro forma consolidated
financial data of Tokheim. You should read this information along with the
sections of this prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors" and the
financial statements of Tokheim and the RPS division, including the notes to
the financial statements, appearing elsewhere or incorporated by reference in
this prospectus.
The summary unaudited pro forma statement of earnings data and other data
give effect to the following as if they had occurred as of December 1, 1997:
(1) our March 1998 public offering of our common stock,
(2) our issuance of, and application of the proceeds from, the outstanding
notes,
(3) the execution of our credit agreement,
(4) our acquisition of the RPS division, and
(5) our sale of senior notes, senior subordinated notes, junior
subordinated notes and warrants in connection with the acquisition of
the RPS division.
The summary unaudited pro forma balance sheet data as of February 28, 1999
includes the transactions described in (2) through (5) above. The summary
unaudited pro forma consolidated financial data do not purport to represent
what our results of operations actually would have been if the transactions
described above had occurred as of such dates and are not necessarily
indicative of our future operating results or financial position.
In the table below, operating income (loss) equals net sales less cost of
sales, selling, general and administrative expenses, depreciation and
amortization, and merger and acquisition costs and other unusual items.
Preferred stock dividends refer to dividends that are payable on Tokheim's ESOP
preferred stock, the proceeds of which are used to service the guaranteed ESOP
obligation. In addition, total debt includes:
. these dollar exchange notes and these euro exchange notes;
. long-term borrowings under our credit agreement and other credit
facilities;
. the current portion of the borrowings under our credit agreement and
other credit facilities;
. cash overdraft facilities;
. the junior subordinated notes issued in connection with the acquisition
of the RPS division; and
. the guarantee of debt incurred by our ESOP to purchase our preferred
stock, the dividends of which are used by the ESOP to service the
guaranteed ESOP obligation.
Common shareholders' equity, net includes amounts attributable to the
warrants issued in connection with the acquisition of the RPS division. The
indentures under which the outstanding notes were, and the exchange notes will
be, issued will permit us, subject to various condition, to refinance the
junior subordinated notes and reacquire the warrants with junior subordinated
debt.
10
<PAGE>
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
November 30, February 28,
1998 1999
------------ ------------
<S> <C> <C>
Statement of Earnings Data:
Net sales.......................................... $743,623 $166,193
Merger and acquisition costs and other unusual
items............................................. 15,603 1,123
Operating income (loss)............................ 4,313 (886)
Interest expense, net.............................. 50,609 12,421
Loss before income taxes........................... (48,036) (14,685)
Net loss(1)........................................ (46,572) (14,292)
Preferred stock dividends.......................... 1,484 374
Net loss applicable to common stock(1)............. (48,056) (14,666)
Other Data:
Capital expenditures............................... $ 20,640 $ 12,341
Depreciation and amortization...................... 24,423 6,892
Interest expense and preferred stock dividends..... 52,930 13,424
Ratio of earnings to fixed charges(2).............. --x --x
<CAPTION>
As of
February 28,
1999
------------
<S> <C> <C>
Balance Sheet Data:
Working capital................................................. $ 88,868
Property, plant and equipment, net.............................. 75,874
Total assets.................................................... 724,906
Total debt...................................................... 459,259
ESOP preferred stock, net....................................... 12,941
Common shareholders' equity, net................................ 18,572
</TABLE>
- --------
(1) Excludes extraordinary loss from debt extinguishment of $23,924 for the
twelve months ended November 30, 1998 and $6,249 for the three months ended
February 28, 1999.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance, the portion of rental expense assumed to represent
interest and dividends on the ESOP preferred stock, which dividends service
the guaranteed ESOP obligation. Earnings were insufficient to cover fixed
charges by $48,036 and $14,685 for the twelve months ended November 30,
1998 and the three months ended February 28, 1999, respectively.
11
<PAGE>
Summary Financial Data of Tokheim Corporation and Subsidiaries
(dollars in thousands)
The following table sets forth summary financial data of Tokheim. The summary
statement of earnings data, other data and balance sheet data as of and for
each of the fiscal years in the five-year period ended November 30, 1998 were
derived from the audited consolidated financial statements of Tokheim. The
information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of Tokheim, including the
notes to the financial statements, appearing elsewhere or incorporated by
reference in this prospectus. The summary historical financial data as of and
for the three months ended February 28, 1998 and 1999 were derived from
unaudited interim consolidated condensed financial statements of Tokheim. In
the opinion of management, such unaudited interim consolidated condensed
financial statements contain all adjustments, consisting of only normal
recurring items with the exception of merger and acquisition costs and other
unusual items and the extraordinary items, necessary to present fairly
Tokheim's financial position and results of operations as of and for the
periods presented.
The summary financial data presented below for 1996 include three months of
Sofitam operations from the date of the acquisition of Sofitam. The results for
1998 include two months of the RPS division's operations from the date of
acquisition.
In the table below, operating income (loss) equals net sales less cost of
products sold, selling, general and administrative expenses, depreciation and
amortization, and merger and acquisition costs and other unusual items. In
addition, total debt includes:
. the dollar exchange notes and the euro exchange notes;
. the 11.5% senior subordinated notes;
. the senior subordinated notes issued in connection with the acquisition
of the RPS division;
. the senior notes issued in connection with the acquisition of the RPS
division;
. the junior subordinated notes issued in connection with the acquisition
of the RPS division;
. long term borrowings under the credit agreement and other credit
facilities;
. the current portion of borrowings under the credit agreement and other
credit facilities;
. cash overdraft facilities; and
. the guaranteed employees' stock ownership plan obligations.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended November 30, February 28,
------------------------------------------------ -----------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- ------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Earnings
Data:
Net sales.............. $202,134 $221,573 $279,733 $385,469 $466,440 $90,852 $166,193
Merger and acquisition
costs and other
unusual items......... 820 2,680 6,459 3,493 13,685 5,987 1,123
Operating income
(loss)................ 3,780 5,811 6,356 20,645 14,769 (966) (886)
Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307
Earnings (loss) before
income taxes(1)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571)
Earnings (loss)(1)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178)
Preferred stock
dividends............. 1,617 1,580 1,543 1,512 1,484 374 374
Earnings (loss)
applicable to common
stock(1).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552)
Other Data:
Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996
Depreciation and
amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892
Interest expense and
preferred stock
dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842
Ratio of earnings to
fixed charges(2)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
As of As of
November 30, February 28,
1998 1999
------------ ------------
(unaudited)
<S> <C> <C>
Balance Sheet Data:
Working capital..................................... $92,596 $88,868
Property, plant and equipment, net.................. 77,905 75,874
Total assets........................................ 776,642 724,906
Total debt.......................................... 443,331 459,259
ESOP preferred stock, net........................... 12,130 12,941
Common shareholders' equity, net.................... 64,631 18,572
</TABLE>
- --------
(1) The amounts for the years ended November 30, 1998 and November 30, 1997 and
the three months ended February 28, 1999 exclude $23,924, $1,886 and
$6,249, respectively, for extraordinary loss from debt extinguishment. The
amounts for the year ended November 30, 1994 exclude the cumulative effect
of change in method of accounting for post-retirement benefits other than
pensions of $13,416.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance expense, the portion of rental expense assumed to
represent interest and dividends on the ESOP preferred stock, which
dividends service the guaranteed ESOP obligation. Earnings were
insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571
for the fiscal years ended 1996 and 1998 and for the three months ended
February 28, 1998 and 1999, respectively.
13
<PAGE>
Summary Financial Data of the RPS Division
(dollars in thousands)
The following table sets forth selected summary financial data of the RPS
division. The summary statement of income data, other data and balance sheet
data as of and for each fiscal year in the three year period ended December 31,
1997 were derived from the audited combined financial statements of the RPS
division. The summary financial data as of and for the nine months ended
September 30, 1997 and 1998 were derived from the unaudited combined condensed
financial statements of the RPS division. The information contained in this
table should be read in conjunction with the combined financial statements of
the RPS division, including the notes to the financial statements, appearing
elsewhere in this prospectus.
In the table below, total debt includes bank overdrafts and short-term loans
plus the current portion of long-term debt.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------- ------------------
1995 1996 1997 1997 1998
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Net sales.................. $303,668 $333,915 $344,248 $231,978 $231,764
Restructuring charges...... -- 9,978 -- -- --
Operating loss............. (7,446) (17,197) (11,648) (10,210) (15,737)
Interest expense, net...... 1,257 1,652 1,418 945 1,586
Loss before income taxes... (10,008) (20,424) (13,499) (14,462) (20,593)
Net loss................... (7,721) (16,366) (6,720) (9,216) (15,730)
Other Data:
Capital expenditures....... $ 11,389 $ 14,736 $ 9,486 $ 6,810 $ 4,951
Depreciation and
amortization.............. 10,084 10,780 11,777 8,476 8,766
</TABLE>
<TABLE>
<CAPTION>
As of As of
December 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Balance Sheet Data:
Working capital.................................... $ 73,406 $101,282
Property, plant and equipment, net................. 32,183 31,735
Total assets....................................... 269,434 260,342
Total debt......................................... 12,614 2,289
Equity and retained earnings (deficit)............. 154,270 178,805
</TABLE>
14
<PAGE>
RISK FACTORS
You should consider the following risk factors, as well as the other
information contained in this prospectus, before making a decision to exchange
your outstanding notes in the exchange offer.
Risks associated with debt financing
We have substantial debt, which could adversely affect our financial results
and prevent us from fulfilling our debt obligations, including those under the
notes.
We have a significant level of debt as a result of:
. our issuance of, and application of the proceeds from, the outstanding
notes,
. the execution of our credit agreement,
. our acquisition of the RPS division, and
. our sale of senior notes, senior subordinated notes and junior
subordinated notes in connection with our acquisition of the RPS
division.
As of February 28, 1999, we had approximately $459.3 million of debt and
approximately $18.6 million of common shareholders' equity. If the transactions
described above were consummated on December 1, 1997, we would have had a net
loss in 1998. Our earnings before income taxes and fixed charges would have
been insufficient to cover fixed charges by approximately $48.0 million for the
year ended November 30, 1998.
Our substantial indebtedness, along with certain covenants in our credit
agreement and the indentures, could have negative consequences to us. For
example:
. we may not be able to satisfy our obligations with respect to the
exchange notes;
. we may have to use available funds for debt payments instead of for
operations;
. our ability to make capital and research and development expenditures
could be limited;
. our ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes, including
refinancing our debt, could be limited;
. we may not be able to pay dividends or make other distributions;
. we may not be able to compete effectively or take advantage of business
opportunities; and
. we may be more vulnerable to a downturn in our business or the economy
generally.
If we cannot generate the significant amount of cash we require to pay
principal and interest on our debt, we may have to abandon or alter our
strategy.
Our ability to make cash payments on the exchange notes and our other debt
obligations will depend on our future performance. In turn, our future
performance depends partly on economic conditions, interest rates, and other
financial and business factors, many of which are beyond our control. We cannot
be sure that our business will generate enough cash flow to make cash payments
on our indebtedness, including the exchange notes, or that we will be able to
achieve estimated cost savings or growth, or that we will be able to refinance
our existing indebtedness in whole or in part.
If we are unable to make our debt payments, we will be forced to adopt an
alternative strategy that may include actions such as:
. reducing or delaying capital or research and development expenditures;
. selling assets;
. restructuring or refinancing our indebtedness; or
. seeking additional equity capital.
15
<PAGE>
We may not be able to implement any of these strategies on satisfactory terms,
or at all.
Interest payments on our debt that bears interest at variable rates could
increase if interest rates increase.
Our borrowings under the credit agreement bear interest at variable rates. If
market interest rates increase, we will be required to make higher payments on
our variable-rate debt, which would reduce our available cash flow.
The exchange notes will be subordinate to our senior debt, including our debt
under the credit agreement and possibly all of our future borrowings.
The exchange notes will be general unsecured obligations of Tokheim. The
exchange notes will be subordinate in right of payment to all of our existing
and future senior debt, including our obligations under the credit agreement,
and to all existing and future senior debt of our subsidiaries. As of February
28, 1999, we had approximately $212.4 million of senior debt. This debt is
guaranteed by Tokheim's U.S. subsidiaries and is secured by:
. real and personal property assets of Tokheim and its material U.S.
subsidiaries;
. 100% of Tokheim's stock in its material U.S. subsidiaries; and
. 65% of Tokheim's stock in its foreign subsidiaries.
We may incur additional senior debt under the indentures. If we declare
bankruptcy, liquidate or reorganize, we must pay all senior debt in full before
our assets will be available to pay our obligations on the exchange notes.
There may not be sufficient assets remaining for us to be able to pay amounts
due on some or all of the exchange notes then outstanding. In addition, we are
not permitted to pay any principal, premium, interest, or other amounts on the
exchange notes, or purchase, redeem or otherwise retire the exchange notes, if
there is a payment default or a non-payment default with respect to our senior
debt, and, in the case of a non-payment default, a notice has been received by
the trustee from the holders of senior debt.
The exchange notes also will be effectively subordinated to all existing and
future obligations of our subsidiaries. Our obligations under the credit
agreement are guaranteed, jointly and severally, by all of our U.S.
subsidiaries. Certain of our non-United States subsidiaries are direct
borrowers under the credit agreement, and we have guaranteed those borrowings.
The indentures and the credit agreement limit our ability to conduct our
business and could prevent us from obtaining additional funds when we need them
in the future.
The indentures and the credit agreement contain covenants and restrictions
that limit our ability and the ability of our subsidiaries to, among other
things:
. incur additional debt;
. pay dividends on capital stock or repurchase capital stock or make
certain other restricted payments;
. use the proceeds of asset sales;
. make investments;
. create liens on our assets to secure debt;
. enter into transactions with affiliates;
. merge or consolidate with another company; and
. transfer and sell assets.
16
<PAGE>
In addition, we must prepay our loans under the credit agreement in an amount
equal to:
. all net proceeds from the sale or issuance of debt, with exceptions;
. all net proceeds from the sale or issuance of equity, with exceptions;
and
. a percentage of excess cash flow for each fiscal year with a range of
50% to 85%, based upon our leverage ratio, commencing with our fiscal
year ending November 30, 1999
These restrictions may limit our ability to get more financing, pay for
needed capital expenditures or withstand downturns in our business.
We may not be able to comply with the financial ratios and financial tests
required under the credit agreement. This could cause us to default under the
credit agreement.
The credit agreement prohibits us from prepaying the exchange notes and
requires us to maintain specified financial ratios and satisfy financial tests.
We may not be able to meet these financial ratios and tests because of events
beyond our control. If we were unable to pay our debts or to comply with these
covenants, we would default under the credit agreement. If our lenders did not
waive this default, our lenders could accelerate payments on our debt and
terminate all commitments under the revolving credit facility. If we were
unable to pay the accelerated debt, the lenders could proceed against the
collateral granted to them. Substantially all of our assets and the assets of
our U.S. subsidiaries are pledged as security under the credit agreement. Our
assets may not be sufficient to repay our debt, including the exchange notes,
if the credit agreement indebtedness is accelerated.
If we experience a change of control, we may be unable to repurchase the
exchange notes and may default under the credit agreement.
If there is a change of control under the indentures, we are required to make
an offer to purchase all exchange notes at a purchase price equal to 101% of
the principal amount of the exchange notes, together with accrued and unpaid
interest, if any, to the date of purchase. We may not have sufficient funds
available to purchase the exchange notes upon a change of control.
In addition, any change of control, and any repurchase of the exchange notes
required under the indentures upon a change of control, will constitute an
event of default under the credit agreement and could cause our obligations
under the credit agreement to be accelerated and declared due and payable by
the lenders. The lenders would be entitled to receive payment of all
outstanding amounts under the credit agreement before we could repurchase any
of the exchange notes. Upon the occurrence of an event of default, the lenders
under the credit agreement would also have the ability to block repurchases of
the exchange notes for a period of time.
Our obligations under the exchange notes could be voided if they resulted from
a fraudulent conveyance.
Any of our creditors may file a lawsuit objecting to our obligations under
the exchange notes or the use of proceeds of the outstanding notes. A court
could void our obligations under the exchange notes or the obligations of our
guarantor subsidiaries under their guarantees, subordinate the exchange notes
or guarantees to our or their other debt, or order the holders to return any
amounts paid for the outstanding notes to Tokheim or to a fund benefitting the
creditors if the court finds we or they:
(1) intended to defraud a creditor or
(2) did not receive fair value for the outstanding notes and we
. were insolvent or became insolvent by offering the outstanding
notes, or
. did not have enough capital to engage in the acquisition of the RPS
division, or
. intended to or believed that we overextended our debt obligations.
17
<PAGE>
Creditors of our subsidiary guarantors may also object to their guarantees of
the exchange notes. A court could order the relief discussed above for the same
reasons discussed above. In addition, the guarantors' creditors could claim
that since the guarantees were made for our benefit, the guarantors did not
receive fair value for the guarantees.
Risks associated with the operation of the business
We may not be able to realize certain efficiencies and cost reductions by
combining the RPS division's operations with ours. Our ability to repay our
debt is partially dependent on such savings.
Achieving the full benefits from combining Tokheim and the RPS division and
capturing the efficiencies and cost reductions expected as a result of the
acquisition of the RPS division depends, in large part, on our ability to
coordinate and integrate the operations of each company. Achieving the
remaining benefits to be derived from the acquisition of Sofitam also depends
on this coordination and integration. We may not be successful in these
efforts. The combination will require substantial attention of management,
which has limited experience integrating the operations of companies the size
of Tokheim and the RPS division. Management may not be able to focus on
completing the integration of Sofitam's operations as a result of the
acquisition of the RPS division. Management will have less time to focus on the
normal, day-to-day operations of Tokheim, especially if there are any other
difficulties encountered in the transition and integration process. Business,
competitive, financial, general economic and other factors, many of which will
be beyond management's control, will affect the timing and ultimate success of
the integration of the companies and the realization of benefits.
If management is unable to effectively integrate the business of the two
companies, the quality of our products could also decline. Any unexpected
difficulties may have a material negative effect on our business, financial
condition or results of operations.
We may not be able to expand or maintain our international operations.
International sales represent a substantial portion of our total sales; pro
forma for the acquisition of the RPS division, 73% of our total sales in 1998
consisted of international sales. Our business strategy includes continued
expansion of international sales activity, which will require significant
management attention and financial resources. In addition, foreign sales are
subject to numerous risks, including:
. political and economic instability in foreign markets;
. restrictive trade policies of foreign governments;
. inconsistent product regulation or sudden policy changes by government
agencies or authorities;
. the imposition of duties, taxes or government royalties;
. foreign exchange rate risks;
. exchange controls;
. national and regional labor strikes;
. potentially longer payment cycles;
. increased costs of maintaining international marketing efforts;
. difficulties in enforcing contractual obligations and intellectual
property rights;
. difficulties in collecting international accounts receivable; and
. the burdens of complying with a wide variety of international and U.S.
export laws and differing regulatory requirements.
Future sales to operators in emerging markets will depend upon the continued
privatization and deregulation of energy and retail petroleum markets in
eastern Europe, Latin America, Africa and Asia, as well
18
<PAGE>
as the strength of their local economies. Our operations in emerging markets
will be subject to the inherent risks of doing business in markets with
financial, political and legal systems that may be unstable or unpredictable.
Any of these factors could limit our international growth, or even reduce our
existing international operations, which would reduce our overall revenues and
profitability. In addition, current local market conditions have slowed our
business in Asia. We currently derive less than 2% of our net sales from the
region as compared to 5% for the year ended November 30, 1997. These market
conditions may not improve and may spread to other regions.
We may not be able to obtain enough cash from our international operations to
pay principal and interest on our debt.
Our ability to pay our debt will depend, in substantial part, on our ability
to obtain the cash flow generated by our international operations, including
the RPS division. We lent money and made capital contributions to our
subsidiaries in connection with the acquisition of the RPS division. We expect
payments of interest by our international subsidiaries on these intercompany
loans to help pay our debt. In addition, some of our subsidiaries will pay us
fees under management agreements executed at the same time as the acquisition
of the RPS division. These interest payments and management fees may be
recharacterized in a way that has adverse tax or other consequences for us, or
may become subject to restrictions of exchange controls on the transfer of
funds into or out of foreign countries, which may cause us to be unable to pay
our outstanding indebtedness, including the exchange notes. In addition,
declines in the value of the euro, or any other currency in which we make
sales, relative to the U.S. dollar reduce the amount of funds that will be
available from our international operations to help pay our debt. Under French
law, the trustee or receiver in bankruptcy or the court in any bankruptcy
proceeding may also be in a position to seek either the nullification or the
non-enforceability, depending on the situation, of any legal acts undertaken by
a company with third parties, such as the increase of intercompany obligations,
including intercompany notes, and the payment of management or other fees. This
act may decrease our cash flow and prevent us from paying our obligations,
including the exchange notes.
Substantially all of our sales are to customers in the retail petroleum
industry. Demand for our products will be affected by the condition of the
retail petroleum industry.
Substantially all of our net sales are derived from the sale and servicing of
petroleum dispensing equipment to the retail petroleum industry. Our results of
operations depend on demand for equipment from the retail petroleum industry in
developed and emerging markets. Several factors affect the retail petroleum
industry's demand for our equipment, including:
. wholesale and retail prices for petroleum products;
. taxation of petroleum products;
. environmental regulations;
. technological improvements;
. consumer demand for new products;
. changing retailing patterns in the retail petroleum industry;
. consolidation trends among major oil companies in developed markets;
. the pace of development in emerging markets;
. changes in interest rates; and
. general economic and industry conditions.
Any of these factors could cause a change in the prices of or demand for our
products and services and reduce our sales to this industry, which in turn
would significantly affect our revenues and profits.
19
<PAGE>
The loss of one of our large customers, or our failure to win a tender
contract from an existing customer, could significantly reduce our revenues and
profit.
Our customers include major oil companies, national oil companies, jobbers,
independent oil companies, convenience store stations, hypermarkets, other
retailers and commercial users. Some of these customers contribute a
substantial amount to our revenues. The loss of any of these customers, or
class of customers, or decreases in these customers' capital expenditures,
could cause a decrease in our cash flow, market share and profits. Recently,
major oil companies and national oil companies have moved toward granting
national, regional and global contracts, or tenders, and toward creating
alliances and preferred supplier relationships with suppliers. Typically, a
customer can terminate these arrangements at any time. The loss of a customer,
or the award of a contract to a competitor, may have a more significant impact
on Tokheim in the future as these arrangements become more common. As a result
of consolidation in the oil industry, especially among major oil companies,
Tokheim is at risk of losing large customers through merger or consolidation.
Fluctuations in exchange rates may decrease our revenues, cash flows and
earnings. Adapting to the euro may impose transition costs on us.
A substantial portion of our expenses and sales are denominated in foreign
currencies. Thus, our revenues, cash flows and earnings are affected by
fluctuations in certain exchange rates, primarily the rates between the U.S.
dollar and the French franc or euro and between the British pound and the U.S.
dollar and the euro.
During 1998, approximately 26% of Tokheim's total revenue was denominated in
French francs, which have significantly depreciated against the U.S. dollar in
recent years. Moreover, as a result of the acquisition of the RPS division we
conduct a substantial portion of our European manufacturing at our Dundee,
Scotland facility, primarily for export. The British pound has recently
appreciated against other European currencies, which makes exports from the
United Kingdom more expensive for our European customers. If foreign currencies
continue to decline in value relative to the U.S. dollar, our U.S. exports
could become more expensive and potentially less competitive in those markets.
On January 1, 1999, several member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency, the euro. We are likely to be financially
affected by the introduction of the euro because we have subsidiaries and
business in many of the member states. We could face substantial transition
costs as we redesign our software systems to reflect the adoption of the new
currency. In addition, the adoption of the euro may affect our payment
obligations under loan agreements denominated in currencies replaced by the
euro and may affect our commercial agreements denominated in these currencies.
Our revenues, cash flows and earnings in western Europe may be affected by
fluctuations of the British pound, because our Dundee plant is now a primary
manufacturing facility, and the British pound was not replaced by the euro. The
United Kingdom's decision not to adopt the euro may affect Tokheim. Our
products manufactured in Dundee could become more expensive and potentially
less competitive in markets outside the United Kingdom if the value of the
British pound increases relative to the euro. On the other hand, the amount of
funds that can be repatriated for the service of debt would decrease if the
value of the British pound declines relative to the euro.
Intense competition in our industry has caused a general decline in the price
of our products.
Competition within the retail petroleum dispensing equipment industry is
intense, and has caused the average price of our products to fall significantly
over the past few years. Prices may continue to fall in the future. Our primary
competitors include, among others:
. Gilbarco Inc., a division of GEC Plc;
. Wayne, a division of Halliburton Co.;
. Scheidt & Bachmann GmbH; and
. Tatsuno Corporation.
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Several of our current and potential future competitors have significantly
greater financial, technical and marketing resources than we do because they
are subsidiaries or divisions of much larger corporations. Our current or
potential competitors may develop products that are superior to ours or
integrate new technologies more quickly than we do. We could potentially lose
market share if competitors are able to form alliances with major oil companies
or respond to their contract proposals more quickly or on more favorable terms
than we can. Any of the factors listed above, or any other factors that
increase competition, could cause price reductions, reduced gross margins and
loss of market share for Tokheim. We may not be able to compete effectively.
We may not be able to apply new technology and software in our products.
Our success depends, in significant part, on the continued market acceptance
of our products. We must also develop and introduce new products and services
and enhanced versions of current products that customers will accept. The
technology and software in our products, including electronic components,
point-of-sale systems and related products, is growing increasingly
sophisticated and expensive. We may not be able to develop successful new
products in a timely fashion. Our current and future products may not be
marketed properly or satisfy the needs of the worldwide market. Some of our
assets could become obsolete or impaired in value as a result.
In addition, there is intense competition to develop new products and to
establish proprietary rights to these products and the related technologies.
Competitors may be successful in establishing proprietary rights to new
technologies. We may not be able to obtain rights to such technology. We may
also face claims that our products infringe patents that our competitors hold.
Our commitment to customizing products to address particular needs of our
customers could burden our resources or delay the delivery or installation of
products. Any of these factors could adversely affect our relationship with
customers and reduce our sales and profits.
A loss of key personnel could substantially disrupt our business.
Our success depends in large part upon our ability to attract, retain and
motivate highly skilled employees from a competitive labor market. We may not
be able to continue to attract and retain sufficient numbers of highly skilled
employees. The loss of Douglas K. Pinner, our Chairman of the Board, President
and Chief Executive Officer, or other key personnel, could substantially
disrupt our business operations and harm our relationships with customers and
suppliers.
Any defect in our products could substantially damage people and the
environment.
A product defect could pose a significant risk of injury or environmental
contamination because our products are used primarily in connection with highly
combustible, toxic materials. We also face the possibility of a product recall
if there are defects in the design or manufacture of our products. Product
liability claims or recalls could cost us a substantial amount of money. These
cases could result in substantial claims against Tokheim.
Our operations may be severely disrupted if our computer systems or those of
our vendors cannot process dates related to the year 2000.
Many computer systems, software products and other business systems with
embedded chips or processors use only two digits to represent the year. As a
result, they may be unable to accurately process certain data before, during or
after the year 2000. Business and governmental entities are at risk for
possible miscalculations or system failures causing disruptions in their
operations. This is commonly known as the Year 2000 issue. This issue can arise
at any point in our supply, manufacturing, processing, distribution and
financial chains.
We have conducted a review of our business systems, including our computer
systems. We are querying our customers, vendors and resellers about their
progress in identifying and addressing problems that their
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computer systems may face in interrelating and processing date information as
the year 2000 approaches and is reached. We may not identify all Year 2000
problems in our computer systems or those of our customers, vendors and
resellers in advance of their occurrence. We may not be able to successfully
remedy any problems that are discovered. Our expenses in identifying and
addressing such problems, or the expenses or liabilities to which we may become
subject as a result of such problems, could disrupt our operations and cause us
to lose customers and market share.
Furthermore, we rely on outside vendors to provide computer hardware
components that we in turn sell to our customers. Many of our products and
services are integrated or interface with other software systems of a customer
at the time of initial installation or thereafter. Because of this, to some
degree Year 2000 readiness is beyond our control. As a result, the failure of
third-party systems to be Year 2000 ready could also disrupt our operations.
Purchased goodwill associated with future acquisitions may have to be amortized
over a maximum of twenty years instead of being amortized over the current
maximum of forty years. This could reduce our profitability.
The Financial Accounting Standards Board is currently considering changing
the maximum amortization period for purchased goodwill from forty years to not
more than twenty years for future acquisitions. Tokheim's current accounting
practice is to amortize goodwill over a maximum of 40 years. If this change
becomes effective we would have to amortize any purchased goodwill associated
with future acquisitions over a much shorter life than we currently do. This
would increase the amount of amortization expense charged to income and reduce
our profitability levels compared to levels we achieve under current rules.
Risks associated with government regulation
A substantial change in environmental laws could require us to redesign our
products or cause our customers to divert their resources away from buying our
products.
Our operations, and those of our principal customers, are subject to local,
regional and national regulations, laws and standards, including those
concerning the environment. Changes in environmental regulation of the
petroleum exploration, manufacturing, distribution and sales businesses could
require our customers to increase their capital spending to comply with such
regulations and consequently decrease their capital spending on our products.
Additionally, we may have significant costs and liabilities relating to
compliance with environmental regulations that cannot be avoided.
Restrictions on new hypermarkets may slow our sales to customers in this
market.
A 1996 French regulation restricting the construction of new hypermarkets has
limited new service station growth and our sales to this important segment of
the French market. It is possible that other countries where hypermarkets
operate will also adopt restrictive laws, which could limit our growth in these
countries.
Risks associated with the exchange offer.
Your failure to exchange your outstanding notes may limit your ability to
transfer your notes.
Tokheim did not register the outstanding notes under the Securities Act or
any state securities laws, and it does not intend to do so after the exchange
offer. As a result, outstanding notes may be transferred only in limited
circumstances under the securities laws. If you do not exchange your
outstanding notes in the exchange offer by following the procedures described
in this prospectus, you will lose your right to have the outstanding notes
registered under the Securities Act, with some exceptions. If you continue to
hold outstanding notes after the exchange offer, you may be unable to sell your
outstanding notes.
If you want to tender your outstanding notes in exchange for exchange notes,
you must follow the procedures described in this prospectus. You should allow
sufficient time to ensure timely delivery of all
22
<PAGE>
required documentation to the appropriate exchange agent. Neither the exchange
agents nor Tokheim is under any duty to give you notification of defects or
irregularities with respect to tenders of outstanding notes for exchange.
Outstanding notes that are not tendered or are tendered but not accepted will,
following the exchange offer, continue to be subject to the existing transfer
restrictions. In addition, if you tender outstanding notes in the exchange
offer to participate in a distribution of the exchange notes, you will be
required to comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
There may not be an active trading market for the exchange notes.
While the outstanding dollar notes are presently eligible for trading in the
PORTAL market of the NASD by qualified institutional buyers, there is no
existing market for the exchange notes. The initial purchasers of the
outstanding notes have advised Tokheim that they currently intend to make a
market in the exchange notes following the exchange offer, but they are not
obligated to do so. Furthermore, any market-making may be discontinued at any
time without notice. Tokheim does not currently intend to apply for a listing
of the exchange notes on any securities exchange. An active public market for
the exchange notes may not develop. Moreover, if one develops, it may not
continue. If an active public market does not develop or is not maintained, the
market price and liquidity of the exchange notes may be adversely affected.
Future trading prices of the exchange notes will depend on many factors,
including, among other things:
. prevailing interest rates;
. our operating results; and
. the market for similar securities.
You may be subject to backup withholding on your exchange notes.
Backup withholding at a 31% rate will generally apply to payments with
respect to the exchange notes to non-U.S. holders if the non-U.S. holder fails
to furnish required information certification to Tokheim or its paying agent
and fails to otherwise establish an exemption. Any amounts withheld will be
allowed as a refund or a credit against your federal income tax liability, if
any, if you follow the procedures of the IRS for obtaining refunds or credits.
You should read the section entitled "Important United States Federal Income
Tax Considerations" under the heading "Information reporting and backup
withholding" for information on how you can avoid backup withholding
requirements.
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<PAGE>
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical facts included in this
prospectus, including statements regarding our future financial position,
business strategy, budgets, projected costs and cost savings and plans and
objectives of management for future operations, are "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. You can generally identify forward-looking statements
by the use of forward-looking words, such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue," or the negative of or
variations on these words or similar terminology. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
can give no assurance that these expectations will be correct. Important
factors that could cause our actual results to differ materially from our
expected results are discussed in the section entitled "Risk Factors" and
elsewhere in this prospectus, including in conjunction with the forward-looking
statements themselves. We do not undertake any obligation to update any
forward-looking statements. Given the uncertainties associated with forward-
looking statements, you should not unduly rely on them.
EXCHANGE RATES
References in this prospectus to "euro" and "(Euro)" are to the currency that
was introduced at the start of the third stage of economic and monetary union
pursuant to the treaty establishing the European Economic Community, which was
amended by the Treaty on European Union, signed at Maastricht, the Netherlands
on February 7, 1992. Except as otherwise stated in this prospectus, conversions
of non-U.S. dollar currencies to U.S. dollars in the financial statements and
other information included in this prospectus have been calculated, for income
statement purposes, on the basis of average exchange rates over the related
periods and, for balance sheet purposes, on the date of the balance sheet.
On May 3, 1998, the Council of the European Union adopted Council Regulation
(EC) No. 974/98, which defines the initial participants in Stage III of
European Monetary Union as Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain. This definition of
initial participants does not include England, Denmark and Greece. Thus, their
currencies--the British pound, the Danish krone, and the Greek drachma--were
not among those that were converted to the euro.
The euro was introduced on January 1, 1999 at an exchange rate of
(Euro)1.00=$1.17. As of April 26, 1999 the noon buying rate for the euro was
(Euro)1.00=$1.06. Unless otherwise indicated, the exchange rate used in this
prospectus is (Euro)1.00=$1.1553.
The following table sets forth, for the periods and dates indicated,
information concerning the French franc exchange rate, set forth in French
francs per dollar.
<TABLE>
<CAPTION>
French francs per dollar
--------------------------------
Year/Period
Calendar Period End High Low Average(1)
--------------- ----------- ---- ---- ----------
<S> <C> <C> <C> <C>
1994..................................... 5.34 5.98 5.10 5.54
1995..................................... 4.91 5.40 4.76 4.99
1996..................................... 5.19 5.27 4.88 5.11
1997..................................... 5.99 6.35 5.19 5.84
1998..................................... 5.62 6.21 5.42 5.90
1999 (through April 26).................. 6.20 6.20 5.54 5.91
</TABLE>
- --------
(1) Average of the closing rates for each business day during the period. On
April 26, 1999, the noon buying rate with respect to the French franc was
$1.00 = 6.20 French francs.
We make no representation that the amounts referred to in this prospectus
could have been or could be converted into other currencies at any particular
rate or at all.
24
<PAGE>
THE EXCHANGE OFFER
Purpose of the exchange offer
On January 29, 1999, we privately placed $123.0 million of 11 3/8% senior
subordinated notes due 2008 and (Euro)75.0 million of 11 3/8% senior
subordinated notes due 2008. Simultaneously with the sale of the outstanding
notes, we entered into two registration rights agreements--one relating to the
outstanding dollar notes and one relating to the outstanding euro notes. We
entered into the registration rights agreements with the subsidiary guarantors
and the initial purchasers of the outstanding notes--BT Alex. Brown, Credit
Lyonnais Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder &
Co. Inc. Under these registration rights agreements, we agreed to file a
registration statement regarding the exchange of the outstanding notes for
notes with terms identical in all material respects. We also agreed to use our
reasonable best efforts to cause that registration statement to become
effective with the SEC. Copies of the registration rights agreements have been
filed as exhibits to our Annual Report on Form 10-K filed with the SEC on March
1, 1999 and are incorporated by reference as exhibits to the registration
statement of which this prospectus is a part.
We are conducting the exchange offer to satisfy our contractual obligations
under the registration rights agreements. The form and terms of the exchange
notes are the same as the form and terms of the outstanding notes, except that
the exchange notes will be registered under the Securities Act. As a result,
the exchange notes will not bear legends restricting their transfer and will
not contain the registration rights and liquidated damage provisions contained
in the outstanding notes. The outstanding notes provide that, if a registration
statement relating to the exchange offer has not been filed by April 29, 1999
and declared effective by June 28, 1999, we will pay liquidated damages on the
outstanding notes. Upon the completion of the exchange offer, you will not be
entitled to any liquidated damages on your outstanding notes or any further
registration rights under the registration rights agreements, except under
limited circumstances. The exchange offer is not extended to holders of
outstanding notes in any jurisdiction where the exchange offer does not comply
with the securities or blue sky laws of that jurisdiction.
If:
.the applicable interpretations of the staff of the SEC do not permit us to
conduct the exchange offer, or
.the exchange offer is not consummated on or before August 12, 1999, or
. holders of the outstanding notes notify us that they are not eligible to
participate in the exchange offer, or would not receive freely tradeable
exchange notes in exchange for tendered outstanding notes
we will use our best efforts to cause to become effective a shelf registration
statement for the resale of the outstanding notes. We also agreed to use our
best efforts to keep the shelf registration statement effective until the
earlier of three years after the issue date of the outstanding notes and such
time as all of the outstanding notes have been sold thereunder.
In this section entitled "The Exchange Offer," the term "holder" means:
.any person in whose name the outstanding notes are registered on the books
of Tokheim, or
.any other person who has obtained a properly completed bond power from the
registered holder, or
. any person whose outstanding notes are held of record by DTC, Euroclear
or Cedel Bank and who wants to deliver these outstanding notes by book-
entry transfer at DTC, Euroclear or Cedel Bank.
Terms of the exchange offer
We are offering to exchange up to $123.0 million total principal amount of
dollar exchange notes for the same total principal amount of outstanding dollar
notes. The outstanding dollar notes must be tendered properly on or before the
expiration date, which is defined below, and not withdrawn. In exchange for
outstanding dollar notes properly tendered and accepted, we will issue a like
total principal amount of up to $123.0 million in dollar exchange notes.
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<PAGE>
In addition, we are offering to exchange up to (Euro)75.0 million total
principal amount of euro exchange notes for the same total principal amount of
outstanding euro notes. The outstanding euro notes also must be tendered
properly on or before the expiration date and not withdrawn. In exchange for
outstanding euro notes properly tendered and accepted, we will issue a like
total principal amount of up to (Euro)75.0 million in euro exchange notes.
The expiration date of the exchange offer is 5:00 p.m., New York City time
for the outstanding dollar notes, and 5:00 p.m., London time for the
outstanding euro notes, on , 1999 unless we extend the exchange
offer.
The exchange offer is not conditioned upon holders tendering a minimum
principal amount of outstanding notes. As of the date of this prospectus,
$123.0 million aggregate principal amount of dollar notes are outstanding, and
(Euro)75.0 million aggregate principal amount of euro notes are outstanding.
You do not have any appraisal or dissenters' rights in the exchange offer.
If you do not tender outstanding notes or you tender outstanding notes that we
do not accept, your outstanding notes will remain outstanding. Any outstanding
notes will be entitled to the benefits of the indenture under which they were,
and the exchange notes will be, issued. The outstanding notes will not,
however, be entitled to any further registration rights under the registration
rights agreements, except under limited circumstances. See the section
entitled "Risk Factors" under the heading "Risks associated with the exchange
offer--Your failure to exchange your notes may limit your ability to transfer
your notes" for more information regarding notes outstanding after the
exchange offer.
After the expiration date, we will return to you any tendered outstanding
notes that we did not accept for exchange.
You will not have to pay brokerage commissions or fees or transfer taxes for
exchanging your notes if you follow the instructions in the letter of
transmittal. We will pay the charges and expenses, other than those taxes
described below, in the exchange offer. See "--Fees and expenses" below for
further information regarding fees and expenses.
Neither Tokheim nor Tokheim's board of directors recommends you to tender or
not tender outstanding notes in the exchange offer. In addition, Tokheim has
not authorized anyone to make any recommendation. You must decide whether to
tender in the exchange offer and, if so, the aggregate amount of outstanding
notes to tender.
We have the right, in accordance with applicable law, at any time:
. to delay the acceptance of the outstanding notes;
. to terminate the exchange offer if we determine that any of the
conditions to the exchange offer have not occurred or have not been
satisfied;
. to extend the expiration date of the exchange offer and keep all
outstanding notes tendered other than those notes properly withdrawn;
and
. to waive any condition or amend the terms of the exchange offer.
If we materially change the exchange offer, or if we waive a material
condition of the exchange offer, we will promptly distribute a prospectus
supplement to you disclosing the change or waiver. We also will extend the
exchange offer as required by Rule 14e-1 under the Securities Exchange Act of
1934.
If we exercise any of the rights listed above, we will promptly give oral or
written notice of the action to the exchange agents, as defined below under
the heading "--Exchange agents", and we will issue a release to appropriate
news agencies. In the case of an extension, an announcement will be made no
later than 9:00 a.m., New York City time in the case of outstanding dollar
notes, or 9:00 a.m., London time in the case of outstanding euro notes, on the
next business day after the previously scheduled expiration date.
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<PAGE>
Acceptance of outstanding notes for exchange, and issuance of exchange notes
Tokheim will issue to the exchange agents exchange notes for outstanding
notes tendered and accepted and not withdrawn promptly after the expiration
date. The exchange agents might not deliver the exchange notes to all tendering
holders at the same time. The timing of delivery depends upon when the exchange
agents receive and process the required documents.
Tokheim will be deemed to have exchanged outstanding notes validly tendered
and not withdrawn when it gives oral or written notice to the exchange agents
of their acceptance. The exchange agents are agents for Tokheim for receiving
tenders of outstanding notes, letters of transmittal and related documents. The
exchange agents are also agents for tendering holders for receiving outstanding
notes, letters of transmittal and related documents and transmitting exchange
notes to validly tendering holders. If for any reason, Tokheim:
.delays the acceptance or exchange of any outstanding notes, or
.extends the exchange offer, or
.is unable to accept or exchange notes,
then the exchange agents may, on behalf of Tokheim and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered notes. Notes that the exchange agents
retain may not be withdrawn, except according to the withdrawal procedures
outlined below in the section entitled "--Withdrawal rights."
In tendering outstanding notes, you must warrant in the letter of transmittal
or in an agent's message, which is described below, that:
. you have full power and authority to tender, exchange, sell, assign and
transfer outstanding notes,
. Tokheim will acquire good, marketable and unencumbered title to the
tendered outstanding notes, free and clear of all liens, restrictions,
charges and other encumbrances, and
. the outstanding notes tendered for exchange are not subject to any
adverse claims or proxies.
You also must warrant and agree that you will, upon request, execute and
deliver any additional documents that Tokheim or the exchange agents request to
complete the exchange, sale, assignment, and transfer of the outstanding notes.
Procedures for Tendering Outstanding Notes
Valid Tender
You may tender your outstanding notes by book-entry transfer or by other
means. For book-entry transfer, you must deliver to the appropriate exchange
agent either:
. a properly completed and duly executed letter of transmittal, including
all other documents that the letter of transmittal requires, or
. an agent's message, meaning a message transmitted to the appropriate
exchange agent by DTC, Euroclear or Cedel Bank, as applicable, and
forming a part of a book-entry confirmation, stating that you agree to
be bound by the terms of the letter of transmittal.
You must deliver your letter of transmittal or agent's message by mail,
facsimile, hand delivery or overnight carrier to the appropriate exchange agent
on or before the expiration date.
In addition, to complete a book-entry transfer, you must also either:
. have DTC transfer the outstanding dollar notes into the dollar exchange
agent's account at DTC using the ATOP procedures for transfer, and
obtain a confirmation of the transfer, or
27
<PAGE>
. have Euroclear or Cedel Bank transfer the outstanding euro notes into
the euro exchange agent's account at Euroclear or Cedel Bank, as
applicable, using their procedures for transfer, and obtain a
confirmation of the transfer, or
. follow the guaranteed delivery procedures described below under the
heading "--Guaranteed delivery."
If you tender fewer than all of your outstanding notes, you should fill in
the amount of notes tendered in the appropriate box on the letter of
transmittal. If you do not indicate the amount tendered in the appropriate
box, we will assume you are tendering all outstanding notes that you hold.
For tendering your outstanding notes other than by book-entry transfer, you
must deliver a completed and signed letter of transmittal to the appropriate
exchange agent. Again, you must deliver the letter of transmittal by mail,
facsimile, hand delivery or overnight carrier to the appropriate exchange
agent on or before the expiration date. In addition, to complete a valid
tender, you must:
. deliver your outstanding dollar notes to the dollar exchange agent on or
before the expiration date, or
. deliver your outstanding euro notes to the euro exchange agent on or
before the expiration date, or
. follow the guaranteed delivery procedures set forth below under the
heading "--Guaranteed delivery."
Delivery of required documents by whatever method you choose is at your sole
risk. Delivery is complete when the exchange agents actually receive the items
to be delivered. Delivery of documents to DTC, Euroclear or Cedel Bank in
accordance with their procedures or to Tokheim does not constitute delivery to
the exchange agents. If delivery is by mail, we recommend registered mail,
return receipt requested, properly insured, or an overnight delivery service.
In all cases, you should allow sufficient time to ensure timely delivery.
Signature guarantees
You do not need to endorse certificates for the outstanding notes or provide
signature guarantees on the letter of transmittal unless:
(1) someone other than the registered holder tenders the certificate, or
(2) you complete the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the letter of transmittal.
In the case of (1) or (2) above, you must sign your outstanding note or
provide a properly executed bond power. The signature on the bond power and on
the letter of transmittal must be guaranteed by a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor
institution." Eligible guarantor institutions include:
. a bank;
. a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer;
. a credit union;
. a national securities exchange, registered securities association or
clearing agency; or
. a savings association that is a participant in a securities transfer
association.
Guaranteed delivery
If you want to tender outstanding notes in the exchange offer and:
. the certificates for the outstanding notes are not immediately
available, or
. all required documents are unlikely to reach the exchange agents on or
before the expiration date, or
. a book-entry transfer cannot be completed in time,
28
<PAGE>
the outstanding notes may be tendered if you comply with the following
guaranteed delivery procedures:
. your tender is made by or through an eligible guarantor institution;
. you deliver a properly completed and signed notice of guaranteed
delivery, like the form provided with the letter of transmittal, to the
appropriate exchange agent on or before the expiration date; and
. you deliver the certificates or a confirmation of book-entry transfer
and a properly completed and signed letter of transmittal to the
appropriate exchange agent within three New York Stock Exchange trading
days after the notice of guaranteed delivery is executed.
You may deliver the notice of guaranteed delivery by hand, facsimile or mail
to the appropriate exchange agent. You must include a guarantee by an eligible
guarantor institution in the form described in the notice.
Our acceptance of properly tendered outstanding notes is a binding agreement
between you and Tokheim upon the terms and subject to the conditions of the
exchange offer.
Determination of validity
We will resolve all questions regarding the form of documents, validity,
eligibility, time of receipt and acceptance for exchange of any tendered
outstanding notes. Our resolution of these questions as well as our
interpretation of the terms and conditions of the exchange offer, including the
letter of transmittal, is final and binding on all parties. A tender of
outstanding notes is invalid until all irregularities have been cured or
waived. Neither Tokheim, any affiliates or assigns of Tokheim, the exchange
agents nor any other person is under any obligation to give notice of any
irregularities in tenders, and they are not liable for failing to give any such
notice. Tokheim reserves the absolute right, in its sole and absolute
discretion, to reject any tenders determined to be in improper form or
unlawful. We also reserve the absolute right to waive any of the conditions of
the exchange offer or any condition or irregularity in the tender of
outstanding notes by any holder. We need not waive similar conditions or
irregularities in the case of other holders.
If any letter of transmittal, endorsement, bond power, power of attorney, or
any other document required by the letter of transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person must indicate that capacity when signing. In addition, unless
waived by Tokheim, the person must submit proper evidence satisfactory to
Tokheim, in its sole discretion, of his or her authority to so act.
If you beneficially own outstanding notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian, you should contact that entity promptly if you want to
participate in the exchange offer.
Resales of exchange notes
We are exchanging the outstanding notes for exchange notes in reliance upon
the staff of the SEC's position, set forth in interpretive letters to third
parties in other similar transactions. We will not seek our own interpretive
letter. As a result, we cannot assure you that the staff will take the same
position on this exchange offer as it did in interpretive letters to other
parties. Based on the staff's letters to other parties, we believe that holders
of exchange notes, other than broker-dealers, can offer the exchange notes for
resale, resell and otherwise transfer the exchange notes without delivering a
prospectus to prospective purchasers. However, you must acquire the exchange
notes in the ordinary course of business and have no intention of engaging in a
distribution of the exchange notes, as a "distribution" is defined by the
Securities Act.
If you are an "affiliate" of Tokheim or you intend to distribute exchange
notes, or if you are a broker-dealer who purchased outstanding notes from
Tokheim to resell pursuant to Rule 144A or any other available exemption under
the Securities Act, you:
. cannot rely on the staff's interpretations in the above mentioned
interpretive letters;
. cannot tender outstanding notes in the exchange offer; and
29
<PAGE>
. must comply with the registration and prospectus delivery requirements
of the Securities Act to transfer the outstanding notes, unless the sale
is exempt.
In addition, if you are a broker-dealer who acquired outstanding notes for
your own account as a result of market-making or other trading activities and
you exchange the outstanding notes for exchange notes, you must deliver a
prospectus with any resales of the exchange notes.
If you want to exchange your outstanding notes for exchange notes, you will
be required to affirm that you:
. are not an "affiliate" of Tokheim;
. are acquiring the exchange notes in the ordinary course of your
business;
. have no arrangement or understanding with any person to participate in a
distribution of the exchange notes, within the meaning of the Securities
Act; and
. are not a broker-dealer, are not engaged in, and do not intend to engage
in, a distribution of the exchange notes, within the meaning of the
Securities Act.
In addition, we may require you to provide information regarding the number
of "beneficial owners" of the outstanding notes within the meaning of Rule 13d-
3 under the Exchange Act. Each broker-dealer that receives exchange notes for
its own account must acknowledge that it acquired the outstanding notes for its
own account as the result of market-making activities or other trading
activities. Each broker-dealer must further agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of exchange notes. By making this acknowledgment and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" under the Securities Act. Based on the staff's position in
interpretive letters issued to third parties, we believe that broker-dealers
who acquired outstanding notes for their own accounts as a result of market-
making activities or other trading activities may fulfill their prospectus
delivery requirements with respect to the exchange notes with a prospectus
meeting the requirements of the Securities Act. Accordingly, a broker-dealer
may use this prospectus to satisfy such requirements. We have agreed that a
broker-dealer may use this prospectus for a period ending 180 days after the
expiration date of the exchange offer. You should read the section entitled
"Plan of Distribution" for further information about the use of this prospectus
by broker-dealers. A broker-dealer intending to use this prospectus in the
resale of exchange notes must notify us, on or prior to the expiration date,
that it is a participating broker-dealer. This notice may be given in the
letter of transmittal or may be delivered to the appropriate exchange agent.
Any participating broker-dealer who is an "affiliate" of Tokheim may not rely
on the staff's interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act when reselling exchange
notes.
Each participating broker-dealer exchanging outstanding notes for exchange
notes agrees that, upon receipt of notice from Tokheim:
(a) that any statement contained or incorporated by reference in this
prospectus makes the prospectus untrue in any material respect, or
(b) that this prospectus omits to state a material fact necessary to make
the statements contained or incorporated by reference in this prospectus,
in light of the circumstances under which they were made, not misleading,
or
(c) of the occurrence of other events specified in the registration
rights agreements,
the participating broker-dealer will suspend the sale of exchange notes. Each
participating broker-dealer agrees not to resell the exchange notes until:
(1) Tokheim has amended or supplemented this prospectus to correct the
misstatement or omission and Tokheim furnishes copies of the amended or
supplemented prospectus to the participating broker-dealer, or
30
<PAGE>
(2) Tokheim gives notice that the sale of the exchange notes may be
resumed.
If Tokheim gives notice suspending the sale of exchange notes, it shall extend
the 180-day period during which this prospectus may be used by a participating
broker-dealer by the number of days between the date Tokheim gives notice of
suspension and the date participating broker-dealers receive copies of the
amended or supplemented prospectus or the date Tokheim gives notice resuming
the sale of exchange notes.
Withdrawal rights
You can withdraw tenders of outstanding notes at any time on or before the
expiration date.
For a withdrawal to be effective, you must deliver a written, telegraphic,
telex or facsimile transmission of a notice of withdrawal or an agent's message
to the appropriate exchange agent on or before the expiration date. The notice
of withdrawal must specify the name of the person tendering the outstanding
notes to be withdrawn, the total principal amount of outstanding notes
withdrawn, and the name of the registered holder of the outstanding notes if
different from the name of the person tendering the outstanding notes. If you
delivered outstanding notes to an exchange agent, you must submit the serial
numbers of the outstanding notes to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an eligible guarantor institution,
except in the case of outstanding notes tendered for the account of an eligible
guarantor institution. If you tendered outstanding notes as a book-entry
transfer, the notice of withdrawal must specify the name and number of the
account at DTC, Euroclear or Cedel Bank, as applicable, to be credited with the
withdrawal of outstanding notes. You must deliver the notice of withdrawal to
the appropriate exchange agent by written, telegraphic, telex or facsimile
transmission, or by an agent's message. You may not rescind withdrawals of
tender. Outstanding notes properly withdrawn may again be tendered at any time
on or before the expiration date.
We will determine all questions regarding the validity, form and eligibility
of withdrawal notices. Our determination will be final and binding on all
parties. Neither Tokheim, any affiliate or assign of Tokheim,
the exchange agents nor any other person is under any obligation to give you
notice of any irregularities in any notice of withdrawal, and they are not
liable for failing to give any such notice. Withdrawn outstanding notes will be
returned to you after withdrawal.
Interest on exchange notes
The dollar exchange notes will bear interest at a rate of 11 3/8% per annum
and the euro exchange notes will bear interest at a rate of 11 3/8% per annum.
Interest is both payable semi-annually on February 1 and August 1 of each year.
Holders of exchange notes will receive interest from the date of initial
issuance of the exchange notes, plus an amount equal to the accrued interest on
the outstanding notes. Interest on the outstanding notes accepted for exchange
will cease to accrue upon issuance of the exchange notes.
Conditions to the exchange offer
We do not need to exchange any outstanding notes, may terminate the exchange
offer or may waive any conditions to the exchange offer or amend the exchange
offer, if any of the following conditions has occurred:
. the staff of the SEC no longer allows the exchange notes to be offered
for resale, resold and otherwise transferred by holders without
compliance with the registration and prospectus delivery provisions of
the Securities Act; or
. a governmental body passes any law, statute, rule or regulation which,
in our opinion, prohibits or prevents the exchange offer; or
. the SEC or any state securities authority issues a stop order suspending
the effectiveness of the registration statement or initiates or
threatens to initiate a proceeding to suspend the effectiveness of the
registration statement; or
31
<PAGE>
. we are unable to obtain any governmental approval that we believe is
necessary to complete the exchange offer.
If we reasonably believe that any of the above conditions has occurred, we
may:
. terminate the exchange offer, whether or not any outstanding notes have
been accepted for exchange,
. waive any condition to the exchange offer; or
. amend the terms of the exchange offer in any respect.
If our waiver or amendment materially changes the exchange offer, we will
promptly disclose the waiver or amendment through a prospectus supplement. We
will distribute the prospectus supplement to the registered holders of the
outstanding notes. The prospectus supplement will also extend the exchange
offer as required by Rule 14d-1 of the Exchange Act.
Exchange agents
We appointed U.S. Bank Trust National Association as dollar exchange agent
for the outstanding dollar notes for the exchange offer. We appointed Midland
Bank plc, HSBC Issuer Services as euro exchange agent for the outstanding euro
notes. You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for a notice of guaranteed delivery to the appropriate exchange agent
addressed as follows:
Dollar exchange agent
By registered or certified Confirm by telephone: By hand or overnight
mail: (651) 244-4512 delivery:
U.S. Bank Trust National U.S. Bank Trust National
Association Association
Facsimile transmissions:
(651) 244-1537
P.O. Box 64485 Fourth Floor--Bond Drop
St. Paul, Minnesota 55164- (Eligible guarantor Window
9549
institutions only) 180 East Fifth Street
Attention: Specialized St. Paul, Minnesota 55101
Finance Attention: Specialized
Finance
Euro exchange agent
By registered or certified Confirm by telephone: By hand or overnight
mail: delivery:
0171-260-7679
Midland Bank plc Midland Bank plc
Facsimile transmissions:
HSBC Issuer Services 0171-260-8086 HSBC Issuer Services
Mariner House, Pepys Mariner House, Pepys
Street (Eligible guarantor Street
London, EC3N 4DA institutions only) London, EC3N 4DA
Attention: Phil Dainesi Attention: Phil Dainesi
If you deliver letters of transmittal or any other required documents to an
address or facsimile number other than those listed above, your tender is
invalid.
Fees and expenses
We will pay the exchange agents reasonable and customary fees for their
services and reasonable out-of-pocket expenses. We will also pay brokerage
houses and other custodians, nominees and fiduciaries their reasonable out-of-
pocket expenses for sending copies of this prospectus and related documents to
holders of outstanding notes, and for handling or tendering for their
customers.
We will pay the transfer taxes for the exchange of the outstanding notes in
the exchange offer. If, however, exchange notes are delivered to or issued in
the name of a person other than the registered holder, or
32
<PAGE>
if a transfer tax is imposed for any reason other than for the exchange of
outstanding notes in the exchange offer, then the tendering holder will pay the
transfer taxes. If a tendering holder does not submit satisfactory evidence of
payment of taxes or exemption from taxes with the letter of transmittal, the
taxes will be billed directly to the tendering holder.
We will not make any payment to brokers, dealers or other nominees soliciting
acceptances in the exchange offer.
Accounting treatment
The exchange notes will be recorded at the same carrying value as the
outstanding notes. Accordingly, Tokheim will not recognize any gain or loss on
the exchange for accounting purposes. We intend to amortize the expenses of the
exchange offer and issuance of the outstanding notes over the respective terms
of the dollar notes and euro notes.
33
<PAGE>
THE TRANSACTIONS
The acquisition and related financings
On September 30, 1998, we completed the acquisition of the RPS division of
Schlumberger Limited for a price equal to $330.0 million in cash, notes, and
warrants. Of the $330.0 million purchase price, $100.0 million was paid in cash
borrowed under the credit agreement including $22.5 million from our 12.5%
senior notes. The seller note portion of the purchase price consisted of $40.0
million in ten year, 12.0% junior subordinated notes, payable in kind, and
$170.0 million in 12.0% senior subordinated notes due January 29, 1999. The
remaining $20.0 million of the purchase price was paid with common stock
warrants exercisable for five years, beginning January 30, 1999 to purchase at
a nominal price 2,526,923 shares of Tokheim's common stock. The 12.0% senior
subordinated notes, along with the senior notes, were repaid on January 29,
1999 with the proceeds from the sale of the outstanding notes. We have the
option, subject to bank approval, to redeem, in whole or in part, the junior
subordinated notes.
Tokheim is to reimburse Schlumberger for the net cash that remained in the
RPS division on the effective date of the acquisition, net of certain
adjustments. We currently estimate this amount to be up to approximately $6.5
million. We anticipate that this payment to Schlumberger will be made in the
third or fourth quarter of 1999 from funds available through the revolving
working capital facility under the credit agreement.
On the closing date of the acquisition, we entered into a technology and
licensing agreement with Schlumberger under which Schlumberger will pay us a
minimum fee of approximately $0.9 million a year, regardless of use, for a
period of five years, payable monthly. The payments under the agreement are due
in full even if Schlumberger terminates the agreement or discontinues use of
the services at any time during the five year payment period.
Also at the closing of the acquisition, we entered into a new credit
agreement. The credit agreement currently provides for a six year, $110.0
million revolving working capital facility and a six year, $120.0 million term
loan facility. An additional agreement provides for the assignment of a three
year, $7.6 million ESOP loan facility. At February 28, 1999, the outstanding
borrowings were $65.1 million under the revolving working capital facility,
$120.0 million under the term loan, and $6.3 million under the ESOP facility.
Available borrowings under the revolving working capital facility were $44.9
million at February 28, 1999.
Also, simultaneously with the acquisition, we entered into a note purchase
agreement, pursuant to which we issued $22.5 million aggregate principal amount
of 12.5% senior notes. Proceeds from the senior notes were used in connection
with our refinancing of existing indebtedness.
Also, on September 30, 1998, we completed the repurchase of the final $55.0
million of our 11.5% senior subordinated notes that were then outstanding.
These notes were redeemed at an aggregate premium and consent payment of
approximately $12.3 million along with accrued interest of approximately $1.1
million.
The proceeds from the issuance of the outstanding notes were used to:
(i) redeem the 12.0% senior subordinated notes; these notes were redeemed
at an aggregate price of $176.7 million, representing principal of
$170.0 million and accrued and unpaid interest of $6.7 million;
(ii) redeem the senior notes; these notes were redeemed at an aggregate
price of $23.2 million, representing principal of $22.5 million,
accrued and unpaid interest of $0.2 million and an applicable call
premium of $0.5 million;
(iii) reduce borrowings under the revolving working capital facility of the
credit agreement by $3.4 million; and
(iv) pay discounts, fees and expenses associated with the offering of the
outstanding notes of $6.3 million.
34
<PAGE>
In addition, total availability under the revolving working capital facility
of the credit agreement was permanently reduced from $120.0 million to $110.0
million.
The indentures under which the outstanding notes were, and the exchange notes
will be, issued permit us, subject to various conditions, to refinance the
junior subordinated notes and reacquire the warrants with junior subordinated
debt.
Since completing the acquisition, we have begun to implement a plan to cut
costs and integrate the RPS division. You should read the section entitled
"Business" under the heading "Business strategy--Realize operating synergies
and cost savings" for more information about this plan.
35
<PAGE>
SOURCES AND USES OF FUNDS
The exchange offer will not generate cash proceeds for Tokheim. The net
proceeds from the offering of the outstanding dollar notes and the outstanding
euro notes were $119.2 million and $84.0 million (1), respectively, after
discounts and expenses. These proceeds were used to redeem the 12% senior
subordinated notes and the senior notes and to repay borrowings under the
credit agreement.
The following table shows the sources and uses of funds from the offering of
the outstanding notes in millions of dollars:
<TABLE>
<S> <C>
Sources of funds:
Outstanding dollar notes..................................... $123.0
Outstanding euro notes....................................... 86.6(1)
------
Total sources of funds..................................... $209.6
======
Uses of funds:
Refinancing of 12.0% senior subordinated notes............... $170.0
Refinancing of 12.5% senior notes............................ 22.5
Payment of accrued interest.................................. 6.9
Premiums paid to redeem 12.5% senior notes................... 0.5
Reduce borrowings under the revolving working capital
facility of the credit agreement............................ 3.4
Fees and expenses............................................ 6.3
------
Total uses of funds........................................ $209.6
======
</TABLE>
- --------
(1) Calculated using an exchange rate of (Euro)1.00=$1.1553.
36
<PAGE>
CAPITALIZATION
(dollars in millions)
The following table sets forth the consolidated capitalization of Tokheim as
of February 28, 1999 which gives effect to the following:
. the exchange offer,
. the issuance of, and the application of the proceeds from, the
outstanding notes,
. the execution of the credit agreement,
. the consummation of the acquisition of the RPS division, and
. the sale of the senior notes, the 12.0% senior subordinated notes, the
junior subordinated notes and the warrants in connection with the
acquisition.
This table should be read in conjunction with Tokheim's interim Consolidated
Condensed Financial Statements and the Unaudited Pro Forma Consolidated
Condensed Financial Statements, and the respective notes related to the
financial statements, appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of
February 28,
1999
------------
Actual
------------
<S> <C>
Total debt:
Cash overdraft facilities................................. $ 15.0
Credit agreement:
Revolving loans......................................... 65.1
Term loan............................................... 120.0
Guaranteed ESOP obligation................................ 6.3
Other debt................................................ 6.0
11 3/8% outstanding dollar notes.......................... 123.0
11 3/8% outstanding euro notes (1)........................ 82.7
12% junior subordinated notes............................. 41.2
------
Total debt............................................ 459.3
Shareholders' equity:
ESOP preferred stock, net................................. 12.9
Common shareholders' equity, net (30,000,000 shares
authorized, 12,698,106 shares issued) (2)................ 18.6
------
Total shareholders' equity............................ 31.5
------
Total capitalization................................ $490.8
======
</TABLE>
- --------
(1) Calculated using an exchange rate of (Euro)1.00=$1.077.
(2) Includes amounts attributable to the warrants. The indentures under which
the outstanding notes were, and the exchange notes will be, issued permit
us, subject to certain conditions, to refinance the junior subordinated
notes and reacquire the warrants with junior subordinated debt.
37
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Amounts in thousands except amounts per share)
The following unaudited pro forma consolidated condensed financial statements
of Tokheim are derived from the audited and unaudited financial statements of
Tokheim and the RPS division, which are included elsewhere in this prospectus,
and have been adjusted to illustrate the effects of the following:
(1) the issuance of, and the application of the proceeds from, the
outstanding notes,
(2) the execution of the credit agreement,
(3) the consummation of the acquisition of the RPS division, and
(4) the sale of the senior notes, the 12.0% senior subordinated notes,
the junior subordinated notes and the warrants in connection with the
acquisition.
These pro forma financial statements and accompanying notes should be read in
conjunction with the consolidated financial statements of Tokheim and the
combined financial statements of the RPS division, including the notes to the
financial statements, appearing elsewhere in this prospectus. The pro forma
statement of earnings for the year ended November 30, 1998 includes the RPS
division's combined statement of income for the ten months ended September 30,
1998 and Tokheim's consolidated statement of earnings for the year ended
November 30, 1998. Tokheim's unaudited interim balance sheet as of February 28,
1999, appearing elsewhere in this prospectus, includes the effects of the
acquisition of the RPS division and related financing and the offering of, and
the application of the proceeds from, the outstanding notes. The pro forma
adjustments necessary to give effect to the exchange offer would be to increase
"Other noncurrent assets and deferred charges" by approximately $1,000 and to
reduce "Cash" by $1,000 to reflect additional fees and expenses associated with
this exchange offer. These pro forma statements of earnings give effect to our
March 1998 common stock offering and the transactions listed in (1)-(4) above,
and related purchase accounting adjustments, as if these events had taken place
on December 1, 1997. These pro forma financial statements are not necessarily
indicative of either future results of operations or the results that might
have occurred if the March 1998 common stock offering and the transactions
listed in (1)-(4) above had been consummated on December 1, 1997.
The acquisition of the RPS division has been accounted for using the purchase
method of accounting. The allocation of the aggregate purchase price included
in these pro forma financial statements is preliminary and therefore certain
amounts will change when such allocation is finalized.
Though not reflected in the Unaudited Pro Forma Consolidated Condensed
Financial Statements, Tokheim believes that through successful integration and
consolidation of the RPS division estimated cost savings of approximately
$28,700 in the first year and $47,300 per annum after three years can be
achieved. Management believes that these cost savings initiatives will not have
any material adverse effects on historical Tokheim and RPS division combined
revenues. The majority of all products currently being offered for sale by
Tokheim Corporation and the RPS division will still be offered for sale to our
existing customer base. The products that will no longer be produced or offered
for sale will be replaced by existing or new product offerings that are
considered to be more technologically advantageous to our customers. All
anticipated cost savings are presented net of any additional costs expected to
be incurred at facilities that will increase production from historical levels.
To date, we have initiated and accelerated various closures and
consolidations which we believe will yield first year cost savings of
approximately $30,000. These cost savings programs include the closure of
manufacturing facilities in Bohnam, Texas and Glenrothes, Scotland and the
consolidation of operations in Spain, Italy, France, the Netherlands, Germany
and Belgium.
38
<PAGE>
Unaudited Pro Forma Consolidated Condensed Statement of Earnings
for the three months ended February 28, 1999
<TABLE>
<CAPTION>
Tokheim
Corporation
And
(b) Offering Of Subsidiaries
Tokheim Outstanding Pro Forma
Corporation Notes Pro Offering Of
And Forma Outstanding
Subsidiaries Adjustments Notes
------------ ----------- ------------
<S> <C> <C> <C>
Net sales............................... $166,193 $ -- $166,193
Cost of sales, exclusive of items listed
below.................................. 133,297 -- 133,297
Selling, general, and administrative
expenses............................... 25,767 -- 25,767
Depreciation and amortization........... 6,892 -- 6,892
Merger and acquisition costs and other
unusual items.......................... 1,123 -- 1,123
-------- ------ --------
Operating loss.......................... (886) -- (886)
Interest expense, net................... 12,307 114 (g) 12,421
Other expense, net...................... 1,378 -- 1,378
-------- ------ --------
Loss before income taxes and
extraordinary loss..................... (14,571) (114) (14,685)
Income taxes............................ (393) -- (393)
-------- ------ --------
Loss before extraordinary loss.......... (14,178) $ (114) (14,292)
======
Preferred stock dividends ($1.94 per
share)................................. (374) (374)
-------- --------
Loss before extraordinary loss
applicable to common stock............. $(14,552) $(14,666)
======== ========
Loss per common share:
Basic:
Before extraordinary loss........... $ (1.15) $ (1.16)
======== ========
Weighted average shares outstanding. 12,662 12,662
======== ========
Diluted:
Before extraordinary loss........... $ (1.15) $ (1.16)
======== ========
Weighted average shares outstanding. 12,662 12,662
======== ========
</TABLE>
39
<PAGE>
Unaudited Pro Forma Consolidated Condensed Statement of Earnings
for the year ended November 30, 1998
<TABLE>
<CAPTION>
Tokheim
Corporation
And
Tokheim Subsidiaries
Corporation Pro Forma
And Acquisition
Acquisition Subsidiaries Of RPS
Of RPS Pro Forma Division,
Division Acquisition Offering Of Related
(a) 10 Months (b) Tokheim And Related Of RPS Outstanding Financing &
10 Months RPS RPS Corporation Financing Division Notes Offering Of
RPS Division Division And Pro Forma & Related Pro Forma Outstanding
Division Adjustments Adjusted Subsidiaries Adjustments Financing Adjustments Notes
--------- ----------- --------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.............. $277,183 $ -- $277,183 $466,440 $ -- $743,623 $-- $743,623
Cost of sales,
exclusive of items
listed below.......... 249,461 (5,893) 243,568 345,031 (708)(c) 587,891 -- 587,891
Selling, general, and
administrative
expenses.............. 38,110 (6,536) 31,574 79,819 -- 111,393 -- 111,393
Depreciation and
amortization.......... 3,251 2,549 5,800 13,136 5,487 (d) 24,423 -- 24,423
Merger and acquisition
costs and other
unusual items......... -- 1,918 1,918 13,685 -- 15,603 -- 15,603
-------- ------- -------- -------- -------- -------- ---- --------
Operating profit
(loss)................ (13,639) 7,962 (5,677) 14,769 (4,779) 4,313 -- 4,313
Interest expense, net.. 1,833 -- 1,833 19,257 29,537 (e) 50,627 (18)(g) 50,609
Other expense (income),
net................... 3,555 (25) 3,530 (1,790) -- 1,740 -- 1,740
-------- ------- -------- -------- -------- -------- ---- --------
Earnings (loss) before
income taxes and
extraordinary loss.... (19,027) 7,987 (11,040) (2,698) (34,316) (48,054) 18 (48,036)
Income taxes........... (5,353) 2,843 (2,510) 1,046 -- (1,464) -- (1,464)
-------- ------- -------- -------- -------- -------- ---- --------
Earnings (loss) before
extraordinary loss.... $(13,674) $ 5,144 $ (8,530) (3,744) $(34,316) (46,590) $ 18 (46,572)
======== ======= ======== ======== ====
Preferred stock
dividends ($1.94 per
share)................ (1,484) (1,484) (1,484)
-------- -------- --------
Earnings (loss) before
extraordinary loss
applicable to common
stock................. $ (5,228) $(48,074) $(48,056)
======== ======== ========
Earnings (loss) per
common share:
Basic:
Before extraordinary
loss................. $ (0.46) $ (3.81) $ (3.81)
======== ======== ========
Weighted average
shares outstanding... 11,371 1,690 (f) 12,615 12,615
======== ======== ======== ========
Diluted:
Before extraordinary
loss................. $ (0.46) $ (3.81) $ (3.81)
======== ======== ========
Weighted average
shares outstanding... 11,371 1,690 (f) 12,615 12,615
======== ======== ======== ========
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
(expense, (income))
<S> <C> <C>
(a) The adjustments to the RPS division's financial
statements reflect amounts that have been
reclassified to conform to Tokheim's presentation
and to remove certain costs associated with
operations as a division of Schlumberger. The
details of these reclassifications and adjustments
are as follows:
Cost of sales:
Reclassification of manufacturing depreciation and
amortization to depreciation and amortization.... $-- $(4,200)
Reflects an adjustment to operations of
Schlumberger's Abbeville facility for the ten
months of 1998 which was not purchased by
Tokheim.......................................... -- (700)
Reclassification of nonrecurring warranty cost
associated with design flaws in new product
launches. These design flaws were corrected and
are not expected to impact ongoing operations.... -- (993)
---- -------
Total adjustments and reclassifications from
cost of sales.................................. -- (5,893)
==== =======
Selling, general, and administrative expenses:
Adjustments to management and technical fees
charged by Schlumberger to its subsidiaries net
of expenses Tokheim expects to incur............. -- (4,011)
Reclassification of selling, general and
administrative depreciation and amortization to
depreciation and amortization.................... -- (1,600)
Reclassification of personnel reductions to merger
and acquisition costs and other unusual items.... -- (475)
Reclassification of other miscellaneous items to
merger and acquisition costs and other unusual
items............................................ -- (450)
---- -------
Total adjustments and reclassification from
selling, general and administrative expenses... -- (6,536)
==== =======
Depreciation and amortization:
Reclassification of manufacturing depreciation and
amortization..................................... -- 4,200
Reclassification of selling, general and
administrative depreciation and amortization .... -- 1,600
Elimination of preexisting RPS division goodwill
amortization that Tokheim did not purchase....... -- (3,251)
---- -------
Total adjustments and reclassifications to
depreciation and amortization.................. -- 2,549
==== =======
Merger and acquisition costs and other unusual
items:
Reclassification of personnel reductions from
selling, general and administrative expenses..... -- 475
Reclassification of nonrecurring warranty cost
associated with design flaws in new product
launches. These design flaws were corrected and
are not expected to impact ongoing operations.... -- 993
Reclassification of other miscellaneous items from
selling, general and administrative costs........ -- 450
---- -------
Total adjustments and reclassification to merger
and acquisition costs and other unusual items.. -- 1,918
---- -------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
(expense, (income))
<S> <C> <C>
Other expense (income), net:
Elimination of the minority interest expense in
net earnings. Tokheim acquired 100% of all RPS
subsidiaries.................................... $-- $ (25)
---- -------
Effect of all adjustments on pretax income......... -- (7,987)
Tax effect on adjustments using the RPS division's
reported tax rate of 35.6%........................ -- 2,843
---- -------
Effect of all adjustments on net earnings...... $-- $(5,144)
==== =======
(b) The Unaudited Pro Forma Consolidated Condensed
Statement of Earnings for the three months ended
February 28, 1999 includes the acquisition of the
RPS division and related financing and subsequent
refinancing of the initial debt structure on
January 29, 1999 with proceeds from the offering
of the outstanding notes. As such, interest
expense is the only amount for the three months
ended February 28, 1999 that requires a pro forma
adjustment to reflect the new interest rates. The
Unaudited Pro Forma Consolidated Condensed
Statement of Earnings includes Tokheim's year
ended November 30, 1998 audited Consolidated
Statement of Earnings, which includes two months
of operations for the newly acquired RPS division
since the date of its acquisition, September 30,
1998.
(c) Reflects a pro forma adjustment for technology
and licensing fees contractually payable by
Schlumberger to Tokheim. These fees relate to
certain services and licenses provided to
Schlumberger by Tokheim. The contract is
noncancelable and requires minimum annual
payments of $850 per annum to Tokheim during the
next 5 years..................................... $-- $ 708
==== =======
(d) Reflects a pro forma adjustment for the
amortization of purchased goodwill associated
with the Acquisition as follows:
</TABLE>
<TABLE>
<CAPTION>
Anticipated Three Month Ten Month
Gross Amortization Amortization Amortization
Amount Period Amount Amount
-------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Goodwill..................... $263,389 40 years $-- $5,487
======== ==== ======
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
(e) The pro forma adjustments to interest expense,
net, for the acquisition of the RPS division and
related financing were calculated as follows:
Tokheim's historical interest expense, net......... $-- $19,257
RPS division's historical interest expense, net.... -- 1,833
---- -------
Total............................................ -- 21,090
Plus: Interest expense for 10 additional months on
borrowings under:
New credit agreement (at interest rates ranging
from 7.65% to 9.9%, spread among three different
facilities)...................................... -- 14,836
12.0% senior subordinated notes, increasing rate
by 0.5% after 4 months and every 3 months
thereafter....................................... -- 17,496
12.5% senior notes, increasing rate by 0.5% after
2 months and every 3 months thereafter........... -- 2,550
12.0% junior subordinated notes................... -- 4,117
---- -------
Total............................................ -- 38,999
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
Less: Interest expense on:
Tokheim's debt refinanced:
Old credit agreement............................. -- (1,717)
11.5% senior subordinated notes.................. -- (6,325)
RPS division..................................... -- (1,833)
------- -------
Total............................................ -- (9,875)
Sub-total........................................ -- 50,214
Amortization of deferred financing costs:
Remove:
Old credit agreement............................. -- (1,380)
11.5% senior subordinated notes.................. -- (307)
Add:
Credit agreement................................. -- 1,413
12.5% senior notes............................... -- 566
12.0% senior subordinated notes.................. -- 121
------- -------
Pro forma interest expense, net.................... -- 50,627
------- -------
Pro forma adjustment to interest expense, net...... $ -- $29,537
======= =======
Interest expense, net, includes that portion of interest with respect to the
guaranteed ESOP obligation which is not paid through dividends on, or
redemptions of, the ESOP preferred stock.
(f) Represents the incremental weighted average
shares for Tokheim's March 1998 common stock
offering. In addition, per the terms of the
letter agreement, Tokheim has financed $20,000 of
the RPS division purchase price by issuing
warrants to purchase, for a nominal value,
2,526,923 shares of Tokheim common stock. The
Tokheim warrants are exercisable at any time up
to and including January 29, 2003. Tokheim is
currently in negotiations with Schlumberger to
repurchase in whole or in part the outstanding
warrants. The warrants are considered potential
common stock under the guidelines of SFAS No. 128
"Earnings Per Share" and will be reflected in the
calculation of shares outstanding when Tokheim is
in an earnings position.
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
(g) The pro forma adjustments to interest expense,
net, for the offering of the outstanding notes
were calculated as follows:
Tokheim's actual interest expense, net for the
three months ended February 28, 1999.............. $12,307 --
Tokheim's pro forma interest expense, net for the
acquisition of the RPS division and related
financing......................................... -- $50,627
Plus: two and twelve months, respectively, of
interest expense on borrowings under:
11.375% senior subordinated dollar notes.......... 2,332 13,991
11.375% senior subordinated euro notes (calculated
using a standard rate of exchange of 1.1553 euro
to 1 U.S. dollar)................................ 1,643 9,857
------- -------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
Less: two and twelve months, respectively, of
interest expense on:
12.0% senior subordinated notes, increasing rate
by 0.5% after 4 months and every 3 months
thereafter....................................... (3,400) (20,896)
12.5% senior notes, increasing rate by 0.5% after
2 months and every 3 months thereafter........... (469) (3,019)
------- -------
Total............................................ (3,869) (23,915)
------- -------
Sub-total........................................ 12,413 50,560
Amortization of deferred financing costs:
Remove:
12.5% senior notes................................ (113) (679)
12.0% senior subordinated notes................... (24) (145)
Add:
11.375% senior subordinated dollar notes.......... 82 494
11.375% senior subordinated euro notes............ 63 379
------- -------
Pro forma interest expense, net for the
refinancing...................................... $12,421 $50,609
======= =======
Pro forma adjustment to interest expense, net..... $ 114 $ (18)
======= =======
</TABLE>
Interest expense, net, includes that portion of interest with respect to the
guaranteed ESOP obligation which is not paid through dividends on, or
redemptions of, the ESOP preferred stock.
44
<PAGE>
SELECTED FINANCIAL DATA OF TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except dollars per share)
The following table sets forth selected historical financial data of Tokheim.
The statement of earnings data, other data and balance sheet data as of and for
each of the fiscal years in the five-year period ended November 30, 1998 were
derived from the audited consolidated financial statements of Tokheim. The
information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of Tokheim, including the
notes to the financial statements, appearing elsewhere or incorporated by
reference in this prospectus. The selected historical financial data as of and
for the three months ended February 28, 1998 and 1999 were derived from
unaudited interim financial statements of Tokheim. In the opinion of
management, such unaudited interim consolidated condensed financial statements
contain all adjustments, which consist of only normal recurring items with the
exception of merger and acquisition costs and other unusual items and the
extraordinary items, necessary to present fairly Tokheim's financial position
and results of operations as of and for the periods presented.
The summary financial data presented below for 1996 include three months of
Sofitam operations from the date of the acquisition of Sofitam. The results for
1998 include two months of the RPS division's operations from the date of
acquisition.
In the table below, operating income (loss) equals net sales less cost of
products sold, selling, general and administrative expenses, depreciation and
amortization, and merger and acquisition costs and other unusual items. In
addition, total debt includes:
. the dollar exchange notes and the euro exchange notes;
. the 11.5% senior subordinated notes;
. the senior subordinated notes issued in connection with the acquisition
of the RPS division;
. the senior notes issued in connection with the acquisition of the RPS
division;
. the junior subordinated notes issued in connection with the acquisition
of the RPS division;
. long term borrowings under the credit agreement and other credit
facilities;
. the current portion of borrowings under the credit agreement and other
credit facilities;
. cash overdraft facilities; and
. the guaranteed employees' stock ownership plan obligations.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended November 30, February 28,
------------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- --------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Earnings
Data:
Net sales.............. $202,134 $221,573 $279,733 $385,469 $ 466,440 $ 90,852 $166,193
Merger and acquisition
costs and other
unusual items......... 820 2,680 6,459 3,493 13,685 5,987 1,123
Operating income
(loss)................ 3,780 5,811 6,356 20,645 14,769 (966) (866)
Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307
Earnings (loss) before
income taxes(1)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571)
Earnings (loss)(1)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178)
Preferred stock
dividends............. 1,617 1,580 1,543 1,512 1,484 374 374
Earnings (loss)
applicable to common
stock(1).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552)
Other Data:
Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996
Depreciation and
amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892
Interest expense and
preferred stock
dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842
Ratio of earnings to
fixed charges(2)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
As of As of
November 30, February 28,
1998 1999
------------ ------------
<S> <C> <C>
Balance Sheet Data (at period end): (unaudited)
Working capital..................................... $ 92,596 $ 88,868
Property, plant and equipment, net.................. 77,905 75,874
Total assets........................................ 776,642 724,906
Total debt.......................................... 443,331 459,259
ESOP preferred stock, net........................... 12,130 12,941
Common shareholders' equity, net.................... 64,631 18,572
</TABLE>
- --------
(1) The amounts for the years ended November 30, 1998 and November 30, 1997 and
the three months ended February 28, 1999 exclude $23,924, $1,886 and
$6,249, respectively, for extraordinary loss on debt extinguishment. The
amounts for the year ended November 30, 1994 exclude the cumulative effect
of change in method of accounting for post-retirement benefits other than
pensions of $13,416.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance expense, the portion of rental expense assumed to
represent interest and dividends on the ESOP preferred stock, which
dividends service the guaranteed ESOP obligation. Earnings were
insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571
for the fiscal years ended 1996 and 1998 and for the three months ended
February 28, 1998 and 1999, respectively.
46
<PAGE>
SELECTED FINANCIAL DATA OF THE RPS DIVISION
(dollars in thousands)
The following table sets forth selected financial data of the RPS division.
The statement of income data, other data and balance sheet data as of and for
each fiscal year in the three year period ended December 31, 1997 were derived
from the audited combined financial statements of the RPS division. The
selected financial data as of and for the nine months ended September 30, 1997
and 1998 were derived from the unaudited combined financial statements of the
RPS division. The information contained in this table should be read in
conjunction with the combined financial statements of the RPS division,
including the notes to the financial statements, appearing elsewhere in this
prospectus.
As used in the table presented below, total debt includes bank overdrafts and
short-term loans plus the current portion of long-term debt.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------- ------------------
1995 1996 1997 1997 1998
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Net sales.................. $303,668 $333,915 $344,248 $231,978 $231,764
Restructuring charges...... -- 9,978 -- -- --
Operating loss............. (7,446) (17,197) (11,648) (10,210) (15,737)
Interest expense, net...... 1,257 1,652 1,418 945 1,586
Loss before income taxes... (10,008) (20,424) (13,499) (14,462) (20,593)
Net loss................... (7,721) (16,366) (6,720) (9,216) (15,730)
Other Data:
Capital expenditures....... $ 11,389 $ 14,736 $ 9,486 $ 6,810 $ 4,951
Depreciation and
amortization.............. 10,084 10,780 11,777 8,476 8,766
</TABLE>
<TABLE>
<CAPTION>
As of As of
December 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Balance Sheet Data:
Working capital.................................... $ 73,406 $101,282
Property, plant and equipment, net................. 32,183 31,735
Total assets....................................... 269,434 260,342
Total debt......................................... 12,614 2,289
Equity and retained earnings (deficit)............. 154,270 178,805
</TABLE>
47
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
On September 30, 1998, we completed the acquisition of the fuel dispenser
systems and service business of Schlumberger Limited, also known as the RPS
division, for a price equal to $330.0 million in cash, notes, and warrants. Of
the $330.0 million purchase price, $100.0 million was paid in cash borrowed
under the terms of our credit agreement including $22.5 million from our 12.5%
senior notes due 2005. The $210.0 million seller note portion of the purchase
price consisted of $40.0 million in ten year, 12.0% junior subordinated
payment-in-kind notes and $170.0 million in 12.0% senior subordinated notes due
January 29, 1999. $20.0 million of the purchase price was paid with warrants
exercisable for five years, beginning January 30, 1999, to purchase at a
nominal price, 2,526,923 shares of Tokheim's common stock.
The acquisition of the RPS division has been accounted for using the purchase
method of accounting. The RPS division's results of operations have been
included in the consolidated financial statements of Tokheim from the date of
acquisition. The purchase price has been preliminarily allocated to assets
acquired and liabilities assumed based on the RPS division's net book value of
assets at September 30, 1998, as adjusted, which is estimated to approximate
fair value. The purchase price allocated under this assumption exceeded the
estimated fair value of the tangible net assets acquired by approximately
$263.4 million. This amount is recognized as goodwill and is being amortized
over forty years. The current purchase price allocation is preliminary due to
the timing of the acquisition relative to Tokheim's year end. A more precise
allocation of purchase price is currently being performed at various RPS
division locations to more accurately identify and value the assets, including
intangibles, and liabilities assumed.
Tokheim is to reimburse Schlumberger for the net cash that remained in the
RPS division on the effective date of the acquisition, net of certain
adjustments. This amount is currently estimated to be up to approximately $6.5
million. It is anticipated that this payment to Schlumberger will be made in
the third or fourth quarter of 1999 from funds available through the revolving
working capital facility under the credit agreement.
Simultaneously with the acquisition of the RPS division, Tokheim entered into
a note purchase agreement, pursuant to which Tokheim issued $22.5 million
aggregate principal amount of senior notes. Proceeds from the senior notes were
used in connection with the financing of the acquisition of the RPS division
and the refinancing of existing indebtedness.
On January 29, 1999, we redeemed the 12.0% senior subordinated notes and the
senior notes with the proceeds from the issuance of $123.0 million aggregate
principal amount of our 11.375% senior subordinated notes due 2008 and
(Euro)75.0 in million aggregate principal amount, or approximately $87.0
million, of our 11.375% senior subordinated notes due 2008 in a private
placement pursuant to Rule 144A and Regulation S. The 12.0% senior subordinated
notes were redeemed at an aggregate price of $176.7 million, representing
principal of $170.0 million and accrued and unpaid interest of $6.7 million.
The senior notes were redeemed at an aggregate price of $23.2 million,
representing principal of $22.5 million, accrued and unpaid interest of $0.2
million and an applicable call premium of $0.5 million.
Also simultaneously with the acquisition of the RPS division, we executed a
new credit agreement with a consortium of banks to pay a portion of the
purchase price and to refinance previously existing indebtedness. The credit
agreement currently provides for a six year, $110.0 million revolving working
capital facility and a six year $120.0 million term loan facility. An
additional agreement provides for the assignment of a three year $7.6 million
ESOP loan facility.
Also on September 30, 1998, we completed the repurchase of the final $55.0
million of our 11.5% senior subordinated notes due 2006 that were then
outstanding. These notes were redeemed at an aggregate premium
48
<PAGE>
and consent payment of $12.3 million along with accrued interest of $1.1
million. The premium and consent payment was aggregated with the write off of
the remaining deferred issuance costs related to the 11.5% senior subordinated
notes and the old credit agreement and reported as an extraordinary loss on
debt extinguishment of approximately $19.0 million in the fourth quarter of
1998.
In March 1998, Tokheim completed an offering of 4,370,000 shares of its
common stock. Net proceeds from the common stock offering totaled approximately
$67.7 million. We used $39.4 million of the proceeds to redeem $35.0 million in
aggregate principal amount of our 11.5% senior subordinated notes. These 11.5%
senior subordinated notes were redeemed at the call price of 109.857%,
expressed as a percentage of the original face value, resulting in premiums
paid of $3.5 million along with accrued interest of $0.9 million. Following the
redemption, $55.0 million in aggregate principal amount of the 11.5% senior
subordinated notes remained outstanding. We recorded an extraordinary loss on
the extinguishment of the 11.5% senior subordinated notes of approximately $5.0
million during the second quarter of 1998. This loss includes $3.5 million of
premiums paid to purchase the 11.5% senior subordinated notes and $1.5 million
representing the write-off of a proportionate share of the original unamortized
deferred issuance costs. The remaining $28.3 million was applied toward the old
credit agreement and general corporate purposes.
We acquired Sofitam in September 1996 for $107.4 million less certain
adjustments. Tokheim's 1996 financial statements include three months of
Sofitam operations, and the 1997 and 1998 financial statements include a full
year of Sofitam operations. A comparison of sales in 1997 versus 1996 of
entities that were part of Tokheim before the acquisition is not meaningful
because certain sales made by these entities were conducted through Sofitam in
1996 and 1997.
International sales by foreign subsidiaries and exports from the U.S. totaled
approximately 60%, 64%, and 47% of consolidated net sales in 1998, 1997, and
1996, respectively. The acquisition of Sofitam has significantly extended our
international distribution network, reducing our reliance on U.S. domestic
sales. Furthermore the acquisition of the RPS division will significantly
increase the percentage of international sales in relation to future
consolidated sales.
In December 1997, we acquired Management Solutions, Inc., or MSI. MSI
develops and distributes retail automation systems, which includes point-of-
sale software, primarily for the convenience store, petroleum dispensing and
fast food service industries. We paid MSI's stockholders an initial amount of
$12.0 million. We are also obligated to make contingent payments of up to $13.2
million over fiscal years 1998, 1999 and 2000 based on MSI's performance. The
$13.2 million consists of $8.0 million of additional purchase price, $2.6
million related to a non-compete agreement, and $2.6 million of additional
employee compensation. We borrowed funds for the initial purchase price under
the old credit agreement.
Results of operations
Quarter ended February 28, 1999 compared to quarter ended February 28, 1998
Consolidated sales for the three month period ended February 28, 1999 were
$166.2 million compared to $90.9 million for the 1998 three month period. Sales
for North America, excluding export sales, have increased 38.0% for the three
month period from $36.1 million in 1998 to $49.9 million in 1999. International
sales, including domestic export sales, have increased 112.6% for the three
month period from $54.7 million in 1998 to $116.3 million in 1999. These
increases in sales from the prior year are primarily attributable to the
acquisition of the RPS division. Tokheim has observed a decline in purchasing
by major oil companies due to their merger activity. The low barrel price of
crude oil has also resulted in a delay of capital spending by major oil
companies. Those factors, however, were ameliorated by the purchasing momentum
of the jobber and mini-major market segments, the growing importance of the
hypermarket segments, demand in commercial and consumer products lines, and
increased service revenues.
Gross margins as a percent of sales, which is defined as net sales less cost
of sales divided by net sales, decreased from 26.3% in the three month period
ended February 28, 1998 to 19.8% in the 1999 three month
49
<PAGE>
period. This decline was primarily driven by historically lower margins
recognized in the RPS division. In addition, the first quarter sales mix is
composed of a larger portion of service contracts, which provide lower margins
than dispenser sales. Furthermore, the first three months of our business cycle
are generally lower sales volume months creating less opportunity to recover
manufacturing fixed cost to the extent of other quarters.
Selling, general, and administrative expenses as a percent of sales for the
three month period ended February 28, 1999 were 15.5% compared to 17.9% for the
1998 three month period. This decline as a percent of sales is primarily due to
the inclusion of the RPS division sales, elimination of redundant staffing
positions and the closure of the RPS division headquarters in Montrouge,
France. All remaining Montrouge personnel and job functions were consolidated
at our existing European headquarters in Trembley, France.
Net interest expense for the three month period ended February 28, 1999 was
$12.3 million compared to $4.0 million in the comparable 1998 period. This
increase is due to increased debt levels associated with the September 1998
acquisition and financing of the RPS division.
Depreciation and amortization expense for the three month period ended
February 28, 1999 was $6.9 million compared to $2.5 million in the comparable
1998 period. The majority of the increase between periods is associated with
the inclusion of the newly acquired RPS division which resulted in increased
amortization expense related to goodwill and depreciation of fixed assets
recorded in connection with the acquisition of the RPS division.
Merger and acquisition costs and other unusual items for the three month
period ended February 28, 1999 of $1.1 million, relates to closure expenses and
severance payments incurred in connection with the closing and consolidation of
certain pre-acquisition Tokheim facilities.
Foreign currency loss for the three month period ended February 28, 1999 was
$1.4 million compared to a loss of less than $0.1 million in the comparable
1998 period. The increase in the loss is primarily driven by short term
intercompany receivables and payables being revalued at the currency rate of
exchange in effect at February 28, 1999.
Other income, net for the first quarter of 1999 was $0.2 million compared to
net expense of $0.2 million for the comparable 1998 period. This difference is
attributable to various income and expense items, which are individually
insignificant.
Income taxes for the three month period ended February 28, 1999 were a
benefit of $0.4 million compared to an expense of $0.5 million in the
comparable 1998 period. This change is due to earnings in subsidiaries where
net operating loss carryforwards are available to offset book pretax earnings,
and tax benefits being recorded in subsidiaries with first quarter losses who
will recover these benefits in future 1999 quarters.
During the first quarter of 1999, we incurred an extraordinary loss on debt
extinguishment of approximately $6.2 million in connection with the refinancing
of the senior notes and the 12.0% senior subordinated notes. This amount
consists of $0.5 million of premiums paid on the redemption of the senior notes
and approximately $5.7 million of unamortized deferred issuance costs that were
written off.
As a result of the above mentioned items, loss before extraordinary item was
$14.2 million or $1.15 per diluted common share for the three months ended
February 28, 1999 compared to a loss of $5.6 million or $0.72 per diluted
common share for the same period in 1998. Loss from extraordinary loss on debt
extinguishment was $6.2 million or $0.49 per diluted common share for the three
months ended February 28, 1999. Net loss for the three months ended February
28, 1999 was $1.64 per diluted common share compared to a net loss of $0.72 per
diluted common share for the comparable 1998 period.
Fiscal years 1998, 1997 and 1996
Net sales for 1998 were $466.4 million. Net sales excluding the current year
acquisitions of MSI and the RPS division were $390.4 million as compared to
$385.5 million in 1997.
50
<PAGE>
After excluding the effects of the acquisitions of MSI and the RPS division,
net sales for 1998 increased by 1.3% from 1997 levels. Sales for North America,
excluding export sales, increased 18.4% from $139.9 million in 1997 to $165.6
million in 1998. This increase was driven by a stronger demand in our retail
distribution, commercial dispensers and service parts sales. This demand was
driven by new, more convenient products, such as credit/debit card readers, and
environmental regulations, such as those requiring vapor recovery systems.
During the current year the oil industry had various major oil companies merge
together. It is currently unknown what the effect, if any, of these mergers
will have on our future sales levels or operations. International sales,
including domestic export sales, were $224.8 million in 1998 compared to $245.5
million in 1997, representing a decrease of $20.7 million or 8.4%. This
decrease is due in part to the continued decline in foreign currency exchange
rates from prior year levels. International sales would have been $5.9 million
higher if average exchange rates of European and African currencies remained
consistent with 1997 rates. The other major contributing factor is a
significant decline in current year domestic export sales to the Asia Pacific
and Middle East regions compared to prior year levels. The depressed sales to
the Asia Pacific region compared to prior year levels have been caused by a
significant economic downturn in that region's economy. There can be no
assurance as to when Asian market conditions will improve or whether they may
worsen or spread to other regions.
Net sales for 1997 were $385.5 million, an increase of 37.8% from 1996 net
sales of $279.7 million. Substantially all of this increase was due to the
inclusion of a full year of Sofitam's results in 1997 compared to three months
of Sofitam's results in 1996. These increases were offset by the impact of a
decline in revenues due to a decline in foreign currency exchange rates. Sales
for 1997 would have been $20.9 million higher if average exchange rates of
European and African currencies had remained the same as in 1996.
Gross margin as a percent of sales, which is defined as net sales less cost
of sales, divided by net sales, was 26.0% in 1998 compared to 26.3% in 1997.
This decline is due to the historically lower gross margins in the RPS
division's business, offset partially by manufacturing improvements made in
some of our operations. During 1998 the Fort Wayne, Indiana manufacturing
facility implemented operational improvements. Our operational excellence
strategy provides an integrated process resulting in what we believe is a true
world-class manufacturing facility. This comprehensive approach utilizes the
following advanced operations to gain the maximum amount of operational
efficiencies:
. six sigma quality;
. high performance organizations;
. supplier partnerships; and
. advanced materials management and strategies.
Once fully implemented at the Fort Wayne, Indiana facility, these same
techniques will be implemented in all other manufacturing facilities.
Gross margin for 1997 was 26.3%, up from 24.8% in 1996. This increase is due
to:
. the inclusion of Sofitam's operations at higher margin levels for a full
year;
. personnel reductions and related cost savings;
. reduction of warranty expense in North America; and
. the results of concentrated efforts to improve manufacturing
efficiencies globally.
These cost reductions were offset somewhat by decreasing sales prices.
Selling, general and administrative expense as a percentage of net sales was
17.1% for 1998. After removing the effects of the acquisitions of MSI and the
RPS division, selling, general and administrative
51
<PAGE>
expense was 17.6% or $68.9 million in 1998 compared to 17.7% or $68.2 million
in 1997. The slight increase in dollars is primarily attributed to increased
costs associated with year 2000 corrective actions and increased incentive
compensation related to sales and earnings performance. Selling, general and
administrative expense was 17.7% or $68.2 million in 1997, compared to 18.5% or
$51.7 million in 1996. This increase over 1996 is largely attributable to a
full year of Sofitam expenses. These increases were offset by a program we
implemented in 1997 to improve efficiency and reduce personnel, which
translated into lower total compensation cost.
Depreciation and amortization expense for the twelve month period ended
November 30, 1998 was $13,136 or 2.8% of sales compared to $9,232 or 2.3% of
sales in 1997. This increase is attributable to increased amortization of
goodwill and depreciation of fixed assets acquired through the September 30,
1998 acquisition of the RPS division. Depreciation and amortization expense for
the twelve month period ended November 30, 1997 was $9,232 or 2.3% of sales
compared to $5,028 or 1.7% of sales in 1996. This increase is attributable to
recognition of a full fiscal year of amortization of goodwill and depreciation
of fixed assets acquired through the September 1996 acquisition of Sofitam.
Merger and acquisition costs and other unusual items for the twelve month
period ended November 30, 1998 were $13,685 or 2.9% of sales compared to $3,493
or 1.0% of sales in 1997. This increase is primarily attributable to the non-
recurring write-off of in process research and development costs incurred in
connection with the December 1997 acquisition of MSI and involuntary
termination and exit costs in connection with the integration and consolidation
plans. Merger and acquisition costs and other unusual items for the twelve
month period ended November 30, 1997 were $3,493 or 1.0% of sales compared to
$6,459 or 2.3% of sales in 1996. The 1997 and 1996 amounts include expenses
incurred through several corporate realignment initiatives related to the
Sofitam acquisition. Included in the 1996 amount are settled claims related to
ending an exclusive sales representative agreement with past distributors. Also
included in the 1996 amount are other charges relating to litigation and
customer satisfaction programs involving dispensers sold in prior years. See
Note 3 to Tokheim Corporation and Subsidiaries' Financial Statements included
elsewhere in this prospectus for additional information.
Net interest expense increased in 1998 to $19.2 million from $16.5 million in
1997. This increase is the direct result of higher levels of debt incurred to
effect the acquisition of the RPS division. Net interest expense increased in
1997 to $16.5 million from $7.2 million in 1996, reflecting a full year's
interest expense on Tokheim's 11.5% senior subordinated notes due 2006 issued
to finance the acquisition of Sofitam.
A net foreign currency exchange gain of $1.4 million was realized in 1998
compared to a net currency loss of less than $0.1 million in 1997 and a net
currency loss of $0.2 million in 1996. During the second quarter of 1998 we
realized a foreign currency gain of $0.8 million associated with the repayment
of various French franc denominated borrowings previously entered into under
our old credit agreement. Due to the decline in the value of the French franc,
we were able to repay these borrowings with less U.S. dollars than we had
received when the original contracts were entered into. During the fourth
quarter of 1998 we settled a foreign denominated obligation which resulted in a
foreign currency gain of $0.6 million. The 1997 currency loss was due
principally to the decline of the French franc against the U.S. dollar and was
partially offset by a foreign currency gain of $0.5 million on the sale of a
foreign currency option contract.
Other income, net was $0.7 million in 1998 compared to $1.4 million in 1997.
This decrease is principally due to lower gains realized on the sale of
property, plant and equipment. Other income, net was $1.4 million in 1997
compared to $0.2 million in 1996. This increase is partly due to gains on the
sale of property, plant and equipment that were $0.4 million greater in 1997
than 1996 and to the inclusion of Sofitam's other income for the full year. In
addition, other income in 1996 of $0.2 million includes $0.3 million of expense
for a litigation settlement of a non operating nature.
Income tax expense for 1998 was $1.0 million, which is comparable with the
prior year. As in prior years, the majority of this amount is comprised of
foreign taxes and U.S. state taxes. Our domestic and foreign
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operations benefit from the use of net operating loss carryforwards generated
in prior years. Income tax expense for 1997 was $1.2 million, an increase from
$0.8 million in 1996. The increase was due to higher income, offset partially
by utilization of net operating loss carryforwards and adjustments of prior
year's taxes and refunds. At the end of 1998, Tokheim recorded a net deferred
tax asset of $40.2 million, which was offset in full by a valuation allowance
due largely to uncertainties associated with our ability to fully use these tax
benefits. We are 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, Tokheim is able to generate sufficient levels of
taxable income, the valuation allowance will be adjusted accordingly. You
should read Note 15 of the Consolidated Financial Statements of Tokheim
Corporation and Subsidiaries for additional information concerning Tokheim's
income tax position at November 30, 1998.
Loss before extraordinary loss on debt extinguishment in 1998 was $3.7
million, or $0.46 loss per diluted common share, compared with 1997 earnings
before extraordinary loss on debt extinguishment of $4.0 million or $0.27
earnings per diluted common share and a loss of $2.0 million or $0.45 loss per
diluted common share in 1996. Net loss in 1998 included merger and acquisition
costs and other unusual items of $13.7 million, compared to $3.5 million in
1997 and $6.5 million in 1996. For further discussion see Note 3 to the
Consolidated Financial Statements of Tokheim Corporation and Subsidiaries.
In 1998, we incurred a $23.9 million extraordinary loss, or $2.10 loss per
diluted common share, as a result of redeeming all outstanding 11.5% senior
subordinated notes and refinancing borrowings under the old credit agreement.
This loss includes $15.7 million of premiums paid to purchase these notes and
$8.2 million of the remaining unamortized deferred issuance costs associated
with the 11.5% senior subordinated notes and the old credit agreement. In 1997,
we incurred a $1.9 million extraordinary loss, or $0.21 loss per diluted common
share, as a result of the open-market purchase and retirement of $10.0 million
in aggregate principal amount of the 11.5% senior subordinated notes. This loss
includes $1.4 million of premiums paid to purchase the 11.5% senior
subordinated notes and $0.5 million representing the write-off of a
proportionate share of the original unamortized deferred issuance costs. For
further information on the 11.5% senior subordinated notes you should read the
discussions under "--Liquidity and capital resources" and Note 7 to the
Consolidated Financial Statements of Tokheim Corporation and Subsidiaries,
"Senior Subordinated Notes."
On January 1, 1999, several member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency, the euro. Tokheim conducts business in these
member countries. The transition period for the introduction of the euro is
from January 1, 1999 to June 30, 2002. We have been, and are continuing to,
address the issues involved with the introduction of the euro. The more
important issues facing Tokheim include:
. converting information technology systems;
. reassessing currency exchange rate risk;
. negotiating and amending licensing agreements and contracts;
. product pricing; and
. processing tax and accounting records.
Conversion to the euro may reduce our intra-European exposure to changes in
foreign currency exchange rates. As a result, our intra-European foreign
currency translation and transaction gains and losses could be reduced.
Based upon our plans and progress to date, we believe that use of the euro
will not have a significant impact on the manner in which we conduct our
business affairs and process our business and accounting records. However there
can be no certainty that such plans will be successfully implemented or that
external factors will not have an adverse effect on Tokheim's operations. Any
costs of compliance associated with the adoption of the euro will be expensed
as incurred and we do not expect these costs to be material to Tokheim's
financial condition, results of operations or cash flows.
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Inflation has not had a significant impact on Tokheim's results of
operations.
Tokheim is a party to various legal matters, and its operations are subject
to federal, state, and local environmental laws and regulations. We believe
that the outcome of such pending claims will not individually or in the
aggregate have a material adverse effect on Tokheim's business, financial
condition or results of operations. For more information about legal matters
and regulation, you should read Note 20 to the Consolidated Financial
Statements of Tokheim Corporation and Subsidiaries, "Contingent Liabilities."
Liquidity and capital resources
Cash used in operations for the three month period ended February 28, 1999
was $1.3 million versus $5.3 million in the comparable period of 1998. During
the first quarter of 1999, Tokheim was able to collect receivables and reduce
inventory levels by a combined amount of $24.8 million. This cash inflow was
used to reduce the outstanding payables by approximately $17.9 million. These
working capital sources and uses are primarily related to the seasonality of
the business.
Cash used in investing activities for the three month period ended February
28, 1999 was $5.0 million compared to a cash usage of $12.5 million in the
comparable 1998 period. The cash usage in the 1998 period is attributable to
the acquisition of MSI.
Cash provided from financing activities for the three month period ended
February 28, 1999 was $13.3 million compared to cash provided in the comparable
1998 period of $19.8 million. The cash provided in 1998 is largely attributable
to an increase in notes payable to banks of $20.6 million used primarily to
finance the acquisition of MSI and for short term working capital needs. The
most significant item in the 1999 period was the issuance of the outstanding
dollar notes and the outstanding euro notes, the proceeds of which were used to
refinance the 12.0% senior subordinated notes and the senior notes which were
originally issued in connection with the acquisition of the RPS division, and
to refinance certain other debt of Tokheim at the date of the acquisition.
On January 29, 1999, Tokheim issued $123.0 million aggregate principal amount
of outstanding dollar notes and (Euro)75.0 million, which is equivalent to
$87.0 million, aggregate principal amount of outstanding euro notes. The
outstanding notes will mature on August 1, 2008, and interest is payable semi-
annually on February 1 and August 1 of each year, commencing August 1, 1999.
Net proceeds from the issuance of the outstanding notes were used to redeem
the 12.0% senior subordinated notes and the senior notes. The 12.0% senior
subordinated notes were redeemed at an aggregate price of $176.7 million,
representing principal of $170.0 million and accrued and unpaid interest on the
notes of $6.7 million. The senior notes were redeemed at an aggregate price of
$23.2 million, representing principal of $22.5 million, accrued and unpaid
interest on the notes of $0.2 million and an applicable call premium of $0.5
million. In addition, we used approximately $9.1 million of the net proceeds to
reduce borrowings under the revolving credit facility under the credit
agreement and to permanently reduce the bank working capital commitment from
$120.0 million to $110.0 million.
During the first quarter of 1999, we incurred an extraordinary loss on debt
extinguishment of approximately $6.2 million in connection with the refinancing
of the senior notes and the 12% senior subordinated notes with proceeds
received from the offering of the outstanding notes. This amount consists of
$0.5 million of premiums paid on the redemption of the senior notes and
approximately $5.7 million of unamortized deferred debt issuance costs that
were written off.
As part of the purchase price of the RPS division, we have provided $20.3
million for certain costs we expect to incur to close down redundant operations
in connection with the reorganization and rationalization of the RPS division's
operations. As of February 28, 1999 we have incurred and charged approximately
$2.2 million against this accrual for projects initiated since the acquisition
date, leaving a remaining balance of
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$18.1 million. We expect to incur approximately $5.0 million of expenditures
during the second quarter of 1999 representing severance and closure costs
related to the Bonham, Texas, Tulla, Ireland and Belgium facilities. In
addition, at November 30, 1998 we set up a restructuring reserve related to the
closure of our Glenrothes, Scotland facility in the amount of $5.1 million.
During the first quarter of 1999 we charged approximately $3.0 million against
the reserve. These charges relate to severance costs, facility closure expenses
and the write down in value of impaired assets. We expect the closure of this
facility to be completed during the second quarter of 1999.
Tokheim has guaranteed loans to the ESOP in the amounts of $6.4 million and
$7.0 million at February 28, 1999 and November 30, 1998, respectively. The
trustee who holds the ESOP preferred stock may elect to convert each preferred
share to one common share in the event of a redemption by Tokheim, certain
consolidations or mergers of Tokheim, or a redemption by the trustee that is
necessary to provide for distributions under our retirement savings plan. A
participant may elect to receive a distribution from the plan in cash or common
stock. If redeemed by the trustee, we are responsible for purchasing the
preferred stock at the twenty-five dollar floor value. We may elect to pay the
redemption price in cash or an equivalent amount of common stock. Preferred
stock dividends paid were $0.4 million for the three month periods ended
February 28, 1999 and 1998, respectively.
In December 1997, we initiated our global Year 2000 plan, including the
organization and staffing of a full-time Year 2000 program office. We have
organized the process into the following sections:
.product certification, to ensure all of our products sold are Year 2000
ready;
. internal information systems, to ensure all internal hardware and
software is Year 2000 ready through upgrades or replacement;
. suppliers, distributors and external agents, to ensure all suppliers,
distributors and external agents that we use to purchase or sell goods
and services are Year 2000 ready; and
. manufacturing and infrastructure, to ensure manufacturing and
infrastructure systems are Year 2000 ready.
A more complete description of each of these sections follows.
Product certification consists of classifying, inventorying, assessing,
remediating and eventually certifying of all of Tokheim's products which have
embedded technologies within them. Examples of these types of products are fuel
dispensers, forecourt controllers, credit card readers, direct payment
terminals, outside payment terminals, and point-of-sale systems. Tokheim has a
total of 1,344 products on file. Of these products, 324 are not Year 2000
supported by Tokheim. The remaining 1,020 are active products which Tokheim has
an obligation to notify the customer as to its Year 2000 readiness. For those
customers with non-Year 2000 ready products, Tokheim has made available
upgrades or new systems to be purchased by the customer to correct any Year
2000 deficiencies. Tokheim is currently at a Year 2000 ready status of 93% for
these active products.
Internal information systems relates to the combination of computer hardware
and software that Tokheim uses internally for operations and financial
reporting. All of our computer hardware and the majority of our software
programs were purchased from outside firms. Some specialized programs were
internally developed. Tokheim has inventoried a total of 182 critical systems
and determined that 117 or 64% are Year 2000 ready. The remaining systems are
projected to be ready by October 1999.
Suppliers, distributors, and external agents involves the area of Tokheim's
Year 2000 program that assesses the Year 2000 readiness of its raw material and
component part vendors. Tokheim has currently identified 850 critical
suppliers, distributors and external agents. Survey responses indicate that 329
have identified themselves as ready, 127 have said they are on schedule to be
ready, and 153 have said that they are not yet ready. Tokheim has found the
remaining supply chain partners reluctant to admit verbally or in a written
statement what their Year 2000 readiness status is. The readiness of Tokheim's
external partners will more than likely improve; however, we do not know how
extensive any improvement will be.
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Manufacturing/infrastructure involves the area of Tokheim's Year 2000 program
that looks at its internal manufacturing equipment and the services needed to
keep operations running. Examples of items in this category include robotically
controlled manufacturing machines, CNC milling and punching equipment and
automated test equipment stations for testing calibration and flow rates of our
fuel dispensers. Infrastructure refers mainly to service-oriented items that
our plants cannot operate without, such as electricity, water,
telecommunications and transportation. Tokheim has inventoried 1,038 items in
this category and determined that 91% of the items are Year 2000 ready.
As of February 28, 1999 most of Tokheim's products worldwide have been tested
for Year 2000 readiness. A substantial majority of our total product lines are
Year 2000 ready, and we believe that the remaining products will be Year 2000
ready by December 1999. Our products presently being sold are Year 2000 ready.
We are currently assessing which products in the field are not Year 2000 ready
and our responsibility to customers, if any, to remedy non-compliant products.
This assessment is being done for all products sold by each entity with the
assessment efforts focused on the recently acquired RPS division locations.
There is a possibility that certain third-party networks over which the point-
of-sale systems must operate may not be Year 2000 ready, but our products will
still allow the pumping of petroleum products. We have surveyed our critical
suppliers, and about half of the respondents have indicated that they are Year
2000 ready. The other half of those responding have indicated that they are
still working to achieve Year 2000 readiness, but none has indicated that it
expects not to be ready. We believe that all of our information systems will be
Year 2000 ready no later than the third quarter of 1999. To date, we have not
uncovered any material Year 2000 problems. The total costs associated with
required modifications to become Year 2000 ready are not expected to be
material to Tokheim's financial position, results of operations or cash flows.
We estimate that we will spend a total of approximately $3.7 million by
December 31, 1999, of which approximately $1.3 million had been spent by
February 28, 1999, to become Year 2000 ready. We have enlisted the assistance
of a third-party consulting company to provide independent verification and
validation of our entire Year 2000 plan.
Failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, normal business activities or operations.
Such failures could materially and adversely affect Tokheim's results of
operation, liquidity, and financial condition. We believe that the most likely
failure scenario is that our point-of-sale systems that have not been corrected
may fail, but our dispensers will still allow the pumping of petroleum
products. Under this scenario, purchasers of petroleum products would still be
able to use the dispensers but would be required to pay for their purchases at
the cashier rather than at the pump.
There is a possibility that our customers would seek legal recourse or take
other corrective action if a Year 2000 problem arises in our products that
disrupts our customers' businesses. At this time we cannot reasonably predict
the probability that our customers would pursue one of these courses of action,
the legal outcome of any action, or the financial impact on Tokheim of any of
these courses of action.
Due to the general uncertainty inherent in the Year 2000 problem, resulting
in part from the uncertainty of the Year 2000 readiness of third-party
suppliers, customers, and devices that interface with our products, we are
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on Tokheim's results of operations, liquidity, or
financial condition. The Year 2000 plan is expected to significantly reduce our
level of uncertainty about the Year 2000 problem and, in particular, about the
Year 2000 readiness of our material external agents. Tokheim believes that with
the implementation of new business systems and completion of the Year 2000 plan
as scheduled, the possibility of significant interruptions of normal operations
should be reduced. However, contingency planning for all sections discussed
above commenced in the fourth quarter of 1998, and we are currently focusing on
assessing the potential Year 2000 problems that may arise and the risks of not
becoming Year 2000 ready for each section mentioned. We expect to have a
contingency plan in place by the end of the second quarter of 1999.
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The future
Tokheim's principal sources of liquidity in the future are expected to be
cash flow from operations, including cash flow anticipated to be generated from
the RPS division, and available borrowings under the credit agreement. It is
expected that Tokheim's principal uses of liquidity will be to provide working
capital, finance capital expenditures, fund costs associated with Tokheim's
integration and rationalization plan and meet debt service requirements. As a
result of the acquisition of the RPS division, Tokheim has a significant level
of debt. Based upon current levels of operations and anticipated cost savings
and future growth, Tokheim believes that its expected cash flow from
operations, together with available borrowings under the credit agreement and
its other sources of liquidity, such as the sale of closed facilities and the
operating leases, will be adequate to meet its anticipated requirements for
working capital, capital expenditures, lease payments and scheduled principal
and interest payments. There can be no assurance, however, that Tokheim's
business will continue to generate cash flows at or above current levels, that
estimated cost savings or growth will be achieved or that Tokheim will be able
to refinance its existing indebtedness in whole or in part.
The indentures under which the outstanding notes were, and the exchange notes
will be, issued and the credit agreement contain a number of significant
covenants. The credit agreement requires Tokheim to maintain specified
financial ratios and satisfy financial tests. Tokheim's ability to meet such
financial ratios and tests may be affected by events beyond its control.
Several covenants in the credit agreement were amended in first quarter 1999.
There is a possibility that Tokheim will not be able to meet these amended
financial ratios and tests. The consequences of such a failure to meet these
tests are described more fully in the section "Risk Factors" under the heading
"We may not be able to comply with the financial ratios and financial tests . .
. under the credit agreement."
In addition, the indentures limit the ability of Tokheim and its subsidiaries
to, among other things:
. incur additional debt;
. pay dividends on capital stock or repurchase capital stock or make other
restricted payments;
. use the proceeds of asset sales;
. make investments;
. create liens on assets to secure debt;
. enter into transactions with affiliates;
. merge or consolidate with another company; and
. transfer and sell assets.
New accounting pronouncements
Tokheim 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 Tokheim's financial statements. None
of the pronouncements that have been issued but not yet adopted by Tokheim are
expected to have a material impact on Tokheim's financial position, results of
operations or cash flows. You should read the notes to the Consolidated
Condensed Financial Statements for additional information regarding recently
issued accounting pronouncements.
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BUSINESS
Tokheim
On September 30, 1998, we acquired the RPS division and became the world's
largest manufacturer and servicer of electronic and mechanical petroleum
dispensing systems. These systems include petroleum dispensers and pumps,
retail automation systems, including point-of-sale systems, dispenser payment
or "pay-at-the-pump" terminals, replacement parts and upgrade kits. Customer
service includes the installation, maintenance, certification and calibration
of, and technical support for petroleum dispensers, pumps, electronic hardware
and software systems. We provide products and services to customers in more
than 80 countries. We are the largest supplier of petroleum dispensing systems
in Europe, Africa, Canada and Mexico, and one of the largest in the United
States. We also have established operations in Asia and Latin America. We
believe that our global capabilities provide us with a competitive advantage to
attract additional business and form alliances with customers.
Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations. These owners include major oil companies, national
oil companies, jobbers, independent oil companies, convenience store stations,
hypermarkets and other retailers. Petroleum dispensing systems are also sold to
commercial customers. As a result of industry consolidation, management
estimates that the top three manufacturers of petroleum dispensing equipment
account for approximately 75% of worldwide annual sales. Tokheim estimates that
the combined annual sales of the top five manufacturers in its industry is
approximately $2 billion.
In 1998, approximately 88% of our net sales were to retail operators, such as
Arco, BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell, SuperAmerica, Total
and their affiliated jobbers, and approximately 12% of our 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 our products has been driven by demand for new, more
convenient systems, such as credit/debit card readers, and by environmental
regulations. These regulations include those requiring vapor recovery systems
and more secure underground storage tanks, often with electronic leak detection
technology. In emerging markets, economic growth requires vehicle use and
infrastructure development, which increase the demand for fuel and fuel
dispensers. Deregulation of local markets and privatization of state-owned oil
companies have also created additional growth opportunities in emerging
markets.
Tokheim believes that it offers superior customer service and support. In
western Europe and Africa we provide support through our extensive, company-
direct service organization. Throughout the rest of the world, service is
provided through authorized service representatives and distributors. Customer
service includes the installation, maintenance, certification and calibration
of, and technical support for, petroleum dispensers, pumps, electronic hardware
and software systems. We offer 24-hour, seven day-per-week support by telephone
and over the Internet via our FASRLINK help desk to authorized service
representatives, distributors and customers in major markets. We believe our
service and support capabilities are important factors in winning supply
contracts and gaining new customers. Additionally, major oil companies are more
frequently entering into geographically broader service contracts, which we
believe we are well-positioned to win.
Tokheim is the world's largest manufacturer and servicer of electronic and
mechanical petroleum dispensing systems. As of the date of this prospectus,
Tokheim's U.S. subsidiaries are: Envirotronic Systems, Inc.; Gasboy
International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum
Equipment, Inc.; Tokheim Automation Corporation; Tokheim Equipment Corporation;
Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. As a
result of our acquisition of Sofitam in September 1996 and the RPS division in
September 1998, Tokheim has positioned itself as the largest global competitor
in the petroleum dispenser business, with an estimated 37% share of the world
market, and the ability to provide both products and services to customers in
over 80 countries. Tokheim was already one of the world's largest manufacturers
and servicers of electronic and mechanical petroleum dispensing systems prior
to its acquisition of the RPS division. Between 1994 and 1998, Tokheim's
revenues grew from approximately $202.1 million to $466.4 million, in large
part due to the Sofitam acquisition.
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Prior to the acquisition, the RPS division of Schlumberger Limited was
headquartered in France, and was a leading manufacturer and servicer of fuel
dispensing systems in western Europe. In 1992, it established a presence in
North America with the acquisition of Southwest Energy Control Systems and
continued to develop its North American position. The RPS division is also
present in eastern Europe and the former Soviet Union. The main manufacturing
sites for Europe and North America are located in Dundee, Scotland and in
Bonham, Texas, respectively. We recently announced that we will close the
Bonham facility.
History
Tokheim
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, a group of businessmen from Fort Wayne, Indiana
purchased Tokheim. The company moved to Fort Wayne and was incorporated in
Indiana under the name Tokheim Oil Tank and Pump Company. The present name was
adopted in December 1953. Our common stock began trading on the New York Stock
Exchange on September 8, 1978. In 1986, Tokheim acquired the business now
operated as Gasboy International, Inc. 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, Tokheim 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,
Tokheim strengthened its offerings of retail automation systems, including
point-of-sale systems, with the acquisition of MSI.
The RPS division
Schlumberger built the RPS division mainly through acquisitions of other
petroleum dispensing equipment companies. The French RPS division was
established in 1920 under the name Aster-Boutillon and became part of
Schlumberger in 1972. In 1985, the RPS division acquired Koppens Automatic, a
manufacturer of fuel dispensers established in the Netherlands. In 1992, the
RPS division established a presence in North America with the acquisition of
Southwest Energy Control Systems. The RPS division developed a presence in
Germany through the acquisitions of Schwelm Tanksysteme GmbH and Paul Germann
GmbH, which became part of the RPS division in 1990 and 1996, respectively. The
RPS division expanded its European service business in 1996 by acquiring a
leading French service business named Gueant and three Italian companies, CME
Centro denominazione eletronica Srl, Borghetti snc and LA NUOVA RIMIC Srl. The
RPS division has approximately 125,000 fuel dispensers operating in the field,
over 50,000 operational retail automation systems, over 20,000 operational
payment terminals and over 20,000 service stations under a maintenance service
contract. The RPS division sells to major oil companies mainly located in
western Europe, including Shell, BP, Fina, Elf, Total and Repsol, and to
independent retailers, distributors and hypermarkets, such as Palmetto (USA),
Ten Hoeve Bros. (USA), Southwest Convenience (USA), Intermarche (France), Ocean
(France) and Famila (Germany).
Competitive strengths
Tokheim believes that a number of factors make it a premier manufacturer and
servicer of petroleum dispensing systems. These factors include Tokheim's:
Global capabilities. Tokheim is the world's largest manufacturer and servicer
of petroleum dispenser systems, supplying products and services in more than 80
countries. As a result, we believe that we are able to satisfy the complete
petroleum dispensing equipment needs of customers throughout the world. Our
global
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capabilities provide a significant advantage when competing for sales to major
oil companies and national oil companies, including through tenders that major
oil companies and national oil companies are awarding more frequently to meet
their fuel dispensing equipment needs.
World's largest service network. Tokheim offers service to customers in over
80 countries through our 414 distributors, 319 authorized service
representatives and over 3,800 trained field representatives. We believe our
global distribution and service network also provides a significant advantage
when competing for tenders. We believe that the reach of our European and
African networks for distribution and service makes us a preferred partner for
major oil companies in these regions. We also recently launched an Internet-
based help desk known as FASRLINK, which provides authorized service
representatives worldwide with 24-hour access to installation drawings, product
updates and diagnostic procedures.
Our service network enables us to strengthen existing customer relationships,
attract new customers, increase its understanding of competitive products and
customer needs, and augment sales.
Strong customer relationships. Tokheim's strong relationships with major oil
companies, independent oil companies and hypermarkets are increasingly
valuable. As these customers expand across regions, they commonly rely on their
traditional suppliers to expand with them. We have established relationships
with many such customers, including Arco, BP Amoco, Carrefour, Elf, Esso, Fina,
Intermarche, Repsol, Shell, Statoil and Total. Furthermore, our ability to
customize our equipment and software to meet customer- and country-specific
standards makes us attractive to major oil companies and national oil companies
as a single source of supply.
Broad, technologically advanced product line. Tokheim manufactures and sells
a wide variety of dispensers, pumps, meters, payment and retail automation
systems, including point-of-sale systems, both hardware and software, and fleet
fueling systems. Tokheim's acquisition of MSI in December 1997 provided
additional depth to its retail automation system product line. The RPS
division's unique microprocessor-driven dispenser electronics platform further
enhances our product portfolio. Our commitment to invest in technology allows
us to continue to satisfy diverse customer- and country-specific requirements.
We consider Tokheim to be an industry leader in the integration of electronics
and software into our products and believe there is a significant potential
demand for certain existing technologies. For example, in 1997, only 26% of all
retail petroleum dispensers in the United States were estimated to have
dispenser payment or "pay-at-the-pump" terminals.
Proven management team. Since Tokheim's current management team was assembled
in 1992, it has successfully implemented a strategic plan that has restored
financial viability, strengthened relationships with major oil companies,
broadened product lines and reduced costs. As part of this strategy, Tokheim
acquired Sofitam in 1996 and the RPS division in 1998. Management has been
successful to date in integrating Sofitam's operations into Tokheim and
consolidating our operations in Europe. In addition, management has already
initiated numerous cost-cutting programs in connection with the acquisition of
the RPS division. For more information on these programs, you should read below
under the heading "--Business strategy--Realize operating synergies and cost
savings."
Business strategy
Tokheim's business strategy has the following principal components:
Leverage global platform. Tokheim intends to use its broad product portfolio
and its understanding of the regulatory requirements of the countries where its
customers operate to compete aggressively for national, regional and global
tenders and new customers. We also believe we can obtain additional customers
and increase sales to existing customers by offering comprehensive sales and
service coverage worldwide through our extensive network.
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Enhance largest service organization. Tokheim's service organization provides
it with information on customer needs and products, the opportunity to sell new
products to service customers and a stable source of recurring revenues from
product support. We intend to expand our service organization geographically.
Maintain technological leadership. In developed markets, such as the United
States, Canada and western Europe, Tokheim believes that improved technology
will be the primary driver of sales of petroleum dispensing products. As a
result, we have made a significant effort to maintain our competitive edge
technologically and consider ourself a leader in the integration of electronics
and software into petroleum dispensing products. For example, our new RFID
technology, which is currently being test marketed in the U.S. and is similar
to the drive-through payment systems used at toll booths, permits consumers to
pay for fuel purchases without using cash or credit cards. We also plan to
continue to invest in developing new technologies, such as human interface
displays, wireless forecourt systems, improved metering and robotic fueling.
Maintain top quality. Tokheim strives to produce the highest quality products
and is committed to continuously improving quality. An aggressive focus on
product quality has reduced Tokheim's defect rate (measured in parts per
million) by approximately 90% since 1995. Another indication of commitment to
quality is the award of ISO-9000 certification to most of our manufacturing
facilities. Moreover, our automated computerized dispenser testers
comprehensively test each dispenser's electrical and fluid systems before
shipment to the customer, further assuring the delivery of quality products.
Realize operating synergies and cost savings. Tokheim believes that it will
be able to achieve an additional $43.7 million in annual cash cost savings by
the end of the third full year after the acquisition of the RPS division, of
which Tokheim believes $28.7 million can be obtained in the first full fiscal
year after the acquisition. The principal remaining components of our cost
savings program are:
. Combine manufacturing capabilities. We intend to consolidate
substantially all of our dispenser manufacturing into three modern
facilities. Management estimates that Tokheim can save $26.0 million on
an annual basis from such consolidation.
. Integrate service organizations. Tokheim is in the process of
streamlining its European service organization. We plan to further
reduce costs and improve service by integrating Tokheim's and the RPS
division's service organizations. Management estimates that Tokheim can
save $9.0 million on an annual basis from such integration.
. Eliminate general and administrative redundancies. Management expects to
achieve further savings by eliminating redundant administrative staff
and headquarter facilities. Management estimates that Tokheim can save
$5.0 million on an annual basis from such reductions.
. Reduce raw material costs. Management expects to save $5.5 million
annually due to increased purchasing leverage.
. Reduce foreign currency exposure. The RPS division incurred a $2.5
million loss from currency exchange connected with intercompany
purchases of inventory during fiscal 1997. Management expects to reduce
these losses by approximately $1.8 million annually by using hedging
techniques.
To realize the $47.3 million of cost savings, management expects that
approximately $32.2 million of expenditures will be required, most of which are
yet to be incurred. Management believes that further cost savings may be
achievable from:
. reduced manufacturing costs resulting from product standardization and
elimination of redundant products;
. productivity and efficiency improvements resulting from increased
capacity utilization levels;
. reduced administrative expense items such as insurance premiums and
supplies; and
. cost savings from bringing in-house various manufacturing operations,
such as fabrication, that the RPS division outsourced before the
acquisition.
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The savings described above are based on estimates and assumptions of
Tokheim that are inherently uncertain, and are subject to significant
business, economic and competitive uncertainties and contingencies, all
of which are difficult to predict and many of which are beyond
Tokheim's control. We can give no assurance as to what extent or when
such savings will be achieved. You should read "Forward-Looking
Statements" for more information about these uncertainties.
Products
Tokheim's principal product offerings include petroleum dispensers and pumps,
retail automation systems, including point-of-sale systems, dispenser payment
or "pay-at-the-pump" terminals, replacement parts and upgrade kits. Petroleum
dispensers and pumps transfer fuel from storage tanks to vehicles or portable
containers. Dispensers include meters, which measure the quantity of fuel
pumped and transfer the information to calculators which determine a sales
price. Retail automation systems control in-store and at-the-pump fuel sales,
pump activation and credit card transactions, monitor inventory, transmit data
to a central management system and perform other management functions. Pay-at-
the-pump terminals automate customer payment at the pump with cash or
credit/debit cards. Upgrade kits permit owners to upgrade a dispenser's
capabilities and functionality without incurring the cost of replacing the
entire dispenser. Tokheim also offers services for its products through
authorized service representatives and company-owned facilities.
In the United States, Tokheim's most popular petroleum dispensers are the
Premier(TM) series. Premier dispensers include a variety of sizes and models
that dispense multiple grades of fuel and that offer advanced pay-at-the-pump
terminals. Internationally, Tokheim offers a range of petroleum pumps,
including its Consommateur, Bernice, ADONIS, Partner 3 and Eurotron Spectra
models.
One of Tokheim's distinguishing characteristics is its commitment to adapting
products to local needs. For example, Tokheim 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. Tokheim 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.
Tokheim provides both the software and hardware required for retail
automation systems. Tokheim's Columbus(TM) system was introduced on a
commercial basis in 1997. Columbus uses a touch-screen PC monitor and Windows
NT software in an open architecture system that allows full integration with
both existing and new equipment. The user-friendly, touch-screen cashier
interface reduces both employer training time and customer wait time. Other
point-of-sale 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 point-of-sale, backroom and
store management systems. The CVN integrates such features as advanced gas pump
controls, barcode scanning, credit authorization, commercial and charge
accounts, employee time clock, detailed inventory tracking and cash drawer
controls. Among its dispenser features, the CVN displays up to 32 separate
pumps at all times, with up to two customers per pump. Its "One Touch" controls
allow service station employees to easily authorize, pre-pay and monitor pumps
by pressing one button. The system can also automatically add merchandise
purchases to the customer's fuel bill.
The CVN has the capacity to work with a monitoring system to automatically
alert station owners of the status, fuel level, temperature, water content and
presence of leaks in underground storage tanks. The system interfaces with
almost every type of dispenser and control currently on the market, including
those not manufactured by Tokheim. 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.
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Tokheim believes that its retail automation systems comprise one of the
broadest product ranges in the marketplace, from simple pump controllers to
sophisticated convenience store and fast-food functions. Tokheim believes that
by combining its retail automation resources under the leadership of MSI, it
will strengthen its market position and better utilize these resources.
Tokheim's newest dispenser payment terminal is INsight(TM), which can be used
with any of the Premier dispenser models now in the market. INsight provides a
flexible platform for merchandising at the dispenser, using a monitor that
prompts the consumer, making transactions easier to initiate and complete. This
product includes an animated graphic display for payment options (cash, credit
card or debit card) and a larger display for text. Non-fuel items, such as car
washes or food, can also be purchased through INsight. Tokheim has developed a
graphic printer to provide such items as coupons, logos and barcodes on the
consumer's receipt.
In 1997, Tokheim began market testing of its RFID technology. Similar to the
drive-through payment system at toll booths in major metropolitan areas, this
technology automatically charges a consumer's account, which is read from
either a microchip key ring tag or a microchip window tag. By eliminating the
need to pay for fuel with cash or credit cards, the system speeds gas
purchases, both increasing consumer convenience and enabling stations to fuel
more cars in less time. The technology also permits the gathering of
information about consumer buying habits to improve marketing techniques, such
as promotion of food and car washes on pump-mounted displays. Tokheim's RFID
system is compatible with all point-of-sale systems and with other
manufacturer's dispensers as an upgrade. Tokheim has entered into an agreement
with Micron Communications to further develop its RFID system, which is
currently being test marketed with consumers.
Also in 1997, Tokheim introduced its Fuel Link(TM) wireless communication
system. Fuel Link transmits information by radio frequency between the point of
sale and the dispenser hardware, eliminating the cost of installing underground
wiring to upgrade the functionality of the dispenser.
For the commercial market, Tokheim's new Gasboy products include Astra(TM)
and Fuel Point(TM). Astra is an electronic dispenser designed for the above-
ground tank market. The Fuel Point system automatically reads information from
the dispenser's nozzle, including vehicle identification, odometer data, fuel
consumption and service record, and other operating and maintenance data,
eliminating the risk of manually misentered data.
In the United States, the RPS division's most popular petroleum dispensers
are from the Centurion(TM) series. Centurion are the first local area network-
based dispensers with the electronics scheme called EZ BUS(TM) electronics. EZ
BUS's compact design reduces the number of electronic components and connection
points, making maintenance easier. In addition, customers can add options by
simply upgrading the dispenser software without changing electronic hardware.
The Highway is a highly sophisticated, open architecture, PC-based point-of-
sale system designed to interface with dispensers of other major manufacturers.
This product has the ability to drive multiple dispenser brands at a single
site.
In Europe, the RPS division's most popular petroleum dispensers are the
Eurotron Spectra, which are multiproduct dispensers designed to address the
spectrum of petroleum requirements across European markets. The Eurotron
Spectra dispensers are offered in a range of configurations, and the main
components have approvals for use in all European markets. The OMEGA 2010(TM)
forecourt equipment controller, which has also been designed for use throughout
Europe, can adjust to different national and international regulations
governing weights and measures and safety.
Service
Tokheim believes that one of its strongest competitive advantages is its
ability to offer comprehensive customer support and service. Service consists
of installation, maintenance, certification and calibration of petroleum
dispensers, pumps, electronic hardware and software systems. Tokheim offers
service to customers in over 80 countries through its 414 distributors, 319
authorized service representatives and over 3,800 trained field
representatives. Tokheim's customer service division, which maintains a help
desk in English, Spanish and
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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 Tokheim's training centers.
To improve efficiency, response time and customer convenience, Tokheim has
begun to implement a system to collect performance data and coordinate the
dispatch of service technicians. In addition, we recently launched an Internet-
based help desk known as FASRLINK, which provides authorized service
representatives worldwide immediate access to installation drawings, product
updates, service bulletins and diagnostic procedures 24 hours a day.
Customers
Tokheim's products are sold primarily to retail service station operators and
commercial customers which fall into seven categories.
Major oil companies. Major oil companies 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. Tokheim's major oil company customers include BP Amoco, Elf
Aquitaine, Marathon Oil, Shell and Total, among others.
National oil companies. A national oil company is a non-U.S. oil company that
operates exclusively, or almost exclusively, in a single national market. Most
national oil companies are, or until recently were, state-owned. In recent
years, a number of national oil companies 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. Initial deregulation occurred in 1995,
allowing major oil companies 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 national oil companies more
sensitive to costs and customer service. These new sensitivities often
translate into demand for newer, more sophisticated dispenser equipment.
Additionally, a number of privatized nationals are now expanding across
borders. Tokheim's national oil company customers include Petroleos Mexicanos
in Mexico, Petroleo Brasileiro S.A. in Brazil, Paz Oil in Israel and Deltaven
S.A. in Venezuela, among others.
Independent oil companies. Independent oil companies 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
major oil companies. Independent oil companies that are Tokheim 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 major oil company. A station owned by a jobber looks
substantially the same as one owned by a major oil company, selling major oil
company-branded products and using standard major oil company station layouts.
Most jobbers own multiple stations. Some jobbers work exclusively with one
major oil company, while others have multiple major oil company partners.
Usually, jobbers are not required to purchase their petroleum dispensing
equipment from the same manufacturers as their affiliated major oil company.
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 major oil companies. Tokheim's convenience store stations customers
also include national and regional operators, as well as small, local
businesses.
Hypermarkets. Tokheim 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
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sales are through hypermarkets. Tokheim'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. Tokheim'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, Tokheim relies on two primary channels of distribution:
direct sales to national accounts such as major oil companies and certain
independent oil companies, and indirect sales through a large network of
independent distributors. Tokheim directly markets through national account
managers who call on the major oil companies, independent oil companies and
large convenience store chains. National account managers work closely with the
major oil companies to develop technology, pricing and account strategies.
Tokheim markets to jobbers and convenience stores through its 261 independent
distributors. To coordinate its distributor marketing, Tokheim 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. Tokheim has 153 international distributors
serving customers that cannot be served cost-effectively by its direct sales
force. Tokheim generally requires letters of credit from its international
distributors to limit any risk of non-payment by such distributor. However, as
major oil companies expand geographically and as national oil companies become
more commercially competitive, they increasingly are purchasing directly from
manufacturers, using national, regional and global "tenders," "alliances" and
"preferred supplier" relationships. A "tender" is an award made by a major oil
company or a national oil company 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 major oil companies and national oil companies to reduce the
number of their suppliers while improving relationships with those remaining.
In response to the advent of tenders, manufacturers have expanded and adapted
their product lines and service capabilities to satisfy the specific
regulatory, marketing, and service demands of each country being supplied.
Tenders are often nonexclusive and cancellable by the customer at any time.
An "alliance" involves a closer relationship than a tender. Often, a major
oil company or national oil company will ask only its alliance partner to
submit a tender proposal. As part of an alliance, manufacturers can assist the
major oil company or national oil company by tracking purchases, warranty
coverage, service coverage and service response requirements on behalf of the
major oil company or national oil company. Tokheim has also been able to expand
its alliance with Amoco, for example, to obtain its Mexican business.
"Preferred supplier" relationships are less committed arrangements than
alliances. These arrangements typically involve a one-way commitment by the
manufacturer on such matters as prices, service and available inventory.
Usually, the major oil company or national oil company 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 major oil company or national oil company seeking to reduce the number
of suppliers with which it deals while increasing volume purchasing discounts
often will identify several manufacturers as preferred suppliers. Tokheim has
an expanded preferred supplier relationship with Total.
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Manufacturing and quality
Tokheim's manufacturing process consists of sheet metal fabrication,
machining, assembly of electronic components and customer-specific painting.
Tokheim's manufacturing and production are generally to order. To improve
quality and productivity and to reduce costs, Tokheim employs a cellular
manufacturing format and just-in-time process engineering. The majority of our
manufacturing operations are concentrated in the following cities:
. Fort Wayne, Indiana;
. Washington, Indiana;
. Lansdale, Pennsylvania;
. Grentheville, France;
. Kya Sand, Randburg, South Africa;
. Dundee, Scotland;
. Bladel, the Netherlands; and
. Turnhout, Belgium.
The headquarters of the RPS division was, prior to the acquisition, located
in Montrouge, Paris, France. We recently closed manufacturing facilities in
Glenrothes, Scotland and Bonham, Texas. Management anticipates that Tokheim has
sufficient production capacity to meet demand over the next several years.
We strive to produce the highest quality products and are committed to
continuously improving the quality of our products and processes. An aggressive
focus on product quality has reduced Tokheim's defect rate, measured in parts
per million, by approximately 90% since 1995. One important element in reducing
the defect rate has been our effort to satisfy the standards for ISO-9000
certification at our manufacturing facilities. The International Organization
for Standardization awards ISO-9000 certification on a facility-by-facility
basis to manufacturers that adhere to strict quality standards. Companies must
maintain these standards and supply supporting documentation to retain their
ISO certification, and certified facilities are audited regularly. Independent
third party registrars must nominate candidates for certification. Most of
Tokheim's manufacturing facilities are ISO-9000 certified. We are actively
seeking certification for the uncertified manufacturing facilities.
Another important aspect of our efforts to improve quality is our automated
computerized dispenser tester. The computerized dispenser tester monitors all
fluid paths to detect leakage and, simulating real-world conditions, tests
displays, keypads, valves, pulsers, totalizers, card readers, cash acceptors,
printers, vapor recovery systems and other critical dispenser components. After
each testing cycle, technicians review the data for any potential corrective
actions. The computerized dispenser tester is networked to Tokheim'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.
Tokheim has been recognized by third parties for its commitment to quality.
In September 1998, Tokheim received the Manufacturer of the Year Award from the
1,639 member Petroleum Equipment Institute. The Manufacturer of the Year Award
is the top honor that the Institute presents each year. This award recognizes
Tokheim's commitment to marketing through distributors, competitive pricing,
honest business practices, good product availability and responsive customer
service. 1998 was the third consecutive year Tokheim was recognized. In 1997
and 1996, Tokheim was one of five recipients, out of 350 candidates, of the
Institute's Circle of Excellence Award. Tokheim'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.
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Supplies
The principal raw materials essential to Tokheim's business are flat sheet
steel, aluminum, copper tubing, iron castings and electronics, point-of-sale
systems, and computer components, all of which are generally available through
competitive sources of supply. At its U.S. facilities, Tokheim'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, we consider the quality of performance
of the required items, as well as the supplier's delivery responsiveness and
prices. We have significantly reduced the number of suppliers we use to develop
more effective relationships with the remaining suppliers. We have 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 majority of Tokheim's manufacturing operations are concentrated in cities
marked with an asterisk ("*"). In addition, Tokheim conducts manufacturing
operations in Turnhout, Belgium. We recently closed manufacturing facilities in
Glenrothes, Scotland and Bonham, Texas. Tokheim conducts manufacturing
operations and owns an engineering and design center and a corporate office
building in Fort Wayne, Indiana. The facility in Greenwood Village, Colorado is
used for software development.
<TABLE>
<CAPTION>
Cities where Tokheim owns properties Cities where Tokheim leases properties
------------------------------------ --------------------------------------
<C> <S>
Fort Wayne, Indiana Greenwood Village, Colorado
Fremont, Indiana Tremblay, France
Washington, Indiana* Casablanca, Morocco
Lansdale, Pennsylvania* Solothurn, Switzerland
Brighton, Ontario, Canada West Sussex, United Kingdom
Kya Sand, Randburg, South Africa* Barcelona, Spain
Weilheim, Germany La Soukra, Tunisia
Grentheville, France* Dakar, Senegal
Scurzolengo, Italy Douala, Cameroon
Abidjan, Ivory Coast Leiderdorp, the Netherlands
Dundee, Scotland* Additional sites in France, Austria,
Denmark, Norway,
Bladel, the Netherlands* Great Britain, the Czech Republic,
Slovakia, Hungary,
Vilvoorde, Belgium Italy, Spain, Switzerland, Ireland, the
Netherlands, Germany, Poland and
the United States
</TABLE>
The properties that Tokheim owns or leases in the cities not marked with one
or more asterisks, other than Fort Wayne and Greenwood Village, are used
primarily for warehouse space or sales and service.
We believe that we have sufficient production capacity to meet demand over
the next several years. Tokheim is currently holding for sale facilities in
Falaise, France, Scurzolengo, Italy, Vilvoorde, Belgium, Tulla, Ireland,
Jasper, Tennessee, Bonhan, Texas and Atlanta, Georgia, as well as a 109-acre
track of unimproved land located in Fort Wayne, Indiana. Tokheim has entered
into a contract for the sale of 34 acres of the 109-acre tract of unimproved
land.
Employees
As of February 28, 1999, Tokheim employed approximately 4,700 persons. Most
employees are involved in manufacturing and production, with the balance
engaged in administration, sales and clerical work. In the United States,
approximately 500 of the employees are union members covered by collective
bargaining agreements. The collective bargaining agreement covering factory
employees expires in 2003, and the collective bargaining agreement covering
office employees expires in 2000. Tokheim believes its relationship
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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
We continually seek to enhance our existing product lines to offer increased
functionality in new or existing products. We have dedicated research and
engineering staffs. Tokheim, not including the RPS division for 1997 and 1996,
spent approximately $21.1 million, $18.3 million and $15.9 million in 1998,
1997 and 1996, respectively, to improve existing products and manufacturing
methods, develop new products and pursue other applied research and
development. The RPS division spent $16.6 million and $15.9 million in 1996 and
1997, respectively. Tokheim has also begun to form exclusive relationships with
the major oil companies to develop products that meet their specific needs and
with electronics companies to develop advanced technologies.
Tokheim 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
Tokheim is defending various claims and legal actions, including claims
relating to environmental laws, product liability and various contract and
employee matters. We believe that the outcome of these pending claims will not,
individually or in the aggregate, have a material adverse effect on our
business, financial condition or result of operations.
Regulation
Tokheim'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, Tokheim's products are subject to
standards set by Underwriters' Laboratories, or 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 Tokheim's dispensers. Other countries often either
accept UL product standards or observe the standard of a comparable body
including the Canadian Standards Association and the British Approval Service
for Electrical Equipment and Flammable Atmosphere and Organization of
International Meteorology League, or OIML in Europe. Individual countries may
vary the standards created by these groups.
Weights and Measures. Meters and displays must meet certain accuracy
standards. In the United States, "Handbook 44" from the National Institute on
Weights and Measures, which all states have adopted, sets forth those
standards. The standards generally require that the meter accurately measure
the amount of fuel pumped to within 0.4%. Meters must be able to measure output
at varying flow rates, ranging from almost zero to fifteen gallons per minute.
Also, pumps must eliminate most of the vapor from the fuel to ensure that what
is being measured is fuel. Dispensers in the U.S. are typically inspected every
year by state inspectors. Outside the United States, similar standards govern
meters and displays. Standards set by OIML are generally accepted throughout
Europe, including in France.
Environment. Tokheim'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. Therefore, the nature of
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Tokheim'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 these claims. Based upon its experience to date,
Tokheim 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 its
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.
You should read Note 18 to the Consolidated Financial Statements of Tokheim
Corporation and Subsidiaries, "Contingent Liabilities" for more information
about environmental regulation.
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.
Tokheim 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 Tokheim 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 Tokheim, or on or under other locations where such wastes have been
taken for disposal. In addition, where Tokheim 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.
Tokheim has reached a tentative settlement with respect to certain
environmental liabilities under an indemnity provision of a sale agreement
concerning the sale of the die casting facility of a former subsidiary to a
third party. Pursuant to the settlement agreement, Tokheim will repurchase the
real property and will enter into a leaseback agreement with the third party.
The state recently accepted the facility into its site remediation program.
Based on Tokheim's environmental consultant's report, we presently do not
anticipate any material costs at the facility.
Tokheim also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act and comparable state statutes. The U.S. Environmental Protection
Agency and various state agencies have promulgated regulations that limit the
disposal options for certain hazardous and nonhazardous waste. These
regulations may also require corrective action with respect to contamination of
facilities caused by the past handling of industrial waste.
Although no assurances can be given in this regard, we do not believe that
any environmental cleanup activities will have a material adverse effect on our
financial condition or results of operations.
Environmental regulations also affect Tokheim's customers, their spending and
their demand for Tokheim'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, or CARB, which has become the de facto governing body of such
standards in the U.S. CARB's standards apply to vapor recovery systems on the
nozzle. In general, a product that meets CARB's standards will pass the tests
of other states. More recently, the U.S. federal government promulgated rules
that required many gas stations to upgrade their underground tanks and pipes to
use various corrosion preventing tanks, pipes, materials or devices, self-
containing mechanisms including an interior lining, and leak detection devices
or tests by the end of 1998. Since these gas stations temporarily closed to
comply with these regulations, we believe that many choose to replace their
aging gas pumps at the same time. The international
69
<PAGE>
operations of Tokheim 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 Tokheim 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
Tokheim manufactures and sells its products have an effect on product design,
they apply equally to Tokheim's competitors and have not had, nor are they
expected to have, a material adverse effect on Tokheim's competitive position.
Environmental laws and regulations also significantly affect the Company's
customers and their spending levels on its products.
Since 1989, the RPS division has conducted, with the assistance of an outside
environmental consulting firm, extensive investigations on the Bladel site
located in the Netherlands. These investigations have evidenced a significant
level of soil and groundwater contamination with mineral oil and aromatic and
chlorinated hydrocarbons. The RPS division prepared a remediation plan for
cleaning the premises in 1997. Before implementing the plan, the RPS division
has requested that local governmental authorities confirm that no further
liabilities for any existing soil contamination will arise for the RPS division
in the future. Discussions between the RPS division and the local governmental
authorities are currently in process. The total capital cost of remediation
measures is estimated to be $1.5 million, to be spent over three years.
Operation and related costs for a groundwater treatment system could extend
beyond eight years which is the period during which Schlumberger has agreed to
arrange for and bear the cost for remediation and monitoring for known soil and
groundwater contamination at Bladel.
In addition to Bladel, pursuant to the terms of the purchase agreement,
Schlumberger is required to arrange for and bear the cost of monitoring and
remediating the soil and ground water contamination that Schlumberger knows of
or discovers within a set period of time after the acquisition of the RPS
division, subject to a deductible limit of $700,000. Schlumberger is to take
actions required to address this contamination in accordance with applicable
environmental laws and under the oversight and with the approval of the
appropriate governmental authorities.
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<PAGE>
MANAGEMENT
Directors
The following table sets forth certain information and ages as of May 31,
1999 regarding each of Tokheim's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Douglas K. Pinner....... 58 Chairman of the Board, President and
Chief Executive Officer
Gerald H. Frieling, 69 Vice Chairman of the Board
Jr.....................
John A. Negovetich...... 53 Executive Vice President, Finance and Administration,
and Chief Financial Officer
Norman L. Roelke........ 49 Vice President, Secretary and General Counsel
Jacques St. Denis....... 41 Executive Vice President, Operations
Scott A. Swogger........ 46 President, Tokheim U.S.
Walter S. Ainsworth..... 71 Director
Robert M. Akin, III..... 63 Director
James K. Baker.......... 67 Director
B. D. Cooper............ 57 Director
Richard W. Hansen....... 62 Director
Leo J. Hawk............. 66 Director
Dr. Winfred M. 58 Director
Phillips...............
Ian M. Rolland.......... 66 Director
</TABLE>
Douglas K. Pinner has been President and Chief Executive Officer since 1992,
a Director since 1993 and Chairman of the Board since 1996.
Gerald H. Frieling, Jr. has been Vice Chairman of the Board since 1996. From
1991 to 1996, he was Chairman of the Board. From 1991 to 1992, Mr. Frieling was
Chief Executive Officer. Previously, he was Chairman of the Board, President
and Chief Executive Officer of National-Standard, a diversified manufacturer of
specialty wire, metal products and machinery. He is also a director of CTS
Corporation.
John A. Negovetich has been Executive Vice President, Finance and
Administration and Chief Financial Officer since 1998. From 1996 to 1998, Mr.
Negovetich was President, Tokheim North America. From 1996 to 1997, Mr.
Negovetich was Chief Financial Officer, Tokheim North America. From 1993 to
1995, Mr. Negovetich was Vice President, Finance, Chief Financial Officer and a
member of the Board of Ardco, Inc.
Norman L. Roelke has been Vice President and General Counsel of Tokheim
since 1994 and Secretary since 1995. From 1987 to 1994, Mr. Roelke served as
Corporate Counsel and Assistant Secretary.
Jacques St. Denis has been Executive Vice President, Operations since 1998.
From 1996 to 1998, he served as President and Director General of Tokheim-
Sofitam S.A., the Tokheim 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.
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<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 Hudson International Conductors, a manufacturer of speciality wire
products that became a subsidiary of Phelps Dodge Corp.
James K. Baker has been a Director since 1993. Before his retirement in 1998,
Mr. Baker served as Vice Chairman of the Board of Arvin Industries, Inc., a
global manufacturer of automotive products. Previously, he was Chairman and
Chief Executive Officer of Arvin Industries, Inc. Mr. Baker is also a director
of First Chicago NBD Corp., Amcast Industrial Corp., the GEON Company and
CINergy Corp.
B.D. Cooper has been a Director since 1993. Mr. Cooper is Chairman of the
Board of P.E.S. Inc., which sells and distributes petroleum equipment to the
petroleum industry. He is also a director of Delhi Bancshares and Chairman of
the Board of Heritage Banks.
Richard W. Hansen has been a Director since 1995. Before his retirement in
1996, Mr. Hansen served as Chairman, President and Chief Executive Officer of
Furnas Electric Company, a leading manufacturer of industrial electrical and
electronic motor control products.
Leo J. Hawk has been a Director since 1998. Since 1992, Mr. Hawk has been
Chairman of the Board of Superior Metal Products, Inc. which manufactures
functional and decorative hardware for major appliance, office furniture and
automotive industries.
Dr. Winfred M. Phillips has been a Director since 1986. Dr. Phillips is Dean
of the College of Engineering and Associate Vice President, Engineering and
Industrial Experiment Station of the University of Florida.
Ian M. Rolland has been a Director since 1981. Before his retirement in 1998,
Mr. Rolland served as Chairman and Chief Executive Officer of Lincoln National
Corporation, which provides life insurance and annuities, property-casualty
insurance and related services through its subsidiary companies. He is also a
director of NIPSCO Industries, Inc. and Norwest Corporation.
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<PAGE>
PRINCIPAL SHAREHOLDERS
Management ownership
The following table sets forth, as of May 31, 1999, the number of shares
beneficially owned, or deemed to be beneficially owned pursuant to the rules of
the SEC by each director of Tokheim, the executive officers, and the current
directors and executive officers of Tokheim as a group. All references are to
common stock unless otherwise noted:
Amount and Nature of Beneficial Ownership
<TABLE>
<CAPTION>
Common
Stock Preferred Exercisable Percent
Common in the Stock in Stock of
Name Stock RSP the RSP Options Class
---- ------- ------ --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Walter S. Ainsworth......... 6,414(1) -- -- -- *
Robert M. Akin, III......... 8,800 -- -- -- *
James K. Baker.............. 18,600 -- -- -- *
B. D. Cooper................ 3,800(2)(3) -- -- -- *
Gerald H. Frieling, Jr...... 8,400 -- -- -- *
Richard W. Hansen........... 27,400 -- -- -- *
Leo J. Hawk................. 8,000 -- -- -- *
John A. Negovetich.......... 10,500 379 600 22,500 *
Winfred M. Phillips......... 5,600 -- -- -- *
Douglas K. Pinner........... 84,034 4,305 1,940 26,250 *
Norman L. Roelke............ 5,464 728 2,780 22,000 *
Ian M. Rolland.............. 6,125 -- -- -- *
Jacques St-Denis............ 11,897 424 1,733 20,000 *
Scott A. Swogger............ -- 323 1,254 7,750 *
Executive officers and
directors as a group (14
persons)................... 205,034 6,159 8,307 98,500 2.3
</TABLE>
- --------
* Represents less than 1% of the Tokheim's outstanding common stock.
(1) In addition, Catherine Ainsworth, Mr. Ainsworth's wife, owns 478 shares,
with respect to which Mr. Ainsworth disclaims any beneficial interest.
(2) In addition, Barbara Cooper, Mr. Cooper's wife, owns 1,000 shares, with
respect to which Mr. Cooper disclaims any beneficial interest.
(3) In addition, P.E.S. Inc. Pension Plan owns 2,000 shares. Mr. Cooper is a
participant and trustee of the Plan.
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<PAGE>
Other beneficial owners
The following table sets forth the number of shares of common stock
beneficially owned by the only persons known to Tokheim to own more than 5% of
the outstanding shares of common stock and the holder of Tokheim's convertible
preferred stock:
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Individual Beneficial Class of Percent of
or Identity of Group Ownership Shares Shares
- -------------------- ---------- --------------- ----------
<S> <C> <C> <C>
National City Bank...................... 771,479(1) convertible 100.0
fka Fort Wayne National Bank preferred stock
110 West Berry Street
Fort Wayne, Indiana 46802
Schlumberger Limited.................... 2,526,923(2) common stock 16.6
42 rue St Dominique
75007 Paris, France
David L. Babson and Company, Inc........ 1,481,100 common stock 11.9
One Memorial Drive, Suite 1100
Cambridge, Massachusetts 02142
Dresdner RCM Global Investors........... 1,251,868 common stock 9.9
Four Embarcadero Center
San Francisco, California 94111
Richard C. Blum & Associates, L.P....... 1,233,900 common stock 9.7
909 Montgomery Street, Suite 400
San Francisco, CA 94133
Dimensional Fund Advisors, Inc.......... 718,700 common stock 5.7
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- --------
(1) Represents shares of Tokheim's preferred stock held by the trustee of the
retirement savings plan for employees of Tokheim Corporation and its
subsidiaries. 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.
(2) Represents shares for which warrants are exercisable.
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<PAGE>
DESCRIPTION OF OTHER INDEBTEDNESS
The following are summaries of the material provisions of our credit
agreement and other debt documents, copies of which we have filed as exhibits
to the registration statement of which this prospectus forms a part. You should
read the section of this prospectus entitled "Where You Can Find Additional
Information" for more information on how to obtain copies of these documents.
The credit agreement
Tokheim and some of its subsidiaries, including several subsidiaries used to
acquire the RPS division (the "Borrowers"), entered into a new credit agreement
with The First National Bank of Chicago, as administrative agent (the "Agent"),
Credit Lyonnais, as collateral agent, and other institutions party thereto (the
"Banks"). The credit agreement currently consists of a six year working
capital/letter of credit facility in favor of the Borrowers in an aggregate
principal amount of $110.0 million and a six year term loan facility in favor
of Tokheim, in an aggregate principal amount of $120.0 million. Pursuant to the
credit agreement, $20.0 million of the availability under the working capital
facility may be utilized for issuance of standby letters of credit. $10.0
million of the availability under the working capital facility may be utilized
for swing line facilities to be provided to Tokheim and certain of the other
Borrowers. The credit agreement will permit borrowings in U.S. dollars. If
additional conditions are met, the credit agreement allows borrowings in French
francs, British pounds, Dutch gilders, German deutsche marks and euros, so long
as such non-U.S. currencies are freely traded, readily available and
convertible into U.S. dollars, and in other currencies as agreed by each Bank.
Each loan requested to be made in a non-U.S. currency which is capable of being
made in the euro will be made in the euro unless the Agent otherwise consents.
An additional agreement provides for the assignment of a three year $7.6
million ESOP loan facility with NBD Bank, N.A, and certain other banks (the
"ESOP Credit Agreement") to the Agent and the Banks.
Tokheim's indebtedness under the credit agreement is secured by:
. a first perfected security interest in and lien on certain of the real
and personal property assets of Tokheim, including claims against
certain subsidiaries to which Tokheim has made intercompany loans, and
Tokheim's direct and indirect material majority-owned U.S. subsidiaries,
. a pledge of 100% of the stock of Tokheim's direct and indirect material
majority-owned U.S. subsidiaries, and
. a pledge of 65% of the stock of Tokheim's first-tier material foreign
subsidiaries,
and is guaranteed by all of Tokheim's direct and indirect material majority-
owned U.S. subsidiaries. Some indebtedness of Tokheim's foreign subsidiaries
which are borrowers or become borrowers under the credit agreement will be
secured by personal property of the foreign subsidiaries.
Indebtedness under the credit agreement bears interest based upon, at the
applicable Borrower's option:
(1) the base rate in the case of U.S. dollar denominated loans, defined as
the higher of:
(a) the applicable prime rate, and
(b) the federal funds rate, as adjusted pursuant to the credit
agreement, plus 0.50% plus an applicable margin based upon
Tokheim's leverage ratio, with a range of 1.50% to 3.00% for
revolving loans and 3.00% for term loans, or
(2) the applicable eurocurrency rate, as defined in the credit agreement,
for a deposit in the currency of, and for a maturity corresponding to,
the applicable loan and interest period, plus an applicable margin
based upon Tokheim's leverage ratio, with a range of 2.50% to 4.00% for
revolving loans and 4.00% for term loans.
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<PAGE>
The credit agreement contains customary provisions relating to yield
protection, availability and capital adequacy.
Indebtedness under the credit agreement matures as follows: the $110.0
million in revolving loans matures on September 30, 2004, and the $120.0
million in term loans will amortize with payments due on a quarterly basis
commencing on February 28, 2000, with a final principal payment due on
September 30, 2004. Indebtedness under the ESOP Credit Agreement will amortize
with a final principal payment on July 1, 2001. The unused portion of the
commitment under the credit agreement will be subject to a commitment fee in
the range of 0.375% to 0.50%, depending upon the leverage ratio of Tokheim.
The revolving loan commitment under the credit agreement may be voluntarily
permanently reduced by Tokheim in whole or in part on one day's notice without
premium or penalty. The Borrowers may prepay the term loans subject to a pre-
payment penalty if the Borrowers prepay the entire amount of the term loans in
the first 3 years after September 30, 1998. The Borrowers will be able to
prepay the loans in accordance with the terms of the credit agreement. Subject
to the provisions of the credit agreement, the Borrowers will be able to, from
time to time, borrow, repay and reborrow under the working capital facility.
The credit agreement requires an amount equal to all net proceeds from asset
sales by Tokheim or any of its subsidiaries, with specified exceptions, to be
applied to repay the loans under the credit agreement. Tokheim must prepay the
loans under the credit agreement in an amount equal to:
. all net proceeds from the sale or issuance of debt, with exceptions;
. all net proceeds from the sale or issuance of equity, with exceptions;
and
. a percentage of excess cash flow, as defined in the credit agreement,
for each fiscal year with a range of 50% to 85%, based upon Tokheim's
leverage ratio, commencing with Tokheim's fiscal year ending November
30, 1999.
The credit agreement requires Tokheim to meet consolidated financial tests,
including:
. minimum level of consolidated net worth,
. minimum level of EBITDA, as defined in the credit agreement,
. minimum level of consolidated interest coverage,
. maximum consolidated leverage ratio and senior leverage ratio, and
. minimum consolidated fixed charge coverage ratio.
The credit agreement also contains covenants which, among other things,
limit:
. the incurrence of additional indebtedness,
. dividends,
. transactions with affiliates,
. asset sales,
. acquisitions,
. investments,
. mergers and consolidations,
. prepayments of certain other indebtedness, including the exchange notes,
. amendments to certain other indebtedness, including the exchange notes,
. liens and encumbrances, and
. other matters customarily restricted in such agreements.
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<PAGE>
These covenants are more restrictive than those in favor of holders of the
exchange notes as described in this prospectus and as set forth in the
indentures.
The credit agreement contains events of default, including:
. payment defaults,
. breach of representations and warranties,
. covenant defaults,
. cross-default to other indebtedness,
. events of bankruptcy and insolvency,
. change in control,
. ERISA,
. judgment defaults, and
. failure of any guarantee or security agreement supporting the credit
agreement to be in full force and effect.
The junior subordinated notes
To pay part of the consideration for the acquisition of the RPS division,
Tokheim issued $40.0 million in ten year, 12.0% junior subordinated notes due
2008. Interest on the junior subordinated notes is payable quarterly and in-
kind. All existing U.S. subsidiaries have guaranteed, and all future U.S.
subsidiaries will guarantee, the junior subordinated notes on a junior
subordinated basis with unconditional guarantees that are or will be unsecured
and subordinated to senior debt of such subsidiaries.
The junior subordinated notes are unsecured junior subordinated obligations
of Tokheim and are junior to Tokheim's senior debt, including the exchange
notes. The junior subordinated notes were issued under an indenture that limits
the ability of Tokheim and its subsidiaries to, among other things:
. incur indebtedness;
. pay dividends and make other payments;
. make investments;
. sell assets;
. enter into transactions with affiliates;
. restrict distributions from subsidiaries;
. incur liens; and
. consolidate, merge or transfer all or substantially all of its or its
subsidiaries' assets.
Subject to the terms of the indenture under which they were issued, the
junior subordinated notes may be redeemed at any time, in whole or in part, at
the option of Tokheim at a redemption price equal to the unpaid principal
amount of the junior subordinated notes plus accrued interest thereon to the
redemption date. Upon a change of control, as defined in the junior
subordinated note indenture,any holder of junior subordinated notes will have
the right, subject to the conditions set forth in the indenture, to cause
Tokheim to repurchase all or any part of the junior subordinated notes of the
holder at a purchase price equal to 101% of the principal amount of the junior
subordinated notes to be repurchased plus accrued and unpaid interest on the
junior subordinated notes, if any, to the date of repurchase. The junior
subordinated notes are subject to a registration rights agreement which can be
exercised any time after 120 days after their date of issuance.
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<PAGE>
DESCRIPTION OF THE WARRANTS
The following is a summary of the material provisions of the warrants, a copy
of which we have filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the section of this prospectus
entitled "Where You Can Find Additional Information" for more information on
how to obtain a copy of this document.
As part of the consideration paid in the acquisition, Tokheim issued the
warrants to Schlumberger to purchase up to 19.9% of the outstanding shares of
Tokheim's common stock at an exercise price of $.01 per share. The actual
number of shares issuable upon exercise is 2,526,923. The warrants are
exercisable for five years beginning January 30, 1999.
The number of shares of Tokheim's common stock issuable upon exercise of the
warrants, along with the purchase price of the warrants, will be further
adjusted to reflect:
. any stock splits, stock subdivisions or combinations of Tokheim's common
stock,
. any reclassification of Tokheim's common stock,
. any capital reorganization, merger or consolidation of Tokheim,
. any issuance of common stock by Tokheim at less than fair market value,
or
. any issuance of any securities by Tokheim which are convertible into
other securities at less than fair market value.
78
<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
General
The outstanding notes were, and the exchange notes will be, issued under
indentures, each dated as of January 29, 1999, among Tokheim, the subsidiary
guarantors and U.S. Bank Trust National Association, as trustee under each
indenture. Each indenture is governed by New York law. The terms of the
exchange notes are the same as the terms of the outstanding notes, except that
Tokheim registered the exchange notes under the Securities Act. As a result,
their transfer is not restricted like transfer of the outstanding notes. In
addition, holders of the exchange notes are not entitled to rights under the
registration rights agreements. For purposes of this summary, references to
"Tokheim" include only Tokheim Corporation and not its subsidiaries. In this
section entitled "Description of the Exchange Notes," the terms the "notes,"
the "dollar notes" and the "euro notes" refer to the exchange notes, the dollar
exchange notes, and the euro exchange notes, respectively. You can find the
definitions of capitalized terms used in this section below under the heading
entitled "--Certain definitions."
The following description is a summary of the material provisions of the
indentures. It does not restate the indentures in their entirety. We urge you
to read the indentures because they, and not this description, define your
rights as holders of the notes. Copies of the indentures and the registration
rights agreements can be obtained by following the instructions contained in
this prospectus in the sections "Where You Can Find More Information" and
"Information Incorporated by Reference." The terms of the notes include those
stated in the indentures and those made part of the indenture by reference to
the Trust Indenture Act of 1939.
Brief description of the notes
The notes:
.are unsecured obligations of Tokheim;
.rank subordinate to all Senior Debt of Tokheim, including the credit
agreement;
. rank senior to the junior subordinated notes and any Warrant Repurchase
Indebtedness;
. accrue interest from the most recent date to which interest has been
paid or, if no interest has been paid, from and including the date of
issuance of the outstanding notes;
.mature on August 1, 2008.
Tokheim has agreed to offer to repurchase the notes under the circumstances
described in the indentures upon:
.a Change of Control; or
.certain Asset Sales by Tokheim and its Subsidiaries.
The indentures also contain covenants concerning, among other things:
.limiting Indebtedness;
.limiting Restricted Payments;
.limiting Asset Sales;
.limiting dividend and other payment restrictions affecting Tokheim's
Subsidiaries;
.limiting issuance and sales of preferred stock of Subsidiaries;
.limiting Liens;
.prohibiting the incurrence of senior subordinated debt;
.the merger, consolidation or sale of assets of Tokheim;
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<PAGE>
.limiting transactions with Affiliates;
.providing reports to holders;
.limiting additional Subsidiary Guarantees; and
. limiting amendments to the junior subordinated notes issued to
Schlumberger and Warrant Repurchase Indebtedness.
The dollar notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples of $1,000. The euro
notes will be issued only in registered form, without coupons, in denominations
of (Euro)1,000 and integral multiples of (Euro)1,000. Initially, the trustee
will act as principal paying agent and registrar for the notes at its office in
New York, New York. The registrar, paying agent and transfer agent are
appointed in accordance with the indentures, and initially are as set forth on
the inside back cover page of this prospectus. Tokheim may change any paying
agent and registrar without notice to holders of the notes, provided that, for
so long as the notes are listed on the Luxembourg Stock Exchange and the rules
of such exchange so require, Tokheim will cause notice of the change in the
transfer agent in Luxembourg to be published in a daily newspaper with general
circulation in Luxembourg, which is expected to be the Luxemburger Wort. Any
outstanding notes that remain outstanding after the completion of the exchange
offer, together with the notes issued in connection with the exchange offer,
will be treated as a single class of securities under the applicable indenture.
Principal, maturity and interest
The dollar notes are limited in aggregate principal amount to $123.0 million
and will mature on August 1, 2008. The euro notes are limited in aggregate
principal amount to (Euro)75.0 million and will mature on August 1, 2008. The
notes will be payable in each case at maturity at par, plus accrued and unpaid
interest, if any. Interest on the dollar notes will accrue at the rate of
11.375%, and interest on the euro notes will accrue at the rate of 11.375%.
Interest on the notes will be payable semiannually in cash on each February 1
and August 1. Interest payments will be made to the persons who are registered
holders at the close of business on January 15 and July 15 immediately
preceding the applicable interest payment date. Interest on the notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from and including the date of issuance of the
outstanding notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Where not all of the notes represented by a certificated note are the subject
of a transfer, a new certificated note in respect of the principal amount of
the notes that have not been so transferred will be issued to the transferor.
The new note will be available at the office of the registrar in New York City
or at the office of the transfer agent in Luxembourg, if any, as applicable.
With respect to the dollar notes, payments of principal, premium, if any, and
interest will be made, on presentation of such notes if in certificated form,
at the corporate trust office of the paying agent in New York City. Payment
will be made by United States dollar check drawn on, or wire transfer to a
United States dollar account maintained by the holder with, a bank located in
New York City. Payments of any installment of interest on the dollar notes will
be made by a United States dollar check drawn on a bank in New York City mailed
to the holder at such holder's registered address or, if arrangements
satisfactory to Tokheim and the paying agents are made, by wire transfer to a
dollar account maintained by the holder with a bank in New York City.
With respect to the euro notes, payments of principal, premium, if any, and
interest will be made in the case of payments of principal, on presentation of
such notes if in certificated form at the office of the paying agent in London
by credit or transfer to a euro account maintained by the holder in the place
of payment specified by the holder. Holders of euro notes who wish to receive
payment in any currency other than euros must make arrangements at their own
expense.
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<PAGE>
For so long as the notes are listed on the Luxembourg Stock Exchange and the
rules of such stock exchange so require, Tokheim will maintain a paying agent
and transfer agent in Luxembourg. If a payment date is not a business day at a
place of payment, payment may be made at that place on the next succeeding
business day and no interest shall accrue for the intervening period.
The notes will not be entitled to the benefit of any mandatory sinking fund.
Redemption
Optional redemption of dollar notes. The dollar notes will be redeemable, at
Tokheim's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices. The following prices are expressed as
percentages of the principal amount of the dollar notes, if they are redeemed
during the twelve-month period commencing on February 1 of the year set forth
below, plus, in each case, accrued and unpaid interest on the dollar notes, if
any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................... 105.688%
2005........................................................... 103.792%
2006........................................................... 101.896%
2007 and thereafter............................................ 100.000%
</TABLE>
Optional redemption of euro notes. The euro notes will be redeemable, at
Tokheim's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices. The following prices are expressed as
percentages of the principal amount of the euro notes, if they are redeemed
during the twelve-month period commencing on February 1 of the year set forth
below, plus, in each case, accrued and unpaid interest on the euro notes, if
any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................... 105.688%
2005........................................................... 103.792%
2006........................................................... 101.896%
2007 and thereafter............................................ 100.000%
</TABLE>
For so long as the notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, Tokheim will cause a notice of redemption of
either the euro notes or the dollar notes to be published in a daily newspaper
with general circulation in Luxembourg, which is expected to be the Luxemburger
Wort.
Optional redemption upon public equity offerings. At any time, or from time
to time, on or prior to February 1, 2002, Tokheim may, at its option, use the
net cash proceeds of one or more public equity offerings to redeem up to 35% of
the original principal amount of the dollar notes issued in the exchange offer
and up to 35% of the original principal amount of the euro notes issued in the
exchange offer provided that at least 55% of the original principal amount of
the dollar notes issued in the exchange offer or the euro notes issued in the
exchange offer, as the case may be, remains outstanding immediately after any
redemption. Each redemption will be at a redemption price equal to 111.375% of
the principal amount of the redeemed notes plus accrued and unpaid interest on
the notes, if any, to the date of redemption. Tokheim shall make the redemption
not more than 120 days after the consummation of any public equity offering.
As used in the preceding paragraph, "public equity offering" means an
underwritten public offering of Qualified Capital Stock of Tokheim pursuant to
a registration statement filed with the SEC in accordance with the Securities
Act.
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Selection and notice of redemption
In the event that less than all of the applicable notes are to be redeemed at
any time, the trustee will select the notes for redemption in compliance with
the requirements of the principal national securities exchange, if any, on
which the notes are listed. If the notes are not then listed on a national
securities exchange, then the trustee will select the notes for redemption on a
pro rata basis, by lot or by such method as the trustee shall deem fair and
appropriate; provided, however, that no notes of a principal amount of $1,000
or (Euro)1,000, as the case may be, or less shall be redeemed in part;
provided, further, that if a partial redemption is made with the proceeds of a
public equity offering, the trustee will select the notes or portions of the
notes for redemption only on a pro rata basis or on as nearly a pro rata basis
as is practicable, subject to DTC, Euroclear and Cedel Bank procedures, as
applicable, unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days
before the redemption date to each holder of notes to be redeemed at its
registered address. If any note is to be redeemed in part only, the notice of
redemption that relates to that note shall state the portion of the principal
amount of the note to be redeemed. A new note in a principal amount equal to
the unredeemed portion of the notes will be issued in the name of the holder of
the notes upon delivery of the original note to the paying agent and
cancellation of the original note. On and after the redemption date, interest
will cease to accrue on notes or portions of the notes called for redemption as
long as Tokheim has deposited with the paying agents in New York, London and,
if the notes are listed on the Luxembourg Stock Exchange, Luxembourg, funds in
satisfaction of the applicable redemption price pursuant to the indentures.
Subordination
The payment of all Obligations on the notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Debt, whether outstanding on the issue date of
outstanding notes or incurred after that date. Upon any payment or distribution
of assets of Tokheim of any kind or character, whether in cash, property or
securities, to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors or marshalling of
assets of Tokheim or in a bankruptcy, reorganization, insolvency, receivership
or other similar proceeding relating to Tokheim or its property, whether
voluntary or involuntary, all Obligations due upon all Senior Debt shall first
be paid in full in cash or Cash Equivalents, or such payment duly provided for
to the satisfaction of the holders of Senior Debt, by Tokheim or any of its
Subsidiaries before any payment or distribution of any kind or character is
made on account of any Obligations on the notes, or for the acquisition by
Tokheim or any of its Subsidiaries of any of the notes for cash or property. If
any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Senior Debt, neither Tokheim nor
any of its Subsidiaries will make payment of any kind or character, other than
payments by a trust previously established pursuant to the provisions described
below under the heading "--Legal defeasance and covenant defeasance" with
respect to any Obligations on the notes or to acquire any of the notes for cash
or property.
In addition,
. if any other event of default occurs and is continuing with respect to
any Designated Senior Debt, as such event of default is defined in the
instruments creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding
to accelerate the maturity of the Designated Senior Debt, and
. the Representative for the respective issue of Designated Senior Debt
gives written notice of the event of default to the trustee,
then, unless and until all events of default have been cured or waived or have
ceased to exist or the trustee receives notice from the Representative for the
respective issue of Designated Senior Debt terminating the Blockage Period,
during the 180 days after the delivery of such written notice of an event of
default (the "Blockage Period"), neither Tokheim nor any of its Subsidiaries
shall:
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. make any payment of any kind or character, other than payments by a
trust previously established pursuant to the provisions described
below under the heading "--Legal defeasance and covenant defeasance"
with respect to any Obligations on the notes, or
. acquire any of the notes for cash or property.
Notwithstanding anything in this paragraph to the contrary, in no event will a
Blockage Period extend beyond 180 days from the date of the commencement of the
Blockage Period. Only one such Blockage Period may be commenced within any 365
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Debt whether or
not within a period of 365 consecutive days, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
Notwithstanding the foregoing, any subsequent action, or any breach of any
financial covenants for a period commencing after the date of commencement of
such Blockage Period that, in either case, would give rise to an event of
default pursuant to any provisions under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose). The occurrence of a Blockage Period will not prevent the occurrence
of an Event of Default.
By reason of such subordination, in the event of the insolvency of Tokheim,
creditors of Tokheim who are not holders of Senior Debt, including the holders
of the notes, may recover less, ratably, than holders of Senior Debt.
The notes will be general unsecured obligations of Tokheim and will be
subordinated in right of payment to all existing and future Senior Debt of
Tokheim, including Tokheim's obligations under the credit agreement and to all
indebtedness and other obligations of Tokheim's Subsidiaries. As of February
28, 1999 Tokheim had approximately $212.4 million of Senior Debt, substantially
all of which was secured by the assets of Tokheim and several of its
Subsidiaries. The notes will rank senior in right of payment to the junior
subordinated notes and any Warrant Repurchase Indebtedness.
Subsidiary guarantees
Tokheim's payment obligations under the notes will be fully and
unconditionally, jointly and severally guaranteed on a senior subordinated
basis by the Guarantors. As of the date of issuance of the notes, the
Guarantors are:
. Envirotronic Systems, Inc.;
. Gasboy International, Inc.;
. Management Solutions, Inc.;
. Sunbelt Hose & Petroleum Equipment, Inc.;
. Tokheim Automation Corporation;
. Tokheim Equipment Corporation;
. Tokheim Investment Corp.;
. Tokheim RPS, LLC; and
. Tokheim Services LLC.
The Subsidiary Guarantee of each Guarantor with respect to the notes will be
subordinated to the prior payment in full in cash or Cash Equivalents of the
Guarantor Senior Debt to the same extent that the notes are subordinated to
Senior Debt of Tokheim. The obligations of each Guarantor under its Subsidiary
Guarantee will be limited so as not to constitute a fraudulent conveyance under
applicable law.
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Under the indentures, so long as no default or Event of Default has occurred
and is continuing, if the sale or disposal of all of a Guarantor's assets or
its capital stock in accordance with the terms of the indentures constitutes an
Asset Sale, then that Guarantor or the entity acquiring its property will be
released and relieved of any obligations under its Subsidiary Guarantee.
However, the Net Cash Proceeds of any such sale or other disposition must be
applied in accordance with the indentures. See information below under the
heading "--Certain covenants--Limitation on asset sales."
Change of control
The indentures provide that, upon the occurrence of a Change of Control, each
holder will have the right to require that Tokheim purchase all or a portion of
the holder's notes pursuant to the offer described below (the "Change of
Control Offer"), at a purchase price equal to 101% of the principal amount of
the notes plus accrued and unpaid interest to the date of purchase.
The indentures provide that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, Tokheim
covenants to:
. repay in full all Indebtedness and terminate all commitments under the
credit agreement and all other Senior Debt whose terms require repayment
upon a Change of Control, or
. offer to repay in full and terminate all commitments under all
Indebtedness under the credit agreement and all other such Senior Debt
and to repay the Indebtedness owed to each lender which has accepted
such offer, or
. obtain the requisite consents under the credit agreement and all other
Senior Debt to permit the repurchase of the notes as provided below.
Within 30 days following the date upon which the Change of Control occurred,
Tokheim must send, by first class mail, a notice to each holder, with a copy to
the trustee. The notice shall govern the terms of the Change of Control Offer.
The notice shall state, among other things, the purchase date, which must be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed, other than as may be required by law (the "Change of Control Payment
Date"). For so long as the notes are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require, Tokheim will
. cause a copy of such notice to be published in a daily newspaper with
general circulation in Luxembourg, which is expected to be the
Luxemburger Wort, and
. advise the Luxembourg Stock Exchange of the Change of Control Offer.
Holders electing to have a note purchased pursuant to a Change of
Control Offer will be required to surrender the note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the note
completed, to the paying agent, including, if applicable, the paying and
transfer agent in Luxembourg, at the address specified in the notice
prior to the close of business on the third business day prior to the
Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that Tokheim
will have available funds sufficient to pay the Change of Control purchase
price for all the notes that might be delivered by holders seeking to accept
the Change of Control Offer. In the event Tokheim is required to purchase
outstanding notes pursuant to a Change of Control Offer, Tokheim expects that
it would seek third party financing to the extent it does not have available
funds to meet its purchase obligations. However, there can be no assurance that
Tokheim would be able to obtain such financing. In addition, the credit
agreement will restrict the ability of Tokheim to make a Change of Control
Offer. A Change of Control may result in an Event of Default under the credit
agreement.
Neither the board of directors of Tokheim nor the trustee may waive the
covenant relating to a holder's right to redemption upon a Change of Control.
Restrictions in the indentures described in this prospectus on the ability of
Tokheim and its Subsidiaries to
. incur additional Indebtedness,
. grant liens on its property,
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. make Restricted Payments
. make Asset Sales
may also make more difficult or discourage a takeover of Tokheim, whether
favored or opposed by the management of Tokheim. Consummation of any such
transaction in certain circumstances may require redemption or repurchase of
the notes, and there can be no assurance that Tokheim or the acquiring party
will have sufficient financial resources to effect such redemption or
repurchase. Such restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or discourage any
leveraged buyout of Tokheim or any of its Subsidiaries by the management of
Tokheim. While such restrictions cover a wide variety of arrangements which
have traditionally been used to effect highly leveraged transactions, the
indentures may not afford the holders of notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
Tokheim will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations under the Exchange Act to the
extent such laws and regulations are applicable in
connection with the repurchase of notes pursuant to a Change of Control Offer.
To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions of the indentures, Tokheim shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the "Change of Control"
provisions of the indentures by virtue of its compliance.
Certain covenants
The indentures contain, among others, the following covenants:
Limitation on incurrence of additional indebtedness. Tokheim will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, acquire, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for payment of (collectively,
"incur") any Indebtedness, other than Permitted Indebtedness; provided,
however, that if no default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, Tokheim may incur Indebtedness including, without limitation,
Acquired Indebtedness, and Subsidiaries of Tokheim may incur Acquired
Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of Tokheim is greater than 2.00 to 1.00 if incurred
on or prior to the second anniversary of the issue date of the outstanding
notes or greater than 2.25 to 1.00 if incurred thereafter.
Limitation on restricted payments. Tokheim will not, and will not cause or
permit any of its Subsidiaries to, directly or indirectly:
(A) declare or pay any dividend or make any distribution, other than
dividends or distributions payable in Qualified Capital Stock of
Tokheim, on or in respect of shares of Tokheim's Capital Stock,
(B) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of Tokheim or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock,
(C) make any Investment, other than Permitted Investments, or
(D) repurchase or redeem the junior subordinated notes, the warrants, any
Warrant Repurchase Indebtedness or Refinancing Indebtedness the
proceeds of which are used to repurchase or redeem the junior
subordinated notes, the warrants or any Warrant Repurchase
Indebtedness, or make any cash payments of interest thereon during:
. a Blockage Period in effect with respect to any such junior
Indebtedness or
. the time when Tokheim could, by the terms of such Indebtedness,
otherwise defer such interest or pay such interest in-kind
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(each of the foregoing actions set forth in clauses (A), (B), (C) and (D) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto:
(i) a default or an Event of Default shall have occurred and be continuing,
or
(ii) Tokheim is not able to incur at least $1.00 of additional
Indebtedness, other than Permitted Indebtedness, in compliance with
the "--Limitation on incurrence of additional indebtedness" covenant,
or
(iii) the aggregate amount of Restricted Payments, including the proposed
Restricted Payment, made subsequent to the issue date of the
outstanding notes (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as
determined reasonably and in good faith by the board of directors of
Tokheim) shall exceed the sum of:
(w) 50% of the cumulative Consolidated Net Earnings, or if cumulative
Consolidated Net Earnings shall be a loss, minus 100% of such loss,
of Tokheim earned subsequent to the issue date of the outstanding
notes and on or prior to the date the Restricted Payment occurs
(the "Reference Date"), treating such period as a single accounting
period; plus
(x) 100% of the aggregate net cash proceeds received by Tokheim from
any Person, other than a Subsidiary of Tokheim, from the issuance
and sale subsequent to the issue date of the outstanding notes and
on or prior to the Reference Date of Qualified Capital Stock of
Tokheim; plus
(y) 100% of the net cash proceeds from the sale of Investments by
Tokheim, other than Permitted Investments, provided that such
Investment was made after the issue date of the outstanding notes;
plus
(z) without duplication of any amounts included in clause (x) above,
100% of the aggregate net cash proceeds of any equity contribution
received by Tokheim after the issue date of the outstanding notes
from a holder of Tokheim's Capital Stock
(excluding, in the case of clauses (x) and (z), any net cash proceeds
from a public equity offering to the extent used to redeem the notes or
from a sale as described in clause (2)(ii) of the next succeeding
paragraph).
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of the dividend if the dividend would have been permitted
on the date of declaration; or
(2) the acquisition of any shares of Capital Stock of Tokheim or of any of
the Indebtedness described in clause (4) of the immediately preceding
paragraph, either
(i) solely in exchange for shares of Qualified Capital Stock of Tokheim
or
(ii) through the application of the net cash proceeds of a
substantially concurrent sale for cash, other than to a Subsidiary
of Tokheim, of shares of Qualified Capital Stock of Tokheim
(excluding, in the case of this clause 2(ii), any net cash
proceeds from a public equity offering to the extent used to
redeem the notes); or
(3) dividends on, and redemptions of, the shares of Tokheim's preferred
stock held by the trust of Tokheim's retirement savings plan in
accordance with the terms on the plan on the date of the indentures;
(4) payments to redeem or repurchase stock or similar rights from
management of Tokheim in connection with the repurchase provisions
under employee stock option or stock purchase agreements or other
agreements to compensate management employees upon the termination of
employment, death or disability of any such person; provided that such
redemptions or repurchases shall not exceed $1.0 million; or
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(5) the purchase, redemption or acquisition of the warrants with proceeds
from the issuance of Warrant Repurchase Indebtedness; or
(6) the purchase, redemption, acquisition, or refinancing of the junior
subordinated notes with Refinancing Indebtedness.
In determining the aggregate amount of Restricted Payments made subsequent to
the issue date of the outstanding notes in accordance with clause (iii) of the
immediately preceding paragraph, amounts expended pursuant to clauses (1), (4)
and (5) shall be included in such calculation.
Not later than the date of making any Restricted Payment, Tokheim shall
deliver to the trustee an officers' certificate stating that such Restricted
Payment complies with the indentures and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations
may be based upon Tokheim's latest available internal quarterly financial
statements.
Limitation on Asset Sales. Tokheim will not, and will not permit any of its
Subsidiaries to, consummate an Asset Sale unless:
(1) Tokheim or the applicable Subsidiary, as the case may be, receives
consideration at the time of the Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of, as determined
in good faith by Tokheim's board of directors,
(2) with respect to Asset Sales by Tokheim or any Wholly Owned Subsidiary
of Tokheim, at least 80% of the consideration received by Tokheim or
such Subsidiary, as the case may be, from such Asset Sale shall be in
the form of cash or Cash Equivalents and is received at the time of
such disposition and
(3) upon the consummation of an Asset Sale, Tokheim shall apply, or cause
such Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 365 days of receipt thereof:
(A) to prepay any Senior Debt or Indebtedness of any Subsidiary of
Tokheim,
(B) to make an investment in properties and assets that replace the
properties and assets that were the subject of such Asset Sale or
in properties or assets that will be used in the business of
Tokheim and its Subsidiaries as existing on the issue date of the
outstanding notes or in businesses reasonably related thereto
("Replacement Assets") or
(C) a combination of prepayment and investment permitted by the
foregoing clauses (3)(A) and (3)(B).
On the 366th day after an Asset Sale or such earlier date, if any, as the board
of directors of Tokheim or of such Subsidiary determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(A),
(3)(B) and (3)(C) of the next preceding sentence (each, a "Net Proceeds Offer
Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been
applied on or before such Net Proceeds Trigger Date as permitted in clauses
(3)(A), (3)(B) and (3)(C) of the next preceding sentence (each a "Net Proceeds
Offer Amount" shall be applied by Tokheim or such Subsidiary to make an offer
to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer
Payment Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all holders on a pro rata basis, that
amount of notes equal to the Net Proceeds Offer Amount at a price equal to 100%
of the principal amount of the notes to be purchased, plus accrued and unpaid
interest on the notes, if any, to the date of purchase. Tokheim may defer the
Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5.0 million resulting from one or more Asset
Sales, at which time the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $5.0 million, shall be applied as required
pursuant to this paragraph.
Notwithstanding the immediately preceding paragraph, Tokheim and its
Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent:
(1) at least 80% of the consideration for such Asset Sale constitutes
Replacement Assets and the remainder in cash or Cash Equivalents and
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(2) such Asset Sale is for fair market value;
provided that any consideration not constituting Replacement Assets received by
Tokheim or any of its Subsidiaries in connection with any Asset Sale permitted
to be consummated under this paragraph shall constitute Net Cash Proceeds
subject to the provisions of the immediately preceding paragraph.
Each Net Proceeds Offer will be mailed to the record holders as shown on the
register of holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the trustee, and shall comply with the procedures set
forth in the indentures. For so long as the notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, Tokheim will cause a
copy of such notice to be published in a daily newspaper with general
circulation in Luxembourg, which is expected to be the Luxemburger Wort, and
the Luxembourg Stock Exchange will be advised of the Net Proceeds Offer. Upon
receiving notice of the Net Proceeds Offer, holders may elect to tender their
notes in whole or in part in integral multiples of $1,000 or (Euro)1,000, as
the case may be, in exchange for cash. To the extent holders properly tender
notes in an amount exceeding the Net Proceeds Offer Amount, notes of tendering
holders will be purchased on a pro rata basis, based on amounts tendered. A Net
Proceeds Offer shall remain open for a period of 20 business days or such
longer period as may be required by law.
Tokheim will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations under the Exchange Act to the
extent those laws and regulations are applicable in connection with the
repurchase of notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the indentures, Tokheim shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the indentures by virtue
thereof.
Limitation on dividends and other payment restrictions affecting
subsidiaries.
Tokheim will not, and will not cause or permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or permit to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of
Tokheim to:
(a) pay dividends or make any other distributions on or in respect of its
Capital Stock;
(b) make loans or advances or pay or guarantee any Indebtedness or other
obligation owed to Tokheim or any other Subsidiary of Tokheim; or
(c) transfer any of its property or assets to Tokheim or any other
Subsidiary of Tokheim,
except for such encumbrances or restrictions existing under or by reason of:
(1) applicable law;
(2) the indentures;
(3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Subsidiary of Tokheim;
(4) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets
of the Person so acquired;
(5) agreements existing on the issue date of the outstanding notes to the
extent and in the manner the agreements are in effect on the issue date
of the outstanding notes;
(6) the credit agreement or the ESOP credit agreements; or
(7) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4), (5) or (6) above; provided, however
that the provisions relating to such encumbrance or restriction
contained in any such Refinancing Indebtedness are no less favorable to
Tokheim in any material respect as determined by the board of directors
of Tokheim in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in
agreements referred to in such clause (2), (4), (5) or (6).
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Limitation on preferred stock of subsidiaries. Tokheim will not permit any of
its Subsidiaries to issue any preferred stock, other than to Tokheim or to a
Wholly Owned Subsidiary of Tokheim, or permit any Person, other than Tokheim or
a Wholly Owned Subsidiary of Tokheim, to own any preferred stock of any
Subsidiary of Tokheim.
Limitation on Liens. Tokheim will not, and will not cause or permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
Tokheim or any of its Subsidiaries whether owned on the issue date of the
outstanding notes or acquired after the issue date of the outstanding notes, or
any proceeds from such property or assets, or assign or otherwise convey any
right to receive income or profits from such property, assets, or proceeds
unless:
. in the case of Liens securing Indebtedness that is expressly subordinate
or junior in right of payment to the notes, the notes are secured by a
Lien on such property, assets or proceeds that is senior in priority to
such Liens and
. in all other cases, the notes are equally and ratably secured,
except for:
(A) Liens existing as of the issue date of the outstanding notes to the
extent and in the manner such Liens are in effect on the issue date of
the outstanding notes;
(B) Liens securing Senior Debt and Liens securing Guarantor Senior Debt;
(C) Liens securing the notes and the Subsidiary Guarantees;
(D) Liens of Tokheim or a Wholly Owned Subsidiary of Tokheim on assets of
any Subsidiary of Tokheim;
(E) Liens securing Refinancing Indebtedness which is incurred to Refinance
any Indebtedness which has been secured by a Lien permitted under the
indentures and which has been incurred in accordance with the
provisions of the indentures; provided, however that such Liens
(x) are no less favorable to the holders and are not more favorable to
the lienholders with respect to such Liens that the Liens in
respect of the Indebtedness being Refinanced and
(y) do not extend to or cover any property or assets of Tokheim or any
of its Subsidiaries not securing the Indebtedness so Refinanced;
and
(F) Permitted Liens.
Prohibition on incurrence of senior subordinated debt. Tokheim will not incur
or suffer to exist Indebtedness that is senior in right of payment to the notes
and subordinate in right of payment to any Senior Debt of Tokheim. The
Guarantors will not incur or suffer to exist Indebtedness that is senior in
right of payment to any Subsidiary Guarantees and subordinate in right of
payment to any Guarantor Senior Debt.
Merger, consolidation or sale of assets of Tokheim. Tokheim will not, in a
single transaction or series of related transactions, consolidate or merge with
or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of, or cause or permit any Subsidiary of Tokheim to sell, assign,
transfer, lease, convey or otherwise dispose of, all or substantially all of
Tokheim's assets, determined on a consolidated basis for Tokheim and its
Subsidiaries, whether as an entirety or substantially as an entirety to any
person unless:
(a) either
(1) Tokheim shall be the surviving or continuing corporation or
(2) the Person, if other than Tokheim, formed by such consolidation or
into which Tokheim is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the
properties and assets of Tokheim and of Tokheim's Subsidiaries
substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the
laws of the United States or any State thereof or the District
of Columbia and
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(y) shall expressly assume, by supplemental indenture in form and
substance satisfactory to the trustee, executed and delivered to
the trustee, the due and punctual payment of the principal of,
and premium, if any, and interest on all of the notes and the
performance of every covenant contained in the notes, the
indentures and the registration rights agreements to be
performed or observed on the part of Tokheim;
(b) immediately after giving effect to such transaction and the assumption
contemplated by clause (a)(2)(y) above, including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction, Tokheim
or the Surviving Entity, as the case may be, shall have a Consolidated
Net Worth equal to or greater than the Consolidated Net Worth of
Tokheim immediately prior to such transaction;
(c) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (a)(2)(y) above,
including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any
Lien granted in connection with or in respect of the transaction, no
default or Event of Default shall have occurred or be continuing; and
(d) Tokheim or the Surviving Entity, as the case may be, shall have
delivered to the trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger, sale assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture complies with the applicable provisions of the
indentures and that all conditions precedent in the indentures relating
to such transaction have been satisfied.
The indentures provide that upon any consolidation, combination or merger or
any transfer of all or substantially all of the assets of Tokheim in accordance
with the foregoing, in which Tokheim is not the continuing corporation, the
successor Person formed by such consolidation or into which Tokheim is merged
or to which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, Tokheim under the
indentures and the notes with the same effect as if such surviving entity had
been named as such.
Each Guarantor, other than any Guarantor whose Subsidiary Guarantee is to be
released in accordance with the terms of the Subsidiary Guarantee and the
indentures in connection with any transaction complying with the provisions of
"--Limitation on asset sales," will not, and Tokheim will not cause or permit
any Guarantor to, consolidate with or merge with or into any Person other than
Tokheim or any other Guarantor unless:
(1) the entity formed by or surviving any such consolidation or merger, if
other than the Guarantor, or to which such sale, lease, conveyance or
other disposition shall have been made is a corporation organized and
existing under the laws of the United States or any State thereof or
the District of Columbia;
(2) such entity assumes by supplemental indenture all of the obligations of
the Guarantor on the Subsidiary Guarantee;
(3) immediately before and after giving effect to such transaction, no
default or Event of Default shall have occurred and be continuing; and
(4) immediately after giving effect to such transaction and the use of any
net proceeds therefrom on a pro forma basis, Tokheim could satisfy the
provisions of clause (b) of the first paragraph of this covenant.
Any merger or consolidation of a Guarantor with and into Tokheim, with
Tokheim being the surviving entity, or another Guarantor of Tokheim need only
comply with clause (d) of the first paragraph of this covenant.
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Limitations on transactions with affiliates. (a) Tokheim will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction or series of related transactions (including,
without limitation, the purchase, sale, lease or exchange of any property or
the rendering of any service) with, or for the benefit of, any of its
Affiliates (each an "Affiliate Transaction"), other than:
(x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable to Tokheim
or such Subsidiary than those that could reasonably have been obtained
in a comparable transaction at such time on an arm's length basis from
a Person that is not an Affiliate of Tokheim or such Subsidiary.
All Affiliate Transactions, and each series of related Affiliate Transactions
which are similar or part of a common plan, involving aggregate payments or
other property with a fair market value in excess of $1.0 million shall be
approved by the board of directors of Tokheim or the Subsidiary, as the case
may be, such approval to be evidenced by a resolution of the board of directors
stating that the board of directors has determined that the transaction
complies with the foregoing provisions.
If Tokheim or any Subsidiary of Tokheim enters into an Affiliate Transaction,
or a series of related Affiliate Transactions related to a common plan, that
involves aggregate payments or other property with a fair market value of more
than $5.0 million, Tokheim or the Subsidiary, as the case may be, shall, prior
to the consummation of the transaction, obtain a favorable opinion as to the
fairness of the transaction or series of related transactions to Tokheim or the
relevant Subsidiary, as the case may be, from a financial point of view, from
an Independent Financial Advisor and file the same with the trustee.
(b) The restrictions set forth in clause (a) shall not apply to:
. reasonable fees and compensation paid to, and indemnity provided on
behalf of, officers, directors or employees of Tokheim or any Subsidiary
of the Tokheim as determined in good faith by Tokheim's board of
directors;
. transactions exclusively between or among Tokheim and any of its Wholly
Owned Subsidiaries; provided the transactions are not otherwise
prohibited by the indentures;
. transactions permitted by, and complying with, the provisions of the
covenant described under "Merger, consolidation and sale of assets of
Tokheim" above;
. transactions with distributors or other purchases or sales of goods or
services, in each case in the ordinary course of business and otherwise
in compliance with the terms of the indentures which are fair to
Tokheim, in the reasonable determination of the board of directors of
Tokheim or the senior management of Tokheim, or are on terms at least as
favorable as might reasonably have been obtained at such time from an
unaffiliated party;
. any management agreement as in effect as of the issue date of the
outstanding notes or any amendment to the management agreement or any
replacement agreement for the management agreement so long as any
amendment or replacement agreement is not more disadvantageous to the
holders in any material respect than the original agreement as in effect
on the issue date of the outstanding notes and any similar agreements
entered into after the issue date of the outstanding notes; and
. intercompany loans or capital contributions from Tokheim or any
Subsidiary to any of Tokheim's Subsidiaries; provided the loans are
otherwise in compliance with the terms of the indentures.
Reports to holders. The indentures provide that Tokheim will deliver to the
trustee within 15 days after the filing of the same with the SEC, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, which Tokheim is required to file with the SEC pursuant to
Sections 13 or
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15(d) of the Exchange Act. The indentures further provide that, notwithstanding
that Tokheim may not be subject to the reporting requirements of Sections 13 or
15(d) of the Exchange Act, Tokheim will file with the SEC, to the extent
permitted, and provide the trustee and holders with, such annual reports and
such information, documents and other reports specified in Sections 13 and
15(d) of the Exchange Act. Tokheim will also comply with the other provisions
of (S) 314(a) of the Trust Indenture Act. For so long as the notes are listed
on the Luxembourg Stock Exchange and the rules of that exchange so require,
copies of all reports and information described above will be available during
normal business hours at the office of the transfer agent in Luxembourg.
Additional subsidiary guarantees. The indentures provide that Tokheim will
cause any current and future Subsidiary of Tokheim that Guarantees any Senior
Debt of Tokheim or Indebtedness of Tokheim that is subordinated to the notes to
simultaneously execute and deliver supplemental indentures pursuant to which it
will become a Guarantor under the indentures.
Limitation on amendments to the junior subordinated notes and Warrant
Repurchase Indebtedness. The indentures provide that Tokheim shall not amend
the indentures or other agreements governing the terms of the junior
subordinated notes or Warrant Repurchase Indebtedness, or any Refinancing
Indebtedness thereof, in any way adverse to the holders of the notes.
Events of Default
The following events are defined in the indentures as "Events of Default":
(a) the failure to pay interest on, or liquidated damages owing pursuant
to the registration rights agreements, if any, with respect to, any notes
when the same become due and payable and the default continues for a period
of 30 days, whether or not such payment shall be prohibited by the
subordination provisions of the indentures;
(b) the failure to pay the principal on the notes when such principal
becomes due and payable, at maturity, upon redemption or otherwise,
including the failure to make a payment to purchase notes tendered pursuant
to a Change of Control Offer or a Net Proceeds Offer, whether or not such
payment shall be prohibited by the subordination provisions of the
indentures;
(c) a default in the observance or performance of any other covenant or
agreement contained in the indentures which default continues for a period
of 30 days after Tokheim receives written notice specifying the default and
demanding that the default be remedied from the trustee or the holders of
at least 25% of the outstanding principal amount of the dollar notes or the
holders of at least 25% of the outstanding principal amount of the euro
notes, as the case may be, (except in the case of a default with respect to
the "Merger, consolidation and sale of assets of Tokheim" covenant, which
will constitute an Event of Default with such notice requirement but
without such passage of time requirement);
(d) there shall be a default under any Indebtedness of Tokheim or any
Subsidiary, whether the Indebtedness now exists or shall hereinafter be
created, if both:
(1) the default either:
(A) results from the failure to pay any such Indebtedness at its
stated final maturity; or
(B) relates to an obligation other than the obligation to pay such
Indebtedness at its stated final maturity and results in the
holder or holders of such Indebtedness causing the Indebtedness
to become due prior to its stated final maturity and
(2) the amount of the Indebtedness, together with the principal amount
of any other such Indebtedness in default for failure to pay
principal at stated final maturity or the maturity of which has
been so accelerated, aggregates $10.0 million or more at any one
time outstanding;
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(e) one or more judgments in an aggregate amount in excess of $5.0
million which are not covered by third party insurance as to which the
insurer has not disclaimed coverage shall have been rendered against
Tokheim or any of its Subsidiaries, and the judgments remain undischarged,
unpaid or unstayed for a period of 60 days after the judgment or judgments
become final and non-appealable;
(f) except as permitted by the indentures, any Subsidiary Guarantee shall
be held in a judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Guarantee; or
(g) certain events of bankruptcy affecting Tokheim or any of its
Significant Subsidiaries.
If an Event of Default, other than an Event of Default specified in clause
(g) above with respect to Tokheim, shall occur and be continuing, the trustee
or the holders of at least 25% in principal amount of the then-outstanding
dollar notes or the holders of at least 25% in principal amount of the then-
outstanding euro notes, as the case may be, may declare the principal of and
accrued interest on all the dollar notes or the euro notes, as the case may be,
to be due and payable by notice in writing to Tokheim and the trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (A) shall become
immediately due and payable or (B) if there are any amounts outstanding under
the credit agreement or the ESOP credit agreements, shall become immediately
due and payable upon the first to occur of an acceleration under the credit
agreement or the ESOP credit agreements or 5 business days after receipt by
Tokheim and the Representative under the credit agreement or the ESOP credit
agreements of such Acceleration Notice. If an Event of Default specified in
clause (g) above with respect to Tokheim occurs and is continuing, then all
unpaid principal of, premium, if any, and accrued and unpaid interest on all of
the outstanding notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the trustee or any
holder.
The indentures provide that, at any time after a declaration of acceleration
with respect to the notes as described in the preceding paragraph, the holders
of a majority in principal amount of the then-outstanding dollar notes or euro
notes, as the case may be, may rescind and cancel such declaration and its
consequences if:
(1) the rescission would not conflict with any judgment or decree,
(2) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because
of the acceleration,
(3) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been
paid,
(4) Tokheim has paid the trustee its reasonable compensation and reimbursed
the trustee for its expenses, disbursements and advances and
(5) in the event of the cure or waiver of an Event of Default of the type
described in clause (g) of the description of Events of Default above,
the trustee shall have received an officers' certificate and an opinion
of counsel that such Event of Default has been cured or waived. No such
rescission shall affect any subsequent default or impair any right
consequent thereto.
The holders of a majority in aggregate principal amount of the applicable
notes then outstanding may waive any existing default or Event of Default under
the applicable indenture, and its consequences, except a default in the payment
of the principal of or interest on any applicable notes.
Holders of the notes may not enforce the applicable indenture or the notes
except as provided in the applicable indenture and under the Trust Indenture
Act. Subject to the provisions of the applicable indenture relating to the
duties of the trustee, the trustee is under no obligation to exercise any of
its rights or powers under the applicable indenture at the request, order or
direction of any of the applicable holders, unless such holders have offered to
the trustee reasonable indemnity. Subject to all provisions of the applicable
indenture
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and applicable law, the holders of a majority in aggregate principal amount of
the then outstanding applicable notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee.
Under the indentures, Tokheim will be required to provide an officers'
certificate to the trustee promptly upon any officer obtaining knowledge of any
default or Event of Default that has occurred and, if applicable, describe such
default or Event of Default and the status thereof; provided that such officers
shall provide such certification at least annually whether or not they know of
any default or Event of Default.
Legal defeasance and covenant defeasance
Under each indenture Tokheim may, at its option and at any time, elect to
have its obligations, and the obligations of the Guarantors, discharged with
respect to any outstanding notes under such indenture and the related
Subsidiary Guarantees ("Legal Defeasance"). Such Legal Defeasance means that
Tokheim and each Guarantor shall be deemed to have paid and discharged the
entire indebtedness represented by the then-outstanding applicable notes and
any Subsidiary Guarantees, except for:
(1) the rights of holders of then-outstanding applicable notes to receive
payments in respect of the principal of, premium, if any, and interest
on such notes when such payments are due,
(2) Tokheim's obligations with respect to such notes and the maintenance of
an office or agency for payments,
(3) the rights, powers, trust, duties, and immunities of the trustee and
Tokheim's obligations in connection therewith and
(4) the "Legal Defeasance" provisions of the applicable indenture.
In addition, Tokheim may, at its option and at any time, elect to have the
obligations of Tokheim and each Guarantor released with respect to certain
covenants that are described in the indentures ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to such notes. In the event Covenant
Defeasance occurs, certain events, not including non-payment, bankruptcy,
receivership, reorganization and insolvency events, described under "Events of
Default" will no longer constitute an Event of Default with respect to such
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance under the
applicable indenture:
(1) Tokheim must irrevocably deposit with the trustee, in trust, for the
benefit of the applicable holders, cash in U.S. dollars, non-callable
U.S. government obligations, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if
any, and interest on the applicable notes on the stated date for
payment of such amounts or on the applicable redemption date, as the
case may be;
(2) in the case of Legal Defeasance, Tokheim shall have delivered to the
trustee an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that
(A) Tokheim has received from, or there has been published by, the
Internal Revenue Service a ruling or
(B) since the date of the applicable indenture, there has been a change
in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the holders will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
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(3) in the case of Covenant Defeasance, Tokheim shall have delivered to the
trustee an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that the applicable holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or, insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the applicable
indenture or any other material agreement or instrument to which
Tokheim or any of its Subsidiaries is a party or by which Tokheim or
any of its Subsidiaries is bound;
(6) Tokheim shall have delivered to the trustee an officers' certificate
stating that the deposit was not made by Tokheim with the intent of
preferring the holders over any other creditors of Tokheim or others;
and
(7) Tokheim shall have delivered to the trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent
provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with, except that the opinion of counsel
shall speak only to clauses (2), (3) and (5) above.
Tokheim in its sole discretion can defease the dollar notes and/or the euro
notes.
Satisfaction and discharge
Each indenture will be discharged and will cease to be of further effect,
except as to surviving rights of registration of transfer or exchange of the
notes issued under such indentures, as expressly provided for in the
indentures, and Tokheim and the Guarantors will be discharged from their
obligations under the notes and the Subsidiary Guarantees when:
(1) either
(a) all the applicable notes theretofore authenticated and delivered
have been delivered to the trustee for cancellation, except for
mutilated, lost, stolen or destroyed notes which have been replaced
or paid and notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by Tokheim and
thereafter repaid to Tokheim or discharged from such trust, or
(b) all applicable notes not theretofore delivered to the trustee for
cancellation have become due and payable, and Tokheim has
irrevocably deposited or caused to be deposited with the trustee
funds in an amount sufficient to pay and discharge the entire
Indebtedness on such notes not theretofore delivered to the trustee
for cancellation, for principal of, premium, if any, and interest
on the applicable notes to date of such deposit, in the case of
notes that have become due and payable, or to the stated maturity
or redemption date, as the case may be;
(2) Tokheim has paid or caused to be paid all other sums payable under the
applicable indenture by Tokheim; and
(3) Tokheim has delivered to the trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent under
the applicable indenture relating to the satisfaction and discharge of
the applicable indenture have been complied with.
Modification of the indentures
From time to time, Tokheim, the Guarantors and the trustee, without the
consent of the applicable holders, may amend either indenture for certain
specified purposes, including, without limitation, curing ambiguities,
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defects or inconsistencies, so long as such change does not, in the opinion of
the trustee, adversely affect the rights of any of the applicable holders in
any material respect. In formulating its opinion on such matters, the trustee
will be entitled to rely on such evidence as it deems appropriate, including,
without limitation, solely on an opinion of counsel. Other modifications and
amendments of the indentures may be made with the consent of the applicable
holders of a majority in principal amount of the then-outstanding applicable
notes, except that,
(A) without the consent of each holder affected thereby, no amendment may:
(1) reduce the amount of applicable notes whose applicable holders must
consent to an amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any
applicable notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any applicable notes, or change the date on
which any applicable notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price for any
applicable notes;
(4) make any applicable notes payable in money other than that stated
in the applicable notes;
(5) make any change in provisions of the applicable indenture
protecting the right of each applicable holder to receive payment
of principal of, premium, if any, and interest on such holder's
notes on or after the due date of such payment or to bring suit to
enforce such payment;
(6) modify or change any provision of the applicable indenture or the
related definitions affecting the subordination or ranking of the
applicable notes in a manner which adversely affects the applicable
holders; provided, however, that it is understood that any
amendment, the purpose of which is to permit the incurrence of
additional Indebtedness under the applicable indenture shall not be
construed as adversely affecting the ranking of the applicable
notes, or
(7) make any change to the Subsidiary Guarantees in any manner that
adversely affects the rights of the applicable holders, and
(B) without the consent of holders of not less than 66 2/3% in aggregate
principal amount of dollar notes then outstanding, in the case of the
dollar notes indenture, or holders of not less than 66 2/3% in
aggregate principal amount of euro notes then outstanding, in the case
of the euro notes indenture, no such amendment, supplement or waiver
may amend, change or modify in any material respect the obligation of
Tokheim to make and consummate a Change of Control Offer in the event
of a Change of Control or make and consummate a Net Proceeds Offer with
respect to any Asset Sale or modify any of the provisions or
definitions with respect to such obligations.
Governing law
Each indenture provides that it and the applicable notes will be governed by,
and construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
Under the Judiciary Law of the State of New York, a judgment or decree in an
action based upon an obligation denominated in a currency other than U.S.
dollars will be rendered in the foreign currency of the underlying obligation
and converted into U.S. dollars at a rate of exchange prevailing on the date of
entry of the judgment or decree.
The trustee
Each indenture provides that, except during the continuance of an Event of
Default, the trustee will perform only such duties as are specifically set
forth in the applicable indenture. During the existence of an Event of Default,
the trustee will exercise such rights and powers vested in it by the applicable
indenture, and use the same degree of care and skill in its exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
Each indenture and the provisions of the Trust Indenture Act contain certain
limitations on the rights of the trustee, should it become a creditor of the
Company, to obtain payments of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise.
Subject to the Trust Indenture Act, the trustee will be permitted to engage in
other transactions; provided that if the trustee acquires any conflicting
interest as described in the Trust Indenture Act, it must eliminate such
conflict or resign.
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Additional information
Anyone who receives this prospectus may obtain a copy of the indentures and
registration rights agreements without charge by writing to Tokheim
Corporation, 10501 Corporate Drive, Fort Wayne, Indiana, 46845 Attention:
Executive Vice President, Finance and Administration and Chief Financial
Officer. In addition, Tokheim filed the registration rights agreements as
exhibits to its Form 10-K filed with the SEC on March 1, 1999. Tokheim filed
the indentures in substantially final form as exhibits to its Form 10-K filed
with the SEC on March 1, 1999, and the indentures in final form as exhibits to
the first amendment to the registration statement of which this prospectus
forms a part. See the section in this prospectus entitled "Where You Can Find
More Information" for information regarding how to obtain documents from the
SEC.
Form of notes, clearance and settlement
The outstanding dollar notes are, and the dollar notes will be, represented
by one or more notes in registered, global form. The dollar global notes will
be deposited on the date of the acceptance for exchange of the outstanding
dollar notes and the issuance of the dollar notes (the "Closing Date") with
the trustee as custodian for DTC and registered in the name of Cede & Co. as
nominee of DTC, in each case for credit to the accounts of DTC participants
and indirect participants (each as defined below) including, without
limitation, Morgan Guaranty Trust Company of New York, Brussels office, as
operator (the "Euroclear Operator") of Euroclear, and Cedel Bank. The
outstanding euro notes are, and the euro notes will be, represented by a note
in registered, global form. The euro global note will be deposited on the date
of the acceptance for exchange of the outstanding euro notes and the issuance
of the euro notes with the paying agent in London as common depositary for
Euroclear and Cedel Bank. The euro notes will not be eligible for clearance
through DTC, except indirectly through DTC's participation in Euroclear or
Cedel.
Except in the limited circumstances set forth below, notes in certificated
form will not be issued.
Investors who purchased outstanding euro notes pursuant to Rule 144A and
investors who purchased outstanding euro notes pursuant to Regulation S who
exchange their outstanding euro notes for euro notes in the exchange offer
will each hold their interests through the euro global note.
Depositary procedures
DTC. DTC has advised Tokheim as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with it ("DTC participants") and to
facilitate the clearance and settlement of securities transactions between DTC
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. DTC participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a DTC participant, either directly or indirectly
("indirect participants").
Euroclear and Cedel Bank. Tokheim understands as follows with respect to
Euroclear and Cedel Bank: Euroclear and Cedel Bank each hold securities for
their account holders and facilitate the clearance and settlement of
securities transactions by electronic book-entry transfer between their
respective account holders, thereby eliminating the need for physical
movements of certificates and any risk from lack of simultaneous transfers of
securities. Euroclear and Cedel Bank each provide various services, including
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Each of Euroclear and
Cedel Bank can settle securities transactions in any of more than 30
currencies, including euros. Euroclear and Cedel Bank each also deal with
domestic securities markets in several countries through established
depository and custodial relationships. The respective systems of
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Euroclear and Cedel Bank have established an electronic bridge between their
two systems across which their respective account holders may settle trades
with each other. Account holders in both Euroclear and Cedel Bank are world-
wide financial institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
both Euroclear and Cedel Bank is available to other institutions that clear
through or maintain a custodial relationship with an account holder of either
system. An account holder's overall contractual relations with either Euroclear
or Cedel Bank are governed by the respective rules and operating procedures of
Euroclear or Cedel Bank and any applicable laws. Both Euroclear and Cedel Bank
act under such rules and operating procedures only on behalf of their
respective account holders, and have no record of or relationship with any
persons who are not direct account holders.
Dollar notes. With respect to the dollar global notes, DTC has advised
Tokheim that pursuant to procedures established by it,
(1) upon initial deposit of a dollar global note, DTC will credit the
accounts of DTC participants, designated by the dollar exchange agent,
with portions of the principal amount of such dollar global note
deposited,
(2) for DTC participants, initial ownership of interests in such dollar
global notes will be shown on, and the transfer of ownership thereof
will be effected through, records maintained by DTC and
(3) for non-DTC participant owners, ownership interests in such dollar
global notes will only be shown on, and the transfer of ownership
thereof will only be effected through, the records of the DTC
participants, including Euroclear and Cedel Bank, or others through
which they hold their account.
All interests in a dollar global note deposited with DTC, including those held
through Euroclear or Cedel Bank, are subject to the procedures and requirements
of DTC. Those interests held through Euroclear or Cedel Bank are also subject
to the procedures and requirements of such system.
Euro notes. With respect to the euro global note, investors who hold accounts
with the Euroclear Operator or Cedel Bank may acquire, hold and transfer
security entitlements with respect to the euro global note against the
Euroclear Operator or Cedel Bank and their respective property by book-entry to
accounts with the Euroclear Operator or Cedel Bank, each of which has an
account with the common depositary, and subject at all times to the procedures
and requirements of Euroclear or Cedel Bank, as the case may be. "Security
entitlement" means the rights and property interests of an accountholder
against its securities intermediary under applicable law in or with respect to
a security, including any ownership, co-ownership, contractual or other rights.
Investors who do not have accounts with the Euroclear Operator or Cedel Bank
may acquire, hold and transfer security entitlements with respect to the euro
global note against the securities intermediary and its property with which
such investors hold accounts by book-entry to accounts with such securities
intermediary, which in turn may hold a security entitlement with respect to the
Euro Global Note through the Euroclear Operator or Cedel Bank. Investors
electing to acquire security entitlements with respect to the euro global note
through an account with the Euroclear Operator or Cedel Bank or some other
securities intermediary must follow the settlement procedures of their
securities intermediary with respect to the settlement of new issues of
securities. Security entitlements with respect to the euro global note to be
acquired through an account with the Euroclear Operator or Cedel Bank will be
credited to such account as of the settlement date against payment in euro for
value as of the settlement date. Investors electing to acquire, hold or
transfer security entitlements with respect to a euro global note through an
account with the Euroclear Operator, Cedel Bank or some other securities
intermediary other than in connection with the initial distribution of the euro
notes must follow the settlement procedures of their securities intermediary
with respect to the settlement of secondary market transactions in securities.
Except as described below, owners of interests in the dollar global notes and
the euro global note will not have notes registered in their names, will not
receive physical delivery of notes in certificated form and will not be
considered the registered owners or holders of notes for any purpose. So long
as DTC or its nominee, or the common depositary, as the case may be, is the
registered owner or holder of a global note, such party will be
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considered the sole owner or holder of the notes represented by such global
note for all purposes under the indentures and the notes. Accordingly, each
person owning a beneficial interest in a global note must rely on the
procedures of DTC, Euroclear and Cedel Bank, as the case may be, and their
participants or account holders to exercise any rights and remedies of a holder
of notes under the indentures. Payments of principal and interest on the global
notes will be made to DTC or its nominee, or to the common depositary on behalf
of Euroclear and Cedel Bank, as the case may be, as the registered owners
thereof.
The laws of some countries and some states in the United States require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer beneficial interests in a
global note to such persons may be limited to that extent. Because DTC,
Euroclear and Cedel Bank can act only on behalf of their respective
participants or account holders, as the case may be, the ability of a person
having beneficial interests in a global note to pledge such interests to
persons or entities that do not participate in the relevant clearing system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Payments on the global notes
Payments in respect of the principal of, premium, if any, and interest on a
global note will be made through a paying agent appointed pursuant to the
applicable indenture and will be payable to DTC or its nominee, or the common
depositary on behalf of Euroclear and Cedel Bank, as the case may be, each in
its capacity as the registered holder of such notes under such indentures.
Under the terms of the indentures, Tokheim and the trustee will treat the
persons in whose names the notes, including the global notes, are registered as
the owners of the notes for the purpose of receiving such payments and for any
and all other purposes whatsoever. Consequently, none of Tokheim, the trustee,
or any agent of Tokheim or the trustee has or will have any responsibility or
liability for
(1) any aspect or accuracy of the records of the relevant clearing system, the
participants therein or the account holders thereof, as the case may be,
relating to payments made on account of beneficial ownership interests in
the global notes, or for maintaining, supervising or reviewing any records
of such clearing system, participant or account holder relating to
beneficial ownership interests in the global notes, or
(2) any other matter relating to the actions and practices of the relevant
clearing system or the participants therein or the account holders thereof.
DTC, Euroclear or Cedel Bank, as the case may be, upon receipt of any such
payment, will immediately credit the accounts of their relevant participants or
account holders, as the case may be, with payments in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
relevant global note, as shown on the records of DTC, Euroclear or Cedel Bank,
as the case may be. Tokheim expects that payments by such participants or
account holders, as the case may be, to the beneficial owners of global notes
will be governed by standing instructions and customary practices and will be
the responsibility of such participants or account holders. Neither Tokheim nor
the trustee will have responsibility or liability for the payment of amounts
owing in respect of beneficial interests in the global notes held by DTC or by
the common depositary for Euroclear and Cedel Bank.
Transfers of global securities and interests therein
Unless definitive securities are issued,
(1) the dollar global notes may be transferred, in whole and not in part,
only to another nominee of DTC or to a successor of DTC or its nominee,
and
(2) the euro global note may be transferred, in whole and not in part, only
by Euroclear and Cedel Bank to the common depositary, as the case may
be, or by the common depositary to Euroclear and Cedel Bank,
respectively, or to another nominee or successor of such parties or a
nominee of such successor.
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Transfers of beneficial interests in the dollar global notes will be subject
to the applicable rules and procedures of DTC and its direct and indirect
participants including, if applicable, those of Euroclear and Cedel Bank, which
are subject to change from time to time. Transfers of beneficial interests in
the euro global note will be subject to the applicable rules and procedures of
Euroclear and Cedel Bank, as the case may be, and their respective account
holders and intermediaries. Any secondary market trading activity in beneficial
interests in the global notes is expected to occur through the participants or
account holders and intermediaries, as the case may be, of DTC, Euroclear and
Cedel Bank, and the securities custody accounts of investors will be credited
with their holdings against payment in same-day funds on the settlement date.
No service charge will be made for any registration of transfer or exchange
of notes, but the trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Although DTC, Euroclear and Cedel Bank have agreed to certain procedures to
facilitate transfers of interests in the global notes among participants in DTC
and account holders in Euroclear and Cedel Bank, they are under no obligation
to perform or to continue to perform such procedures. These procedures may be
discontinued at any time. None of Tokheim, the trustee, or any agent of Tokheim
or the trustee will have any responsibility for the nonperformance or
misperformance, as a result of insolvency, mistake, misconduct or otherwise, by
DTC, Euroclear or Cedel Bank or their respective participants, indirect
participants, account holders or intermediaries of their respective obligations
under the rules and procedures governing their operations.
Tokheim understands that under existing industry practices, if either Tokheim
or the trustee requests any action of holders of notes, or if an owner of a
beneficial interest in a global note desires to give instructions or take an
action that a holder is entitled to give or take under the indentures, DTC,
Euroclear or Cedel Bank, as the case may be, would authorize their respective
participants or account holders, as the case may be, owning the relevant
beneficial interest to give instructions or take the action. The participants
or account holders would authorize indirect participants or intermediaries to
give instructions or take such action, or would otherwise act upon the
instructions of such indirect participants or intermediaries.
Tokheim understands that under existing practices of DTC, Euroclear and Cedel
Bank, if less than all of the respective class of notes are to be redeemed at
any time, DTC, Euroclear or Cedel Bank, as the case may be, will credit their
participants' or account holders' accounts on a proportionate basis, with
adjustments to prevent fractions, or by lot or on such other basis as DTC,
Euroclear or Cedel Bank, as the case may be, deems fair and appropriate,
provided that no beneficial interests of less than $1,000 or (Euro)1,000, as
the case may be, may be redeemed in part.
Certificated notes
Beneficial interests in a global note are exchangeable for definitive notes
in registered certificated form only if:
(1) in the case of the dollar global notes, DTC
(x) notifies Tokheim that it is unwilling or unable to continue as
depositary for such dollar global notes or
(y) has ceased to be a "clearing agency" registered under the Exchange
Act
and, in each case, Tokheim thereupon fails to appoint a successor
depositary within 90 days;
(2) in the case of the euro global note, Euroclear and Cedel Bank are
unwilling or unable to continue as depositary for such euro global note
and Tokheim thereupon fails to appoint a successor depositary within 90
days; or
(3) there shall have occurred and be continuing a default or an Event of
Default with respect to the applicable notes.
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In all cases, certificated notes delivered in exchange for any global note or
beneficial interest in the global note will be registered in the names, and
issued in any approved denominations, requested by or on behalf of DTC,
Euroclear or Cedel Bank, as the case may be, in accordance with their customary
procedures. The notes may not be issued in bearer form.
In the case of the issuance of certificated notes in the limited
circumstances set forth above, the holder of any such certificated note may
transfer the note by surrendering it at the offices or agencies of Tokheim
maintained for such purpose within the city and state of New York, and at the
office of the transfer agent in London. Until otherwise designated by Tokheim,
Tokheim's office or agency in the city and state of New York and London,
England, respectively, will be the offices of the trustee maintained for that
purpose. In the event of a partial transfer of a holding of notes represented
by one certificate, or partial redemption of such a holding represented by one
certificate, a new certificate shall be issued to the transferee in respect of
the part transferred or redeemed and a further new certificate in respect of
the balance of the holding not transferred or redeemed shall be issued to the
transferor, provided that no certificate in denominations less than $1,000 or
(Euro)1,000 as the case may be, shall be issued. Each new certificate to be
issued shall be available for delivery within ten business days at the office
of the trustee or the transfer agent in London. The cost of preparing,
printing, packaging and delivering the certificated notes shall be borne by
Tokheim.
Tokheim shall not be required to register the transfer or exchange of
certificated notes for a period of 15 days preceding:
.the due date for any payment of principal of or interest on the notes or
.a selection of notes to be redeemed.
Also, Tokheim is not required to register the transfer or exchange of any
notes selected for redemption. In the event of the transfer of any certificated
note, the trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents, and Tokheim may require a
holder to pay any taxes and fees required by law and permitted by the
indentures and the notes.
If certificated notes are issued and a holder of a certificated note claims
that the note has been lost, destroyed or wrongfully taken or if the note is
mutilated and is surrendered to the trustee, Tokheim shall issue and the
trustee shall authenticate a replacement note if the trustee's and Tokheim's
requirements are met. If required by the trustee or Tokheim, an indemnity bond
sufficient in the judgment of both to protect Tokheim, the trustee or any
paying agent or authenticating agent appointed pursuant to the indentures from
any loss which any of them may suffer if a note is replaced must be posted.
Tokheim may charge for its expenses in replacing a note.
In case any such mutilated, destroyed, lost or stolen note has become or is
about to become due and payable, or is about to be redeemed or purchased by
Tokheim pursuant to the provisions of the indentures, Tokheim in its discretion
may, instead of issuing a new note, pay, redeem or purchase such note, as the
case may be.
Registration rights; liquidated damages
Tokheim, the Subsidiary Guarantors and BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder &
Co. Inc., as initial purchasers in the offering of the outstanding notes,
entered into a dollar registration rights agreement and a euro registration
rights agreement, each dated as of January 29, 1999. Pursuant to the
registration rights agreements, Tokheim and the Subsidiary Guarantors agreed to
file with the SEC a registration statement with respect to the notes, of which
this prospectus forms a part. If applicable interpretations of the staff of the
SEC do not permit Tokheim to effect the exchange offer, or if for
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any other reason the exchange offer is not consummated within 195 days after
January 29, 1999, or, under certain circumstances, if the initial purchasers of
the outstanding notes so request, Tokheim will at its cost
(a) as promptly as practicable, file a shelf registration statement
covering resales of the outstanding notes,
(b) use its best efforts to cause such shelf registration to be declared
effective under the Securities Act and
(c) use its best efforts to keep effective such shelf registration
statement until the earlier of January 29, 2002 and such time as all of
the applicable outstanding notes have been sold thereunder.
Tokheim will, in the event of the filing of a shelf registration statement,
provide to each holder of the applicable outstanding notes copies of the
prospectus which is a part of such shelf registration statement, notify each
such holder when such shelf registration statement has become effective and
take other actions as are required to permit unrestricted resales of such
outstanding notes. A holder that sells its outstanding notes pursuant to a
shelf registration statement generally will be required to be named as a
selling securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreements which are applicable to such
holder, including certain indemnification obligations.
The registration rights agreements provide that Tokheim will, at its own cost,
(1) file an exchange offer registration statement with the SEC within 90
days after January 29, 1999,
(2) use its best efforts to cause the exchange offer registration statement
to be declared effective under the Securities Act within 150 days after
January 29, 1999 and
(3) use its best efforts to consummate the exchange offer within 195 days
after January 29, 1999.
If
(a) Tokheim fails to file any of the registration statements required by
the registration rights agreements on or before the date specified in
the registration rights agreements for such filing,
(b) any of such registration statements is not declared effective on or
prior to the date specified in the registration rights agreements for
such effectiveness (the "Effectiveness Target Date"),
(c) Tokheim fails to exchange all applicable outstanding notes validly
tendered in accordance with the terms of the exchange offer on or
before the date specified in the registration rights agreements for
such exchange (the "Exchange Target Date") with respect to the exchange
offer registration statement, or
(d) the shelf registration statement or exchange offer registration
statement is declared effective but thereafter ceases to be effective
or usable for its intended purpose during the periods specified in the
registration rights agreements
(each such event referred to in clauses (a) through (d) above a "Registration
Default"), then Tokheim will pay liquidated damages in the form of additional
interest. In the case of a Registration Default, additional interest shall
accrue on the applicable outstanding notes over and above the stated interest
at a rate of 0.50% per annum for the first 90-day period immediately following
the occurrence of the Registration Default, such additional interest rate
increasing by an additional 0.50% per annum at the beginning of each subsequent
90-day period; provided, however, that the additional interest rate on the
applicable outstanding notes may not exceed in the aggregate 1.0% per annum;
provided further, that following the cure of all Registration Defaults,
additional interest on the applicable outstanding notes as a result of such
Registration Default shall cease to accrue.
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Any amounts of additional interest due in accordance with the immediately
preceding paragraph will be payable in cash, on the same original interest
payment dates as the applicable outstanding notes. The amount of additional
interest will be determined by multiplying
(x) the applicable additional interest rate by
(y) the principal amount of the applicable outstanding notes by
(z) a fraction, the numerator of which is the number of days such
additional interest was applicable during such period, determined on
the basis of a 360 day year comprised of twelve 30 day months, and the
denominator of which is 360.
Holders of outstanding notes will be required to make certain representations
to Tokheim which are described in the registration rights agreements, in order
to participate in the exchange offer and will be required to deliver
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreements in order to have their
outstanding notes included in the shelf registration statement and benefit from
the provisions regarding liquidated damages set forth above. Holders of
outstanding notes will also be required to suspend their use of the prospectus
included in the shelf registration statement upon receipt of written notice to
that effect from Tokheim.
Certain definitions
Set forth below is a summary of certain of the defined terms used in the
indentures. Reference is made to the indentures for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of Tokheim
or at the time it merges or consolidates with Tokheim or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of Tokheim
or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person who
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Asset Acquisition" means:
(a) an Investment by Tokheim or any Subsidiary of Tokheim in any other
Person pursuant to which such Person shall become a Subsidiary of
Tokheim or any Subsidiary of Tokheim, or shall be merged with or into
Tokheim or any Subsidiary of Tokheim, or
(b) the acquisition by Tokheim or any Subsidiary of Tokheim of the assets
of any Person, other than a Subsidiary of Tokheim, which constitute all
or substantially all of the assets of such Person or comprise any
division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by Tokheim or any
of its Subsidiaries, including any Sale and Leaseback Transaction, to any
Person other than Tokheim or a Wholly Owned Subsidiary of Tokheim of:
(a) any Capital Stock of any Subsidiary of Tokheim or
(b) any other property or assets of Tokheim or any Subsidiary of Tokheim
other than in the ordinary course of business;
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provided, however, that Asset Sales shall not include:
(1) a transaction or series of related transactions for which Tokheim or
its Subsidiaries receive aggregate consideration of less than $500,000;
(2) sales of accounts receivable that Tokheim has classified as
uncollectible;
(3) sales or other dispositions of Cash Equivalents;
(4) the sale of the stock of the Subsidiary of Tokheim Sofitam
Applications, S.A. to which Tokheim Sofitam Applications S.A. has
contributed its bulk meter business; and
(5) the sale, lease, conveyance, disposition or other transfer:
(w) of all or substantially all of the assets of Tokheim as permitted
under "Certain covenants--Merger, Consolidation or sale of Assets
by Tokheim,"
(x) pursuant to any foreclosure of assets or other remedy provided by
applicable law to a creditor of Tokheim or any Subsidiary of
Tokheim with a Lien on such assets, which Lien is permitted under
the indentures; provided that such foreclosure or other remedy is
conducted in a commercially reasonable manner or in accordance with
any bankruptcy law,
(y) involving only Cash Equivalents or inventory in the ordinary course
of business or obsolete equipment in the ordinary course of
business consistent with past practices of Tokheim or
(z) involving only the lease or sublease of any real or personal
property in the ordinary course of business.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means
(1) with respect to any Person that is a corporation, any and all shares,
interests, participations, or other equivalents, however designated and
whether or not voting, of corporate stock, including each class of
common stock and preferred stock of such Person and
(2) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Cash Equivalents" means
(a) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's");
(c) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(d) certificates of deposit, eurodollar time deposits or bankers'
acceptances maturing within one year from the date of acquisition
thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250.0 million;
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(e) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in
clause (d) above; and
(f) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (a) through (e)
above.
"Change of Control" means the occurrence of one or more of the following
events:
(1) the approval by the holders of Capital Stock of Tokheim of any plan or
proposal for the liquidation or dissolution of Tokheim, whether or not
otherwise in compliance with the provisions of the indentures;
(2) any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act shall become the owner, directly or indirectly,
beneficially or of record, of shares representing either more than 40%
of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of Tokheim or more than 40% of the aggregate
issued and outstanding common stock of Tokheim; or
(3) the replacement of a majority of the board of directors of Tokheim over
a two-year period from the directors who constituted the board of
directors of Tokheim at the beginning of such period, and such
replacement shall not have been approved by a vote of at least a
majority of the board of directors of Tokheim then still in office who
either were members of such board of directors at the beginning of such
period or whose election as a member of such board of directors was
previously so approved.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum, without duplication, of
(1) Consolidated Net Earnings and
(2) to the extent Consolidated Net Earnings has been reduced thereby,
. all income taxes of such Person and its Subsidiaries paid or accrued
in accordance with GAAP for such period, other than income taxes
attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the
ordinary course of business or other transactions the effect of
which has been excluded from Consolidated Net Earnings,
. Consolidated Interest Expense and
. Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Earnings for such period,
all as determined on a consolidated basis for such Person and its Subsidiaries
in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person,
the ratio of Consolidated EBITDA of such Person during the four most recent
full fiscal quarters for which financial information is available (the "Four
Quarter Period") ending on or prior to the date of the transaction giving rise
to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to
(a) the incurrence or repayment of any Indebtedness of such Person or any
of its Subsidiaries, and the application of the proceeds thereof,
giving rise to the need to make such calculation and any incurrence or
repayment of other Indebtedness, and the application of the proceeds
thereof, other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to
working capital or revolving credit facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be, and the application of the
proceeds thereof, occurred on the first day of the Four Quarter Period
and
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(b) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation)
as a result of such Person or one of its Subsidiaries (including any
Person who becomes a Subsidiary as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness
and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable
pursuant to the definition of "Consolidated Net Earnings") attributable
to the assets which are the subject of the Asset Acquisition or Asset
Sale during the Four Quarter Period occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such Asset Sale
or Asset Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its Subsidiaries directly
or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes
of determining the denominator, but not the numerator, of this
"Consolidated Fixed Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest on such Indebtedness
in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on the
Transaction Date may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Sway Obligations, shall
be deemed to accrue at the rate per annum resulting after giving
effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of
(1) Consolidated Interest Expense, plus
(2) the product of
. the amount of all dividend payments on any series of preferred stock
of such Person and its Subsidiaries, other than dividends paid in
Qualified Capital Stock of Tokheim or dividends to the extent
payable to Tokheim or its Subsidiaries, paid, accrued or scheduled
to be paid or accrued during such period, other than in the case of
preferred stock of such Person and its Subsidiaries for which the
dividends are tax deductible for federal income tax purposes, times
. a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated federal,
state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication:
(1) the aggregate of the interest expense of such Person and its
Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP, including without limitation,
(a) any amortization of debt discount, but excluding the amortization
of debt issuance costs,
(b) the net costs under Interest Swap Obligations,
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(c) all capitalized interest and
(d) the interest portion of any deferred payment obligation; and
(2) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Earnings" means, with respect to any Person, for any
period, the aggregate net earnings (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis, before preferred stock
dividend requirements, determined in accordance with GAAP; provided that there
shall be excluded therefrom:
(a) after-tax gains or losses from Asset Sales or abandonments or reserves
relating thereto,
(b) after-tax items classified as extraordinary or nonrecurring gains or
losses,
(c) the net earnings of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary of the
referent Person or is merged or consolidated with the referent Person
or any Subsidiary of the referent Person,
(d) the net earnings, but not loss, of any Subsidiary of the referent
Person to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by a
contract, operation of law or otherwise,
(e) the net earnings of any Person, other than a Subsidiary of the referent
Person, except to the extent of cash dividends or distributions paid to
the referent Person or to a Wholly Owned Subsidiary of the referent
Person by such Person,
(f) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of Consolidated Net
Earnings accrued at any time following the issue date of the
outstanding notes,
(g) income or loss attributable to discontinued operations, including,
without limitation, operations disposed of during such period whether
or not such operations were classified as discontinued,
(h) in the case of a successor to the referent Person by consolidation or
merger or as a transferee of the referent Person's assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets and
(i) all gains or losses from the cumulative effect of any change in
accounting principles.
"Consolidated Net Worth" of any Person means the consolidated shareholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less, without duplication, amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Earnings of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP, excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an accrual of or a
reserve relating to possible cash charges or expenditures for any future or
past period.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Designated Senior Debt" means
(a) Indebtedness under or in respect of the credit agreement or the ESOP
credit agreements and
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(b) any other Indebtedness constituting Senior Debt which, at the time of
determination, has an aggregate principal amount of at least $25.0
million and is specifically designated in the instrument evidencing such
Senior Debt as "Designated Senior Debt" by Tokheim.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms, or by the terms of any security into which it is convertible or
for which it is exchangeable, or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the notes.
"ESOP credit agreements" means those certain credit agreements among Tokheim,
the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and certain other
banks, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by the
"Limitation on incurrence of additional indebtedness" covenant above)) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders and any assignments thereof.
"Fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the board of directors of Tokheim acting
reasonably and in good faith and shall be evidenced by a resolution of the
board of directors of Tokheim delivered to the trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the issue date of
the outstanding notes.
"Guarantor" means any Subsidiary of Tokheim which guarantees the notes
pursuant to the indentures.
"Guarantor Senior Debt" means with respect to any Guarantor, the principal
of, premium, if any, and interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on the issue date of the outstanding notes or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Subsidiary Guarantee of such Guarantor. Without
limiting the generality of the foregoing, "Guarantor Senior Debt" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other monetary
obligations of the Guarantors owing in respect of
(x) all monetary obligations of every nature of the Guarantor under the
credit agreement and the ESOP credit agreements, including obligations
to pay principal and interest, reimbursement obligations under letters
of credit, fees, expenses and indemnities,
(y) all Interest Swap Obligations and
(z) all obligations under Currency Agreements,
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in each case whether outstanding on the issue date of the outstanding notes or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt"
shall not include:
(1) any Indebtedness of a Guarantor or any Affiliate of the Guarantor to a
Subsidiary of the Guarantor or any of the Affiliate's Subsidiaries,
(2) Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of a Guarantor or any Subsidiary of the Guarantor,
including, without limitation, amounts owed for compensation,
(3) Indebtedness to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services,
(4) Indebtedness represented by Disqualified Capital Stock,
(5) any liability for federal, state, local or other taxes owed or owing by
a Guarantor,
(6) Indebtedness incurred in violation of the provisions set forth under
the "Limitation on incurrence of additional Indebtedness" covenant,
(7) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without
recourse to a Guarantor,
(8) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of a Guarantor and
(9) any guarantees of the junior subordinated notes or any Warrant
Repurchase Indebtedness, or guarantees of any Refinancing of the junior
subordinated notes or any Warrant Repurchase Indebtedness.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness of the Person for borrowed money,
(b) all indebtedness of the Person evidenced by bonds, debentures, notes or
other similar instruments,
(c) all Capitalized Lease Obligations of the Person,
(d) all indebtedness or other obligations of the Person issued or assumed
as the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement,
but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90
days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted,
(e) all indebtedness for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction,
(f) guarantees and other contingent obligations in respect of Indebtedness
referred to in clauses (a) through (e) above and clause (h) below,
(g) all indebtedness of any other Person of the type referred to in clauses
(a) through (f) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount
of the Obligation so secured,
(h) all indebtedness under Currency Agreements and Interest Swap
Obligations of such Person and
(i) all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal
to the greater of its voluntary or involuntary liquidation preference
and its maximum fixed repurchase price, but excluding accrued
dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant
to the
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indentures, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors of the
issuer of such Disqualified Capital Stock.
"Independent Financial Advisor" means a firm (a) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in Tokheim and (b) which, in the judgment of the
board of directors of Tokheim, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person. "Investment" shall exclude extensions of trade
credit by Tokheim and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Subsidiary, as
the case may be. For the purposes of the "Limitation on restricted payments"
covenant, the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by Tokheim or any of
its Subsidiaries, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment;
provided that no such payment of dividends or distributions or receipt of any
such other amounts shall reduce the amount of any Investment if such payment
of dividends or distributions or receipt of any such amounts would be included
in Consolidated Net Earnings.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind, including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement
to give any security interest.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by Tokheim or any of its Subsidiaries from the Asset Sale
net of
(a) reasonable out-of-pocket expenses and fees relating to the Asset Sale,
including, without limitation, legal, accounting, brokerage and
investment banking fees and sales commissions,
(b) taxes paid or payable after taking into account any reduction in
consolidated tax liability due to available tax credits or deductions
and any tax sharing arrangements,
(c) repayment of Indebtedness that is required to be repaid in connection
with such Asset Sale and
(d) appropriate amounts to be provided by Tokheim or any Subsidiary, as the
case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by Tokheim or
any Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale.
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"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Permitted Indebtedness" means, without duplication, each of the following:
(1) Indebtedness under the notes and the indentures;
(2) Indebtedness incurred pursuant to the credit agreement and the ESOP
credit agreements in an aggregate principal amount at any time outstanding
not to exceed (A) $7.62 million with respect to the Indebtedness under the
ESOP credit agreements, less the amount of all mandatory principal
payments, if any, excluding any such payments to the extent refinanced at
the time of payment under a replaced ESOP credit agreement and (B) $250.0
million in the aggregate with respect to Indebtedness under the credit
agreement, reduced by any required permanent repayments, if any (which are
accompanied by a corresponding permanent commitment reduction), thereunder;
(3) Other Indebtedness of Tokheim and its Subsidiaries outstanding on the
issue date of the outstanding notes;
(4) Interest Swap Obligations of Tokheim covering Indebtedness of Tokheim
or any of its Subsidiaries and Interest Swap Obligations of any Subsidiary
of the Company covering Indebtedness of such Subsidiary; provided, however
that
(A) such Interest Swap Obligations are designed to protect Tokheim and
its Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with the indentures, and are
used for bona fide hedging, and not speculative, purposes, and the
notional principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which such
Interest Swap Obligation relates at the time entered into, or
(B) such Interest Swap Obligations are required under the terms of the
credit agreement;
(5) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
(A) are designed to protect against fluctuations in currency value, and
are used for bona fide hedging, and not speculative, purposes, and
do not increase the Indebtedness of Tokheim and its Subsidiaries
outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder, or
(B) are required under the terms of the credit agreement;
(6) Indebtedness of a Wholly Owned Subsidiary of Tokheim to Tokheim or to
a Wholly Owned Subsidiary of Tokheim for so long as such Indebtedness is
held by Tokheim or a Wholly Owned Subsidiary of Tokheim, in each case
subject to no Lien held by a Person other than Tokheim or a Wholly Owned
Subsidiary of Tokheim other than a Lien required under the Credit
Agreement; provided that if as of any date any Person other than Tokheim or
a Wholly Owned Subsidiary of Tokheim owns or holds any such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(7) Indebtedness of Tokheim to a Wholly Owned Subsidiary of Tokheim for
so long as such Indebtedness is held by a Wholly Owned Subsidiary of
Tokheim, in each case subject to no Lien other than a Lien required under
the credit agreement; provided that (a) any Indebtedness of Tokheim to any
Wholly Owned Subsidiary of Tokheim is unsecured and subordinated, pursuant
to a written agreement, to Tokheim obligations under the Indentures and the
Notes and (b) if as of any date any Person other than a Wholly Owned
Subsidiary of Tokheim owns or holds any such Indebtedness or any Person
holds a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by
Tokheim;
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(8) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within ten business days of incurrence;
(9) Indebtedness of Tokheim or any of its Subsidiaries represented by
letters of credit for the account of Tokheim or such Subsidiary, as the
case may be, in order to provide security for workers' compensation claims,
payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business;
(10) Refinancing Indebtedness;
(11) Indebtedness incurred by Tokheim or any Subsidiary of Tokheim in
connection with the purchase or improvement of property (real or personal)
or equipment or other capital expenditures in the ordinary course of
business or consisting of Capitalized Lease Obligations, provided that (a)
at the time of the incurrence thereof, such Indebtedness, together with any
other Indebtedness incurred during the most recently completed four fiscal
quarter period in reliance upon this clause (11) does not exceed, in the
aggregate, 3% of the net sales of Tokheim and its Subsidiaries during the
most recently completed four fiscal quarter period on a consolidated basis,
calculated on a pro forma basis if the date of incurrence is prior to the
end of the fourth fiscal quarter following the issue date of the
outstanding notes, and (b) such Indebtedness, together with all then
outstanding Indebtedness incurred in reliance upon this clause (11) does
not exceed, in the aggregate, 3% of the aggregate net sales of Tokheim and
its Subsidiaries during the most recently completed twelve fiscal quarter
period on a consolidated basis, calculated on a pro forma basis if the date
of incurrence is prior to the end of the twelfth fiscal quarter following
the issue date of the outstanding notes;
(12) Indebtedness arising from agreements of Tokheim or a Subsidiary of
Tokheim providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds actually
received by Tokheim and the Subsidiary in connection with such disposition;
(13) Obligations in respect of performance bonds and completion
guarantees provided by Tokheim or any Subsidiary of Tokheim in the ordinary
course of business;
(14) Guarantees by Tokheim or a Subsidiary of Tokheim of Indebtedness
incurred by Tokheim or a Subsidiary of Tokheim so long as the incurrence of
such Indebtedness by Tokheim or any such Subsidiary of Tokheim is otherwise
permitted by the terms of the indentures;
(15) the junior subordinated notes;
(16) Warrant Repurchase Indebtedness;
(17) Indebtedness incurred by Tokheim or any Subsidiary of Tokheim in
exchange for the use of Traits as collateral made in the ordinary course of
business to financial institutions which Indebtedness has a value of no
less than 90% of the face value of such Traits;
(18) Indebtedness of Tokheim or a Subsidiary of Tokheim to a Subsidiary
of Tokheim that is not a Wholly Owned Subsidiary in the aggregate principal
amount not to exceed at any one time $10.0 million; provided that if as of
any date any Person other than a Subsidiary of Tokheim that is not a Wholly
Owned Subsidiary owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(19) Indebtedness from bank overdraft facilities not to exceed $15.0
million at any time; and
(20) $10.0 million of other indebtedness of Tokheim or any of its
Subsidiaries, which amount may, but need not, be incurred in whole or in
part under the credit agreement.
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"Permitted Investments" means
(a) Investments by Tokheim or any Subsidiary of Tokheim in any Person that
is or will become immediately after such Investment a Wholly Owned
Subsidiary of Tokheim or that will merge or consolidate into Tokheim or
a Wholly Owned Subsidiary of Tokheim;
(b) Investments in Tokheim by any Subsidiary of Tokheim; provided that any
Indebtedness evidencing such Investment is unsecured and subordinated,
pursuant to a written agreement and to the same extent that the notes
are subordinated to Senior Debt, to Tokheim's obligations under the
notes and the indentures;
(c) Investments in cash and Cash Equivalents;
(d) loans and advances to employees and officers of Tokheim and its
Subsidiaries totaling up to $5.0 million in the aggregate
. in the ordinary course of business for bona fide business purposes
or
. to purchase Tokheim's Capital Stock;
(e) Currency Agreements and Interest Swap Obligations entered into in the
ordinary course of Tokheim's or its Subsidiaries' businesses and
otherwise in compliance with the indentures and in compliance with the
credit agreement;
(f) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(g) Investments made by Tokheim or its Subsidiaries as a result of
consideration received in connection with an Asset Sale made in
compliance with the "Limitation on asset sales" covenant;
(h) Investments existing on the issue date of the outstanding notes;
(i) Investments in an African Subsidiary in an aggregate amount not to
exceed $2.0 million for which Tokheim is committed on the issue date of
the outstanding notes; and
(j) additional Investments in an aggregate amount not exceeding $5.0
million.
"Permitted Liens" means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) being contested in good faith by appropriate
proceedings and as to which Tokheim or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(2) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent for
a period of more than 60 days or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(3) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security;
(4) Liens securing letters of credit issued in the ordinary course of
business consistent with past practice in connection with the items
referred to in clause (3), or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations, exclusive of obligations for the payment of borrowed money;
(5) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
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(6) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of Tokheim or
any of its Subsidiaries;
(7) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(8) purchase money Liens to finance property or assets of Tokheim or any
Subsidiary of Tokheim acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness shall
not exceed the cost of such property or assets and shall not be secured by
any property or assets of Tokheim or any Subsidiary of Tokheim other than
the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(9) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(10) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(11) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of Tokheim or
any of its Subsidiaries, including rights of offset and set-off;
(12) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
indentures;
(13) Liens securing Indebtedness under Currency Agreements;
(14) Liens securing Acquired Indebtedness incurred in accordance with the
"Limitation on incurrence of additional indebtedness" covenant; provided
that (A) such Liens secured such Acquired Indebtedness at the time of and
prior to the incurrence of such Acquired Indebtedness by Tokheim or a
Subsidiary of Tokheim and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by Tokheim or
a Subsidiary of Tokheim and (B) such Liens do not extend to or cover any
property or assets of Tokheim or of any of its Subsidiaries other than the
property or assets that secured the Acquired Indebtedness prior to the time
such Indebtedness became Acquired Indebtedness of Tokheim or a Subsidiary
of Tokheim and are no more favorable to the lienholders than those securing
the Acquired Indebtedness prior to the incurrence of such Acquired
Indebtedness by Tokheim or a Subsidiary of Tokheim;
(15) Leases or subleases granted to others not interfering in any
material respect with the business of Tokheim or any of its Subsidiaries;
(16) Any interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating, other than any
such interest or title resulting from or arising out of a default by
Tokheim or any of its Subsidiaries on its obligations under such lease;
(17) Liens arising from filing UCC financing statements for precautionary
purposes in connection with true leases of personal property that are
otherwise permitted under the indentures and under which Tokheim or any of
its Subsidiaries is lessee;
(18) Liens placed on Traits used as collateral in exchange for loans
provided to Tokheim or its Subsidiaries; and
(19) Liens in favor of the trustee and any substantially equivalent Lien
granted to any trustee or similar institution under any indenture governing
Indebtedness permitted to be incurred or outstanding under the Indentures.
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"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Qualified Capital Stock" means any Capital Stock of Tokheim that is not
Disqualified Capital Stock.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Tokheim or any Subsidiary
of Tokheim of Indebtedness incurred in accordance with the "Limitation on
incurrence of additional indebtedness" covenant, other than pursuant to clause
(4), (5), (6), (7), (8), (9), (11) or (17) of the definition of Permitted
Indebtedness, in each case that does not
(1) result in an increase in the aggregate principal amount of Indebtedness
of such Person as of the date of such proposed Refinancing, plus the
amount of any premium or penalty required to be paid under the terms of
the instrument governing such Indebtedness and plus the amount of
reasonable fees and expenses incurred by Tokheim in connection with
such Refinancing or
(2) create Indebtedness with
(A) a Weighted Average Life to Maturity that is less that the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or
(B) a final maturity earlier than the final maturity of the
Indebtedness being refinanced;
provided that
(x) if such Indebtedness being Refinanced is Indebtedness of Tokheim, then
such Refinancing Indebtedness shall be Indebtedness solely of Tokheim
and
(y) if such Indebtedness being Refinanced is the junior subordinated notes,
Warrant Repurchase Indebtedness or any Refinancing thereof, then such
Refinancing Indebtedness shall
. be subordinate or junior to the notes at least to the same extent
and in the same manner as the junior subordinated notes as in effect
on the issue date of the outstanding notes,
. provide for no cash interest payments prior to October 2004,
. have covenants no more adverse to Tokheim than the junior
subordinated notes and
. have an effective interest rate not greater than 14%;
provided, however, that prior to the incurrence of such Indebtedness, Moody's
Investors Service, Inc. will have affirmed that its rating of the notes will
not decrease by one or more gradations below its rating in effect on the issue
date of the outstanding notes.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to Tokheim or a Subsidiary of Tokheim of any property, whether owned by
Tokheim or any Subsidiary of Tokheim at the issue date of the outstanding notes
or later
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acquired, which has been or is to be sold or transferred by Tokheim or such
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Senior Debt" means, the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other Obligations with respect to, any Indebtedness of Tokheim, whether
outstanding on the issue date of the outstanding notes or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the
foregoing, "Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other monetary obligations of Tokheim or any
Subsidiary of Tokheim owing in respect of,
(x) the credit agreement and the ESOP credit agreements, including
obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities,
(y) all Interest Swap Obligations and
(z) Obligations under Currency Agreements,
in each case whether outstanding on the issue date of the outstanding notes or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include:
(1) any Indebtedness of Tokheim to a Subsidiary of Tokheim,
(2) Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of Tokheim or any Subsidiary of Tokheim, including,
without limitation, amounts owed for compensation,
(3) Indebtedness to trade creditors and other amounts incurred in
connection with obtaining goods, materials or services,
(4) Indebtedness represented by Disqualified Capital Stock,
(5) any liability for federal, state, local or other taxes owed or owing by
Tokheim,
(6) Indebtedness incurred in violation of the provisions set forth under
"Limitation on incurrence of additional indebtedness,"
(7) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without
recourse to Tokheim,
(8) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of Tokheim and
(9) The junior subordinated notes, any Warrant Repurchase Indebtedness or
any Refinancing of the junior subordinated notes or any Warrant
Repurchase Indebtedness.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(v) of
Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (a) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (b) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
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"Subsidiary Guarantee" shall mean any guarantee of the Notes by any Guarantor
pursuant to the Indentures.
"Traits" means "traites" (as defined under French law), accounts receivable
or invoices.
"Warrant Repurchase Indebtedness" means
(1) up to $20.0 million of Indebtedness incurred by Tokheim to repurchase
the warrants, or a pro rata portion of $20.0 million, if less than all
the warrants are repurchased, plus reasonable fees and expenses
incurred in connection therewith; provided, however that such
Indebtedness
(a) is subordinated to the notes at least to the same extent as the
junior subordinated notes,
(b) contains covenants no more adverse to Tokheim than the junior
subordinated notes,
(c) bears interest at an effective rate not to exceed 14% per annum,
which interest shall not be paid in cash prior to October 2004,
(d) contains no mandatory prepayment provisions and
(e) matures at least 6 months after the maturity of the notes, plus
(2) additional Indebtedness with the same terms incurred in payment of
interest thereon;
provided, however, that prior to the incurrence of such Indebtedness, Moody's
Investors Service, Inc. will have affirmed that its rating of the notes will
not decrease by one or more gradations below its rating in effect on the issue
date of the outstanding notes.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such Indebtedness
into
(b) the sum of the total or the products obtained by multiplying
. the amount of each then remaining installment, sinking fund, serial
maturity or other required payment of principal, including payment
at final maturity, in respect thereof, by
. the number of years, calculated to the nearest one-twelfth, which
will elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities, other than in the case of a
foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law, are
owned by such Person or any Wholly Owned Subsidiary of such Person.
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IMPORTANT UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain U.S. federal income tax consequences
of the purchase, ownership and disposition of the exchange notes as of the date
hereof. It deals only with exchange notes held as capital assets by initial
holders of the outstanding notes, and does not deal with special situations,
such as those of dealers in securities or currencies, financial institutions,
banks, tax-exempt organizations, insurance companies, holders that are
partnerships or other pass-through entities and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to "straddle,"
"conversion," "hedging" or "constructive sales" transactions. The discussion
below is based upon the Internal Revenue Code of 1986 (the "Code") and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified, possibly with
retroactive effect, so as to result in federal income tax consequences
different from those discussed below. This discussion is not binding on the IRS
or the courts. No ruling has been sought or will be sought from the IRS with
respect to the positions and issues discussed herein, and there can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the purchase, ownership or disposition of the Exchange Notes or
that any such position would not be sustained. PROSPECTIVE INVESTORS ARE URGED
TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF
PURCHASING, HOLDING AND DISPOSING OF EXCHANGE NOTES THAT MAY BE SPECIFIC TO
THEM, INCLUDING THE TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN
LAWS.
As used herein, the term "U.S. holder" means a beneficial owner of an
exchange note that is for United States federal income tax purposes
. a citizen or resident of the United States,
. a corporation created or organized under the laws of the United States
or any political subdivision thereof or therein,
. an estate the income of which is subject to U.S. federal income taxation
regardless of source, or
. a trust if both:
(a) A U.S. court is able to exercise primary supervision over the
administration of the trust, and
(b) one or more U.S. persons have the authority to control all
substantial decisions of the trust.
As used herein, the term "Non-U.S. holder" means a holder of an exchange note
that is not a U.S. holder.
U.S. holders
Interest
Interest on the exchange notes generally will be taxable to a U.S. holder as
ordinary interest income at the time accrued or received in accordance with the
U.S. holder's regular method of accounting for federal income tax purposes.
Under certain circumstances described above, Tokheim will be required to pay
additional interest on the outstanding notes if it fails to comply with certain
of its obligations under the registration rights agreements. See "Description
of the Exchange Notes--Registration rights; liquidated damages." Although not
certain, such additional amount should be taxable to a U.S. holder as ordinary
income at the time it accrues or is received in accordance with such holder's
regular method of accounting for federal income tax purposes. It is possible,
however, that the IRS may take a different position, in which case the timing
and the amount of income on the notes may be different.
A U.S. holder who uses the cash method of accounting for federal income tax
purposes and who receives interest on a euro exchange note in euros will be
required to include in income the U.S. dollar value of such Euros, determined
using the spot rate in effect on the date such payment is received, regardless
of whether the
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payment is in fact converted to U.S. dollars at that time. No exchange gain or
loss will be recognized by such holder if the euros are converted to U.S.
dollars on the date received. The U.S. federal income tax consequences of the
conversion of euros into U.S. dollars are described below. See "Exchange of
foreign currencies."
A U.S. holder who uses the accrual method of accounting for federal income
tax purposes, or who is otherwise required to accrue interest prior to receipt,
will be required to include in income the U.S. dollar value
of the amount of interest income accrued, or otherwise required to be taken
into account, with respect to a euro note in a taxable year. The U.S. dollar
value of such accrued income will be determined by translating such income at
the average rate of exchange for the relevant interest accrual period, or with
respect to an accrual period that spans two taxable years, at the average rate
for the portion of such accrual period within the taxable year. The average
rate of exchange for an interest accrual period, or portion thereof, is the
simple average of the exchange rates for each business day of such period, or
such other average that is reasonably derived and consistently applied. An
accrual basis U.S. holder may elect, however, to translate such accrued
interest income using the spot rate of exchange in effect on the last day of
the accrual period or, with respect to an accrual period that spans two taxable
years, using the spot rate of exchange in effect on the last day of the taxable
year. If the last day of an accrual period is within five business days of the
receipt of the accrued interest, a U.S. holder may translate such interest
using the spot rate of exchange in effect on the date of receipt. The above
election must be made in a statement filed with the U.S. holder's U.S. tax
return and will apply to other debt obligations held by the U.S. holder at the
beginning of the first taxable year in which the election applies or acquired
thereafter and may not be changed without the consent of the IRS. Whether or
not such election is made, a U.S. holder may recognize exchange gain or loss
(which will be treated as ordinary income or loss) with respect to accrued
interest income on the date such interest income is received. The amount of
ordinary income or loss recognized will equal the difference, if any, between
the U.S. dollar value of the euros received (determined using the spot rate in
effect on the date such payment is received) in respect of such interest
accrual period and the U.S. dollar value of the interest income that has
accrued during such interest accrual period (as determined above). No
additional exchange gain or loss will be recognized by such holder if the euros
are converted to U.S. dollars on the date received. The U.S. federal income tax
consequences of the conversion of euros into U.S. dollars are described below.
See "--Exchange of foreign currencies."
Exchange offer
The exchange of the outstanding notes for the exchange notes will not be
treated as an "exchange" for U.S. federal income tax purposes. Accordingly, a
U.S. holder will not recognize any taxable gain or loss on the exchange of
outstanding notes for exchange notes pursuant to the exchange offer, and a U.S.
holder will have the same adjusted tax basis and holding period in the exchange
notes as the U.S. holder had in the outstanding notes exchanged therefor.
Dispositions
Upon the sale, exchange, retirement or other disposition of an exchange note,
a U.S. holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the disposition (other than any
amounts attributable to accrued but unpaid interest income) and such holder's
adjusted tax basis in the exchange note. Such gain or loss generally will be
capital gain or loss, except with respect to gains or losses attributable to
changes in currency exchange rates, as described below. To the extent that the
amount realized represents accrued but unpaid interest, however, such amounts
must be taken into account as interest income, with exchange gain or loss
computed as described above. If a U.S. holder receives foreign currency on such
a sale, exchange or retirement, the amount realized will be based on the U.S.
dollar value of the foreign currency on the date of disposition assuming the
exchange notes are not traded on an established securities market.
If the euro exchange notes are traded on an established securities market,
there is a special rule for purchases and sales of euro exchange notes by a
cash basis taxpayer under which units of foreign currency paid or received are
translated into U.S. dollars at the spot rate on the settlement date of the
purchase or sale. In that case, no exchange gain or loss will result from
currency fluctuations between the trade date and the settlement
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of such a purchase or sale. In such event, an accrual basis taxpayer may elect
the same treatment required of cash basis taxpayers with respect to purchases
and sales of euro exchange notes, provided the election is applied
consistently. Such election cannot be changed without the consent of the IRS.
Gain or loss realized by a U.S. holder upon the sale, exchange or retirement
of an exchange note that is attributable to fluctuations in the rate of
exchange between the U.S. dollar and the euro will be ordinary income or loss
and generally will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the foreign currency principal amount of the
exchange note, determined on the date such payment is received or the exchange
note is disposed of, and the U.S. dollar value of the foreign currency
principal amount of the exchange note, determined on the date the U.S. holder
acquired the exchange note. Such foreign currency gain or loss will be
recognized only to the extent of the total gain or loss realized by the U.S.
Holder on the sale, exchange or retirement of the exchange note.
For certain non-corporate U.S. holders, including individuals, the rate of
taxation of capital gains will depend upon
. the holder's holding period in the capital asset, with a preferential
rate generally available for capital assets held for more than one year,
and
. the holder's marginal tax rate for ordinary income.
Exchange of foreign currencies
A U.S. holder will have a tax basis in any euros received as interest or on
the sale, exchange, retirement or other disposition of an exchange note equal
to their U.S. dollar value at the time the interest is received or at the time
payment is received in consideration of the sale, exchange or retirement. Any
gain or loss realized by a U.S. holder on a sale or other disposition of euros
will be ordinary income or loss.
Non-U.S. holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of an exchange note that is a Non-U.S.
holder.
Interest
Payments of interest on an exchange note to any Non-U.S. holder will
generally not be subject to U.S. federal income or withholding tax, provided
that (1) the holder is not (a) a direct or indirect owner (taking into account
certain attribution rules) of 10% or more of the total voting power of all
voting stock of Tokheim or (b) a controlled foreign corporation related to
Tokheim through stock ownership, (2) such interest payments are not effectively
connected with the conduct by the Non-U.S. holder of a trade or business within
the United States and (3) Tokheim or its paying agent receives (a) from the
Non-U.S. holder, a properly completed Form W-8, or substitute Form W-8, under
penalties of perjury which provides the Non-U.S. holder's name and address and
certifies that the Non-U.S. holder of the exchange note is a Non-U.S. holder or
(b) from a security clearing organization, bank or other financial institution
that holds the exchange notes in the ordinary course of its trade or business
(a "financial institution") on behalf of the Non-U.S. holder, certification
under penalties of perjury that such a Form W-8, or substitute Form W-8, has
been received by it, or by another such financial institution, from the Non-
U.S. holder, and a copy of the Form W-8, (or substitute Form W-8, is furnished
to the payor.
A Non-U.S. holder that does not qualify for exemption from withholding under
the preceding paragraph generally will be subject to withholding of U.S.
federal income tax at the rate of 30%, or lower applicable treaty rate, on
payments of interest on the Exchange Notes.
If the payments of interest on an exchange note are effectively connected
with the conduct by a Non-U.S. holder of a trade or business in the United
States, such payments will be subject to U.S. federal income tax on a net basis
at the rates applicable to United States persons generally, and, with respect
to corporate holders,
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may also be subject to a 30% branch profits tax. If payments are subject to
U.S. federal income tax on a net basis in accordance with the rules described
in the preceding sentence, such payments will not be subject to United States
withholding tax so long as the holder provides Tokheim or its paying agent with
a properly executed Form 4224.
Non-U.S. holders should consult any applicable income tax treaties, which may
provide for a lower rate of withholding tax, exemption from or reduction of
branch profits tax, or other rules different from those described above.
Dispositions
Any gain realized by a Non-U.S. holder on the sale, exchange, retirement or
other disposition of an exchange note generally will not be subject to U.S.
federal income or withholding tax, unless
. such gain is effectively connected with the conduct by such Non-U.S.
holder of a trade or business within the United States,
. the Non-U.S. holder is an individual who is present in the United States
for 183 days or more in the taxable year of the disposition and other
conditions are satisfied, or
. the Non-U.S. holder is subject to tax pursuant to the provisions of U.S.
tax law applicable to certain U.S. expatriates.
Federal estate tax
In general, exchange notes held, or treated as held, by an individual who is
a Non-U.S. holder at the time of his or her death will not be subject to U.S.
federal estate tax provided that
. the individual does not actually or constructively own 10% or more of
the total voting power of all voting stock of Tokheim and
. income on the exchange notes was not effectively connected with the
conduct by such Non-U.S. holder of a trade or business within the United
States.
Information reporting and backup withholding
Payments with respect to the exchange notes and the proceeds upon the sale or
other disposition of the exchange notes may be subject to information reporting
and possibly U.S. backup withholding at a 31% rate. Backup withholding will not
apply to a U.S. holder who furnishes its correct taxpayer identification number
and provides other certification. Backup withholding and information reporting
will not apply to payments made by Tokheim in respect to the exchange notes to
a Non-U.S. holder, if the holder certifies, under penalties of perjury, that it
is not a U.S. person and provides its name and address (provided that neither
Tokheim nor its paying agent has actual knowledge that the holder is a U.S.
person) or the Non-U.S. holder otherwise establishes an exemption. Copies of
information returns may be made available, under the provisions of a specific
treaty or agreement, to the tax authorities of the country in which the Non-
U.S. holder resides.
Payment of proceeds from the disposition of exchange notes to or through the
United States office of any broker, U.S. or foreign, will be subject to
information reporting and backup withholding unless the owner certifies as to
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of an
exchange note to or through a non-U.S. office of a non-U.S. broker that is not
a U.S. related person generally will not be subject to information reporting or
backup withholding. For this purpose, a "U.S. related person" is (a) a
"controlled foreign corporation" for U.S. federal income tax purposes or (b) a
foreign person 50% or more of whose gross income from all sources for the three
year period ending with the close of its taxable year preceding the
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payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
U.S. trade or business. In the case of the payment of proceeds from the
disposition of exchange notes to or through a non-U.S. office of a broker that
is a U.S. person or a U.S. related person, the regulations require information
reporting, but not backup withholding, on the payment unless the broker has
documentary evidence in its files that the owner is not a U.S. person and the
broker has no knowledge to the contrary.
Amounts withheld under the backup withholding rules do not constitute a
separate United States federal income tax. Rather, any amounts withheld under
the backup withholding rules will be allowed as a refund or a credit against a
holder's federal income tax liability, if any, provided that the requisite
procedures are followed.
The Treasury Department recently promulgated final regulations regarding the
withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify certain standards governing the information
upon which a withholding agent may rely. The final regulations are generally
effective for payments made after December 31, 1999, subject to certain
transition rules. Non-U.S. holders should consult their own tax advisors with
respect to the impact, if any, of the final regulations.
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PLAN OF DISTRIBUTION
The exchange offer is not being made to, nor will Tokheim accept surrenders
of or exchange from, holders of outstanding notes in any jurisdiction in which
the exchange offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction.
Exchange notes may not be offered or sold directly or indirectly to the
public in the republic of France. Neither this document, which has not been
submitted for the approval of the COMMISSION DES OPERATIONS DE BOURSE, nor any
offering material relating to the exchange notes may be released or issued to
the public in connection with any such offer.
Exchange notes have not been and will not be qualified for sale under the
securities laws of Canada or any province or territory of Canada. Exchange
notes are not being offered and may not be offered or sold, directly or
indirectly, in Canada or to or for the account of any resident of Canada in
contravention of the securities laws of Canada or any province or territory
thereof. This prospectus is not, and under no circumstances is to be construed
as, an advertisement or a public offering in Canada of the securities described
in this prospectus. Canadian residents should consult their own attorney as to
restrictions on resales of exchange notes.
Exchange notes may not be offered in the Netherlands or elsewhere to the
account of any person or entity other than to persons who or entities which
trade or invest in securities in the conduct of a profession or business with
the meaning of the Securities Transactions Supervision Act of 1995 (WET
TOEZICHT EFFECTENVERKEER 1995) and its implementing regulations (which include
banks, investment banks, brokers, dealers, pension funds, insurance companies,
securities firms, investment institutions, other institutional investors, and
other parties including inter alia treasuries and finance companies of large
enterprises which regularly, as an ancillary activity, trade or invest in
securities).
Exchange notes will only be available for exchange in the United Kingdom
pursuant to the exchange offer by persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United Kingdom for
purposes of the Public Offers of Securities Regulations 1995.
No document issued in connection with the exchange offer, including this
prospectus, may be passed on to any person in the United Kingdom unless that
person is as described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended), or is a
person to whom the document may otherwise lawfully be issued or passed on.
Accordingly, by accepting delivery of this prospectus, the recipient warrants
and acknowledges that it is such a person.
In reliance on interpretations of the staff of the SEC set forth in no-action
letters issued to third parties in similar transactions, Tokheim believes that
the exchange notes issued in the exchange offer in exchange for the outstanding
notes may be offered for resale, resold and otherwise transferred by holders
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that the exchange notes are acquired in the
ordinary course of such holders' business and the holders are not engaged in,
and do not intend to engage in, and have no arrangement or understanding with
any person to participate in, a distribution of Exchange Notes. This position
does not apply to any holder that is
(1) an "affiliate" of Tokheim within the meaning of Rule 406 under the
Securities Act,
(2) a broker-dealer who acquired notes directly from Tokheim or
(3) broker-dealers who acquired notes as a result of market-making or other
trading activities.
Any broker-dealers ("Participating broker-dealers") receiving exchange notes in
the exchange offer are subject to a prospectus delivery requirement with
respect to resales of the exchange notes. To date, the SEC has taken the
position that participating broker-dealers may fulfill their prospectus
delivery requirements with respect to
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transactions involving an exchange of securities such as the exchange pursuant
to the exchange offer, other than a resale of an unsold allotment from the sale
of the outstanding notes to the initial purchasers, with this prospectus.
Each broker-dealer receiving exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in any resale
of the exchange notes. Participating broker-dealers may use this prospectus in
reselling exchange notes, if the outstanding notes were acquired for their own
accounts as a result of market-making activities or other trading activities.
Tokheim has agreed that a Participating broker-dealer may use this prospectus
in reselling exchange notes for a period ending 180 days after the expiration
date of the exchange offer. A Participating broker-dealer intending to use this
prospectus in the resale of exchange notes must notify Tokheim, on or before
the expiration date, that it is a Participating broker-dealer. This notice may
be given in the space provided for in the letter of transmittal or may be
delivered to the appropriate exchange agent. Tokheim has agreed that, for a
period of 180 days after the expiration date, it will make this prospectus, and
any amendment or supplement to this prospectus, available to any broker-dealer
that requests these documents in the letter of transmittal.
Tokheim will not receive any cash proceeds from the exchange notes. Broker-
dealers acquiring exchange notes for their own accounts may sell the notes in
one or more transactions in the over-the-counter market, in negotiated
transactions, through writing options on the exchange notes or a combination of
such methods. Any resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of exchange notes.
Any broker-dealer reselling exchange notes that it received in the exchange
offer and any broker or dealer that participates in a distribution of exchange
notes may be deemed to be an "underwriter" within the meaning of the Securities
Act. Any profit on any resale of exchange notes and any commissions or
concessions received by any persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver any by delivering a prospectus, a broker-
dealer will not admit that it is an "underwriter" within the meaning of the
Securities Act.
LEGAL MATTERS
The validity of the exchange notes offered hereby will be passed upon for
Tokheim by Norman L. Roelke, Esq., Vice President, Secretary and General
Counsel of Tokheim.
INDEPENDENT ACCOUNTANTS
The financial statements of Tokheim Corporation and Subsidiaries as of
November 30, 1998 and 1997 and for each of the three years in the period ended
November 30, 1998, included in this prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given the authority of said firm as experts in auditing and accounting.
The financial statements of Retail Petroleum Systems as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997,
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers, independent accountants, given the authority of said
firm as experts in auditing and accounting.
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GENERAL LISTING INFORMATION
Listing
The Certified Certificate of Incorporation of Tokheim and the legal notice
relating to the issue of the exchange notes will be deposited prior to any
listing on the Luxembourg Stock Exchange with the Registrar of the District
Court in Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a
Luxembourg), where such documents are available for inspection and where copies
thereof can be obtained upon request. As long as the exchange notes are listed
on the Luxembourg Stock Exchange, an agent for making payments on, and
transfers of, exchange notes will be maintained in Luxembourg.
Independent accountants
The consolidated accounts of Tokheim Corporation and Subsidiaries for the
three years ended November 30, 1998 have been prepared in accordance with U.S.
GAAP and have been audited by PricewaterhouseCoopers LLP in accordance with
United States generally accepted auditing standards. The unaudited consolidated
interim accounts for the three months ended February 28, 1998 and 1999 were
prepared in accordance with U.S. GAAP. PricewaterhouseCoopers LLP has given and
not withdrawn their written consent to the issue of this prospectus with the
inclusion in it of their report in the form and context in which it is
included.
The consolidated accounts of Retail Petroleum Systems for the three years
ended December 31, 1997 have been prepared in accordance with United States
generally accepted accounting principles and have been audited by
PricewaterhouseCoopers in accordance with United States generally accepted
auditing standards. The unaudited consolidated interim accounts for the nine
months ended September 30, 1997 and 1998 were prepared in accordance with U.S.
GAAP. PricewaterhouseCoopers has given and not withdrawn their written consent
to the issue of this prospectus with the inclusion in it of their report in the
form and context in which it is included.
Documents for inspection
For so long as the exchange notes are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require, copies of the following documents
may be inspected at the specified office of the paying agent and registrar in
Luxembourg.
. Certified Certificate of Incorporation of Tokheim; and
. the indentures relating to the exchange notes (which include the forms
of the exchange note certificates).
In addition, copies of the most recent consolidated financial statements of
Tokheim for the preceding financial year, and any interim quarterly financial
statements published by Tokheim, will be available at the specified office of
the paying agent in Luxembourg for so long as the notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require. Tokheim
publishes only consolidated financial statements.
Notices
All notices shall be deemed to have been given upon (a) the mailing by first
class mail, postage prepaid, of such notices to holders of the exchange notes
at their registered addresses as recorded in the register; and (b) for so long
as the exchange notes are listed on the Luxembourg Stock Exchange and it is
required by the rules of the Luxembourg Stock Exchange, publication of such
notice to the holders of the exchange notes in English in a leading newspaper
having general circulation in Luxembourg, which is expected to be the
Luxemburger Wort, or, if such publication is not practicable, in one other
leading English language daily newspaper with general circulation in Europe,
such newspaper being published on each business day in morning editions,
whether or not it shall be published in Saturday, Sunday or holiday editions.
125
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments, supplements, schedules and exhibits to the
registration statement, referred to as the registration statement) which we
have filed with the Commission under the Securities Act, with respect to the
notes offered in this prospectus. This prospectus does not contain all the
information which is in the registration statement. Certain parts of the
registration statement are omitted as allowed by the rules and regulations of
the Commission. We refer you to the registration statement for further
information about our company and the securities offered in this prospectus.
Statements contained in this prospectus concerning the provisions of documents
are not necessarily summaries of the material provisions of those documents. If
we have filed any other document as an exhibit to the registration statement,
you should read the exhibit for a more complete understanding of the document
or matter.
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any documents we file at
the Commission's public reference rooms at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, New York, New York
10048. Please call the Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Commission filings are also available to the
public at the SEC's web site at http://www.sec.gov. In addition, reports, proxy
statements and other information about Tokheim (symbol: TOK) can be reviewed
and copied at the offices of the New York Stock Exchange, on which our common
stock is listed, at 20 Broad Street, New York, New York 10005. The indentures
require us to file reports and other information required to be filed under the
Exchange Act with the Commission and provide such information to you, upon
request, regardless of whether our company is subject to the reporting
requirements of the Exchange Act.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, meaning that we can disclose important information by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information filed later with the Commission
will update and supersede the information then on file. We incorporate by
reference our Commission filings listed below (File No. 001-06018) and any
other documents we file with the Commission under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act until the exchange offer is completed.
1. Annual Report on Form 10-K for the fiscal year ended November 30, 1998
(filed March 1, 1999);
2. Current Report on Form 8-K/A filed December 14, 1998; and
3. Quarterly Report on Form 10-Q for the quarter ended February 28, 1999
(filed April 14, 1999).
On the request of any person to whom a copy of this prospectus is delivered,
we will provide, without charge, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference. Written requests for
such copies should be directed to Tokheim Corporation, 10501 Corporate Drive,
Fort Wayne, Indiana 46845, telephone number (219) 470-4600 Attention: Executive
Vice President, Finance and Administration and Chief Financial Officer. For so
long as the exchange notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, our quarterly and annual filings will be
available free of charge in Luxembourg.
You should rely only on the information incorporated by reference or provided
in this prospectus or any prospectus supplement. We have not authorized anyone
to provide you with different or additional information. We are not making an
offer to sell any notes in any state or country where the exchange offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of this document.
126
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Financial Statements of Tokheim Corporation and Subsidiaries
Consolidated Condensed Statement of Earnings for the three months ended
February 28, 1999 and 1998 (unaudited)................................. F-2
Consolidated Condensed Balance Sheet as of February 28, 1999 (unaudited)
and November 30, 1998.................................................. F-3
Consolidated Condensed Statement of Cash Flows for the three months
ended February 28, 1999 and 1998 (unaudited)........................... F-4
Notes to the Consolidated Financial Statements.......................... F-5
Report of Independent Accountants....................................... F-14
Consolidated Statement of Earnings for the years ended November 30,
1998, 1997 and 1996.................................................... F-15
Consolidated Statement of Cash Flows for the years ended November 30,
1998, 1997 and 1996.................................................... F-16
Consolidated Balance Sheet as of November 30, 1998 and 1997............. F-17
Consolidated Statement of Shareholders' Equity for the years ended
November 30, 1998, 1997 and 1996....................................... F-19
Notes to Consolidated Financial Statements.............................. F-20
Combined Financial Statements of Retail Petroleum Systems
Combined Condensed Balance Sheets as of September 30, 1998 (unaudited)
and December 31, 1997.................................................. F-58
Unaudited Combined Condensed Statements of Income for the nine months
ended September 30, 1998 and 1997...................................... F-59
Unaudited Combined Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997............................................ F-60
Notes to the Combined Financial Statements (unaudited).................. F-61
Report of Independent Accountants....................................... F-63
Combined Statements of Income for the years ended December 31, 1997,
1996 and 1995.......................................................... F-64
Combined Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.......................................................... F-65
Combined Balance Sheets as of December 31, 1997 and 1996................ F-66
Combined Statements of Equity for the years ended December 31, 1997,
1996 and 1995.......................................................... F-67
Notes to Financial Statements........................................... F-68
</TABLE>
F-1
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Amounts in thousands except amounts per share)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
February 28, February 28,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales................... $166,193 $90,852
Cost of sales, exclusive of
items listed below......... 133,297 67,074
Selling, general, and
administrative expenses.... 25,767 16,257
Depreciation and
amortization............... 6,892 2,500
Merger and acquisition costs
and other unusual items.... 1,123 5,987
-------- -------
Operating loss.............. (886) (966)
-------- -------
Interest expense, net....... 12,307 4,011
Foreign currency loss....... 1,438 35
Minority interest........... 94 73
Other (income), net......... (154) 221
-------- -------
Loss before income taxes.... (14,571) (5,306)
Income taxes................ (393) 300
-------- -------
Loss before extraordinary
item....................... (14,178) (5,606)
Extraordinary loss on debt
extinguishment............. (6,249) --
-------- -------
Net loss.................... $(20,427) $(5,606)
======== =======
Preferred stock dividends... (374) (374)
Loss applicable to common
stock.................... $(20,801) $(5,980)
Loss per common share:
Basic:
Before extraordinary
loss................... $ (1.15) $ (0.72)
Extraordinary loss on
debt extinguishment.... (0.49) --
-------- -------
Net loss................ $ (1.64) $ (0.72)
======== =======
Weighted average shares
outstanding............ 12,662 8,250
Diluted:
Before extraordinary
loss................... $ (1.15) $ (0.72)
Extraordinary loss on
debt extinguishment.... (0.49) --
-------- -------
Net loss................ $ (1.64) $ (0.72)
======== =======
Weighted average shares
outstanding............ 12,662 8,250
</TABLE>
F-2
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
February 28, November 30,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.......................... $ 34,720 $ 26,801
Accounts receivables, net.......................... 146,946 172,693
Inventories:
Raw materials and supplies....................... 67,062 70,545
Work in process.................................. 22,557 27,418
Finished goods................................... 22,816 25,070
-------- --------
112,435 123,033
Other current assets............................... 21,132 19,139
-------- --------
Total current assets........................... 315,233 341,666
Property, plant, and equipment, net.................. 75,874 77,905
Other tangible assets................................ 3,746 4,873
Goodwill, net........................................ 300,489 324,113
Other non-current assets and deferred charges, net... 29,564 28,085
-------- --------
Total assets................................... $724,906 $776,642
======== ========
Liabilities and Shareholders' Equity
Current maturities of long-term debt............... $ 1,911 $ 2,110
Notes payable to banks............................. 383 410
Cash overdrafts.................................... 15,012 15,064
Accounts payable................................... 74,908 95,322
Accrued expenses................................... 134,151 136,164
-------- --------
Total current liabilities...................... 226,365 249,070
Notes payable, bank credit agreement................. 185,146 182,145
Senior notes......................................... -- 22,500
Senior subordinated notes............................ 205,690 170,000
Junior subordinated payment in kind note............. 41,200 40,000
Other long-term debt, less current maturities........ 3,570 4,115
Guaranteed Employees' Stock Ownership Plan
obligation.......................................... 6,347 6,987
Post-retirement benefit liability.................... 14,799 14,418
Minimum pension liability............................ 3,135 3,135
Other long-term liabilities.......................... 7,141 7,511
-------- --------
693,393 699,881
-------- --------
Redeemable convertible preferred stock............... 24,000 24,000
Guaranteed Employees' Stock Ownership Plan
obligation.......................................... (6,347) (6,987)
Treasury stock, at cost.............................. (4,712) (4,883)
-------- --------
12,941 12,130
-------- --------
Common stock......................................... 90,354 90,354
Common stock warrants................................ 20,000 20,000
Minimum pension liability............................ (3,135) (3,135)
Foreign currency translation adjustments............. (47,855) (22,598)
Accumulated deficit.................................. (40,096) (19,295)
-------- --------
19,268 65,326
Less treasury stock, at cost......................... (695) (695)
-------- --------
18,572 64,631
-------- --------
Total liabilities and shareholders' equity..... $724,906 $776,642
======== ========
</TABLE>
F-3
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
February 28, February 28,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $ (20,427) $ (5,606)
Adjustments to reconcile net loss to cash used in
operations:
Write-off of in process research and development. -- 5,879
Payment in kind interest......................... 1,200 --
Extraordinary loss on debt extinguishment........ 6,249 --
Depreciation and amortization.................... 6,892 2,500
Gain on sale of equipment........................ (18) --
Deferred income taxes............................ (135) (183)
Changes in assets and liabilities:
Accounts receivables, net........................ 20,529 11,281
Inventories...................................... 4,247 (4,192)
Other current assets............................. (2,774) (451)
Accounts payable................................. (17,921) (6,707)
Accrued expenses................................. 1,222 (8,340)
Other............................................ (372) 478
--------- --------
Net cash used in operations.................... (1,308) (5,341)
--------- --------
Cash flows from investing activities:
Acquisition, net of cash acquired.................. -- (10,641)
Plant and equipment additions...................... (4,996) (1,885)
--------- --------
Net cash used in investing activities.......... (4,996) (12,526)
--------- --------
Cash flows from financing activities:
Redemption of senior notes......................... (22,500) --
Proceeds from senior subordinated notes............ 209,647 --
Redemption of senior subordinated notes............ (170,000) --
Decrease in other debt............................. (438) (122)
Increase in notes payable, banks................... 3,001 20,644
Increase (decrease) in cash overdraft.............. 463 (504)
Debt issuance costs................................ (6,084) --
Proceeds from issuance of common stock............. -- 158
Premiums paid on debt redemption................... (555) --
Treasury stock, net................................ 170 4
Preferred stock dividends.......................... (374) (374)
--------- --------
Net cash provided from financing activities.... 13,330 19,806
--------- --------
Effect of translation adjustments on cash............ 893 (250)
Cash and cash equivalents:
Increase in cash................................... 7,919 1,689
Beginning of year.................................. 26,801 6,438
--------- --------
End of period...................................... $ 34,720 $ 8,127
========= ========
</TABLE>
F-4
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The interim financial statements are unaudited and reflect all adjustments
(consisting solely of normal recurring adjustments) that, in the opinion of
management, are necessary for a fair statement of the interim periods
presented. This report includes information in a condensed format and should be
read in conjunction with the audited consolidated financial statements included
in Tokheim Corporation's (the "Company") Annual Report to Shareholders for the
year ended November 30, 1998. The results of operations for the three months
ended February 28, 1999 are not necessarily indicative of the results to be
expected for the full year or any other interim period.
Amounts for interim periods are unaudited. Amounts for the year ended
November 30, 1998 were derived from audited consolidated financial statements
included in the 1998 Annual Report to Shareholders.
Certain prior period amounts in these financial statements have been
reclassified to conform with current year presentation.
New Accounting Pronouncements
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," and SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits," are effective for the year ending November 30,
1999. In the opinion of management, these statements will not have a material
impact on the Company's financial position, results of operations, or cash
flows since they are "disclosure only" standards. The Company is currently
evaluating the impact that SFAS No. 131 will have on its current segment
groupings. SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued in June 1998 and is effective for the year ending
November 30, 2000. SFAS No. 133 establishes a new model for accounting for
derivatives in the balance sheet as either assets or liabilities and measures
them at fair value. Certain disclosures concerning the designation and
assessment of hedging relationships are also required. Management has not yet
determined the impact of this statement on the Company's consolidated financial
statements.
The Company will adopt SFAS No. 130, "Reporting Comprehensive Income," for
the year ending November 30, 1999 by including a separate statement of
comprehensive income as part of the consolidated financial statements. Total
comprehensive loss for the three months ended February 28, 1999 and 1998 was
$45.7 million and $7.9 million, respectively. The other components of
comprehensive loss in addition to net loss for these three month periods
consist of foreign currency translation adjustments and minimum pension
liability.
Senior Subordinated Notes
On January 29, 1999, the Company issued $123.0 million aggregate principal
amount of its 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes")
and Euro 75.0 million ($87.0 million equivalent) aggregate principal amount of
its 11.375% Senior Subordinated Notes due 2008 (the "Euro Notes," and together
with the Dollar Notes, the "Notes") in a private placement pursuant to Rule
144A and Regulation S (the "Offering"). The Notes will mature on August 1,
2008, and interest is payable semi-annually on February 1 and August 1 of each
year, commencing August 1, 1999. The Company used the net proceeds from the
Offering to redeem in whole, the $170.0 million in 12.0% senior subordinated
notes due January 29, 1999 (the "Senior Subordinated Seller Notes") and the
$22.5 million of senior notes due 2005 (the "Senior Notes"). In addition, the
Company used approximately $9.1 million of the net proceeds to reduce
borrowings under the revolving credit facility under the Company's new bank
credit agreement (the "New Credit Agreement") and to permanently reduce the
bank working capital commitment from $120.0 million to $110.0 million.
During the first quarter of 1999, the Company incurred an extraordinary loss
on debt extinguishment of approximately $6.2 million in connection with the
refinancing of the Senior Notes and the Senior Subordinated Seller Notes. This
amount consists of $0.5 million of premiums paid on the redemption of the
Senior Notes and approximately $5.7 million of unamortized deferred issuance
costs that were written off.
F-5
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Each of the Dollar Notes and the Euro Notes will be redeemable, at the
Company's option, in whole at any time, or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................... 105.688%
2005........................................................... 103.792%
2006........................................................... 101.896%
2007 and thereafter............................................ 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings
At any time, or from time to time, on or prior to February 1, 2002, the
Company may, at its option, use the net cash proceeds of one or more public
equity offerings to redeem up to 35% of the original principal amount of the
Dollar Notes issued in the Offering and up to 35% of the original principal
amount of the Euro Notes issued in the Offering, each at a redemption price
equal to 111.375% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of redemption; provided that at least 55%
of the original principal amount of the Dollar Notes issued in the Offering or
the Euro Notes issued in the Offering, as the case may be, remains outstanding
immediately after any such redemption and the Company shall make such
redemption not more than 120 days after the consummation of any such public
equity offering.
The Notes are unsecured and subordinated to all of the Company's existing and
future senior debt, including its obligations under the New Credit Agreement.
All of the Company's current and future U.S. subsidiaries will guarantee the
Notes with guarantees that will be unsecured and subordinated to senior debt of
subsidiaries. The indentures under which the Notes were issued contain
covenants limiting the Company's ability to, among other things, incur
additional debt; pay dividends on capital stock, repurchase capital stock or
make certain other restricted payments; make certain investments; create liens
on its assets to secure debt; enter into transactions with affiliates; merge or
consolidate with another company; and transfer and sell assets.
The Company and the subsidiary guarantors have entered into a Registration
Rights Agreement pertaining to the Dollar Notes and another Registration Rights
Agreement pertaining to the Euro Notes (together, the "Registration Rights
Agreements"). Per the Registration Rights Agreements the Company will, at its
own cost, (i) within 90 days after the issue date of the Notes, file a
registration statement on the appropriate registration form (the "Exchange
Offer Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to an exchange offer (the "Exchange Offer") to
exchange the Euro Notes and Dollar Notes for new notes (the "Exchange Notes")
which will have terms substantially identical in all material respects to the
Dollar Notes or the Euro Notes, as the case may be, except that the Exchange
Notes will not contain terms with respect to transfer restrictions or
liquidated damages, (ii) use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
150 days after the issue date of the Notes and (iii) use its best efforts to
consummate the Exchange Offer within 195 days after the issue date of the
Notes. Upon the Exchange Offer Registration Statement being declared effective,
the Company will offer the Exchange Notes in exchange for surrender of the Euro
Notes and the Dollar Notes.
Although the Company intends to file the registration statement described
above, there can be no assurance that such registration statement will be
filed, or, if filed, that it will become effective. If the Company fails to
comply with the above provisions or if such registration statement fails to
become effective, then, as liquidated damages, additional interest (the
"Additional Interest") shall become payable with respect to the Euro Notes or
the Dollar Notes, as applicable, at an increasing rate of 0.5% for every ninety
days that the Company fails to register such notes.
F-6
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements
In connection with the Acquisition and as part of the subsequent financing,
the Company issued and sold $123,000 of 11.375% US dollar-denominated senior
subordinated notes and (Euro)75,000 of 11.375% Euro denominated senior
subordinated notes (together the "Outstanding Notes") in a private placement
pursuant to Rule 144A and Regulation S. The Outstanding Notes are, and the
Exchange Notes which will be issued in this Exchange Offer will be, general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness of the Company, and guaranteed on a
full, unconditional, joint and several basis by the Company's wholly-owned
domestic subsidiaries.
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements as of February 28, 1999
and November 30, 1998 and for the three months ended February 28, 1999 and
1998, of (a) Tokheim Corporation, the parent; (b) the guarantor
subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a
consolidated basis, and
(2) Elimination entries necessary to consolidate Tokheim Corporation, the
parent, with guarantor and nonguarantor subsidiaries.
Investments in subsidiaries are accounted for by the parent using the equity
method of accounting. The guarantor and nonguarantor subsidiaries are presented
on a combined basis. The principal elimination entries eliminate investments in
subsidiaries and intercompany balances and transactions.
Separate financial statements for the guarantor subsidiaries and the
nonguarantor subsidiaries are not presented because management believes that
such financial statements would not be meaningful to investors.
F-7
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
For the three months ended February 28, 1999
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Net sales............... $ 27,546 $ 31,235 $111,067 $(3,655) $166,193
Cost of sales, exclusive
of items listed below.. 22,335 23,741 90,876 (3,655) 133,297
Selling, general, and
administrative
expenses............... 6,018 6,106 13,643 -- 25,767
Depreciation and
amortization........... 1,268 1,097 4,527 -- 6,892
Merger and acquisition
costs and other unusual
items.................. -- 106 1,017 -- 1,123
-------- -------- -------- ------- --------
Operating profit (loss). (2,075) 185 1,004 -- (886)
Interest expense, net... 6,844 (4,553) 10,016 -- 12,307
Foreign currency loss... 194 620 624 -- 1,438
Equity in (earnings)
loss of consolidated
subsidiaries........... 6,126 -- -- (6,126) --
Minority interest....... -- -- 94 -- 94
Other (income) expense,
net ................... (1,079) (2,633) 3,558 -- (154)
-------- -------- -------- ------- --------
Earnings (loss) before
income taxes........... (14,160) 6,751 (13,288) 6,126 (14,571)
Income taxes............ 18 (363) (48) -- (393)
-------- -------- -------- ------- --------
Earnings (loss) before
extraordinary item..... (14,178) 7,114 (13,240) 6,126 (14,178)
Extraordinary loss on
debt extinguishment.... (6,249) -- -- -- (6,249)
-------- -------- -------- ------- --------
Net earnings (loss)..... $(20,427) $ 7,114 $(13,240) $ 6,126 $(20,427)
======== ======== ======== ======= ========
</TABLE>
F-8
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
For the three months ended February 28, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
------- ------------ ------------ ------------ ------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Net sales............... $33,850 $16,312 $48,632 $ (7,942) $90,852
Cost of sales, exclusive
of items listed below.. 25,664 11,337 38,015 (7,942) 67,074
Selling, general, and
administrative
expenses............... 7,229 2,247 6,781 -- 16,257
Depreciation and
amortization........... 938 198 1,364 -- 2,500
Merger and acquisition
costs and other unusual
items.................. 5,879 -- 108 -- 5,987
------- ------- ------- -------- -------
Operating profit (loss). (5,860) 2,530 2,364 -- (966)
Interest expense, net... 1,335 6 2,670 -- 4,011
Foreign currency (gain)
loss................... -- (51) 86 -- 35
Equity in (earnings)
loss of consolidated
subsidiaries........... 663 -- -- (663) --
Minority interest....... -- -- 73 -- 73
Other (income) expense,
net ................... (2,281) 447 2,055 -- 221
------- ------- ------- -------- -------
Earnings (loss) before
income taxes........... (5,577) 2,128 (2,520) 663 (5,306)
Income taxes............ 29 101 170 -- 300
------- ------- ------- -------- -------
Earnings (loss) before
extraordinary item..... (5,606) 2,027 (2,690) 663 (5,606)
Extraordinary loss on
debt extinguishment.... -- -- -- -- --
------- ------- ------- -------- -------
Net earnings (loss)..... $(5,606) $ 2,027 $(2,690) $ 663 $(5,606)
======= ======= ======= ======== =======
</TABLE>
F-9
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the three months ended February 28, 1999
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided from
(used in) operations. $ (7,330) $ 1,576 $(2,078) $6,524 $ (1,308)
Cash flows from
investing activities:
Plant and equipment
additions............ (2,521) (746) (1,729) -- (4,996)
Investments in and
advances to
subsidiaries, net.... (3,409) 4,418 5,515 (6,524) --
-------- ------- ------- ------ --------
Net cash provided
from (used in)
investing
activities......... (5,930) 3,672 3,786 (6,524) (4,996)
Cash flows from
financing activities:
Redemption of senior
notes................ (22,500) -- -- -- (22,500)
Proceeds from issuance
of senior
subordinated notes... 39,647 -- -- -- 39,647
Decrease in term debt. -- -- (438) -- (438)
Increase in notes
payable, banks....... 3,001 -- -- -- 3,001
Increase (decrease) in
cash overdraft....... (131) 229 365 -- 463
Debt issuance costs... (6,084) -- -- -- (6,084)
Premiums paid on debt
extinguishment....... (555) -- -- -- (555)
Treasury stock, net... 170 -- -- -- 170
Preferred stock
dividends............ (374) -- -- -- (374)
-------- ------- ------- ------ --------
Net cash provided
from (used in)
financing
activities......... 13,174 229 (73) -- 13,330
Effect of translation
adjustments on cash.... -- (7,955) 8,848 -- 893
-------- ------- ------- ------ --------
Cash and cash
equivalents:
Increase (decrease) in
cash................. (86) (2,478) 10,483 -- 7,919
Beginning of year..... 849 5,381 20,571 -- 26,801
-------- ------- ------- ------ --------
End of period......... $ 763 $ 2,903 $31,054 $ -- $ 34,720
======== ======= ======= ====== ========
</TABLE>
F-10
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the three months ended February 28, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
(Amounts In thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided
from (used in)
operations.......... $ (8,027) $1,919 $1,291 $ (524) $ (5,341)
Cash flows from
investing activities:
Acquisition, net of
cash acquired....... (10,641) -- -- -- (10,641)
Plant and equipment
additions........... (819) (537) (529) -- (1,885)
Investments in and
advances to
subsidiaries, net... (772) -- 248 524 --
-------- ------ ------ ------ --------
Net cash provided
from (used in)
investing
activities........ (12,232) (537) (281) 524 (12,526)
Cash flows from
financing activities:
Decrease in term
debt................ (13) -- (109) -- (122)
Increase in notes
payable, banks...... 19,000 -- 1,644 -- 20,644
Increase (decrease)
in cash overdraft... 702 26 (1,232) -- (504)
Proceeds from
issuance of common
stock............... 158 -- -- -- 158
Treasury stock, net.. 4 -- -- -- 4
Preferred stock
dividends........... (374) -- -- -- (374)
-------- ------ ------ ------ --------
Net cash provided
from financing
activities........ 19,477 26 303 -- 19,806
Effect of translation
adjustments on cash... -- 320 (570) -- (250)
-------- ------ ------ ------ --------
Cash and cash
equivalents:
Increase (decrease)
in cash............. (782) 1,728 743 -- 1,689
Beginning of year.... 2,764 1,170 2,504 -- 6,438
-------- ------ ------ ------ --------
End of period........ $ 1,982 $2,898 $3,247 $ -- $ 8,127
======== ====== ====== ====== ========
</TABLE>
F-11
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED BALANCE SHEET
As of February 28, 1999
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.......... $ 763 $ 2,903 $ 31,054 $ -- $ 34,720
Accounts receivables,
net.................. 60,175 62,415 106,772 (82,416) 146,946
Inventories, net...... 16,452 15,382 80,717 (116) 112,435
Other current assets.. 1,562 1,478 18,092 -- 21,132
-------- -------- -------- ---------- --------
Total current assets.. 78,952 82,178 236,635 (82,532) 315,233
Investments in
subsidiaries......... 118,394 14,718 3,250 (136,362) --
Property, plant, and
equipment, net....... 23,734 11,035 41,105 -- 75,874
Goodwill, net......... 16,451 92,029 192,009 -- 300,489
Other non-current
assets and deferred
charges, net......... 108,024 241,854 5,628 (322,195) 33,311
-------- -------- -------- ---------- --------
Total assets........ $345,555 $441,814 $478,627 $ (541,089) $724,907
======== ======== ======== ========== ========
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt......... $ -- $ -- $ 1,911 $ -- $ 1,911
Notes payable to banks.. -- -- 383 -- 383
Cash overdrafts......... -- 238 14,774 -- 15,012
Accounts payable........ 40,877 40,377 78,675 (85,021) 74,908
Accrued expenses........ 16,926 42,599 74,626 -- 134,151
-------- -------- -------- ---------- --------
Total current
liabilities............ 57,803 83,214 170,369 (85,021) 226,365
Notes payable, bank
credit agreement....... 3,000 182,146 -- -- 185,146
Senior subordinated
notes.................. 131,636 74,054 -- -- 205,690
Junior subordinated
payment in kind note... 41,200 -- -- -- 41,200
Other long-term debt,
less current
maturities............. 6,000 -- 316,644 (319,074) 3,570
Guaranteed Employees'
Stock Ownership Plan
obligation............. 6,347 -- -- -- 6,347
Post-retirement benefit
liability.............. 14,799 -- -- -- 14,799
Minimum pension
liability.............. 3,135 -- -- -- 3,135
Other long-term
liabilities............ 475 (241) 7,030 (123) 7,141
-------- -------- -------- ---------- --------
264,395 339,173 494,043 (404,218) 693,393
Redeemable convertible
preferred stock........ 24,000 -- -- -- 24,000
Guaranteed Employees'
Stock Ownership Plan
obligation............. (6,347) -- -- -- (6,347)
Treasury stock, at cost. (4,712) -- -- -- (4,712)
-------- -------- -------- ---------- --------
12,941 -- -- -- 12,941
Common stock............ 90,354 107,267 14,960 (122,227) 90,354
Common stock warrants... 20,000 -- -- -- 20,000
Minimum pension
liability.............. (3,135) -- -- -- (3,135)
Foreign currency
translation
adjustments............ (8,522) (34,650) (4,683) -- (47,855)
Retained earnings
(accumulated deficit).. (29,783) 30,024 (25,693) (14,644) (40,096)
-------- -------- -------- ---------- --------
68,914 102,641 (15,416) (136,871) 19,268
Less treasury stock, at
cost................... (695) -- -- -- (695)
-------- -------- -------- ---------- --------
68,219 102,641 (15,416) (136,871) 18,573
-------- -------- -------- ---------- --------
Total liabilities
and shareholders'
equity............. $345,555 $441,814 $478,627 $ (541,089) $724,907
======== ======== ======== ========== ========
</TABLE>
F-12
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Guarantor and Nonguarantor Financial Statements--(Continued)
CONSOLIDATED CONDENSED BALANCE SHEET
As of November 30, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
(Amounts In thousands)
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801
Accounts receivables,
net.................. 52,303 32,643 133,868 (46,121) 172,693
Inventories, net...... 16,720 18,255 88,369 (311) 123,033
Other current assets.. 1,921 759 16,459 -- 19,139
-------- -------- -------- --------- --------
Total current assets.. 71,793 57,038 259,267 (46,432) 341,666
Investments in
subsidiaries......... 112,268 13,869 3,197 (129,334) --
Property, plant, and
equipment, net....... 21,906 10,908 45,091 -- 77,905
Goodwill, net......... 15,765 89,590 218,758 -- 324,113
Other non-current
assets and deferred
charges, net......... 107,666 259,055 5,787 (339,550) 32,958
-------- -------- -------- --------- --------
Total assets........ $329,398 $430,460 $532,100 $(515,316) $776,642
======== ======== ======== ========= ========
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt......... $ -- $ -- $ 2,110 $ -- $ 2,110
Notes payable to banks.. -- -- 410 -- 410
Cash overdrafts......... -- 21 15,043 -- 15,064
Accounts payable........ 32,782 24,750 84,107 (46,317) 95,322
Accrued expenses........ 16,458 42,193 77,513 -- 136,164
-------- -------- -------- --------- --------
Total current
liabilities............ 49,240 66,964 179,183 (46,317) 249,070
Notes payable, bank
credit agreement....... -- 182,145 -- -- 182,145
Senior notes............ 22,500 -- -- -- 22,500
Senior subordinated
notes.................. 95,946 74,054 -- -- 170,000
Junior subordinated
payment in kind note... 40,000 -- -- -- 40,000
Other long-term debt,
less current
maturities............. 9,409 -- 322,997 (328,291) 4,115
Guaranteed Employees'
Stock Ownership Plan
obligation............. 6,987 -- -- -- 6,987
Post-retirement benefit
liability.............. 14,418 -- -- -- 14,418
Minimum pension
liability.............. 3,135 -- -- -- 3,135
Other long-term
liabilities............ 475 (217) 7,366 (113) 7,511
-------- -------- -------- --------- --------
242,110 322,946 509,546 (374,721) 699,881
Redeemable convertible
preferred stock........ 24,000 -- -- -- 24,000
Guaranteed Employees'
Stock Ownership Plan
obligation............. (6,987) -- -- -- (6,987)
Treasury stock, at cost. (4,883) -- -- -- (4,883)
-------- -------- -------- --------- --------
12,130 -- -- -- 12,130
Common stock............ 90,354 107,243 14,960 (122,203) 90,354
Common stock warrants... 20,000 -- -- -- 20,000
Minimum pension
liability.............. (3,135) -- -- -- (3,135)
Foreign currency
translation
adjustments............ (12,547) (313) (9,738) -- (22,598)
Retained earnings
(accumulated deficit).. (18,819) 584 17,332 (18,392) (19,295)
-------- -------- -------- --------- --------
75,853 107,514 22,554 (140,595) 65,326
Less treasury stock, at
cost................... (695) -- -- -- (695)
-------- -------- -------- --------- --------
75,158 107,514 22,554 (140,595) 64,631
-------- -------- -------- --------- --------
Total liabilities
and shareholders'
equity............. $329,398 $430,460 $532,100 $(515,316) $776,642
======== ======== ======== ========= ========
</TABLE>
F-13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors, Tokheim Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, cash flows and shareholders' equity
present fairly, in all material respects, the financial position of Tokheim
Corporation and its subsidiaries at November 30, 1998 and 1997, and the results
of their operations and their cash flows for each of the three years in the
period ended November 30, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
February 19, 1999
Fort Wayne, Indiana
F-14
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
for the years ended November 30, 1998, 1997, and 1996
(Amounts in thousands except dollars per share)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................ $466,440 $385,469 $279,733
Cost of sales, exclusive of items listed below... 345,031 283,932 210,223
Selling, general, and administrative expenses.... 79,819 68,167 51,667
Depreciation and amortization.................... 13,136 9,232 5,028
Merger and acquisition costs and other unusual
items........................................... 13,685 3,493 6,459
-------- -------- --------
Operating profit................................. 14,769 20,645 6,356
Interest expense (net of interest income of $822,
$837 and $602, respectively).................... 19,257 16,451 7,191
Foreign currency (gain) loss..................... (1,442) 48 159
Minority interest in subsidiaries................ 327 394 393
Other income, net................................ (675) (1,445) (158)
-------- -------- --------
Earnings (loss) before income taxes and
extraordinary loss.............................. (2,698) 5,197 (1,229)
Income taxes..................................... 1,046 1,217 780
-------- -------- --------
Earnings (loss) before extraordinary loss........ (3,744) 3,980 (2,009)
Extraordinary loss on debt extinguishment........ (23,924) (1,886) --
-------- -------- --------
Net earnings (loss).............................. (27,668) 2,094 (2,009)
Preferred stock dividends ($1.94 per share)...... (1,484) (1,512) (1,543)
-------- -------- --------
Earnings (loss) applicable to common stock....... $(29,152) $ 582 $ (3,552)
======== ======== ========
Earnings (loss) per common share:
Basic
Before extraordinary loss.................... $ (0.46) $ 0.31 $ (0.45)
Extraordinary loss on debt extinguishment.... (2.10) (0.23) --
-------- -------- --------
Net earnings (loss).......................... $ (2.56) $ 0.08 $ (0.45)
======== ======== ========
Weighted average shares outstanding.......... 11,371 8,042 7,940
======== ======== ========
Diluted
Before extraordinary loss.................... $ (0.46) $ 0.27 $ (0.45)
Extraordinary loss on debt extinguishment.... (2.10) (0.21) --
-------- -------- --------
Net earnings (loss).......................... $ (2.56) $ 0.06 $ (0.45)
======== ======== ========
Weighted average shares outstanding.......... 11,371 9,005 7,940
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-15
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
for the years ended November 30, 1998, 1997, and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss)............................ $(27,668) $ 2,094 $ (2,009)
Adjustments to reconcile net earnings (loss) to
net cash provided from operating activities:
Write-off of in-process research and
development................................. 5,879 -- --
Extraordinary loss on debt extinguishment.... 23,924 1,886 --
Depreciation and amortization................ 13,136 9,232 5,028
Gain on sale of property, plant, and
equipment................................... (36) (408) (59)
Deferred income taxes........................ (431) (139) (251)
Changes in assets and liabilities (net of
effects of the acquisitions in 1998 and
1996):
Receivables, net........................... (21,439) 4,254 2,363
Inventories................................ 4,327 5,975 (2,626)
Other current assets....................... 3,185 (2,001) 5,987
Accounts payable........................... 7,691 5,116 (1,425)
Accrued expenses........................... 6,370 (3,395) 4,249
Other...................................... (5,148) (1,412) (5,360)
-------- -------- --------
Net cash provided from operating
activities.............................. 9,790 21,202 5,897
-------- -------- --------
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired............. (110,641) -- (52,105)
Property, plant, and equipment additions....... (14,548) (11,154) (3,061)
Proceeds from sale of property, plant and
equipment..................................... 775 760 1,087
-------- -------- --------
Net cash used in investing activities.... (124,414) (10,394) (54,079)
-------- -------- --------
Cash Flows From Financing Activities:
Proceeds from senior notes..................... 22,500 -- --
Proceeds from senior subordinated notes........ -- -- 100,000
Redemption of senior subordinated notes........ (90,000) (10,000) --
Payments on term and other debt................ (4,267) (3,747) (31,800)
Net increase (decrease) in notes payable,
banks......................................... 158,769 1,770 (5,044)
Net increase in cash overdraft................. 3,571 1,874 7,237
Debt issuance costs............................ (16,157) -- (11,506)
Proceeds from issuance of common stock......... 74,057 1,706 42
Equity issuance costs.......................... (4,858) -- --
Treasury stock, net............................ (719) (496) (370)
Premiums paid on debt extinguishment........... (15,743) (1,390) --
Preferred stock dividends...................... (1,484) (1,512) (1,543)
-------- -------- --------
Net cash provided from (used in)
financing activities.................... 125,669 (11,795) 57,016
-------- -------- --------
Effect of translation adjustments on cash........ 9,318 (2,389) (4,482)
-------- -------- --------
Increase (decrease) in cash.................... 20,363 (3,376) 4,352
Cash and cash equivalents:
Beginning of year.............................. 6,438 9,814 5,462
-------- -------- --------
End of year.................................... $ 26,801 $ 6,438 $ 9,814
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-16
<PAGE>
CONSOLIDATED BALANCE SHEET
as of November 30, 1998 and 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.................................. $ 26,801 $ 6,438
Accounts receivable, less allowance for doubtful accounts
of $2,115 and $1,392, respectively........................ 172,693 83,011
Inventories:
Raw materials and supplies............................... 70,545 29,427
Work in process.......................................... 27,418 27,514
Finished goods........................................... 25,070 7,406
-------- --------
123,033 64,347
Other current assets....................................... 19,139 6,705
-------- --------
Total current assets..................................... 341,666 160,501
Property, plant and equipment, at cost:
Land and land improvements................................. 5,644 4,679
Buildings and building improvements........................ 41,803 27,956
Machinery and equipment.................................... 97,138 70,068
Construction in progress................................... 6,041 4,514
-------- --------
150,626 107,217
Less accumulated depreciation............................ 72,721 64,682
-------- --------
77,905 42,535
Other tangible assets........................................ 4,873 3,615
Goodwill, net................................................ 324,113 67,695
Other non-current assets and deferred charges, net........... 28,085 16,273
-------- --------
Total assets............................................. $776,642 $290,619
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-17
<PAGE>
CONSOLIDATED BALANCE SHEET
as of November 30, 1998, and 1997
(Amounts in thousands except dollars per share)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt.................... $ 2,110 $ 2,391
Notes payable to banks.................................. 410 98
Cash overdrafts......................................... 15,064 10,575
Accounts payable........................................ 95,322 54,597
Accrued expenses........................................ 136,164 51,190
-------- --------
Total current liabilities............................. 249,070 118,851
Notes payable, bank credit agreement...................... 182,145 24,090
Senior notes.............................................. 22,500 --
Senior subordinated notes................................. 170,000 90,000
Junior subordinated payment-in-kind notes................. 40,000 --
Other long-term debt, less current maturities............. 4,115 4,397
Guaranteed Employees' Stock Ownership Plan (ESOP)
obligation............................................... 6,987 9,429
Post-retirement benefit liability......................... 14,418 14,378
Minimum pension liability................................. 3,135 2,173
Other long-term liabilities............................... 7,511 6,830
-------- --------
699,881 270,148
-------- --------
Commitments and contingencies (Note 20)
Redeemable convertible preferred stock, at liquidation
value of $25 per share, 1,700 shares authorized, 960
shares issued............................................ 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (ESOP)
obligation............................................... (6,987) (9,429)
Treasury stock, at cost, 195 and 189 shares,
respectively............................................. (4,883) (4,718)
-------- --------
12,130 9,853
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued................................................. -- --
Common stock, no par value; 30,000 shares authorized,
12,698 and 8,232 shares issued, respectively............. 90,354 21,158
Common stock warrants..................................... 20,000 --
Minimum pension liability................................. (3,135) (2,173)
Foreign currency translation adjustments.................. (22,598) (18,048)
Retained earnings (accumulated deficit)................... (19,295) 9,821
-------- --------
65,326 10,758
Treasury stock, at cost, 38 and 9 shares, respectively.... (695) (140)
-------- --------
64,631 10,618
-------- --------
Total liabilities and shareholders' equity............ $776,642 $290,619
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the years ended November 30, 1998, 1997 and 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
Common Stock Foreign Retained Total
-------------------- Guaranteed Minimum Currency Earnings Common
Outstanding Treasury ESOP Pension Translation (Accumulated Shareholders'
Amount Amount Warrants Obligation Obligation Adjustments Deficit) Equity
----------- -------- -------- ---------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at November 30,
1995................... $19,409 $(231) $ -- $(786) $(3,868) $ (3,542) $ 12,815 $23,797
Stock options
exercised............. 43 -- -- -- -- -- -- 43
Employee termination
benefits.............. -- 11 -- -- -- -- -- 11
Treasury stock
purchases............. -- 28 -- -- -- -- -- 28
Decrease in guaranteed
ESOP obligation....... -- -- -- 483 -- -- -- 483
Minimum pension
liability adjustment.. -- -- -- -- 620 -- -- 620
Foreign currency
translation
adjustments........... -- -- -- -- -- (3,729) -- (3,729)
Net loss............... -- -- -- -- -- -- (2,009) (2,009)
Treasury stock
transactions.......... -- -- -- -- -- -- (23) (23)
Preferred stock
dividends............. -- -- -- -- -- -- (1,543) (1,543)
------- ----- ------- ----- ------- -------- -------- -------
Balance at November 30,
1996................... $19,452 $(192) $ -- $(303) $(3,248) $ (7,271) $ 9,240 $17,678
Stock options
exercised............. 1,706 -- -- -- -- -- -- 1,706
Treasury stock
purchases............. -- 52 -- -- -- -- -- 52
Decrease in guaranteed
ESOP obligation....... -- -- -- 303 -- -- -- 303
Minimum pension
liability adjustment.. -- -- -- -- 1,075 -- -- 1,075
Foreign currency
translation
adjustments........... -- -- -- -- -- (10,777) -- (10,777)
Net earnings........... -- -- -- -- -- -- 2,094 2,094
Treasury stock
transactions.......... -- -- -- -- -- -- (1) (1)
Preferred stock
dividends............. -- -- -- -- -- -- (1,512) (1,512)
------- ----- ------- ----- ------- -------- -------- -------
Balance at November 30,
1997................... $21,158 $(140) $ -- -- $(2,173) $(18,048) $ 9,821 $10,618
Stock options
exercised............. 1,472 -- -- -- -- -- -- 1,472
Common stock offering.. 67,724 -- -- -- -- -- -- 67,724
Common stock warrants
issued................ -- -- 20,000 -- -- -- -- 20,000
Treasury stock
purchases............. -- (555) -- -- -- -- -- (555)
Minimum pension
liability adjustment.. -- -- -- -- (962) -- -- (962)
Foreign currency
translation
adjustments........... -- -- -- -- -- (4,550) -- (4,550)
Net (loss)............. -- -- -- -- -- -- (27,668) (27,668)
Minority interest
dividends............. -- -- -- -- -- -- 36 36
Preferred stock
dividends............. -- -- -- -- -- -- (1,484) (1,484)
------- ----- ------- ----- ------- -------- -------- -------
Balance at November 30,
1998................... $90,354 $(695) $20,000 $ -- $(3,135) $(22,598) $(19,295) $64,631
======= ===== ======= ===== ======= ======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-19
<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. All
significant intercompany accounts and transactions have been eliminated in
consolidation. In September 1996, the Company acquired the petroleum dispenser
business ("Sofitam") of Sofitam, S.A., in December 1997, the Company acquired
Management Solutions Inc ("MSI"), and in September 1998, the Company acquired
the fuel dispenser systems and service business (the "RPS Division") of
Schlumberger Limited. The accounts of these three acquired companies are
included in the Consolidated Financial Statements since the respective dates
listed above. (See Note 2.)
Nature of Operations--The Company engages principally in the design,
manufacture and servicing of electronic and mechanical petroleum dispensing
marketing systems, including service station equipment, point-of-sale control
systems, and card- and cash-activated transaction systems for customers around
the world. The Company markets its products through subsidiaries located
throughout the world and has major facilities in the United States, France,
Canada, Germany, Italy, the Netherlands, Scotland, and South Africa.
Translation of Foreign Currency--The financial position, results of
operations and cash flows of the Company's foreign subsidiaries are measured
using local currency as the functional currency. Revenues and expenses of such
subsidiaries have been translated into U.S. dollars at average exchange rates
prevailing during the period. Assets and liabilities have been translated at
the rates of exchange at the balance sheet date. Translation gains and losses
are deferred as a separate component of shareholders' equity. Aggregate foreign
currency transaction gains and losses are included in determining net earnings.
Revenue Recognition--Revenue from sales of fuel dispensers and service parts
is generally recorded at the time the goods are shipped. On-call service
revenue is recognized when the service has been performed.
Revenue and costs associated with separately priced customer service
contracts are recognized such that (a) revenue is recognized ratably over the
contract period; (b) costs are expensed as incurred (incremental direct
acquisition costs are not material); and (c) losses are recognized on contracts
where the expected future costs exceed future revenue (no such contracts
existed at November 30, 1998). Customer service contracts include service and
maintenance agreements and extended warranty agreements for fuel dispensers and
point-of-sale system hardware and software.
Revenue from long-term construction contracts is recognized on the
percentage-of-completion method. Percentage-of-completion for the service
station construction business is measured principally by the percentage of
costs incurred for each contract to date relative to the estimated total costs
at completion. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined. Revenue from long-term
construction contracts is not material to the overall consolidated revenue.
Revenue from the sale of software and point-of-sale systems which is
dependent on software is generally recognized at the time of shipment as no
significant future Company obligations are required under the terms of the
sales agreement.
Risks and Uncertainties--The Company is not dependent on any single customer,
group of customers, market, geographic area or supplier of materials, labor or
services. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the Consolidated Financial
Statements and accompanying notes. The more significant areas requiring the use
of management's estimates include allowances for obsolete inventory and
uncollectible receivables, product warranty claims, environmental and product
liabilities, postretirement, pension, and other employee benefits, valuation
allowances for deferred tax assets, future
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
obligations associated with the Company's restructuring plans, future cash
flows associated with assets, and useful lives for depreciation and
amortization. Actual results could differ from these estimates, making it
reasonably possible that a change in certain of these estimates could occur in
the near term. Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and trade
receivables. The Company places its cash with high credit quality financial
institutions. At times, cash in United States banks may exceed FDIC insurance
limits. Concentration of credit risk with respect to trade receivables is
considered to be minimal due to the Company's large customer base and ongoing
control procedures, which monitor the credit worthiness of customers.
Fair Value of Financial Instruments--The fair value of cash and cash
equivalents, trade receivables, and accounts payable approximates the carrying
value because of the short-term maturities of these financial instruments.
The interest rate on the Company's bank credit agreement (the "New Credit
Agreement") fluctuates with current market rates. Consequently, the carrying
value of the New Credit Agreement approximates the market prices for the same
or similar issues in future periods. The estimated fair value of the Company's
12.0% senior subordinated notes (the "Senior Subordinated Seller Notes") and
the Company's 12.5% senior notes due 2005 (the "Senior Notes") approximated the
carrying value at November 30, 1998 since both notes were redeemed at face
value on January 29, 1999. The Company estimates that the fair value of the
$40,000 Junior Subordinated 12.0% Payment-in-Kind notes (the "Junior Notes")
approximated the carrying value at November 30, 1998 as there were no
significant changes in the market conditions or risks related to these notes
during the two month period between the time when the notes were issued on
September 30, 1998 and November 30, 1998.
The fair value of the Company's $20,000 common stock warrants (the
"Warrants") approximates $21,795 at November 30, 1998. This amount is computed
based on the Company's November 30, 1998 common stock price of $8.625 per share
less the nominal consideration to be received if exercised.
The fair value of the Company's convertible preferred stock, which is held in
the Trust of the Company's Retirement Savings Plan ("RSP"), approximates the
carrying value, as such stock is not traded in the open market, and the value
at conversion is equal to a fixed redemption value in cash or equivalent
amounts of common stock.
Inventory Valuation--Inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Property and Depreciation--Depreciation of plant and equipment is generally
determined on a straight-line basis over the estimated useful lives of the
assets. Upon retirement or sale of assets, the cost of the disposed assets and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is credited or charged to income. These gains and losses
are accumulated and shown as a component of other income, net in the statement
of earnings. Buildings are generally depreciated over 40 years. Machinery and
equipment are depreciated over periods ranging from five to ten years.
Expenditures for normal repairs and maintenance are charged to expense as
incurred. Expenditures for improving or rebuilding existing assets which extend
the useful life of the assets are capitalized.
Software and Research and Development Costs--Costs incurred to address year
2000 issues are expensed when incurred. Unamortized software costs included in
other non-current assets were $8,711, and $1,089 at November 30, 1998 and 1997,
respectively. The amounts amortized and charged to expense in 1998, 1997 and
1996 were $2,025, $260 and $163, respectively. Included in unamortized software
costs at November 30, 1998
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
is approximately $4,850 related to software technology costs capitalized in
connection with the acquisition of MSI. Amortization of capitalized software
development costs offered for sale is provided over the estimated economic
useful life of the software product on a straight-line basis, generally three
to four years.
In 1998 Tokheim adopted Statement of Position (SOP) No. 98-1, "Accounting for
the Cost of Computer Software Developed or Obtained for Internal Use." Costs
incurred related to software developed or obtained for internal use are
capitalized during the application development stage of the software
development and are amortized over three years. Prior to the adoption of SOP
No. 98-1 the Company capitalized the cost of purchased software and fees paid
to external software consultants that assist in the development and
installation of internally used software. Since the adoption of SOP 98-1, the
Company continues to capitalize these costs and additionally capitalizes
internal employee's wages and benefits associated with internally developed
software. During 1998 the Company capitalized approximately $1,200 in
connection with internally developed software under SOP 98-1.
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to $21,080,
$18,284 and $15,909 in 1998, 1997 and 1996, respectively. In addition to these
expenses, the Company wrote off $5,879 of in-process research and development
expenses in connection with the acquisition of MSI and the related purchase
price allocation. See Note 2 for additional information.
Goodwill and Other Intangible Assets--Goodwill is amortized on a straight-
line basis over 40 years. The Company will continue to review facts and
circumstances to determine whether the remaining estimated useful life of
goodwill warrants revision or whether the carrying amount may not be
recoverable, using profitability projections to assess whether future operating
income on a non-discounted basis is likely to exceed the amortization over the
remaining life of the goodwill. The amounts amortized and charged to expense in
1998, 1997 and 1996 were approximately $2,709, $1,490 and $420, respectively.
Accumulated amortization of goodwill at November 30, 1998 and 1997 was $4,619
and $1,910, respectively. The Company is in the process of valuing certain
tangible and intangible assets acquired with the RPS Division and will finalize
the preliminary purchase price allocation upon completion of these valuations.
The goodwill recorded in connection with the RPS Division is currently being
amortized over 40 years. The Company will determine the appropriate amounts and
useful lives of the identified intangible assets upon completion of the
valuations. Finalization of the purchase price allocation is not expected to
have a material impact on the Company's financial position or results of
operations as of and for the year ended November 30, 1998. The Company
evaluates the recoverability of goodwill by comparing the estimated future
undiscounted cash flows associated with the recorded goodwill with its carrying
value. If the carrying value exceeds the undiscounted cash flows, a write-down
of goodwill will be recorded.
Other non-current assets and deferred charges consist primarily of debt
issuance costs. These costs are amortized over the terms of the related debt
agreements on a straight-line basis, which is not materially different from the
effective interest method, with periods ranging from six to eight years.
Amortization of these deferred charges included in interest expense at November
30, 1998, 1997 and 1996 was $1,658, $1,623, and $401, respectively. During
1998, the Company capitalized $16,160 of debt issuance costs incurred in
connection with the acquisition of the RPS Division and related financing and
charged $6,666 of deferred debt issuance costs to extraordinary loss on debt
extinguishment. During 1997, the Company charged $496 of deferred bond issuance
costs to extraordinary loss on debt extinguishment. This amount represents the
write-off of a proportionate share of the original unamortized deferred
issuance cost incurred in connection with the issuance of the senior
subordinated notes for the acquisition of Sofitam. During 1996, the Company
wrote-off approximately $233 of deferred debt issuance costs and capitalized
approximately $11,506 of costs incurred in connection with the refinancing of
the Company's preexisting debt and issuance of senior subordinated notes.
Accumulated amortization of other non-current assets and deferred charges at
November 30, 1998 and 1997 was $420 and $2,520, respectively.
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Advertising and Promotion--All costs associated with advertising and product
promotion are expensed in the period incurred. These expenses amounted to
$3,577, $2,687 and $2,268 in 1998, 1997 and 1996, respectively.
Income Taxes--The Company accounts for income taxes under the liability
method in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 109 "Accounting for Income Taxes." The provision for income taxes includes
federal, foreign, state and local income taxes currently payable as well as
deferred taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. If it is more
likely than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized. No additional U.S. income taxes
or foreign withholding taxes have been provided on accumulated earnings of
foreign subsidiaries approximating $20,543 which are expected to be reinvested
indefinitely. (See Note 15).
Environmental Cleanup Matters--The Company adopted The American Institute of
Certified Public Accountants ("AICPA") Statement of Position ("SOP") No. 96-1,
"Environmental Remediation Liabilities" during 1998. This SOP did not have a
material impact on the Company's financial position, results of operations or
cash flows for 1998. The Company expenses environmental expenditures related to
existing conditions resulting from past or current operations and from which no
current or future benefit is discernible. Expenditures which extend the life of
the related property or mitigate or prevent future environmental contamination
are capitalized. The Company determines its liability on a site by site basis
and records a liability at the time when the associated expenses can be
reasonably estimated.
New Accounting Pronouncements
SFAS No. 129, "Disclosure of Information about Capital Structure," was
adopted during the first quarter of the fiscal year ended November 30, 1998.
This statement did not have a material impact on the Company's financial
position, results of operations or cash flows as disclosure requirements did
not change for the Company with this new statement. SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," and SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits," are
effective for the year ending November 30, 1999. In the opinion of management,
these statements will not have a material impact on the Company's financial
position, results of operations, or cash flows since they are "disclosure only"
standards. The Company is currently evaluating the impact that SFAS No. 131
will have on its current segment groupings. SFAS No. 130, "Reporting
Comprehensive Income," is effective for the year ending November 30, 1999. Due
to the significance of the foreign currency translation adjustments recorded,
comprehensive income would have been less than reported net earnings or reduced
net loss had SFAS No. 130 been adopted. SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was issued in June 1998 and is
effective for the year ending November 30, 2000. SFAS No. 133 establishes a new
model for accounting for derivatives in the balance sheet as either assets or
liabilities and measures them at fair value. Certain disclosures concerning the
designation and assessment of hedging relationships are also required.
Management has not yet determined the impact of this statement on the Company's
consolidated financial statements.
SOP No. 97-2 "Software Revenue Recognition," is effective for the Company for
the year ended November 30, 1999. SOP No. 97-2 supersedes SOP No. 91-1 and
provides more specific guidance on revenue recognition related to software
products. The Company does not expect the adoption of SOP No. 97-2 to have a
material impact on the Company's financial position, results of operations or
cash flows.
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Product Warranty Costs--Anticipated costs related to product warranty are
expensed in the period of sale. Amounts accrued and charged to expense are
estimated based on historical warranty claim experience.
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>
1998 1997 1996
-------- ------- --------
<S> <C> <C> <C>
Cash paid during the year for interest............ $ 15,930 $15,204 $ 4,918
Cash paid during the year for income taxes........ 1,194 921 1,013
Senior Subordinated Seller Notes issued in
connection with the RPS acquisition.............. 170,000 -- --
Junior Notes issued in connection with the RPS
acquisition...................................... 40,000 -- --
Liabilities assumed in the Acquisitions including
accrued merger and acquisition costs............. 101,830 -- 123,575
</TABLE>
Reclassifications--Certain prior year amounts in these financial statements
have been reclassified to conform with the current year presentation.
2. ACQUISITIONS
Acquisition of MSI--In December 1997, the Company acquired MSI. MSI develops
and distributes retail automation systems (including Point of Sale ("POS")
software), primarily for the convenience store, petroleum dispensing and fast
food service industries. The Company paid MSI's stockholders an initial amount
of $12,000. The Company is also obligated to make contingent payments of up to
$13,200 over the years 1998, 1999 and 2000 based upon MSI's performance. The
$13,200 consists of $8,000 of additional purchase price, $2,600 related to a
non-compete agreement, and $2,600 of additional employee compensation. The
Company borrowed funds for the initial purchase price under the Company's Old
Credit Agreement.
The MSI acquisition has been accounted for as a purchase, and accordingly,
the results of operations of MSI have been included in the Company's
Consolidated Financial Statements since the date of acquisition. Assets of
approximately $2,700 were acquired and liabilities of approximately $1,400 were
assumed and have been recorded at their determined fair values. An independent
valuation was performed for intangible assets acquired. As such, intangible
software technology was recorded which is being amortized over four years and
$5,879 was allocated to in-process research and development projects that have
not reached technological feasibility and have no alternative future use. This
amount was charged to operations at the date of acquisition and is included in
merger and acquisition costs and other unusual items in the consolidated
statement of earnings. The portion of the contingent payments that do not
relate to employee compensation will be allocated to various intangible assets
and goodwill and amortized over periods ranging from four to twelve years, if
payments are required. The Company was not required to make any contingent
purchase price payments for the year ended November 30, 1998.
As of the acquisition date, MSI was developing the CVN POS(TM) for Windows(R)
solution (CVN Windows) in order to provide a next-generation comprehensive
point of sale (POS) software application in the convenience store, petroleum
dispensing and fast food service industries. CVN Windows will incorporate a
graphical user interface with touch screen controls and allow the system to be
used with most POS systems. CVN Windows was under development for approximately
two years and was in the alpha testing stage at the time of the acquisition. At
the date of acquisition, approximately 85% of the research and development
costs related to CVN Windows had been incurred, based on remaining costs to
complete development, testing and quality assurance. The Company expects to
complete the development tasks for CVN Windows remaining at November 30, 1998
by the third quarter, with projected expenditures of approximately $1,000.
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The CVN POSTM for Windows(R) project represents a new, next-generation
software application aimed for use in the petroleum and mini-mart service
station industry for controlling and monitoring petroleum and Convenience store
items, as well as tracking and controlling cashier functions for correct
operations and cash management. The CVN POSTM for Windows(R) solution has
required extensive programming of the disk operating system (DOS)-based product
in order to incorporate a new database design, product features, graphical user
interface, and enhanced system performance. These development activities
represent substantial engineering in order to implement a new operating system
platform. Moreover, these development efforts represent non-routine
programming, testing, and systems integration considering the functionality
improvements required with increased performance specification. The remaining
processes yet to be completed for the CVN POSTM for Windows included the
development of credit network modules for various customer networks and the
complete functional testing of the system. The operating functionality of the
CVN POSTM for Windows(R) is to provide Fuel Console functions, electronic cash
register functions, electronic payment processing function and control of
island or dispenser payment terminal control functions. The CVN POSTM for
Windows(R) is targeted at Convenience store and petroleum refueling stations.
This product is a new product offering to new customers and as a migration
product for our existing customers. This software provides for the integration
of gas pump controls, scanning and cash register functions into a single
terminal.
To determine the fair value of acquired IPR&D and other identifiable
intangible assets, the Company used an independent appraisal which utilized
standard appraisal methodologies. The appraisal procedures performed to
establish the fair value of IPR&D involved projected cash flows for CVN Windows
over the next five years, commensurate with its useful life, net of capital
charges for all employed intangible and tangible assets, including but not
limited to software technology and know how, and tangible assets, less an
economic rent on profit for this core DOS technology, and discounted to present
value, using a discount rate that reflected a 700 basis point risk premium
reflective of the in process nature of the remaining activities. This risk
assessment reflects uncertainty related to the Company's ability to
successfully integrate remaining functionality and performance features into
the CVN Windows product, combined with the added complexity of implementing
legacy functionality onto a Windows platform. If the Company is delayed in its
market entry with the completed CVN Windows product, it could adversely affect
future operations.
RPS Division Acquisition--On September 30, 1998 the Company completed the
Acquisition of the RPS Division for a purchase price equal to $330,000, of
which $100,000 of which was paid in cash borrowed under the terms of the New
Credit Agreement as well as $22,500 of Senior Notes. The $210,000 seller note
portion of the purchase price consisted of $40,000 in Junior Notes, and
$170,000 in Senior Subordinated Seller Notes. $20,000 of the purchase price was
paid in the form of Warrants. See Note 7, 8 and 12 for additional information
on the debt and warrant instruments used to finance the Acquisition.
The RPS Division is a leading manufacturer and servicer of fuel dispensing
systems in Western Europe.
The Acquisition has been accounted for as a purchase and the RPS Division's
results of operations have been included in the Consolidated Financial
Statements of the Company from the date of acquisition. The purchase price has
been preliminarily allocated to assets acquired and liabilities assumed based
on the RPS Division's net book value of assets as of September 30, 1998, as
adjusted, which is estimated to approximate fair value. The purchase price
allocated under this assumption is preliminary and exceeded the estimated fair
value of tangible net assets acquired by $263,389, which has been recorded as
goodwill. The Company is in the process of valuing certain tangible and
intangible assets acquired with the RPS Division and will finalize the
preliminary purchase price allocation upon completion of these valuations. The
goodwill recorded in connection with the RPS Division is currently being
amortized over 40 years. The Company will determine the appropriate amounts and
useful lives of the identified intangible assets upon completion of the
valuations. Finalization of the purchase price allocation is not expected to
have a material impact on the Company's financial position or results of
operations as of and for the year ended November 30, 1998. The Company is to
reimburse Schlumberger Limited for cash (net of adjustments) that remained in
the RPS Division at the date of closing of
F-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
the Acquisition. This amount is currently estimated to be approximately $6,500.
It is anticipated that this payment will be made in the second quarter of 1999
using the revolving working capital facility under the New Credit Agreement.
Included in accrued liabilities are certain costs the Company will incur to
effect an integration and rationalization plan for the RPS Division's
operations. These costs represent involuntary termination costs and other
closure costs in connection with closing redundant manufacturing and service
operations. These accrued costs do not include costs associated with
consolidation of previously existing Tokheim subsidiaries, which will be
expensed as incurred or separately accrued once all criteria for accrual are
met, nor do these costs benefit future periods. The Company expects the
integration and rationalization plan to be completed by the end of the year
2000. The Company expects to reduce headcount by approximately 535 employees.
The employees being reduced form a cross section from manufacturing,
engineering, selling, general and administrative functions. The table below
summarizes the accrued liability by major category and when such costs are
expected to be incurred:
<TABLE>
<CAPTION>
Fiscal Fiscal Total
Year Year Expected
1999 2000 Costs
------- ------ --------
<S> <C> <C> <C>
Involuntary employee termination benefits for
approximately 535 employees............................ $11,398 $7,218 $18,616
Asset write-off and disposal costs...................... 483 -- 483
Leases and other contractual termination costs.......... 1,195 -- 1,195
------- ------ -------
Total accrued integration and rationalization costs. $13,076 $7,218 $20,294
======= ====== =======
</TABLE>
During 1998, approximately $371 was charged against the accrual, primarily
for employee termination costs.
The table below summarizes the acquisition liabilities as they relate to the
consolidation plan for Sofitam which was established in 1996. The amounts do
not include costs associated with consolidation of previously- existing Tokheim
subsidiaries, which were or will be expensed as incurred, nor do they reflect
costs expected to provide benefits in future periods. The Company expects the
consolidation plan to be completed by the end of 1999. (See Note 3 for
additional information regarding the Company's consolidation plan.)
<TABLE>
<CAPTION>
Charged to
November 30, 1997 Acquisition November 30, 1998
Item Balance Accrual Balance
---- ----------------- ----------- -----------------
<S> <C> <C> <C>
Involuntary employee
termination benefits (A)...... $4,124 $2,279 $1,845
Asset write-off and disposal
costs (B)..................... 2,232 154 2,078
Leases and other contract
terminations costs............ 941 863 78
------ ------ ------
$7,297 $3,296 $4,001
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
November 30, 1996 Adjustments
Original to Charged to
Acquisition Acquisition Acquisition November 30, 1997
Item Accrual Accrual Accrual Balance
---- ----------------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Involuntary employee
termination benefits
(A).................... $6,651 $(186) $2,341 $4,124
Asset write-off and
disposal costs (B)..... 2,108 183 59 2,232
Leases and other
contract terminations
costs.................. 1,040 700 799 941
------ ----- ------ ------
$9,799 $ 697 $3,199 $7,297
====== ===== ====== ======
</TABLE>
- --------
(A) Approximately 300 employees included in the original consolidation plan.
(B) For 9 locations under the original consolidation plan.
The asset write-off and disposal cost liability represents equipment and
inventory write-offs and write-downs for impaired assets. These assets are
located at the Company's France, Spain, Belgium, and German facilities
F-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
which were scheduled to be closed under the Sofitam consolidation and
integration plan during 1999. The assets consist primarily of production
tooling and inventory related to products that will be discontinued, and
furniture and fixtures which will not be moved to other facilities. Due to the
legal and social procedures that must be followed in these European countries,
the consolidation of these facilities and eventual closure needed to be
extended to ensure compliance with local laws pertaining to personnel
disclosures and notifications. The Company expects the consolidation and
closures to be completed by the end of 1999.
The following unaudited pro forma information summarizes consolidated results
of operations of Tokheim, the RPS Division and MSI as if the acquisitions had
occurred at the beginning of 1998 and 1997. These unaudited pro forma results
include certain adjustments, such as additional amortization expense as a
result of goodwill and other intangible assets and increased interest expense
on acquisition debt. They do not purport to be indicative of the results of
operations which actually would have resulted had the acquisition occurred on
December 1, 1997 or 1996, or future results of operations. The Company is in
the process of closing several redundant manufacturing, sales, service and
administrative operations as part of the integration and rationalization plans
discussed above. Anticipated synergies from the merger of Tokheim, the RPS
Division and MSI have been excluded from the amounts included in the pro forma
summary information presented below.
<TABLE>
<CAPTION>
Unaudited
Years Ended
November 30,
------------------
1998 1997
-------- --------
<S> <C> <C>
Net sales................................................ $743,623 $737,520
Net loss................................................. (49,189) (37,966)
Net loss per common share (Basic and Diluted)............ (4.67) (3.48)
</TABLE>
3. MERGER AND ACQUISITION COSTS AND OTHER UNUSUAL ITEMS
For the years ended November 30, 1998, 1997 and 1996, the Company identified
certain expenses related primarily to the acquisition of the RPS Division in
1998 and the acquisition of Sofitam in 1996. These costs, although not uncommon
to the Company's industry, are considered by the Company to be attributable to
the purchase and integration of the acquired companies or otherwise significant
enough in size or unusual enough in nature to warrant separate disclosure.
These costs are shown in aggregate as a single operating line item, "Merger and
acquisition costs and other unusual items," on the Consolidated Statement of
Earnings.
Merger and acquisition costs/Restructuring--During 1998, as a result of the
acquisitions of the RPS Division and MSI, the Company initiated an integration
and rationalization plan that entails the closure and reorganization of certain
manufacturing, sales, service and administrative operations. Amounts charged to
operations for involuntary employee termination costs and other exit costs
incurred to execute certain projects of the integration and rationalization
plan were approximately $7,215 in 1998. Of this amount, approximately $3,235
relates to employee severance and related costs for approximately 136 employees
that served in various manufacturing, sales, service and administrative
capacities. In addition to the severance costs, approximately $3,220 relates to
costs to be incurred in connection with the closure of the Glenrothes, Scotland
manufacturing facility. The Company expects to incur $250 in grant repayment
costs, $420 for fixed asset and production tooling write-offs, $950 licensing
agreement write-off, $1,400 of inventory write-off and approximately $200 for
building clean up and maintenance prior to disposition. The impairment of the
inventory and licensing agreement was caused solely by management's decision to
close operations and discontinue the product lines produced at the Glenrothes
manufacturing facility. These products have been replaced by RPS division
products manufactured at the Dundee, Scotland facility. In addition, the
Company incurred approximately $760 of costs relating to the closure of certain
domestic operations. During 1997 and 1996, the Company implemented several
corporate realignment initiatives, including work force reductions and
reorganization of its
F-27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
domestic and international operations, related to the consolidation of Sofitam.
Amounts charged to operations as incurred for the matters described above for
the years ended November 30, 1997 and 1996 approximated $1,736 and $2,035,
respectively.
Litigation/Other--In connection with the purchase of MSI in the first quarter
of fiscal 1998, the Company recorded a $5,879 charge relating to the write-off
of in-process research and development ("IPR&D"). This amount represents the
estimated fair value of acquired incomplete research and development projects
of MSI at the date of acquisition. See Note 2 for additional information on the
IPR&D. The Company's Spanish subsidiary, Sofitam Iberica, incurred an unusual
operating charge of approximately $485 to settle a customer dispute and the
write off of unusable customer specific inventory. During 1997, the Company
settled a claim against it directly associated with the purchase of Sofitam
related to a personnel matter that resulted in an outcome adverse to the
Company. The Company also favorably settled a claim that involved a former
supplier, which resulted in the reversal of an accrued liability which had been
charged to "Merger and acquisition costs and other unusual items" in 1996. In
addition, during 1997 the Company recorded a charge for an impaired asset
related to license technology. In 1996 the Company settled claims related to a
prior distributor and a foreign distributor to extinguish an exclusive sales
representative agreement. The Company also incurred a charge to operations for
the adverse outcome in a Pension Benefit Guarantee Corporation inquiry with
respect to a terminated benefit plan payout from 1991. In addition, the Company
incurred charges in 1996 related to customer satisfaction programs relating to
dispensers sold in prior years. Amounts charged to merger and acquisition costs
and other unusual items relating to litigation/other for 1998, 1997 and 1996
were $5,985, $1,757, and $4,424, respectively.
4. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
RPS Division integration and rationalization plan.......... $ 20,294 $ --
Schlumberger Limited....................................... 6,507 --
Sofitam integration plan................................... 4,001 7,297
Compensated absences....................................... 14,644 7,087
Salaries, wages, and commissions........................... 14,871 6,076
Retirement benefits and profit sharing..................... 9,625 5,921
Interest................................................... 4,984 3,755
Warranty................................................... 10,627 3,742
Legal and professional..................................... 3,788 3,102
Employee payroll taxes..................................... 5,634 2,708
Deferred revenue........................................... 5,645 2,453
Taxes (sales, VAT, and other).............................. 11,072 2,434
Other...................................................... 24,472 6,615
-------- -------
$136,164 $51,190
======== =======
</TABLE>
5. NOTES PAYABLE, BANK CREDIT AGREEMENT
On September 30, 1998, Tokheim and certain of its subsidiaries, including
certain of the subsidiaries used to acquire the RPS Division (the "Borrowers")
entered into a credit agreement (the "New Credit Agreement") with certain
lenders. The New Credit Agreement replaced the existing ("old credit
agreement") and consists of
F-28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
a six year working capital/letter of credit facility and a six year term loan
facility, each in an aggregate principal amount of $120,000. Pursuant to the
New Credit Agreement, $20,000 of the availability under the working capital
facility may be utilized for issuance of standby letters of credit, and $10,000
of the availability under the working capital facility may be utilized for
swing line facilities to be provided to Tokheim and certain of the other
Borrowers. The New Credit Agreement permits borrowings in U.S. dollars, and, if
certain additional conditions are met, in French francs, British pounds, Dutch
guilders, German marks and euros (so long as such non-U.S. currencies are
freely traded, readily available and convertible into U.S. dollars) and such
other currencies as agreed by each Bank.
An additional agreement provides for the assignment of a three year $7,600
ESOP loan facility with certain banks (the "ESOP Credit Agreement").
At November 30, 1998, the outstanding borrowings were $62,145 under the
revolving working capital facility, $120,000 under the term loan, and $6,987
under the ESOP facility. The term loan calls for equal quarterly principal
payments aggregating to $7,500 in year 2000; $10,000 in year 2001; $12,500 in
year 2002; $15,000 in year 2003; $37,500 in a single payment due first quarter
2004; and the remainder due at maturity. The revolving working capital facility
is due on September 30, 2004. Available borrowings under the revolving working
capital facility were $57,900 at November 30, 1998 subject to a borrowing base
limitation and certain other loan covenant restrictions.
Indebtedness of the Company under the New Credit Agreement (a) is secured by
(i) a first perfected security interest in and lien on certain of the real and
personal property assets of Tokheim (including claims against certain
subsidiaries to which Tokheim has made intercompany loans) and Tokheim's direct
and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100%
of the stock of Tokheim's direct and indirect material majority-owned U.S.
subsidiaries, and (iii) a pledge of 65% of the stock of Tokheim's first-tier
material foreign subsidiaries and (b) is guaranteed by all of Tokheim's direct
and indirect material majority-owned U.S. subsidiaries. Certain indebtedness of
Tokheim's foreign subsidiaries which are Borrowers or become Borrowers under
the New Credit Agreement will be secured by certain of the personal property of
such foreign subsidiaries.
Indebtedness under the New Credit Agreement bears interest based upon (at the
applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar
denominated loans (defined as the higher of (x) the applicable prime rate and
(y) the federal funds rate (as adjusted pursuant to the New Credit Agreement)
plus 0.50%) plus an applicable margin based upon the Company's leverage ratio
(with a range of 1.50% to 3.00% for revolving loans and 3.00% for term loans)
or (ii) the applicable Eurocurrency Rate (as defined in the New Credit
Agreement) for a deposit in the currency of, and for a maturity corresponding
to, the applicable loan and interest period, plus an applicable margin based
upon the Company's leverage ratio (with a range of 2.50% to 4.00% for revolving
loans and 4.00% for term loans). The unused portion of the commitment under the
New Credit Agreement will be subject to a commitment fee in the range of 0.375%
to 0.50% depending upon the leverage ratio of the Company.
Indebtedness under the ESOP Credit Agreement will amortize with a final
principal payment on July 1, 2001.
The revolving loan commitment under the New Credit Agreement may be
voluntarily permanently reduced by the Company in whole or in part on one day's
notice without premium or penalty. The Borrower may prepay the term loans
subject to a pre-payment penalty if the Borrowers prepay the entire amount of
the term loans in the first 3 years after September 30, 1998. The Borrowers
will be able to prepay the loans in accordance with the terms of the New Credit
Agreement. Subject to the provisions of the New Credit Agreement, the Borrowers
will be able to, from time to time, borrow, repay and reborrow under the
working capital facility.
F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The New Credit Agreement requires an amount equal to all net proceeds from
asset sales by the Company or any of its subsidiaries (with certain exceptions)
to be applied to repay the loans under the New Credit Agreement. The New Credit
Agreement also requires the Company to prepay the loans under the New Credit
Agreement in an amount equal to (i) all net proceeds from the sale or issuance
of debt (with certain exceptions), (ii) all net proceeds from the sale or
issuance of equity (with certain exceptions) and (iii) a percentage of Excess
Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a
range of 50% to 85%, based upon the Company's leverage ratio, commencing with
the Company's fiscal year ending November 30, 1999.
The New Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum level of consolidated net worth, minimum
level of EBITDA (as defined in the New Credit Agreement), minimum level of
consolidated interest coverage, maximum consolidated leverage ratio and senior
leverage ratio and minimum consolidated fixed charge coverage ratio. The New
Credit Agreement also contains covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with affiliates,
asset sales, acquisitions, investments, mergers and consolidations, prepayments
of certain other indebtedness, amendments to certain other indebtedness, liens
and encumbrances and other matters customarily restricted in such agreements.
At November 30, 1998 and 1997, the aggregate amounts outstanding under
working capital facilities were $62,145 and $24,090, respectively. These
amounts are classified as long-term debt because the Company had the ability
(under the terms of the facility) and the intent to finance these obligations
beyond one year. The total line of credit under the working capital facility
was approximately $120,000 and $67,768, of which $57,855 and $43,678 was unused
at November 30, 1998 and 1997, respectively. The weighted average annual
interest rates for these lines of credit were 7.1% and 7.6% for 1998 and 1997,
respectively. The range of rates at November 30, 1998 and 1997 was 5.1% to 7.5%
and 7.6% to 8.9%, respectively.
6. SENIOR NOTES
As part of the financing for the acquisition of the RPS Division, the Company
entered into a note purchase agreement, pursuant to which the Company issued
$22,500 million aggregate principal amount of Senior Notes bearing an interest
rate starting at 12.5% and increasing by 0.5% on December 1, 1998, and every
three months thereafter to a maximum of 14.5%. The Company has the option,
subject to bank approval, to redeem (in whole or in part) the Senior Notes. The
Note Purchase Agreement is subject to certain restrictions and covenants common
to such agreements. On January 29, 1999 the Senior Notes were repaid. See Note
21 for additional information.
7. SENIOR SUBORDINATED NOTES
As part of the financing for the Acquisition of the RPS Division, the Company
issued $170,000 in Senior Subordinated Seller Notes due one hundred twenty days
after the Acquisition closing date. The Company has the option, subject to bank
approval, to redeem (in whole or in part) the Senior Subordinated Seller Notes.
Under the terms of the Senior Subordinated Seller Notes, to the extent the
Company has not refinanced the Senior Subordinated Seller Notes within one
hundred twenty days of the Acquisition closing date, such notes convert into an
equal principal amount of eight year notes with an interest rate starting at
12.0% and increasing by 0.5% every three months to a maximum of 14.5%. Interest
exceeding 12.0% will be payable in kind. The Senior Subordinated Seller Notes
are subject to certain restrictions and covenants common to such agreements. On
January 29, 1999 the Senior Subordinated Seller Notes were repaid. See Note 21
for additional information.
In August 1996 the Company issued $100,000 aggregate principal amount of
11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes") to finance the
acquisition of Sofitam. Interest on these notes accrues at
F-30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
the rate of 11.5% per annum and is payable semi-annually in cash on each
February 1 and August 1 to the registered holders at the close of business on
January 15 and July 15 immediately preceding the applicable interest payment
date.
During the fourth quarter of 1997, the Company used proceeds from its Old
Credit Agreement to purchase $10,000 face value of the 11.5% Notes. The Company
purchased these 11.5% Notes on the open market at an aggregate price of $11,390
plus accrued interest and recorded an extraordinary loss of $1,886. This amount
includes $1,390 of premiums paid to repurchase the 11.5% Notes and $496
representing the write-off of a proportionate share of the original unamortized
deferred issuance costs.
The Company used proceeds from the March 1998 Common Stock Offering of
$39,356 to redeem $35,000 in aggregate principal amount of the 11.5% Notes.
These 11.5% Notes were redeemed at a call price of 109.857%, expressed as a
percentage of the original face value, resulting in premiums paid of $3,450
along with accrued interest of $906. Following the redemption, $55,000 in
aggregate principal amount of the 11.5% Notes remained outstanding. The Company
recorded an extraordinary loss on the extinguishment of the 11.5% Notes of
approximately $4,965 during the second quarter of 1998. This loss includes
$3,450 of premiums paid to purchase the 11.5% Notes and $1,515 representing the
write-off of a proportionate share of the original unamortized deferred
issuance costs.
On September 30, 1998, the Company completed the repurchase of the final
$55,000 of 11.5% Notes that were then outstanding. These 11.5% Notes were
redeemed at an aggregate premium and consent payment of $12,332 along with
accrued interest of $1,072. The company recorded an extraordinary loss on the
extinguishment of the 11.5% Notes of approximately $14,940 in the fourth
quarter of 1998. These notes were repurchased with proceeds from borrowings
under the New Credit Agreement. See also Note 21.
8. JUNIOR SUBORDINATED PIK NOTES
In connection with the acquisition of the RPS Division, the Company issued
$40,000 million in Junior Notes. Interest on the Junior Notes is payable
quarterly in cash or in-kind at the Company's option. All existing U.S.
subsidiaries have guaranteed, and all future U.S. subsidiaries will guarantee,
the Junior Notes on a junior subordinated basis with unconditional guarantees
that are or will be unsecured and subordinated to senior debt of such
subsidiaries.
The Junior Notes are unsecured junior subordinated obligations of the Company
and are junior to the Company's senior debt. The Junior Notes were issued under
an indenture (the "Junior Indenture") that limits the ability of the Company
and its subsidiaries to, among other things: incur indebtedness; pay dividends
and make certain other payments; make certain investments; sell certain assets;
enter into certain transactions with affiliates; restrict distributions from
subsidiaries; incur liens; and consolidate, merge or transfer all or
substantially all of its or its subsidiaries' assets.
Subject to the terms of the Junior Indenture, the Junior Notes may be
redeemed at any time, in whole or in part, at the option of the Company at a
redemption price equal to the unpaid principal amount thereof plus accrued
interest thereon to the redemption date. Upon a change of control (as defined
in the Junior Indenture, and subject to certain conditions set forth in the
Junior Indenture), any holder of Junior Notes will have the right to cause the
Company to repurchase all or any part of the Junior Notes of such Holder at a
purchase price equal to 101% of the principal amount of the Junior Notes to be
repurchased plus accrued and unpaid interest thereon, if any, to the date of
repurchase. The Junior Notes are subject to a registration rights agreement,
with registration rights that can be exercised any time after the date that is
120 days after the issue date of the Junior Notes.
F-31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
9. OTHER LONG TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (ESOP)
OBLIGATION
Term debt at November 30, 1998 and 1997 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
0.0% Belgian government note due in 1999 (a)..................... $ 58 $ 93
3.5% German bonds, due in semiannual installments through 1998
(a)............................................................. -- 80
6.0% notes payable, due in semiannual installments through 2004
(a)............................................................. 679 --
8.1% note payable, due in semiannual installments through 2001
(a)............................................................. -- 160
11.5% note payable, due in quarterly installments through 1998
(a)............................................................. -- 405
15.0% note payable, due in quarterly installments through 2002
(a)............................................................. 315 372
14.3% note payable, due in monthly installments through 2000
(a)............................................................. -- 149
27.5% note payable, due in monthly installments through 2000
(a)............................................................. 303 343
5.0% to 16.50% capital lease obligations, due in quarterly
installments through 2002 (a)................................... 2,140 2,315
9.33% capital lease obligation, due in annual installments
through 2004 (a)................................................ 2,356 2,559
Other............................................................ -- 311
5.0% to 15.0% notes payable, due in annual installments through
2004 (a)........................................................ 374 --
------ ------
6,225 6,787
Less: Current maturities......................................... 2,110 2,390
------ ------
$4,115 $4,397
====== ======
Guaranteed Employees' Stock Ownership Plan (ESOP) obligation at
November 30, 1998 and 1997 consisted of the following:
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (ESOP) obligation,
variable rate, maturing $640 to $760 quarterly through 2001,
rate of 7.41% at November 30, 1998 (b).......................... $6,987 $9,429
</TABLE>
Aggregate scheduled maturities of the above term debt and Guaranteed Employees'
Stock Ownership Plan (ESOP) obligation during the upcoming five years
approximate $4,747; $4,418; $2,272; $637; and $482, respectively.
(a) Aggregate cost of plant and equipment pledged as collateral under revenue
bonds and lease obligations is $6,231.
(b) Per the New Credit Agreement as described in Note 5, the ESOP obligation
matures on September 3, 2002.
10. OPERATING LEASES
The Company leases certain manufacturing equipment, office equipment,
computers, vehicles, and office and warehousing space under operating leases.
These leases generally expire in periods ranging from one to five years.
Amounts charged to expenses under operating leases in 1998, 1997 and 1996
were $6,364, $4,104, and $2,835, respectively. Future minimum rental payments
under noncancelable operating leases during the upcoming five years approximate
$6,158, $5,020, $2,865, $2,371 and $2,260.
F-32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
11. STOCK OPTION PLANS
The Company has three separate Stock Option Plans, as outlined below:
1992 Stock Incentive Plan (SIP)
The Plan contains both incentive stock options (ISOs) and non-qualified stock
options (NSOs). The price of each share under this Plan for an ISO or NSO shall
not be less than the fair market value of Tokheim Corporation Common Stock on
the date the option is granted.
Options granted under the SIP become exercisable at the rate of 25% of the
total options granted per year, beginning one year after the grant date. All
options expire within ten years from the date on which they were granted.
In addition, the SIP provides for the granting of Stock Appreciation Rights
(SARs) and Restricted Stock Awards (RSAs). During 1998, there were no SARs or
RSAs granted.
1982 Incentive Stock Option Plan (ISOP) and 1982 Unqualified Stock Option Plan
(USOP)
Effective January 21, 1992, no additional shares could be granted under these
plans. All options expire within ten years from the date on which they were
granted.
The price of each share under the ISOP was not less than fair market value of
Tokheim Corporation Common Stock on the date the option was granted, and under
the USOP was not less than 85% of the fair market value of Tokheim Corporation
Common Stock on the date the option was granted.
Options granted under the respective plans during 1998, 1997, and 1996, are
as follows:
<TABLE>
<CAPTION>
1992 Stock
Incentive Plan
------------------
Year of Grant ISO NSO RSA
------------- ------- --- ------
<S> <C> <C> <C>
1998.................................................. 2,000 -- --
1997.................................................. 468,000 -- 42,500
1996.................................................. 45,000 -- --
</TABLE>
The following table sets forth the status of all outstanding options at
November 30, 1998:
<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 15,300 -- 15,300
$18.6875 -- 2,000 2,000
$18.1250 4,375 13,125 17,500
$12.2500 500 -- 500
$11.9375 2,500 -- 2,500
$9.0000 -- 1,000 1,000
$8.8800 36,250 -- 36,250
$8.6880 81,250 285,000 366,250
$8.5000 11,250 3,750 15,000
$7.9380 2,000 21,000 23,000
$7.1250 19,000 21,500 40,500
------- ------- -------
172,425 347,375 519,800
======= ======= =======
</TABLE>
154,982 and 335,388 options were exercisable as of November 30, 1997 and 1996
respectively.
F-33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The weighted average exercise price was $9.25 and $9.10 and the weighted
average remaining contractual life was 6.83 and 7.15 years for all outstanding
options as of November 30, 1998, and 1997, respectively.
Transactions in stock options under these plans are summarized as follows:
<TABLE>
<CAPTION>
Shares
Under Option Price Range
------------ ------------
<S> <C> <C>
Outstanding, November 30, 1995..................... 482,341 $6.81-$20.00
Granted............................................ 45,000 $7.13-$9.00
Exercised.......................................... (5,000) $8.75
Canceled or expired................................ (70,087) $6.81-$20.00
--------
Outstanding, November 30, 1996..................... 452,254 $6.81-$20.00
Granted............................................ 468,000 $7.94-$18.13
Exercised.......................................... (235,547) $6.81-$9.38
Canceled or expired................................ (58,225) $6.81-$20.00
--------
Outstanding, November 30, 1997..................... 626,482 $6.81-$20.00
Granted............................................ 2,000 $18.69
Exercised.......................................... (94,907) $6.81-$11.94
Canceled or expired................................ (13,775) $7.94-$20.00
--------
Outstanding, November 30, 1998..................... 519,800
========
</TABLE>
Reserved for the granting of new options:
<TABLE>
<CAPTION>
Shares
-------
<S> <C>
November 30, 1996.................................................... 98,774
November 30, 1997.................................................... 133,274
November 30, 1998.................................................... 158,774
</TABLE>
F-34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Effective December 1, 1996, the Company adopted the disclosure-only
provisions of SFAS No. 123. Accordingly, no compensation cost has been
recognized for the existing stock option plans under the provisions of this
statement. The Company continues to account for stock options at their
intrinsic value under the provisions of APBO No. 25, which is allowed under
SFAS No. 123. Under APBO No. 25, because the option terms are fixed and the
exercise price of employee stock options equals the market price on the date of
grant, no compensation expense is recorded. Had compensation cost for the
Company's stock option plan been determined based on the fair value at the
grant date, consistent with the provisions of SFAS No. 123, the Company's net
earnings (loss) would have been impacted as indicated below:
<TABLE>
<CAPTION>
1998 1997
------------------ -----------------
As Pro As Pro
Reported Forma Reported Forma
-------- -------- -------- -------
(in thousands except per share
data)
<S> <C> <C> <C> <C>
Earnings (loss) before extraordinary
loss.................................... $ (3,744) $ (3,744) $ 3,980 $ 3,980
Estimated fair value of the year's option
grants.................................. -- (4) -- (313)
-------- -------- ------- -------
Earnings (loss) before extraordinary
loss.................................... (3,744) (3,748) 3,980 3,667
Extraordinary loss on debt
extinguishment.......................... (23,924) (23,924) (1,886) (1,886)
-------- -------- ------- -------
Net earnings (loss)...................... $(27,668) $(27,672) $ 2,094 $ 1,781
======== ======== ======= =======
Preferred stock dividends ($1.94 per
share).................................. $ (1,484) $ (1,484) $(1,512) $(1,512)
Earnings (loss) applicable to common
stock................................... $(29,152) $(29,156) $ 582 $ 269
Earnings (loss) per common share:
Basic
Before extraordinary loss............ $ (0.46) $ (0.46) $ 0.31 $ 0.27
Extraordinary loss on debt
extinguishment...................... (2.10) (2.10) (0.23) (0.23)
-------- -------- ------- -------
Net earnings (loss).................. $ (2.56) $ (2.56) $ 0.08 $ 0.04
======== ======== ======= =======
Weighted average number of shares
outstanding......................... 11,371 11,371 8,042 8,042
======== ======== ======= =======
Diluted
Before extraordinary loss............ $ (0.46) $ (0.46) $ 0.27 $ 0.24
Extraordinary loss on debt
extinguishment...................... (2.10) (2.10) (0.21) (0.21)
-------- -------- ------- -------
Net earnings (loss).................. $ (2.56) $ (2.56) $ 0.06 $ 0.03
======== ======== ======= =======
Weighed average number of shares
outstanding......................... 11,371 11,371 9,005 9,005
======== ======== ======= =======
</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 1998 and 1997 grants. As such, the impacts are not
necessarily indicative of the effects on reported net earnings (loss) of future
years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for 1998 and 1997:
<TABLE>
<CAPTION>
Assumptions 1998 1997
----------- ------- -------
<S> <C> <C>
Dividend yield............................................... -- --
Risk free interest rate...................................... 5.88% 6.37%
Expected life of options..................................... 5 years 5 years
Expected volatility.......................................... 38.76% 38.76%
Estimated fair value of options granted per share............ $8.94 $9.01
</TABLE>
F-35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
12. COMMON AND PREFERRED STOCK
Changes in common stock and common treasury stock are shown below:
<TABLE>
<CAPTION>
Common
Common Stock Treasury Stock
------------------ ---------------
Shares Amount Shares Amount
---------- ------- ------- ------
<S> <C> <C> <C> <C>
Balance, November 30, 1995............... 7,949,000 $19,409 13,000 $ 231
Stock options exercised.................. 5,000 43 -- --
Employee termination benefits............ -- -- (1,000) (11)
Other.................................... -- -- (1,000) (28)
---------- ------- ------- -----
Balance, November 30, 1996............... 7,954,000 19,452 11,000 192
Stock options exercised.................. 278,000 1,706 -- --
Shares purchased......................... -- -- 8,000 105
Other.................................... -- -- (10,000) (157)
---------- ------- ------- -----
Balance, November 30, 1997............... 8,232,000 $21,158 9,000 $ 140
Stock options exercised.................. 6,000 1,472 -- --
Shares purchased......................... -- -- 29,000 555
Equity Offering.......................... 4,370,000 67,724 -- --
---------- ------- ------- -----
Balance, November 30, 1998............... 12,698,000 $90,354 38,000 $ 695
========== ======= ======= =====
</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, 1995.................. 960,000 $24,000 151,000 $3,784
Shares redeemed............................. -- -- 31,000 771
RSP contributions........................... -- -- (15,000) (384)
------- ------- ------- ------
Balance, November 30, 1996.................. 960,000 $24,000 167,000 $4,171
Shares redeemed............................. -- -- 48,000 1,197
RSP contributions........................... -- -- (26,000) (650)
------- ------- ------- ------
Balance, November 30, 1997.................. 960,000 $24,000 189,000 $4,718
Shares redeemed............................. -- -- 43,000 1,079
RSP contributions........................... -- -- (37,000) (914)
------- ------- ------- ------
Balance, November 30, 1998.................. 960,000 $24,000 195,000 $4,883
======= ======= ======= ======
</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 18 for
further discussions on the Company's Preferred Stock.
F-36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
On March 1998, the Company completed a secondary public offering of 4,370,000
shares of Tokheim common stock at an initial offering price of $16.5625 per
share. The net proceeds of the offering totaled $67,724. The Company used the
proceeds to repurchase $35,000 in aggregate principal amount of outstanding
11.5% Notes, repayment of amounts outstanding under the Old Credit Agreement
and general corporate purposes.
As part of the consideration paid ($20,000) in the RPS Division Acquisition,
the Company issued the Warrants, exercisable for up to 19.9% of the outstanding
shares of the Company's common stock at an exercise price of $.01 per share.
The actual number of shares issuable upon exercise is 2,526,923. The Warrants
are exercisable for five years beginning January 30, 1999.
The number of shares of the Company's common stock issuable upon exercise of
the Warrants, along with the purchase price of the common stock Warrants, will
be further adjusted to reflect any stock splits, stock subdivisions or
combinations of the Company's common stock, any reclassification of the
Company's common stock, any capital reorganization, merger or consolidation of
the Company, any issuance of common stock by the Company, and any issuance of
convertible securities by the Company.
The Company may redeem the Warrants, in whole or in part, at any time on or
before January 29, 1999, by paying $20.0 million (or an appropriate percentage
thereof if the Warrants are redeemed in part).
13. EARNINGS PER SHARE
The Company adopted SFAS No. 128, Earnings Per Share, during the first
quarter of fiscal 1998. Under SFAS No. 128, the Company presents two earnings
per share ("EPS") amounts, Basic and Diluted. Basic EPS is calculated based on
earnings available to common shareholders and the weighted average number of
shares outstanding during the reported period. Diluted EPS includes additional
dilution from potential common stock, such as stock issuable pursuant to the
conversion of preferred stock or the exercise of stock options and warrants
outstanding. The incremental shares from conversions of preferred stock and the
exercise of stock options and rants were not included in computing diluted EPS
for the years ended November 30, 1998, and 1996, since the effect of such is
antidilutive during periods when a loss from continuing operations applicable
to common shareholders is reported. For the year ended November 30, 1998, the
weighted average of potentially issuable common shares included 764,664 shares
of convertible preferred stock outstanding, 210,488 shares for stock options
and 428,938 shares related to the Warrants. During the year ended November 30,
1996, the weighted average of potentially issuable common shares included
800,400 shares of convertible preferred stock outstanding and 67,504 shares for
stock options. EPS for the years ended November 30, 1997 and 1996 have been
restated to apply the provisions of SFAS No. 128. Earnings per common share
calculated for the years ended November 30, 1997 and 1996 on a primary and
fully diluted basis under the provisions of Accounting Principles Board Opinion
No. 15 differed by less than one cent per share from that calculated on a basic
and diluted basis under SFAS No. 128 as there is no difference in the earnings
amounts applicable to common stock and the difference between the weighted
average shares outstanding used in the two calculations is not material.
F-37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The following table presents the share information necessary to calculate
earnings (loss) per share for fiscal years ended November 30, 1998, 1997, and
1996:
<TABLE>
<CAPTION>
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Basic shares outstanding:
Weighted average outstanding............................ 11,371 8,042 7,940
====== ===== =====
Diluted shares outstanding:
Weighted average outstanding............................ 11,371 8,042 7,940
Share equivalents....................................... -- 177 --
Weighted conversion of preferred stock.................. -- 786 --
------ ----- -----
Adjusted outstanding.................................... 11,371 9,005 7,940
====== ===== =====
</TABLE>
The AICPA issued SOP No. 93-6, Employers' Accounting for Employee Stock
Ownership Plans, in November 1993. As allowed by that statement, the Company
has elected to continue its current accounting practices for the ESOP which are
based on SOP No. 76-3 and subject to consensuses of the Emerging Issues Task
Force of the Financial Accounting Standards Board. Dividends paid on Preferred
Stock are deducted from EPS computations and Preferred Stock outstanding is
converted at a ratio of one-for-one.
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998
---------------------------------------------------------
1st 2nd 3rd 4th Total
Quarter(A) Quarter Quarter Quarter(B) (A)(B)
---------- ------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net sales............... $90,852 $99,652 $101,492 $174,443 $466,440
Cost of sales (C)....... 67,074 73,118 73,782 131,057 345,031
Earnings (loss) before
extraordinary loss..... (5,606) 2,427 2,929 (3,496) (3,744)
Extraordinary loss on
debt extinguishment.... -- (4,965) -- (18,959) (23,924)
Net earnings (loss)..... (5,606)(D) (2,538)(E) 2,929 (22,455)(F) (27,668)
Earnings (loss) per
common share:
Basic:
Before extraordinary
loss............... (0.72) 0.17 0.20 (0.31) (0.46)
Extraordinary loss
on debt
extinguishment..... -- (0.42) -- (1.50) (2.10)
Net earnings
(loss)............. (0.72) (0.25) 0.20 (1.81) (2.56)
Diluted:
Before extraordinary
loss............... (072) 0.16 0.19 (0.31) (0.46)
Extraordinary loss
on debt
extinguishment..... -- (0.39) -- (1.50) (2.10)
Net earnings
(loss)............. (0.72) (0.23) 0.19 (1.81) (2.56)
</TABLE>
- --------
(A) Includes MSI's results of operations since December 31, 1997, the date of
acquisition.
(B) Includes the RPS Division's results of operations since September 30, 1998,
the date of acquisition.
(C) Includes product development expenses and excludes depreciation and
amortization.
(D) Includes a $5,879 write-off of in-process research and development in
connection with the MSI acquisition
(E) Includes a $4,965 extraordinary loss on debt extinguishment on the
redemption of $35,000 of the 11.5% Notes, repurchased with proceeds from
the Company's Common Stock Offering. Includes a currency gain of $770
associated with the repayment of various French franc denominated
borrowings.
F-38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
(F) Includes an extraordinary loss on debt extinguishment on the redemption of
$55,000 of the 11.5% Notes and refinancing of the company's bank debt. In
addition, the Company recorded merger and acquisition costs and other
unusual items of $7,089 associated with various integration and
rationalization plans for the RPS Division and Sofitam.
<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............................ 125 1,210 152 2,493 3,980
Extraordinary loss on debt
extinguishment.................. -- -- -- (1,886) (1,886)
Net earnings..................... 125 1,210 152 607 2,094
Earnings (loss) per common share:
Basic:
Before extraordinary item.... (0.03) 0.10 (0.03) 0.26 0.31
Extraordinary loss on debt
extinguishment.............. -- -- -- (0.23) (0.23)
Net earnings (loss).......... (0.03) 0.10 (0.03) 0.03 0.08
Diluted:
Before extraordinary item.... (0.03) 0.09 (0.03) 0.23 0.27
Extraordinary loss on debt
extinguishment.............. -- -- -- (0.20) (0.21)
Net earnings (loss).......... (0.03) 0.09 (0.03) 0.03 0.06
</TABLE>
- --------
(A) Includes product development expenses and excludes depreciation and
amortization.
15. INCOME TAXES
Earnings (loss) before income taxes and extraordinary loss consists of the
following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ -------
<S> <C> <C> <C>
Domestic............................................ $ 2,117 $4,209 $ (542)
Foreign............................................. (4,815) 988 (687)
------- ------ -------
$(2,698) $5,197 $(1,229)
======= ====== =======
Income tax provision (benefit) consists of the following:
<CAPTION>
1998 1997 1996
------- ------ -------
<S> <C> <C> <C>
Current:
Federal........................................... $ (340) $ 240 $ (460)
State............................................. 747 311 277
Foreign........................................... 596 652 906
Deferred:
Foreign........................................... 43 14 57
------- ------ -------
Total tax provision............................. $ 1,046 $1,217 $ 780
======= ====== =======
</TABLE>
F-39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
A reconciliation of the reported tax expense (benefit) and the amount
computed by applying the statutory U.S. federal income tax rate of 35% to
earnings (loss) before income taxes and extraordinary loss is as stated below.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)........... $ (944) $1,819 $ (430)
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax benefit..... 487 202 180
Tax effect of dividends paid on stock held in
Retirement Savings Plans......................... (519) (529) (540)
Adjustments to prior year accruals and refunds.... -- (600) (111)
Foreign income (losses) not tax effected at
statutory rate................................... 2,030 917 1,248
Miscellaneous items, net.......................... (8) (592) 433
------ ------ ------
Reported tax expense................................ $1,046 $1,217 $ 780
====== ====== ======
</TABLE>
The components of the deferred tax assets and liabilities as of November 30,
1998 and 1997 are as stated below.
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable................................... $ 958 $ 346
Compensation and benefit accruals..................... 7,453 7,336
Accrued expenses...................................... 5,065 1,234
Net operating loss carryforwards...................... 33,145 12,822
Tax credit............................................ 383 378
Inventory............................................. 4,238 --
Intangible assets..................................... 4,944 --
Valuation allowance................................... (48,211) (19,095)
-------- --------
Total deferred tax asset............................ $ 7,975 $ 3,021
======== ========
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Gross deferred tax liabilities:
Property, plant and equipment......................... $ 1,494 $ 1,529
Pension assets........................................ 797 700
Inventory............................................. 1,819 476
Accrued expenses...................................... 3,865 --
Miscellaneous other, foreign.......................... -- 658
-------- --------
Total deferred tax liability........................ 7,975 3,363
-------- --------
Net deferred tax liability.............................. $ -- $ (342)
======== ========
</TABLE>
For domestic federal income tax purposes, the net operating loss ("NOL")
carryovers amount to $46,578 which will expire from 2006 to 2019.
At November 30, 1998, the Company recorded a net deferred tax asset of
approximately $40,240, which was offset in full by a valuation allowance due
largely to uncertainties associated with the Company's ability to fully use
these tax benefits. The Company is continuing to evaluate the likelihood that
all or part of the deferred tax asset will be realized through the generation
of future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly.
F-40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
16. GEOGRAPHICAL SEGMENTS
Domestic and foreign operations information for the years ended November 30,
1998, 1997, and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales--unaffiliated customers:
North America................................ $186,835 $139,928 $147,763
Export....................................... 30,744 46,529 38,541
Europe....................................... 226,587 176,402 80,370
Africa....................................... 22,274 22,610 13,059
-------- -------- --------
$466,440 $385,469 $279,733
======== ======== ========
Inter-area sales eliminations:
North America................................ $ 7,162 $ 8,432 $ 9,471
======== ======== ========
Europe....................................... $ 3,470 $ 3,660 $ 1,100
======== ======== ========
Africa....................................... $ 3 $ 286 $ 510
======== ======== ========
Operating profit:
North America................................ $ 2,198 $ 5,557 $ 494
Europe....................................... 11,666 10,259 2,649
Africa....................................... 1,052 1,444 633
Adjustments and eliminations................. (147) 3,385 2,580
-------- -------- --------
$ 14,769 $ 20,645 $ 6,356
======== ======== ========
Identifiable assets:
North America................................ $595,291 $207,209 $216,989
Europe....................................... 509,684 169,110 186,372
Africa....................................... 15,798 14,448 14,955
Adjustments and eliminations................. (345,311) (100,148) (108,455)
-------- -------- --------
$775,642 $290,619 $309,861
======== ======== ========
</TABLE>
The Company's foreign operations are located in: Canada; South Africa;
Scotland; Germany; France; Italy; Ivory Coast; Morocco; Switzerland; Spain;
Tunisia; Senegal; Cameroon; the Netherlands; Belgium; Poland; Austria; Denmark;
Norway; Great Britain; Czech Republic; Slovakia; Hungary and Ireland. Transfers
between geographical areas are at cost plus an incremental amount intended to
provide a reasonable profit margin to the selling enterprise.
17. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year.......................... $1,392 $ 904 $1,150
Sofitam acquisition adjustments..................... -- 350 --
Charged to operations............................... 1,210 192 667
Uncollectible accounts written off, less
recoveries......................................... (507) (34) (900)
Foreign currency translation adjustments............ 20 (20) (13)
------ ------ ------
Balance, end of year.............................. $2,115 $1,392 $ 904
====== ====== ======
</TABLE>
F-41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
18. RETIREMENT PLAN COST
The Company has several retirement plans covering most employees, including
certain employees in foreign countries. Charges to operations for the cost of
the Company's retirement plans, including the RSP, were $2,470, $2,625 and
$3,052 in 1998, 1997 and 1996, respectively.
Defined Benefit Plans (U.S.)--The Company maintains two noncontributory
defined benefit pension plans which cover certain union employees. The Company
makes contributions to the plans equal to the minimum contribution required by
the Internal Revenue Code. The benefits are based upon a fixed benefit rate and
the employee's years of service. Future benefits under these plans were frozen
as of December 31, 1990, at which time the plans' participants became eligible
to participate in the RSP.
The following table sets forth the aggregate defined benefit plans' funded
status and the amounts reflected in the accompanying Consolidated Balance Sheet
as of November 30, 1998 and 1997:
<TABLE>
<CAPTION>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
-------------- -----------------
1998 1997 1998 1997
------ ------ -------- -------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated plan
benefits:
Vested.................................... $1,562 $1,470 $ 9,837 $ 9,624
Non-vested................................ 84 80 672 662
------ ------ -------- -------
Accumulated benefit obligations........... $1,646 $1,550 $ 10,509 $10,286
====== ====== ======== =======
Projected benefit obligations............... $1,646 $1,550 $ 10,509 $10,286
Plan assets at fair value, principally
common stocks, bonds, and guaranteed
investment contracts, including $1,160 and
$555 for 1998 and 1997, respectively, of
the Company's common stock................. 2,179 2,149 8,924 9,477
------ ------ -------- -------
Plan assets in excess of (less than)
projected benefit obligations.............. 533 599 (1,585) (809)
Unrecognized net loss....................... 366 238 3,202 2,262
Unrecognized net assets at December 1, 1991
and 1990 being recognized over 15 years.... (173) (202) (67) (89)
Adjustment required to recognize minimum
liability.................................. -- -- (3,135) (2,173)
------ ------ -------- -------
Prepaid pension cost (pension liability)
recognized in the Consolidated Balance
Sheet...................................... $ 726 $ 635 $ (1,585) $ (809)
====== ====== ======== =======
</TABLE>
The net periodic pension expense amounts were based on the following
actuarial assumptions:
<TABLE>
<CAPTION>
Assets Accumulated
Exceed Benefits
Accumulated Exceed
Benefits Assets
----------- -----------
1998 1997 1998 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Discount rate on plan liabilities.................... 6.75% 7.25% 6.75% 7.25%
Rate of return on plan assets........................ 8.00% 8.00% 8.00% 8.00%
</TABLE>
The Company has recorded an additional minimum pension liability for the
underfunded plan of $3,135 and $2,173 at November 30, 1998 and 1997,
respectively, representing the excess of unfunded accumulated benefit
obligations over previously recorded pension cost liabilities.
F-42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The net periodic pension cost of U.S. defined benefit plans for 1998, 1997,
and 1996 includes the following components:
<TABLE>
<CAPTION>
1998 1997 1996
----- ------- -------
<S> <C> <C> <C>
Interest cost on projected benefit obligations..... $ 818 $ 844 $ 842
Return on plan assets.............................. (335) (1,739) (1,204)
Net amortization and deferral...................... (526) 1,056 619
----- ------- -------
Net periodic pension expense....................... $ 43 $ 161 $ 257
===== ======= =======
</TABLE>
Defined Benefit Plans (Foreign)--Certain Sofitam subsidiaries in France offer
unfunded defined benefit plans that cover all employees and provide lump-sum
benefit payments upon retirement unless employment is terminated prior to
retirement age. The following table sets forth the actuarial valuation
information for 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C> <C>
Actuarial present value of accumulated plan
benefits
Vested......................................... -- --
Non-vested..................................... $ 2,549 $ 2,178
------- -------
Accumulated benefit obligations................ 2,549 2,178
Effect of future salary increases.............. 937 1,086
======= =======
Projected benefit obligation................... $ 3,486 $ 3,264
Plan assets at fair value........................ -- --
------- -------
Funded status.................................. (3,486) (3,264)
Amortization of unrecognized net transition
obligation.................................... 590 692
Unrecognized net (gain) loss................... 359 324
------- -------
Prepaid pension cost (pension liability)....... $(2,537) $(2,248)
======= =======
The net periodic pension expense amounts were
based on the following actuarial assumptions:
*Discount rate................................... 4.77% 6.00%
*Salary growth percentage........................ 2.50% 3.50%
The net periodic pension cost of the foreign
defined benefit plans includes the following
components:
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Service cost................................... $ 208 $ 222 $ 207
Interest cost on projected benefit obligation.. 166 201 219
Amortization................................... 105 114 120
------- ------- -------
Net periodic pension cost.................... $ 493 $ 537 $ 546
======= ======= =======
</TABLE>
- --------
* In France
The information presented above was calculated based on actuarial valuations
of the plans as of August 31, 1998, 1997 and 1996, which approximates those as
of November 30, 1998, 1997 and 1996, respectively. The Company's other foreign
retirement plans represent an insignificant portion of the Company's total
retirement plans.
Defined Contribution Plan (U.S.)--The RSP covers substantially all U.S.
employees of Tokheim and includes a common and preferred stock ESOP, which
provide a retirement contribution of 2% (of salary) for
F-43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
factory and office employees, and 1.5% for all other participants in the plan
and a matching contribution of at least two-thirds of the first 6% of employee
contributions. The matching contribution can increase to 150% of the first 6%
of contributions, depending on the performance of the Company. See Note 11 for
a discussion of the Company's accounting for the ESOP pursuant to SOP 76-3.
The number of shares of preferred stock in the RSP at November 30, 1998 and
1997 was 764,664 and 793,160 respectively, at a cost of $25 per share. The
number of common shares in the RSP at November 30, 1998 and 1997 was 116,708
and 137,645, respectively, at an average cost of $17.17 and $18.22 per share,
respectively. The dividend yield on the preferred stock is 7.75%, and the
conversion rate is one share of preferred stock to one share of common stock.
Each year, approximately 8% of the preferred stock held by the plan is
allocated to participants' accounts. The Company has guaranteed the RSP loans
as described in Note 7. A like amount entitled "Guaranteed Employees' Stock
Ownership Plan (RSP) obligation" is recorded as a reduction of shareholders'
equity. As the Company makes contributions to the RSP, these contributions,
plus the dividends paid on the Company's preferred and common stock held by the
RSP, are used to repay the loans. As the principal amounts of the loans are
repaid, the RSP obligation in the equity and liability sections of the balance
sheet is reduced accordingly. Company contributions in excess of dividends are
allocated to interest and compensation expense on a basis proportional to the
required debt service on RSP loans. Amounts allocated to interest expense were
$565, $631, and $715 for 1998, 1997 and 1996 respectively.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Interest expense incurred by the Plan Trust(s) on ESOP
debt.................................................. $ 511 $ 710 $1,075
Company contributions to the RSP....................... 2,513 2,464 2,541
Dividends on preferred stock used for debt service by
the RSP............................................... 1,484 1,512 1,543
</TABLE>
19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides defined benefit postretirement health and life insurance
benefits to most of its U.S. employees. Covered employees become eligible for
these benefits at retirement, after meeting minimum age and service
requirements. The Company continues to fund benefits on a pay-as-you-go basis,
with some retirees paying a portion of the costs.
The accumulated postretirement benefit obligations as of November 30, 1998
and 1997, respectively, consisted of unfunded obligations as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Retirees and dependents..................................... $ 7,037 $ 6,890
Fully eligible active plan participants..................... 733 708
Other active plan participants.............................. 6,342 4,588
------- -------
Total accumulated postretirement benefit obligations...... 14,112 12,186
Unrecognized net gain....................................... 1,477 3,092
------- -------
Accrued postretirement benefit cost......................... 15,589 15,278
Less current portion........................................ (1,171) (900)
------- -------
$14,418 $14,378
======= =======
</TABLE>
Net postretirement benefit costs for 1998, 1997 and 1996 include the
following components:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Service costs.......................................... $ 380 $ 323 $ 603
Interest costs on accumulated postretirement benefit
obligation............................................ 901 860 1,108
------ ------ ------
Net postretirement benefit costs....................... $1,281 $1,183 $1,711
====== ====== ======
</TABLE>
F-44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The assumptions used to develop the net postretirement benefit expense and
the present value of benefit obligations are as follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
Discount rate.................................................... 6.75% 7.25%
Health care cost trend rate for the next year.................... 6.00% 6.50%
</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 2002. A 1% increase in this annual trend rate would increase the accumulated
postretirement benefit obligation as of November 30, 1998 by approximately
$1,600 and the combined service and interest components of the annual net post-
retirement health care cost by approximately $170.
20. CONTINGENT LIABILITIES
The Company is defending various claims and legal actions which are common to
its operations. These legal actions primarily involve claims for damages
arising out of the Company's manufacturing operations, including environmental
actions, patent infringement, product liability, and various contract and
employment matters.
Environmental Matters--The Company's operations and properties are subject to
a variety of complex and stringent federal, state, and local laws and
regulations, including those governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters. There
can be no assurance that material costs or liabilities will not be incurred in
connection with such claims. Based upon its experience to date, the Company
believes that the future costs of compliance with existing environmental laws
and regulations, and liabilities for known environmental claims pursuant to
such laws and regulations, will not have a material adverse effect on the
Company's business, financial condition, results of operations or cash flows.
However, future events, such as new information, changes in existing laws and
regulations or their interpretation, or more vigorous enforcement policies of
regulatory agencies may give rise to additional expenditures or liabilities
that could be material.
The U.S. Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, imposes liability, without
regard to fault or the legality of the original conduct, on certain classes of
persons with respect to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of the disposal site
or sites where the release occurred and companies that disposed of or arranged
for the disposal of the hazardous substances found at the site. Persons who are
or were responsible for releases of hazardous substances under CERCLA may be
subject to joint and several liability for the costs of cleaning up the
releases and for damages to natural resources. It is not uncommon for
neighboring landowners and other third parties to file claims for personal
injury or property damages allegedly caused by the hazardous substances
released into the environment. In addition, where the Company has sold
properties used in its prior manufacturing operations, it may have contractual
obligations to the new owner to remediate environmental contamination on the
site arising from prior operations.
The Company also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act and comparable state statutes. The U.S. Environmental Protection
Agency ("EPA") and various state agencies have promulgated regulations that
limit the disposal options for certain hazardous and non-hazardous waste. Such
regulations may also require corrective action with respect to contamination of
facilities caused by the past handling of industrial waste.
F-45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The Company has been named as a potentially responsible party ("PRP") under
CERCLA or similar state Superfund laws at three sites: the Fort Wayne Reduction
Site in Fort Wayne, Indiana; the Moyer Landfill Site in Collegeville,
Pennsylvania; and the I. Jones Recycling Site in Fort Wayne, Indiana. The
Company believes that the clean-ups at these three sites are largely complete
and that it has paid, or has currently accrued sufficient funds to pay, any
liabilities it may have associated with the clean-up of these sites. The
Company also owns or leases, and has in the past owned or leased, numerous
properties that for many years have been used in industrial and manufacturing
operations. Although the Company has in the past utilized operating and
disposal practices that were standard for the industry at the time, hazardous
substances may have been disposed of or released on or under the properties
owned or leased by the Company, or on or under other locations where such
wastes have been taken for disposal. The Company currently owns a facility near
Atlanta, Georgia that was previously used to refurbish gasoline dispensers. As
part of this operation, chlorinated solvents were inadvertently released to the
soil and groundwater through the facility septic system. Migration of these
releases has caused solvent concentrations above background levels in the
groundwater under an adjacent residential property. The Company has completed
the cleanup of this release under the oversight of the Georgia Environmental
Protection Division of the Georgia Department of Natural Resources, and is
currently monitoring the property to ensure that additional cleanup work is not
necessary.
The Company is also involved in one lawsuit with respect to environmental
liabilities under an indemnity provision of a sale agreement concerning the
sale of the die casting facility of a former subsidiary to a third party. The
Company has reached a settlement in this matter. Pursuant to the settlement
agreement, the Company will repurchase the real property and then lease the
property to the third party. The Company has agreed to place the facility into
the state remediation program. The Company presently does not anticipate any
material costs as a result of submitting the facility to the state site
remediation program.
Total amounts included in accrued expenses related to environmental matters
were $717 and $990 at November 30, 1998 and 1997, respectively. During 1995,
the Company settled two actions with the EPA. In one matter, the Company
settled for $627 as part of a global settlement with other PRPs, and the
Company recorded the liability in full at November 30, 1994. The EPA approved
this settlement in late 1997, and the Company paid one-half of the settlement
amount in December 1997. The final payment was made in December 1998. The
Company is pursuing recovery of these amounts from its insurance carriers and
has received $150 to date. In the other matter, the Company settled as a
participating generator as part of a global settlement. The Company received a
favorable judgment with respect to the environmental oversight costs from the
U.S. Court of Appeals for the 7th Circuit; the only outstanding liability is
the potential natural resource damages. The Company's portion of these damages
is estimated to be immaterial.
Product Liability and Other Matters--The Company is subject to various other
legal actions arising out of the conduct of its business, including actions
relating to product liability, and claims for damages alleging violations of
federal, state, or local statutes or ordinances dealing with civil rights,
equal pay, and sex discrimination. Total amounts included in accrued expenses
related to these actions were $1,718 and $1,330 at November 30, 1998 and 1997,
respectively. The Company is also seeking to recover in excess of $1.0 million
from its former outside legal firm for malpractice in handling a litigation
matter for the Company. In addition the Company successfully appealed a jury
verdict of $350 with respect to an equal pay act and sexual discrimination
claim to the 7th U.S. Court of Appeals.
In the opinion of the Company, amounts accrued for awards or assessments in
connection with these matters at this time are adequate, and the ultimate
resolution of environmental, product liability, and other legal matters will
not have a material effect on the Company's consolidated financial position,
results of operations, or cash flows. The Company is not able to estimate
accurately the additional loss or range of loss that is reasonably possible, in
addition to the amounts accrued. The Company reassesses these matters as new
facts and cases are brought to management's attention.
F-46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
21. SUBSEQUENT EVENTS
On January 26, 1999, the Company issued $123,000 aggregate principal amount
of 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and
(Euro)75,000 ($87,000 equivalent) aggregate principal amount of 11.375% Senior
Subordinated Notes due 2008 (the "Euro Notes") in a private placement pursuant
to Rule 144A (the "Offering"). The Notes will mature on August 1, 2008, and
interest is payable semi-annually on February 1 and August 1 of each year,
commencing August 1, 1999. The Company used the net proceeds from the Offering
to redeem in whole, the $170,000 Senior Subordinated Seller Notes and the
$22,500 Senior Notes. In addition, the Company used approximately $9,100 of the
net proceeds to reduce borrowings under the revolving credit facility under the
New Credit Agreement and to permanently reduce the bank working capital
commitment from $120,000 to $110,000.
During the first quarter of 1999, the Company incurred an extraordinary loss
on debt extinguishment of approximately $6,500 in connection with the
refinancing of the Senior Notes and the Senior Subordinated Seller Notes with
proceeds received from the Offering. This amount consists of $500 of premiums
on the Senior Notes and approximately $6,000 of unamortized deferred issuance
costs.
Each of the Dollar Notes and the Euro Notes will be redeemable, at the
Company's option, in whole at any time, or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................... 105.688%
2005........................................................... 103.792%
2006........................................................... 101.896%
2007 and thereafter............................................ 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to February 1, 2002, the Company may, at its option, use
the net cash proceeds of one or more public equity offerings to redeem up to
35% of the original principal amount of the Dollar Notes issued in the Offering
and up to 35% of the original principal amount of the Euro Notes issued in the
Offering, each at a redemption price equal to 111.375% of the principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
redemption; provided that at least 55% of the original principal amount of the
Dollar Notes issued in the Offering or the Euro Notes issued in the Offering,
as the case may be, remains outstanding immediately after any such redemption
and the Company shall make such redemption not more than 120 days after the
consummation of any such public equity offering.
The Notes are unsecured and subordinated to all of the Company's existing and
future senior debt, including its obligations under the New Credit Agreement.
All of the Company's current and future U.S. subsidiaries will guarantee the
Notes with guarantees that will be unsecured and subordinated to senior debt of
subsidiaries. The indentures under which the Notes were issued contain
covenants limiting the Company's ability to incur additional debt; pay
dividends on capital stock, repurchase capital stock or make certain other
restricted payments; make certain investments; create liens on our assets to
secure debt; enter into transactions with affiliates; merge or consolidate with
another company; and transfer and sell assets.
The Company and the subsidiary guarantors have entered into a Registration
Rights Agreement pertaining to the Dollar Notes and another Registration Rights
Agreement pertaining to the Euro Notes (together, the "Registration Rights
Agreements"). Per the registration rights agreement the Company will, at its
own cost, (i)
F-47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
within 90 days after the Issue Date, file a registration statement on the
appropriate registration form (the "Exchange Offer Registration Statement")
with the Securities and Exchange Commission (the "Commission") with respect to
the Exchange Offer to exchange the Euro and Dollar for the Exchange Notes which
will have terms substantially identical in all material respects to the Dollar
Notes or the Euro Notes, as the case may be, (except that the Exchange Notes
will not contain terms with respect to transfer restrictions or liquidated
damages), (ii) use its best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 150 days
after the Issue Date and (iii) use its best efforts to consummate the Exchange
Offer within 195 days after the Issue Date. Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the
Exchange Notes in exchange for surrender of the Euro and Dollar Notes.
Although the Company intends to file the registration statement described
above, there can be no assurance that such registration statement will be
filed, or, if filed, that it will become effective. If the Company fails to
comply with the above provisions or if such registration statement fails to
become effective, then, as liquidated damages, additional interest (the
"Additional Interest") shall become payable with respect to the applicable Euro
and Dollar Notes at an increasing rate of 0.5% for every ninety days that the
Company fails to register such notes.
22. SHAREHOLDER RIGHTS PLAN
On January 22, 1997, the Board of Directors of the Company approved the
extension of the benefits afforded by the Company's then-existing rights plan
by adopting a new shareholder rights plan. Pursuant to the new Rights
Agreement, dated as of January 22, 1997, and as amended by Amendment No. 1,
dated as of September 30, 1998, by and between the Company and Harris Trust and
Savings Bank, as Rights Agent, one Right was issued for each outstanding share
of Common Stock upon the expiration of the Company's then-existing rights
(February 9, 1997). Each of the new Rights entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Preferred Stock at a price of $44.00 per one-thousandth of a share. The Rights
will not become exercisable, however, unless and until, among other things,
certain persons acquire 15% or more of the outstanding Common Stock of the
Company or the Board of Directors of the Company determines that a person is an
Adverse Person.
A person who beneficially owns 10% or more of the outstanding shares of
Common Stock of the Company will be declared an Adverse Person if the Board of
Directors determines (a) that such beneficial ownership is intended to cause
the Company to repurchase the Common Stock beneficially owned by such person or
to pressure the Company to take action or enter into transactions intended to
provide such person with short-term financial gain that are not in the best
long-term interests of the Company and its shareholders or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse impact on
the Company to the detriment of the Company's shareholders, employees,
suppliers, customers or community. If certain persons acquire 15% or more of
the outstanding Common Stock or is declared an Adverse Person (subject to
certain conditions and exceptions more fully described in the Rights
Agreement), each Right will entitle the holder (other than the person who
acquired 15% or more of the outstanding Common Stock or is declared an Adverse
Person) to purchase Common Stock of the Company having a market value equal to
twice the exercise price of a Right. The new Rights are redeemable under
certain circumstances at $0.01 per Right and will expire, unless earlier
redeemed, on February 9, 2007.
23. GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS
In connection with the Acquisition and as part of the subsequent financing,
the Company issued and sold $123,000 of 11.375% US dollar-denominated senior
subordinated notes and (Euro)75,000 of 11.375% Euro denominated senior
subordinated notes (together the "Outstanding Notes") in a private placement
pursuant to
F-48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Rule 144A and Regulation S. The Outstanding Notes are, and the Exchange Notes
which will be issued in this Exchange Offer will be, general unsecured
obligations of the Company, subordinated in right of payment to all existing
and future senior indebtedness of the Company, and guaranteed on a full,
unconditional, joint and several basis by the Company's wholly owned domestic
subsidiaries.
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements as of November 30, 1998
and 1997 and for the years ended November 30, 1998, 1997 and 1996, of (a)
Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the
nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and
(2) Elimination entries necessary to consolidate Tokheim Corporation, the
parent, with guarantor and nonguarantor subsidiaries.
Investments in subsidiaries are accounted for by the parent using the equity
method of accounting. The guarantor and nonguarantor subsidiaries are presented
on a combined basis. The principal elimination entries eliminate investments in
subsidiaries and intercompany balances and transactions.
Separate financial statements for the guarantor subsidiaries and the
nonguarantor subsidiaries are not presented because management believes that
such financial statements would not be meaningful to investors.
F-49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
For the year ended November 30, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $149,660 $83,788 $260,004 $(27,012) $466,440
Cost of sales, exclusive
of items listed below.. 112,809 58,527 200,707 (27,012) 345,031
Selling, general, and
administrative
expenses............... 32,606 14,189 33,024 -- 79,819
Depreciation and
amortization........... 4,419 1,302 7,415 -- 13,136
Merger and acquisition
costs and other unusual
items.................. 7,206 108 6,371 -- 13,685
-------- ------- -------- -------- --------
Operating profit (loss). (7,380) 9,662 12,487 -- 14,769
Interest expense, net... 4,650 1,283 13,324 -- 19,257
Foreign currency (gain)
loss................... (996) 3 (449) -- (1,442)
Equity in (earnings)
loss of consolidated
subsidiaries........... 2,032 -- -- (2,032) --
Minority interest....... -- -- 327 -- 327
Other (income) expense,
net.................... (9,444) 1,745 7,024 -- (675)
-------- ------- -------- -------- --------
Earnings (loss) before
income taxes........... (3,622) 6,631 (7,739) 2,032 (2,698)
Income taxes............ 122 287 637 -- 1,046
-------- ------- -------- -------- --------
Earnings (loss) before
extraordinary item..... (3,744) 6,344 (8,376) 2,032 (3,744)
Extraordinary loss on
debt extinguishment.... (23,924) -- -- -- (23,924)
-------- ------- -------- -------- --------
Net earnings (loss)..... $(27,668) $ 6,344 $ (8,376) $ 2,032 $(27,668)
======== ======= ======== ======== ========
</TABLE>
F-50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
For the year ended November 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $149,124 $55,784 $211,972 $(31,411) $385,469
Cost of sales, exclusive
of items listed below.. 113,234 39,879 162,230 (31,411) 283,932
Selling, general, and
administrative
expenses............... 31,606 7,259 29,302 -- 68,167
Depreciation and
amortization........... 2,930 736 5,566 -- 9,232
Merger and acquisition
costs and other unusual
items.................. 2,952 -- 541 -- 3,493
-------- ------- -------- -------- --------
Operating profit (loss). (1,598) 7,910 14,333 -- 20,645
Interest expense, net... 5,344 5 11,102 -- 16,451
Foreign currency (gain)
loss................... (808) -- 856 -- 48
Equity in (earnings)
loss of consolidated
subsidiaries........... (2,622) -- -- 2,622 --
Minority interest....... -- -- 394 -- 394
Other (income) expense,
net.................... (5,760) 1,536 2,779 -- (1,445)
-------- ------- -------- -------- --------
Earnings (loss) before
income taxes........... 2,248 6,369 (798) (2,622) 5,197
Income taxes............ (1,732) 2,085 864 -- 1,217
-------- ------- -------- -------- --------
Earnings (loss) before
extraordinary item..... 3,980 4,284 (1,662) (2,622) 3,980
Extraordinary loss on
debt extinguishment.... (1,886) -- -- -- (1,886)
-------- ------- -------- -------- --------
Net earnings (loss)..... $ 2,094 $ 4,284 $ (1,662) $ (2,622) $ 2,094
======== ======= ======== ======== ========
</TABLE>
F-51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $153,016 $52,855 $107,863 $(34,001) $279,733
Cost of sales, exclusive
of items listed below.. 119,528 41,076 83,620 (34,001) 210,223
Selling, general, and
administrative
expenses............... 29,289 6,956 15,422 -- 51,667
Depreciation and
amortization........... 3,042 657 1,329 -- 5,028
Merger and acquisition
costs and other unusual
items.................. 5,230 -- 1,229 -- 6,459
-------- ------- -------- -------- --------
Operating profit (loss). (4,073) 4,166 6,263 -- 6,356
Interest expense, net... 3,162 2 4,027 -- 7,191
Foreign currency (gain)
loss................... 50 (1) 110 -- 159
Equity in (earnings)
loss of consolidated
subsidiaries........... (1,904) -- -- 1,904 --
Minority interest....... -- -- 393 -- 393
Other (income) expense,
net.................... (1,483) (276) 1,601 -- (158)
-------- ------- -------- -------- --------
Earnings (loss) before
income taxes........... (3,898) 4,441 132 (1,904) (1,229)
Income taxes............ (1,889) 1,831 838 -- 780
-------- ------- -------- -------- --------
Net earnings (loss)..... $ (2,009) $ 2,610 $ (706) $ (1,904) $ (2,009)
======== ======= ======== ======== ========
</TABLE>
F-52
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the year ended November 30, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided from
(used in) operations. $ (1,001) $ 13,634 $ 18,394 $(21,237) $ 9,790
Cash flows from
investing activities:
Acquisition, net of
cash acquired........ (10,641) (100,000) -- -- (110,641)
Plant and equipment
additions............ (5,165) (2,743) (6,640) -- (14,548)
Investments in and
advances to
subsidiaries, net.... 71,402 (87,676) (4,963) 21,237 --
Proceeds from sale of
property and
equipment............ 23 163 589 -- 775
-------- --------- -------- -------- ---------
Net cash provided
from (used in)
investing
activities......... 55,619 (190,256) (11,014) 21,237 (124,414)
Cash flows from
financing activities:
Proceeds from issuance
of senior notes...... 22,500 -- -- -- 22,500
Redemption of senior
subordinated notes... (90,000) -- -- -- (90,000)
Decrease in term debt. (39) -- (4,228) -- (4,267)
Increase (decrease) in
notes payable, banks. (24,090) 182,146 713 -- 158,769
Increase in cash
overdraft............ -- 148 3,423 -- 3,571
Debt issuance costs... (16,157) -- -- -- (16,157)
Proceeds from issuance
of common stock...... 74,057 -- -- -- 74,057
Equity issuance costs. (4,858) -- -- -- (4,858)
Premiums paid on debt
extinguishment....... (15,743) -- -- -- (15,743)
Treasury stock, net... (719) -- -- -- (719)
Preferred stock
dividends............ (1,484) -- -- -- (1,484)
-------- --------- -------- -------- ---------
Net cash provided
from (used in)
financing
activities......... (56,533) 182,294 (92) -- 125,669
Effect of translation
adjustments on cash.... -- (1,461) 10,779 -- 9,318
Cash and cash
equivalents:
Increase (decrease) in
cash................. (1,915) 4,211 18,067 -- 20,363
Beginning of year..... 2,764 1,170 2,504 -- 6,438
-------- --------- -------- -------- ---------
End of period......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801
======== ========= ======== ======== =========
</TABLE>
F-53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the year ended November 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided
from operations..... $ 11,092 $ 2,109 $ 7,510 $491 $ 21,202
Cash flows from
investing activities:
Plant and equipment
additions........... (4,708) (846) (5,600) -- (11,154)
Investments in and
advances to
subsidiaries, net... (1,691) (319) 2,600 (590) --
Proceeds from sale of
property and
equipment........... 240 20 500 -- 760
-------- ------- ------- ---- --------
Net cash used in
investing
activities........ (6,159) (1,145) (2,500) (590) (10,394)
Cash flows from
financing activities:
Redemption of senior
subordinated notes.. (10,000) -- -- -- (10,000)
Increase (decrease)
in term debt........ (55) -- (3,692) -- (3,747)
Increase (decrease)
notes payable,
banks............... 7,946 -- (6,176) -- 1,770
Increase (decrease)
in cash overdraft... -- (355) 2,229 -- 1,874
Proceeds from
issuance of common
stock............... 1,706 -- -- -- 1,706
Premiums paid on debt
extinguishment...... (1,390) -- -- -- (1,390)
Treasury stock, net.. (496) -- (99) 99 (496)
Preferred stock
dividends........... (1,512) -- -- -- (1,512)
-------- ------- ------- ---- --------
Net cash provided
from (used in)
financing
activities........ (3,801) (355) (7,738) 99 (11,795)
Effect of translation
adjustments on cash... -- (6) (2,383) -- (2,389)
Cash and cash
equivalents:
Increase (decrease)
in cash............. 1,132 603 (5,111) -- (3,376)
Beginning of year.... 1,632 567 7,615 -- 9,814
-------- ------- ------- ---- --------
End of period........ $ 2,764 $ 1,170 $ 2,504 $-- $ 6,438
======== ======= ======= ==== ========
</TABLE>
F-54
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided from
(used in) operations. $ 9,266 $ 3,034 $ (8,689) $2,286 $ 5,897
Cash flows from
investing activities:
Acquisition, net of
cash acquired........ (9,799) -- (42,306) -- (52,105)
Plant and equipment
additions............ (1,299) (654) (1,108) -- (3,061)
Investments in and
advances to
subsidiaries, net.... (80,741) (2,500) 85,527 (2,286) --
Proceeds from sale of
property and
equipment............ 150 5 932 -- 1,087
-------- ------- -------- ------ --------
Net cash provided
from (used in)
investing
activities......... (91,689) (3,149) 43,045 (2,286) (54,079)
Cash flows from
financing activities:
Proceeds from senior
subordinated notes... 100,000 -- -- -- 100,000
Decrease in term debt. (4,052) -- (27,748) -- (31,800)
Decrease notes
payable, banks....... (556) -- (4,488) -- (5,044)
Increase (decrease) in
cash overdraft....... -- -- 7,237 -- 7,237
Debt issuance costs .. (11,506) -- -- -- (11,506)
Proceeds from issuance
of common stock...... 42 -- -- -- 42
Treasury stock, net... (370) -- -- -- (370)
Preferred stock
dividends............ (1,543) -- -- -- (1,543)
-------- ------- -------- ------ --------
Net cash provided
from (used in)
financing
activities......... 82,015 -- (24,999) -- 57,016
Effect of translation
adjustments on cash.... -- -- (4,482) -- (4,482)
Cash and cash
equivalents:
Increase (decrease) in
cash................. (408) (115) 4,875 -- 4,352
Beginning of year..... 2,040 682 2,740 -- 5,462
-------- ------- -------- ------ --------
End of period......... $ 1,632 $ 567 $ 7,615 $ -- $ 9,814
======== ======= ======== ====== ========
</TABLE>
F-55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED BALANCE SHEET
As of November 30, 1998
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.......... $ 849 $ 5,381 $ 20,571 $ -- $ 26,801
Accounts receivables,
net.................. 52,303 32,643 133,868 (46,121) 172,693
Inventories, net...... 16,720 18,255 88,369 (311) 123,033
Other current assets.. 1,921 759 16,459 -- 19,139
-------- -------- -------- --------- --------
Total current
assets............. 71,793 57,038 259,267 (46,432) 341,666
Investments in
subsidiaries........... 112,268 13,869 3,197 (129,334) --
Property, plant, and
equipment, net......... 21,906 10,908 45,091 -- 77,905
Goodwill, net........... 15,765 89,590 218,758 -- 324,113
Other non-current assets
and deferred charges,
net.................... 107,666 259,055 5,787 (339,550) 32,958
-------- -------- -------- --------- --------
Total assets........ $329,398 $430,460 $532,100 $(515,316) $776,642
======== ======== ======== ========= ========
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt......... $ -- $ -- $ 2,110 $ -- $ 2,110
Notes payable to banks.. -- -- 410 -- 410
Cash overdrafts......... -- 21 15,043 -- 15,064
Accounts payable........ 32,782 24,750 84,107 (46,317) 95,322
Accrued expenses........ 16,458 42,193 77,513 -- 136,164
-------- -------- -------- --------- --------
Total current
liabilities........ 49,240 66,964 179,183 (46,317) 249,070
Notes payable, bank
credit agreement....... -- 182,145 -- -- 182,145
Senior notes............ 22,500 -- -- -- 22,500
Senior subordinated
notes.................. 95,946 74,054 -- -- 170,000
Junior subordinated
Payment In Kind note... 40,000 -- -- -- 40,000
Other long-term debt,
less current
maturities............. 9,409 -- 322,997 (328,291) 4,115
Guaranteed Employees'
Stock Ownership Plan
obligation............. 6,987 -- -- -- 6,987
Post-retirement benefit
liability.............. 14,418 -- -- -- 14,418
Minimum pension
liability.............. 3,135 -- -- -- 3,135
Other long-term
liabilities............ 475 (217) 7,366 (113) 7,511
-------- -------- -------- --------- --------
242,110 322,946 509,546 (374,721) 699,881
Redeemable convertible
preferred stock........ 24,000 -- -- -- 24,000
Guaranteed Employees'
Stock Ownership Plan
obligation............. (6,987) -- -- -- (6,987)
Treasury stock, at cost. (4,883) -- -- -- (4,883)
-------- -------- -------- --------- --------
12,130 -- -- -- 12,130
Common stock............ 90,354 107,243 14,960 (122,203) 90,354
Common stock warrants... 20,000 -- -- -- 20,000
Minimum pension
liability.............. (3,135) -- -- -- (3,135)
Foreign currency
translation
adjustments............ (12,547) (313) (9,738) -- (22,598)
Retained earnings
(accumulated deficit).. (18,819) 584 17,332 (18,392) (19,295)
-------- -------- -------- --------- --------
75,853 107,514 22,554 (140,595) 65,326
Less treasury stock, at
cost................... (695) -- -- -- (695)
-------- -------- -------- --------- --------
75,158 107,514 22,554 (140,595) 64,631
-------- -------- -------- --------- --------
Total liabilities
and shareholders'
equity............. $329,398 $430,460 $532,100 $(515,316) $776,642
======== ======== ======== ========= ========
</TABLE>
F-56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
CONSOLIDATED CONDENSED BALANCE SHEET
As of November 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.......... $ 2,764 $ 1,170 $ 2,504 $ -- $ 6,438
Accounts receivables,
net.................. 27,755 10,005 56,867 (11,616) 83,011
Inventories, net...... 19,455 8,326 36,382 184 64,347
Other current assets.. 2,310 242 4,153 -- 6,705
-------- ------- -------- --------- --------
Total current
assets............. 52,284 19,743 99,906 (11,432) 160,501
Investments in
subsidiaries........... 32,488 7,089 3,440 (43,017) --
Property, plant, and
equipment, net......... 19,180 4,119 19,236 -- 42,535
Goodwill, net........... 3,581 -- 64,114 -- 67,695
Other non-current assets
and deferred charges,
net.................... 99,423 55 1,756 (81,346) 19,888
-------- ------- -------- --------- --------
Total assets........ $206,956 $31,006 $188,452 $(135,795) $290,619
======== ======= ======== ========= ========
Liabilities and
Shareholders' Equity
Current maturities of
long-term debt......... $ 39 $ -- $ 2,352 $ -- $ 2,391
Notes payable to banks.. -- -- 98 -- 98
Cash overdrafts......... -- -- 10,575 -- 10,575
Accounts payable........ 22,994 6,387 36,364 (11,148) 54,597
Accrued expenses........ 14,662 4,453 32,075 -- 51,190
-------- ------- -------- --------- --------
Total current
liabilities........ 37,695 10,840 81,464 (11,148) 118,851
Notes payable, bank
credit agreement....... 24,090 -- -- -- 24,090
Senior subordinated
notes.................. 90,000 -- -- -- 90,000
Other long-term debt,
less current
maturities............. -- -- 86,899 (82,502) 4,397
Guaranteed Employees'
Stock Ownership Plan
obligation............. 9,429 -- -- -- 9,429
Post-retirement benefit
liability.............. 14,378 -- -- -- 14,378
Minimum pension
liability.............. 2,173 -- -- -- 2,173
Other long-term
liabilities............ 597 (362) 6,698 (103) 6,830
-------- ------- -------- --------- --------
178,362 10,478 175,061 (93,753) 270,148
Redeemable convertible
preferred stock........ 24,000 -- -- -- 24,000
Guaranteed Employees'
Stock Ownership Plan
obligation............. (9,429) -- -- -- (9,429)
Treasury stock, at cost. (4,718) -- -- -- (4,718)
-------- ------- -------- --------- --------
9,853 -- -- -- 9,853
Common stock............ 21,158 27,147 5,032 (32,179) 21,158
Minimum pension
liability.............. (2,173) -- -- -- (2,173)
Foreign currency
translation
adjustments............ (11,735) 89 (6,402) -- (18,048)
Retained earnings
(accumulated deficit).. 11,631 (6,708) 14,761 (9,863) 9,821
-------- ------- -------- --------- --------
18,881 20,528 13,391 (42,042) 10,758
Less treasury stock, at
cost................... (140) -- -- -- (140)
-------- ------- -------- --------- --------
18,741 20,528 13,391 (42,042) 10,618
-------- ------- -------- --------- --------
Total liabilities
and shareholders'
equity............. $206,956 $31,006 $188,452 $(135,795) $290,619
======== ======= ======== ========= ========
</TABLE>
F-57
<PAGE>
RPS DIVISION
Combined Condensed Balance Sheets
(Amounts in thousands)
<TABLE>
<CAPTION>
As of
--------------------------
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents......................... $ 9,728 $ 7,321
Accounts receivables, net of allowance for
doubtful accounts of $4,111 and $3,313,
respectively..................................... 82,181 102,540
Inventory, net.................................... 69,317 58,859
Other current assets.............................. 13,669 11,872
-------- --------
Total current assets........................ 174,895 180,592
Property, plant & equipment, net.................... 31,735 32,183
Other tangible assets............................... 1,056 1,326
Goodwill............................................ 49,792 51,757
Other noncurrent assets and deferred charges
(principally taxes on income)...................... 2,864 3,576
-------- --------
Total assets................................ $260,342 $269,434
======== ========
Liabilities and Equity:
Liabilities:
Current liabilities:
Current portion long-term debt.................. $ -- $ 46
Cash overdraft.................................. 2,289 12,614
Accounts payable and accruals................... 71,324 94,526
-------- --------
Total current liabilities................... 73,613 107,186
Postretirement benefits......................... 4,571 4,188
Minority interest............................... 162 133
Other long-term liabilities..................... 3,191 3,657
-------- --------
Total liabilities........................... 81,537 115,164
Equity and retained earnings (deficit):
Equity........................................ 200,708 160,578
Retained earnings (deficit)................... (21,903) (6,308)
-------- --------
Total liabilities and stockholders' equity.. $260,342 $269,434
======== ========
</TABLE>
F-58
<PAGE>
RPS DIVISION
Combined Condensed Statements of Income
(Amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, September 30,
1998 1997
------------- -------------
Unaudited Unaudited
------------- -------------
<S> <C> <C>
Net Sales........................................... $ 231,764 $ 231,978
Cost of sales....................................... 199,486 194,623
Selling, general, and administrative expenses....... 48,015 47,565
--------- ---------
Operating loss...................................... (15,737) (10,210)
Interest expense, net............................... 1,586 945
Other expense, net.................................. 3,270 3,307
--------- ---------
Loss before income taxes............................ (20,593) (14,462)
Income tax benefit.................................. (4,863) (5,246)
--------- ---------
Net loss............................................ $ (15,730) $ (9,216)
========= =========
</TABLE>
F-59
<PAGE>
RPS DIVISION
Combined Condensed Statements of Cash Flows
(Amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, September 30,
1998 1997
------------- -------------
Unaudited Unaudited
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(15,730) $ (9,216)
Adjustment to reconcile net loss to net cash used
in operations:
Depreciation and amortization..................... 8,766 8,476
Minority Interest................................. 29 11
Deferred income taxes............................. 151 1,659
Changes in assets and liabilities, net of effect
of acquired businesses:
Receivables, net................................. 18,009 29,355
Related party receivables........................ 2,350 1,106
Inventories...................................... (10,458) 588
Accounts payable................................. (16,811) (32,412)
Related party payables........................... (6,254) (2,117)
U.S. and foreign income taxes.................... (1,396) (2,989)
Other............................................ (1,552) 2,298
-------- --------
Net cash used in operations................ (22,896) (3,241)
-------- --------
Cash flows from investing activities:
Property, plant and equipment additions.......... (4,951) (6,810)
Investments...................................... 48 3,483
Other, net....................................... 312 19,303
-------- --------
Net cash provided by (used in) investing
activities................................ (4,591) 15,976
-------- --------
Cash flows from financing activities:
Net decrease in long-term debt................... (46) (694)
Net decrease cash overdraft and short-term debt.. (10,325) (4,056)
Capital contributions and other changes in
equity, net..................................... 7,915 (20,286)
Related party advances........................... 32,350 14,640
Dividends declared............................... -- (5,705)
-------- --------
Net cash provided from (used in) financing
activities................................ 29,894 (16,101)
-------- --------
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents. 2,407 (3,366)
Cash and cash equivalents, beginning of year..... 7,321 5,445
-------- --------
Cash and cash equivalents, end of period......... $ 9,729 $ 2,079
======== ========
</TABLE>
F-60
<PAGE>
RETAIL PETROLEUM SYSTEMS
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
Retail Petroleum Systems ("RPS" or the "Company") provides the worldwide
retail petroleum industry with integrated solutions for secured fuel dispenser
transactions. These solutions are based on a range of products and services,
including gasoline dispensers, payment terminals, service station management
systems, maintenance and installation of equipment, turn-key construction, and
renovation of service stations. RPS has 2,350 employees and its operations are
principally focused in Europe and the United States.
RPS is a wholly owned business of Schlumberger Limited (SL). The accompanying
interim financial statements have been prepared as if the Company had operated
as an independent stand-alone entity for the periods presented. These results
of operations, however, may not be indicative of the future results of
operations for RPS operating as a stand-alone entity.
On June 19, 1998, SL signed a contract with Tokheim Corporation for the sale
of the RPS operations. The accompanying interim financial statements do not
include any adjustments which may result from this change in ownership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Combined Interim Financial Statements of RPS have been prepared in
accordance with accounting principles generally accepted in the United States.
Principles of consolidation
The Combined Financial Statements include the accounts of all entities
controlled by RPS. All significant intercompany accounts and transactions are
eliminated. The equity method of accounting is used for investments in
affiliates in which RPS owns between 20% and 50%.
The combined balance sheet as of September 30, 1998, the combined statements
of income for the nine months ended September 30, 1998 and 1997, and the
combined statements of cash flows for the nine months ended September 30, 1998
and 1997 have been prepared by the Company, and are not audited. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position at September
30, 1998, and the results of operations and cash flows at September 30, 1998
and September 30, 1997 have been made. The combined balance sheet at December
31, 1997 has been derived from the audited financial statements at that date.
The results of operations for the nine months ended September 30, 1998 are
not necessarily indicative of the results to be expected for any subsequent
quarter or the entire year ending December 31, 1998.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management believes
that the estimates are reasonable.
F-61
<PAGE>
3. COMBINED STATEMENT OF EQUITY
<TABLE>
<CAPTION>
Retained Total
Equity Earnings Equity
-------- -------- --------
<S> <C> <C> <C>
Balance, December 31, 1996........................ $157,670 $ 6,396 $164,066
Net loss.......................................... -- (9,216) (9,216)
Dividend declared................................. -- (5,705) (5,705)
Capital contribution.............................. 3,628 -- 3,628
Related party advances............................ (6,298) -- 14,640
Other............................................. (3,359) -- (24,297)
Currency translation adjustment................... 385 -- 385
-------- -------- --------
Balance, September 30, 1997....................... 152,026 (8,525) 143,501
Balance, December 31, 1997........................ 160,578 (6,308) 154,270
Net loss.......................................... -- (15,730) (15,730)
Capital contribution.............................. 11,518 -- 11,518
Related party advances............................ 32,350 -- 32,350
Other............................................. (4,445) 135 (4,310)
Currency translation adjustment................... 707 -- 707
-------- -------- --------
Balance, September 30, 1998....................... $200,708 $(21,903) $178,805
======== ======== ========
</TABLE>
F-62
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Schlumberger Limited
In our opinion, the accompanying combined balance sheets and the related
combined statements of income and equity and of cash flows present fairly, in
all material respects, the financial position of Retail Petroleum Systems (a
wholly owned business of Schlumberger Limited) at December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers
July 6, 1998
Paris, France
F-63
<PAGE>
RETAIL PETROLEUM SYSTEMS
COMBINED STATEMENTS OF INCOME
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
----------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net revenue...................................... $344,248 $333,915 $303,668
-------- -------- --------
Expenses
Cost of goods sold and services................ 286,580 273,492 249,101
Research & engineering......................... 16,616 15,949 14,122
Marketing...................................... 25,520 24,111 21,364
General and administrative..................... 13,904 15,720 16,469
Goodwill amortization.......................... 3,902 3,255 2,594
Administrative fees allocated from parent...... 9,374 8,607 7,464
Restructuring charge........................... -- 9,978 --
-------- -------- --------
355,896 351,112 311,114
-------- -------- --------
Loss from operations............................. (11,648) (17,197) (7,446)
-------- -------- --------
Interest expense................................. (1,418) (1,652) (1,257)
Other expense.................................... (403) (1,557) (1,305)
-------- -------- --------
Loss before taxes and minority interest.......... (13,469) (20,406) (10,008)
Income tax benefit............................... 6,779 4,058 2,287
Minority interest................................ (30) (18) --
-------- -------- --------
Net loss......................................... $ (6,720) $(16,366) $ (7,721)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-64
<PAGE>
RETAIL PETROLEUM SYSTEMS
COMBINED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
--------------------------
1997 1996 1995
------- -------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $(6,720) $(16,366) $(7,721)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization.................. 11,777 10,780 10,084
Other.......................................... 8,276 (1,920) (2,966)
Changes in operating assets and liabilities, net
of effect of acquired businesses:
Accounts receivable............................ (5,872) (22,210) (13,780)
Inventories.................................... 3,128 (9,064) (1,796)
Accounts payable and accrued liabilities....... (11,615) 38,668 10,012
Prepaid and refundable income taxes............ (3,558) 301 585
Other assets and liabilities, net.............. 17,741 10,243 (1,001)
------- -------- -------
Net cash provided by (used in) operating
activities.................................. 13,157 10,432 (6,583)
------- -------- -------
Cash flows from investing activities:
Capital expenditures............................. (9,486) (14,736) (11,389)
Acquisition of businesses........................ (1,933) (20,224) (314)
Other, net....................................... 1,151 (1,440) (294)
------- -------- -------
Net cash used in investing activities........ (10,268) (36,400) (11,997)
------- -------- -------
Cash flows from financing activities:
Advances from related parties.................... 2,083 25,402 18,442
Long-term debt................................... (740) 466 (248)
Capital contributions............................ 3,628 5,013 4,936
Dividends paid................................... (5,984) (5,702) (1,500)
------- -------- -------
Net cash provided by (used in) financing
activities.................................. (1,013) 25,179 21,630
------- -------- -------
Net change in cash and cash equivalents...... 1,876 (789) 3,050
Cash and cash equivalents, beginning of year. 5,445 6,234 3,184
------- -------- -------
Cash and cash equivalents, end of year....... $ 7,321 $ 5,445 $ 6,234
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-65
<PAGE>
RETAIL PETROLEUM SYSTEMS
COMBINED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents................................. $ 7,321 $ 5,445
Short-term investments.................................... 1,001 3,431
Accounts receivable, net of allowance for doubtful
accounts of $3,313 and $3,397............................ 98,920 102,716
Receivables from related parties.......................... 3,620 2,076
Inventories............................................... 58,859 67,875
Deferred tax.............................................. 2,238 1,683
Prepaid and refundable income taxes....................... 4,631 1,420
Other current assets...................................... 4,002 2,964
-------- --------
Total current assets.................................... 180,592 187,610
-------- --------
Long-term investments and receivables....................... 988 2,383
Fixed assets, net of accumulated depreciation of $42,782 and
$45,651.................................................... 32,183 32,599
Goodwill.................................................... 51,757 57,391
Deferred tax................................................ 3,576 2,891
Other assets................................................ 338 19,796
-------- --------
Total assets............................................ $269,434 $302,670
======== ========
Liabilities and Equity
Current liabilities:
Bank overdrafts and short-term loans...................... $ 12,614 $ 11,433
Accounts payable and accrued liabilities.................. 87,608 110,516
Payables to related parties............................... 6,781 5,667
Dividends payable......................................... 137 --
Current portion of long-term debt......................... 46 203
-------- --------
Total current liabilities............................... 107,186 127,819
-------- --------
Long-term debt.............................................. -- 583
-------- --------
Other liabilities
Postretirement benefits................................... 4,188 3,827
Other long-term liabilities............................... 3,657 6,257
-------- --------
Total liabilities....................................... 115,031 138,486
-------- --------
Commitments and contingencies (Note 15)..................... -- --
Minority interest in subsidiaries........................... 133 118
Equity and retained earnings (deficit)
Equity.................................................... 160,578 157,670
Retained earnings (deficit)............................... (6,308) 6,396
-------- --------
154,270 164,066
-------- --------
Total liabilities and equity............................ $269,434 $302,670
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-66
<PAGE>
RETAIL PETROLEUM SYSTEMS
COMBINED STATEMENTS OF EQUITY
(Amounts in thousands)
<TABLE>
<CAPTION>
Retained
Earnings Total
Equity (Deficit) Equity
-------- --------- --------
<S> <C> <C> <C>
Balance, January 1, 1995......................... $107,245 $ 37,685 $144,930
Net loss....................................... (7,721) (7,721)
Dividends paid................................. (1,500) (1,500)
Capital contribution........................... 4,936 4,936
Related party advances......................... 18,442 18,442
Other.......................................... (315) (315)
Currency translation adjustment................ 2,198 2,198
-------- -------- --------
132,506 28,464 160,970
-------- -------- --------
Balance, December 31, 1995....................... 132,506 28,464 160,970
Net loss....................................... (16,366) (16,366)
Dividends paid................................. (5,702) (5,702)
Capital contribution........................... 5,013 5,013
Related party advances......................... 25,402 25,402
Other.......................................... (3,462) (3,462)
Currency translation adjustment................ (1,789) (1,789)
-------- -------- --------
157,670 6,396 164,066
-------- -------- --------
Balance, December 31, 1996....................... 157,670 6,396 164,066
Net loss....................................... (6,720) (6,720)
Dividends paid................................. (5,984) (26,922)
Capital contribution........................... 3,628 3,628
Related party advances......................... 2,083 23,021
Other.......................................... (1,237) (1,237)
Currency translation adjustment................ (1,566) (1,566)
-------- -------- --------
Balance, December 31, 1997....................... $160,578 $ (6,308) $154,270
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-67
<PAGE>
RETAIL PETROLEUM SYSTEMS
Notes to Financial Statements
(Dollars in thousands, unless otherwise indicated)
1. ORGANIZATION
Retail Petroleum Systems ("RPS" or the "Company") provides the worldwide
retail petroleum industry with integrated solutions for secured fuel dispenser
transactions. These solutions are based on a range of products and services,
including gasoline dispensers, payment terminals, service station management
systems, maintenance and installation of equipment, turn-key construction, and
renovation of service stations. RPS has 2,350 employees and its operations are
principally focused in Europe and the United States. RPS's operations involve a
single industry segment for financial reporting purposes.
RPS is a wholly owned business of Schlumberger Limited (SL). The accompanying
financial statements have been prepared as if the Company had operated as an
independent stand-alone entity for the periods presented. These results of
operations, however, may not be indicative of the future results of operations
for RPS operating as a stand-alone entity.
On June 19, 1998, SL signed a contract with Tokheim Corporation for the sale
of the RPS operations. The accompanying financial statements do not include any
adjustments which may result from this change in ownership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Combined Financial Statements of RPS have been prepared in accordance
with accounting principles generally accepted in the United States.
Principles of Consolidation
The Combined Financial Statements include the accounts of all entities
controlled by RPS. All significant intercompany accounts and transactions are
eliminated. The equity method of accounting is used for investments in
affiliates in which RPS owns between 20% and 50%.
Revenue Recognition
Generally, revenue is recognized upon delivery of equipment to the customer,
or in the case of installation, when installation is complete. Maintenance
contracts revenue is recognized on a pro-rata basis over the life of the
contract. On-call revenue is recognized in the month in which the service is
provided. Turn-key station revenue is recognized using the "percentage of
completion" method. Approximately fifty percent of the Company's revenue is
recognized upon delivery of equipment to the customer, or in the case of
installation when installation is complete.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management believes
that the estimates are reasonable.
Translation of Non-U.S. Currencies
All assets and liabilities recorded in functional currencies other than US
dollars are translated at current exchange rates. The resulting adjustments are
charged or credited directly to the equity section of the balance sheet.
Revenue and expenses are translated at the weighted-average exchange rates for
the period. All realized
F-68
<PAGE>
and unrealized transaction gains and losses are included in income in the
period in which they occur. Transaction losses included in results of
operations were $3 million, $2 million, and $.1 million in 1997, 1996 and 1995,
respectively.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an
original maturity of three months or less at date of purchase.
Investments
Short-term investments held to maturity are stated at cost plus accrued
interest, which approximates market, and are comprised primarily of money
market funds.
For purposes of the Combined Statement of Cash Flows, the Company does not
consider short-term investments to be cash equivalents as they generally have
original maturities in excess of three months.
Financial Instruments
The fair value of cash, accounts receivable, trade accounts payable, short-
term borrowings, and accrued expenses are not materially different than their
carrying amounts as reported at December 31, 1997 and 1996.
Inventories
Inventories are stated at lower of average cost or market. Spares inventory
includes new and repaired parts primarily for maintenance of dispensers. Spares
are principally valued at average cost.
Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation, which is
provided for by charges to income over the estimated useful lives of the assets
by the straight-line method. Expenditures for renewals, replacements, and
betterments are generally capitalized. Maintenance and repairs are charged to
operating expense as incurred. Upon sale or other disposition, the applicable
amounts of asset cost and accumulated depreciation are removed from the
accounts and the net amount, less proceeds from disposal, is charged or
credited to income.
Estimated useful lives of buildings and improvements range from ten to 30
years and machinery and equipment from three to ten years.
Goodwill
Goodwill represents cost in excess of net assets of purchased companies and
is amortized on a straight-line basis over periods ranging from five to 40
years. Accumulated amortization was $23 million and $19 million at December 31,
1997 and 1996, respectively. The Company evaluates the recoverability of
goodwill at each balance sheet date.
Research and Engineering
All research and engineering expenditures are expensed as incurred, including
costs relating to patents or rights that may result from such expenditures.
Taxes on Income
Taxes on income are computed in accordance with the tax rules and regulations
of the many taxing authorities where the income is earned. The income tax rates
imposed by these taxing authorities vary substantially. In most countries, RPS
is a division of the SL legal entity that is the ultimate tax payer in that
F-69
<PAGE>
jurisdiction. Taxable income may differ from pre-tax income for financial
accounting purposes. To the extent that differences are due to revenue or
expense items reported in one period for tax purposes and in another period for
financial accounting purposes, an appropriate provision for deferred income
taxes is made.
Tax credits and other allowances are credited to current income tax expense
on the flow-through method of accounting.
3. INVENTORIES
Inventories at December 31, 1997 and 1996 consist of the following:
<TABLE>
<S> <C> <C>
Raw materials............................................. $18,071 $19,689
Work in progress.......................................... 6,038 9,793
Finished goods............................................ 9,321 13,246
Spares.................................................... 25,429 25,147
------- -------
$58,859 $67,875
======= =======
</TABLE>
4. FIXED ASSETS
Fixed assets at December 31, 1997 and 1996 consist of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Land.................................................... $ 364 $ 392
Buildings and improvements.............................. 21,691 21,830
Machinery and equipment................................. 52,910 56,028
------- -------
74,965 78,250
Less: Accumulated depreciation.......................... (42,782) (45,651)
------- -------
Fixed assets............................................ $32,183 $32,599
======= =======
</TABLE>
Depreciation expense aggregated $7.9 million in 1997 and $7.5 million in both
1996 and 1995.
5. ACQUISITIONS AND GOODWILL
In July 1996, RPS acquired for $7.0 million, GUEANT Pere & Fils and its
subsidiary ETPM, a gasoline dispenser service company providing maintenance of
service stations and project management of turn-key stations. In August 1996,
RPS acquired for $13.0 million, GERMANN and its Polish subsidiary, a turn-key
gasoline station provider located in Germany. Costs in excess of net assets
acquired were respectively $5.0 million and $12.0 million, respectively, which
are being amortized on a straight-line basis over ten and 20 years,
respectively.
In addition, between December 1995 and August 1996, RPS acquired three small
service companies in Italy, Borghetti, CME, and Nuova Rimic, for an aggregate
amount of $1.8 million. Costs in excess of net assets acquired were $1.0
million and are being amortized on straight-line basis over 10 years.
All acquisitions were accounted for as purchases.
6. DEBT
At December 31, 1996, the Company had $.5 million of long-term debt in French
francs at variable rates up to 7% and $46,000 in German marks at a rate of
5.75%. All long-term debt was repaid in 1997, except for the $46,000 in German
marks which is due on June 30, 1998. The carrying value of long-term debt at
December 31, 1997 approximates the aggregate fair value.
F-70
<PAGE>
At December 31, 1997, the Company had available lines of credit of
approximately $13.4 million. The Company, at December 31, 1997, borrowed $12.6
million under these lines of credit at fixed and variable rates up to 8%.
7. TAXES ON INCOME
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-----------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
U.S. loss before taxes........................... $ 1,932 $ 4,698 $ 1,808
Foreign loss before taxes........................ 11,537 15,708 8,200
------- ------- -------
Total loss before taxes.......................... $13,469 $20,406 $10,008
======= ======= =======
</TABLE>
The following table shows the components of current and deferred income tax
benefits by taxing jurisdiction, both domestic and foreign:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Current
Federal..................................... $ 134 $ (992) $ 681
State and local............................. 10 (104) 65
Foreign..................................... (5,745) (2,682) (1,561)
------- ------- -------
(5,601) (3,778) (815)
------- ------- -------
Deferred
Federal..................................... (645) (285) (968)
State and local............................. (111) (49) (166)
Foreign..................................... (422) 54 (338)
------- ------- -------
(1,178) (280) (1,472)
Total income tax benefits................. $(6,779) $(4,058) $(2,287)
======= ======= =======
</TABLE>
At December 31, 1997 and 1996, gross deferred tax assets were $6,695 and
$5,202, respectively; gross deferred tax liabilities were $881 and $612,
respectively. The principal components of net deferred tax assets (liabilities)
were:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1996
------ ------
<S> <C> <C>
Employee and retiree benefits............................. $3,059 $2,736
Accounts receivable....................................... 517 516
Warranty.................................................. 1,721 1,167
Property, plant and equipment............................. 670 191
Others, net............................................... (153) (36)
------ ------
$5,814 $4,574
====== ======
</TABLE>
A reconciliation between the U.S. federal income tax rate and the effective
tax rate is:
<TABLE>
<CAPTION>
December 31,
------------------
1997 1996 1995
---- ----- -----
<S> <C> <C> <C>
Statutory tax rate...... 35.0% 35.0% 35.0%
Difference in effective
tax rate on foreign
earnings............... 12.7 (16.9) (15.6)
State and local taxes... 2.6 1.8 3.5
---- ----- -----
Effective tax rate...... 50.3% 19.9% 22.9%
==== ===== =====
</TABLE>
F-71
<PAGE>
8. PENSION AND OTHER BENEFIT PLANS
SL sponsors several defined benefit pension plans that cover substantially
all U.S. employees. The benefits are based on years of service and compensation
on a career-average pay basis. These plans are substantially fully funded with
a trustee in respect to past and current service. Charges to expense are based
upon costs computed by independent actuaries. The funding policy is to
contribute annually amounts that are allowable for federal income tax purposes.
These contributions are intended to provide for benefits earned to date and
those expected to be earned in the future.
In the U.S., the RPS employees are included in the SL Plan, and accordingly,
$0.4 million was allocated to RPS for its share of pension expense for each of
the years ended December 31, 1997, 1996 and 1995. At December 31, 1997 and
December 31, 1996, accrued pension costs relating to the Company's
participation in this plan were $1.3 million.
Outside of the U.S., subsidiaries of SL sponsor several defined benefit and
defined contribution plans that cover substantially all employees who are not
covered by statutory plans. For defined benefit plans, charges to expense are
based upon costs computed by independent actuaries. These plans are
substantially fully funded with trustees in respect to past and current
service. For all non-US defined benefit plans, pension expense was $1.0
million, $1.8 million, and $1.1 million in 1997, 1996 and 1995, respectively.
For non-U.S. defined contribution plans, funding and costs are generally
based upon a predetermined percentage of employee compensation, Charges to
expense in 1997, 1996 and 1995, were $2.5 million, $2.4 million and $2.5
million, respectively.
In accordance with France labor agreements, RPS is required to pay certain
retirement benefits to employees who retire while working for the Company. The
benefit consists of a lump sum payment depending upon seniority, age and salary
level at retirement date. At both December 31, 1997 and 1996, accrued French
retirement costs were $1.3 million.
Health Care Benefits
The Company provides health care benefits for certain active employees. The
cost of providing these benefits is recognized as expense when incurred and
aggregated $1 million, $1.1 million and $.9 million in 1997, 1996 and 1995,
respectively. Outside the US, such benefits are mostly provided through
government-sponsored programs.
Postretirement Benefits other than Pensions
The Company provides certain health care benefits to former employees who
have retired under the US pension plans.
The principal actuarial assumptions used to measure costs were a discount
rate of 8% in 1997 and 7.5% in 1996 and 1995. The overall medical cost trend
rate assumption beginning December 31, 1997, was 8% graded to 5% over the next
six years and 5% thereafter. Previously, the overall assumption had been 9%
graded to 6% over the next six years and thereafter.
Net periodic Postretirement benefit cost in the U.S. for 1997, 1996 and 1995,
included the following components:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Service cost--benefits earned during the period.......... $116 $181 $168
Interest cost on accumulated postretirement benefit
obligation.............................................. 56 80 64
Amortization of unrecognized net gain and other.......... (13) -- --
---- ---- ----
$159 $261 $232
==== ==== ====
</TABLE>
F-72
<PAGE>
The funded status at December 31, 1997 and 1996, was as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $ 144 $ 105
Actives.................................................. 824 607
------ ------
968 712
Unrecognized net gain...................................... 380 476
Unrecognized prior service cost............................ 14 15
------ ------
Postretirement benefit liability....................... $1,362 $1,203
====== ======
</TABLE>
The assumed discount rate used to determine the accumulated Postretirement
benefit obligation was 7.5% for 1997 and 8% for 1996.
If the assumed medical cost trend rate was increased by one percentage point,
health care cost in 1997 would have been $.2 million, and the accumulated
postretirement benefit obligation would have been $1.2 million at December 31,
1997.
9. RESTRUCTURING CHARGE
In 1996, the Company announced a charge of $6.8 million after tax, which
included pre-tax charges of $9.6 million for severance and termination costs,
and other asset impairments/charges of $.4 million.
The severance and termination costs relate to less than 10% of the worldwide
workforce, primarily in Europe, and pertain to both manufacturing and operating
personnel in about five locations. At December 31, 1997, $8.1 million of the
severance and termination costs had been spent. The remainder should be spent
within the next nine months.
10. LEASES AND LEASE COMMITMENTS
Minimum rental commitments under noncancellable operating leases, primarily
real estate and office facilities, in effect at December 31, 1997 are as
follows:
<TABLE>
<S> <C>
Year ended December 31,
1998............................ $4,629
1999............................ 3,833
2000............................ 2,282
2001............................ 1,318
2002 and beyond................. 593
</TABLE>
Operating lease rental expense aggregated $6.4 million, $5.1 million and $4.8
million for 1997, 1996 and 1995, respectively. These leases concern mostly
office building rentals and service van rentals.
F-73
<PAGE>
11. GEOGRAPHIC INFORMATION
During the years ended December 31, 1997, 1996 and 1995, neither sales to any
government nor sales to any single customer exceeded 10% of operating revenue.
<TABLE>
<CAPTION>
United
States Europe Other Total
------- -------- ------ --------
<S> <C> <C> <C> <C>
Geographic Area 1997
Operating revenue........................ $72,064 $267,216 $4,968 $344,248
Operating loss........................... (1,312) (9,187) (1,149) (11,648)
Identifiable assets at December 31....... 47,233 222,201 -- 269,434
Geographic Area 1996
Operating revenue........................ 56,291 275,718 1,906 333,915
Operating loss........................... (5,619) (10,010) (1,568) (17,197)
Identifiable assets at December 31....... 42,331 260,339 -- 302,670
Geographic Area 1995
Operating revenue........................ 63,134 239,386 1,148 303,668
Operating loss........................... (1,479) (5,416) (551) (7,446)
Identifiable assets at December 31....... 41,229 186,532 -- 227,831
</TABLE>
12. STOCK OPTION PLANS
As of December 31, 1997, SL administered stock option plans, which are
described below. SL applies APB Opinion 25 and related Interpretations in
accounting for its plans. Accordingly, no compensation cost has been recognized
for its stock option plans. Had compensation cost for the SL plans been
determined based on the fair value at the grant dates for awards under these
plans, consistent with the methodology of SFAS 123, RPS net loss would have
been the pro forma amounts indicated below.
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
<S> <C> <C> <C>
Net loss
As reported................................. $(6,720) $(16,366) $(7,721)
Pro forma................................... (7,117) (16,619) (7,753)
</TABLE>
As required by SFAS No. 123, the above pro-forma data reflect the effect of
stock option grants during 1997, 1996, and 1995.
During 1997, 1996, 1995 and in prior years, key employees of RPS were granted
stock options under the SL stock option plans. The exercise price of each
option equals the market price of SL stock on the date of grant; and option's
maximum term is ten years, and options generally vest in 20% increments over
five years.
As required by SFAS No. 123, the fair value of each grant is estimated on the
date of grant using the multiple option Black-Scholes option-pricing model with
the following weighted-average assumptions used for 1997, 1996 and 1995:
dividend of $0.75; expected volatility of 21% for 1997 grants and 20% for 1996
and 1995 grants; risk-free interest rates of 5.8%-6.77% for the 1997 grants;
5.09%-6.01% for the 1996 grants, and 5.70%-7.66% for the 1995 grants; and
expected option lives of 5.09 years for RPS employees for 1997 grants and 5.39
years for the 1996 and 1995 grants.
F-74
<PAGE>
A summary of the status of the SL stock option plans for RPS as of December
31, 1997, 1996 and 1995, and changes during the years ending on those dates is
presented below.
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
1997 Exercise 1996 Exercise 1995 Exercise
Fixed Options Shares Price Shares Price Shares Price
------------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year................. 179,600 $ 34.08 164,700 $ 30.04 148,000 $ 29.28
Granted................ 42,500 $ 81.03 62,000 $ 42.35 22,500 $ 32.07
Exercised.............. (32,750) $ 29.80 (47,100) $ 30.84 (5,800) $ 18.55
------- ------- -------
Outstanding at end of
year.................... 189,350 $ 45.36 179,600 $ 34.08 164,700 $ 30.04
======= ======= =======
Options exercisable at
year-end................ 60,550 56,600 79,400
Weighted-average fair
value of options granted
during the year......... $ 24.01 $ 11.25 $ 8.35
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1997.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------- -----------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding contractual Exercise Exercisable Exercise
Exercise Prices as of 12/31/97 Life Price as of 12/31/97 Price
- --------------- -------------- ----------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$32.46-45.36....... $189,350 7.47 $45.36 60,550 $32.46
</TABLE>
13. RELATED PARTY TRANSACTIONS
In certain countries, RPS participates in SL's centralized treasury and cash
processes. In these countries, cash is managed either through zero balance
accounts or an interest-bearing offsetting mechanism. Cash disbursements for
operations, acquisitions, and other investments are funded as needed from
Schlumberger Limited.
SL and its affiliates provide a number of administrative functions to RPS
which resulted in charges of $9.4 million, $8.6 million, and $7.5 million being
recorded in the results of operations for 1997, 1996 and 1995, respectively.
Management believes that the method used to allocate such costs is reasonable
under the circumstances and the expense is reasonable and adequate compared to
the services provided.
There are no formal tax sharing arrangements between RPS and any entity of
SL. In most countries, RPS is a division of the SL legal entity that is the
ultimate tax payer in that jurisdiction. Thus the income tax benefit recorded
reflects the tax effect of the net operating losses incurred by RPS that are
available to offset the income of the SL legal entity that is the ultimate
taxpayer.
14. TRANSACTIONS WITH AFFILIATES
In July 1997, SI SPA, a non-RPS Schlumberger company purchased the shares of
Schlumberger Industries SPA, another Schlumberger company, from Koppens Holding
Nederland BV, a RPS company. As this was a transaction within a party under
common control, this transaction was recorded at net book value. The difference
between net book value and sale proceeds was credited to equity in 1997. The
sales proceeds were transferred through a dividend to Schlumberger Limited in
1997.
In December 1997, RPS via Koppens Iberica, acquired the shares of GNC, a
Portuguese subsidiary of SL for $5.8 million. This company was acquired to
implement and develop RPS business in Portugal. The difference between purchase
price and net book value was debited to equity in 1997.
F-75
<PAGE>
15. CONTINGENCIES
The Company complies with government laws and regulations and responsible
management practices for the protection of the environment. The Combined
Balance Sheet includes accruals for the estimated future costs associated with
certain environmental remediation activities related to the past use or
disposal of hazardous materials. Due to a number of uncertainties, including
uncertainty of timing, the scope of remediation, future technology, regulatory
changes and other factors, it is possible that the ultimate remediation costs
may exceed the amounts estimated. However, in the opinion of management, such
additional costs are not expected to be material relative to consolidated
liquidity, financial position or future results of operations.
In addition, the Company is party to various other legal proceedings.
Although the ultimate disposition of these proceedings is not presently
determinable, in the opinion of the Company any liability that might ensue
would not be material in relation to the Combined Financial Statements.
16. SUPPLEMENTARY INFORMATION
Operating revenue and related cost of goods sold and services comprised the
following:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Operating revenue
Sales........................................ $185,702 $186,764 $191,439
Services..................................... 158,546 147,151 112,229
-------- -------- --------
$344,248 $333,915 $303,668
-------- -------- --------
Direct operating costs
Goods sold................................... $148,257 $149,142 $156,374
Services..................................... 138,323 124,350 92,727
-------- -------- --------
$286,350 $273,492 $249,101
======== ======== ========
</TABLE>
Cash paid for interest and income taxes was as follows:
<TABLE>
<CAPTION>
Year Ended December
31,
--------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Interest............................................. $1,414 $1,897 $1,649
Income taxes......................................... $1,926 $ 248 $ 516
</TABLE>
Accounts payable and accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
December 31,
----------------
1997 1996
------- --------
<S> <C> <C>
Payroll, vacation and employee benefits................. $12,056 $ 13,945
Trade................................................... 41,245 44,969
Taxes, other than on income............................. 8,988 10,398
Other................................................... 25,319 41,204
------- --------
$87,608 $110,516
======= ========
</TABLE>
F-76
<PAGE>
Principal Executive Office of Tokheim
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana 46801
Independent Accountants
PricewaterhouseCoopers LLP
490 Lincoln Tower
Fort Wayne, Indiana 46802
Legal Advisors
To Tokheim
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Trustee, Registrar, Principal Paying and Transfer Agent
U.S. Bank Trust National Association
100 Wall Street
16th Floor
New York, New York 10005
Listing Agent, Paying and Transfer Agent
(if the Notes are listed on the Luxembourg Stock Exchange)
Bankers Trust Luxembourg S.A.
P.O. Box 807
14, Boulevard F.D. Roosevelt
L-2450 Luxembourg
Paying Agent and Common Depositary
Midland Bank plc
HSBC Issuer Services
Mariner House, Pepys Street
London, EC3N 4DA
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Until , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 15
Risks associated with debt financing..................................... 15
Risks associated with the operation of the business...................... 18
Risks associated with government regulation.............................. 22
Risks associated with the exchange offer................................. 22
Forward-Looking Statements................................................ 24
Exchange Rates............................................................ 24
The Exchange Offer........................................................ 25
The Transactions.......................................................... 34
Sources and Uses of Funds................................................. 36
Capitalization............................................................ 37
Unaudited Pro Forma Consolidated Condensed Financial Statements........... 38
Selected Financial Data of Tokheim Corporation and Subsidiaries........... 45
Selected Financial Data of the RPS Division............................... 47
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 48
Business.................................................................. 58
Management................................................................ 71
Principal Shareholders.................................................... 73
Description of Other Indebtedness......................................... 75
Description of the Warrants............................................... 78
Description of the Exchange Notes......................................... 79
Important United States Federal Income Tax Considerations................. 118
Plan of Distribution...................................................... 123
Legal Matters............................................................. 124
Independent Accountants................................................... 124
General Listing Information............................................... 125
Where You Can Find More Information....................................... 126
Information Incorporated by Reference..................................... 126
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Tokheim Corporation
$123,000,000
11 3/8% senior subordinated notes
due 2008
(Euro)75,000,000
11 3/8% senior subordinated notes
due 2008
----------------
Prospectus
----------------
, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of incorporation and bylaws referred to
below.
Each of Tokheim Corporation and Envirotronic Systems, Inc. is empowered by
Chapter 37 of the Indiana Business Corporation Law (the "IBCL"), subject to the
procedures and limitations therein, to indemnify any person against expenses
(including attorneys' fees) and the obligation to pay a judgment, settlement,
penalty, fine or reasonable expenses incurred with respect to a threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal, in which such
person is made a party by reason of such person's being or having been a
director, officer, employee or agent of the corporation if his or her conduct
was in good faith and he or she reasonably believed that, if acting in the
individual's official capacity, the conduct was in the best interests of the
corporation and in all other cases, the conduct was not opposed to the
corporation's best interests. In the case of any criminal proceeding, the
corporation is empowered to indemnify a person if he or she had reasonable
cause to believe the conduct was lawful or had no reasonable cause to believe
the conduct was unlawful. In addition, unless limited by its articles of
incorporation, a corporation shall indemnify a person who was wholly successful
in the defense of any proceeding to which the person was a party because the
person is or was a director, officer, employee or agent against reasonable
expenses incurred by him or her in connection with the proceeding. A
corporation has the power to purchase and maintain insurance on behalf of any
of the persons described above against any liability asserted against such
person and incurred by such person in any of the capacities described above, or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
IBCL.
Article VII, Section 7.8 of Tokheim Corporation's Restated Articles of
Incorporation, as amended, and Article VII, Section 7.8 of Envirotronic
Systems, Inc.'s Articles of Incorporation, as amended, obligate each
corporation to indemnify its past and present officers and directors in the
manner contemplated by the IBCL. Any such person who is wholly successful with
respect to any proceeding of the type described above is entitled to
indemnification as of right. In addition, each corporation's Board of Directors
is authorized to approve indemnification of any such person to the full extent
permitted by applicable law, or to any other person as it may determine.
Tokheim Corporation has directors' and officers' liability insurance which
protects each director and officer from certain claims and suits, including
shareholder derivative suits, even where the director may be determined to not
be entitled to indemnification under the IBCL, and claims and suits arising
under the Securities Act. The policy may also afford coverage under
circumstances where the facts do not justify a finding that the director or
officer acted in good faith and in a manner that was in or not opposed to the
best interests of Tokheim Corporation. Article VII, Section 7.8(h) of
Envirotronic Systems, Inc.'s Articles of Incorporation, as amended, permits its
Board of Directors to authorize the corporation to purchase and maintain
insurance on behalf of any eligible person against any liability asserted
against such person or any liability or expense incurred by such person in any
such capacity, or arising out of such person's status as such, whether or not
the corporation would have the power to indemnify such person against such
liability or expense. Tokheim Corporation's and Envirotronic Systems, Inc.'s
bylaws contain no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of organization and limited liability
company agreement referred to below.
Tokheim Services LLC is empowered by Chapter 2, Section 2(14) of the Indiana
Business Flexibility Act (the "IBFA") to indemnify and hold harmless any
member, manager, agent or employee from and against any and all claims and
demands, except in the case of action or failure to act by the member, agent,
or employee which constitutes willful misconduct or recklessness and subject to
any standards and restrictions set forth in a
II-1
<PAGE>
written operating agreement. Chapter 4, Section 4(2) of the IBFA provides that
a written operating agreement may provide for indemnification of a member or
manager for judgments, settlements, penalties, fines or expenses incurred in a
proceeding to which a person is a party because the person is or was a member
or manager. Tokheim Services LLC's articles of organization and limited
liability company agreement contain no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, certificate of incorporation and bylaws referred
to below.
Tokheim Equipment Corporation is empowered by Section 145 of the Delaware
General Corporation Law (the "DGCL"), subject to the procedures and limitations
therein, to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or other entity
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her if he or she acted
in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action brought by or in the right of a
corporation, the corporation may indemnify a director, officer, employee or
agent of the corporation (or other entity if such person is serving in such
capacity at the corporation's request) against expenses (including attorneys'
fees) actually and reasonably incurred by him or her if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the corporation, except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless a court determines
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses as the court shall deem proper. In addition,
unless limited by its articles of incorporation, a corporation shall indemnify
a person who was wholly successful in the defense of any proceeding to which
the person was a party because the person is or was a director, officer,
employee or agent against reasonable expenses incurred by him or her in
connection with the proceeding. A corporation has the power to purchase and
maintain insurance on behalf of any of the persons described above against any
liability asserted against such person and incurred by such person in any of
the capacities described above, or arising out of such person's status as such,
whether or not the corporation would have the power to indemnify such person
against such liability under the DGCL.
Article VIII, Section 1 of Tokheim Equipment Corporation's bylaws obligates
it to indemnify its past and present officers and directors to the fullest
extent permitted by the DGCL. In addition, the corporation may indemnify any
other person whom it has the power or obligation to indemnify under the
provisions of the DGCL, and if authorized by the Board of Directors, may
indemnify employees and agents of the corporation on terms similar to those
applicable to its directors and officers. Article VIII, Section 8 of Tokheim
Equipment Corporation's bylaws authorizes it to purchase and maintain insurance
on behalf of its past and present officers and directors against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power or the obligation to indemnify such person against such
liability. Tokheim Equipment Corporation's certificate of incorporation
contains no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, certificate of formation and limited liability
company agreement referred to below.
Tokheim RPS, LLC is empowered by Section 18-108 of the Delaware Limited
Liability Company Act, subject to the procedures and limitations therein, to
indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever, subject to such standards
and restrictions, if any, as are set forth in its limited liability company
agreement. Tokheim RPS, LLC's certificate of formation and its limited
liability company agreement contain no indemnification or insurance provisions.
II-2
<PAGE>
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of incorporation and bylaws referred to
below.
Management Solutions, Inc. is empowered by Section 7-109 of the Colorado
Business Corporations Act (the "CBCA"), subject to the procedures and
limitations therein, to indemnify any person against liability for reasonable
expenses incurred in connection with a proceeding in which such person is made
a party by reason of such person's being or having been a director, officer,
employee or agent if his or her conduct was in good faith and if he or she
reasonably believed that, if acting in the individual's official capacity, the
conduct was in the best interests of the corporation and in all other cases,
the conduct was not opposed to the corporation's best interests. In the case of
any criminal proceeding, the corporation is empowered to indemnify an
individual if he or she had no reasonable cause to believe the conduct was
unlawful. However, a corporation may not indemnify a director, officer,
employee or other agent (a) in connection with a proceeding by or in the right
of the corporation in which the person was adjudged liable to the corporation
or (b) in connection with any other proceeding charging that the person derived
an improper personal benefit, whether or not involving action in an official
capacity, in which proceeding the person was adjudged liable on the basis that
he or she derived an improper personal benefit. In addition, unless limited by
its articles of incorporation, a corporation shall indemnify a person who was
wholly successful in the defense of any proceeding to which the person was a
party because the person is or was a director, officer, employee or agent
against reasonable expenses incurred by him or her in connection with the
proceeding. A corporation is empowered to purchase and maintain insurance on
behalf of any of the persons described above against liability asserted against
or incurred by such person in the capacities described above or arising from
his or her status as such, whether or not the corporation would have power to
indemnify the person against the same liability under the CBCA.
Article XI of Management Solutions, Inc.'s Articles of Incorporation, as
amended, provides that Management Solutions, Inc. may indemnify any of its past
or present directors or officers or any person who may have served at its
request as a director or officer of another corporation in which it owns shares
of capital stock or of which it is a creditor, against expenses actually and
necessarily incurred by him or her in connection with the defense of any claim
or demand against him or her or any action, suit or proceeding in which he or
she is made a party by reason of having been or being such a director or
officer, and against any judgment for damages rendered therein, except in
relation to matters as to which he or she shall be adjudged in such action,
suit or proceeding to be liable for willful negligence or intentional
misconduct in the performance of duty. Management Solutions Inc.'s bylaws
contain no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of incorporation and bylaws referred to
below.
Sunbelt Hose & Petroleum Equipment, Inc. is empowered by Section 14-2-851 of
the Georgia Business Corporation Code (the "GBCC"), subject to the procedures
and limitations therein, to indemnify an individual who is a party to a
proceeding because he or she is or was a director of the corporation or who,
while a director of the corporation, is or was serving at the corporation's
request as a director, officer, partner, trustee, employee or agent of another
corporation or entity, against liability incurred in the proceeding if (1) such
individual conducted himself or herself in good faith; and (2) such individual
reasonably believed (A) in the case of conduct in his or her official capacity,
that such conduct was in the best interests of the corporation; (B) in all
other cases, that such conduct was at least not opposed to the best interests
of the corporation; and (C) in the case of any criminal proceeding, that the
individual had no reasonable cause to believe such conduct was unlawful;
provided that a corporation may not indemnify a director (a) in connection with
a proceeding by or in the right of the corporation, except for reasonable
expenses incurred in connection with the proceeding if it is determined that
the director has met the relevant standard of conduct; or (b) in connection
with any proceeding with respect to conduct for which he or she was adjudged
liable on the basis that personal benefit was improperly received by him or
her, whether or not involving action in his or her official capacity. In
addition, a corporation is obligated to indemnify a director who was wholly
successful in such a proceeding. A corporation is empowered by the GBCC to
indemnify an officer of the corporation who is a party to a proceeding because
he or she is an officer of the corporation to the same extent as a director,
except for liability arising out of
II-3
<PAGE>
conduct that constitutes appropriation of any business opportunity of the
corporation, acts or omissions which involve intentional misconduct or a
knowing violation of law, liability for unlawful distributions or receipt of an
improper benefit. An officer is entitled to mandatory indemnification to the
same extent as a director. A corporation may also indemnify an employee or
agent who is not a director to the extent, consistent with public policy, that
may be provided by its articles of incorporation, bylaws, general or specific
action of its board of directors, or contract. The GBCC empowers a corporation
to purchase and maintain insurance on behalf of any person described above
against liability asserted against or incurred by such person in any capacity
described above or arising from his or her status as such, whether or not the
corporation would have power to indemnify him or her against the same liability
under the GBCC.
Article Eight, Section 8.6 of Sunbelt Hose & Petroleum Equipment, Inc.'s
bylaws obligates the corporation to indemnify any person who was or is a party
or is threatened to be made a party of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
entity against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such proceeding if such person acted in a manner he or she
reasonably believed to be in, or not opposed to, the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct unlawful. In the case of an
action or proceeding brought by or in the right of a corporation, the
corporation must indemnify a director, officer, employee or agent of the
corporation (or other entity if such person is serving in such capacity at the
corporation's request) against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection with the defense or
settlement of such proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests
of the corporation, except that no indemnification shall be made in respect of
any claim or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to
the corporation, unless the court in which such proceeding was brought
determines that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses as the court shall deem proper. In addition,
the corporation is obligated to indemnify any person described above that has
been successful on the merits or otherwise in defense of any such proceeding
against expenses (including attorneys' fees) actually and reasonably incurred
in connection therewith. Sunbelt Hose & Petroleum Equipment Inc.'s bylaws also
authorize it to purchase and maintain insurance on behalf of its past and
present officers, directors, employees or agents (or persons serving in such
capacity for another entity at the request of the corporation) against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such
liability. Sunbelt Hose & Petroleum Equipment, Inc.'s articles of
incorporation, as amended, contain no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of incorporation and bylaws referred to
below.
Gasboy International, Inc. is empowered by Section 1741 of the Pennsylvania
Business Corporation Law (the "PBCL") to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he or she was a representative of the corporation, or
is or was serving at the request of the corporation as a representative of
another corporation or entity, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with the proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify such persons against expenses (including
attorneys' fees) actually and reasonably incurred by him or
II-4
<PAGE>
her if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless a court determines that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses as the
court shall deem proper. In addition, a corporation shall indemnify a
representative of such corporation who was successful on the merits or
otherwise in the defense of any proceeding described above against reasonable
expenses incurred by him or her in connection therewith. No indemnification
under any bylaw, agreement or otherwise is permitted in any case where the act
or failure to act giving rise to the claim for indemnification is determined by
a court to have constituted willful misconduct or recklessness, and the
articles may not provide for indemnification in the case of willful misconduct
or recklessness. A corporation has the power to purchase and maintain insurance
on behalf of any of the persons described above against any liability asserted
against such person and incurred by such person in any of the capacities
described above, or arising out of such person's status as such, whether or not
the corporation would have the power to indemnify such person against such
liability under the PBCL. Gasboy International, Inc.'s articles of
incorporation and bylaws contain no indemnification or insurance provisions.
The following summary is qualified in its entirety by reference to the
complete text of the statute, articles of incorporation and bylaws referred to
below.
Tokheim Investment Corp. and Tokheim Automation Corporation are empowered by
Section 2.02-1 of the Texas Business Corporation Act (the "TBCA") to indemnify
a person who was, is, or is threatened to be made a named defendant or
respondent in a proceeding because the person is or was a director of the
corporation or, while a director of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, employee, agent or
other similar functionary of another corporation or entity against judgments,
penalties, fines, settlements and reasonable expenses (including attorneys'
fees) actually incurred by the person only if it is determined that the person
(1) conducted himself or herself in good faith; (2) reasonably believed (a) in
the case of conduct in his or her official capacity as a director of the
corporation, that such conduct was in the corporation's best interests and (b)
in all other cases, that his or her conduct was at least not opposed to the
corporation's best interests; and (3) in the case of any criminal proceeding,
had no reasonable cause to believe his or her conduct was unlawful. A director
may only be indemnified in respect of a proceeding in which the person is found
liable on the basis that personal benefit was improperly received by him or
her, whether or not the benefit resulted from an action taken in the person's
official capacity, or in which the person is found liable to the corporation,
for reasonable expenses actually incurred by the person in connection with the
proceeding; provided that no indemnification shall be made in respect of any
proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his or her duty to the
corporation. A corporation shall indemnify a director for the expenses
described above incurred in connection with a proceeding described above if the
person is wholly successful. Officers of a corporation are entitled to the same
mandatory indemnification as directors, and officers, employees and agents of a
corporation may be indemnified to the same extent as directors or to such
further extent, consistent with law, as may be provided in the corporation's
articles of incorporation, bylaws, general or specific action of its board of
directors or contract. A corporation is empowered to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation (or who was serving in a similar capacity at the
request of the corporation for another corporation or entity) against any
liability asserted against such person and incurred by such person in such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify him or her against that liability
under the TBCA.
Article 8 of Tokheim Investment Corp.'s articles of incorporation, as
amended, provide that it may indemnify any director or officer of the
corporation, and any person who may have served at the request of the
corporation as a director or officer of another corporation in which it owns
shares or of which it is a creditor, against any costs and expenses, including
counsel fees, actually and necessarily incurred (or reasonably expected to be
incurred) in connection with the defense of any civil, criminal,
administrative, investigative or
II-5
<PAGE>
other action, suit or proceeding (whether by or in the right of the corporation
or otherwise) in which he or she may become involved or with which he or she
may be threatened, by reason of such person being or having been such a
director or officer, and against any payments in settlement of any such action,
suit or proceeding or in satisfaction of any related judgment, fine or penalty.
Tokheim Investment Corp.'s bylaws, and Tokheim Automation Corporation's
articles of incorporation and bylaws, contain no indemnification or insurance
provisions.
Item21.Exhibits and Financial Statement Schedules
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
1.1 Purchase Agreement, dated as of January 26, 1999 among Tokheim
Corporation, BT Alex. Brown, Credit Lyonnais Securities, First
Chicago Capital Markets, Inc., Gleacher NatWest International, ABN
AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc.
and certain subsidiary guarantors of Tokheim Corporation
(incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended September 30, 1998, filed
March 1, 1999).
2.1 Stock Purchase Agreement, dated as of December 29, 1997 between
Tokheim Corporation and Arthur S. ("Rusty") Elston, Ronald H.
Elston, Eric E. Burwell and Curt E. Burwell (incorporated herein
by reference to the Registrant's Current Report on Form 8-K, dated
December 31, 1997).
2.2 Master Agreement for Purchase and Sale of Shares, Assets, and
Liabilities, dated as of June 19, 1998, between Tokheim
Corporation and Schlumberger Limited (incorporated herein by
reference to the Registrant's Current Report on Form 8-K/A dated
October 1, 1998).
2.3 Amendment No. 1 to the Master Agreement for Purchase and Sale of
Shares, Assets and Liabilities, dated as of September 30, 1998
between Tokheim Corporation and Schlumberger Limited (incorporated
herein by reference to the Registrant's Current Report on Form 8-
K/A dated October 1, 1998).
3.1 Restated Articles of Incorporation of Tokheim Corporation, as
amended, as filed with the Indiana Secretary of State on February
5, 1997 (incorporated herein by reference to the Registrant's
Annual Report on Form 10-K/A for the year ended November 30,
1996).
3.2 Bylaws of Tokheim Corporation, as restated on July 12, 1995 and
amended March 2, 1998 (incorporated herein by reference to the
Registrant's Quarterly Report on Form 10-Q for the period ended
May 31, 1998).
3.3 Articles of Incorporation of Monitec Corporation (now known as
Envirotronic Systems, Inc.).
3.4 Articles of Amendment of the Articles of Incorporation of Monitec
Corporation (changing name to Envirotronic Systems, Inc.).
3.5 Bylaws of Envirotronic Systems, Inc.
3.6 Amended and Restated Articles of Incorporation of William M.
Wilson's Sons, Inc. (now known as Gasboy International, Inc.).
3.7 Amendment No. 1 to Amended and Restated Articles of Incorporation
of William M. Wilson's Sons, Inc.
3.8 Amendment No. 2 to Amended and Restated Articles of Incorporation
of William M. Wilson's Sons, Inc.
3.9 Amendment No. 2 to Amended and Restated Articles of Incorporation
of William M. Wilson's Sons, Inc. (changing name to Gasboy
International, Inc.).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
3.10 Restated Bylaws of Gasboy International, Inc.
3.11 Articles of Incorporation of Management Solutions of Colorado,
Inc. (now known as Management Solutions, Inc.).
3.12 Articles of Amendment to the Articles of Incorporation of
Management Solutions of Colorado, Inc. (changing name to
Management Solutions, Inc.).
3.13 Bylaws of Management Solutions, Inc.
3.14 Articles of Incorporation of ESCIA, Inc. (now known as Sunbelt
Hose & Petroleum Equipment, Inc.).
3.15 Articles of Amendment of ESCIA, Inc. (changing name to Sunbelt
Hose & Petroleum Equipment, Inc.).
3.16 Bylaws of Sunbelt Hose & Petroleum Equipment, Inc.
3.17 Articles of Incorporation of Tokheim Base Systems, Inc. (now known
as Tokheim Automation Corporation).
3.18 Articles of Amendment to the Articles of Incorporation of Tokheim
Base Systems, Inc. (changing name to Mini Base Systems, Inc.).
3.19 Articles of Amendment to the Articles of Incorporation of Mini
Base Systems, Inc. (changing name to Tokheim Automation
Corporation).
3.20 Bylaws of Tokheim Automation Corporation.
3.21 Certificate of Incorporation of Tokheim Equipment Corporation.
3.22 Bylaws of Tokheim Equipment Corporation.
3.23 Articles of Incorporation of Tokheim Investment Corp.
3.24 Bylaws of Tokheim Investment Corp.
3.25 Certificate of Formation of Tokheim RPS, LLC.
3.26 Limited Liability Company Agreement of Tokheim RPS, LLC.
3.27 Articles of Organization of Tokheim Services LLC.
3.28 Limited Liability Company Agreement of Tokheim Services LLC.
4.1 Rights Agreement, dated as of January 22, 1997, between Tokheim
Corporation and Harris Trust and Savings Bank, as Rights Agent
(incorporated herein by reference to the Registrant's Current
Report on Form 8-K, filed February 23, 1997).
4.2 Amendment No. 1 to Rights Agreement, dated as of September 30,
1998, between Tokheim Corporation and Harris Trust and Savings
Bank (incorporated herein by reference to the Registrant's Current
Report on Form 8-K/A dated October 1, 1998).
4.3 Indenture, dated as of August 23, 1996, between Tokheim
Corporation and Harris Trust and Savings Bank, as Trustee
(incorporated herein by reference to the Registrant's Current
Report on Form 8-K, filed September 23, 1996).
4.4 Credit Agreement, dated as of September 3, 1996, among Tokheim
Corporation, certain subsidiaries of Tokheim Corporation, certain
banks and NBD Bank, N.A. (incorporated herein by reference to the
Registrant's Current Report on Form 8-K, filed September 6, 1996).
4.5 Amendment No. 1 to Credit Agreement, dated as of May 15, 1997
(incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
4.6 Amendment No. 2 to Credit Agreement, dated as of June 30, 1997
(incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
4.7 Amendment No. 3 to Credit Agreement, dated as of September 25,
1997 (incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
4.8 Amendment No. 4 to Credit Agreement, dated as of December 29, 1997
(incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended November 30, 1997, filed
February 13, 1997).
4.9 Amendment No. 5 to Credit Agreement, dated as of March 20, 1998
(incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended February 28, 1998).
4.10 Securities Purchase Agreement, dated September 30, 1998, between
Tokheim Corporation and Schlumberger Limited (incorporated herein
by reference to the Registrant's Current Report on Form 8-K/A
dated October 1, 1998).
4.11 12% Senior Subordinated Note due January 28, 1999 in the amount of
$170,000,000 (incorporated herein by reference to the Registrant's
Current Report on Form 8-K/A dated October 1, 1998).
4.12 Senior Subordinated Note Indenture, dated as of September 30,
1998, among Tokheim Corporation, Management Solutions, Inc.,
Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose &
Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy
International, Inc., Tokheim Automation Corporation, Tokheim
Investment Corp., as guarantors, and Harris Trust and Savings
Bank, as trustee (incorporated herein by reference to the
Registrant's Current Report on Form 8-K/A dated October 1, 1998).
4.13 12% Junior Subordinated Note due 2008 in the amount of $40,000,000
(incorporated herein by reference to the Registrant's Current
Report on Form 8-K/A dated October 1, 1998).
4.14 Junior Subordinated Note Indenture, dated as of September 30,
1998, among Tokheim Corporation, Management Solutions, Inc.,
Tokheim Equipment Corporation, Tokheim RPS, LLC, Sunbelt Hose &
Petroleum Equipment, Inc., Envirotronic Systems, Inc., Gasboy
International, Inc., Tokheim Automation Corporation, Tokheim
Investment Corp., as guarantors, and Harris Trust and Savings
Bank, as trustee (incorporated herein by reference to the
Registrant's Current Report on Form 8-K/A dated October 1, 1998).
4.15 Amendment No. 1 to Junior Subordinated Note Indenture, dated as of
January 25, 1999 (incorporated herein by reference to the
Registrant's Annual Report on Form 10-K, for the year ended
September 30, 1998, filed March 1, 1999).
4.16 Warrant to Purchase up to 19.9% of the Shares of Common Stock of
Tokheim Corporation (incorporated herein by reference to the
Registrant's Current Report on Form 8-K/A dated October 1, 1998).
4.17 Form of Roll-Over Note (incorporated herein by reference to the
Registrant's Current Report on Form 8-K/A dated October 1, 1998).
4.18 Registration Rights Agreement, dated September 30, 1998, between
Tokheim Corporation and Schlumberger Limited (incorporated herein
by reference to the Registrant's Current Report on Form 8-K/A
dated October 1, 1998).
4.19 Note Purchase Agreement, dated as of September 30, 1998, among
Tokheim Corporation, the Subsidiaries and the Purchasers
(incorporated herein by reference to the Registrant's Current
Report on Form 8-K/A dated October 1, 1998).
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
4.20 Amended and Restated Credit Agreement, dated as of September 30,
1998, among Tokheim Corporation, the Borrowing Subsidiaries, the
Lenders and NBD Bank, N.A. as administrative agent and Credit
Lyonnais as documentation and collateral agent and Gleacher
NatWest Inc. and Bankers Trust Company as co-syndication agents
(incorporated herein by reference to the Registrant's Current
Report on Form 8-K/A dated October 1, 1998).
4.21 Second Amended and Restated Credit Agreement, dated as of December
14, 1998, among Tokheim Corporation, the Borrowing Subsidiaries,
the Lenders and NBD Bank, N.A. as administrative agent and Credit
Lyonnais as documentation and collateral agent and Gleacher
NatWest Inc. and Bankers Trust Company as co-syndication agents
(incorporated herein by reference to the Registrant's Annual
Report on Form 10-K, for the year ended September 30, 1998, filed
March 1, 1999).
4.22 Consent and Amendment No. 1 to Amended and Restated Credit
Agreement, dated as of January 11, 1999 (incorporated herein by
reference to the Registrant's Quarterly Report on Form 10-Q, for
the quarter ended February 28, 1999, filed April 14, 1999).
4.23 Amendment No. 2 to Amended and Restated Credit Agreement, dated as
of March 1, 1999 (incorporated herein by reference to the
Registrant's Quarterly Report on Form 10-Q, for the quarter ended
February 28, 1999, filed April 14, 1999).
4.24 Amendment No. 3 to Second Amended and Restated Credit Agreement,
dated as of February 27, 1999 (incorporated herein by reference to
the Registrant's Quarterly Report on Form 10-Q, for the quarter
ended February 28, 1999, filed April 14, 1999).
4.25 Dollar Notes Indenture, dated as of January 29, 1999, among
Tokheim Corporation, BT Alex. Brown, Credit Lyonnais Securities,
First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated,
Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim
Corporation.
4.26 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim
Corporation, BT Alex. Brown, Credit Lyonnais Securities, First
Chicago Capital Markets, Inc., Gleacher NatWest International, ABN
AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc.
and certain subsidiary guarantors of Tokheim Corporation.
4.27 Dollar Registration Rights Agreement, dated as of January 29,
1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated,
Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim
Corporation (incorporated herein by reference to the Registrant's
Annual Report on Form 10-K, for the year ended September 30, 1998,
filed March 1, 1999).
4.28 Euro Registration Rights Agreement, dated as of January 29, 1999,
among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated,
Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim
Corporation (incorporated herein by reference to the Registrant's
Annual Report on Form 10-K, for the year ended September 30, 1998,
filed March 1, 1999).
5.1 Opinion of Norman L. Roelke, Vice President, Secretary and General
Counsel of the Registrant.
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established
December 15, 1992 (incorporated herein by reference to the
Registrant's Registration Statement on Form S-8, File No. 33-
52167, dated February 4, 1994).
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
10.2 Retirement Savings Plan for Employees of Tokheim Corporation and
Subsidiaries (incorporated herein by reference to Amendment No. 1
to the Registrant's Registration Statement on Form S-8, File No.
33-29710, dated August 1, 1989).
10.3 Tokheim Corporation 1996 Key Management Incentive Bonus Plan
(incorporated herein by reference to the Registrant's Report on
Form 10-Q/A, for the quarter ended February 29, 1996, filed
November 20, 1996).
10.4 Employment Agreement, dated December 10, 1997, between the
Registrant and Douglas K. Pinner (incorporated herein by reference
to the Registrant's Annual Report on Form 10-K for the year ended
November 30, 1997).
10.5 Employment Agreement, dated December 23, 1997, between the
Registrant and John A. Negovetich (incorporated herein by
reference to the Registrant's Annual Report on Form 10-K for the
year ended November 30, 1997).
10.6 Employment Agreement, dated December 23, 1997, between the
Registrant and Jacques St-Denis (incorporated herein by reference
to the Registrant's Annual Report on Form 10-K for the year ended
November 30, 1997).
10.7 Employment Agreement, dated December 23, 1997, between the
Registrant and Norman L. Roelke (incorporated herein by reference
to the Registrant's Annual Report on Form 10-K for the year ended
November 30, 1997).
10.8 Employment Agreement, dated December 23, 1997, between the
Registrant and Scott A. Swogger. (incorporated herein by reference
to the Registrant's Annual Report on Form 10-K for the year ended
November 30, 1997).
10.9 Technology License Agreement, effective as of December 1, 1997,
between Tokheim and Gilbarco, Inc. (incorporated herein by
reference to the Registrant's Annual Report on Form 10-K for the
year ended November 30, 1997).
10.10 Tokheim Corporation 1997 Incentive Plan (incorporated herein by
reference to the Registrant's Annual Report on Form 10-K for the
year ended November 39, 1997).
10.11 Employment Agreement, dated December 31, 1997, between Management
Solutions, Inc. and Arthur S. Elston (incorporated herein by
reference to the Registrant's Annual Report on Form 10-K for the
year ended November 30, 1997).
11.1 Statement re computation of per share earnings (incorporated
herein by reference to the Registrant's Quarterly Report on Form
10-Q, for the quarter ended February 28, 1999, filed April 14,
1999, and by reference to the Registrant's Annual Report on Form
10-K, for the year ended November 30, 1998).
12.1 Statement re computation of ratios.
21.1 Subsidiaries of Tokheim Corporation (incorporated herein by
reference to the Registrant's Annual Report on Form 10-K, for the
year ended November 30, 1998, filed March 1, 1999).
23.1 Consent of PriceWaterhouseCoopers LLP.
23.2 Consent of PriceWaterhouseCoopers.
24.1 Powers of Attorney (included in Signature page to registration
statement).
25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939 of U.S. Bank Trust National Association, as
Dollar Notes Trustee, under the Dollar Notes Indenture, relating
to the 11 3/8% Dollar Notes due 2008.
25.2 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939 of U.S. Bank Trust National Association, as
Euro Notes Trustee, under the Euro Notes Indenture, relating to
the 11 3/8% Euro Notes due 2008.
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
27.1 Financial Data Schedule (incorporated herein by reference to the
Registrant's Quarterly Report on Form 10-Q, for the quarter ended
February 28, 1999, filed April 14, 1999, and by reference to the
Registrant's Annual Report on Form 10-K, for the year ended
November 30, 1998).
99.1 Form of Letter of Transmittal for the Dollar Notes.
99.2 Form of Notice of Guaranteed Delivery for the Dollar Notes.
99.3 Form of Tender Instruction for the Dollar Notes.
99.4 Form of Letter of Transmittal for the Euro Notes.
99.5 Form of Notice of Guaranteed Delivery for the Euro Notes.
99.6 Form of Tender Instruction for the Euro Notes.
</TABLE>
Item22.Undertakings
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrants
have duly caused this registration statement to be signed on their behalf by
the undersigned, thereunto duly authorized, in the City of Fort Wayne, State
of Indiana, as of June 15, 1999.
Tokheim Corporation
/s/ Douglas K. Pinner
By: _________________________________
Name: Douglas K. Pinner
Title:Chairman, President and Chief
Executive Officer
Envirotronic Systems, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Gasboy International, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Management Solutions, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Sunbelt Hose & Petroleum Equipment,
Inc.
/s/ Norman L. Roelke
By: ________________________________
Name: Norman L. Roelke
Title:Secretary
Tokheim Automation Corporation
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Tokheim Equipment Corporation
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
II-12
<PAGE>
Tokheim Investment Corp.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Tokheim RPS, LLC
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:
Tokheim Services LLC
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:
II-13
<PAGE>
We the undersigned directors and officers of the registrants do hereby
constitute and appoint Douglas K. Pinner and Norman L. Roelke, and each of
them, our true and lawful attorneys-in-fact and agents, to do any and all acts
and things in our names and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said corporations to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
below on April 26, 1999.
Tokheim Corporation
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Chairman of the Board, President and Chief
___________________________________________ Executive Officer and Director
Douglas K. Pinner
/s/ John A. Negovetich Executive Vice President, Finance and
___________________________________________ Administration and Chief Financial Officer
John A. Negovetich
/s/ Gerald H. Frieling, Jr. Vice Chairman of the Board and Director
___________________________________________
Gerald H. Frieling, Jr.
/s/ Walter S. Ainsworth Director
___________________________________________
Walter S. Ainsworth
/s/ Robert M. Akin, III Director
___________________________________________
Robert M. Akin, III
/s/ James K. Baker Director
___________________________________________
James K. Baker
/s/ B.D. Cooper Director
___________________________________________
B.D. Cooper
/s/ Richard W. Hansen Director
___________________________________________
Richard W. Hansen
/s/ Leo J. Hawk Director
___________________________________________
Leo J. Hawk
/s/ Dr. Winfred M. Phillips Director
___________________________________________
Dr. Winfred M. Phillips
/s/ Ian M. Rolland Director
___________________________________________
Ian M. Rolland
</TABLE>
II-14
<PAGE>
Envirotronic Systems, Inc.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Director
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer and Director
___________________________________________
John A. Negovetich
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
Gasboy International, Inc.
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ D. Michael Boone Principal Executive Officer and Director
___________________________________________
D. Michael Boone
/s/ John A. Negovetich Principal Financial Officer and Director
___________________________________________
John A. Negovetich
/s/ John Lotz Principal Accounting Officer
___________________________________________
John Lotz
/s/ Douglas K. Pinner Director
___________________________________________
Douglas K. Pinner
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
/s/ Jacques St-Denis Director
___________________________________________
Jacques St-Denis
Management Solutions, Inc.
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Scott A. Swogger Principal Executive Officer
___________________________________________
Scott A. Swogger
/s/ Richard B. Kendall Principal Financial Officer
___________________________________________
Richard B. Kendall
/s/ John Lotz Principal Accounting Officer
___________________________________________
John Lotz
/s/ Douglas K. Pinner Director
___________________________________________
Douglas K. Pinner
</TABLE>
II-15
<PAGE>
<TABLE>
<S> <C>
/s/ John A. Negovetich Director
___________________________________________
John A. Negovetich
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
Sunbelt Hose & Petroleum Equipment, Inc.
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Director
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer and Director
___________________________________________
John A. Negovetich
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
Tokheim Automation Corporation
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Director
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer and Director
___________________________________________
John A. Negovetich
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
Tokheim Equipment Corporation
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Director
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer and Director
___________________________________________
John A. Negovetich
/s/ John Lotz Principal Accounting Officer
___________________________________________
John Lotz
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
</TABLE>
II-16
<PAGE>
Tokheim Investment Corp.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Director
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer, Principal
___________________________________________ Accounting Officer and Director
John A. Negovetich
/s/ Norman L. Roelke Director
___________________________________________
Norman L. Roelke
Tokheim RPS, LLC
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Manager
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer, Principal
___________________________________________ Accounting Officer and Manager
John A. Negovetich
/s/ Norman L. Roelke Manager
___________________________________________
Norman L. Roelke
Tokheim Services LLC
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Douglas K. Pinner Principal Executive Officer and Manager
___________________________________________
Douglas K. Pinner
/s/ John A. Negovetich Principal Financial Officer, Principal
___________________________________________ Accounting Officer and Manager
John A. Negovetich
/s/ Norman L. Roelke Manager
___________________________________________
</TABLE> Norman L. Roelke
II-17
<PAGE>
EXHIBIT 4.25
================================================================================
TOKHEIM CORPORATION
as Issuer
THE GUARANTORS NAMED HEREIN
and
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
--------------
INDENTURE
--------------
Dated as of January 29, 1999
$123,000,000
11 3/8% Senior Subordinated Notes due 2008
and
Series B 11 3/8% Senior Subordinated Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310 (a)(1)........................................................................ 7.10
(a)(2)........................................................................ 7.10
(a)(3)........................................................................ N.A.
(a)(4)........................................................................ N.A.
F (a)(5)........................................................................ 7.08; 7.10
(b)........................................................................... 7.08; 7.10; 11.02
(c)........................................................................... N.A.
311 (a)........................................................................... 7.11
(b)........................................................................... 7.11
(c)........................................................................... N.A.
312 (a)........................................................................... 2.05
(b)........................................................................... 11.03
(c)........................................................................... 11.03
313 (a)........................................................................... 7.06
(b)(1)........................................................................ N.A.
(b)(2)........................................................................ 7.06
(c)........................................................................... 7.06; 11.02
(d)........................................................................... 7.06
314 (a)........................................................................... 4.07; 4.08; 11.02
(b)........................................................................... N.A.
(c)(1)........................................................................ 11.04
(c)(2)........................................................................ 11.04
(c)(3)........................................................................ N.A.
(d)........................................................................... N.A.
(e)........................................................................... 11.05
(f)........................................................................... N.A.
315 (a)........................................................................... 7.01(b)
(b)........................................................................... 7.05; 11.02
(c)........................................................................... 7.01(a)
(d)........................................................................... 7.01(c)
(e)........................................................................... 6.11
316 (a)(last sentence)............................................................ 2.09
(a)(1)(A)..................................................................... 6.05
(a)(1)(B)..................................................................... 6.04
(a)(2)........................................................................ N.A.
(b)........................................................................... 6.07
(c)........................................................................... 9.05
317 (a)(1)........................................................................ 6.08
(a)(2)........................................................................ 6.09
(b)........................................................................... 2.04
318 (a)........................................................................... 11.01
(c)........................................................................... 11.01
</TABLE>
_____________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. Definitions....................................................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act................................. 18
SECTION 1.03. Rules of Construction............................................................. 19
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating................................................................... 19
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.......................... 20
SECTION 2.03. Registrar and Paying Agent........................................................ 21
SECTION 2.04. Paying Agent To Hold Assets in Trust.............................................. 21
SECTION 2.05. Noteholder Lists.................................................................. 21
SECTION 2.06. Transfer and Exchange............................................................. 22
SECTION 2.07. Replacement Notes................................................................. 22
SECTION 2.08. Outstanding Notes................................................................. 22
SECTION 2.09. Treasury Notes.................................................................... 23
SECTION 2.10. Temporary Notes................................................................... 23
SECTION 2.11. Cancellation...................................................................... 23
SECTION 2.12. Defaulted Interest................................................................ 23
SECTION 2.13. CUSIP Number...................................................................... 24
SECTION 2.14. Deposit of Moneys................................................................. 24
SECTION 2.15. Restrictive Legends............................................................... 24
SECTION 2.16. Book-Entry Provisions for Global Note............................................. 25
SECTION 2.17. Registration of Transfers and Exchanges........................................... 26
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee................................................................ 30
SECTION 3.02. Selection of Notes To Be Redeemed................................................. 30
SECTION 3.03. Notice of Redemption.............................................................. 30
SECTION 3.04. Effect of Notice of Redemption.................................................... 31
SECTION 3.05. Deposit of Redemption Price....................................................... 31
SECTION 3.06. Notes Redeemed in Part............................................................ 31
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.................................................................. 32
SECTION 4.02. Maintenance of Office or Agency................................................... 32
SECTION 4.03. Corporate Existence............................................................... 32
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.04. Payment of Taxes and Other Claims................................................. 32
SECTION 4.05. Maintenance of Properties and Insurance........................................... 33
SECTION 4.06. Compliance Certificate; Notice of Default......................................... 33
SECTION 4.07. Compliance with Laws.............................................................. 34
SECTION 4.08. SEC Reports....................................................................... 34
SECTION 4.09. Waiver of Stay, Extension or Usury Laws........................................... 34
SECTION 4.10. Limitation on Restricted Payments................................................. 35
SECTION 4.11. Limitation on Transactions with Affiliates........................................ 36
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness............................... 36
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries..... 37
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt............................. 37
SECTION 4.15. Change of Control................................................................. 37
SECTION 4.16. Limitation on Asset Sales......................................................... 39
SECTION 4.17. Limitation on Preferred Stock of Subsidiaries..................................... 41
SECTION 4.18. Limitation on Liens............................................................... 41
SECTION 4.19. Additional Subsidiary Guarantees.................................................. 42
SECTION 4.20. Limitation on Amendments to Schlumberger Junior Subordinated Notes and Warrant
Repurchase Indebtedness....................................................... 42
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets of the Company............................ 42
SECTION 5.02. Successor Corporation Substituted................................................. 43
SECTION 5.03. Merger, Consolidation and Sale of Assets of Guarantors............................ 43
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default................................................................. 44
SECTION 6.02. Acceleration...................................................................... 45
SECTION 6.03. Other Remedies.................................................................... 45
SECTION 6.04. Waiver of Past Defaults........................................................... 46
SECTION 6.05. Control by Majority............................................................... 46
SECTION 6.06. Limitation on Suits............................................................... 46
SECTION 6.07. Rights of Holders To Receive Payment.............................................. 47
SECTION 6.08. Collection Suit by Trustee........................................................ 47
SECTION 6.09. Trustee May File Proofs of Claim.................................................. 47
SECTION 6.10. Priorities........................................................................ 47
SECTION 6.11. Undertaking for Costs............................................................. 48
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee................................................................. 48
SECTION 7.02. Rights of Trustee................................................................. 49
SECTION 7.03. Individual Rights of Trustee...................................................... 50
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7.04. Trustee's Disclaimer.............................................................. 50
SECTION 7.05. Notice of Default................................................................. 50
SECTION 7.06. Reports by Trustee to Holders..................................................... 50
SECTION 7.07. Compensation and Indemnity........................................................ 51
SECTION 7.08. Replacement of Trustee............................................................ 51
SECTION 7.09. Successor Trustee by Merger, Etc.................................................. 52
SECTION 7.10. Eligibility; Disqualification..................................................... 52
SECTION 7.11. Preferential Collection of Claims Against Company................................. 52
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.......................................... 53
SECTION 8.02. Legal Defeasance and Covenant Defeasance.......................................... 54
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance............................. 55
SECTION 8.04. Application of Trust Money........................................................ 56
SECTION 8.05. Repayment to the Company.......................................................... 56
SECTION 8.06. Reinstatement..................................................................... 56
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders........................................................ 57
SECTION 9.02. With Consent of Holders........................................................... 57
SECTION 9.03. Effect on Senior Debt............................................................. 58
SECTION 9.04. Compliance with TIA............................................................... 58
SECTION 9.05. Revocation and Effect of Consents................................................. 59
SECTION 9.06. Notation on or Exchange of Notes.................................................. 59
SECTION 9.07. Trustee To Sign Amendments, Etc................................................... 59
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt................................................. 60
SECTION 10.02. No Payment on Notes in Certain Circumstances...................................... 60
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.................................... 61
SECTION 10.04. Payments May Be Paid Prior to Dissolution......................................... 62
SECTION 10.05. Subrogation....................................................................... 62
SECTION 10.06. Obligations of the Company Unconditional.......................................... 62
SECTION 10.07. Notice to Trustee................................................................. 62
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 63
SECTION 10.09. Trustee's Relation to Senior Debt................................................. 63
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders
of Senior Debt................................................................ 63
SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination of Notes................ 64
SECTION 10.12. This Article Ten Not To Prevent Events of Default................................. 64
SECTION 10.13. Trustee's Compensation Not Prejudiced............................................. 64
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE ELEVEN
MISCELLANEOUS
<S> <C>
SECTION 11.01. TIA Controls....................................................................... 64
SECTION 11.02. Notices............................................................................ 64
SECTION 11.03. Communications by Holders with Other Holders....................................... 65
SECTION 11.04. Certificate and Opinion as to Conditions Precedent................................. 66
SECTION 11.05. Statements Required in Certificate or Opinion...................................... 66
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.......................................... 66
SECTION 11.07. Legal Holidays..................................................................... 66
SECTION 11.08. Governing Law...................................................................... 66
SECTION 11.09. No Adverse Interpretation of Other Agreements...................................... 67
SECTION 11.10. No Recourse Against Others......................................................... 67
SECTION 11.11. Successors......................................................................... 67
SECTION 11.12. Counterparts....................................................................... 67
SECTION 11.13. Severability....................................................................... 67
SECTION 11.14. Judgment Currency.................................................................. 68
ARTICLE TWELVE
GUARANTEE
SECTION 12.01. Unconditional Guarantee............................................................ 68
SECTION 12.02. Severability....................................................................... 69
SECTION 12.03. Limitation of Guarantor's Liability................................................ 69
SECTION 12.04. Execution of Guarantee............................................................. 69
SECTION 12.05. Subordination of Subrogation and Other Rights...................................... 69
ARTICLE THIRTEEN
SUBORDINATION OF GUARANTEE
SECTION 13.01. Guarantee Subordinated to Guarantor Senior Debt.................................... 69
SECTION 13.02. No Payment in Certain Circumstances................................................ 70
SECTION 13.03. Payment Over of Proceeds upon Dissolution, Etc..................................... 71
SECTION 13.04. Payments May Be Paid Prior to Dissolution.......................................... 72
SECTION 13.05. Subrogation........................................................................ 72
SECTION 13.06. Obligations of Guarantors Unconditional............................................ 72
SECTION 13.07. Notice to Trustee.................................................................. 72
SECTION 13.08. Reliance on Judicial Order or Certificate of Liquidating Agent..................... 73
SECTION 13.09. Trustee's Relation to Guarantor Senior Debt........................................ 73
SECTION 13.10. Subordination Rights Not Impaired by Acts or Omissions of the Company, the
Guarantors or Holders of Guarantor Senior Debt................................. 73
SECTION 13.11. Noteholders Authorize Trustee to Effectuate Subordination of Guarantees............ 74
SECTION 13.12. This Article Thirteen Not To Prevent Events of Default............................. 74
SECTION 13.13. Trustee's Compensation Not Prejudiced.............................................. 74
Exhibit A - Form of Initial Note.............................................................. A-1
Exhibit B - Form of Exchange Note............................................................. B-1
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exhibit C - Form of Certificate To Be Delivered upon Exchange or Registration of
Transfer of Securities....................................................... C-1
Exhibit D - Form of Transferee Letter of Representation...................................... D-1
Exhibit E - Form of Certificate to be delivered in Connection with Regulation S
Transfers.................................................................... E-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of this Indenture.
-v-
<PAGE>
INDENTURE, dated as of January 29, 1999, by and among Tokheim
Corporation, an Indiana corporation (the "Company"), each of the Subsidiaries of
-------
the Company named on the signature pages hereto as Guarantors (the
"Guarantors"), as guarantors, and U.S. Bank Trust National Association, a
----------
national banking corporation, as Trustee (the "Trustee").
-------
The Company has duly authorized the creation of an issue of 11 3/8%
Senior Subordinated Notes due 2008 (the "Initial Notes") and Series B 11 3/8%
-------------
Senior Subordinated Notes due 2008 (the "Exchange Notes," and together with the
--------------
Initial Notes, the "Notes") and, to provide therefor, the Company and each
-----
Guarantor has duly authorized the execution and delivery of this Indenture. All
things necessary to make the Notes, when duly issued and executed by the
Company, and authenticated and delivered hereunder, the valid obligations of the
Company, and to make this Indenture a valid and binding agreement of the Company
and the Guarantors, have been done.
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.02(a).
-------------------
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Acquisition" means the acquisition by the Company of the fuel
-----------
dispenser, systems and services business of Schlumberger Limited.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of
the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
---------------------
"Agent" means any Registrar, Paying Agent or co-Registrar.
-----
"Agent Members" has the meaning provided in Section 2.16.
-------------
"all or substantially all" shall have the meaning given such phrase in
------------------------
the Revised Model Business Corporation Act.
"Asset Acquisition" means (a) an Investment by the Company or any
-----------------
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Sub-
<PAGE>
sidiary of the Company, or shall be merged with or into the Company or any
Subsidiary of the Company, or (b) the acquisition by the Company or any
Subsidiary of the Company of the assets of any Person (other than a Subsidiary
of the Company) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sales shall not
-------- -------
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000; (ii) sales of accounts receivable that the Company has classified as
uncollectible; (iii) sales or other dispositions of Cash Equivalents; (iv) the
sale of the stock of the Subsidiary of Tokheim Sofitam Applications, S.A. to
which Tokheim Sofitam Applications S.A. has contributed its bulk meter business;
and (v) the sale, lease, conveyance, disposition or other transfer (w) of all or
substantially all of the assets of the Company as permitted under Section 5.01,
(x) pursuant to any foreclosure of assets or other remedy provided by applicable
law to a creditor of the Company or any Subsidiary of the Company with a Lien on
such assets, which Lien is permitted under this Indenture; provided that such
--------
foreclosure or other remedy is conducted in a commercially reasonable manner or
in accordance with any Bankruptcy Law, (y) involving only Cash Equivalents or
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of the Company or (z)
involving only the lease or sublease of any real or personal property in the
ordinary course of business.
"Authenticating Agent" has the meaning provided in Section 2.02.
--------------------
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
--------------
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
---------------
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
------------
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
-2-
<PAGE>
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
---
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
-------
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit, eurodollar time deposits or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than $250.0
million; (v) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (iv) above; and
(vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Indenture); (ii) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act shall become the owner, directly or indirectly,
beneficially or of record, of shares representing either more than 40% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company or more than 40% of the aggregate issued and
outstanding Common Stock of the Company; or (iii) the replacement of a majority
of the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of
at least a majority of the Board of Directors of the Company then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Date" has the meaning provided in Section 4.15.
----------------------
"Change of Control Offer" has the meaning provided in Section 4.15.
-----------------------
"Change of Control Payment Date" has the meaning provided in Section
------------------------------
4.15.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
-------
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Earnings and (ii)
to the extent Consolidated Net Earnings has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business or other transactions the
effect of which has been excluded from Consolidated Net Earnings), (B)
Consolidated Interest Expense and (C) Con-
-3-
<PAGE>
solidated Non-cash Charges less any non-cash items increasing Consolidated Net
Earnings for such period, all as determined on a consolidated basis for such
Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four most
recent full fiscal quarters for which financial information is available (the
"Four Quarter Period") ending on or prior to the date of the transaction
-------------------
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person
----------------
for the Four Quarter Period. In addition to and without limitation of the
foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital or revolving credit facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or
Asset Acquisitions (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation) as a result of such Person or one of
its Subsidiaries (including any Person who becomes a Subsidiary as a result of
the Asset Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness and also including any Consolidated EBITDA (provided that
--------
such Consolidated EBITDA shall be included only to the extent includable
pursuant to the definition of "Consolidated Net Earnings") attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If such Person or any of its
Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such Person had directly
incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on the Transaction Date; (2)
if interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period; and (3) notwithstanding clause (1) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for
--------------------------
any period, the sum, without duplication, of (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Subsidiaries (other than dividends
paid in Qualified Capital Stock of the Company or dividends to the extent
payable to the Company or its Subsidiaries) paid, accrued or scheduled to be
paid or accrued during such period times (other than in the case of Preferred
Stock of such Person and its Subsidiaries for which the dividends are tax
deductible for federal income tax purposes) and (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
-----------------------------
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period
-4-
<PAGE>
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount (but excluding the
amortization of debt issuance costs), (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Earnings" means, with respect to any Person, for
-------------------------
any period, the aggregate net earnings (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis (before preferred stock
dividend requirements), determined in accordance with GAAP; provided that there
--------
shall be excluded therefrom (a) after-tax gains or losses from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net earnings of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Subsidiary of the referent Person or is merged or consolidated
with the referent Person or any Subsidiary of the referent Person, (d) the net
earnings (but not loss) of any Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by a contract, operation of law or otherwise, (e) the
net earnings of any Person, other than a Subsidiary of the referent Person,
except to the extent of cash dividends or distributions paid to the referent
Person or to a Wholly Owned Subsidiary of the referent Person by such Person,
(f) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Earnings
accrued at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets and (i) all gains or losses from the cumulative effect of any
change in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated
----------------------
shareholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person,
-----------------------------
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries reducing Consolidated Net Earnings
of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve relating to possible cash charges or expenditures for
any future or past period).
"Covenant Defeasance" has the meaning provided in Section 8.02.
-------------------
"Currency Agreement" means any foreign exchange contract, currency
-----------------
swap agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Notice" has the meaning provided in Section 10.02.
--------------
"Depository" and "DTC" mean The Depository Trust Company, its nominees
---------- ---
and successors.
-5-
<PAGE>
"Designated Senior Debt" means (i) Indebtedness under or in respect
----------------------
of the New Credit Agreement or the ESOP Credit Agreements and (ii) any other
Indebtedness constituting Senior Debt which, at the time of determination, has
an aggregate principal amount of at least $25.0 million and is specifically
designated in the instrument evidencing such Senior Debt as "Designated Senior
Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"ESOP Credit Agreements" means those certain credit agreements among
----------------------
the Company, the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and
certain other banks, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by Section
--------
4.12)) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders and any assignments thereof.
"Euro Senior Subordinated Notes" means the Euro 75,000,000 11 3/8%
------------------------------
Senior Subordinated Notes due 2008, issued pursuant to an indenture, dated the
date of this Agreement, by and among the Company, the Guarantors, as guarantors,
and U.S. Bank Trust National Association, as trustee.
"Event of Default" has the meaning provided in Section 6.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the preamble to this
--------------
Indenture.
"Exchange Offer" means the registration by the Company under the
--------------
Securities Act pursuant to a registration statement of the offer by the Company
to each Holder of the Initial Notes to exchange all the Initial Notes held by
such Holder for the Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Initial Notes held by such Holder, all in
accordance with the terms and conditions of the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in
----
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date.
"Global Note" has the meaning provided in Section 2.01.
-----------
-6-
<PAGE>
"Guarantee" means any guarantee of the Notes by any Guarantor pursuant
---------
to this Indenture.
"Guarantor" means any Subsidiary of the Company which guarantees the
---------
Notes pursuant to this Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, the
---------------------
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of such Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Guarantee of such Guarantor. Without limiting the generality of
the foregoing, "Guarantor Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other monetary obligations of such Guarantor owing
in respect of (x) all monetary obligations of every nature of such Guarantor
under the New Credit Agreement and the ESOP Credit Agreements including
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) all obligations under Currency Agreements, in each case
whether outstanding on the Issue Date or thereafter incurred. Notwithstanding
the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness
of a Guarantor or any Affiliate of such Guarantor to a Subsidiary of the
Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or
guaranteed on behalf of, any shareholder, director, officer or employee of a
Guarantor or any Subsidiary of the Guarantor (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by a Guarantor, (vi)
Indebtedness incurred in violation of Section 4.12, (vii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of Title
11, United States Code, is without recourse to a Guarantor, (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of a Guarantor and (ix) any guarantees of the
Schlumberger Junior Subordinated Notes or Warrant Repurchase Indebtedness, or
guarantees of any Refinancing of the Schlumberger Junior Subordinated Notes or
the Warrant Repurchase Indebtedness.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered on the Registrar's books.
"incur" has the meaning provided Section 4.12.
-----
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all indebtedness or
other obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all indebtedness
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all indebtedness of any other Person of the
type referred to in clauses (i) through (vi) which are secured by any lien on
any property or asset of such Person, the amount of such Obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Obligation so secured, (viii) all indebtedness under Currency
Agreements and Interest Swap Obligations of such Person and (ix) all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
rep-
-7-
<PAGE>
resented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any. For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
-----------------------------
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" has the meaning provided in the preamble to this
-------------
Indenture.
"Initial Purchasers" means BT Alex. Brown Incorporated, ABN AMRO
------------------
Incorporated, Credit Lyonnais Securities (USA) Inc., First Chicago Capital
Markets, Inc., Gleacher NatWest International, PaineWebber Incorporated and
Schroder & Co. Inc.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
---------------------
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or
----------
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person. "Investment" shall exclude extensions of trade
credit by the Company and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Subsidiary, as the
case may be. For the purposes of Section 4.10, the amount of any Investment
shall be the original cost of such Investment plus the cost of all additional
Investments by the Company or any of its Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment, reduced by the payment of dividends or
distributions in connection with such Investment or any other amounts received
in respect of such Investment; provided that no such payment of dividends or
--------
distributions or receipt of any such other amounts shall reduce the amount of
any
-8-
<PAGE>
Investment if such payment of dividends or distributions or receipt of any such
amounts would be included in Consolidated Net Earnings.
"Issue Date" means the date of original issuance of the Notes.
----------
"Legal Defeasance" has the meaning provided in Section 8.02.
----------------
"Legal Holiday" has the meaning provided in Section 11.07.
-------------
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Liquidated Damages" means all liquidated damages owing pursuant to
------------------
the Registration Rights Agreement.
"Maturity Date" means August 1, 2008.
-------------
"Moody's" means Moody's Investors Service, Inc. and its successors.
-------
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting, brokerage and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.16.
------------------
"Net Proceeds Offer Amount" has the meaning provided in Section 4.16.
-------------------------
"Net Proceeds Offer Payment Date" has the meaning provided in Section
-------------------------------
4.16.
"Net Proceeds Offer Trigger Date" has the meaning provided in Section
-------------------------------
4.16.
"New Credit Agreement" means the Second Amended and Restated Credit
--------------------
Agreement among the Company, certain of its Subsidiaries, the lenders party
thereto in their capacities as lenders thereunder, NBD Bank, N.A., as
administrative agent, and Credit Lyonnais, as collateral agent, together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
--------
increase in borrowings is permitted by Section 4.12)) all or any portion of the
Indebtedness under such agree-
-9-
<PAGE>
ment or any successor or replacement agreement and whether by the same or any
other agent, lender or group of lenders.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Portion of Net Proceeds" has the meaning provided in Section
----------------------------
4.16.
"Notes" means the Initial Notes and the Exchange Notes treated as a
-----
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
-----------
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated January 26,
-------------------
1999, pursuant to which the Initial Notes were offered, and any supplement
thereto.
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel, who
------------------
may be counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.
"Other Debt" has the meaning provided in Section 4.16.
----------
"Paying Agent" has the meaning provided in Section 2.03.
------------
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(i) Indebtedness under the Notes and this Indenture;
(ii) Indebtedness incurred pursuant to the New Credit Agreement and
the ESOP Credit Agreements in an aggregate principal amount at any time
outstanding not to exceed (A) $7.62 million with respect to the
Indebtedness under the ESOP Credit Agreements, less the amount of all
mandatory principal payments, if any (excluding any such payments to the
extent refinanced at the time of payment under a replaced ESOP Credit
Agreement), and (B) $250.0 million in the aggregate with respect to
Indebtedness under the New Credit Agreement, reduced by any required
permanent repayments, if any (which are accompanied by a corresponding
permanent commitment reduction), thereunder;
(iii) Other Indebtedness of the Company and its Subsidiaries
outstanding on the Issue Date;
(iv) Interest Swap Obligations of the Company covering Indebtedness
of the Company or any of its Subsidiaries and Interest Swap Obligations of
any Subsidiary of the Company covering Indebtedness of such Subsidiary;
provided, however, that (x) (A) such Interest Swap Obligations are de-
-------- -------
-10-
<PAGE>
signed to protect the Company and its Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with this Indenture
(and are used for bona fide hedging, and not speculative, purposes); and
(B) the notional principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which such Interest Swap
Obligation relates at the time entered into; or (y) such Interest Swap
Obligations are required under the terms of the New Credit Agreement;
(v) Indebtedness under Currency Agreements; provided that in the
--------
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements (x) (A) are designed to protect against fluctuations in currency
value (and are used for bona fide hedging, and not speculative, purposes);
and (B) do not increase the Indebtedness of the Company and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder; or (y) are required under the terms of the New Credit
Agreement;
(vi) Indebtedness of a Wholly Owned Subsidiary of the Company to the
Company or to a Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Wholly Owned Subsidiary of the
Company, in each case subject to no Lien held by a Person other than the
Company or a Wholly Owned Subsidiary of the Company other than a Lien
required under the New Credit Agreement; provided that if as of any date
--------
any Person other than the Company or a Wholly Owned Subsidiary of the
Company owns or holds any such Indebtedness or holds a Lien in respect of
such Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned
Subsidiary of the Company, in each case subject to no Lien other than a
Lien required under the New Credit Agreement; provided that (a) any
--------
Indebtedness of the Company to any Wholly Owned Subsidiary of the Company
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under this Indenture and the Notes and (b) if as of
any date any Person other than a Wholly Owned Subsidiary of the Company
owns or holds any such Indebtedness or any Person holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
-------- -------
Indebtedness is extinguished within ten business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness incurred by the Company or any Subsidiary of the
Company in connection with the purchase or improvement of property (real or
personal) or equipment or other capital expenditures in the ordinary course
of business or consisting of Capitalized Lease Obligations, provided that
(i) at the time of the incurrence thereof, such Indebtedness, together with
any other Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (xi) does not exceed, in
the aggregate, 3% of the net sales of the Company and its Subsidiaries
during the most recently completed four fiscal quarter period on a
consolidated basis (calculated on a pro forma basis if the date of
incurrence is prior to the end of the fourth fiscal quarter following the
Issue Date)
-11-
<PAGE>
and (ii) such Indebtedness, together with all then outstanding Indebtedness
incurred in reliance upon this clause (xi) does not exceed, in the
aggregate, 3% of the aggregate net sales of the Company and its
Subsidiaries during the most recently completed twelve fiscal quarter
period on a consolidated basis (calculated on a pro forma basis if the date
of incurrence is prior to the end of the twelfth fiscal quarter following
the Issue Date);
(xii) Indebtedness arising from agreements of the Company or a
Subsidiary of the Company providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing
such acquisition; provided that the maximum aggregate liability in respect
--------
of all such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and the Subsidiary in connection with such
disposition;
(xiii) Obligations in respect of performance bonds and completion
guarantees provided by the Company or any Subsidiary of the Company in the
ordinary course of business;
(xiv) Guarantees by the Company or a Subsidiary of the Company of
Indebtedness incurred by the Company or a Subsidiary of the Company so long
as the incurrence of such Indebtedness by the Company or any such
Subsidiary of the Company is otherwise permitted by the terms of this
Indenture;
(xv) Schlumberger Junior Subordinated Notes;
(xvi) Warrant Repurchase Indebtedness;
(xvii) Indebtedness incurred by the Company or any Subsidiary of the
Company in exchange for the use of Traits as collateral made in the
ordinary course of business to financial institutions which Indebtedness
has a value of no less than 90% of the face value of such Traits;
(xviii) Indebtedness of the Company or a Subsidiary of the Company to
a Subsidiary of the Company that is not a Wholly Owned Subsidiary in the
aggregate principal amount not to exceed at any one time $10.0 million;
provided that if as of any date any Person other than a Subsidiary of the
--------
Company that is not a Wholly Owned Subsidiary owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(xix) Indebtedness from bank overdraft facilities not to exceed
$15.0 million at any time;
(xx) $10.0 million of other indebtedness of the Company or any of
its Subsidiaries (which amount may, but need not, be incurred in whole or
in part under the New Credit Agreement); and
(xxi) the Euro Senior Subordinated Notes.
"Permitted Investments" means (i) Investments by the Company or any
---------------------
Subsidiary of the Company in any Person that is or will become immediately after
such Investment a Wholly Owned Subsidiary of the Company or that will merge or
consolidate into the Company or a Wholly Owned Subsidiary of the Company, (ii)
Investments in the Company by any Subsidiary of the Company; provided that any
--------
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement and to the same extent that the Notes are subordinated to
Senior Debt, to the Company's obligations under the Notes and this Indenture;
(iii) Investments in cash and Cash Equivalents; (iv) loans and advances to
employees and officers of the Company and its Subsidiaries totaling up to $5.0
million in the aggregate (A) in the ordinary course of business for
-12-
<PAGE>
bona fide business purposes or (B) to purchase the Company's Capital Stock; (v)
Currency Agreements and Interest Swap Obligations entered into in the ordinary
course of the Company's or its Subsidiaries' businesses and otherwise in
compliance with this Indenture and in compliance with the New Credit Agreement;
(vi) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (vii) Investments made by the
Company or its Subsidiaries as a result of consideration received in connection
with an Asset Sale made in compliance with Section 4.16; (viii) Investments
existing on the Issue Date; (ix) Investments in an African Subsidiary in an
aggregate amount not to exceed $2.0 million for which the Company is committed
on the Issue Date; and (x) additional Investments in an aggregate amount not
exceeding $5.0 million.
"Permitted Liens" means the following types of Liens:
---------------
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) being contested in good faith by
appropriate proceedings and as to which the Company or its Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent for a period of more than 60 days or being contested in good
faith, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security;
(iv) Liens securing letters of credit issued in the ordinary course
of business consistent with past practice in connection with the items
referred to in clause (iii), or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(v) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(vi) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
(vii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
--------
assets which is not leased property subject to such Capitalized Lease
Obligation;
(viii) purchase money Liens to finance property or assets of the
Company or any Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
-------- -------
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Subsidiary
of the Company other than the property and assets so acquired and (B) the
Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
-13-
<PAGE>
(ix) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(x) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(xi) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Subsidiaries, including rights of offset and set-off;
(xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xiii) Liens securing Indebtedness under Currency Agreements;
(xiv) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.12; provided that (A) such Liens secured such Acquired
--------
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Subsidiary of the Company and (B)
such Liens do not extend to or cover any property or assets of the Company
or of any of its Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Subsidiary of the Company
and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness
by the Company or a Subsidiary of the Company;
(xv) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Subsidiaries;
(xvi) Any interest or title of a lessor in the property subject to
any lease, whether characterized as capitalized or operating, other than
any such interest or title resulting from or arising out of a default by
the Company or any of its Subsidiaries on its obligations under such lease;
(xvii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property
that are otherwise permitted under this Indenture and under which the
Company or any of its Subsidiaries is lessee;
(xviii) Liens placed on Traits used as collateral in exchange for
loans provided to the Company or its Subsidiaries;
(xix) Liens in favor of the Trustee and any substantially equivalent
Lien granted to any trustee or similar institution under any indenture
governing Indebtedness permitted to be Incurred or outstanding under this
Indenture; and
(xx) Liens on any property or assets of the Company or any
Subsidiary securing on a paripassu basis all of the Notes and the Euro
Senior Subordinated Notes.
"Person" means an individual, partnership, corporation,
------
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
-14-
<PAGE>
"Physical Notes" has the meaning provided in Section 2.01.
--------------
"Preferred Stock" of any Person means any Capital Stock of such
---------------
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
---------
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or required to
---------
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
"Public Equity Offering" means an underwritten public offering of
----------------------
Qualified Capital Stock of the Company by the Company pursuant to a registration
statement filed with the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock of the Company that
-----------------------
is not Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
----------------------------- ---
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes, whether
-----------
or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
----------------
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
"Reference Date" has the meaning provided in Section 4.10.
--------------
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
---------- -----------
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Subsidiary of the Company of Indebtedness incurred in accordance with Section
4.12 (other than pursuant to clause (iv), (v), (vi), (vii), (viii), (ix), (xi)
or (xvii) of the definition of Permitted Indebtedness), in each case that does
not (1) result in an increase in the aggregate principal amount of Indebtedness
of such Person as of the date of such proposed Refinancing (plus the amount of
any premium or penalty required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable fees and expenses
incurred by the Company in connection with such Refinancing) or (2) create
Indebtedness with (A) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness being
Refinanced; provided that (x) if such Indebtedness being Refinanced is
--------
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of
-15-
<PAGE>
the Company and (y) if such Indebtedness being Refinanced is the Schlumberger
Junior Subordinated Notes, Warrant Repurchase Indebtedness or any Refinancing
thereof, then such Refinancing Indebtedness shall (i) be subordinate or junior
to the Notes at least to the same extent and in the same manner as the
Schlumberger Junior Subordinated Notes as in effect on the Issue Date, (ii)
provide for no cash interest payments prior to October 2004, (iii) have
covenants no more adverse to the Company than the Schlumberger Junior
Subordinated Notes and (iv) have an effective interest rate not greater than
14%, provided, however, that prior to the incurrence of such Indebtedness,
-------- -------
Moody's will have affirmed that its rating of the Notes will not decrease by one
or more gradations below its rating in effect on the Issue Date.
"Registrar" has the meaning provided in Section 2.03.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated January 29, 1999 among the Company, the Guarantors and the
Initial Purchasers relating to the Notes for the benefit of themselves and the
Holders, as the same may be amended or modified from time to time in accordance
with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
------------
"Representative" means the indenture trustee or other trustee, agent
--------------
or representative in respect of any Designated Senior Debt; provided that if,
--------
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning provided in Section 4.10.
------------------
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
--------
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Revolving Credit Facility" means one or more revolving credit
-------------------------
facilities under the New Credit Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
---------
"S&P" means Standard & Poor's Corporation and its successors.
---
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of the Company of any property,
whether owned by the Company or any Subsidiary of the Company at the Issue Date
or later acquired, which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"Schlumberger" means Schlumberger Limited, a Netherland Antilles
------------
corporation.
"Schlumberger Junior Subordinated Notes" means (i) the $40.0 million
--------------------------------------
Junior Subordinated Notes issued by the Company to Schlumberger in connection
with the Acquisition pursuant to the Junior Subordinated Notes Indenture, as
amended up to the Issue Date, between the Company and Harris Trust and Saving
Bank, as trustee and (ii) additional subordinated notes issued as payment of
interest thereon.
-16-
<PAGE>
"Schlumberger Warrants" means the warrants issued by the Company to
---------------------
Schlumberger as part of the consideration for the Acquisition.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
"Senior Debt" means, the principal of, premium, if any, and interest
-----------
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other Obligations with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Debt" shall
also include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other monetary
obligations of the Company or any Subsidiary of the Company owing in respect of,
(x) the New Credit Agreement and the ESOP Credit Agreements, including
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) Obligations under Currency Agreements, in each case whether
outstanding on the Issue Date or thereafter incurred. Notwithstanding the
foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company
to a Subsidiary of the Company, (ii) Indebtedness to, or guaranteed on behalf
of, any shareholder, director, officer or employee of the Company or any
Subsidiary of the Company (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in
violation of Section 4.12, (vii) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company, (viii) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of the
Company and (ix) the Schlumberger Junior Subordinated Notes, any Warrant
Repurchase Indebtedness or any Refinancing of the Schlumberger Junior
Subordinated Notes or any Warrant Repurchase Indebtedness.
"Significant Subsidiary" shall have the meaning set forth in Rule
----------------------
1.02(v) of Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.04.
"Traits" means "traites" (as defined under French law), accounts
------
receivable or invoices.
"Trust Officer" means any officer of the Trustee assigned by the
-------------
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
-17-
<PAGE>
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S. Government Obligations" means direct obligations of, and
---------------------------
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Warrant Repurchase Indebtedness" means (i) up to $20.0 million of
-------------------------------
Indebtedness incurred by the Company to repurchase Schlumberger Warrants (or a
pro rata portion of $20.0 million, if less than all the Schlumberger Warrants
are repurchased) plus reasonable fees and expenses incurred in connection
therewith; provided, however, that such Indebtedness (a) is subordinated to the
-------- -------
Notes at least to the same extent as the Schlumberger Junior Subordinated Notes,
(b) contains covenants no more adverse to the Company than the Schlumberger
Junior Subordinated Notes, (c) bears interest at an effective rate not to exceed
14% per annum, which interest shall not be paid in cash prior to October 2004,
(d) contains no mandatory prepayment provisions and (e) matures at least 6
months after the maturity of the Notes plus (ii) additional Indebtedness with
the same terms incurred in payment of interest thereon; provided, however, that
-------- -------
prior to the incurrence of such Indebtedness, Moody's will have affirmed that
its rating of the Notes will not decrease by one or more gradations below its
rating in effect on the Issue Date.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
-----------------------
Person of which all the outstanding voting securities (other than in the case of
a foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
-18-
<PAGE>
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Exchange Notes and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit B hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or Depository rule or usage. The Company
and the Trustee shall approve the form of the Notes and any notation, legend or
endorsement on them. Each Note shall be dated the date of its issuance and shall
show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The Notes shall be issued initially in the form of one or more
permanent global Notes in registered form, substantially in the form set forth
in Exhibit A (the "Global Note"), deposited with the Trustee, as custodian for
-----------
the Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.
Beneficial interests in a Global Note are exchangeable for definitive
Notes in registered certificated form ("Physical Notes") only if (i) the
--------------
Depository (x) notifies the Company that it is unwilling or unable to continue
as depository for such Global Notes, (y) has ceased to be a "clearing agency"
registered under the Exchange Act and, in each case, the Company thereupon fails
to appoint a successor depository within 90 days, or (ii) there shall have
occurred and be continuing a Default or an Event of Default. Notes that are
issued in the
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<PAGE>
form of permanent certificated Notes in registered form, in substantially the
form set forth in Exhibit A, are referred to herein as "Physical Notes."
Physical Notes shall initially be registered in the name of the Depository
or the nominee of such Depository and be delivered to the Trustee as custodian
for such Depository. Beneficial owners of Physical Notes, however, may
request registration of such Physical Notes in their names or the names of their
nominees.
SECTION 2.02. Execution and Authentication; Aggregate Principal
-------------------------------------------------
Amount.
------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Notes.
If an Officer or Assistant Secretary whose signature is on a Note was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office or position at the time the Trustee authenticates the Note,
the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $123,000,000 and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon written orders of the Company in the form of
an Officers' Certificate. The Officers' Certificate shall specify the amount of
Notes to be authenticated, the date on which the Notes are to be authenticated
and the aggregate principal amount of Notes outstanding on the date of
authentication, whether the Notes are to be Initial Notes or Exchange Notes, and
shall further specify the amount of such Notes to be issued as the Global Note
or Physical Notes. The aggregate principal amount of Notes outstanding at any
time may not exceed $123,000,000 except as provided in Section 2.07.
In the event that the Company shall issue and the Trustee shall
authenticate any Securities issued under this Indenture subsequent to the Issue
Date pursuant to clause (ii) of the first sentence of the immediately preceding
paragraph, the Company shall use its reasonable best efforts to obtain the same
"CUSIP" number for such Notes as is printed on the Notes outstanding at such
time; provided, however, that if any series of Notes issued under this Indenture
-------- -------
subsequent to the Issue Date is determined, pursuant to an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee to be a different
class of security than the Notes outstanding at such time for federal income tax
purposes, the Company may obtain a "CUSIP" number for such Notes that is
different than the "CUSIP" number printed on the Securities then outstanding.
The Trustee may appoint an authenticating agent (the "Authenticating
--------------
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
- -----
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
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<PAGE>
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York, and, for
so long as the Notes are listed on the Luxembourg Stock Exchange and the rules
of such stock exchange so require, in Luxembourg) where (a) Notes may be
presented or surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Notes may be presented or surrendered for payment (the "Paying
--------- ------
Agent") and (c) notices and demands to or upon the Company in respect of the
- -----
Notes and this Indenture may be served. The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company, upon prior written
notice to the Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional Paying Agents and the term "Registrar" includes
any co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. The
Company initially appoints DTC as Depository. The Depository, the Paying Agent
or Registrar may resign upon 30 days notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent (if other than the Company), the Paying Agent shall have no further
liability for such assets. If the Company or any Guarantor or any of their
respective Affiliates acts as Paying Agent, it shall, on or before each due date
of the principal of or interest on the Notes, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
SECTION 2.05. Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee at least five days before each
Record Date and at such other times as the Trustee may request in writing a list
as of such date and in such form as the Trustee may reasonably require of the
names and addresses of the Holders, which list may be conclusively relied upon
by the Trustee.
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<PAGE>
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.16 and 2.17, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations of the same series, the Registrar or
co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
-------- -------
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes (and each of the Guarantors shall execute a Guarantee
thereon) at the Registrar's or co-Registrar's request. No service charge shall
be made for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge in connection therewith payable by the transferor of such
Securities (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.10, 3.06, 4.15, 4.16
or 9.06, in which event the Company shall be responsible for the payment of such
taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements for replacement of Notes are met. If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee or any
Agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Note, including reasonable fees and expenses of counsel. Every
replacement Note shall constitute an additional obligation of the Company and
the Guarantors.
SECTION 2.08. Outstanding Notes.
-----------------
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives an Opinion of Counsel that the replaced Note is held by a bona
----
fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
- ----
such Note and replacement thereof pursuant to Section 2.07.
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<PAGE>
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company, the Guarantors or any of their respective Affiliates shall be
considered as though they are not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Trust Officer of the Trustee
actually knows are so owned shall be so considered. The Company shall notify
the Trustee, in writing, when it or any of its Affiliates repurchases or
otherwise acquires Notes, of the aggregate principal amount of such Notes so
repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
upon receipt of a written order of the Company pursuant to Section 2.02
definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, dispose of
and deliver evidence of such disposal of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may not
issue new Notes to replace Notes that it has paid or delivered to the Trustee
for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
The Company shall pay interest on overdue principal from time to time
on demand at the applicable rate of interest then borne by the Notes. The
Company shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the rate of
interest then borne by the Notes.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special rec-
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<PAGE>
ord date, the Company shall mail to each Holder, as of a recent date selected by
the Company, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(1) shall be paid to
Holders as of the Record Date for the Interest Payment Date for which interest
has not been paid.
SECTION 2.13. CUSIP Number.
------------
The Company in issuing the Notes may use a "CUSIP" number, and if so,
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that no representation is hereby deemed to be
--------
made by the Trustee as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Redemption Date, Change of Control Payment Date, Net Proceeds Offer Payment Date
and on the Maturity Date, the Company shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date, Redemption Date, Change of Control Payment
Date, Net Proceeds Offer Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Redemption Date, Change of Control Payment Date, Net
Proceeds Offer Payment Date or Maturity Date, as the case may be.
SECTION 2.15. Restrictive Legends.
-------------------
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend")
------------------------
on the face thereof until January 29, 2001, unless otherwise agreed to by the
Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (2) AGREES THAT
IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED
PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY, RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES TO AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3), OR (7) UNDER THE ACT) (AN
"ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED
ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY
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<PAGE>
RULE 144 UNDER THE ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND, IF THE COMPANY SO REQUESTS,
BASED UPON AN OPINION OF COUNSEL, OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE ACT.
Each Global Note shall also bear the following legend:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF INTERESTS IN THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN SECTION 2.17 OF THE INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Note.
-------------------------------------
(a) The Global Note initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.17. In addition,
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<PAGE>
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the Global Note if (i) the Depository (x) notifies
the Company that it is unwilling or unable to continue as Depository for the
Global Note or (y) has ceased to be a "clearing agency" registered under the
Exchange Act and, in each case, a successor Depository is not appointed by the
Company within 90 days of such notice or (ii) there shall have occurred and be
continuing a Default or Event of Default.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b) of this Section 2.16, the Registrar shall (if one or more Physical
Notes are to be issued) reflect on its books and records the date and a decrease
in the principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver, one or
more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 2.16, the Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) shall,
except as otherwise provided by paragraph (f) of Section 2.17, bear the legend
regarding transfer restrictions applicable to the Physical Notes set forth in
Section 2.15.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Registration of Transfers and Exchanges.
---------------------------------------
(a) Transfer and Exchange of Physical Notes. When Physical Notes
---------------------------------------
are presented to the Registrar with a request:
(i) to register the transfer of the Physical Notes; or
(ii) to exchange such Physical Notes for an equal principal amount
of Physical Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.17 for such
transactions are met; provided, however, that the Physical Notes presented or
-------- -------
surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Registrar, duly executed by the
Holder thereof or its attorney duly authorized in writing; and
(II) in the case of Physical Notes the offer and sale of which have
not been registered under the Securities Act, such Physical Notes shall be
accompanied, in the sole discretion of the Company, by the following
additional information and documents, as applicable:
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<PAGE>
(A) if such Physical Note is being delivered to the Registrar by a
Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect
(substantially in the form of Exhibit C hereto); or
---------
(B) if such Physical Note is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit C hereto); or
---------
(C) if such Physical Note is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect
(substantially in the form of Exhibit C hereto) and a
---------
transferee letter of representation substantially in the form
of Exhibit D hereto and, at the option of the Company, an
---------
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Note is being transferred in reliance on Rule
144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit C hereto)
---------
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such Physical Notes is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit C hereto), a transferor
---------
certificate for Regulation S transfers substantially in the
form of Exhibit E hereto and, at the option of the Company, and
---------
Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities
Act.
(F) if such Physical Note is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit C hereto) and, at the option of the
---------
Company, an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act.
(b) Restrictions on Transfer of a Physical Note for a Beneficial
------------------------------------------------------------
Interest in a Global Note. A Physical Note the offer and sale of which has not
- -------------------------
been registered under the Securities Act may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set forth
below. Upon receipt by the Registrar of a Physical Note, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Registrar, together with:
(A) certification, substantially in the form of Exhibit C hereto,
---------
that such Physical Note is being transferred (I) to a QIB, (II)
to an Accredited Investor or (III) in an offshore transaction
in compliance with Regulation S and, with respect to (II) and
(III), at the option of the Company, an Opinion of Counsel
reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; and
(B) written instructions directing the Registrar to make, or to
direct the Depository to make, an endorsement on the applicable
Global Note to reflect an increase in the aggregate amount of
the Notes represented by the Global Note,
then the Registrar shall cancel such Physical Note and cause, or direct the
Depository to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Registrar, the principal amount of Notes
represented by the applicable Global Note to be increased accordingly. If no
Global Note is
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<PAGE>
then outstanding, the Company shall, unless events in either clause (i) or (ii)
of Section 2.16(b) have occurred and are continuing, issue and the Trustee
shall, upon written instructions from the Company in accordance with Section
2.02, authenticate such a Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
-------------------------------------
of Global Notes or beneficial interests therein shall be effected through the
Depository in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor. Upon
receipt by the Registrar of written instructions, or such other instruction as
is customary for the Depository, from the Depository or its nominee, requesting
the registration of transfer of an interest in a Global Note to another type of
Global Note, together with the applicable Global Notes (or, if the applicable
type of Global Note required to represent the interest as requested to be
transferred is not then outstanding, only the Global Note representing the
interest being transferred), the Registrar shall cancel such Global Notes (or
Global Note), and the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate, new
Global Notes of the types so canceled (or the type so canceled and applicable
type required to represent the interest as requested to be transferred)
reflecting the applicable increase and decrease of the principal amount of Notes
represented by such types of Global Notes, giving effect to such transfer. If
the applicable type of Global Note required to represent the interest as
requested to be transferred is not outstanding at the time of such request, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate a new Global Note of such
type in principal amount equal to the principal amount of the interest requested
to be transferred.
(d) Transfer of a Beneficial Interest in a Global Note for a Physical
-----------------------------------------------------------------
Note.
- ----
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Physical Note only if
(i) the Depository (x) notifies the Company that it is unwilling or unable
to continue as Depository for the Global Note or (y) has ceased to be a
"clearing agency" registered under the Exchange Act and, in each case, a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) there shall have occurred and be continuing a Default or
Event of Default; provided, however, that prior to the registration under
-------- -------
the Securities Act, a transferee that is a QIB or Institutional Accredited
Investor may not exchange a beneficial interest in Global Note for a
Physical Note. Upon receipt by the Registrar of written instructions, or
such other form of instructions as is customary for the Depository, from
the Depository or its nominee on behalf of any Person (subject to the
previous sentence) having a beneficial interest in a Global Note and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the Person designated by
the Depository as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a
beneficial interest in Notes the offer and sale of which have not been
registered under the Securities Act, the following additional information
and documents:
(A) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification
to that effect (substantially in the form of Exhibit C hereto)
---------
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act;
(B) if such beneficial interest is being transferred in reliance on
Regulation S under the Securities Act, delivery of a
certification to that effect (substantially in the form of
Exhibit E hereto) and, at the option of the Company, an Opinion
---------
of Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act; or
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<PAGE>
(C) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
---------
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with
the Securities Act,
then the Registrar will cause, in accordance with the standing instructions
and procedures existing between the Depository and the Registrar, the
aggregate principal amount of the applicable Global Note to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate in accordance
with Section 2.02, the Trustee will authenticate and deliver to the
transferee a Physical Note in the appropriate principal amount.
(ii) Notes issued in exchange for a beneficial interest in a Global
Note pursuant to this Section 2.17(d) shall be registered in such names and
in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Registrar in writing. The Registrar shall deliver such
Physical Notes to the Persons in whose names such Physical Notes are so
registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless, and the Trustee is hereby authorized to deliver Notes without the
Private Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act; (ii)
such Note has been sold pursuant to an effective registration statement under
the Securities Act (including pursuant to a registration); or (iii) the date of
such transfer, exchange or replacement is two years after the later of (x) the
Issue Date and (y) the last date that the Company or any affiliate (as defined
in Rule 144 under the Securities Act) of the Company was the owner of such Notes
(or any predecessor thereto).
(g) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Participants or beneficial
owners of interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
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<PAGE>
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to Paragraph 7 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
---------------------------------
In the event that less than all of the Notes are to be redeemed at any
time, selection of the Notes to be redeemed shall be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
-------- -------
a principal amount of $1,000 or less shall be redeemed in part; provided,
--------
further, that if a partial redemption is made with the proceeds of a Public
- -------
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis
as is practicable (subject to DTC procedures), unless such method is otherwise
prohibited. Notice of redemption shall be mailed by first-class mail at least 30
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon delivery of the original Note to the Paying Agent and cancellation
of the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agents in New York and Luxembourg funds in
satisfaction of the applicable redemption price pursuant to this Indenture.
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with
a copy to the Trustee and any Paying Agent. At the Company's written request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. So long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the Company will cause a
notice of such redemption to be published in a daily newspaper of general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such redemption.
Each notice for redemption shall identify the Notes to be redeemed
(including the CUSIP number thereon, if any) and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
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<PAGE>
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus accrued
interest, if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption .
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before 11:00 a.m., New York time, on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Notes to be redeemed
on that date. The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose, except with
respect to monies owed as obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.
SECTION 3.06. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
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<PAGE>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
----------------
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes plus 2% per annum. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, and, for so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange so require, in Luxembourg, the
office or agency required under Section 2.03. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 11.02 hereof. The
Company hereby initially designates (i) the Trustee at its address set forth in
Section 11.02 hereof as its office or agency in The Borough of Manhattan, The
City of New York, for such purposes and (ii) so long as the Securities are
listed on the Luxembourg Stock Exchange and the rules of such stock exchange so
require, Bankers Trust Luxembourg S.A., 14, Boulevard F.D. Roosevelt, L-2450
Luxembourg, as its office or agency in Luxembourg for such purposes.
SECTION 4.03. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five and Section 4.16, the
Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be required to
-------- -------
preserve, with respect to itself, any material right or franchise and, with
respect to any of its Subsidiaries, any such existence, material right or
franchise, if the Board of Directors of the Company shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and the Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes
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<PAGE>
and any penalties, interest and additions to taxes) levied or imposed upon it or
any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii)
all lawful claims for labor, materials and supplies that, if unpaid, might by
law become a Lien upon the property of it or any of its Subsidiaries; provided,
--------
however, that the Company shall not be required to pay or discharge or cause to
- -------
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted for which adequate
reserves, to the extent required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain its material properties in good working order and condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business; provided, however, that nothing in this Section 4.05 shall
-------- -------
prevent the Company or any of its Subsidiaries from discontinuing the operation
and maintenance of any of its properties, if such discontinuance is, in the
good faith judgment of the Board of Directors or senior management of the
Company or the Subsidiary, as the case may be, desirable in the conduct of their
respective businesses.
(b) The Company shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Board of Directors of the Company, are adequate and appropriate for the conduct
of the business of the Company and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the good faith judgment of the Board
of Directors of the Company, for companies similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee, within 90 days after
the end of the Company's fiscal year, which currently ends on November 30 of
each year, an Officers' Certificate stating that a review of its activities and
the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of such Officer's knowledge the Company during
such preceding fiscal year has kept, observed, performed and fulfilled each and
every such covenant and no Default or Event of Default occurred during such year
and at the date of such certificate there is no Default or Event of Default that
has occurred and is continuing or, if such signers do know of such Default or
Event of Default, the certificate shall describe the Default or Event of Default
and its status with particularity. The Officers' Certificate shall also notify
the Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that a Default or Event of Default
under this Indenture has occurred insofar as they relate to accounting matters
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.02 hereof,
by registered or certified
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<PAGE>
mail or by telegram, telex or facsimile transmission followed by hard copy by
registered or certified mail an Officers' Certificate specifying such event,
notice or other action and the status thereof within five Business Days of its
becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole.
SECTION 4.08. SEC Reports.
-----------
(a) The Company (at its own expense) shall file with the SEC and
shall file with the Trustee within 15 days after it files them with the SEC
copies of the quarterly and annual reports and of the information, documents,
and other reports, if any (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe), which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act
(without regard to whether the Company is subject to the requirements of such
Section 13 or 15(d) of the Exchange Act). Upon qualification of this Indenture
under the TIA, the Company shall also comply with the provisions of TIA (S)
314(a).
(b) At the Company's expense, the Company shall cause an annual
report if furnished by it to stockholders generally and each quarterly or other
financial report if furnished by it to stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) The Company shall provide to any Holder any information
reasonably requested by such Holder concerning the Company (including financial
statements) necessary in order to permit such Holder to sell or transfer Notes
in compliance with Rule 144A under the Securities Act.
(d) For so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Exchange so require, copies of all reports and
information described above will be available during normal business hours at
the office of the Paying Agent in Luxembourg.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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<PAGE>
SECTION 4.10. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of shares of the Company's
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any Investment
(other than Permitted Investments) or (d) repurchase or redeem the Schlumberger
Junior Subordinated Notes, the Schlumberger Warrants, the Warrant Repurchase
Indebtedness or Refinancing Indebtedness the proceeds of which are used to
repurchase or redeem the Schlumberger Junior Subordinated Notes , the
Schlumberger Warrants or the Warrant Repurchase Indebtedness (other than a
repurchase or redemption using proceeds of Refinancing Indebtedness), or make
any cash payments of interest thereon during (l) a blockage period in effect
with respect to any such junior Indebtedness or (2) the time when the Company
could, by the terms of such Indebtedness, otherwise defer such interest or pay
such interest in-kind (each of the foregoing actions set forth in clauses (a),
(b), (c) and (d) being referred to as a "Restricted Payment"), if at the time
------------------
of such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing, or (ii)
the Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness), in compliance with Section 4.12 or (iii)
the aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Earnings (or if cumulative Consolidated Net Earnings shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date"), treating such
--------------
period as a single accounting period; plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company; plus (y) 100%
of the net cash proceeds from the sale of Investments by the Company (other than
Permitted Investments), provided that such Investment was made after the Issue
--------
Date; plus (z) without duplication of any amounts included in clause (iii)(x)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company after the Issue Date from a holder of the Company's
Capital Stock (excluding, in the case of clauses (iii)(x) and (z), any net cash
proceeds from a Public Equity Offering to the extent used to redeem the Notes or
from a sale as described in clause (2) (ii) of the next succeeding paragraph).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; or (2) the acquisition of
any shares of Capital Stock of the Company or of any of the Indebtedness
described in clause (d) of the immediately preceding paragraph, either (i)
solely in exchange for shares of Qualified Capital Stock of the Company or (ii)
through the application of the net cash proceeds of a substantially concurrent
sale for cash (other than to a Subsidiary of the Company) of shares of Qualified
Capital Stock of the Company (excluding, in the case of clause 2(ii), any net
cash proceeds from a Public Equity Offering to the extent used to redeem the
Notes); or (3) dividends on, and redemptions of, the shares of the Company's
preferred stock held by the trust of the Company's retirement savings plan in
accordance with the terms thereof on the date of this Indenture; (4) payments to
redeem or repurchase stock or similar rights from management of the Company in
connection with the repurchase provisions under employee stock option or stock
purchase agreements or other agreements to compensate management employees upon
the termination of employment, death or disability of any such person; provided
--------
that such redemptions or repurchases shall not exceed $1.0 million; or (5) the
purchase, redemption or acquisition of the Schlumberger Warrants with proceeds
from the issuance of Warrant Repurchase Indebtedness; or (6) the purchase,
redemption, acquisition, or refinancing of the Schlumberger Junior Subordinated
Notes with Refinancing Indebtedness. In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date in
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<PAGE>
accordance with clause (iii) of the immediately preceding paragraph, amounts
expended pursuant to clauses (1), (4) and (5) shall be included in such
calculation.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
SECTION 4.11. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction or
series of related transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with,
or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"),
---------------------
other than (x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable to the Company or
such Subsidiary than those that could reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property
with a fair market value in excess of $1.0 million shall be approved by the
Board of Directors of the Company or such Subsidiary, as the case may be, such
approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to
a common plan) that involves aggregate payments or other property with a fair
market value of more than $5.0 million, the Company or such Subsidiary, as the
case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related transactions
to the Company or the relevant Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with the
Trustee.
(b) The restrictions set forth in clause (a) shall not apply to: (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the Company
as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of its Wholly
Owned Subsidiaries or exclusively between or among such Wholly Owned
Subsidiaries; provided such transactions are not otherwise prohibited by this
--------
Indenture; (iii) Restricted Payments permitted by this Indenture; (iv)
transactions permitted by, and complying with Section 5.01; (v) transactions
with distributors or other purchases or sales of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
this Indenture which are fair to the Company, in the reasonable determination of
the Board of Directors of the Company or the senior management thereof, or are
on terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party; (vi) any management agreement as in effect as
of the Issue Date or any amendment thereto or any replacement agreement thereto
so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date and any similar agreements entered into
after the Issue Date; and (vii) intercompany loans or capital contributions from
the Company or any Subsidiary to any of the Company's Subsidiaries; provided
--------
such loans are otherwise in compliance with the terms of this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, "incur") any Indebtedness (other
-----
than Permitted Indebtedness); provided, however, that if no Default or Event of
-------- -------
Default shall have occurred and be continuing at the time of or
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as a consequence of the incurrence of any such Indebtedness, the Company may
incur Indebtedness (including, without limitation, Acquired Indebtedness) and
Subsidiaries of the Company may incur Acquired Indebtedness, in each case if on
the date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than 2.00 to 1.00 if incurred on or prior to the second anniversary
of the Issue Date or greater than 2.25 to 1.00 if incurred thereafter.
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
------------------------------------------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or pay or
guarantee any Indebtedness or other obligation owed to the Company or any other
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Indenture; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Subsidiary of the Company; (4) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired; (5)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (6) the New Credit Agreement or the
ESOP Credit Agreements; or (7) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4), (5) or (6) above; provided, however, that the
-------- -------
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company in any material
respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4), (5) or (6).
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt.
-----------------------------------------------------
The Company will not incur or suffer to exist Indebtedness that is
senior in right of payment to the Notes and subordinate in right of payment to
any Senior Debt of the Company. The Guarantors will not incur or suffer to exist
Indebtedness that is senior in right of payment to any Guarantee and subordinate
in right of payment to any Guarantor Senior Debt.
SECTION 4.15. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase all or a portion of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer"), at
-----------------------
a purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase.
Prior to the mailing of the notice referred to below, but in any event
within 30 days following any Change of Control, the Company covenants to (i)
repay in full all Indebtedness and terminate all commitments under the New
Credit Agreement and all other Senior Debt whose terms require repayment upon a
Change of Control or offer to repay in full and terminate all commitments under
all Indebtedness under the New Credit Agreement and all other such Senior Debt
and to repay the Indebtedness owed to each lender which has accepted such offer
or (ii) obtain the requisite consents under the New Credit Agreement and all
other Senior Debt to permit the repurchase of the Notes as provided below.
(b) Within 30 days following the date upon which the Change of
Control occurred (the "Change of Control Date"), the Company shall send, by
----------------------
first class mail, a notice to each Holder, with a copy to
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the Trustee, which notice shall govern the terms of the Change of Control Offer.
For so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the Company will cause a copy of such notice
to be published in a daily newspaper with general circulation in Luxembourg
(which is expected to be the Luxemburger Wort) and the Luxembourg Stock Exchange
will be advised of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be accepted
for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date"); provided that the
------------------------------ --------
Change of Control Payment Date for the Notes shall be a date subsequent to
any payment dates for the purchase or other repayment of Senior Debt having
similar provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent, including, if applicable, the Paying
and Transfer Agent in Luxembourg, at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
--------
issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient
to pay the purchase price plus accrued interest, if any, of all Notes so
tendered and (iii) deliver to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any, and the Trustee shall promptly authenticate and mail to such Holders new
Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted shall be promptly mailed by the Company
to the Holder thereof. For purposes of this Section 4.15, the Trustee shall act
as the Paying Agent.
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Any amounts remaining after the purchase of Notes pursuant to a Change
of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.15, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
-------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, consummate an Asset Sale unless (i) the Company or the applicable
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of Directors),
(ii) with respect to Asset Sales by the Company or any Wholly Owned Subsidiary
of the Company, at least 80% of the consideration received by the Company or
such Subsidiary, as the case may be, from such Asset Sale shall be in the form
of cash or Cash Equivalents and is received at the time of such disposition and
(iii) upon the consummation of an Asset Sale, the Company shall apply, or cause
such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale
within 365 days of receipt thereof (A) to prepay any Senior Debt or Indebtedness
of any Subsidiary of the Company, (B) to make an investment in properties and
assets that replace the properties and assets that were the subject of such
Asset Sale or in properties or assets that will be used in the business of the
Company and its Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets") or (C) a combination of
------------------
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Directors of the Company or of such Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net
---
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
- ---------------------------
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company
-------------------------
or such Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
------------------
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than
--------------------------------
45 days following the applicable Net Proceeds Offer Trigger Date, from all
Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase. The Company may defer the Net Proceeds Offer until there is an
aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0
million resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0
million, shall be applied as required pursuant to this paragraph).
Notwithstanding the immediately preceding paragraph, the Company and
its Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent (i) at least 80% of the consideration for such
Asset Sale constitutes Replacement Assets and the remainder in cash or Cash
Equivalents and (ii) such Asset Sale is for fair market value; provided that any
--------
consideration not constituting Replacement Assets received by the Company or any
of its Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the immediately preceding paragraph.
Notwithstanding the second immediately preceding paragraph, in the
event that any other Indebtedness of the Company that ranks pari passu with the
Notes (the "Other Debt") requires an offer to purchase to be made to repurchase
----------
such Other Debt upon the consummation of an Asset Sale, the Company may apply
the Net Proceeds Offer Amount otherwise required to be applied to a Net Proceeds
Offer to offer to purchase such
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<PAGE>
Other Debt so long as the amount of Net Proceeds Offer Amount applied to
purchase the Notes is not less than the Note Portion of Net Proceeds Offer
Amount. With respect to any Net Proceeds Offer Amount, the Company shall make
the Net Proceeds Offer in respect thereof at the same time as the analogous
offer to purchase is made pursuant to any Other Debt and the Net Proceeds Offer
Payment Date in respect thereof shall be the same as the purchase date in
respect thereof pursuant to any Other Debt.
For purposes of this covenant, "Note Portion of Net Proceeds Offer
----------------------------------
Amount" means (1) if no Other Debt is being offered to be purchased, the amount
- ------
of the Net Proceeds and (2) if Other Debt is being offered to be purchased, the
amount of the Net Proceeds Offer Amount equal to the product of (x) the Net
Proceeds Offer Amount and (y) a fraction the numerator of which is the aggregate
amount of all Securities tendered pursuant to the Net Proceeds Offer related to
such Net Proceeds Offer Amount (the "Note Amount") and the denominator of which
-----------
is the sum of the Note Amount and the aggregate amount as of the relevant
purchase date of all Other Debt tendered and purchased pursuant to a concurrent
offer to purchase such Other Debt made at the time of such Net Proceeds Offer.
Each Net Proceeds Offer will be mailed to the record Holders as shown
on the register of Holders within 25 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of exchange so require, the Company will
cause a copy of such notice to be published in a daily newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of the Net Proceeds Offer. Upon
receiving notice of the Net Proceeds Offer, Holders may elect to tender their
Notes in whole or in part in integral multiples of $1,000 in exchange for cash.
To the extent Holders properly tender Notes in an amount exceeding the Net
Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro
rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open
for a period of 20 business days or such longer period as may be required by
law.
(b) Each notice of a Net Proceeds Offer pursuant to this Section 4.16
shall be mailed or caused to be mailed, by first class mail, by the Company not
more than 25 days after the Net Proceeds Offer Trigger Date to all Holders at
their last registered addresses as of a date within 15 days of the mailing of
such notice, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section
4.16 and that all Notes tendered will be accepted for payment; provided,
--------
however, that if the aggregate principal amount of Notes tendered in a Net
-------
Proceeds Offer plus accrued interest at the expiration of such offer
exceeds the Note Portion of Net Proceeds Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000 or multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest)
and the Net Proceeds Offer Payment Date; provided that the Net Proceeds
--------
Offer Payment Date for the Notes shall be a date subsequent to any payment
dates for the purchase or other repayment of Senior Debt having similar
provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Net Proceeds Offer Payment Date;
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(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day prior to the Net
Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
--------
issued shall be in an original principal amount of $1,000 or integral
multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(1) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price plus accrued interest, if any, of all Notes to be purchased and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any. For purposes of this Section 4.16, the Trustee shall act as the Paying
Agent.
Any amounts remaining after the purchase of Notes pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.16, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Preferred Stock of Subsidiaries.
---------------------------------------------
The Company will not permit any of its Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the
Company.
SECTION 4.18. Limitation on Liens.
-------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Notes, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens and (ii) in all
other cases, the Notes are equally and ratably secured, except for (A) Liens
existing as of the
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Issue Date to the extent and in the manner such Liens are in effect on the Issue
Date; (B) Liens securing Senior Debt and Liens securing Guarantor Senior Debt;
(C) Liens securing the Notes and the Guarantees; (D) Liens of the Company or a
Wholly Owned Subsidiary of the Company on assets of any Subsidiary of the
Company; (E) Liens securing Refinancing Indebtedness which is incurred to
Refinance any Indebtedness which has been secured by a Lien permitted under this
Indenture and which has been incurred in accordance with the provisions of this
Indenture; provided, however, that such Liens (x) are no less favorable to the
-------- -------
Holders and are not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being Refinanced and (y) do not
extend to or cover any property or assets of the Company or any of its
Subsidiaries not securing the Indebtedness so Refinanced; and (F) Permitted
Liens.
SECTION 4.19. Additional Subsidiary Guarantees.
--------------------------------
The Company will cause any current and future Subsidiary of the
Company that Guarantees any Senior Debt of the Company or Indebtedness of the
Company that is subordinated to the Notes to simultaneously execute and deliver
a supplemental indenture pursuant to which it will become a Guarantor under this
Indenture.
SECTION 4.20. Limitation on Amendments to Schlumberger Junior
Subordinated Notes and Warrant Repurchase Indebtedness.
------------------------------------------------------
The Company shall not amend the indentures or other agreements
governing the terms of the Schlumberger Junior Subordinated Notes or Warrant
Repurchase Indebtedness, or any Refinancing Indebtedness thereof, in any way
adverse to the Holders of the Notes.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets of the Company.
------------------------------------------------------
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless:
(i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x)
----------------
shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (y)
shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the
due and punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every covenant
contained in the Notes, this Indenture and the Registration Rights
Agreement to be performed or observed on the part of the Company;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect
to any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company
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or such Surviving Entity, as the case may be, shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
(iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and
(iv) the Company or the Surviving Entity, as the case may be, shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture complies with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to
such transaction have been satisfied.
For so long as the Notes are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require, copies of all reports and information
described above will be available during normal business hours at the office of
the Transfer Agent in Luxembourg.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such surviving entity
had been named as such.
SECTION 5.03. Merger, Consolidation and Sale of Assets of Guarantors.
------------------------------------------------------
Each Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with Section 4.16) will not, and the
Company will not cause or permit any Guarantor to, consolidate with or merge
with or into any Person other than the Company or any other Guarantor unless:
(i) the entity formed by or surviving any such consolidation or merger (if other
than the Guarantor) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
(ii) such entity assumes by supplemental indenture all of the obligations of the
Guarantor on the Guarantee; (iii) immediately before and after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (ii) of the first paragraph of Section 5.01.
Any merger or consolidation of a Guarantor with and into the Company (with the
Company being the surviving entity) or another Guarantor of the Company need
only comply with clause (iv) of Section 5.01.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
----------------
(1) the Company fails to pay interest on, or Liquidated Damages (if
any), with respect to any Notes when the same becomes due and payable and
the default continues for a period of 30 days (whether or not such payment
shall be prohibited under Article Ten);
(2) the Company fails to pay the principal on the Notes when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer),
whether or not such payment shall be prohibited under Article Ten;
(3) the Company defaults in the observance or performance of any
other covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Notes (except in the case of a default with respect to
Section 5.01, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(4) there shall be a default under any Indebtedness of the Company or
any Subsidiary, whether such Indebtedness now exists or shall hereinafter
be created, if both (A) such default either (1) results from the failure to
pay any such Indebtedness at its stated final maturity or (2) relates to an
obligation other than the obligation to pay such Indebtedness at its stated
final maturity and results in the holder or holders of such Indebtedness
causing such Indebtedness to become due prior to its stated final maturity
and (B) the amount of such Indebtedness, together with the principal amount
of any other such Indebtedness in default for failure to pay principal at
stated final maturity or the maturity of which has been so accelerated,
aggregates $10.0 million or more at any one time outstanding;
(5) one or more judgments in an aggregate amount in excess of $5.0
million (which are not covered by third party insurance as to which the
insurer has not disclaimed coverage) shall have been rendered against the
Company or any of its Subsidiaries and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
(6) except as permitted by this Indenture, any Guarantee shall be
held in a judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Guarantee;
(7) the Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to the appointment of a Custodian of it or for substantially
all of its property, (D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (E) makes a general
assignment for the benefit of its creditors, or (F) takes any corporate
action to authorize or effect any of the foregoing; or
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(8) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary in
an involuntary case or proceeding under any Bankruptcy Law, which shall (A)
approve as properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company or any Significant
Subsidiary, (B) appoint a Custodian of the Company or any Significant
Subsidiary or for substantially all of its property or (C) order the
winding-up or liquidation of its affairs; and such judgment, decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days.
SECTION 6.02. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default specified
in Sections 6.01(7) or (8) above with respect to the Company) shall occur and be
continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Notes may declare the principal of and accrued interest on all the
Notes to be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (i) shall become
-------------------
immediately due and payable or (ii) if there are any amounts outstanding under
the New Credit Agreement or the ESOP Credit Agreements, shall become immediately
due and payable upon the first to occur of an acceleration under the New Credit
Agreement or the ESOP Credit Agreements or 5 business days after receipt by the
Company and the Representative under the New Credit Agreement or the ESOP Credit
Agreements of such Acceleration Notice.
(b) If an Event of Default specified in Section 6.01(7) or (8) above
with respect to the Company shall occur and be continuing, then all unpaid
principal of, premium, if any, and accrued and unpaid interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with Section 6.02(a) and (b), the Holders of a majority
in principal amount of the outstanding Notes may rescind and cancel such
declaration and its consequences if (i) the rescission would not conflict with
any judgment or decree, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration, (iii) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration, has
been paid, (iv) the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default of the type described in
Section 6.01(7) or (8) above, the Trustee shall have received an Officers'
Certificate and an Opinion of Counsel that such Event of Default has been cured
or waived. The holders of a majority in aggregate principal amount of Notes then
outstanding may waive any existing Default or Event of Default under this
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any Notes. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a
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waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
aggregate principal amount of Notes then outstanding by notice to the Trustee
may waive an existing Default or Event of Default and its consequences, except a
Default in the payment of principal of or interest on any Note as specified in
clauses (1) and (2) of Section 6.01. The Company shall deliver to the Trustee
an Officers' Certificate stating that the requisite percentage of Holders have
consented to such waiver and attaching copies of such consents. In case of any
such waiver, the Company, the Trustee and the Holders shall be restored to their
former positions and rights hereunder and under the Notes, respectively. This
paragraph of this Section 6.04 shall be in lieu of (S) 316(a)(1)(B) of the TIA
and such (S) 316(a)(1)(B) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Notes, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Noteholder (it being understood that the Trustee shall have no
duty to ascertain whether or not such actions or forbearances are unduly
prejudicial to such Holders), or that may involve the Trustee in personal
liability; provided that the Trustee may take any other action deemed proper by
--------
the Trustee which is not inconsistent with such direction; and provided further
-------- -------
that this provision shall not affect the rights of the Trustee set forth in
Section 7.01(d). In the event the Trustee takes any action or follows any
direction pursuant to this Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This Section
6.05 shall be in lieu of (S) 316(a)(1)(A) of the TIA, and such (S) 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
SECTION 6.06. Limitation on Suits.
-------------------
A Noteholder may not pursue any remedy with respect to this Indenture
or the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of satisfactory indemnity; and
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(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which,
in the opinion of the Trustee, is inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over such other
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relating to the Company or any
other obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Noteholder to make such payments to the Trustee and,
in the event that the Trustee shall consent to the making of such payments
directly to the Noteholders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section 7.07.
The Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of Section 7.07 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Noteholder in any such proceeding; provided, however, that the Trustee may,
-------- -------
on behalf of the Noteholders, vote for the election of a trustee in bankruptcy
or similar official and may be a member of a creditors' committee.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
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Second: if the Holders are forced to proceed against the Company or
any Guarantor directly without the Trustee, to Holders for their collection
costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Noteholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
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(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely on any resolution, certificate, Officers'
Certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate, an Opinion of
Counsel or both, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or indirectly or by or through
agents or attorneys, and the Trustee shall not be responsible for the
misconduct or negligence of any agent or attorney (other than an agent who
is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney and to consult with the officers and
representatives of the Company, including the Company's accountants and
attorneys.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of
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this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which may be incurred by it in compliance
with such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The recitals contained herein and in the Notes shall be taken as
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 90 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in payment of principal of, or
interest on, any Note, including an accelerated payment and the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and,
except in the case of a failure to comply with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Noteholders. This Section 7.05 shall be in lieu of the proviso to (S)
315(b) of the TIA, and such proviso of (S) 315(b) of the TIA is hereby expressly
excluded from this Indenture and the Notes, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each January 29, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Noteholder a brief report dated
as of such date that complies with TIA (S) 313(a). The Trustee also shall
comply with TIA (S)(S) 313(b), (c) and (d).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each securities exchange, if
any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any securities exchange or of any delisting thereof and the Trustee
shall comply with TIA (S) 313(d).
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SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture or in connection with the
collection of any funds. Such expenses shall include the reasonable fees and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
stockholders and directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the administration of this trust including
the reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their rights,
powers or duties hereunder. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek indemnity. At the
Trustee's sole discretion, the Company shall defend the claim and the Trustee
shall cooperate and may participate in the defense; provided that any settlement
--------
of a claim shall be approved in writing by the Trustee. Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company shall pay the reasonable fees and expenses of such counsel; provided
--------
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense and there is no conflict of interest between the
Company and the Trustee in connection with such defense as reasonably determined
by the Trustee. The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
-------- -------
affect the Trustee's rights as set forth in the preceding paragraph or Section
6.10.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------- ----
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
--------
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
In addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA (S) 310(a)(2). The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the Company, as
obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of TIA (S) 311 shall apply to the Company, as obligor on the Notes.
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ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
----------------------------------------
This Indenture will be discharged and will cease to be of further
effect (except those obligations referred to in the penultimate paragraph of
this Section 8.01), and the Company and the Guarantors will be discharged from
their respective obligations under the Notes and the Guarantees, if all Notes
theretofore authenticated and delivered (other than mutilated, destroyed, lost
or stolen Notes which have been replaced and paid or Notes for whose payment
U.S. Legal Tender has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Company and thereafter
repaid to the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Notes under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all Notes
not theretofore delivered to the Trustee for cancellation have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
and discharge the entire Indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if
any, and interest on the outstanding Notes to the date of such deposit (in
the case of Notes that have become due and payable) or to the stated
maturity or redemption date, as the case may be; provided that the Trustee
--------
shall have been irrevocably instructed to apply such U.S. Legal Tender to
the payment of said principal, premium, if any, and interest with respect
to the Notes and, provided, further, that from and after the time
-------- -------
of deposit, the money deposited shall not be subject to the rights of
holders of Senior Debt pursuant to the provisions of Article Ten or to the
rights of holders of Guarantor Senior Debt pursuant to the provisions of
Article Thirteen;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the satisfaction and discharge of this Indenture have
been complied with. Such Opinion of Counsel shall also state that such
satisfaction and discharge does not result in a default under the New
Credit Agreement (if then in effect) or any other agreement or instrument
then known to such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Notes are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
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After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and each Guarantor's
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.03, be
deemed to have been discharged from their respective obligations with respect to
all outstanding Notes and the Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
----------------
Defeasance means that the Company and each Guarantor shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and the Guarantees, which shall thereafter be deemed to be "outstanding" only
for the purposes of Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all their other
respective obligations under such Notes, the Guarantees and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), and Holders of the Notes and the
Guarantees and any amounts deposited under Section 8.03 hereof shall cease to be
subject to any obligations to, or the rights of, any holder of Senior Debt under
Article Ten or otherwise or any holder of Guarantor Senior Debt under Article
Thirteen or otherwise, except for the following provisions, which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (ii) the Company's obligations with respect to such Notes under Article
Two and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (iv) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.03 hereof,
be released from its obligations under the covenants contained in Sections 4.10
through 4.19 and Article Five hereof with respect to the outstanding Notes and
the Guarantees on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes and the Guarantees
-------------------
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes and the Guarantees shall not be deemed outstanding for accounting
purposes) and Holders of the Notes and the Guarantees and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise or any
holder of Guarantor Senior Debt under Article Thirteen or otherwise. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes and the Guarantees, the Company and each Guarantor may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event or Default
under Section 6.01(3) hereof, but, except as specified above, the remainder of
this Indenture, such Notes and the Guarantees shall be unaffected thereby. In
addition, upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to the satisfaction of the conditions
set forth in Section 8.03 hereof, Sections 6.01(3), 6.01(4) and 6.01(5) shall
not constitute Events of Default.
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SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance.
-----------------------------------------------------
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Notes and the Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on the Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be, provided that the Trustee shall have
--------
received an irrevocable written order from the Company instructing the
Trustee to apply such U.S. Legal Tender or the proceeds of such U.S.
Government Obligations to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence), or insofar as Sections
6.01(7) and 6.01(8) hereof are concerned, at any time in the period ending
on the 91st day after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with (except that the Opinion of Counsel
shall speak only to clauses (b), (c) and (e) above); and
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(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Senior Debt of the Company other than the Notes,
and (ii) assuming no intervening bankruptcy or insolvency of the Company
between the date of deposit and the 91st day following the deposit and that
no Holder is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law.
SECTION 8.04. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to this Article Eight,
and shall apply the deposited U.S. Legal Tender and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of
principal of, premium, if any, and interest on the Notes. The Trustee shall be
under no obligation to invest said U.S. Legal Tender or U.S. Government
Obligations except as it may agree with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. Repayment to the Company.
------------------------
Subject to Sections 8.01, 8.02, 8.03, 8.04 and 8.06, the Trustee and
the Paying Agent shall promptly pay to the Company upon request any excess U.S.
Legal Tender or U.S. Government Obligations held by them at any time and
thereupon shall be relieved from all liability with respect to such money. The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal, premium, if any, or interest that
remains unclaimed for two years; provided that the Trustee or such Paying Agent,
--------
before being required to make any payment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York and, for so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, in a newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) or mail
to each Holder entitled to such money notice that such money remains unclaimed,
and that after a date specified therein which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company,
Noteholders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person.
SECTION 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Article Eight by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and each Guarantor's respective obligations
under this Indenture, the Guarantees and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article Eight
until such time as the Trustee or Paying Agent is permitted to apply all such
U.S. Legal Tender or U.S. Government Obli-
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gations in accordance with this Article Eight; provided that if the Company has
--------
made any payment of principal, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture, the Notes or the Guarantees
without notice to or consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency; provided that such
--------
amendment or supplement does not, in the opinion of the Trustee, adversely
affect the rights of any Holder in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Noteholders or that does not adversely affect the rights of
any Noteholder;
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities; or
(7) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any
Noteholders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel
- --------
stating that such amendment or supplement complies with the provisions of this
Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, the Guarantors and the Trustee, together, with the written consent
of the Holder or Holders of at least a majority in aggregate principal amount of
the then outstanding Notes, may amend or supplement this Indenture, the Notes or
the Guarantees, without notice to any other Noteholders. Subject to Section
6.07, the Holder or Holders of a majority in aggregate principal amount of the
outstanding Notes may waive compliance by the Company or any Guarantor with any
provision of this Indenture, the Notes or the Guarantees without notice to any
other Noteholder. No amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, shall, without the consent of each Holder of each Note
affected thereby:
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(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of, premium, if any,
and interest on such Holder's Notes on or after the due date thereof or to
bring suit to enforce such payment or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; or
(6) modify Articles Ten, Twelve or Thirteen or the definitions used in
Articles Ten, Twelve or Thirteen in a manner which adversely affects the
Holders of the Notes in any material respect.
provided, however, that any amendment the purpose of which is to permit the
- -------- -------
incurrence of additional Indebtedness under this Indenture shall not be
construed as adversely affecting the ranking of the Notes.
(b) Without the consent of Holders of not less than 66 2/3% in
aggregate principal amount of Notes then outstanding, no such amendment,
supplement or waiver may amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control Offer in
the event of a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale or modify any of the provisions or definitions
with respect thereto.
(c) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Effect on Senior Debt.
---------------------
No amendment of this Indenture shall adversely affect the rights of
any holder of (i) Senior Debt under Article Ten of this Indenture or (ii)
Guarantor Senior Debt under Article Thirteen of this Indenture, without the
consent of such holder.
SECTION 9.04. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture, the Notes or
the Guarantees shall comply with the TIA as then in effect.
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SECTION 9.05. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (6) of Section 9.02(a), in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
--------
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 9.06. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
SECTION 9.07. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
--------
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
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ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt.
---------------------------------
The Company covenants and agrees, and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article Ten; and the
Trustee and each Person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations on the
Senior Debt, whether outstanding on the Issue Date or thereafter incurred; that
the subordination is for the benefit of, and shall be enforceable directly by,
the holders of Senior Debt, and that each holder of Senior Debt whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02. No Payment on Notes in Certain Circumstances.
--------------------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character (other than payments by a trust previously
established pursuant to Article Eight) shall be made by the Company or any of
its Subsidiaries with respect to any Obligations on the Notes or to acquire any
of the Notes for cash or property.
In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instruments creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof, and if the Representative for the respective
issue of Designated Senior Debt gives written notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all events of default
--------------
have been cured or waived or have ceased to exist or the Trustee receives notice
from the Representative for the respective issue of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the
---------------
Company nor any of its Subsidiaries shall (x) make any payment of any kind or
character (other than payments by a trust previously established pursuant to the
provisions described under Article Eight) with respect to any Obligations on the
Notes or (y) acquire any of the Notes for cash or property. Notwithstanding
anything herein to the contrary, in no event will a Blockage Period extend
beyond 180 days from the date of the commencement of the Blockage Period, and
only one such Blockage Period may be commenced within any 365 consecutive days.
No event of default which existed or was continuing on the date of the
commencement of any Blockage Period with respect to the Designated Senior Debt
shall be, or be made, the basis for commencement of a second Blockage Period by
the Representative of such Designated Senior Debt whether or not within a period
of 365 consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being acknowledged
that any subsequent action or any breach of any financial covenants for a period
commencing after the date of commencement of such Blockage Period that, in
either case, would give rise to an event of default pursuant to any provisions
under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on
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the basis of the respective amount of Senior Debt held by such holders) or their
respective Representatives, as their respective interests may appear. The
Trustee shall be entitled to rely on information regarding amounts then due and
owing on the Senior Debt, if any, received from the holders of Senior Debt (or
their Representatives) or, if such information is not received from such holders
or their Representatives, from the Company and only amounts included in the
information provided to the Trustee shall be paid to the holders of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder.
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.
----------------------------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due upon all Senior Debt shall first be paid in
full in cash or Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, before any payment or distribution
of any kind or character is made on account of any Obligations on the Notes, or
for the acquisition of any of the Notes for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
of the Notes or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the respective amounts of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all Obligations on Senior Debt then due
have been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Senior Debt.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt then due
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(c) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
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SECTION 10.04. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
by the Trustee that a given payment would be prohibited by Section 10.02 or
10.03, the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of, and interest on, the Notes to
the Holders entitled thereto unless at least two Business Days prior to the date
upon which such payment would otherwise become due and payable a Trust Officer
shall have actually received the written notice provided for in the second
sentence of Section 10.02(a) or in Section 10.07 (provided that, notwithstanding
--------
the foregoing, such application shall otherwise be subject to the provisions of
the first sentence of Section 10.02(a) and Section 10.03). The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
SECTION 10.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt by or on behalf of the Company
or by or on behalf of the Holders by virtue of this Article Ten which otherwise
would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article Ten
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior Debt,
on the other hand.
SECTION 10.06. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of the Company other than the
holders of the Senior Debt, nor shall anything herein or therein prevent the
Holder of any Note or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of such
holding of Senior Debt or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
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In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 10.08. Reliance on Judicial Order or Certificate of
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any insolvency,
bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization
or similar case or proceeding is pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Debt.
--------------------------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Notes and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Notes to the holders of the Senior Debt, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or
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any instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the payment or collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.
----------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid balance of its Notes and accrued
interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Notes. Nothing herein contained shall be deemed to authorize the
Trustee or the holders of Senior Debt or their Representative to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To Prevent Events of Default.
-------------------------------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 11.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
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if to the Company:
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana 46845
Facsimile No.: (219) 484-1110
Attention: Executive Vice President, Finance and Administration
if to the Trustee:
U.S. Bank Trust National Association
100 Wall Street
16th Floor
New York, New York 10005
Facsimile No: (212) 809-5459
Attention: Corporate Trust Administration
if to the Luxembourg Paying and Transfer Agent, if any:
Bankers Trust Luxembourg S.A.
P.O. Box 807
14, Boulevard F.D. Roosevelt
L-2450 Luxembourg
Facsimile No: 352-473-136
Attention: Corporate Trust Administration
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA (S) 312(c).
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SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Noteholders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or Chicago, Illinois or at such place of payment are not required to be
open. If a payment date is a Legal Holiday at such place, payment may be made at
such place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
SECTION 11.08. Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES
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TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company or of the Trustee shall not have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Noteholder by accepting a Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of the Notes.
SECTION 11.11. Successors.
----------
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.12. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which will be deemed an original, and all of which together shall constitute one
and the same instrument. Delivery of an executed counterpart sent by telecopier
shall be effective as delivery of a manually executed counterpart.
SECTION 11.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
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SECTION 11.14. Judgment Currency.
-----------------
The Company hereby agrees to indemnify the Trustee, its directors, its
officers and each person, if any, who controls the Trustee within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any loss
incurred by such person as a result of any judgment or order being given or made
against the Company for any U.S. dollar amount due under this Agreement and such
judgment or order being expressed and paid in a currency (the "Judgment
--------
Currency") other than United States dollars and as a result of any variation as
- --------
between (i) the rate of exchange at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order
and (ii) the spot rate of exchange in The City of New York at which such party
on the date of payment of such judgment or order is able to purchase United
States dollars with the amount of the Judgment Currency actually received by
such party. The foregoing indemnity shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "spot rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, United States dollars.
ARTICLE TWELVE
GUARANTEE
SECTION 12.01. Unconditional Guarantee.
-----------------------
Each Guarantor hereby unconditionally guarantees to each Holder of a
Note authenticated by the Trustee and to the Trustee and its successors and
assigns that: the principal of, premium thereon (if any) and interest on the
Notes will be promptly paid in full when due, subject to any applicable grace
period, whether at maturity, by acceleration or otherwise, and interest on the
overdue principal and interest on any overdue interest on the Notes and all
other obligations of the Company to the Holders or the Trustee hereunder or
under the Notes will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; subject, however, to the limitations set
forth in Section 12.03. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that the Guarantee will
not be discharged except by complete performance of the obligations contained in
the Notes and this Indenture. If any Holder or the Trustee is required by any
court or otherwise to return to the Company or any Guarantor or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or a Guarantor, any amount paid by the Company or a Guarantor to the Trustee or
such Holder, the Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between such Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purpose of the Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
obligations (whether or not due and payable) shall become due and payable by
such Guarantor for the purpose of the Guarantee.
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SECTION 12.02. Severability.
------------
In case any provision of this Article Twelve 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.
SECTION 12.03. Limitation of Guarantor's Liability.
-----------------------------------
Each Guarantor, and by its acceptance hereof, each Holder and the
Trustee, hereby confirm that it is the intention of all such parties that the
Guarantee does not constitute a fraudulent transfer or conveyance for purposes
of Title 11 of the United States Code, as amended, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S. Federal
or state or other applicable law. To effectuate the foregoing intention, each
Holder and each Guarantor hereby irrevocably agree that the obligations of a
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor, and after giving effect to any collections from or payments made by
or on behalf of such Guarantor in respect of the obligations of such Guarantor
pursuant to Section 12.04, result in the obligations of such Guarantor not
constituting such a fraudulent transfer or conveyance.
SECTION 12.04. Execution of Guarantee.
----------------------
To further evidence the Guarantee to the Holders, each Guarantor
hereby agrees to execute a guarantee to be endorsed on and made a part of each
Note ordered to be authenticated and delivered by the Trustee. Each Guarantor
hereby agrees that its guarantee set forth in Section 12.01 shall remain in full
force and effect notwithstanding any failure to endorse on each Note a
guarantee. Each such guarantee shall be signed on behalf of each Guarantor by
its Chairman of the Board, its President or one of its Vice Presidents prior to
the authentication of the Note on which it is endorsed, and the delivery of such
Note by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of such guarantee on behalf of such Guarantor. Such
signature upon the guarantee may be a manual or facsimile signature of such
officer and may be imprinted or otherwise reproduced on the guarantee, and in
case such officer who shall have signed the guarantee shall cease to be such
officer before the Note on which such guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Note nevertheless may be authenticated and delivered or disposed of as though
the Person who signed the guarantee had not ceased to be such officer of such
Guarantor.
SECTION 12.05. Subordination of Subrogation and Other Rights.
---------------------------------------------
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under the Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Notes in accordance with
the provisions provided therefor in this Indenture.
ARTICLE THIRTEEN
SUBORDINATION OF GUARANTEE
SECTION 13.01. Guarantee Subordinated to Guarantor Senior Debt.
-----------------------------------------------
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Notes, by its acceptance thereof, likewise covenants and agrees, that
such Guarantor's Guarantee shall be issued subject to the
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provisions of this Article Thirteen; and the Trustee and each Person holding any
Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all Obligations on the Notes
pursuant to such Guarantee shall, to the extent and in the manner herein set
forth, be subordinated and junior in right of payment to the prior payment in
full in cash or Cash Equivalents of all Obligations on the Guarantor Senior Debt
of such Guarantor, whether outstanding on the Issue Date or thereafter incurred;
that the subordination is for the benefit of, and shall be enforceable directly
by, the holders of Guarantor Senior Debt of such Guarantor, and that each holder
of Guarantor Senior Debt of such Guarantor whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired
Guarantor Senior Debt of such Guarantor in reliance upon the covenants and
provisions contained in this Indenture, the Notes and the Guarantees.
SECTION 13.02. No Payment in Certain Circumstances.
-----------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Guarantor Senior
Debt of any Guarantor, no payment of any kind or character (other than payments
by a trust previously established pursuant to Article Eight) shall be made by
such Guarantor with respect to any Obligations on such Guarantor's Guarantee or
to acquire any of the Notes for cash or property.
In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instruments creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof, and if the Representative for the respective
issue of Designated Senior Debt gives a Default Notice, then, unless and until
all events of default have been cured or waived or have ceased to exist or the
Trustee receives notice from the Representative for the respective issue of
Designated Senior Debt terminating the Blockage Period, during Blockage Period
no Guarantor shall (x) make any payment of any kind or character (other than
payments by a trust previously established pursuant to the provisions described
under Article Eight) with respect to any Obligations on the Guarantees or (y)
acquire any of the Notes for cash or property. Notwithstanding anything herein
to the contrary, in no event will a Blockage Period extend beyond 180 days from
the date of the commencement of the Blockage Period, and only one such Blockage
Period may be commenced within any 365 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any Blockage
Period with respect to the Designated Senior Debt shall be, or be made, the
basis for commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
from any Guarantor shall be received by the Trustee or any Holder when such
payment is prohibited by Section 13.02(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Guarantor Senior Debt of such Guarantor (pro rata to such holders on the basis
of the respective amount of Guarantor Senior Debt of such Guarantor held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Guarantor Senior Debt of such Guarantor, if any,
received from the holders of Guarantor Senior Debt of such Guarantor (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from such Guarantor and only amounts included in the
information provided to the Trustee shall be paid to the holders of Guarantor
Senior Debt of such Guarantor.
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Nothing contained in this Article Thirteen shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.02 or to pursue any rights or
remedies hereunder.
SECTION 13.03. Payment Over of Proceeds upon Dissolution, Etc.
----------------------------------------------
(a) Upon any payment or distribution of assets of any Guarantor of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary, all of such Guarantor's Obligations due upon all Guarantor
Senior Debt of such Guarantor shall first be paid in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Guarantor Senior Debt of such Guarantor, before any payment or
distribution of any kind or character is made on account of any Obligations on
such Guarantor's Guarantees, or for the acquisition of any of the Notes by such
Guarantor, for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment or distribution of assets of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Guarantor Senior Debt of such
Guarantor (pro rata to such holders on the basis of the respective amounts of
Guarantor Senior Debt of such Guarantor held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt of such Guarantor may have
been issued, as their respective interests may appear, for application to the
payment of Guarantor Senior Debt of such Guarantor remaining unpaid until all
Obligations on Guarantor Senior Debt of such Guarantor then due have been paid
in full in cash or Cash Equivalents after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Guarantor
Senior Debt of such Guarantor.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by Section 13.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Guarantor Senior Debt of such Guarantor (pro rata to such
holders on the basis of the respective amount of Guarantor Senior Debt of such
Guarantor held by such holders) or their respective Representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Guarantor
Senior Debt of such Guarantor may have been issued, as their respective
interests may appear, for application to the payment of Guarantor Senior Debt of
such Guarantor then due remaining unpaid until all such Guarantor Senior Debt of
such Guarantor has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Debt of such Guarantor.
(c) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of all or substantially all
of its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Guarantor
Senior Debt of such Guarantor shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, assume such Guarantor's obligations hereunder in accordance with
Article Five hereof.
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SECTION 13.04. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article Thirteen or elsewhere in this
Indenture shall prevent (i) any Guarantor, except under the conditions described
in Sections 13.02 and 13.03, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes or payments on the
Guarantees of such Guarantor, or from depositing with the Trustee any moneys for
such payments, or (ii) in the absence of actual knowledge by the Trustee that a
given payment would be prohibited by Section 13.02 or 13.03, the application by
the Trustee of any moneys deposited with it for the purpose of making such
payments of principal of, and interest on, the Notes or payments on the
Guarantees of such Guarantor to the Holders entitled thereto unless at least two
Business Days prior to the date upon which such payment would otherwise become
due and payable a Trust Officer shall have actually received the written notice
provided for in the second sentence of Section 13.02(a) or in Section 13.07
(provided that, notwithstanding the foregoing, such application shall otherwise
--------
be subject to the provisions of the first sentence of Section 13.02(a) and
Section 13.03). Each Guarantor shall give prompt written notice to the Trustee
of any dissolution, winding-up, liquidation or reorganization of such Guarantor.
SECTION 13.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt of each Guarantor, the Holders of the Notes shall be
subrogated to the rights of the holders of Guarantor Senior Debt of such
Guarantor to receive payments or distributions of cash, property or securities
of such Guarantor applicable to the Guarantor Senior Debt of such Guarantor
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Guarantor
Senior Debt of such Guarantor by or on behalf of such Guarantor or by or on
behalf of the Holders by virtue of this Article Thirteen which otherwise would
have been made to the Holders shall, as between such Guarantor and the Holders
of the Notes, be deemed to be a payment by such Guarantor to or on account of
the Guarantor Senior Debt of such Guarantor, it being understood that the
provisions of this Article Thirteen are and are intended solely for the purpose
of defining the relative rights of the Holders of the Notes, on the one hand,
and the holders of the Guarantor Senior Debt of such Guarantor, on the other
hand.
SECTION 13.06. Obligations of Guarantors Unconditional.
---------------------------------------
Nothing contained in this Article Thirteen or elsewhere in this
Indenture, the Notes or the Guarantees is intended to or shall impair, as among
any Guarantor, its creditors other than the holders of Guarantor Senior Debt of
such Guarantor, and the Holders, the obligation of such Guarantor, which is
absolute and unconditional, to pay to the Holders the principal of and any
interest on the Notes and any payments due on the Guarantees as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of the Guarantor Senior Debt of such Guarantor,
nor shall anything herein or therein prevent the Holder of any Note or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of such Guarantor received upon the
exercise of any such remedy.
SECTION 13.07. Notice to Trustee.
-----------------
Each Guarantor shall give prompt written notice to the Trustee of any
fact known to such Guarantor which would prohibit the making of any payment to
or by the Trustee in respect of the Notes or the Guarantees pursuant to the
provisions of this Article Thirteen. Regardless of anything to the contrary
contained in this Article Thirteen or elsewhere in this Indenture, the Trustee
shall not be charged with knowledge of the existence of any default or event of
default with respect to any Guarantor Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing from such Guarantor, or from a
holder of Guarantor Senior Debt or a Representative therefor, together with
proof satisfactory to the Trustee of such holding of Guarantor Senior Debt or of
the authority of such Representative,
-72-
<PAGE>
and, prior to the receipt of any such written notice, the Trustee shall be
entitled to assume (in the absence of actual knowledge to the contrary) that no
such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Article Thirteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amounts of Guarantor
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Thirteen, and if such evidence is not
furnished the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 13.08. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of any Guarantor referred
to in this Article Thirteen, the Trustee, subject to the provisions of Article
Seven hereof, and the Holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee
for the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or the Holders of the Notes, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Guarantor Senior Debt of such Guarantor and
other Indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen.
SECTION 13.09. Trustee's Relation to Guarantor Senior Debt.
-------------------------------------------
The Trustee and any agent of any Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article Thirteen with respect to
any Guarantor Senior Debt which may at any time be held by it in its individual
or any other capacity to the same extent as any other holder of Guarantor Senior
Debt and nothing in this Indenture shall deprive the Trustee or any such agent
of any of its rights as such holder.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Thirteen, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Guarantor Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.
SECTION 13.10. Subordination Rights Not Impaired by Acts or Omissions
of the Company, the Guarantors or Holders of Guarantor
------------------------------------------------------
Senior Debt.
------------
No right of any present or future holders of any Guarantor Senior Debt
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by Company or any Guarantor with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without
-73-
<PAGE>
incurring responsibility to the Trustee or the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Thirteen or
the obligations hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt; and (iv) exercise or refrain
from exercising any rights against the Company, any Guarantor and any other
Person.
SECTION 13.11. Noteholders Authorize Trustee to Effectuate
Subordination of Guarantees.
---------------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Guarantor
Senior Debt and the Holders of Notes, the subordination provided in this Article
Thirteen, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of any Guarantor, the filing of a claim for the unpaid
balance of its Notes or any amounts due on the Guarantees and accrued interest
in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Guarantor Senior Debt
or their Representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes, the Guarantees or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 13.12. This Article Thirteen Not To Prevent Events of Default.
------------------------------------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Thirteen will not be
construed as preventing the occurrence of an Event of Default.
SECTION 13.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article Thirteen will apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
[Signature Pages Follow]
-74-
<PAGE>
SIGNATURES
----------
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
Issuer:
TOKHEIM CORPORATION
By: _____________________________
Name:
Title:
Guarantors:
ENVIROTRONIC SYSTEMS, INC.,
as Guarantor
By: _____________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.,
as Guarantor
By: _____________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.,
as Guarantor
By: _____________________________
Name:
Title:
S-1
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.,
as Guarantor
By: _____________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION,
as Guarantor
By: _____________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION,
as Guarantor
By: _____________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.,
as Guarantor
By: _____________________________
Name:
Title:
TOKHEIM RPS, LLC,
as Guarantor
By: _____________________________
Name:
Title:
S-2
<PAGE>
TOKHEIM SERVICES, LLC,
as Guarantor
By: _____________________________
Name:
Title:
Trustee:
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: _____________________________
Name:
Title:
S-3
<PAGE>
EXHIBIT A
---------
CUSIP No.:
TOKHEIM CORPORATION
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
No. $
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of
Dollars, on August 1, 2008.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By: _____________________________
Name:
Title:
Dated: January 29, 1999 By: _____________________________
Name:
Title:
A-1
<PAGE>
Certificate of Authentication
This is one of the Dollar denominated 11 3/8% Senior Subordinated
Notes due 2008 referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
Dated: January 29, 1999 By: _____________________________
Authorized Signatory
A-2
<PAGE>
(REVERSE OF SECURITY)
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
1. Interest. TOKHEIM CORPORATION, an Indiana corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Note at the
-------
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from January 29, 1999. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing August 1, 1999. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
The Notes are not entitled to the benefit of any mandatory sinking
fund.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. Payments of principal and premium, if any,
will be made (on presentation of such Notes if in certificated form) at the
corporate trust office of the Paying Agent in New York City or, for so long as
the Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require and subject to any applicable laws and regulations, at the
office of the Paying Agent in Luxembourg by United States dollar check drawn on,
or wire transfer to a United States dollar account maintained by the Holder
with, a bank located in New York City. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender") by a check
-----------------
drawn on a bank in New York City. However, the Company may pay principal and
interest by its check payable in such U.S. Legal Tender. The Company may deliver
any such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
--------------------------
Association, a national banking corporation (the "Trustee"), will act as Paying
-------
Agent and Registrar in the Borough of Manhattan, The City of New York, and, for
so long as the Notes are listed on the Luxembourg Stock Exchange and the rules
of such exchange shall require, Bankers Trust Luxembourg S.A. will act as Paying
Agent and Registrar in Luxembourg. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of January 29, 1999 (the "Indenture"), by and among the Company, the
---------
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 (the "Notes"). The Notes are limited in aggregate principal amount to
-----
$123,000,000. The Notes include the Initial Notes and the Exchange Notes, as
defined below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
---
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
A-3
<PAGE>
5. Subordination. The Notes are unsecured obligations of the Company
-------------
and subordinated in right of payment, in the manner and to the extent set forth
in the Indenture, to the prior payment in full in cash or Cash Equivalents of
all Senior Debt of the Company, whether outstanding on the date of the Indenture
or thereafter created, incurred, assumed or guaranteed. Each Holder by his
acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. Guarantee. The obligations of the Company hereunder are
---------
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by a
Guarantor is subordinated in right of payment to all Guarantor Senior Debt of
such Guarantor to the same extent that the Notes are subordinated to Senior Debt
of the Company.
7. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004................................................... 105.688%
2005................................................... 103.792%
2006................................................... 101.896%
2007 and thereafter.................................... 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to February 1, 2002, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the principal
amount of the Notes originally issued at a redemption price equal to 111.375% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the date of redemption; provided that at least 55%
--------
of the initial aggregate principal amount of Notes originally issued remains
outstanding immediately after any such redemption.
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
8. Notice of Redemption. Notice of redemption under paragraphs 7(a)
--------------------
and 7(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the Company
will cause a copy of such notice to be published in a newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such redemption. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes
A-4
<PAGE>
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
9. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture. For so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Company will cause
a copy of such notice to be published in a newspaper with general circulation in
Luxembourg (which is expected to be the Luxemburger Wort) and the Luxembourg
Stock Exchange will be advised of such offer to purchase.
10. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement by and among the Company, the Guarantors and the Initial Purchasers,
the Company will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for the
Company's Series B 11 3/8% Senior Subordinated Notes due 2008 (the "Exchange
--------
Notes"), which have been registered under the Securities Act, in like principal
- -----
amount and having terms identical in all material respects to the Initial Notes.
The Holders of the Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
11. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
12. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
13. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
14. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
15. Amendment; Supplement; Waiver. Subject to certain exceptions, the
-----------------------------
Indenture or the Notes may be amended or supplemented with the written consent
of the Holders of at least a majority in aggregate principal amount of the Notes
then outstanding, and any existing Default or Event of Default or noncompliance
with any provision may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material respect the rights
of any Holder of a Note.
A-5
<PAGE>
16. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting Subsidiaries, merge or consolidate with any other Person, sell or
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
17. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
18. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
19. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
20. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
21. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
-------------
THIS NOTE AND THE INDENTURE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
23. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
A-6
<PAGE>
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana 46845, Attn: Executive Vice President, Finance and
Administration.
A-7
<PAGE>
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guaranty being referred to herein as the "Guarantee") the due and punctual
---------
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee, all in accordance with the terms set forth in Article
Twelve of the Indenture.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Guarantor Senior Debt of each Guarantor, to the extent and in the
manner provided in Article Twelve and Article Thirteen of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
ENVIROTRONIC SYSTEMS, INC.
By: ___________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.
By: ___________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.
By: ___________________________
Name:
Title:
A-8
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.
By: ___________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION
By: ___________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION
By: ___________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.
By: ___________________________
Name:
Title:
TOKHEIM RPS, LLC
By: ___________________________
Name:
Title:
TOKHEIM SERVICES, LLC
By: ___________________________
Name:
Title:
A-9
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _______________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:_____________________ Signed:_________________________________________
(Sign exactly as your name appears on the other
side of this Note)
Medallion Guarantee:_____________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
--------------
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) January 29, 2001, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
A-10
<PAGE>
Check One
---------
(1) [_] to the Company or a subsidiary thereof; or
(2) [_] pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) [_] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) [_] outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) [_] pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(6) [_] pursuant to an effective registration statement under the Securities
Act; or
(7) [_] pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
--------
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A-11
<PAGE>
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date:_____________________ Signed:_________________________________________
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee: ________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:_____________________ ________________________________________
NOTICE: To be executed by an executive
officer
A-12
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [_]
Section 4.16 [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$__________________
Date:_____________________ ________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within Note
in every particular without alteration or
enlargement or any change whatsoever and
be guaranteed by the endorser's bank or
broker.
Medallion Guarantee:_______________________________
A-13
<PAGE>
EXHIBIT B
---------
CUSIP No.:
TOKHEIM CORPORATION
SERIES B 11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
No. $
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on August 1,
2008.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By: _______________________________
Name:
Title:
Dated: January 29, 1998 By: _______________________________
Name:
Title:
B-1
<PAGE>
Certificate of Authentication
This is one of the Series B Dollar denominated 11 3/8% Senior
Subordinated Notes due 2008 referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
Dated: January 29, 1999 By: ___________________________________
Authorized Signatory
B-2
<PAGE>
(REVERSE OF SECURITY)
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
1. Interest. TOKHEIM CORPORATION, an Indiana corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Note at the
-------
per annum shown above. Interest on the Notes will accrue from the most recent
date on which interest has been paid or, if no interest has been paid, from
January 29, 1999. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing August 1, 1999. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
The Notes are not entitled to the benefit of any mandatory sinking
fund.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. Payments of principal and premium, if any,
will be made (on presentation of such Notes if in certificated form) at the
corporate trust office of the Paying Agent in New York City or, for so long as
the Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require and subject to any applicable laws and regulations, at the
office of the Paying Agent in Luxembourg by United States dollar check drawn on,
or wire transfer to a United States dollar account maintained by the Holder
with, a bank located in New York City. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender") by a check
-----------------
drawn on a bank in New York City. However, the Company may pay principal and
interest by its check payable in such U.S. Legal Tender. The Company may deliver
any such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
--------------------------
Association, a New York banking corporation (the "Trustee"), will act as Paying
-------
Agent and Registrar, and, for so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange shall require, Bankers Trust
Luxembourg S.A., will act as Paying Agent and Registrar in Luxembourg. The
Company may change any Paying Agent, Registrar or co-Registrar without notice to
the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of January 29, 1999 (the "Indenture"), by and among the Company, the
---------
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 (the "Initial Notes"). The Notes are limited in aggregate principal
-------------
amount to $123,000,000. The Notes include the Initial Notes and the Exchange
Notes, as defined below, issued in exchange for the Initial Notes pursuant to
the Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
---
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
B-3
<PAGE>
5. Subordination. The Notes are unsecured obligations of the
-------------
Company subordinated in right of payment, in the manner and to the extent set
forth in the Indenture, to the prior payment in full in cash or Cash Equivalents
of all Senior Debt of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by
his acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. Guarantee. The obligations of the Company hereunder are
---------
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by a
Guarantor is subordinated in right of payment to all Guarantor Senior Debt of
such Guarantor to the same extent that the Notes are subordinated to Senior Debt
of the Company.
7. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on August
1 of the year set forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
Year Percentage
---- ----------
2004............................. 105.688%
2005............................. 103.792%
2006............................. 101.896%
2007 and thereafter.............. 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to February 1, 2002, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the principal
amount of the Notes originally issued at a redemption price equal to 111.375% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the date of redemption; provided that at least 55% of the initial aggregate
--------
principal amount of Notes originally issued remains outstanding immediately
after any such redemption:
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
8. Notice of Redemption. Notice of redemption under paragraphs 7(a)
--------------------
and 7(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the Company
will cause a copy of such Notice to be published in a newspaper of general
circulation (which is expected to be the Luxemburger Wort) and the Luxembourg
Stock Exchange will be advised of such redemption. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes
B-4
<PAGE>
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
9. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture. For so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange shall require, the Company will
cause a copy of such Notice to be published in a newspaper of general
circulation (which is expected to be the Luxemburger Wort) and the Luxembourg
Stock Exchange will be advised of such offer to purchase.
10. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting Subsidiaries, merge or consolidate with any other Person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
B-5
<PAGE>
17. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
20. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
-------------
THIS NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana 46845, Attn: Executive Vice President, Finance and
Administration.
B-6
<PAGE>
[FORM OF GUARANTEE]
-------------------
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guarantee being referred to herein as the "Guarantee") the due and punctual
---------
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee, all in accordance with the terms set forth in Article
Twelve of the Indenture.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Guarantor Senior Debt of each Guarantor, to the extent and in the
manner provided in Article Twelve and Article Thirteen of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
ENVIROTRONIC SYSTEMS, INC
By:______________________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.
By:______________________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.
By:______________________________________
Name:
Title:
B-7
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.
By:______________________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION
By:______________________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION
By:______________________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.
By:______________________________________
Name:
Title:
TOKHEIM RPS, LLC
By:______________________________________
Name:
Title:
TOKHEIM SERVICES, LLC
By:______________________________________
Name:
Title:
B-8
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint________________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:______________________ Signed: _________________________________
(Sign exactly as your name
appears on the other side of this
Note)
Medallion Guarantee: ______________________
B-9
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [_]
Section 4.16 [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$___________________
Date: _________________ _____________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the face
of the within Note in every particular without
alteration or enlargement or any change whatsoever and
be guaranteed by the endorser's bank or broker.
Medallion Guarantee: ____________________________
B-10
<PAGE>
EXHIBIT C
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11 3/8% Senior Subordinated Notes due 2008
(the "Notes") Tokheim Corporation
------------------------------------------
This Certificate relates to $_______ principal amount of Notes held in
the form of* ___ a beneficial interest in a Global Note or* _______ Physical
Notes by ______ (the "Transferor").
----------
The Transferor:*
[_] has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Note held by the Depository a
Physical Note or Physical Notes in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or
[_] has requested by written order that the Registrar exchange or
register the transfer of a Physical Note or Physical Notes.
[_] In connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Notes does not require registration under the Securities Act of
1933, as amended (the "Act"), because*:
---
[_] Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
[_] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[_] Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit D to the Indenture.
- ---------
[_] Such Note is being transferred in reliance on Regulation S under
the Act. [An Opinion of Counsel to the effect that such transfer does not
require registration under the Act accompanies this certification.]
[_] Such Note is being transferred in reliance on Rule 144 under the
Act. [An Opinion of Counsel to the effect that such transfer does not require
registration under the Act accompanies this certification.]
[_] Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of Counsel to the effect that such transfer
does not require registration under the Act accompanies this certification.]
________________________________
[INSERT NAME OF TRANSFEROR]
By: ____________________________
[Authorized Signatory]
Date:____________________
*Check applicable box.
C-1
<PAGE>
EXHIBIT D
---------
Form of Transferee Letter of Representation
-------------------------------------------
Attention: Corporate Trust Division
Dear Sirs:
This certificate is delivered to request a transfer of $________
principal amount of the 11 3/8% Senior Subordinated Notes due 2008 of Tokheim
Corporation (the "Company") and any guarantee thereof (the "Notes"). Upon
------- -----
transfer, the Notes would be registered in the name of the new beneficial owner
as follows:
Name:__________________________
Address:_______________________
Taxpayer ID Number:____________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
----------
Act")) purchasing for our own account or for the account of such an
- ---
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and we
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes to offer, sell or otherwise
transfer such Notes prior to the date which is two years after the later of the
date of original issue and the last date on which the Company or any affiliate
of the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to
-----------------------------------
a registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
---
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000, (e) in an offshore transaction in accordance with Regulation S under
the Securities Act (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Note if the Note is not in book-
entry form), and, if such transfer is being effected by certain transferors
prior to the expiration of the "40-day distribution compliance period" (within
the meaning of Rule 903(b)(2) of Regulation S under the Securities Act), a
certificate that may be obtained from the Trustee is delivered by the
transferee, or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
D-1
<PAGE>
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (d) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. The Company and the Trustee reserve the right
prior to any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Notes pursuant to clause (d) or (e) above to require the
delivery of an opinion of counsel, certificates and/or other information
satisfactory to the Company and the Trustee.
Dated: ______________________ TRANSFEREE:
By: ________________________________
D-2
<PAGE>
EXHIBIT E
---------
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
Attention: Corporate Trust Administration
Re: 11 3/8% Senior Subordinated Notes due 2008
(the "Notes") Tokheim Corporation
------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $ ____________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
--------------
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(a) or Rule 904(a) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________
E-1
<PAGE>
EXHIBIT 4.26
================================================================================
TOKHEIM CORPORATION
as Issuer
THE GUARANTORS NAMED HEREIN
and
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
_______________
INDENTURE
_______________
Dated as of January 29, 1999
Euro 75,000,000
11 3/8% Senior Subordinated Notes due 2008
and
Series B 11 3/8% Senior Subordinated Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310 (a)(1)........................................................................ 7.10
(a)(2)........................................................................ 7.10
(a)(3)........................................................................ N.A.
(a)(4)........................................................................ N.A.
(a)(5)........................................................................ 7.08; 7.10
(b)........................................................................... 7.08; 7.10; 11.02
(c)........................................................................... N.A.
311 (a)........................................................................... 7.11
(b)........................................................................... 7.11
(c)........................................................................... N.A.
312 (a)........................................................................... 2.05
(b)........................................................................... 11.03
(c)........................................................................... 11.03
313 (a)........................................................................... 7.06
(b)(1)........................................................................ N.A.
(b)(2)........................................................................ 7.06
(c)........................................................................... 7.06; 11.02
(d)........................................................................... 7.06
314 (a)........................................................................... 4.07; 4.08; 11.02
(b)........................................................................... N.A.
(c)(1)........................................................................ 11.04
(c)(2)........................................................................ 11.04
(c)(3)........................................................................ N.A.
(d)........................................................................... N.A.
(e)........................................................................... 11.05
(f)........................................................................... N.A.
315 (a)........................................................................... 7.01(b)
(b)........................................................................... 7.05; 11.02
(c)........................................................................... 7.01(a)
(d)........................................................................... 7.01(c)
(e)........................................................................... 6.11
316 (a)(last sentence)............................................................ 2.09
(a)(1)(A)..................................................................... 6.05
(a)(1)(B)..................................................................... 6.04
(a)(2)........................................................................ N.A.
(b)........................................................................... 6.07
(c)........................................................................... 9.05
317 (a)(1)........................................................................ 6.08
(a)(2)........................................................................ 6.09
(b)........................................................................... 2.04
318 (a)........................................................................... 11.01
(c)........................................................................... 11.01
</TABLE>
- ---------------------------------
N.A. means Not Applicable
Note: This Cross-reference Table shall not, for any purpose be deemed to be
a part of the Indenture
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. Definitions.................................................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.............................. 18
SECTION 1.03. Rules of Construction.......................................................... 19
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating................................................................ 19
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount....................... 20
SECTION 2.03. Registrar and Paying Agent..................................................... 21
SECTION 2.04. Paying Agent To Hold Assets in Trust........................................... 21
SECTION 2.05. Noteholder Lists............................................................... 22
SECTION 2.06. Transfer and Exchange.......................................................... 22
SECTION 2.07. Replacement Notes.............................................................. 22
SECTION 2.08. Outstanding Notes.............................................................. 23
SECTION 2.09. Treasury Notes................................................................. 23
SECTION 2.10. Temporary Notes................................................................ 23
SECTION 2.11. Cancellation................................................................... 23
SECTION 2.12. Defaulted Interest............................................................. 24
SECTION 2.13. CUSIP Number................................................................... 24
SECTION 2.14. Deposit of Moneys.............................................................. 24
SECTION 2.15. Restrictive Legends............................................................ 24
SECTION 2.16. Book-Entry Provisions for Global Note.......................................... 26
SECTION 2.17. Registration of Transfers and Exchanges........................................ 26
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee............................................................. 30
SECTION 3.02. Selection of Notes To Be Redeemed.............................................. 30
SECTION 3.03. Notice of Redemption........................................................... 31
SECTION 3.04. Effect of Notice of Redemption................................................. 31
SECTION 3.05. Deposit of Redemption Price.................................................... 31
SECTION 3.06. Notes Redeemed in Part......................................................... 32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes............................................................... 32
SECTION 4.02. Maintenance of Office or Agency................................................ 32
SECTION 4.03. Corporate Existence............................................................ 33
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.04. Payment of Taxes and Other Claims...................................................... 33
SECTION 4.05. Maintenance of Properties and Insurance................................................ 33
SECTION 4.06. Compliance Certificate; Notice of Default.............................................. 33
SECTION 4.07. Compliance with Laws................................................................... 34
SECTION 4.08. SEC Reports............................................................................ 34
SECTION 4.09. Waiver of Stay, Extension or Usury Laws................................................ 35
SECTION 4.10. Limitation on Restricted Payments...................................................... 35
SECTION 4.11. Limitation on Transactions with Affiliates............................................. 36
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.................................... 37
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries.......... 37
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt.................................. 37
SECTION 4.15. Change of Control...................................................................... 38
SECTION 4.16. Limitation on Asset Sales.............................................................. 39
SECTION 4.17. Limitation on Preferred Stock of Subsidiaries.......................................... 42
SECTION 4.18. Limitation on Liens.................................................................... 42
SECTION 4.19. Additional Subsidiary Guarantees....................................................... 42
SECTION 4.20. Limitation on Amendments to Schlumberger Junior Subordinated Notes and Warrant
Repurchase Indebtedness............................................................ 42
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets of the Company................................. 43
SECTION 5.02. Successor Corporation Substituted...................................................... 43
SECTION 5.03. Merger, Consolidation and Sale of Assets of Guarantors................................. 44
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default...................................................................... 44
SECTION 6.02. Acceleration........................................................................... 45
SECTION 6.03. Other Remedies......................................................................... 46
SECTION 6.04. Waiver of Past Defaults................................................................ 46
SECTION 6.05. Control by Majority.................................................................... 46
SECTION 6.06. Limitation on Suits.................................................................... 47
SECTION 6.07. Rights of Holders To Receive Payment................................................... 47
SECTION 6.08. Collection Suit by Trustee............................................................. 47
SECTION 6.09. Trustee May File Proofs of Claim....................................................... 47
SECTION 6.10. Priorities............................................................................. 48
SECTION 6.11. Undertaking for Costs.................................................................. 48
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee...................................................................... 49
SECTION 7.02. Rights of Trustee...................................................................... 49
SECTION 7.03. Individual Rights of Trustee........................................................... 50
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7.04. Trustee's Disclaimer................................................................... 50
SECTION 7.05. Notice of Default...................................................................... 51
SECTION 7.06. Reports by Trustee to Holders.......................................................... 51
SECTION 7.07. Compensation and Indemnity............................................................. 51
SECTION 7.08. Replacement of Trustee................................................................. 52
SECTION 7.09. Successor Trustee by Merger, Etc....................................................... 53
SECTION 7.10. Eligibility; Disqualification.......................................................... 53
SECTION 7.11. Preferential Collection of Claims Against Company...................................... 53
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations............................................... 53
SECTION 8.02. Legal Defeasance and Covenant Defeasance............................................... 54
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance.................................. 55
SECTION 8.04. Application of Trust Money............................................................. 56
SECTION 8.05. Repayment to the Company............................................................... 57
SECTION 8.06. Reinstatement.......................................................................... 57
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders............................................................. 57
SECTION 9.02. With Consent of Holders................................................................ 58
SECTION 9.03. Effect on Senior Debt.................................................................. 59
SECTION 9.04. Compliance with TIA.................................................................... 59
SECTION 9.05. Revocation and Effect of Consents...................................................... 59
SECTION 9.06. Notation on or Exchange of Notes....................................................... 60
SECTION 9.07. Trustee To Sign Amendments, Etc........................................................ 60
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt...................................................... 60
SECTION 10.02. No Payment on Notes in Certain Circumstances........................................... 60
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc......................................... 61
SECTION 10.04. Payments May Be Paid Prior to Dissolution.............................................. 62
SECTION 10.05. Subrogation............................................................................ 62
SECTION 10.06. Obligations of the Company Unconditional............................................... 62
SECTION 10.07. Notice to Trustee...................................................................... 63
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent......................... 63
SECTION 10.09. Trustee's Relation to Senior Debt...................................................... 63
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders
of Senior Debt..................................................................... 64
SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination of Notes..................... 64
SECTION 10.12. This Article Ten Not To Prevent Events of Default...................................... 64
SECTION 10.13. Trustee's Compensation Not Prejudiced.................................................. 65
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE ELEVEN
MISCELLANEOUS
<S> <C>
SECTION 11.01. TIA Controls........................................................................... 65
SECTION 11.02. Notices................................................................................ 65
SECTION 11.03. Communications by Holders with Other Holders........................................... 66
SECTION 11.04. Certificate and Opinion as to Conditions Precedent..................................... 66
SECTION 11.05. Statements Required in Certificate or Opinion.......................................... 66
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.............................................. 67
SECTION 11.07. Legal Holidays......................................................................... 67
SECTION 11.08. Governing Law.......................................................................... 67
SECTION 11.09. No Adverse Interpretation of Other Agreements.......................................... 67
SECTION 11.10. No Recourse Against Others............................................................. 67
SECTION 11.11. Successors............................................................................. 68
SECTION 11.12. Counterparts........................................................................... 68
SECTION 11.13. Severability........................................................................... 68
SECTION 11.14. Judgment Currency...................................................................... 68
ARTICLE TWELVE
GUARANTEE
SECTION 12.01. Unconditional Guarantee............................................................... 68
SECTION 12.02. Severability.......................................................................... 69
SECTION 12.03. Limitation of Guarantor's Liability................................................... 69
SECTION 12.04. Execution of Guarantee................................................................ 69
SECTION 12.05. Subordination of Subrogation and Other Rights......................................... 70
ARTICLE THIRTEEN
SUBORDINATION OF GUARANTEE
SECTION 13.01. Guarantee Subordinated to Guarantor Senior Debt....................................... 70
SECTION 13.02. No Payment in Certain Circumstances................................................... 70
SECTION 13.03. Payment Over of Proceeds upon Dissolution, Etc........................................ 71
SECTION 13.04. Payments May Be Paid Prior to Dissolution............................................. 72
SECTION 13.05. Subrogation........................................................................... 72
SECTION 13.06. Obligations of Guarantors Unconditional............................................... 72
SECTION 13.07. Notice to Trustee..................................................................... 73
SECTION 13.08. Reliance on Judicial Order or Certificate of Liquidating Agent........................ 73
SECTION 13.09. Trustee's Relation to Guarantor Senior Debt........................................... 73
SECTION 13.10. Subordination Rights Not Impaired by Acts or Omissions of the Company, the
Guarantors or Holders of Guarantor Senior Debt.................................... 74
SECTION 13.11. Noteholders Authorize Trustee to Effectuate Subordination of Guarantees............... 74
SECTION 13.12. This Article Thirteen Not To Prevent Events of Default................................ 74
SECTION 13.13. Trustee's Compensation Not Prejudiced................................................. 75
Exhibit A - Form of Initial Note................................................................. A-1
Exhibit B - Form of Exchange Note................................................................ B-1
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exhibit C - Form of Certificate To Be Delivered upon Exchange or Registration of
Transfer of Securities.......................................................... C-1
Exhibit D - Form of Transferee Letter of Representation......................................... D-1
Exhibit E - Form of Certificate to be delivered in Connection with Regulation S
Transfers....................................................................... E-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be
Part of this Indenture.
-v-
<PAGE>
INDENTURE, dated as of January 29, 1999, by and among Tokheim
Corporation, an Indiana corporation (the "Company"), each of the subsidiaries of
-------
the Company named on the signature pages hereto, as Guarantors (the
"Guarantors"), as guarantors, and U.S. Bank Trust National Association, a
----------
national banking corporation, as Trustee (the "Trustee").
-------
The Company has duly authorized the creation of an issue of 11 3/8%
Senior Subordinated Notes due 2008 (the "Initial Notes") and Series B 11 3/8%
-------------
Senior Subordinated Notes due 2008 (the "Exchange Notes," and together with the
--------------
Initial Notes, the "Notes") and, to provide therefor, the Company and each
-----
Guarantor has duly authorized the execution and delivery of this Indenture. All
things necessary to make the Notes, when duly issued and executed by the
Company, and authenticated and delivered hereunder, the valid obligations of the
Company, and to make this Indenture a valid and binding agreement of the Company
and the Guarantors, have been done.
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.02(a).
-------------------
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Acquisition" means the acquisition by the Company of the fuel
-----------
dispenser, systems and services business of Schlumberger Limited.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term ''control'' means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms ''controlling'' and ''controlled'' have meanings correlative of
the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
---------------------
"Agent" means any Registrar, Paying Agent or co-Registrar.
-----
"Agent Members" has the meaning provided in Section 2.16.
-------------
"all or substantially all" shall have the meaning given such phrase in
------------------------
the Revised Model Business Corporation Act.
"Asset Acquisition" means (a) an Investment by the Company or any
-----------------
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Sub-
<PAGE>
sidiary of the Company, or shall be merged with or into the Company or any
Subsidiary of the Company, or (b) the acquisition by the Company or any
Subsidiary of the Company of the assets of any Person (other than a Subsidiary
of the Company) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sales shall not
-------- -------
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000; (ii) sales of accounts receivable that the Company has classified as
uncollectible; (iii) sales or other dispositions of Cash Equivalents; (iv) the
sale of the stock of the Subsidiary of Tokheim Sofitam Applications, S.A. to
which Tokheim Sofitam Applications S.A. has contributed its bulk meter business;
and (v) the sale, lease, conveyance, disposition or other transfer (w) of all or
substantially all of the assets of the Company as permitted under Section 5.01,
(x) pursuant to any foreclosure of assets or other remedy provided by applicable
law to a creditor of the Company or any Subsidiary of the Company with a Lien on
such assets, which Lien is permitted under this Indenture; provided that such
--------
foreclosure or other remedy is conducted in a commercially reasonable manner or
in accordance with any Bankruptcy Law, (y) involving only Cash Equivalents or
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of the Company or (z)
involving only the lease or sublease of any real or personal property in the
ordinary course of business.
"Authenticating Agent" has the meaning provided in Section 2.02.
--------------------
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
--------------
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
---------------
"Board of Directors" means, as to any Person, the board of directors
------------------
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
------------
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
-2-
<PAGE>
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
----
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
--------
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit, eurodollar time deposits or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than $250.0
million; (v) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (iv) above; and
(vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"Cedel" means Cedel Bank, societe anonyme.
-----
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Indenture); (ii) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act shall become the owner, directly or indirectly,
beneficially or of record, of shares representing either more than 40% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company or more than 40% of the aggregate issued and
outstanding Common Stock of the Company; or (iii) the replacement of a majority
of the Board of Directors of the Company over a two-year period from the
directors who constituted the Board of Directors of the Company at the beginning
of such period, and such replacement shall not have been approved by a vote of
at least a majority of the Board of Directors of the Company then still in
office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Date" has the meaning provided in Section 4.15.
----------------------
"Change of Control Offer" has the meaning provided in Section 4.15.
-----------------------
"Change of Control Payment Date" has the meaning provided in Section
------------------------------
4.15.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
-------
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Earnings and (ii)
to the extent Consolidated Net Earnings has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business or other transactions the
effect
-3-
<PAGE>
of which has been excluded from Consolidated Net Earnings), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Earnings for such period, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four most
recent full fiscal quarters for which financial information is available (the
"Four Quarter Period") ending on or prior to the date of the transaction
- ---------------------
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
----------------
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital or revolving credit facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation) as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
--------
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Earnings") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period occurring during the Four Quarter Period or at any time subsequent to the
last day of the Four Quarter Period and on or prior to the Transaction Date, as
if such Asset Sale or Asset Acquisition (including the incurrence, assumption or
liability for any such Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for
--------------------------
any period, the sum, without duplication, of (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Subsidiaries (other than dividends
paid in Qualified Capital Stock of the Company or dividends to the extent
payable to the Company or its Subsidiaries) paid, accrued or scheduled to be
paid or accrued during such period times (other than in the case of Preferred
Stock of such Person and its Subsidiaries for which the dividends are tax
deductible for federal income tax purposes) and (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
-4-
<PAGE>
"Consolidated Interest Expense" means, with respect to any Person for
-----------------------------
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (a)
any amortization of debt discount (but excluding the amortization of debt
issuance costs), (b) the net costs under Interest Swap Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Earnings" means, with respect to any Person, for
-------------------------
any period, the aggregate net earnings (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis (before preferred stock
dividend requirements), determined in accordance with GAAP; provided that there
--------
shall be excluded therefrom (a) after-tax gains or losses from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net earnings of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Subsidiary of the referent Person or is merged or consolidated
with the referent Person or any Subsidiary of the referent Person, (d) the net
earnings (but not loss) of any Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by a contract, operation of law or otherwise, (e) the
net earnings of any Person, other than a Subsidiary of the referent Person,
except to the extent of cash dividends or distributions paid to the referent
Person or to a Wholly Owned Subsidiary of the referent Person by such Person,
(f) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Earnings
accrued at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets and (i) all gains or losses from the cumulative effect of any
change in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated
----------------------
shareholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person,
-----------------------------
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries reducing Consolidated Net Earnings
of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve relating to possible cash charges or expenditures for
any future or past period).
"Covenant Defeasance" has the meaning provided in Section 8.02.
-------------------
"Currency Agreement" means any foreign exchange contract, currency
-----------------
swap agreement or other similar agreement or arrangement.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Notice" has the meaning provided in Section 10.02.
--------------
-5-
<PAGE>
"Depository" means with respect to the Regulation S Global Note,
----------
Euroclear or Cedel or a Person designated as the common depository by Euroclear
or Cedel, and with respect to the Rule 144A Global Note, DTC, its nominees and
successors.
"Designated Senior Debt" means (i) Indebtedness under or in respect
----------------------
of the New Credit Agreement or the ESOP Credit Agreements and (ii) any other
Indebtedness constituting Senior Debt which, at the time of determination, has
an aggregate principal amount of at least $25.0 million and is specifically
designated in the instrument evidencing such Senior Debt as "Designated Senior
Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"Dollar Senior Subordinated Notes" means the $123,000,000 11 3/8%
--------------------------------
Senior Subordinated Notes due 2008, issued pursuant to an indenture, dated the
date of this Agreement, by and among the Company, the Guarantors, as guarantors,
and U.S. Bank Trust National Association, as trustee.
"DTC" means The Depository Trust Company.
---
"ESOP Credit Agreements" means those certain credit agreements among
----------------------
the Company, the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and
certain other banks, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by Section
--------
4.12)) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders and any assignments thereof.
"Euro" means the currency that was introduced at the start of the
----
third stage of economic and monetary union pursuant to the treaty establishing
the European Economic Community, as amended by the Treaty on European Union,
signed at Maastricht, the Netherlands on February 7, 1992.
"Euroclear" means Morgan Guarantee Trust Company of New York (Brussels
---------
Office) as operator of the Euroclear System.
"Euro Government Obligations" means direct obligations of, and
---------------------------
obligations guaranteed by, any member country of the European Community which
has adopted the Euro as its sole currency for the payment of which the full
faith and credit of such country is pledged.
"Euro Legal Tender" means such legal coin or currency denominated in
-----------------
Euro as at the time of payment shall be legal tender for the payment of public
and private debts.
"Event of Default" has the meaning provided in Section 6.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the preamble to this
--------------
Indenture.
-6-
<PAGE>
"Exchange Offer" means the registration by the Company under the
--------------
Securities Act pursuant to a registration statement of the offer by the Company
to each Holder of the Initial Notes to exchange all the Initial Notes held by
such Holder for the Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Initial Notes held by such Holder, all in
accordance with the terms and conditions of the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in
----
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date.
"Global Note" has the meaning provided in Section 2.01.
-----------
"Guarantee" means any guarantee of the Notes by any Guarantor pursuant
---------
to this Indenture.
"Guarantor" means any Subsidiary of the Company which guarantees the
---------
Notes pursuant to this Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, the
---------------------
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of such Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Guarantee of such Guarantor. Without limiting the generality of
the foregoing, "Guarantor Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other monetary obligations of such Guarantor owing
in respect of (x) all monetary obligations of every nature of such Guarantor
under the New Credit Agreement and the ESOP Credit Agreements including
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) all obligations under Currency Agreements, in each case
whether outstanding on the Issue Date or thereafter incurred. Notwithstanding
the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness
of a Guarantor or any Affiliate of such Guarantor to a Subsidiary of the
Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or
guaranteed on behalf of, any shareholder, director, officer or employee of a
Guarantor or any Subsidiary of the Guarantor (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by a Guarantor, (vi)
Indebtedness incurred in violation of Section 4.12, (vii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of Title
11, United States Code, is without recourse to a guarantor, (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of a Guarantor and (ix) any guarantees of the
Schlumberger Junior Subordinated Notes or the Warrant Repurchase Indebtedness,
or guarantees of any Refinancing of the Schlumberger Junior Subordinated Notes
or the Warrant Repurchase Indebtedness.
-7-
<PAGE>
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered on the Registrar's books.
"incur" has the meaning provided Section 4.12.
-----
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all indebtedness or
other obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all indebtedness
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all indebtedness of any other Person of the
type referred to in clauses (i) through (vi) which are secured by any lien on
any property or asset of such Person, the amount of such Obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Obligation so secured, (viii) all indebtedness under Currency
Agreements and Interest Swap Obligations of such Person and (ix) all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any. For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
-----------------------------
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" has the meaning provided in the preamble to this
-------------
Indenture.
"Initial Purchasers" means BT Alex. Brown Incorporated, ABN AMRO
------------------
Incorporated, Credit Lyonnais Securities (U.S.A.) Inc., First Chicago Capital
Markets, Inc., Gleacher Natwest International, Schroder & Co. Inc., and
PaineWebber Incorporated.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
---------------------
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of
-8-
<PAGE>
interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or
----------
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person. "Investment" shall exclude extensions of trade
credit by the Company and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Subsidiary, as the
case may be. For the purposes of Section 4.10, the amount of any Investment
shall be the original cost of such Investment plus the cost of all additional
Investments by the Company or any of its Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment, reduced by the payment of dividends or
distributions in connection with such Investment or any other amounts received
in respect of such Investment; provided that no such payment of dividends or
--------
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Earnings.
"Issue Date" means the date of original issuance of the Notes.
----------
"Legal Defeasance" has the meaning provided in Section 8.02.
----------------
"Legal Holiday" has the meaning provided in Section 11.07.
-------------
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Liquidated Damages" means all liquidated damages owing pursuant to
------------------
the Registration Rights Agreement.
"Maturity Date" means August 1, 2008.
-------------
"Moody's" means Moody's Investors Service, Inc. and its successors.
-------
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting, brokerage and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
-9-
<PAGE>
"Net Proceeds Offer" has the meaning provided in Section 4.16.
------------------
"Net Proceeds Offer Amount" has the meaning provided in Section 4.16.
-------------------------
"Net Proceeds Offer Payment Date" has the meaning provided in Section
-------------------------------
4.16.
"Net Proceeds Offer Trigger Date" has the meaning provided in Section
-------------------------------
4.16.
"New Credit Agreement" means the Second Amended and Restated Credit
--------------------
Agreement among the Company, certain of its Subsidiaries, the lenders party
thereto in their capacities as lenders thereunder, NBD Bank, N.A., as
administrative agent, and Credit Lyonnais, as collateral agent, together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
--------
increase in borrowings is permitted by Section 4.12)) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Portion of Net Proceeds" has the meaning provided in Section
----------------------------
4.16.
"Notes" means the Initial Notes and the Exchange Notes treated as a
-----
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
-----------
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated January 26,
-------------------
1999, pursuant to which the Initial Notes were offered, and any supplement
thereto.
"Officer" means, with respect to any Person, the Chairman of the
-------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel, who
------------------
may be counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.
"Other Debt" has the meaning provided in Section 4.10.
----------
"Paying Agent" has the meaning provided in Section 2.03.
------------
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
-10-
<PAGE>
(i) Indebtedness under the Notes and this Indenture;
(ii) Indebtedness incurred pursuant to the New Credit Agreement and
the ESOP Credit Agreements in an aggregate principal amount at any time
outstanding not to exceed (A) $7.62 million with respect to the Indebtedness
under the ESOP Credit Agreements, less the amount of all mandatory principal
payments, if any (excluding any such payments to the extent refinanced at the
time of payment under a replaced ESOP Credit Agreement), and (B) $250.0 million
in the aggregate with respect to Indebtedness under the New Credit Agreement,
reduced by any required permanent repayments, if any (which are accompanied by a
corresponding permanent commitment reduction), thereunder;
(iii) Other Indebtedness of the Company and its Subsidiaries
outstanding on the Issue Date;
(iv) Interest Swap Obligations of the Company covering Indebtedness
of the Company or any of its Subsidiaries and Interest Swap Obligations of any
Subsidiary of the Company covering Indebtedness of such Subsidiary; provided,
--------
however, that (x) (A) such Interest Swap Obligations are designed to protect the
- -------
Company and its Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture (and are used for bona fide hedging,
and not speculative, purposes); and (B) the notional principal amount of such
Interest Swap Obligation does not exceed the principal amount of the
Indebtedness to which such Interest Swap Obligation relates at the time entered
into; (y) or such Interest Swap Obligations are required under the terms of the
New Credit Agreement;
(v) Indebtedness under Currency Agreements; provided that in the
--------
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements (x)(A) are designed to protect against fluctuations in currency value
(and are used for bona fide hedging, and not speculative, purposes) and (B) do
not increase the Indebtedness of the Company and its Subsidiaries outstanding
other than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder; or (y) are
required under the terms of the New Credit Agreement;
(vi) Indebtedness of a Wholly Owned Subsidiary of the Company to the
Company or to a Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Wholly Owned Subsidiary of the Company,
in each case subject to no Lien held by a Person other than the Company or a
Wholly Owned Subsidiary of the Company other than a Lien required under the New
Credit Agreement; provided that if as of any date any Person other than the
--------
Company or a Wholly Owned Subsidiary of the Company owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be
deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by
the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned Subsidiary of
the Company, in each case subject to no Lien other than a Lien required under
the New Credit Agreement; provided that (a) any Indebtedness of the Company to
--------
any Wholly Owned Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under this
Indenture and the Notes and (b) if as of any date any Person other than a Wholly
Owned Subsidiary of the Company owns or holds any such Indebtedness or any
Person holds a Lien in respect of such Indebtedness, such date shall be deemed
the incurrence of Indebtedness not constituting Permitted Indebtedness by the
Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
-------- -------
extinguished within ten business days of incurrence;
-11-
<PAGE>
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness incurred by the Company or any Subsidiary of the
Company in connection with the purchase or improvement of property (real or
personal) or equipment or other capital expenditures in the ordinary course of
business or consisting of Capitalized Lease Obligations, provided that (i) at
the time of the incurrence thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four fiscal quarter
period in reliance upon this clause (xi) does not exceed, in the aggregate, 3%
of the net sales of the Company and its Subsidiaries during the most recently
completed four fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end of the fourth
fiscal quarter following the Issue Date) and (ii) such Indebtedness, together
with all then outstanding Indebtedness incurred in reliance upon this clause
(xi) does not exceed, in the aggregate, 3% of the aggregate net sales of the
Company and its Subsidiaries during the most recently completed twelve fiscal
quarter period on a consolidated basis (calculated on a pro forma basis if the
date of incurrence is prior to the end of the twelfth fiscal quarter following
the Issue Date);
(xii) Indebtedness arising from agreements of the Company or a
Subsidiary of the Company providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all such
- --------
Indebtedness shall at no time exceed the gross proceeds actually received by the
Company and the Subsidiary in connection with such disposition;
(xiii) Obligations in respect of performance bonds and completion
guarantees provided by the Company or any Subsidiary of the Company in the
ordinary course of business;
(xiv) Guarantees by the Company or a Subsidiary of the Company of
Indebtedness incurred by the Company or a Subsidiary of the Company so long as
the incurrence of such Indebtedness by the Company or any such Subsidiary of the
Company is otherwise permitted by the terms of this Indenture;
(xv) Schlumberger Junior Subordinated Notes;
(xvi) Warrant Repurchase Indebtedness;
(xvii) Indebtedness incurred by the Company or any Subsidiary of the
Company in exchange for the use of Traits as collateral made in the ordinary
course of business to financial institutions which Indebtedness has a value of
no less than 90% of the face value of such Traits;
(xviii) Indebtedness of the Company or a Subsidiary of the Company to a
Subsidiary of the Company that is not a Wholly Owned Subsidiary in the aggregate
principal amount not to exceed at any one time $10.0 million; provided that if
--------
as of any date any Person other than a Subsidiary of the Company that is not a
Wholly Owned Subsidiary owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
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(xix) Indebtedness from bank overdraft facilities not to exceed $15.0
million at any time;
(xx) $10.0 million of other indebtedness of the Company or any of
its Subsidiaries (which amount may, but need not, be incurred in whole or in
part under the New Credit Agreement); and
(xxi) the Dollar Senior Subordinated Notes.
"Permitted Investments" means (i) Investments by the Company or any
---------------------
Subsidiary of the Company in any Person that is or will become immediately after
such Investment a Wholly Owned Subsidiary of the Company or that will merge or
consolidate into the Company or a Wholly Owned Subsidiary of the Company, (ii)
Investments in the Company by any Subsidiary of the Company; provided that any
--------
Indebtedness evidencing such Investment is unsecured and subordinated, pursuant
to a written agreement and to the same extent that the Notes are subordinated to
Senior Debt, to the Company's obligations under the Notes and this Indenture;
(iii) Investments in cash and Cash Equivalents; (iv) loans and advances to
employees and officers of the Company and its Subsidiaries totaling up to $5.0
million in the aggregate (A) in the ordinary course of business for bona fide
business purposes or (B) to purchase the Company's Capital Stock; (v) Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
the Company's or its Subsidiaries' businesses and otherwise in compliance with
this Indenture and in compliance with the New Credit Agreement; (vi) Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers; (vii) Investments made by the Company or its
Subsidiaries as a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.16; (viii) Investments existing on the
Issue Date; (ix) Investments in an African Subsidiary in an aggregate amount not
to exceed $2.0 million for which the Company is committed on the Issue Date; and
(x) additional Investments in an aggregate amount not exceeding $5.0 million.
"Permitted Liens" means the following types of Liens:
---------------
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) being contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set aside
on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent for a period of more than 60 days or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(iv) Liens securing letters of credit issued in the ordinary course
of business consistent with past practice in connection with the items referred
to in clause (iii), or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(v) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceedings may be initiated
shall not have expired;
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<PAGE>
(vi) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(vii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or assets
which is not leased property subject to such Capitalized Lease Obligation;
(viii) purchase money Liens to finance property or assets of the
Company or any Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the related purchase money Indebtedness
-------- -------
shall not exceed the cost of such property or assets and shall not be secured by
any property or assets of the Company or any Subsidiary of the Company other
than the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(ix) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(x) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(xi) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
(xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xiii) Liens securing Indebtedness under Currency Agreements;
(xiv) Liens securing Acquired Indebtedness incurred in accordance
with Section 4.12; provided that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and were not granted
in connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and (B) such Liens do
not extend to or cover any property or assets of the Company or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of
the Company or a Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the
Company;
(xv) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its Subsidiaries;
(xvi) Any interest or title of a lessor in the property subject to
any lease, whether characterized as capitalized or operating, other than any
such interest or title resulting from or arising out of a default by the Company
or any of its Subsidiaries on its obligations under such lease;
-14-
<PAGE>
(xvii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property that
are otherwise permitted under this Indenture and under which the Company or any
of its Subsidiaries is lessee;
(xviii) Liens placed on Traits used as collateral in exchange for
loans provided to the Company or its Subsidiaries;
(xix) Liens in favor of the Trustee and any substantially equivalent
Lien granted to any trustee or similar institution under any indenture governing
Indebtedness permitted to be Incurred or outstanding under this Indenture; and
(xx) Liens on any property or assets of the Company or any
Subsidiary securing on a paripassu basis all of the Notes and the Dollar Senior
Subordinated Notes.
"Person" means an individual, partnership, corporation, unincorporated
------
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
--------------
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
---------
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or required to
---------
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
"Public Equity Offering" means an underwritten public offering of
----------------------
Qualified Capital Stock of the Company by the Company pursuant to a registration
statement filed with the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock of the Company that
-----------------------
is not Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
----------------------------- ---
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes, whether or
-----------
not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
----------------
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
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<PAGE>
"Reference Date" has the meaning provided in Section 4.10.
--------------
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
---------- -----------
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Subsidiary of the Company of Indebtedness incurred in accordance with Section
4.12 (other than pursuant to clause (iv), (v), (vi), (vii), (viii), (ix), (xi)
or (xvii) of the definition of Permitted Indebtedness), in each case that does
not (1) result in an increase in the aggregate principal amount of Indebtedness
of such Person as of the date of such proposed Refinancing (plus the amount of
any premium or penalty required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable fees and expenses
incurred by the Company in connection with such Refinancing) or (2) create
Indebtedness with (A) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness being
Refinanced; provided that (x) if such Indebtedness being Refinanced is
--------
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced
is the Schlumberger Junior Subordinated Notes, Warrant Repurchase Indebtedness
or any Refinancing thereof, then such Refinancing Indebtedness shall (i) be
subordinate or junior to the Notes at least to the same extent and in the same
manner as the Schlumberger Junior Subordinated Notes as in effect on the Issue
Date, (ii) provide for no cash interest payments prior to October 2004, (iii)
have covenants no more adverse to the Company than the Schlumberger Junior
Subordinated Notes and (iv) have an effective interest rate not greater than
14%, provided, however, that prior to the incurrence of such indebtedness,
-------- -------
Moody's Investors will have affirmed that its rating of the Notes will not
decrease by one or more gradations below its rating in effect on the Issue Date.
"Registrar" has the meaning provided in Section 2.03.
---------
"Registration Rights Agreement" means the Registration Rights Agreement
-----------------------------
dated January 29, 1999 among the Company, the Guarantors and the Initial
Purchasers relating to the Notes for the benefit of themselves and the Holders,
as the same may be amended or modified from time to time in accordance with the
terms thereof.
"Regulation S" means Regulation S under the Securities Act.
------------
"Representative" means the indenture trustee or other trustee, agent or
--------------
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then the
Representative for such Designated Senior Debt shall at all times constitute the
holders of a majority in outstanding principal amount of such Designated Senior
Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning provided in Section 4.10.
------------------
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"Revolving Credit Facility" means one or more revolving credit
-------------------------
facilities under the New Credit Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
---------
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<PAGE>
"S&P" means Standard & Poor's Corporation and its successors.
---
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of the Company of any property,
whether owned by the Company or any Subsidiary of the Company at the Issue Date
or later acquired, which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"Schlumberger" means Schlumberger Limited, a Netherlands Antilles
------------
corporation.
"Schlumberger Junior Subordinated Notes" means (i) the $40.0 million
--------------------------------------
Junior Subordinated Notes issued by the Company to Schlumberger in connection
with the Acquisition pursuant to the Junior Subordinated Notes Indenture, as
amended up to the Issue Date, between the Company and Harris Trust and Saving
Bank, as trustee and (ii) additional subordinated notes issued as payment of
interest thereon.
"Schlumberger Warrants" means the warrants issued by the Company to
---------------------
Schlumberger as part of the consideration for the Acquisition.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
"Senior Debt" means, the principal of, premium, if any, and interest
-----------
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other Obligations with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Debt" shall
also include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other monetary
obligations of the Company or any Subsidiary of the Company owing in respect of,
(x) the New Credit Agreement and the ESOP Credit Agreements, including
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) Obligations under Currency Agreements, in each case whether
outstanding on the Issue Date or thereafter incurred. Notwithstanding the
foregoing, "Senior Debt" shall not include (i) any Indebtedness of the Company
to a Subsidiary of the Company, (ii) Indebtedness to, or guaranteed on behalf
of, any shareholder, director, officer or employee of the Company or any
Subsidiary of the Company (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in
violation of Section 4.12, (vii) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company, (viii) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of the
Company and (ix) the Schlumberger Junior Subordinated Notes, any Warrant
Repurchase Indebtedness or any Refinancing of the Schlumberger Junior
Subordinated Notes or any Warrant Repurchase Indebtedness.
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<PAGE>
"Significant Subsidiary" shall have the meaning set forth in Rule
----------------------
1.02(v) of Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (SS).(SS).
---
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.04.
"Traits" means "traites" (as defined under French law), accounts
------
receivable or invoices.
"Trust Officer" means any officer of the Trustee assigned by the
-------------
Trustee to administer this Indenture, or in the case of a successor trustee, an
officer assigned to the department, division or group performing the corporation
trust work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Warrant Repurchase Indebtedness" means (i) up to $20.0 million of
-------------------------------
Indebtedness incurred by the Company to repurchase Schlumberger Warrants (or a
pro rata portion of $20.0 million, if less than all the Schlumberger Warrants
are repurchased) plus reasonable fees and expenses incurred in connection
therewith, provided, however, that such Indebtedness (a) is subordinated to the
Notes at least to the same extent as the Schlumberger Junior Subordinated Notes,
(b) contains covenants no more adverse to the Company than the Schlumberger
Junior Subordinated Notes, (c) bears interest at an effective rate not to exceed
14% per annum, which interest shall not be paid in cash prior to October 2004,
(d) contains no mandatory prepayment provisions and (e) matures at least 6
months after the maturity of the Notes plus (ii) additional Indebtedness with
the same terms incurred in payment of interest thereon, provided, however, that
prior to the incurrence of such Indebtedness, Moody's will have affirmed that
its rating of the Notes will not decrease by one or more gradations below its
rating in effect on the issue date.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
-----------------------
Person of which all the outstanding voting securities (other than in the case of
a foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
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<PAGE>
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular; and
(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto. The Exchange Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit B hereto. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or Depository rule or usage. The Company and the
Trustee shall approve the form of the Notes and any notation, legend or
endorsement on them. Each Note shall be dated the date of its issuance and shall
show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
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<PAGE>
The Notes shall be issued initially in the form of two permanent global
Notes in registered form, substantially in the form set forth in Exhibit A (the
"Global Note"), (x) one deposited with the Trustee, as custodian for Euroclear
-----------
and Cedel (the "Regulation S Global Note") and (y) one deposited with the
------------------------
Trustee, as custodian for DTC (the "Rule 144A Global Note"), each duly executed
---------------------
by the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of a Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Beneficial interests in a Global Note are exchangeable for definitive
Notes in registered certificated form ("Physical Notes") only if (i) the
--------------
Depository is unwilling or unable to continue as depository for such Global Note
and the Company thereupon fails to appoint a successor depository within 90
days, or (ii) there shall have occurred and be continuing a Default or an Event
of Default with respect to the Notes. Physical Notes shall initially be
registered in the name of the Depository or the nominee of such Depository and
be delivered to the Trustee as custodian for such Depository. Beneficial owners
of Physical Notes, however, may request registration of such Physical Notes
in their names or the names of their nominees.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing use of Euroclear" and the "General Terms and
Conditions of Cedel Bank and "Customer Handbook of Cedel shall be applicable to
interests in the Regulation S Global Note that are held by the Agent and Members
through Euroclear or Cedel.
SECTION 2.02. Execution and Authentication; Aggregate Principal
-------------------------------------------------
Amount.
- ------
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Notes.
If an Officer or Assistant Secretary whose signature is on a
Note was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed Euro 75,00,000 and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon written orders of the Company in the form of
an Officers' Certificate. The Officers' Certificate shall specify the amount of
Notes to be authenticated, the date on which the Notes are to be authenticated
and the aggregate principal amount of Notes outstanding on the date of
authentication, whether the Notes are to be Initial Notes or Exchange Notes, and
shall further specify the amount of such Notes to be issued as the Global Note
or Physical Notes. The aggregate principal amount of Notes outstanding at any
time may not exceed Euro 75,00,000 except as provided in Section 2.07.
In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clause (ii) of the first sentence of the immediately preceding
paragraph, the Company shall use its reasonable best efforts to obtain the same
"CUSIP" and "ISIN" number for such Notes as is printed on the Notes outstanding
at such time; provided, however, that if any series of Notes issued under this
Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of
Counsel of the Company in a form reasonably satisfactory to the Trustee to be a
different class of security than
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<PAGE>
the Notes outstanding at such time for federal income tax purposes, the Company
may obtain a "CUSIP" and "ISIN" number for such Notes that is different than the
"CUSIP" and "ISIN" number printed on the Securities then outstanding.
The Trustee may appoint an authenticating agent (the "Authenticating
--------------
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
- -----
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of Euro 1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York, and, for
so long as the Notes are listed on the Luxembourg Stock Exchange and the rules
of such stock exchange so require, in Luxembourg) where (a) Notes may be
presented or surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Notes may be presented or surrendered for payment (the "Paying
--------- ------
Agent") and (c) notices and demands to or upon the Company in respect of the
- -----
Notes and this Indenture may be served. The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company, upon prior written
notice to the Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional Paying Agent, and the term "Registrar" includes
any co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Paying Agent and as
Registrar (and with respect to Notes represented by the Regulation S Global
Note, acting through its London Branch) and agent for service of demands and
notices in connection with the Notes, until such time as the Trustee has
resigned or a successor has been appointed. The Company initially appoints as
Depository (x) with respect to the Regulation S Global Note, MSS (Nominees)
Limited, the nominee of Midland Bank plc, as common depository for and behalf of
Morgan Guaranty Trust Company of New York, Brussels office, as Operator of
Euroclear and (y) with respect to the Rule 144A Global Note, DTC. The
Depository, the Paying Agent or Registrar may resign upon 30 days notice to the
Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered
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<PAGE>
by the Company to the Paying Agent (if other than the Company), the Paying Agent
shall have no further liability for such assets. If the Company or any Guarantor
or any of their respective Affiliates acts as Paying Agent, it shall, on or
before each due date of the principal of or interest on the Notes, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
SECTION 2.05. Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee at least five days before each
Record Date and at such other times as the Trustee may request in writing a list
as of such date and in such form as the Trustee may reasonably require of the
names and addresses of the Holders, which list may be conclusively relied upon
by the Trustee.
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.16 and 2.17, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations of the same series, the Registrar or
co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
-------- -------
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes (and each of the Guarantors shall execute a Guarantee
thereon) at the Registrar's or co-Registrar's request. No service charge shall
be made for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge in connection therewith payable by the transferor of such
Securities (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.10, 3.06, 4.15, 4.16
or 9.06, in which event the Company shall be responsible for the payment of such
taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements for replacement of Notes are met. If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee or any
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<PAGE>
Agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Note, including reasonable fees and expenses of counsel. Every
replacement Note shall constitute an additional obligation of the Company and
the Guarantors.
SECTION 2.08. Outstanding Notes.
-----------------
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives an Opinion of Counsel that the replaced Note is held by a bona
----
fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
- ----
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company, the Guarantors or any of their respective Affiliates shall be
considered as though they are not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Trust Officer of the Trustee
actually knows are so owned shall be so considered. The Company shall notify
the Trustee, in writing, when it or any of its Affiliates repurchases or
otherwise acquires Notes, of the aggregate principal amount of such Notes so
repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
upon receipt of a written order of the Company pursuant to Section 2.02
definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, dispose of
and deliver evidence of such disposal of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may not
issue new Notes to replace Notes that it has paid or delivered to the Trustee
for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebted-
-23-
<PAGE>
ness represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
The Company shall pay interest on overdue principal from time to time
on demand at the applicable rate of interest then borne by the Notes. The
Company shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the rate of
interest then borne by the Notes.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, as of a recent date selected by the Company, with a copy to the Trustee,
a notice that states the subsequent special record date, the payment date and
the amount of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(1) shall be paid to
Holders as of the Record Date for the Interest Payment Date for which interest
has not been paid.
SECTION 2.13. CUSIP Number.
------------
The Company in issuing the Notes may use "CUSIP" and/or "ISIN"
numbers, and if so, the Trustee shall use the CUSIP and ISIN numbers in notices
of redemption or exchange as a convenience to Holders; provided that no
--------
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP or ISIN number printed in the notice or on the Notes,
and that reliance may be placed only on the other identification numbers printed
on the Notes. The Company shall promptly notify the Trustee of any change in
the CUSIP or ISIN number.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 12:00 noon London time on the Business Day prior to each
Interest Payment Date, Redemption Date, Change of Control Payment Date, Net
Proceeds Offer Payment Date and on the Maturity Date, the Company shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date, Redemption
Date, Change of Control Payment Date, Net Proceeds Offer Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Paying
Agent to remit payment to the Holders on such Interest Payment Date, Redemption
Date, Change of Control Payment Date, Net Proceeds Offer Payment Date or
Maturity Date, as the case may be.
SECTION 2.15. Restrictive Legends.
-------------------
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
------------------------
face thereof until January 29, 2001, unless otherwise agreed to by the Company
and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EX-
-24-
<PAGE>
CEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (2) AGREES THAT
IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED
PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY, RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES TO AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3), OR (7) UNDER THE ACT) (AN
"ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED
ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE), (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND, IF THE COMPANY SO REQUESTS, BASED UPON AN OPINION OF COUNSEL, OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
Each Global Note shall also bear the following legend:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, AND TRANSFERS OF INTERESTS IN THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.17 OF THE INDENTURE.
-25-
<PAGE>
SECTION 2.16. Book-Entry Provisions for Global Note.
-------------------------------------
(a) The Global Note initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.17. In addition, Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Global Note if (i) the Depository notifies the Company that it
is unwilling or unable to continue as Depository for the Global Note and a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) there shall have occurred and be continuing a Default or Event of
Default.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b) of this Section 2.16, the Registrar shall (if one or more Physical
Notes are to be issued) reflect on its books and records the date and a decrease
in the principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver, one or
more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 2.16, the Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) shall,
except as otherwise provided by paragraph (f) of Section 2.17, bear the legend
regarding transfer restrictions applicable to the Physical Notes set forth in
Section 2.15.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Registration of Transfers and Exchanges.
---------------------------------------
(a) Transfer and Exchange of Physical Notes. When Physical Notes
---------------------------------------
are presented to the Registrar with a request:
-26-
<PAGE>
(i) to register the transfer of the Physical Notes; or
(ii) to exchange such Physical Notes for an equal principal amount of
Physical Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.17 for such
transactions are met; provided, however, that the Physical Notes presented or
-------- -------
surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar, duly executed by the Holder
thereof or its attorney duly authorized in writing; and
(II) in the case of Physical Notes the offer and sale of which have
not been registered under the Securities Act, such Physical Notes shall be
accompanied, in the sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Physical Note is being delivered to the Registrar by a
Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect
(substantially in the form of Exhibit C hereto); or
---------
(B) if such Physical Note is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit C hereto); or
---------
(C) if such Physical Note is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect
(substantially in the form of Exhibit C hereto) and a
---------
transferee letter of representation substantially in the form
of Exhibit D hereto and, at the option of the Company, an
---------
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Note is being transferred in reliance on Rule
144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit C hereto)
---------
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such Physical Notes is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit C hereto), a transferor
---------
certificate for Regulation S transfers substantially in the
form of Exhibit E hereto and, at the option of the Company, and
---------
Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities
Act.
(F) if such Physical Note is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit C hereto) and, at the option of the
---------
Company, an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act.
(b) Restrictions on Transfer of a Physical Note for a Beneficial
------------------------------------------------------------
Interest in a Global Note. A Physical Note the offer and sale of which has not
- -------------------------
been registered under the Securities Act may not be exchanged
-27-
<PAGE>
for a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Registrar, together with:
(A) certification, substantially in the form of Exhibit C hereto,
---------
that such Physical Note is being transferred (I) to a QIB, (II)
to an Accredited Investor or (III) in an offshore transaction
in compliance with Regulation S and, with respect to (II) and
(III), at the option of the Company, an Opinion of Counsel
reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act; and
(B) written instructions directing the Registrar to make, or to
direct the Depository to make, an endorsement on the applicable
Global Note to reflect an increase in the aggregate amount of
the Notes represented by the Global Note,
then the Registrar shall cancel such Physical Note and cause, or direct the
Depository to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Registrar, the principal amount of Notes
represented by the applicable Global Note to be increased accordingly. If no
Global Note is then outstanding, the Company shall, unless events in either
clause (i) or (ii) of Section 2.16(b) have occurred and are continuing, issue
and the Trustee shall, upon written instructions from the Company in accordance
with Section 2.02, authenticate such a Global Note in the appropriate principal
amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
-------------------------------------
of Global Notes or beneficial interests therein shall be effected through the
Depository in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor. Upon
receipt by the Registrar of written instructions, or such other instruction as
is customary for the Depository, from the Depository or its nominee, requesting
the registration of transfer of an interest in a Global Note to another type of
Global Note, together with the applicable Global Notes (or, if the applicable
type of Global Note required to represent the interest as requested to be
transferred is not then outstanding, only the Global Note representing the
interest being transferred), the Registrar shall cancel such Global Notes (or
Global Notes), and the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate, new
Global Notes of the types so canceled (or the type so canceled and applicable
type required to represent the interest as requested to be transferred)
reflecting the applicable increase and decrease of the principal amount of Notes
represented by such types of Global Notes, giving effect to such transfer. If
the applicable type of Global Note required to represent the interest as
requested to be transferred is not outstanding at the time of such request, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate a new Global Note of such
type in principal amount equal to the principal amount of the interest requested
to be transferred.
(d) Transfer of a Beneficial Interest in a Global Note for a Physical
-----------------------------------------------------------------
Note.
- ----
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Physical Note only
if (i) the Depository notifies the Company that it is unwilling or unable
to continue as Depository for the Global Note and a successor Depository is
not appointed by the Company within 90 days of such notice or (ii) there
shall have occurred and be continuing a Default or Event of Default.;
provided, however, that prior to the registration under the Securities Act,
-------- -------
a transferee that is a QIB or Institutional Accredited Investor may not
exchange a beneficial interest in Global Note for a Physical Note. Upon
receipt by the Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or its
nominee on behalf of any Person (subject to the previous sentence) having a
beneficial interest in a Global Note and upon receipt by the Trustee of a
written order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest containing reg-
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<PAGE>
istration instructions and, in the case of any such transfer or exchange of
a beneficial interest in Notes the offer and sale of which have not been
registered under the Securities Act, the following additional information
and documents:
(A) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification
to that effect (substantially in the form of Exhibit C hereto)
---------
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act;
(B) if such beneficial interest is being transferred in reliance on
Regulation S under the Securities Act, delivery of a
certification to that effect (substantially in the form of
Exhibit E hereto) and, at the option of the Company, an Opinion
---------
of Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act; or
(C) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
---------
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with
the Securities Act,
then the Registrar will cause, in accordance with the standing instructions
and procedures existing between the Depository and the Registrar, the
aggregate principal amount of the applicable Global Note to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate in accordance
with Section 2.02, the Trustee will authenticate and deliver to the
transferee a Physical Note in the appropriate principal amount.
(ii) Notes issued in exchange for a beneficial interest in a Global
Note pursuant to this Section 2.17(d) shall be registered in such names and
in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Registrar in writing. The Registrar shall deliver such
Physical Notes to the Persons in whose names such Physical Notes are so
registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless, and the Trustee is hereby authorized to deliver Notes without the
Private Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act; (ii)
such Note has been sold pursuant to an effective registration statement under
the Securities Act (including pursuant to a registration); or (iii) the date of
such transfer, exchange or replacement is two years after the later of (x) the
Issue Date and (y) the last date that the Company or any affiliate (as defined
in Rule 144 under the Securities Act) of the Company was the owner of such Notes
(or any predecessor thereto).
-29-
<PAGE>
(g) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Participants or beneficial
owners of interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to Paragraph 7 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
---------------------------------
In the event that less than all of the Notes are to be redeemed at any
time, selection of the Notes to be redeemed shall be made by the Trustee in
compliance with the requirements of the principal securities exchange, if any,
on which such Notes are listed or, if such Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
-------- -------
a principal amount of Euro 1,000 or less shall be redeemed in part; provided,
--------
further, that if a partial redemption is made with the proceeds of a Public
- -------
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis
as is practicable (subject to the procedures of the Depository), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by first-
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at its registered address. If any Note is to
be redeemed in part only, the notice of redemption that relates to such Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in a principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon delivery of the original Note to
the Paying Agent and cancellation of the original Note. On and after the
redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the Paying
Agents in New York and Luxembourg funds in satisfaction of the applicable
redemption price pursuant to this Indenture.
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SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with
a copy to the Trustee and any Paying Agent. At the Company's written request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. So long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require the Company will cause a
notice of such redemption to be published in a daily newspaper of general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such redemption.
Each notice for redemption shall identify the Notes to be redeemed
(including the CUSIP number, if any) and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus accrued
interest, if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes in
the aggregate principal amount equal to the unredeemed portion thereof will
be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before 12:00 noon London time on the Business Day prior to the
Redemption Date, the Company shall deposit with the Paying Agent Euro Legal
Tender sufficient to pay the Redemption Price plus
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accrued interest, if any, of all Notes to be redeemed on that date. The Paying
Agent shall promptly return to the Company any Euro Legal Tender so deposited
which is not required for that purpose, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.
SECTION 3.06. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
----------------
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date Euro Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes plus 2% per annum. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, and, for so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange so require, in Luxembourg, the
office or agency required under Section 2.03. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 11.02 hereof. The
Company hereby initially designates (i) the Trustee at its address set forth in
Section 11.02 hereof as its office or agency in The Borough of Manhattan, The
City of New York, for such purposes, (ii) so long as the Securities are listed
on the Luxembourg Stock Exchange and the rules of such stock exchange so
require, Bankers Trust Luxembourg S.A., 14, Boulevard F.D. Roosevelt, L-2450
Luxembourg, as its office or agency in Luxembourg for such purposes and (iii)
the Paying Agent at its address set forth in Section 11.02 here of as its office
or agency in London, for such purposes.
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SECTION 4.03. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five and Section 4.16, the
Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be required to
-------- -------
preserve, with respect to itself, any material right or franchise and, with
respect to any of its Subsidiaries, any such existence, material right or
franchise, if the Board of Directors of the Company shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and the Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of it or any of its Subsidiaries; provided, however, that the
-------- -------
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain its material properties in good working order and condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business; provided, however, that nothing in this Section 4.05 shall
-------- -------
prevent the Company or any of its Subsidiaries from discontinuing the operation
and maintenance of any of its properties, if such discontinuance is, in the
good faith judgment of the Board of Directors or senior management of the
Company or the Subsidiary, as the case may be, desirable in the conduct of their
respective businesses.
(b) The Company shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Board of Directors of the Company, are adequate and appropriate for the conduct
of the business of the Company and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the good faith judgment of the Board
of Directors of the Company, for companies similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee, within 90 days after
the end of the Company's fiscal year, which currently ends on November 30 of
each year, an Officers' Certificate stating that a review of its activities and
the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of such Officer's knowledge the Company during
such preceding fiscal year has kept, observed, performed and fulfilled each and
every such covenant and no Default or Event of Default occurred dur-
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ing such year and at the date of such certificate there is no Default or Event
of Default that has occurred and is continuing or, if such signers do know of
such Default or Event of Default, the certificate shall describe the Default or
Event of Default and its status with particularity. The Officers' Certificate
shall also notify the Trustee should the Company elect to change the manner in
which it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that a Default or Event of Default
under this Indenture has occurred insofar as they relate to accounting matters
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.02 hereof,
by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action and the status thereof within five
Business Days of its becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole.
SECTION 4.08. SEC Reports.
-----------
(a) The Company (at its own expense) shall file with the SEC and
shall file with the Trustee within 15 days after it files them with the SEC
copies of the quarterly and annual reports and of the information, documents,
and other reports, if any (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe), which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act
(without regard to whether the Company is subject to the requirements of such
Section 13 or 15(d) of the Exchange Act). Upon qualification of this Indenture
under the TIA, the Company shall also comply with the provisions of TIA (S)
314(a).
(b) At the Company's expense, the Company shall cause an annual
report if furnished by it to stockholders generally and each quarterly or other
financial report if furnished by it to stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) The Company shall provide to any Holder any information
reasonably requested by such Holder concerning the Company (including financial
statements) necessary in order to permit such Holder to sell or transfer Notes
in compliance with Rule 144A under the Securities Act.
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<PAGE>
(d) For so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, copies of all reports and
information described above will be available during normal business hours at
the office of the Paying Agent in Luxembourg.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of shares of the Company's
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any Investment
(other than Permitted Investments) or (d) repurchase or redeem the Schlumberger
Junior Subordinated Notes, the Schlumberger Warrants, the Warrant Repurchase
Indebtedness or Refinancing Indebtedness the proceeds of which are used to
repurchase or redeem the Schlumberger Junior Subordinated Notes, the
Schlumberger Warrants or the Warrant Repurchase Indebtedness (other than a
repurchase or redemption using proceeds of Refinancing Indebtedness), or make
any cash payments of interest thereon during (l) a blockage period in effect
with respect to any such junior Indebtedness or (2) the time when the Company
could, by the terms of such Indebtedness, otherwise defer such interest or pay
such interest in-kind (each of the foregoing actions set forth in clauses (a),
(b), (c) and (d) being referred to as a "Restricted Payment"), if at the time
------------------
of such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing, or (ii)
the Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness), in compliance with Section 4.12 or (iii)
the aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Earnings (or if cumulative Consolidated Net Earnings shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date"), treating such
--------------
period as a single accounting period; plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company; plus (y) 100%
of the net cash proceeds from the sale of Investments by the Company (other than
Permitted Investments), provided that such Investment was made after the Issue
--------
Date; plus (z) without duplication of any amounts included in clause (iii)(x)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company after the Issue Date from a holder of the Company's
Capital Stock (excluding, in the case of clauses (iii)(x) and (z), any net cash
proceeds from a Public Equity Offering to the extent used to redeem the Notes or
from a sale as described in clause (2) (ii) of the next succeeding paragraph).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 60 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; or (2) the acquisition of
any shares of
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Capital Stock of the Company or of any of the Indebtedness described in clause
(d) of the immediately preceding paragraph, either (i) solely in exchange for
shares of Qualified Capital Stock of the Company or (ii) through the application
of the net cash proceeds of a substantially concurrent sale for cash (other than
to a Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company (excluding, in the case of clause 2(ii), any net cash proceeds from a
Public Equity Offering to the extent used to redeem the Notes); or (3) dividends
on, and redemptions of, the shares of the Company's preferred stock held by the
trust of the Company's retirement savings plan in accordance with the terms
thereof on the date of this Indenture; (4) payments to redeem or repurchase
stock or similar rights from management of the Company in connection with the
repurchase provisions under employee stock option or stock purchase agreements
or other agreements to compensate management employees upon the termination of
employment, death or disability of any such person; provided that such
--------
redemptions or repurchases shall not exceed $1.0 million; or (5) the purchase,
redemption or acquisition of the Schlumberger Warrants with proceeds from the
issuance of Warrant Repurchase Indebtedness; or (6) the purchase, redemption,
acquisition, or refinancing of the Schlumberger Junior Subordinated Notes with
Refinancing Indebtedness. In determining the aggregate amount of Restricted
Payments made subsequent to the Issue Date in accordance with clause (iii) of
the immediately preceding paragraph, amounts expended pursuant to clauses (1),
(4) and (5) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
SECTION 4.11. Limitation on Transactions with Affiliates.
------------------------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction or
series of related transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with,
or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"),
---------
other than (x) Affiliate Transactions permitted under paragraph (b) below and
(y) Affiliate Transactions on terms that are no less favorable to the Company or
such Subsidiary than those that could reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property
with a fair market value in excess of $1.0 million shall be approved by the
Board of Directors of the Company or such Subsidiary, as the case may be, such
approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to
a common plan) that involves aggregate payments or other property with a fair
market value of more than $5.0 million, the Company or such Subsidiary, as the
case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related transactions
to the Company or the relevant Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with the
Trustee.
(b) The restrictions set forth in clause (a) shall not apply to: (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the Company
as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of its Wholly
Owned Subsidiaries or exclusively between or among such Wholly Owned
Subsidiaries; provided such transactions are not otherwise prohibited by this
--------
Indenture; (iii) Restricted Payments permitted by this Indenture; (iv)
transactions permitted by, and complying with Section 5.01; (v) transactions
with distributors or other purchases or sales of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
this Indenture which are fair to the Company, in the reasonable determination of
the Board of Directors of the Company or the senior manage-
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ment thereof, or are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party; (vi) any management
agreement as in effect as of the Issue Date or any amendment thereto or any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date and any similar
agreements entered into after the Issue Date; and (vii) intercompany loans or
capital contributions from the Company or any Subsidiary to any of the Company's
Subsidiaries; provided such loans are otherwise in compliance with the terms of
--------
this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, "incur") any Indebtedness (other
-----
than Permitted Indebtedness); provided, however, that if no Default or Event of
-------- -------
Default shall have occurred and be continuing at the time of or as a consequence
of the incurrence of any such Indebtedness, the Company may incur Indebtedness
(including, without limitation, Acquired Indebtedness) and Subsidiaries of the
Company may incur Acquired Indebtedness, in each case if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.00
to 1.00 if incurred on or prior to the second anniversary of the Issue Date or
greater than 2.25 to 1.00 if incurred thereafter.
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
------------------------------------------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or pay or
guarantee any Indebtedness or other obligation owed to the Company or any other
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Indenture; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Subsidiary of the Company; (4) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired; (5)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (6) the New Credit Agreement or the
ESOP Credit Agreements; or (7) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4), (5) or (6) above; provided, however, that the
-------- -------
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company in any material
respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4), (5) or (6).
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt.
-----------------------------------------------------
The Company will not incur or suffer to exist Indebtedness that is
senior in right of payment to the Notes and subordinate in right of payment to
any Senior Debt of the Company. The Guarantors will not incur or suffer to exist
Indebtedness that is senior in right of payment to any Guarantee and subordinate
in right of payment to any Guarantor Senior Debt.
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SECTION 4.15. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase all or a portion of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer"),
-----------------------
at a purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest to the date of purchase.
Prior to the mailing of the notice referred to below, but in any event
within 30 days following any Change of Control, the Company covenants to (i)
repay in full all Indebtedness and terminate all commitments under the New
Credit Agreement and all other Senior Debt whose terms require repayment upon a
Change of Control or offer to repay in full and terminate all commitments under
all Indebtedness under the New Credit Agreement and all other such Senior Debt
and to repay the Indebtedness owed to each lender which has accepted such offer
or (ii) obtain the requisite consents under the New Credit Agreement and all
other Senior Debt to permit the repurchase of the Notes as provided below.
(b) Within 30 days following the date upon which the Change of
Control occurred (the "Change of Control Date"), the Company shall send, by
----------------------
first class mail, a notice to each Holder, with a copy to the Trustee, which
notice shall govern the terms of the Change of Control Offer. For so long as
the Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require, the Company will cause a copy of such notice to be
published in a daily newspaper with general circulation in Luxembourg (which is
expected to be the Luxemburger Wort) and the Luxembourg Stock Exchange will be
advised of such Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be accepted
for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date"); provided that the
------------------------------ --------
Change of Control Payment Date for the Notes shall be a date subsequent to
any payment dates for the purchase or other repayment of Senior Debt having
similar provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent, including, if applicable, the Paying
and Transfer Agent in Luxembourg, at the address specified in the notice
prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
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(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
--------
issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent Euro Legal Tender sufficient
to pay the purchase price plus accrued interest, if any, of all Notes so
tendered and (iii) deliver to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any, and the Trustee shall promptly authenticate and mail to such Holders new
Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted shall be promptly mailed by the Company
to the Holder thereof. For purposes of this Section 4.15, the Trustee shall act
as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a Change
of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.15, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
-------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, consummate an Asset Sale unless (i) the Company or the applicable
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of Directors),
(ii) with respect to Asset Sales by the Company or any Wholly Owned Subsidiary
of the Company, at least 80% of the consideration received by the Company or
such Subsidiary, as the case may be, from such Asset Sale shall be in the form
of cash or Cash Equivalents and is received at the time of such disposition and
(iii) upon the consummation of an Asset Sale, the Company shall apply, or cause
such Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale
within 365 days of receipt thereof (A) to prepay any Senior Debt or Indebtedness
of any Subsidiary of the Company, (B) to make an investment in properties and
assets that replace the properties and assets that were the subject of such
Asset Sale or in properties or assets that will be used in the business of the
Company and its Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets") or (C) a combination of
------------------
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Directors of the Company or of such Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net
---
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
- ---------------------------
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company
-------------------------
or such Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
------------------
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than
--------------------------------
45 days following the applicable Net Proceeds Offer Trigger Date, from all
Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and
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unpaid interest thereon, if any, to the date of purchase. The Company may defer
the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5.0 million resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $5.0 million, shall be applied as required pursuant
to this paragraph).
Notwithstanding the immediately preceding paragraph, the Company and
its Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent (i) at least 80% of the consideration for such
Asset Sale constitutes Replacement Assets and the remainder in cash or Cash
Equivalents and (ii) such Asset Sale is for fair market value; provided that any
--------
consideration not constituting Replacement Assets received by the Company or any
of its Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the immediately preceding paragraph.
Notwithstanding the second immediately preceding paragraph, in the
event that any other Indebtedness of the Company that ranks pari passu with the
Notes (the "Other Debt") requires an offer to purchase to be made to repurchase
----------
such Other Debt upon the consummation of an Asset Sale, the Company may apply
the Net Proceeds Offer Amount otherwise required to be applied to a Net Proceeds
Offer to offer to purchase such Other Debt so long as the amount of Net Proceeds
Offer Amount applied to purchase the Notes is not less than the Note Portion of
Net Proceeds Offer Amount. With respect to any Net Proceeds Offer Amount, the
Company shall make the Net Proceeds Offer in respect thereof at the same time as
the analogous offer to purchase is made pursuant to any Other Debt and the Net
Proceeds Offer Payment Date in respect thereof shall be the same as the purchase
date in respect thereof pursuant to any Other Debt.
For purposes of this covenant, "Note Portion of Net Proceeds Offer
----------------------------------
Amount" means (1) if no Other Debt is being offered to be purchased, the amount
- ------
of the Net Proceeds and (2) if Other Debt is being offered to be purchased, the
amount of the Net Proceeds Offer Amount equal to the product of (x) the Net
Proceeds Offer Amount and (y) a fraction the numerator of which is the aggregate
amount of all Securities tendered pursuant to the Net Proceeds Offer related to
such Net Proceeds Offer Amount (the "Note Amount") and the denominator of which
-----------
is the sum of the Note Amount and the aggregate amount as of the relevant
purchase date of all Other Debt tendered and purchased pursuant to a concurrent
offer to purchase such Other Debt made at the time of such Net Proceeds Offer.
Each Net Proceeds Offer will be mailed to the record Holders as shown
on the register of Holders within 25 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such Exchange so require, the Company
will cause a copy of such notice to be published in a daily newspaper with
general circulation in Luxembourg (which is expected to be the Luxembourger
Wort) and the Luxembourg Stock Exchange will be advised of the Net Proceeds
Offer. Upon receiving notice of the Net Proceeds Offer, Holders may elect to
tender their Notes in whole or in part in integral multiples of Euro 1,000 in
exchange for cash. To the extent Holders properly tender Notes in an amount
exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be
purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer
shall remain open for a period of 20 business days or such longer period as may
be required by law.
(b) Each notice of a Net Proceeds Offer pursuant to this Section 4.16
shall be mailed or caused to be mailed, by first class mail, by the Company not
more than 25 days after the Net Proceeds Offer Trigger Date to all Holders at
their last registered addresses as of a date within 15 days of the mailing of
such notice, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the following terms:
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(1) that the Net Proceeds Offer is being made pursuant to Section
4.16 and that all Notes tendered will be accepted for payment; provided,
--------
however, that if the aggregate principal amount of Notes tendered in a Net
-------
Proceeds Offer plus accrued interest at the expiration of such offer
exceeds the Note Portion of Net Proceeds Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such adjustments
--- ----
as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000 or multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest)
and the Net Proceeds Offer Payment Date; provided that the Net Proceeds
--------
Offer Payment Date for the Notes shall be a date subsequent to any payment
dates for the purchase or other repayment of Senior Debt having similar
provisions;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Net Proceeds Offer Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day prior to the Net
Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
--------
issued shall be in an original principal amount of $1,000 or integral
multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(1) above,
(ii) deposit with the Paying Agent Euro Legal Tender sufficient to pay the
purchase price plus accrued interest, if any, of all Notes to be purchased and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any. For purposes of this Section 4.16, the Trustee shall act as the Paying
Agent.
Any amounts remaining after the purchase of Notes pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company.
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.16, the Company shall comply with the applicable
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securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Preferred Stock of Subsidiaries.
---------------------------------------------
The Company will not permit any of its Subsidiaries to issue any
Preferred Stock (other than to the Company or to a Wholly Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly Owned
Subsidiary of the Company) to own any Preferred Stock of any Subsidiary of the
Company.
SECTION 4.18. Limitation on Liens.
-------------------
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Notes, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to such Liens and (ii) in all
other cases, the Notes are equally and ratably secured, except for (A) Liens
existing as of the Issue Date to the extent and in the manner such Liens are in
effect on the Issue Date; (B) Liens securing Senior Debt and Liens securing
Guarantor Senior Debt; (C) Liens securing the Notes and the Guarantees; (D)
Liens of the Company or a Wholly Owned Subsidiary of the Company on assets of
any Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which
is incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens (x) are no
-------- -------
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (y) do not extend to or cover any property or assets of the
Company or any of its Subsidiaries not securing the Indebtedness so Refinanced;
and (F) Permitted Liens.
SECTION 4.19. Additional Subsidiary Guarantees.
--------------------------------
The Company will cause any current and future Subsidiary of the
Company that Guarantees any Senior Debt of the Company or Indebtedness of the
Company that is subordinated to the Notes to simultaneously execute and deliver
a supplemental indenture pursuant to which it will become a Guarantor under this
Indenture.
SECTION 4.20. Limitation on Amendments to Schlumberger Junior
Subordinated Notes and Warrant Repurchase Indebtedness.
------------------------------------------------------
The Company shall not amend the indentures or other agreements
governing the terms of the Schlumberger Junior Subordinated Notes or Warrant
Repurchase Indebtedness, or any Refinancing Indebtedness thereof, in any way
adverse to the Holders of the Notes.
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<PAGE>
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets of the Company.
------------------------------------------------------
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless:
(i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x)
shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (y)
shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the
due and punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every covenant
contained in the Notes, this Indenture and the Registration Rights
Agreement to be performed or observed on the part of the Company;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect
to any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
(iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing;
(iv) the Company or the Surviving Entity, as the case may be, shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture complies with the applicable provisions of this
Indenture and that all conditions precedent in this Indenture relating to
such transaction have been satisfied; and
For so long as the Notes are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require, copies of all reports and information
described above will be available during normal business hours at the office of
the Transfer Agent in Luxembourg.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such
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conveyance, lease or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture and
the Notes with the same effect as if such surviving entity had been named as
such.
SECTION 5.03. Merger, Consolidation and Sale of Assets of Guarantors.
------------------------------------------------------
Each Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with Section 4.16) will not, and the
Company will not cause or permit any Guarantor to, consolidate with or merge
with or into any Person other than the Company or any other Guarantor unless:
(i) the entity formed by or surviving any such consolidation or merger (if other
than the Guarantor) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
(ii) such entity assumes by supplemental indenture all of the obligations of the
Guarantor on the Guarantee; (iii) immediately before and after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (ii) of the first paragraph of Section 5.01.
Any merger or consolidation of a Guarantor with and into the Company (with the
Company being the surviving entity) or another Guarantor of the Company need
only comply with clause (iv) of Section 5.01.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
----------------
(1) the Company fails to pay interest on, or Liquidated Damages (if
any), with respect to any Notes when the same becomes due and payable and
the default continues for a period of 30 days (whether or not such payment
shall be prohibited under Article Ten);
(2) the Company fails to pay the principal on the Notes when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer),
whether or not such payment shall be prohibited under Article Ten;
(3) the Company defaults in the observance or performance of any
other covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Notes (except in the case of a default with respect to
Section 5.01, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(4) there shall be a default under any Indebtedness of the Company
or any Subsidiary, whether such Indebtedness now exists or shall
hereinafter be created, if both (A) such default either (1) results from
the failure to pay any such Indebtedness at its stated final maturity or
(2) relates to an obligation other than the obligation to pay such
Indebtedness at its stated final maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due prior
to its stated final maturity and (B) the amount of such Indebtedness,
together with the principal amount of any other such
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Indebtedness in default for failure to pay principal at stated final
maturity or the maturity of which has been so accelerated, aggregates $10.0
million or more at any one time outstanding;
(5) one or more judgments in an aggregate amount in excess of $5.0
million (which are not covered by third party insurance as to which the
insurer has not disclaimed coverage) shall have been rendered against the
Company or any of its Subsidiaries and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
(6) except as permitted by this Indenture, any Guarantee shall be
held in a judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Guarantee;
(7) the Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to the appointment of a Custodian of it or for substantially
all of its property, (D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (E) makes a general
assignment for the benefit of its creditors, or (F) takes any corporate
action to authorize or effect any of the foregoing; or
(8) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary in
an involuntary case or proceeding under any Bankruptcy Law, which shall (A)
approve as properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company or any Significant
Subsidiary, (B) appoint a Custodian of the Company or any Significant
Subsidiary or for substantially all of its property or (C) order the
winding-up or liquidation of its affairs; and such judgment, decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days.
SECTION 6.02. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default specified
in Sections 6.01(7) or (8) above with respect to the Company) shall occur and be
continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Notes may declare the principal of and accrued interest on all the
Notes to be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (i) shall become
-------------------
immediately due and payable or (ii) if there are any amounts outstanding under
the New Credit Agreement or the ESOP Credit Agreements, shall become immediately
due and payable upon the first to occur of an acceleration under the New Credit
Agreement or the ESOP Credit Agreements or 5 business days after receipt by the
Company and the Representative under the New Credit Agreement or the ESOP Credit
Agreements of such Acceleration Notice.
(b) If an Event of Default specified in Section 6.01(7) or (8) above
with respect to the Company shall occur and be continuing, then all unpaid
principal of, premium, if any, and accrued and unpaid interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with Section 6.02(a) and (b), the Holders of a majority
in principal amount of the outstanding Notes may rescind and cancel such
declaration and its consequences if (i) the rescission would not conflict with
any judgment or
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decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of an Event of Default of the type described in Section
6.01(7) or (8) above, the Trustee shall have received an Officers' Certificate
and an Opinion of Counsel that such Event of Default has been cured or waived.
The holders of a majority in aggregate principal amount of Notes then
outstanding may waive any existing Default or Event of Default under this
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any Notes. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
aggregate principal amount of Notes then outstanding by notice to the Trustee
may waive an existing Default or Event of Default and its consequences, except a
Default in the payment of principal of or interest on any Note as specified in
clauses (1) and (2) of Section 6.01. The Company shall deliver to the Trustee an
Officers' Certificate stating that the requisite percentage of Holders have
consented to such waiver and attaching copies of such consents. In case of any
such waiver, the Company, the Trustee and the Holders shall be restored to their
former positions and rights hereunder and under the Notes, respectively. This
paragraph of this Section 6.04 shall be in lieu of (S) 316(a)(1)(B) of the TIA
and such (S) 316(a)(1)(B) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Notes, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Noteholder (it being understood that the Trustee shall have no
duty to ascertain whether or not such actions or forbearances are unduly
prejudicial to such Holders), or that may involve the Trustee in personal
liability; provided that the Trustee may take any other action deemed proper by
--------
the Trustee which is not
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inconsistent with such direction; and provided further that this provision shall
-------- -------
not affect the rights of the Trustee set forth in Section 7.01(d). In the event
the Trustee takes any action or follows any direction pursuant to this
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against any loss or expense caused by taking such action
or following such direction. This Section 6.05 shall be in lieu of (S)
316(a)(1)(A) of the TIA, and such (S) 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
-------------------
A Noteholder may not pursue any remedy with respect to this
Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 45 days
after receipt of the request and the offer of satisfactory indemnity; and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which,
in the opinion of the Trustee, is inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over such other
Noteholder.
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in
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any judicial proceedings relating to the Company or any other obligor upon the
Notes, any of their respective creditors or any of their respective property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by each
Noteholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07. The Company's
payment obligations under this Section 6.09 shall be secured in accordance with
the provisions of Section 7.07 hereunder. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
-------- -------
Noteholders, vote for the election of a trustee in bankruptcy or similar
official and may be a member of a creditors' committee.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company or
any Guarantor directly without the Trustee, to Holders for their collection
costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Noteholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
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(a) The Trustee may rely on any resolution, certificate, Officers'
Certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate, an Opinion of
Counsel or both, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or indirectly or by or through
agents or attorneys, and the Trustee shall not be responsible for the
misconduct or negligence of any agent or attorney (other than an agent who
is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney and to consult with the officers and
representatives of the Company, including the Company's accountants and
attorneys.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in compliance with
such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The recitals contained herein and in the Notes shall be taken as
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or the Notes other than the
Trustee's certificate of authentication.
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SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 90 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in payment of principal of, or
interest on, any Note, including an accelerated payment and the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and,
except in the case of a failure to comply with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Noteholders. This Section 7.05 shall be in lieu of the proviso to (S)
315(b) of the TIA, and such proviso of (S) 315(b) of the TIA is hereby expressly
excluded from this Indenture and the Notes, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each January 29, the Trustee shall, to the extent
that any of the events described in TIA (S) 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Noteholder a brief report dated
as of such date that complies with TIA (S) 313(a). The Trustee also shall
comply with TIA (S)(S) 313(b), (c) and (d).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each securities exchange, if
any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any securities exchange or of any delisting thereof and the Trustee
shall comply with TIA (S) 313(d).
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture or in connection with the
collection of any funds. Such expenses shall include the reasonable fees and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
stockholders and directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the administration of this trust including
the reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their rights,
powers or duties hereunder. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek indemnity. At the
Trustee's sole discretion, the Company shall defend the claim and the Trustee
shall cooperate and may participate in the defense; provided that any settlement
--------
of a claim shall be approved in writing by the Trustee. Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company shall pay the reasonable fees and expenses of such counsel; provided
--------
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense and there is no conflict of interest between the
Company and the Trustee in connection with such defense as reasonably determined
by the Trustee. The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify
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against any loss or liability to the extent incurred by the Trustee through its
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
-------- -------
affect the Trustee's rights as set forth in the preceding paragraph or Section
6.10.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------- ---
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
--------
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
In addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA (S) 310(a)(2). The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the Company, as
obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of TIA (S) 311 shall apply to the Company, as obligor on the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
----------------------------------------
This Indenture will be discharged and will cease to be of further
effect (except those obligations referred to in the penultimate paragraph of
this Section 8.01), and the Company and the Guarantors will be discharged from
their respective obligations under the Notes and the Guarantees, if all Notes
theretofore authenticated and delivered (other than mutilated, destroyed, lost
or stolen Notes which have been replaced and paid or Notes for whose payment
Euro Legal Tender has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Company and thereafter
repaid to the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Notes under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all Notes
not theretofore delivered to the Trustee for cancellation have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, Euro Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest,
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to pay and discharge the entire Indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if
any, and interest on the outstanding Notes to the date of such deposit (in
the case of Notes that have become due and payable) or to the stated
maturity or redemption date, as the case may be; provided that the Trustee
--------
shall have been irrevocably instructed to apply such Euro Legal Tender to
the payment of said principal, premium, if any, and interest with respect
to the Notes and, provided, further, that from and after the time of
-------- -------
deposit, the money deposited shall not be subject to the rights of holders
of Senior Debt pursuant to the provisions of Article Ten or to the rights
of holders of Guarantor Senior Debt pursuant to the provisions of Article
Thirteen;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the satisfaction and discharge of this Indenture have
been complied with. Such Opinion of Counsel shall also state that such
satisfaction and discharge does not result in a default under the New
Credit Agreement (if then in effect) or any other agreement or instrument
then known to such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Notes are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and each Guarantor's
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.03, be
deemed to have been discharged from their respective obligations with respect to
all outstanding Notes and the Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
----------------
Defeasance means that the Company and each Guarantor shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and the Guarantees, which shall thereafter be deemed to be "outstanding" only
for the purposes of Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all their other
respective obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and the Guarantees and any
amounts deposited under Section 8.03 hereof shall cease to be subject to any
obligations to, or the rights of, any holder of Senior Debt under Article Ten or
otherwise or any holder of Guarantor Senior Debt under Article Thirteen or
otherwise, except for the following provisions, which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (ii) the Company's obligations with respect to such Notes under
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Article Two and Section 4.02 hereof, (iii) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (iv) this Article Eight. Subject to compliance with
this Article Eight, the Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.03 hereof,
be released from their respective obligations under the covenants contained in
Sections 4.10 through 4.19 and Article Five hereof with respect to the
outstanding Notes and the Guarantees on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
-------------------
and the Guarantees shall thereafter be deemed not "outstanding" for the purposes
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes and the Guarantees shall not be deemed outstanding
for accounting purposes) and Holders of the Notes and the Guarantees and any
amounts deposited under Section 8.03 hereof shall cease to be subject to any
obligations to, or the rights of, any holder of Senior Debt under Article Ten or
otherwise or any holder of Guarantor Senior Debt under Article Thirteen or
otherwise. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes and the Guarantees, the Company and each Guarantor may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event or Default under Section 6.01(3) hereof, but, except as specified
above, the remainder of this Indenture, such Notes and the Guarantees shall be
unaffected thereby. In addition, upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (c), subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, Sections
6.01(3), 6.01(4) and 6.01(5) shall not constitute Events of Default.
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance.
-----------------------------------------------------
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Notes and the Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, Euro Legal Tender or U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on the Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be, provided that the Trustee shall have
--------
received an irrevocable written order from the Company instructing the
Trustee to apply such Euro Legal Tender or the proceeds of such U.S.
Government Obligations to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same
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amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence) or insofar as Sections
6.01(7) and 6.01(8) hereof are concerned, at any time in the period ending
on the 91st day after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with (except that the Opinion of Counsel
shall speak only to clauses (b), (c) and (e) above); and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Senior Debt of the Company other than the Notes,
and (ii) assuming no intervening bankruptcy or insolvency of the Company
between the date of deposit and the 91st day following the deposit and that
no Holder is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law.
SECTION 8.04. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust Euro Legal Tender or
Euro Government Obligations deposited with it pursuant to this Article Eight,
and shall apply the deposited Euro Legal Tender and the money from Euro
Government Obligations in accordance with this Indenture to the payment of
principal of, premium, if any, and interest on the Notes. The Trustee shall be
under no obligation to invest said Euro Legal Tender or Euro Government
Obligations except as it may agree with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Euro Legal Tender or Euro
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any Euro Legal Tender or Euro Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of
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independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.05. Repayment to the Company.
------------------------
Subject to Sections 8.01, 8.,02, 8.03, 8.04 and 8.06, the Trustee and
the Paying Agent shall promptly pay to the Company upon request any excess Euro
Legal Tender or Euro Government Obligations held by them at any time and
thereupon shall be relieved from all liability with respect to such money. The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal, premium, if any, or interest that
remains unclaimed for two years; provided that the Trustee or such Paying Agent,
--------
before being required to make any payment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York and, for so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, in a newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) or mail
to each Holder entitled to such money notice that such money remains unclaimed,
and that after a date specified therein which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company,
Noteholders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person.
SECTION 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any Euro Legal
Tender or Euro Government Obligations in accordance with Article Eight by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Article
Eight until such time as the Trustee or Paying Agent is permitted to apply all
such Euro Legal Tender or Euro Government Obligations in accordance with Article
Eight; provided that if the Company has made any payment of principal, premium,
--------
if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the Euro Legal Tender or Euro Government
Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture, the Notes or the Guarantees
without notice to or consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency; provided that
--------
such amendment or supplement does not, in the opinion of the Trustee,
adversely affect the rights of any Holder in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
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(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Noteholders or that does not adversely affect the rights of
any Noteholder;
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities; or
(7) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any
Noteholders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel
- --------
stating that such amendment or supplement complies with the provisions of this
Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, the Guarantors and the Trustee, together, with the written consent
of the Holder or Holders of at least a majority in aggregate principal amount of
the then outstanding Notes, may amend or supplement this Indenture, the Notes or
the Guarantees, without notice to any other Noteholders. Subject to Section
6.07, the Holder or Holders of a majority in aggregate principal amount of the
outstanding Notes may waive compliance by the Company or any Guarantor with any
provision of this Indenture, the Notes or the Guarantees without notice to any
other Noteholder. No amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, shall, without the consent of each Holder of each Note
affected thereby:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of, premium, if any,
and interest on such Holder's Notes on or after the due date thereof or to
bring suit to enforce such payment or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; or
(6) modify Articles Ten, Twelve or Thirteen or the definitions used in
Articles Ten, Twelve or Thirteen in a manner which adversely affects the
Holders of the Notes in any material respect;
provided, however, that any amendment the purpose of which is to permit the
- -------- -------
incurrence of additional Indebtedness under this Indenture shall not be
construed as adversely affecting the ranking of the Notes.
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(b) Without the consent of Holders of not less than 66 2/3% in
aggregate principal amount of Notes then outstanding, no such amendment,
supplement or waiver may amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control Offer in
the event of a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale or modify any of the provisions or definitions
with respect thereto.
(c) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Effect on Senior Debt.
---------------------
No amendment of this Indenture shall adversely affect the rights of
any holder of (i) Senior Debt under Article Ten of this Indenture or (ii)
Guarantor Senior Debt under Article Thirteen of this Indenture, without the
consent of such holder.
SECTION 9.04. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture, the Notes or
the Guarantees shall comply with the TIA as then in effect.
SECTION 9.05. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (6) of Section 9.02(a), in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
--------
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
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SECTION 9.06. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
SECTION 9.07. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
--------
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt.
---------------------------------
The Company covenants and agrees, and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article Ten; and the
Trustee and each Person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations on the
Senior Debt, whether outstanding on the Issue Date or thereafter incurred; that
the subordination is for the benefit of, and shall be enforceable directly by,
the holders of Senior Debt, and that each holder of Senior Debt whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02. No Payment on Notes in Certain Circumstances.
--------------------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character (other than payments by a trust previously
established pursuant to Article Eight) shall be made by the Company or any of
its Subsidiaries with respect to any Obligations on the Notes or to acquire any
of the Notes for cash or property.
In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instruments creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof, and if the Representative for the respective
issue of Designated Senior Debt gives written notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all events of default
--------------
have been cured or waived or have ceased to exist or the Trustee receives notice
from the Representative for the respective issue
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of Designated Senior Debt terminating the Blockage Period (as defined below),
during the 180 days after the delivery of such Default Notice (the "Blockage
--------
Period"), neither the Company nor any of its Subsidiaries shall (x) make any
- ------
payment of any kind or character (other than payments by a trust previously
established pursuant to the provisions described under Article Eight) with
respect to any Obligations on the Notes or (y) acquire any of the Notes for cash
or property. Notwithstanding anything herein to the contrary, in no event will a
Blockage Period extend beyond 180 days from the date of the commencement of the
Blockage Period, and only one such Blockage Period may be commenced within any
365 consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Debt shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Debt whether or
not within a period of 365 consecutive days, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days (it
being acknowledged that any subsequent action or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder.
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.
----------------------------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due upon all Senior Debt shall first be paid in
full in cash or Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, before any payment or distribution
of any kind or character is made on account of any Obligations on the Notes, or
for the acquisition of any of the Notes for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
of the Notes or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the respective amounts of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all Obligations on Senior Debt then due
have been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Senior Debt.
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(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt then due
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(c) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
SECTION 10.04. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
by the Trustee that a given payment would be prohibited by Section 10.02 or
10.03, the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of, and interest on, the Notes to
the Holders entitled thereto unless at least two Business Days prior to the date
upon which such payment would otherwise become due and payable a Trust Officer
shall have actually received the written notice provided for in the second
sentence of Section 10.02(a) or in Section 10.07 (provided that, notwithstanding
--------
the foregoing, such application shall otherwise be subject to the provisions of
the first sentence of Section 10.02(a) and Section 10.03). The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
SECTION 10.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt by or on behalf of the Company
or by or on behalf of the Holders by virtue of this Article Ten which otherwise
would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article Ten
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior Debt,
on the other hand.
SECTION 10.06. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or
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is intended to or shall affect the relative rights of the Holders and creditors
of the Company other than the holders of the Senior Debt, nor shall anything
herein or therein prevent the Holder of any Note or the Trustee on its behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
SECTION 10.07. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of such
holding of Senior Debt or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 10.08. Reliance on Judicial Order or Certificate of
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any insolvency,
bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization
or similar case or proceeding is pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
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Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Debt.
--------------------------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Notes and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Notes to the holders of the Senior Debt, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.
----------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid balance of its Notes and accrued
interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Notes. Nothing herein contained shall be deemed to authorize the
Trustee or the holders of Senior Debt or their Representative to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To Prevent Events of Default.
-------------------------------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
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SECTION 10.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 11.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana 46845
Facsimile No.: (219) 484-1110
Attention: Executive Vice President, Finance and Administration
if to the Trustee:
U.S. Bank Trust National Association
100 Wall Street
16th Floor
New York, New York 10005
Facsimile No: (212) 809-5459
Attention: Corporate Trust Administration
if to the Luxembourg Paying and Transfer Agent, if any:
Bankers Trust Luxembourg S.A.
P.O. Box 807
14, Boulevard F.D. Roosevelt
L-2450 Luxembourg
Facsimile No: 352-473-136
Attention: Corporate Trust Administration
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if to the Paying Agent:
Midland Bank plc
HSBC Issuer Services
Mariner House
Pepys Street
London EC3 N4DA
England
Facsimile No.: 44-171-260-5846
Attention: Corporate Trust Administration
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
faxed; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA (S) 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
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(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Noteholders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or Chicago, Illinois or at such place of payment are not required to be
open. If a payment date is a Legal Holiday at such place, payment may be made at
such place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
SECTION 11.08. Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such,
of the Company or of the Trustee shall not have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Noteholder by accepting a Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of the Notes.
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SECTION 11.11. Successors.
----------
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.12. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which will be deemed an original, and all of which together shall constitute one
and the same instrument. Delivery of an executed counterpart sent by telecopier
shall be effective as delivery of a manually executed counterpart.
SECTION 11.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 11.14. Judgment Currency.
-----------------
The Company hereby agrees to indemnify the Trustee, its directors, its
officers and each person, if any, who controls the Trustee within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any loss
incurred by such person as a result of any judgment or order being given or made
against the Company for any U.S. dollar amount due under this Agreement and such
judgment or order being expressed and paid in a currency (the "Judgment
--------
Currency") other than United States dollars and as a result of any variation as
- --------
between (i) the rate of exchange at which the United States dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order
and (ii) the spot rate of exchange in The City of New York at which such party
on the date of payment of such judgment or order is able to purchase United
States dollars with the amount of the Judgment Currency actually received by
such party. The foregoing indemnity shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid. The term "spot rate of
exchange" shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, United States dollars.
ARTICLE TWELVE
GUARANTEE
SECTION 12.01. Unconditional Guarantee.
-----------------------
Each Guarantor hereby unconditionally guarantees to each Holder of a
Note authenticated by the Trustee and to the Trustee and its successors and
assigns that: the principal of, premium thereon (if any) and interest on the
Notes will be promptly paid in full when due, subject to any applicable grace
period, whether at maturity, by acceleration or otherwise, and interest on the
overdue principal and interest on any overdue interest on the Notes and all
other obligations of the Company to the Holders or the Trustee hereunder or
under the Notes will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; subject, however, to the limitations set
forth in Section 12.03. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to
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enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of such Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that the Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture. If any
Holder or the Trustee is required by any court or otherwise to return to the
Company or any Guarantor or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or a Guarantor, any amount paid by
the Company or a Guarantor to the Trustee or such Holder, the Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between such Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six for
the purpose of the Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall become due and payable by such Guarantor for the purpose of the Guarantee.
SECTION 12.02. Severability.
------------
In case any provision of this Article Twelve 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.
SECTION 12.03. Limitation of Guarantor's Liability.
-----------------------------------
Each Guarantor, and by its acceptance hereof, each Holder and the
Trustee, hereby confirm that it is the intention of all such parties that the
Guarantee does not constitute a fraudulent transfer or conveyance for purposes
of Title 11 of the United States Code, as amended, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S. Federal
or state or other applicable law. To effectuate the foregoing intention, each
Holder and each Guarantor hereby irrevocably agree that the obligations of a
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor, and after giving effect to any collections from or payments made by
or on behalf of such Guarantor in respect of the obligations of such Guarantor
pursuant to Section 12.04, result in the obligations of such Guarantor not
constituting such a fraudulent transfer or conveyance.
SECTION 12.04. Execution of Guarantee.
----------------------
To further evidence the Guarantee to the Holders, each Guarantor
hereby agrees to execute a guarantee to be endorsed on and made a part of each
Note ordered to be authenticated and delivered by the Trustee. Each Guarantor
hereby agrees that its guarantee set forth in Section 12.01 shall remain in full
force and effect notwithstanding any failure to endorse on each Note a
guarantee. Each such guarantee shall be signed on behalf of each Guarantor by
its Chairman of the Board, its President or one of its Vice Presidents prior to
the authentication of the Note on which it is endorsed, and the delivery of such
Note by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of such guarantee on behalf of such Guarantor. Such
signature upon the guarantee may be a manual or facsimile signature of such
officer and may be imprinted or otherwise reproduced on the guarantee, and in
case such officer who shall have signed the guarantee shall cease to be such
officer before the Note on which such guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Note nevertheless may be authenticated and delivered or disposed of as though
the Person who signed the guarantee had not ceased to be such officer of such
Guarantor.
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SECTION 12.05. Subordination of Subrogation and Other Rights.
---------------------------------------------
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under the Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Notes in accordance with
the provisions provided therefor in this Indenture.
ARTICLE THIRTEEN
SUBORDINATION OF GUARANTEE
SECTION 13.01. Guarantee Subordinated to Guarantor Senior Debt.
-----------------------------------------------
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Notes, by its acceptance thereof, likewise covenants and agrees, that
such Guarantor's Guarantee shall be issued subject to the provisions of this
Article Thirteen; and the Trustee and each Person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that the payment of all Obligations on the Notes pursuant to such
Guarantee shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
or Cash Equivalents of all Obligations on the Guarantor Senior Debt of such
Guarantor, whether outstanding on the Issue Date or thereafter incurred; that
the subordination is for the benefit of, and shall be enforceable directly by,
the holders of Guarantor Senior Debt of such Guarantor, and that each holder of
Guarantor Senior Debt of such Guarantor whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired
Guarantor Senior Debt of such Guarantor in reliance upon the covenants and
provisions contained in this Indenture, the Notes and the Guarantees.
SECTION 13.02. No Payment in Certain Circumstances.
-----------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Guarantor Senior
Debt of any Guarantor, no payment of any kind or character (other than payments
by a trust previously established pursuant to Article Eight) shall be made by
such Guarantor with respect to any Obligations on such Guarantor's Guarantee or
to acquire any of the Notes for cash or property.
In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instruments creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof, and if the Representative for the respective
issue of Designated Senior Debt gives a Default Notice, then, unless and until
all events of default have been cured or waived or have ceased to exist or the
Trustee receives notice from the Representative for the respective issue of
Designated Senior Debt terminating the Blockage Period, during Blockage Period
no Guarantor shall (x) make any payment of any kind or character (other than
payments by a trust previously established pursuant to the provisions described
under Article Eight) with respect to any Obligations on the Guarantees or (y)
acquire any of the Notes for cash or property. Notwithstanding anything herein
to the contrary, in no event will a Blockage Period extend beyond 180 days from
the date of the commencement of the Blockage Period, and only one such Blockage
Period may be commenced within any 365 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any Blockage
Period with respect to the Designated Senior Debt shall be, or be made, the
basis for commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether
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or not within a period of 365 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days (it being acknowledged that any subsequent action or any breach of any
financial covenants for a period commencing after the date of commencement of
such Blockage Period that, in either case, would give rise to an event of
default pursuant to any provisions under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose).
(b) In the event that, notwithstanding the foregoing, any payment
from any Guarantor shall be received by the Trustee or any Holder when such
payment is prohibited by Section 13.02(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Guarantor Senior Debt of such Guarantor (pro rata to such holders on the basis
of the respective amount of Guarantor Senior Debt of such Guarantor held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Guarantor Senior Debt of such Guarantor, if any,
received from the holders of Guarantor Senior Debt of such Guarantor (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from such Guarantor and only amounts included in the
information provided to the Trustee shall be paid to the holders of Guarantor
Senior Debt of such Guarantor.
Nothing contained in this Article Thirteen shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 6.02 or to pursue any rights or
remedies hereunder.
SECTION 13.03. Payment Over of Proceeds upon Dissolution, Etc.
----------------------------------------------
(a) Upon any payment or distribution of assets of any Guarantor of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary, all of such Guarantor's Obligations due upon all Guarantor
Senior Debt of such Guarantor shall first be paid in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Guarantor Senior Debt of such Guarantor, before any payment or
distribution of any kind or character is made on account of any Obligations on
such Guarantor's Guarantees, or for the acquisition of any of the Notes by such
Guarantor, for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment or distribution of assets of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them, directly to the holders of Guarantor Senior Debt of such
Guarantor (pro rata to such holders on the basis of the respective amounts of
Guarantor Senior Debt of such Guarantor held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt of such Guarantor may have
been issued, as their respective interests may appear, for application to the
payment of Guarantor Senior Debt of such Guarantor remaining unpaid until all
Obligations on Guarantor Senior Debt of such Guarantor then due have been paid
in full in cash or Cash Equivalents after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Guarantor
Senior Debt of such Guarantor.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by Section 13.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Guarantor Senior Debt of such Guarantor (pro rata to such
holders on the basis of the respective amount of Guarantor Senior Debt of such
Guarantor held by such holders) or their respective Representatives, or to the
trustee or trustees under any in-
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denture pursuant to which any of such Guarantor Senior Debt of such Guarantor
may have been issued, as their respective interests may appear, for application
to the payment of Guarantor Senior Debt of such Guarantor then due remaining
unpaid until all such Guarantor Senior Debt of such Guarantor has been paid in
full in cash or Cash Equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Debt of such Guarantor.
(c) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of all or substantially all
of its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Guarantor
Senior Debt of such Guarantor shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, assume such Guarantor's obligations hereunder in accordance with
Article Five hereof.
SECTION 13.04. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article Thirteen or elsewhere in this
Indenture shall prevent (i) any Guarantor, except under the conditions described
in Sections 13.02 and 13.03, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes or payments on the
Guarantees of such Guarantor, or from depositing with the Trustee any moneys for
such payments, or (ii) in the absence of actual knowledge by the Trustee that a
given payment would be prohibited by Section 13.02 or 13.03, the application by
the Trustee of any moneys deposited with it for the purpose of making such
payments of principal of, and interest on, the Notes or payments on the
Guarantees of such Guarantor to the Holders entitled thereto unless at least two
Business Days prior to the date upon which such payment would otherwise become
due and payable a Trust Officer shall have actually received the written notice
provided for in the second sentence of Section 13.02(a) or in Section 13.07
(provided that, notwithstanding the foregoing, such application shall otherwise
--------
be subject to the provisions of the first sentence of Section 13.02(a) and
Section 13.03). Each Guarantor shall give prompt written notice to the Trustee
of any dissolution, winding-up, liquidation or reorganization of such Guarantor.
SECTION 13.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt of each Guarantor, the Holders of the Notes shall be
subrogated to the rights of the holders of Guarantor Senior Debt of such
Guarantor to receive payments or distributions of cash, property or securities
of such Guarantor applicable to the Guarantor Senior Debt of such Guarantor
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Guarantor
Senior Debt of such Guarantor by or on behalf of such Guarantor or by or on
behalf of the Holders by virtue of this Article Thirteen which otherwise would
have been made to the Holders shall, as between such Guarantor and the Holders
of the Notes, be deemed to be a payment by such Guarantor to or on account of
the Guarantor Senior Debt of such Guarantor, it being understood that the
provisions of this Article Thirteen are and are intended solely for the purpose
of defining the relative rights of the Holders of the Notes, on the one hand,
and the holders of the Guarantor Senior Debt of such Guarantor, on the other
hand.
SECTION 13.06. Obligations of Guarantors Unconditional.
---------------------------------------
Nothing contained in this Article Thirteen or elsewhere in this
Indenture, the Notes or the Guarantees is intended to or shall impair, as among
any Guarantor, its creditors other than the holders of Guarantor Senior Debt of
such Guarantor, and the Holders, the obligation of such Guarantor, which is
absolute and unconditional, to pay to the Holders the principal of and any
interest on the Notes and any payments due on the Guarantees as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of the Guarantor Senior Debt of such Guarantor,
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nor shall anything herein or therein prevent the Holder of any Note or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of such Guarantor received upon the
exercise of any such remedy.
SECTION 13.07. Notice to Trustee.
-----------------
Each Guarantor shall give prompt written notice to the Trustee of any
fact known to such Guarantor which would prohibit the making of any payment to
or by the Trustee in respect of the Notes or Guarantees pursuant to the
provisions of this Article Thirteen. Regardless of anything to the contrary
contained in this Article Thirteen or elsewhere in this Indenture, the Trustee
shall not be charged with knowledge of the existence of any default or event of
default with respect to any Guarantor Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing from such Guarantor, or from a
holder of Guarantor Senior Debt or a Representative therefor, together with
proof satisfactory to the Trustee of such holding of Guarantor Senior Debt or of
the authority of such Representative, and, prior to the receipt of any such
written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Article Thirteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amounts of Guarantor
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Thirteen, and if such evidence is not
furnished the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 13.08. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
-----------------
Upon any payment or distribution of assets of any Guarantor referred
to in this Article Thirteen, the Trustee, subject to the provisions of Article
Seven hereof, and the Holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee
for the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or the Holders of the Notes, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Guarantor Senior Debt of such Guarantor and
other Indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen.
SECTION 13.09. Trustee's Relation to Guarantor Senior Debt.
-------------------------------------------
The Trustee and any agent of any Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article Thirteen with respect to
any Guarantor Senior Debt which may at any time be held by it in its individual
or any other capacity to the same extent as any other holder of Guarantor Senior
Debt and nothing in this Indenture shall deprive the Trustee or any such agent
of any of its rights as such holder.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Thirteen, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Guarantor Senior Debt.
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Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.
SECTION 13.10. Subordination Rights Not Impaired by Acts or Omissions
of the Company, the Guarantors or Holders of Guarantor
------------------------------------------------------
Senior Debt.
------------
No right of any present or future holders of any Guarantor Senior Debt
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by Company or any Guarantor with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Thirteen or the
obligations hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt; and (iv) exercise or refrain
from exercising any rights against the Company, any Guarantor and any other
Person.
SECTION 13.11. Noteholders Authorize Trustee to Effectuate
Subordination of Guarantees.
---------------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Guarantor
Senior Debt and the Holders of Notes, the subordination provided in this Article
Thirteen, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of any Guarantor, the filing of a claim for the unpaid
balance of its Notes or any amounts due on the Guarantees and accrued interest
in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Guarantor Senior Debt
or their Representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes, the Guarantees or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 13.12. This Article Thirteen Not To Prevent Events of Default.
------------------------------------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Thirteen will not be
construed as preventing the occurrence of an Event of Default.
-74-
<PAGE>
SECTION 13.13. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article Thirteen will apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
[Signature Pages Follow]
------------------------
-75-
<PAGE>
SIGNATURES
----------
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
Issuer:
TOKHEIM CORPORATION
By: ________________________________
Name:
Title:
Guarantors:
ENVIROTRONIC SYSTEMS, INC.,
as Guarantor
By: ________________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.,
as Guarantor
By: ________________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.,
as Guarantor
By: ________________________________
Name:
Title:
S-1
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.,
as Guarantor
By: ________________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION,
as Guarantor
By: ________________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION,
as Guarantor
By: ________________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.,
as Guarantor
By: ________________________________
Name:
Title:
TOKHEIM RPS, LLC,
as Guarantor
By: ________________________________
Name:
Title:
S-2
<PAGE>
TOKHEIM SERVICES, LLC,
as Guarantor
By: ________________________________
Name:
Title:
Trustee:
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: ________________________________
Name:
Title:
S-3
<PAGE>
EXHIBIT A
---------
CUSIP No.:
TOKHEIM CORPORATION
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
No. Euro
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Euro 75,000,000 on August 1, 2008.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By: ________________________________
Name:
Title:
Dated: January 29, 1999 By: ________________________________
Name:
Title:
A-1
<PAGE>
Certificate of Authentication
This is one of the Euro denominated 11 3/8% Senior Subordinated Notes
due 2008 referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
Dated: January 29, 1999 By: ________________________________
Authorized Signatory
A-2
<PAGE>
(REVERSE OF SECURITY)
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
1. Interest. TOKHEIM CORPORATION, an Indiana corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Note at the
-------
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from January 29, 1999. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing August 1, 1999. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
The Notes are not entitled to the benefit of any mandatory sinking
fund.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. Payments of principal and premium, if any,
will be made (on presentation of such Notes if in certificated form) by credit
or transfer to a Euro account maintained by the Holder in the place of payment
specified by the Holder. Holders of Notes who receive payment in currency other
than Euro must make arrangements at their own expense. The Company shall deliver
such interest, principal or other payment to the Paying Agent no later than
12:00 noon London time on the Business Day prior to the date such payment is
due. However, the Company may pay principal and interest by its check payable in
Euro. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
--------------------------
Association, a national banking corporation (the "Trustee"), will act through
-------
MSS (Nominees) Limited, the nominee of Midland Bank plc, London branch, as
Paying Agent and Registrar in the Borough of Manhattan, The City of New York,
and, for so long as the Notes are listed on the Luxembourg Stock Exchange and
the rules of each Exchange shall require, Bankers Trust Luxembourg S.A. will act
as Paying Agent and Registrar in Luxembourg. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of January 29, 1999 (the "Indenture"), by and among the Company, the
---------
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 (the "Notes"). The Notes are limited in aggregate principal amount to
-----
Euro 75,000,000. The Notes include the Initial Notes and the Exchange Notes, as
defined below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
---
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
A-3
<PAGE>
5. Subordination. The Notes are unsecured obligations of the Company
-------------
and subordinated in right of payment, in the manner and to the extent set forth
in the Indenture, to the prior payment in full in cash or Cash Equivalents of
all Senior Debt of the Company, whether outstanding on the date of the Indenture
or thereafter created, incurred, assumed or guaranteed. Each Holder by his
acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. Guarantee. The obligations of the Company hereunder are
---------
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by
a Guarantor is subordinated in right of payment to all Guarantor Senior Debt of
such Guarantor to the same extent that the Notes are subordinated to Senior Debt
of the Company.
7. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption.
Year Percentage
---- ----------
2004.................................... 105.688%
2005.................................... 103.792%
2006.................................... 101.896%
2007 and thereafter..................... 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to February 1, 2002, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the
principal amount of the Notes originally issued at a redemption price equal to
111.375% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 55%
--------
of the initial aggregate principal amount of Notes originally issued remains
outstanding immediately after any such redemption.
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
8. Notice of Redemption. Notice of redemption under paragraphs 7(a)
--------------------
and 7(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the Company
will cause a copy of such notice to be published in a newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such redemption. Notes in
denominations larger than Euro 1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes
A-4
<PAGE>
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
9. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture. For so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such Exchange shall require, the Company will
cause a copy of such notice to be published in a newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such offer to purchase.
10. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement by and among the Company, the Guarantors and the Initial Purchasers,
the Company will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for the
Company's Series B 11 3/8% Senior Subordinated Notes due 2008 (the "Exchange
--------
Notes"), which have been registered under the Securities Act, in like principal
- -----
amount and having terms identical in all material respects to the Initial Notes.
The Holders of the Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
11. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of Euro 1,000 and integral multiples of
Euro 1,000. A Holder shall register the transfer of or exchange Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
12. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
13. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
14. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee Euro Legal Tender or Euro Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
15. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
A-5
<PAGE>
16. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting Subsidiaries, merge or consolidate with any other Person, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
17. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
18. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
19. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
20. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
21. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
-------------
THIS NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
23. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
A-6
<PAGE>
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana 46845, Attn: Executive Vice President, Finance and
Administration.
A-7
<PAGE>
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guaranty being referred to herein as the "Guarantee") the due and punctual
---------
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Twelve of the Indenture.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Guarantor Senior Debt of each Guarantor, to the extent and in the
manner provided in Article Twelve and Article Thirteen of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
ENVIROTRONIC SYSTEMS, INC.
By: _____________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.
By: _____________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.
By: _____________________________
Name:
Title:
A-8
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.
By: _______________________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION
By: _______________________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION.
By: _______________________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.
By: _______________________________________
Name:
Title:
TOKHEIM RPS, LLC
By: _______________________________________
Name:
Title:
TOKHEIM SERVICES, LLC
By: _______________________________________
Name:
Title:
A-9
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _______________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:____________________ Signed: _________________________________________
(Sign exactly as your name appears on
the other side of this Note)
Medallion Guarantee: _________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
--------------
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) January 29, 2001, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
A-10
<PAGE>
Check One
---------
(1) [_] to the Company or a subsidiary thereof; or
(2) [_] pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) [_] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) [_] outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) [_] pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(6) [_] pursuant to an effective registration statement under the Securities
Act; or
(7) [_] pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4), (5) or (7) is checked,
--------
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
A-11
<PAGE>
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date: _______________________ Signed: ________________________________________
(Sign exactly as your name appears on
the other side of this Security)
Medallion Guarantee: _______________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: _______________________ ________________________________________
NOTICE: To be executed by an executive
officer
A-12
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [_]
Section 4.16 [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
Euro __________________
Date: ________________________ _____________________________________________
NOTICE: The signature on this assignment
must correspond with the name as it appears
upon the face of the within Note in every
particular without alteration or enlargement
or any change whatsoever and be guaranteed by
the endorser's bank or broker.
Medallion Guarantee: ____________________________
A-13
<PAGE>
EXHIBIT B
---------
ISIN No.:
TOKHEIM CORPORATION
SERIES B 11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
No. Euro
TOKHEIM CORPORATION, an Indiana corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of Euro 75,000,000 August 1, 2008.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TOKHEIM CORPORATION
By: ______________________________________________
Name:
Title:
Dated: By: ______________________________________________
Name:
Title:
B-1
<PAGE>
Certificate of Authentication
This is one of the Series B Euro denominated 11 3/8% Senior
Subordinated Notes due 2008 referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
Dated: January 29, 1999 By: ______________________________________________
Authorized Signatory
B-2
<PAGE>
(REVERSE OF SECURITY)
11 3/8% SENIOR SUBORDINATED NOTE DUE 2008
1. Interest. TOKHEIM CORPORATION, an Indiana
--------
corporation (the "Company"), promises to pay interest on the principal amount of
-------
this Note at the rate per annum shown above. Interest on the Notes will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from January 29, 1999. The Company will pay interest semi-annually
in arrears on each Interest Payment Date, commencing August 1, 1999. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes plus 2%
per annum.
The Notes are not entitled to the benefit of any mandatory sinking
fund.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. Payments of principal and premium, if any,
will be made (on presentation of such Notes if in certificated form) by credit
or transfer to a Euro account maintained by the Holder in the place of payment
specified by the Holder, Holders of Notes who receive payment in currency other
than the Euro must make arrangements at their own expense. The Company shall
deliver such interest, principal or other payment to the Paying Agent no later
than 12:00 noon London time on the Business Day prior to the date such payment
is due. However, the Company may pay principal and interest by its check payable
in Euro. The Company may deliver any such interest payment to the Paying Agent
or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
--------------------------
Association, a New York banking corporation (the "Trustee"), will act through
-------
MSS (Nominees) Limited, the nominee of Midland Bank plc, London branch, as
Paying Agent and Registrar in London, England, and, for so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such exchange shall
require, Bankers Trust Luxembourg S.A., will act as Paying Agent and Registrar
in Luxembourg. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of January 29, 1999 (the "Indenture"), by and among the Company, the
---------
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 (the "Initial Notes"). The Notes are limited in aggregate principal
-------------
amount to Euro 75,000,000. The Notes include the Initial Notes and the Exchange
Notes, as defined below, issued in exchange for the Initial Notes pursuant to
the Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
---
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Company.
B-3
<PAGE>
5. Subordination. The Notes are unsecured obligations of the Company
-------------
subordinated in right of payment, in the manner and to the extent set forth in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Senior Debt of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed. Each Holder by his
acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. Guarantee. The obligations of the Company hereunder are
---------
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by a
Guarantor is subordinated in right of payment to all Guarantor Senior Debt of
such Guarantor to the same extent that the Notes are subordinated to Senior Debt
of the Company.
7. Redemption.
----------
(a) Optional Redemption. The Notes will be redeemable, at the
-------------------
Company's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
Year Percentage
---- ----------
2004......................................... 105.688%
2005......................................... 103.792%
2006......................................... 101.896%
2007 and thereafter.......................... 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to February 1, 2002, the Company may, at its
option, use the net cash proceeds of one or more Public Equity Offerings (as
defined in the Indenture) to redeem up to an aggregate of 35% of the principal
amount of the Notes originally issued at a redemption price equal to 111.375% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the date of redemption; provided that at least 55%
--------
of the initial aggregate principal amount of Notes originally issued remains
outstanding immediately after any such redemption:
In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
8. Notice of Redemption. Notice of redemption under paragraphs 7(a)
--------------------
and 7(b) of this Note will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. For so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange shall require, the
Company will cause a copy of such Notice to be published in a newspaper of
general circulation (which is expected to be the Luxemburger Wort) and the
Luxembourg Stock Exchange will be advised of such redemption. Notes in
denominations larger than Euro 1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes
B-4
<PAGE>
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
9. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture. For so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange shall require, the Company will
cause a copy of such Notice to be published in a newspaper of general
circulation (which is expected to be the Luxemburger Wort) and the Luxembourg
Stock Exchange will be advised of such offer to purchase.
10. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of Euro 1,000 and integral multiples of
Euro 1,000. A Holder shall register the transfer of or exchange Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee Euro Legal Tender or Euro Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting Subsidiaries, merge or consolidate with any other Person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
B-5
<PAGE>
17. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
20. Authentication. This Note shall not be valid until the Trustee
--------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
-------------
THIS NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
22. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Tokheim Corporation, 10501 Corporate
Drive, Fort Wayne, Indiana 46845, Attn: Executive Vice President, Finance and
Administration.
B-6
<PAGE>
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guarantee being referred to herein as the "Guarantee") the due and punctual
---------
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Twelve of the Indenture.
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth, and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Guarantor Senior Debt of each Guarantor, to the extent and in the
manner provided in Article Twelve and Article Thirteen of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
ENVIROTRONIC SYSTEMS, INC.
By: ______________________________________________
Name:
Title:
GASBOY INTERNATIONAL, INC.
By: ______________________________________________
Name:
Title:
MANAGEMENT SOLUTIONS, INC.
By: ______________________________________________
Name:
Title:
B-7
<PAGE>
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.
By: ______________________________________________
Name:
Title:
TOKHEIM AUTOMATION CORPORATION
By: ______________________________________________
Name:
Title:
TOKHEIM EQUIPMENT CORPORATION
By: ______________________________________________
Name:
Title:
TOKHEIM INVESTMENT CORP.
By: ______________________________________________
Name:
Title:
TOKHEIM RPS, LLC
By: ______________________________________________
Name:
Title:
TOKHEIM SERVICES, LLC
By: ______________________________________________
Name:
Title:
B-8
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _______________________________________________________,
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _________________________ Signed: ____________________________________
(Sign exactly as your name appears
on the other side of this Note)
Medallion Guarantee: ____________________________
B-9
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [_]
Section 4.16 [_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
Euro ___________________
Date: _______________________ ______________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon
the face of the within Note in every
particular without alteration or enlargement
or any change whatsoever and be guaranteed by
the endorser's bank or broker.
Medallion Guarantee: ____________________________
B-10
<PAGE>
EXHIBIT C
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11 3/8%Senior Subordinated Notes due 2008
(the "Notes") Tokheim Corporation
-----------------------------------------
This Certificate relates to Euro_______ principal amount of Notes held
in the form of* ___ a beneficial interest in a Global Note or* _______ Physical
Notes by ______ (the "Transferor").
----------
The Transferor:*
[_] has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Note held by the Depository a
Physical Note or Physical Notes in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or
[_] has requested by written order that the Registrar exchange or
register the transfer of a Physical Note or Physical Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Notes does not require registration under the Securities Act of
1933, as amended (the "Act"), because*:
---
[_] Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
[_] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[_] Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit D to the Indenture.
- ---------
[_] Such Note is being transferred in reliance on Regulation S under
the Act. [An Opinion of Counsel to the effect that such transfer does not
require registration under the Act accompanies this certification.]
[_] Such Note is being transferred in reliance on Rule 144 under the
Act. [An Opinion of Counsel to the effect that such transfer does not require
registration under the Act accompanies this certification.]
[_] Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of Counsel to the effect that such transfer
does not require registration under the Act accompanies this certification.]
________________________________
[INSERT NAME OF TRANSFEROR]
By: ____________________________
[Authorized Signatory]
Date: ____________________
*Check applicable box.
C-1
<PAGE>
EXHIBIT D
---------
Form of Transferee Letter of Representation
-------------------------------------------
Attention: Corporate Trust Division
Ladies and Gentlemen:
This certificate is delivered to request a transfer of Euro________
principal amount of the 11 3/8% Senior Subordinated Notes due 2008 of Tokheim
Corporation (the "Company") and any guarantee thereof (the "Notes"). Upon
------- -----
transfer, the Notes would be registered in the name of the new beneficial owner
as follows:
Name: ____________________________
Address: _________________________
Taxpayer ID Number: ______________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
----------
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and we
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes to offer, sell or otherwise
transfer such Notes prior to the date which is two years after the later of the
date of original issue and the last date on which the Company or any affiliate
of the Company was the owner of such Notes (or any predecessor thereto) (the
"Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to
-----------------------------------
a registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
---
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000, (e) in an offshore transaction in accordance with Regulation S under
the Securities Act (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Note if the Note is not in book-
entry form), and, if such transfer is being effected by certain transferors
prior to the expiration of the "40-day distribution compliance period" (within
the meaning of Rule 903(b)(2) of Regulation S under the Securities Act), a
certificate that may be obtained from the Trustee is delivered by the
transferee, or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
D-1
<PAGE>
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (d) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. The Company and the Trustee reserve the right
prior to any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Notes pursuant to clause (d) or (e) above to require the
delivery of an opinion of counsel, certificates and/or other information
satisfactory to the Company and the Trustee.
Dated: ______________________ TRANSFEREE:
By: ________________________________
D-2
<PAGE>
EXHIBIT E
---------
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
Attention: Corporate Trust Administration
Re: 11 3/8% Senior Subordinated Notes due 2008
(the "Notes") Tokheim Corporation
------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of Euro ____________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
--------------
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(a) or Rule 904(a) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________
E-1
<PAGE>
Exhibit 5.1
-----------
April 28, 1999
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, IN 46845
Re: Tokheim Corporation
Registration Statement on Form S-4
Ladies and Gentlemen:
I am Vice President, Secretary and General Counsel of Tokheim
Corporation, an Indiana corporation (the "Company"), and its direct and indirect
wholly-owned subsidiaries, Envirotronic Systems, Inc., an Indiana corporation,
Gasboy International, Inc., a Pennsylvania corporation, Management Solutions,
Inc., a Colorado corporation, Sunbelt Hose & Petroleum Equipment, Inc., a
Georgia corporation, Tokheim Services LLC, an Indiana limited liability company,
Tokheim Equipment Corporation, a Delaware corporation, Tokheim Automation
Corporation, a Texas corporation, Tokheim Investment Corp., a Texas corporation,
and Tokheim RPS, LLC, a Delaware limited liability company (collectively, the
"Subsidiary Guarantors"). In my capacity as General Counsel, I am authorized to
furnish opinions on behalf of the Company and the Subsidiary Guarantors that may
be required in connection with various matters, including the Company's offer to
exchange (the "Exchange Offer") up to $123,000,000 aggregate principal amount of
its outstanding Series A 11 3/8% Senior Subordinated Notes due 2008 (the
"Outstanding Dollar Notes") and related subsidiary guarantees, for its Series B
11 3/8% Senior Subordinated Exchange Notes due 2008 (the "Dollar Exchange
Notes") and related subsidiary guarantees (the "Dollar Subsidiary Guarantees"),
and up to Euro 75,000,000 aggregate principal amount of its outstanding Series A
11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Euro Notes," and,
together with the Outstanding Dollar Notes, the "Outstanding Notes") and related
subsidiary guarantees, for its Series B 11 3/8% Senior Subordinated Exchange
Notes due 2008 (the "Euro Exchange Notes," and, together with the Dollar
Exchange Notes, the "Exchange Notes") and related subsidiary guarantees (the
"Euro Subsidiary Guarantees" and, together with the Dollar Guarantees, the
"Subsidiary Guarantees"). The Dollar Exchange Notes and Dollar Subsidiary
Guarantees will be issued under a Dollar Note Indenture, dated as of January 29,
1999,
<PAGE>
Tokheim Corporation
April 28, 1999
Page 2
among the Company, the Subsidiary Guarantors and U.S. Bank Trust National
Association, as trustee. The Euro Exchange Notes and Euro Subsidiary Guarantees
will be issued under a Euro Note Indenture (together with the Dollar Note
Indenture, the "Indentures"), dated as of January 29, 1999, among the Company,
the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of the following
documents: (i) the Registration Statement on Form S-4 (File No. 333- ) as filed
with the Securities and Exchange Commission (the "Commission") on the date
hereof (the "Registration Statement"); (ii) copies of the Indentures; (iii) the
forms of the Exchange Notes and Subsidiary Guarantees and specimen certificates
thereof; and (iv) such other documents, certificates and records as I have
deemed necessary or appropriate as the basis for the opinions set forth herein.
I have also examined originals or copies, certified or otherwise identified to
my satisfaction, of such records of the Company and the Subsidiary Guarantors
and such agreements, certificates of public officials, certificates of officers
or other representatives of the Company, the Subsidiary Guarantors and others,
and such other documents, certificates and records, all as I have deemed
necessary or appropriate as a basis for the opinions set forth herein,
including, without limitation, (i) the charter and bylaws (or similar
organization documents), each as amended to date, of the Company and each
Subsidiary Guarantor and (ii) certain resolutions adopted by the Board of
Directors or Managers, as applicable, of the Company and the Subsidiary
Guarantors.
For purposes of my opinion, I have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified, facsimile, conformed or photostatic
copies and the authenticity of the originals of such copies. As to any facts
material to the opinions expressed herein which I did not
<PAGE>
Tokheim Corporation
April 28, 1999
Page 3
independently establish or verify, I have relied upon the statements and
representations of officers and other representatives of the Company and others.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that:
1. When (i) the Registration Statement becomes effective and the
Indentures have been qualified under the Trust Indenture Act of 1939, as amended
(the "TIA"), and (ii) the Exchange Notes have been duly executed and
authenticated in accordance with the terms of the Indentures and delivered in
exchange for the Outstanding Notes in accordance with the Exchange Offer, the
Exchange Notes will constitute valid and binding obligations of the Company,
entitled to the benefits of the Indentures and enforceable against the Company
in accordance with their terms, except that (a) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) or the discretion of the court before which any proceeding therefor may be
brought, and (b) the enforceability of the indemnification and contribution
provisions thereof may be limited by applicable law or public policy.
2. When (i) the Registration Statement becomes effective and the
Indentures have been qualified under the TIA and (ii) the Exchange Notes have
been duly executed and authenticated and the Subsidiary Guarantees endorsed
thereon have been executed by the Subsidiary Guarantors in accordance with the
terms of the Indentures and delivered in exchange for the Outstanding Notes in
accordance with the Exchange Offer, the Subsidiary Guarantees will be valid and
binding obligations of the Subsidiary Guarantors entitled to the benefits of the
Indentures and enforceable against the Subsidiary Guarantors in accordance with
their terms, except that (a) the enforcement thereof may be subject to (i)
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the use in this Registration Statement on Form S-4 of
Tokheim Corporation of our report dated February 19, 1999, relating to the
financial statements of Tokheim Corporation and Subsidiaries, which appear in
such Registration Statement. We also consent to the reference to us under the
heading "Independent Accountants" in such Registration Statement.
PricewaterhouseCoopers LLP
Fort Wayne, Indiana
June 11, 1999
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the use in this Registration Statement on Form S-4 of
Tokheim Corporation of our report dated July 6, 1998 relating to the financial
statements of Retail Petroleum Systems, which appear in such Registration
Statement. We also consent to the reference to us under the heading "Independent
Accountants" in such Registration Statement.
PricewaterhouseCoopers
Paris, France
June 11, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TOKHEIM CORPORATION
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Dollar Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Dollar Notes due 2008
Pursuant to the Prospectus dated , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS
EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
The Exchange Agent for The Exchange Offer Is:
U.S. Bank Trust National Association
Facsimile Transmissions
By Registered or Certified Mail:
(Eligible Guarantor Institutions Only)
U.S. Bank Trust National Association
P.O. Box 64485 Attn: Specialized Finance
St. Paul, Minnesota 55164-9549 (651) 244-1537
Attention: Specialized Finance
To Confirm by Telephone
By Hand or Overnight Delivery or for Information Call:
U.S. Bank Trust National Association (651) 244-4512
Fourth Floor--Bond Drop Window
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Specialized Finance
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
they have in the Prospectus (as defined below).
This Letter of Transmittal is to be completed either if (a) certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-
entry confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at The Depository Trust Company ("DTC"), as well as
this Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required
<PAGE>
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a confirmation of a book-
entry transfer of Outstanding Notes into the Exchange Agent's account at DTC.
The term "Agent's Message" means a message, transmitted by DTC to and received
by the Exchange Agent and forming a part of a book-entry confirmation, which
states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by this Letter of Transmittal and that Tokheim Corporation,
an Indiana corporation (the "Company"), may enforce this Letter of Transmittal
against such participant.
Holders (as defined below) of Outstanding Notes whose certificates (the
"Certificates") for such Outstanding Notes are not immediately available or who
cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the
Prospectus) or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Outstanding Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
DESCRIPTION OF OUTSTANDING NOTES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
If blank,
please
print name
and
address of
registered Outstanding Notes
Holder(s) (Attach additional list if necessary)
- ---------------------------------------------------------------
<S> <C> <C> <C>
Principal
Aggregate Amount of
Principal Outstanding
Amount of Notes Tendered
Certificate Outstanding (if less than
Number(s)* Notes all)**
---------------------
---------------------
---------------------
---------------------
---------------------
Total
- ---------------------------------------------------------------
</TABLE>
*Need not be completed by book-entry Holders.
** Outstanding Notes may be tendered in whole or in part in multiples of
$1,000. All Outstanding Notes held shall be deemed tendered unless a
lesser number is specified in this column. See Instruction 4.
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
DTC Account Number Transaction Code Number
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 1):
Name(s) of Registered Holder(s)
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution ______________________________________________
DTC Account Number Transaction Code Number
3
<PAGE>
[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING
NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: __________________________________________________________________________
Address: _______________________________________________________________________
4
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation
(the "Company"), the above described principal amount of the Company's Series A
11 3/8% Senior Subordinated Dollar Notes due 2008 (the "Outstanding Notes") in
exchange for an equivalent amount of the Company's Series B 11 3/8% Senior
Subordinated Dollar Notes due 2008 (the "Exchange Notes") which have been
registered under the Securities Act of 1933 (the "Securities Act"), upon the
terms and subject to the conditions set forth in the Prospectus dated
, 1999 (as the same may be amended or supplemented from
time to time, the "Prospectus"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Prospectus, constitute
the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) subject only
to the right of withdrawal described in the Prospectus, to (i) deliver
Certificates for Outstanding Notes to the Company together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of
the Series B Notes to be issued in exchange for such Outstanding Notes, (ii)
present Certificates for such Outstanding Notes for transfer, and to transfer
the Outstanding Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Outstanding Notes, all in accordance with the
terms and conditions of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the
Outstanding Notes tendered hereby and that, when the same are accepted for
exchange, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Outstanding Notes tendered hereby are not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be
necessary or desirable to complete the exchange, assignment and transfer of the
Outstanding Notes tendered hereby, and the undersigned will comply with its
obligations under the Dollar Registration Rights Agreement. The undersigned has
read and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Outstanding
Notes. The Certificate number(s) and the Outstanding Notes that the undersigned
wishes to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at DTC), without expense to the
tendering Holder, promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions attached
hereto will, upon the Company's acceptance for exchange of such tendered
Outstanding
5
<PAGE>
Notes, constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please deliver Exchange Notes to the undersigned at the
address shown below the undersigned's signature.
By tendering Notes and executing this Letter of Transmittal or effecting
delivery of an Agent's Message in lieu thereof, the undersigned hereby
represents and agrees that (i) the undersigned is not an "affiliate" of the
Company, (ii) any Exchange Notes to be received by the undersigned are being
acquired in the ordinary course of its business, (iii) the undersigned has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of Exchange Notes to be received in
the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Notes. The Company
may require the undersigned, as a condition to the undersigned's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" within
the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the
undersigned holds the Outstanding Notes to be exchanged in the Exchange Offer.
By tendering Outstanding Notes pursuant to the Exchange Offer and executing
this Letter of Transmittal or effecting delivery of an Agent's Message in lieu
thereof, a Holder of Outstanding Notes which is a broker-dealer represents and
agrees, consistent with certain interpretive letters issued by the Staff of the
Division of Corporation Finance of the Securities and Exchange Commission to
third parties, that such Outstanding Notes were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities, and it will deliver a Prospectus (as amended or supplemented from
time to time) meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes (provided that, by so acknowledging and by
delivering a Prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act).
The Company has agreed that, subject to the provisions of the Dollar
Registration Rights Agreement, the Prospectus, as it may be amended or
supplemented from time to time, may be used by a participating broker-dealer
(as defined below) in connection with resales of Exchange Notes received in
exchange for Outstanding Notes, where such Outstanding Notes were acquired by
such participating broker-dealer for its own account as a result of market-
making activities or other trading activities, for a period ending 180 days
after the Expiration Date (subject to extension under certain limited
circumstances described in the Prospectus). In that regard, each broker-dealer
who acquired Outstanding Notes for its own account as a result of market-making
or other trading activities (a "participating broker-dealer"), by tendering
such Outstanding Notes and executing this Letter of Transmittal or effecting
delivery of an Agent's Message in lieu thereof, agrees that, upon receipt of
notice from the Company of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in the
Prospectus untrue in any material respect or which causes the Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference therein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain
other events specified in the Dollar Registration Rights Agreement, such
participating broker-dealer will suspend the sale of Exchange Notes pursuant to
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to the participating broker-dealer or the Company
6
<PAGE>
has given notice that the sale of the Exchange Notes may be resumed, as the
case may be. If the Company gives such notice to suspend the sale of the
Exchange Notes, it shall extend the 180-day period referred to above during
which participating broker-dealers are entitled to use the Prospectus in
connection with the resale of Exchange Notes by the number of days during the
period from and including the date of the giving of such notice to and
including the date when participating broker-dealers shall have received copies
of the supplemented or amended Prospectus necessary to permit resales of the
Exchange Notes or to and including the date on which the Company has given
notice that the sale of Exchange Notes may be resumed, as the case may be.
As a result, a participating broker-dealer who intends to use the Prospectus
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the Expiration Date, that it
is a participating broker-dealer. Such notice may be given in the space
provided above or may be delivered to the Exchange Agent at the address set
forth in the Prospectus under "The Exchange Offer--Exchange Agents."
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
The undersigned, by completing the box entitled "Description of Outstanding
Notes" above and signing this letter, will be deemed to have tendered the
Outstanding Notes as set forth in such box.
7
<PAGE>
IMPORTANT
HOLDERS: SIGN HERE
(Please Complete Substitute Form W-9 herein)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Signature(s) of Holder(s)
Date: _______________________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Certificate(s) for the Outstanding Notes tendered or on a security
position listing or by person(s) authorized to become the registered
holder(s) by certificates and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, please provide the following information and see
Instruction 2 below.)
Name(s): __________________________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Please Print)
Capacity (full title): ____________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Address: __________________________________________________________________
---------------------------------------------------------------------------
Area Code and Telephone No.: ______________________________________________
Taxpayer Identification or Social Security No.: ___________________________
(See Substitute Form W-9 herein)
GUARANTEE OF SIGNATURE(S)
(See Instruction 2 below)
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
---------------------------------------------------------------------------
(Please Type or Print)
Title: ____________________________________________________________________
Name of Firm: _____________________________________________________________
Address: __________________________________________________________________
---------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.: ______________________________________________
Date: _______________________________
8
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(Signature Guarantee Required--See (Signature Guarantee Required--See
Instruction 2) Instruction 2)
TO BE COMPLETED ONLY if Exchange TO BE COMPLETED ONLY if Exchange
Notes or Outstanding Notes not Notes or Outstanding Notes not
tendered are to be issued in the tendered are to be sent to someone
name of someone other than the other than the registered Holder
registered Holder of the of the Outstanding Notes whose
Outstanding Notes whose name(s) name(s) appear(s) above, or such
appear(s) above. registered Holder at an address
other than that shown above.
[_] Outstanding Notes not tendered
to:
[_] Outstanding Notes not tendered
to:
[_] Exchange Notes to:
Name ______________________________ [_] Exchange Notes to:
(Please Print) Name ______________________________
Address ___________________________ (Please Print)
__________________________________ Address ___________________________
__________________________________ __________________________________
(Include Zip Code) __________________________________
__________________________________ (Include Zip Code)
Tax Identification or Social
Security Number
9
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus
and an Agent's Message is not delivered. Certificates, or timely confirmation
of a book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at DTC, as well as this Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at its address set forth herein on or prior to
the Expiration Date. Tenders by book-entry transfer may also be made by
delivering an Agent's Message in lieu thereof. Outstanding Notes may be
tendered in whole or in part in integral multiples of $1,000.
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available or (ii) who cannot deliver their
Outstanding Notes, this Letter of Transmittal and all other required documents
to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot
complete the procedures for delivery by book-entry transfer on a timely basis,
may tender their Outstanding Notes by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes"
in the Prospectus. Pursuant to such procedures: (i) such tender must be made by
or through an Eligible Guarantor Institution (as defined below); (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, must be received by
the Exchange Agent on or prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation) representing all tendered
Outstanding Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer-- Procedures for
Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Guarantor Institution in the form set forth in such Notice of
Guaranteed Delivery. For Outstanding Notes to be properly tendered pursuant to
the guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Guarantor Institution" means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
institution," including (as such terms are defined therein) (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association.
The method of delivery of Certificates, this Letter of Transmittal and all
other required documents is at the option and sole risk of the tendering
Holder, and the delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, registered mail with return receipt
requested, properly insured, or overnight delivery service is recommended. In
all cases, sufficient time should be allowed to ensure timely delivery.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if:
i. this Letter of Transmittal is signed by the registered Holder (which
term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the
10
<PAGE>
owner of the Outstanding Notes (the "Holder"')) of Outstanding Notes
tendered herewith, unless such Holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or
ii. such Outstanding Notes are tendered for the account of a firm that is
an Eligible Guarantor Institution.
In all other cases, an Eligible Guarantor Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description
of Outstanding Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Outstanding Notes and any other required information should
be listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will
be accepted only in integral multiples of $1,000. If less than all the
Outstanding Notes evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Outstanding Notes which are to be tendered in
the box entitled "Principal Amount of Outstanding Notes Tendered." In such
case, new Certificate(s) for the remainder of the Outstanding Notes that were
evidenced by your old Certificate(s) will only be sent to the Holder of the
Outstanding Note, promptly after the Expiration Date. All Outstanding Notes
represented by Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in
the Prospectus on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Outstanding
Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to
be withdrawn, and (if Certificates for Outstanding Notes have been tendered)
the name of the registered Holder of the Outstanding Notes as set forth on the
Certificate for the Outstanding Notes, if different from that of the person who
tendered such Original Notes. If Certificates for the Outstanding Notes have
been delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Outstanding Notes, the tendering
Holder must submit the serial numbers shown on the particular Certificates for
the Outstanding Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Guarantor Institution, except in
the case of Outstanding Notes tendered for the account of an Eligible Guarantor
Institution. If Outstanding Notes have been tendered pursuant to the procedures
for book-entry transfer set forth in the Prospectus under "The Exchange Offer--
Procedures for Tendering Outstanding Notes," the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of Outstanding Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Exchange Offer--Procedures
for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or
any other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Outstanding Notes which have been tendered
but which are withdrawn will be returned to the Holder thereof without cost to
such Holder promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered Holder(s) of the Outstanding
Notes tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
11
<PAGE>
If any of Outstanding Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and, unless waived by the Company,
must submit proper evidence satisfactory to the Company, in its sole
discretion, of each such person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Outstanding Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the registered Holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Guarantor Institution.
If this Letter of Transmittal is signed by a person other than the registered
owner(s) of the Outstanding Notes listed, the Certificates must be endorsed or
accompanied by appropriate bond powers, signed exactly as the name or names of
the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee for the Outstanding Notes may require in
accordance with the restrictions on transfer applicable to the Outstanding
Notes. Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Guarantor Institution.
6. Special Issuance and Delivery Instructions. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Notes not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. Irregularities. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the
Exchange Offer set forth in the Prospectus under "The Exchange Offer--
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Outstanding Notes of any particular Holder whether or not similar
conditions or irregularities are waived in the case of other Holders. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Outstanding Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. The Company, any affiliates or assigns of the Company, the
Exchange Agent, or any other person shall not be under any duty to give
notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
12
<PAGE>
9. 31% Backup Withholding; Substitute Form W-9. Under the U.S. Federal income
tax law, a Holder whose tendered Outstanding Notes are accepted for exchange is
required to provide the Exchange Agent with such Holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the Holder or other payee to a $50 penalty. In addition,
payments to such Holders or other payees with respect to Outstanding Notes
exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the Holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-
9. If the Holder furnishes the Exchange Agent with its TIN within 60 days after
the date of the Substitute Form W-9, the amounts retained during the 60-day
period will be remitted to the Holder and no further amounts shall be retained
or withheld from payments made to the Holder thereafter. If, however, the
Holder has not provided the Exchange Agent with its TIN within such 60-day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes
are registered in more than one name or are not in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to the backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. Waiver of Conditions. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
11. No Conditional Tenders. No alternative, conditional or contingent tenders
will be accepted. All tendering Holders of Outstanding Notes, by execution of
this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of Outstanding Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of
Outstanding Notes nor shall any of them incur any liability for failure to give
any such notice.
12. Lost, Destroyed or Stolen Certificates. If any Certificate(s)
representing Outstanding Notes have been lost, destroyed or stolen, the Holder
should promptly notify the Exchange Agent. The Holder will then be
13
<PAGE>
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
13. Security Transfer Taxes. Holders who tender their Outstanding Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Outstanding Notes in connection with the Exchange
Offer, then the amount of any such transfer tax (whether imposed on the
registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
14
<PAGE>
PAYER'S NAME: U.S. BANK TRUST NATIONAL ASSOCIATION
Part I--Taxpayer
Identification Number-- -------------------------
For all accounts, enter Social Security Number
taxpayer identification
number in the box at
right. (For most
individuals, this is
your social security
number. If you do not
have a number, see
Obtaining a Number in
the enclosed
Guidelines.) Certify by
signing and dating
below.
SUBSTITUTE
Form W-9 OR
Department of the -------------------------
Treasury Employer Identification
Internal Revenue Number
Service
(If awaiting TIN, write
"Applied For")
- --------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
-------------------------------------------------------
Part II:--For Payees exempt from backup withholding,
see the enclosed Guidelines and complete as
instructed therein.
(2) I am not subject to backup withholding either because (a) I have not been
notified by the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or (b) the IRS has notified me that I am no longer subject to
backup withholding.
Note: If the account is
in more than one name,
check in the enclosed
Guidelines to determine
which number to give the
payer.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if,
after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS that you were no longer
subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------
Signature Date______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU IN CONNECTION WITH THE MERGER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON
APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
15
<PAGE>
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
----------------------------------------
Give the SOCIAL
For this type SECURITY
of account: number of--
----------------------------------------
1. Individual The individual
----------------------------------------
Give the EMPLOYER
For this type IDENTIFICATION
of account: number of--
----------------------------------------
6. Sole proprietorship The owner(1)
7. A valid trust, Legal entity(3)
estate, or pension
trust
2. Two or more The actual owner
individuals of the account
(joint account) or, if combined
funds, the first
individual on
the account.(2)
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational or other
tax-exempt
organization
3. Custodian account of The minor(4)
a minor (Uniform Gift
to Minors Act)
4.a. The usual revocable The grantor-
savings trust trustee(2)
(grantor is also
trustee)
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
b. So-called trust The actual
account that is not a owner(2)
legal or valid trust
under State law
12. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- -------
5. Sole proprietorship The owner(1)
(1) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your SSN or EIN.
(2) List first and circle the name of the person whose number you furnish.
(3) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
(4) Circle the minor's name and furnish the minor's social security number.
<PAGE>
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER
PAGE 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers
Act of 1940 U.C. who regularly acts as a broker are exempt. Payments subject to
reporting under Sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except a
corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions and patronage
dividends.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an individual
retirement plan or custodial account under Section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
an agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times under the Investment Company Act of
1940.
(12) A common trust fund operated by a bank under Section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
Interest payments that are generally exempt from back-up withholding include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, royalties, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
TOKHEIM CORPORATION
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Dollar Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Dollar Notes due 2008
Pursuant to the Prospectus dated , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's Series A 11 3/8% Senior Subordinated Dollar
Notes due 2008 (the "Outstanding Notes") are not immediately available, (ii)
Outstanding Notes, the Letter of Transmittal and all other required documents
cannot be delivered to U.S. Bank Trust National Association (the "Exchange
Agent") on or prior to the Expiration Date or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See
"The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus. In addition, in order to utilize the guaranteed delivery procedure
to tender Outstanding Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal relating to the Outstanding Notes (or
facsimile thereof) must also be received by the Exchange Agent on or prior to
the Expiration Date. Capitalized terms not defined herein have the meanings
they have in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
U.S. Bank Trust National Association
By Registered or Certified Mail: Facsimile Transmissions
U.S. Bank Trust National Association (Eligible Guarantor Institutions Only)
P.O. Box 64485
St. Paul, Minnesota 55164-9549 Attn: Specialized Finance
Attn: Specialized Finance (651) 244-1537
By Hand or Overnight Delivery To Confirm by Telephone
or for Information Call:
U.S. Bank Trust National Association
Fourth Floor--Bond Drop Window (651) 244-4512
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Specialized Finance
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE GUARANTOR INSTITUTION" UNDER THE INSTRUCTIONS
THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED
IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation
(the "Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1999 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate principal amount of Outstanding
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering Outstanding Notes."
Aggregate Principal Amount Name(s) of Registered Holder(s): ____
Amount Tendered: $ * -------------------------------------
Certificate No(s) (if available): ______________________________________________
- --------------------------------------------------------------------------------
$ ______________________________________________________________________________
(Total Principal Amount Represented by Outstanding Notes Certificate(s))
If Outstanding Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number: ____________________________________________________________
Date: __________________________________________________________________________
- --------
*Must be in integral multiples of $1,000.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X ___________________________________ -------------------------------------
X ___________________________________ -------------------------------------
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number: ________________________________________________
Must be signed by the holder(s) of the Outstanding Notes as their name(s)
appear(s) on certificates for Outstanding Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below and, unless waived by
the Company, provide proper evidence satisfactory to the Company of such
person's authority to so act.
2
<PAGE>
Please print name(s) and address(es)
Name(s): ---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Capacity: ---------------------------------------------------------------------
Address(es):
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer Association
(each of the foregoing being referred to as an "Eligible Guarantor
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of
its addresses set forth above, either the Outstanding Notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
Outstanding Notes to the Exchange Agent's account at The Depository Trust
Company ("DTC"), pursuant to the procedures for book-entry transfer set forth
in the Prospectus, in either case together with one or more properly completed
and duly executed Letter(s) of Transmittal (or facsimile thereof) and any other
required documents within three New York Stock Exchange trading days after the
date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Outstanding Notes tendered hereby to
the Exchange Agent within the time period set forth above and that failure to
do so could result in a financial loss to the undersigned.
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- -------------------------------------
Address Title
- ------------------------------------- -------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone Number: _____ Date: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.3
TOKHEIM CORPORATION
Instruction to Registered Holder and/or Depository
Trust Company Participant from Beneficial Owner
for
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Dollar Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Dollar Notes due 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS
EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
To Registered Holder and/or Depository Trust Company Participant:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Tokheim Corporation, an Indiana
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its Series B 11 3/8% Senior Subordinated Dollar
Notes Due 2008 (the "Exchange Notes") for all of its outstanding Series A 11
3/8% Senior Subordinated Dollar Notes Due 2008 (the "Outstanding Notes").
Capitalized terms used but not defined herein have the meanings they have in
the Prospectus.
This will instruct you, the registered holder and/or Depository Trust Company
Participant, as to the action to be taken by you relating to the Exchange Offer
with respect to the Outstanding Notes held by you for the account of the
undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
$ of the 11 3/8% Senior Subordinated Dollar
Notes Due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[_] To TENDER the following Outstanding Notes held by you for the
account of the undersigned (INSERT PRINCIPAL AMOUNT OF ORIGINAL NOTES
TO BE TENDERED (IF LESS THAN ALL)): $
[_] NOT to TENDER any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i)
the undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes
to be received by the undersigned are being acquired in the ordinary course of
its business, (iii) the undersigned has no arrangement or understanding with
any person to participate in a distribution (within the meaning of the
Securities Act) of Exchange Notes to be received in the Exchange Offer, and
(iv) if the undersigned is not a broker-dealer, the undersigned is not engaged
in, and does not intend to engage in, a
<PAGE>
distribution (within the meaning of the Securities Act) of such Exchange Notes.
The Company may require the undersigned, as a condition to the undersigned's
eligibility to participate in the Exchange Offer, to furnish to the Company (or
an agent thereof) in writing information as to the number of "beneficial
owners" within the meaning of Rule 13d-3 under the Exchange Act on behalf of
whom the undersigned holds the Outstanding Notes to be exchanged in the
Exchange Offer. By tendering Outstanding Notes pursuant to the Exchange Offer,
a holder of Outstanding Notes which is a broker-dealer represents and agrees,
consistent with certain interpretive letters issued by the staff of the
Division of Corporation Finance of the Securities and Exchange Commission to
third parties, that such Outstanding Notes were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities, and it will deliver a Prospectus (as amended or supplemented from
time to time) meeting the requirements of the Securities Act in connection with
any resale of such Exchanges Notes (provided that, by so acknowledging and by
delivering a Prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act).
SIGN HERE
- --------------------------------------------------------------------------------
Name of beneficial owner(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) (please print)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Telephone Number)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
- --------------------------------------------------------------------------------
Date
2
<PAGE>
EXHIBIT 99.4
LETTER OF TRANSMITTAL
TOKHEIM CORPORATION
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Euro Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Euro Notes due 2008
Pursuant to the Prospectus dated , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., LONDON
TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS
MAY BE WITHDRAWN PRIOR TO 5:00 P.M., LONDON TIME, ON THE EXPIRATION DATE.
The Exchange Agent for The Exchange Offer Is:
Midland Bank plc, HSBC Issuer Services
By Registered or Certified Mail: Facsimile Transmissions
(Eligible Guarantor Institutions Only)
Midland Bank plc,
HSBC Issuer Services
Attn: Phil Dainesi
Mariner House, Pepys Street
0171-260-8086
London, EC3N 4DA
Attention: Phil Dainesi To Confirm by Telephone
By Hand or Overnight Delivery or for Information Call:
Midland Bank plc, 0171-260-7679
HSBC Issuer Services
Mariner House, Pepys Street
London, EC3N 4DA
Attention: Phil Dainesi
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
they have in the Prospectus (as defined below).
This Letter of Transmittal is to be completed either if (a) certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-
entry confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at Euroclear or Cedel Bank, as well as this Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature
<PAGE>
guarantees, and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at its address set forth herein on or
prior to the Expiration Date. Tenders by book-entry transfer may also be made
by delivering an Agent's Message in lieu of this Letter of Transmittal. The
term "book-entry confirmation" means a confirmation of a book-entry transfer of
Outstanding Notes into the Exchange Agent's account at Euroclear or Cedel Bank.
The term "Agent's Message" means a message, transmitted by Euroclear or Cedel
Bank to and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that Euroclear or Cedel Bank has received an express
acknowledgment from the tendering participant, which acknowledgment states that
such participant has received and agrees to be bound by this Letter of
Transmittal and that Tokheim Corporation, an Indiana corporation (the
"Company"), may enforce this Letter of Transmittal against such participant.
Holders (as defined below) of Outstanding Notes whose certificates (the
"Certificates") for such Outstanding Notes are not immediately available or who
cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the
Prospectus) or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Outstanding Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
DESCRIPTION OF OUTSTANDING NOTES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
If blank,
please
print name
and
address of
registered Outstanding Notes
Holder(s) (Attach additional list if necessary)
- ---------------------------------------------------------------
<S> <C> <C> <C>
Principal
Aggregate Amount of
Principal Outstanding
Amount of Notes Tendered
Certificate Outstanding (if less than
Number(s)* Notes all)**
---------------------
---------------------
---------------------
---------------------
---------------------
Total
- ---------------------------------------------------------------
</TABLE>
*Need not be completed by book-entry Holders.
** Outstanding Notes may be tendered in whole or in part in multiples of
(Euro)1,000. All Outstanding Notes held shall be deemed tendered unless
a lesser number is specified in this column. See Instruction 4.
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH EUROCLEAR
OR CEDEL BANK AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
Euroclear or Cedel Bank Account Number Transaction
Code Number
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 1):
Name(s) of Registered Holder(s)
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution ______________________________________________
Euroclear or Cedel Bank Account Number Transaction Code
Number
3
<PAGE>
[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING
NOTES ARE TO BE RETURNED BY CREDITING THE EUROCLEAR OR CEDEL BANK ACCOUNT
NUMBER SET FORTH ABOVE.
[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: __________________________________________________________________________
Address: _______________________________________________________________________
4
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation
(the "Company"), the above described principal amount of the Company's Series A
11 3/8% Senior Subordinated Notes due 2008 (the "Outstanding Notes") in
exchange for an equivalent amount of the Company's Series B 11 3/8% Senior
Subordinated Notes due 2008 (the "Exchange Notes") which have been registered
under the Securities Act of 1933 (the "Securities Act"), upon the terms and
subject to the conditions set forth in the Prospectus dated
, 1999 (as the same may be amended or supplemented from
time to time, the "Prospectus"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Prospectus, constitute
the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) subject only
to the right of withdrawal described in the Prospectus, to (i) deliver
Certificates for Outstanding Notes to the Company together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of
the Series B Notes to be issued in exchange for such Outstanding Notes, (ii)
present Certificates for such Outstanding Notes for transfer, and to transfer
the Outstanding Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Outstanding Notes, all in accordance with the
terms and conditions of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the
Outstanding Notes tendered hereby and that, when the same are accepted for
exchange, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Outstanding Notes tendered hereby are not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be
necessary or desirable to complete the exchange, assignment and transfer of the
Outstanding Notes tendered hereby, and the undersigned will comply with its
obligations under the Dollar Registration Rights Agreement. The undersigned has
read and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Outstanding
Notes. The Certificate number(s) and the Outstanding Notes that the undersigned
wishes to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at Euroclear or Cedel Bank), without
expense to the tendering Holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions attached
hereto will, upon the Company's acceptance for exchange of such tendered
Outstanding
5
<PAGE>
Notes, constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at Euroclear or Cedel Bank. If applicable,
substitute Certificates representing Outstanding Notes not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Outstanding Notes, will be credited to the account
indicated above maintained at Euroclear or Cedel Bank. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please deliver
Exchange Notes to the undersigned at the address shown below the undersigned's
signature.
By tendering Notes and executing this Letter of Transmittal or effecting
delivery of an Agent's Message in lieu thereof, the undersigned hereby
represents and agrees that (i) the undersigned is not an "affiliate" of the
Company, (ii) any Exchange Notes to be received by the undersigned are being
acquired in the ordinary course of its business, (iii) the undersigned has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of Exchange Notes to be received in
the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Notes. The Company
may require the undersigned, as a condition to the undersigned's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" within
the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the
undersigned holds the Outstanding Notes to be exchanged in the Exchange Offer.
By tendering Outstanding Notes pursuant to the Exchange Offer and executing
this Letter of Transmittal or effecting delivery of an Agent's Message in lieu
thereof, a Holder of Outstanding Notes which is a broker-dealer represents and
agrees, consistent with certain interpretive letters issued by the Staff of the
Division of Corporation Finance of the Securities and Exchange Commission to
third parties, that such Outstanding Notes were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities, and it will deliver a Prospectus (as amended or supplemented from
time to time) meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes (provided that, by so acknowledging and by
delivering a Prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act).
The Company has agreed that, subject to the provisions of the Euro
Registration Rights Agreement, the Prospectus, as it may be amended or
supplemented from time to time, may be used by a participating broker-dealer
(as defined below) in connection with resales of Exchange Notes received in
exchange for Outstanding Notes, where such Outstanding Notes were acquired by
such participating broker-dealer for its own account as a result of market-
making activities or other trading activities, for a period ending 180 days
after the Expiration Date (subject to extension under certain limited
circumstances described in the Prospectus). In that regard, each broker-dealer
who acquired Outstanding Notes for its own account as a result of market-making
or other trading activities (a "participating broker-dealer"), by tendering
such Outstanding Notes and executing this Letter of Transmittal or effecting
delivery of an Agent's Message in lieu thereof, agrees that, upon receipt of
notice from the Company of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in the
Prospectus untrue in any material respect or which causes the Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference therein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain
other events specified in the Euro Registration Rights Agreement, such
participating broker-dealer will suspend the sale of Exchange Notes pursuant to
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to the participating broker-dealer or the Company
6
<PAGE>
has given notice that the sale of the Exchange Notes may be resumed, as the
case may be. If the Company gives such notice to suspend the sale of the
Exchange Notes, it shall extend the 180-day period referred to above during
which participating broker-dealers are entitled to use the Prospectus in
connection with the resale of Exchange Notes by the number of days during the
period from and including the date of the giving of such notice to and
including the date when participating broker-dealers shall have received copies
of the supplemented or amended Prospectus necessary to permit resales of the
Exchange Notes or to and including the date on which the Company has given
notice that the sale of Exchange Notes may be resumed, as the case may be.
As a result, a participating broker-dealer who intends to use the Prospectus
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the Expiration Date, that it
is a participating broker-dealer. Such notice may be given in the space
provided above or may be delivered to the Exchange Agent at the address set
forth in the Prospectus under "The Exchange Offer--Exchange Agents."
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
The undersigned, by completing the box entitled "Description of Outstanding
Notes" above and signing this letter, will be deemed to have tendered the
Outstanding Notes as set forth in such box.
7
<PAGE>
IMPORTANT
HOLDERS: SIGN HERE
(Please Complete Substitute Form W-9 herein)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Signature(s) of Holder(s)
Date: _______________________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Certificate(s) for the Outstanding Notes tendered or on a security
position listing or by person(s) authorized to become the registered
holder(s) by certificates and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, please provide the following information and see
Instruction 2 below.)
Name(s): __________________________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(Please Print)
Capacity (full title): ____________________________________________________
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Address: __________________________________________________________________
---------------------------------------------------------------------------
Area Code and Telephone No.: ______________________________________________
Taxpayer Identification or Social Security No.: ___________________________
(See Substitute Form W-9 herein)
GUARANTEE OF SIGNATURE(S)
(See Instruction 2 below)
Authorized Signature: _____________________________________________________
Name: _____________________________________________________________________
---------------------------------------------------------------------------
(Please Type or Print)
Title: ____________________________________________________________________
Name of Firm: _____________________________________________________________
Address: __________________________________________________________________
---------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.: ______________________________________________
Date: _______________________________
8
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(Signature Guarantee Required--See (Signature Guarantee Required--See
Instruction 2) Instruction 2)
TO BE COMPLETED ONLY if Exchange TO BE COMPLETED ONLY if Exchange
Notes or Outstanding Notes not Notes or Outstanding Notes not
tendered are to be issued in the tendered are to be sent to someone
name of someone other than the other than the registered Holder
registered Holder of the of the Outstanding Notes whose
Outstanding Notes whose name(s) name(s) appear(s) above, or such
appear(s) above. registered Holder at an address
other than that shown above.
[_] Outstanding Notes not tendered
to:
[_] Outstanding Notes not tendered
to:
[_] Exchange Notes to:
Name ______________________________ [_] Exchange Notes to:
(Please Print) Name ______________________________
Address ___________________________ (Please Print)
__________________________________ Address ___________________________
__________________________________ __________________________________
(Include Zip Code) __________________________________
__________________________________ (Include Zip Code)
Tax Identification or Social
Security Number
9
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus
and an Agent's Message is not delivered. Certificates, or timely confirmation
of a book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at Euroclear or Cedel Bank, as well as this Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu thereof. Outstanding
Notes may be tendered in whole or in part in integral multiples of
(Euro)1,000.
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available or (ii) who cannot deliver their
Outstanding Notes, this Letter of Transmittal and all other required documents
to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot
complete the procedures for delivery by book-entry transfer on a timely basis,
may tender their Outstanding Notes by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes"
in the Prospectus. Pursuant to such procedures: (i) such tender must be made
by or through an Eligible Guarantor Institution (as defined below); (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, must be received by
the Exchange Agent on or prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation) representing all tendered
Outstanding Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Guarantor Institution in the form set forth in such Notice of
Guaranteed Delivery. For Outstanding Notes to be properly tendered pursuant to
the guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Guarantor Institution" means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
institution," including (as such terms are defined therein) (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association.
The method of delivery of Certificates, this Letter of Transmittal and all
other required documents is at the option and sole risk of the tendering
Holder, and the delivery will be deemed made only when actually received by
the Exchange Agent. If delivery is by mail, registered mail with return
receipt requested, properly insured, or overnight delivery service is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance
of such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if:
i. this Letter of Transmittal is signed by the registered Holder (which
term, for purposes of this document, shall include any account holder with
Euroclear or Cedel Bank whose name appears on a
10
<PAGE>
security position listing as the owner of the Outstanding Notes (the
"Holder"')) of Outstanding Notes tendered herewith, unless such Holder(s)
has completed either the box entitled "Special Issuance Instructions" or
the box entitled "Special Delivery Instructions" above, or
ii. such Outstanding Notes are tendered for the account of a firm that is
an Eligible Guarantor Institution.
In all other cases, an Eligible Guarantor Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description
of Outstanding Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Outstanding Notes and any other required information should
be listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will
be accepted only in integral multiples of (Euro)1,000. If less than all the
Outstanding Notes evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Outstanding Notes which are to be tendered in
the box entitled "Principal Amount of Outstanding Notes Tendered." In such
case, new Certificate(s) for the remainder of the Outstanding Notes that were
evidenced by your old Certificate(s) will only be sent to the Holder of the
Outstanding Note, promptly after the Expiration Date. All Outstanding Notes
represented by Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in
the Prospectus on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Outstanding
Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to
be withdrawn, and (if Certificates for Outstanding Notes have been tendered)
the name of the registered Holder of the Outstanding Notes as set forth on the
Certificate for the Outstanding Notes, if different from that of the person who
tendered such Original Notes. If Certificates for the Outstanding Notes have
been delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Outstanding Notes, the tendering
Holder must submit the serial numbers shown on the particular Certificates for
the Outstanding Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Guarantor Institution, except in
the case of Outstanding Notes tendered for the account of an Eligible Guarantor
Institution. If Outstanding Notes have been tendered pursuant to the procedures
for book-entry transfer set forth in the Prospectus under "The Exchange Offer--
Procedures for Tendering Outstanding Notes," the notice of withdrawal must
specify the name and number of the account at Euroclear or Cedel Bank to be
credited with the withdrawal of Outstanding Notes, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of
Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but may
be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described in the Prospectus under "The Exchange
Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or
any other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Outstanding Notes which have been tendered
but which are withdrawn will be returned to the Holder thereof without cost to
such Holder promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered Holder(s) of the Outstanding
Notes tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
11
<PAGE>
If any of Outstanding Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and, unless waived by the Company,
must submit proper evidence satisfactory to the Company, in its sole
discretion, of each such person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Outstanding Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the registered Holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Guarantor Institution.
If this Letter of Transmittal is signed by a person other than the registered
owner(s) of the Outstanding Notes listed, the Certificates must be endorsed or
accompanied by appropriate bond powers, signed exactly as the name or names of
the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee for the Outstanding Notes may require in
accordance with the restrictions on transfer applicable to the Outstanding
Notes. Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Guarantor Institution.
6. Special Issuance and Delivery Instructions. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Notes not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account indicated above
maintained at Euroclear or Cedel Bank. See Instruction 4.
7. Irregularities. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the
Exchange Offer set forth in the Prospectus under "The Exchange Offer--
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Outstanding Notes of any particular Holder whether or not similar
conditions or irregularities are waived in the case of other Holders. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Outstanding Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. The Company, any affiliates or assigns of the Company, the
Exchange Agent, or any other person shall not be under any duty to give
notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
12
<PAGE>
9. 31% Backup Withholding; Substitute Form W-9. Under the U.S. Federal income
tax law, a Holder whose tendered Outstanding Notes are accepted for exchange is
required to provide the Exchange Agent with such Holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the Holder or other payee to a $50 penalty. In addition,
payments to such Holders or other payees with respect to Outstanding Notes
exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the Holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-
9. If the Holder furnishes the Exchange Agent with its TIN within 60 days after
the date of the Substitute Form W-9, the amounts retained during the 60-day
period will be remitted to the Holder and no further amounts shall be retained
or withheld from payments made to the Holder thereafter. If, however, the
Holder has not provided the Exchange Agent with its TIN within such 60-day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes
are registered in more than one name or are not in the name of the actual
owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to the backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. Waiver of Conditions. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
11. No Conditional Tenders. No alternative, conditional or contingent tenders
will be accepted. All tendering Holders of Outstanding Notes, by execution of
this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of Outstanding Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of
Outstanding Notes nor shall any of them incur any liability for failure to give
any such notice.
12. Lost, Destroyed or Stolen Certificates. If any Certificate(s)
representing Outstanding Notes have been lost, destroyed or stolen, the Holder
should promptly notify the Exchange Agent. The Holder will then be
13
<PAGE>
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
13. Security Transfer Taxes. Holders who tender their Outstanding Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Outstanding Notes in connection with the Exchange
Offer, then the amount of any such transfer tax (whether imposed on the
registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
14
<PAGE>
PAYER'S NAME: U.S. BANK TRUST NATIONAL ASSOCIATION
Part I--Taxpayer
Identification Number-- -------------------------
For all accounts, enter Social Security Number
taxpayer identification
number in the box at
right. (For most
individuals, this is
your social security
number. If you do not
have a number, see
Obtaining a Number in
the enclosed
Guidelines.) Certify by
signing and dating
below.
SUBSTITUTE
Form W-9 OR
Department of the -------------------------
Treasury Employer Identification
Internal Revenue Number
Service
(If awaiting TIN, write
"Applied For")
- --------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
-------------------------------------------------------
Part II:--For Payees exempt from backup withholding,
see the enclosed Guidelines and complete as
instructed therein.
(2) I am not subject to backup withholding either because (a) I have not been
notified by the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or (b) the IRS has notified me that I am no longer subject to
backup withholding.
Note: If the account is
in more than one name,
check in the enclosed
Guidelines to determine
which number to give the
payer.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if,
after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS that you were no longer
subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------
Signature Date______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU IN CONNECTION WITH THE MERGER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON
APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
15
<PAGE>
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
----------------------------------------
Give the SOCIAL
For this type SECURITY
of account: number of--
----------------------------------------
1. Individual The individual
----------------------------------------
Give the EMPLOYER
For this type IDENTIFICATION
of account: number of--
----------------------------------------
6. Sole proprietorship The owner(1)
7. A valid trust, Legal entity(3)
estate, or pension
trust
2. Two or more The actual owner
individuals of the account
(joint account) or, if combined
funds, the first
individual on
the account.(2)
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational or other
tax-exempt
organization
3. Custodian account of The minor(4)
a minor (Uniform Gift
to Minors Act)
4.a. The usual revocable The grantor-
savings trust trustee(2)
(grantor is also
trustee)
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
b. So-called trust The actual
account that is not a owner(2)
legal or valid trust
under State law
12. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- -------
5. Sole proprietorship The owner(1)
(1) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your SSN or EIN.
(2) List first and circle the name of the person whose number you furnish.
(3) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
(4) Circle the minor's name and furnish the minor's social security number.
<PAGE>
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER
PAGE 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers
Act of 1940 U.C. who regularly acts as a broker are exempt. Payments subject to
reporting under Sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except a
corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions and patronage
dividends.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an individual
retirement plan or custodial account under Section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
an agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times under the Investment Company Act of
1940.
(12) A common trust fund operated by a bank under Section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
Interest payments that are generally exempt from back-up withholding include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, royalties, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.5
NOTICE OF GUARANTEED DELIVERY
TOKHEIM CORPORATION
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Euro Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Euro Notes due 2008
Pursuant to the Prospectus dated , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's Series A 11 3/8% Senior Subordinated Euro Notes
due 2008 (the "Outstanding Notes") are not immediately available, (ii)
Outstanding Notes, the Letter of Transmittal and all other required documents
cannot be delivered to Midland Bank plc, HSBC Issuer Services (the "Exchange
Agent") on or prior to the Expiration Date or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See
"The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus. In addition, in order to utilize the guaranteed delivery procedure
to tender Outstanding Notes pursuant to the Exchange Offer, a completed,
signed and dated Letter of Transmittal relating to the Outstanding Notes (or
facsimile thereof) must also be received by the Exchange Agent on or prior to
the Expiration Date. Capitalized terms not defined herein have the meanings
they have in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
Midland Bank plc, HSBC Issuer Services
By Registered or Certified Mail: Facsimile Transmissions
(Eligible Guarantor Institutions Only)
Midland Bank plc
HSBC Issuer Services
Attn: Phil Dainesi
Mariner House, Pepys Street
0171-260-8086
London, EC3N 4DA
Attention: Phil Dainesi To Confirm by Telephone
By Hand or Overnight Delivery or for Information Call:
Midland Bank plc 0171-260-7679
HSBC Issuer Services
Mariner House, Pepys Street
London, EC3N 4DA
Attention: Phil Dainesi
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE GUARANTOR INSTITUTION" UNDER THE INSTRUCTIONS
THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED
IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Tokheim Corporation, an Indiana corporation
(the "Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1999 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate principal amount of Outstanding
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering Outstanding Notes."
Aggregate Principal Amount Name(s) of Registered Holder(s): ____
-------------------------------------
Amount Tendered: (Euro) *
Certificate No(s) (if available): ______________________________________________
- --------------------------------------------------------------------------------
(Euro) ____________________________________________________________________
(Total Principal Amount Represented by Outstanding Notes Certificate(s))
If Outstanding Notes will be tendered by book-entry transfer, provide the
following information:
Euroclear or Cedel Bank Account Number: ___________________________________
Date: __________________________________________________________________________
- --------
*Must be in integral multiples of $1,000.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X ___________________________________ -------------------------------------
X ___________________________________ -------------------------------------
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number: ________________________________________________
Must be signed by the holder(s) of the Outstanding Notes as their name(s)
appear(s) on certificates for Outstanding Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below and, unless waived by
the Company, provide proper evidence satisfactory to the Company of such
person's authority to so act.
2
<PAGE>
Please print name(s) and address(es)
Name(s): ---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Capacity: ---------------------------------------------------------------------
Address(es):
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer Association
(each of the foregoing being referred to as an "Eligible Guarantor
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of
its addresses set forth above, either the Outstanding Notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
Outstanding Notes to the Exchange Agent's account at Euroclear or Cedel Bank,
pursuant to the procedures for book-entry transfer set forth in the Prospectus,
in either case together with one or more properly completed and duly executed
Letter(s) of Transmittal (or facsimile thereof) and any other required
documents within three New York Stock Exchange trading days after the date of
execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Outstanding Notes tendered hereby to
the Exchange Agent within the time period set forth above and that failure to
do so could result in a financial loss to the undersigned.
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- -------------------------------------
Address Title
- ------------------------------------- -------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone Number: _____ Date: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.6
TOKHEIM CORPORATION
Instruction to Registered Holder and/or Depository
Trust Company Participant from Beneficial Owner
for
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Euro Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Euro Notes due 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., LONDON
TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS
MAY BE WITHDRAWN PRIOR TO 5:00 P.M., LONDON TIME, ON THE EXPIRATION DATE.
To Registered Holder and/or Euroclear and Cedel Bank account holders:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Tokheim Corporation, an Indiana
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its Series B 11 3/8% Senior Subordinated Euro
Notes Due 2008 (the "Exchange Notes") for all of its outstanding Series A 11
3/8% Senior Subordinated Euro Notes Due 2008 (the "Outstanding Notes").
Capitalized terms used but not defined herein have the meanings they have in
the Prospectus.
This will instruct you, the registered holder and/or Euroclear or Cedel Bank
account holder, as to the action to be taken by you relating to the Exchange
Offer with respect to the Outstanding Notes held by you for the account of the
undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
(Euro) of the 11 3/8% Senior Subordinated Euro
Notes Due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[_] To TENDER the following Outstanding Notes held by you for the
account of the undersigned (INSERT PRINCIPAL AMOUNT OF ORIGINAL NOTES
TO BE TENDERED (IF LESS THAN ALL)): (Euro)
[_] NOT to TENDER any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i)
the undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes
to be received by the undersigned are being acquired in the ordinary course of
its business, (iii) the undersigned has no arrangement or understanding with
any person to participate in a distribution (within the meaning of the
Securities Act) of Exchange Notes to be received in the Exchange Offer, and
(iv) if the undersigned is not a broker-dealer, the undersigned is not engaged
in, and does not intend to engage in, a
<PAGE>
distribution (within the meaning of the Securities Act) of such Exchange Notes.
The Company may require the undersigned, as a condition to the undersigned's
eligibility to participate in the Exchange Offer, to furnish to the Company (or
an agent thereof) in writing information as to the number of "beneficial
owners" within the meaning of Rule 13d-3 under the Exchange Act on behalf of
whom the undersigned holds the Outstanding Notes to be exchanged in the
Exchange Offer. By tendering Outstanding Notes pursuant to the Exchange Offer,
a holder of Outstanding Notes which is a broker-dealer represents and agrees,
consistent with certain interpretive letters issued by the staff of the
Division of Corporation Finance of the Securities and Exchange Commission to
third parties, that such Outstanding Notes were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities, and it will deliver a Prospectus (as amended or supplemented from
time to time) meeting the requirements of the Securities Act in connection with
any resale of such Exchanges Notes (provided that, by so acknowledging and by
delivering a Prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act).
SIGN HERE
- --------------------------------------------------------------------------------
Name of beneficial owner(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) (please print)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Telephone Number)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
- --------------------------------------------------------------------------------
Date
2
