<PAGE>
As filed with the Securities Exchange Commission on April 28, 1999
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
TOKHEIM CORPORATION
(Exact name of registrant as specified in its charter)
---------------
Indiana 3580 35-0712500
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
10501 Corporate Drive
Fort Wayne, IN 46845
(219) 470-4600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Copy to:
Douglas K. Pinner Chairman of the William R. Kunkel Skadden, Arps, Slate,
Board, President and Chief Executive Meagher & Flom (Illinois)
Officer 10501 Corporate Drive Fort 333 West Wacker Drive Chicago, IL 60606
Wayne, IN 46845 (219) 470-4600 (312) 407-0700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
<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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
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<CAPTION>
Proposed
Proposed Maximum
Title of Each Class Maximum Aggregate Amount of
Of Securities To Be Amount To Be Offering Price Offering Price Registration
Registered Registered Per Unit (1) (1) Fee
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<S> <C> <C> <C> <C>
11 3/8% Senior
Subordinated Dollar
Notes due 2008......... $123,000,000 100% $123,000,000 $34,194
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Guarantees of Senior
Subordinated Dollar
Notes (2).............. -- -- -- (3)
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11 3/8% Senior
Subordinated Euro Notes
due 2008............... $86,647,500(4) 100% $86,647,500(4) $24,088
- --------------------------------------------------------------------------------------
Guarantees of Senior
Subordinated Euro Notes
(2).................... -- -- -- (3)
</TABLE>
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(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
(2) All existing and future U.S. subsidiaries of the Registrant have each
guaranteed the Notes being registered.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to the
guarantees of the Notes being registered.
(4) Calculated using an exchange rate of (Euro)1.00=$1.1553.
---------------
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
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<PAGE>
TOKHEIM CORPORATION
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form S-4 Item Location in Prospectus
- ------------- -------------------------------------------
<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;
Certain United States Federal Income Tax
Considerations; The Transactions;
Description of the Exchange Notes; Plan of
Distribution
Item 5:Pro Forma Financial Prospectus Summary; Unaudited Pro Forma
Information.................. Consolidated Condensed Financial
Statements; Selected Financial Data of
Tokheim Corporation and Subsidiaries;
Selected Financial Data of the RPS Division
Item 6:Material Contacts With The
Company Being
Acquired..................... Not Applicable
Item 7:Additional Information
Required For
Reoffering By Persons And
Parties Deemed
to Be Underwriters........... Not Applicable
Item 8:Interests Of Named Experts
And Counsel.................. Not Applicable
Item 9:Disclosure Of Commission
Position On
Indemnification For
Securities Act Liabilities... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
Item 10:Information With Respect To Summary; Unaudited Pro Forma Consolidated
S-3 Registrants.............. Condensed Financial Statements
Item 11:Incorporation Of Certain
Information By
Reference.................... Information Incorporated by Reference
Item 12:Information With Respect To
S-2 Or S-3
Registrants.................. Not Applicable
Item 13:Incorporation Of Certain
Information By
Reference.................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form S-4 Item Location in Prospectus
- ------------- -------------------------------------------
<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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these notes until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these notes and it is not soliciting an offer to buy these +
+notes in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated April 28, 1999
Prospectus
[LOGO OF TOKHEIM CORPORATION]
Tokheim Corporation
Exchange Offer for
$123,000,000 and (Euro)75,000,000
11 3/8% Senior 11 3/8% Senior
Subordinated Notes Subordinated Notes
Due 2008 Due 2008
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Terms of the Exchange Offer
. Expires 5:00 p.m. New . The exchange of
York City time (in the outstanding notes for
case of outstanding exchange notes will not
dollar notes) or 5:00 be a taxable exchange
p.m., London time (in for U.S. federal income
the case of outstanding tax purposes.
Euro notes), ,
1999, unless extended. . The terms of the
exchange notes and the
. All outstanding notes outstanding notes are
that are validly substantially
tendered and not identical, except for
validly withdrawn will certain transfer
be exchanged. restrictions,
registration rights and
. Tenders of the liquidated damages
outstanding notes may relating to the
be withdrawn any time outstanding notes.
prior to the expiration
of the exchange offer. . There is no existing
market for the exchange
. Not subject to any notes and the Company
condition, other than does not currently
that the exchange offer intend to apply for
not violate applicable their listing on any
law or any applicable securities exchange.
interpretation of the
staff of the Securities
and Exchange
Commission.
. The Company will not
receive any proceeds
from the exchange
offer.
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For a discussion of certain factors that should be considered by holders
prior to tendering their outstanding notes in the exchange offer, see "Risk
Factors" beginning on page 21.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
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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>
<CAPTION>
Page
----
<S> <C>
Summary................................................................... 1
Risk Factors.............................................................. 21
Debt Financing Risks.................................................... 21
Risks Associated with the Operation of the Business..................... 24
Government Regulation................................................... 28
Risks Associated with the Exchange Offer................................ 28
The Exchange Offer........................................................ 30
The Transactions.......................................................... 38
Sources and Uses of Funds................................................. 39
Capitalization............................................................ 40
Unaudited Pro Forma Consolidated Condensed Financial Statements........... 41
Selected Financial Data of Tokheim Corporation and Subsidiaries .......... 47
Selected Financial Data of the RPS Division............................... 49
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 50
Business.................................................................. 59
Management................................................................ 72
Principal Shareholders.................................................... 74
Description of Certain Indebtedness....................................... 76
Description of the Schlumberger Warrants.................................. 78
Description of the Exchange Notes......................................... 79
Certain United States Federal Income Tax Considerations................... 112
Plan of Distribution...................................................... 117
Legal Matters............................................................. 117
Independent Accountants................................................... 118
General Listing Information............................................... 119
Where You Can Find More Information....................................... 120
Information Incorporated by Reference..................................... 120
Index to Financial Statements............................................. F-1
</TABLE>
i
<PAGE>
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SUURENDERS OF OR EXCHANGE FROM, HOLDERS OF OUTSTANDING NOTES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE
IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
EXCHANGE NOTES MAY NOT BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY TO THE
PUBLIC IN THE REPUBLIC OF FRANCE. NEITHER THIS DOCUMENT, WHICH HAS NOT BEEN
SUBMITTED FOR THE APPROVAL OF THE COMMISSION DES OPERATIONS DE BOURSE, NOR ANY
OFFERING MATERIAL RELATING TO THE EXCHANGE NOTES MAY BE RELEASED OR ISSUED TO
THE PUBLIC IN CONNECTION WITH ANY SUCH OFFER.
EXCHANGE NOTES HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER THE
SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA. EXCHANGE
NOTES ARE NOT BEING OFFERED AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR
INDIRECTLY, IN CANADA OR TO OR FOR THE ACCOUNT OF ANY RESIDENT OF CANADA IN
CONTRAVENTION OF THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY
THEREOF. THIS PROSPECTUS IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED
AS, AN ADVERTISEMENT OR A PUBLIC OFFERING IN CANADA OF THE SECURITIES DESCRIBED
HEREIN. CANADIAN RESIDENTS SHOULD CONSULT THEIR OWN ATTORNEY AS TO RESTRICTIONS
ON RESALES OF EXCHANGE NOTES.
EXCHANGE NOTES MAY NOT BE OFFERED IN THE NETHERLANDS OR ELSEWHERE TO THE
ACCOUNT OF ANY PERSON OR ENTITY OTHER THAN TO PERSONS WHO OR ENTITIES WHICH
TRADE OR INVEST IN SECURITIES IN THE CONDUCT OF A PROFESSION OR BUSINESS WITHIN
THE MEANING OF THE SECURITIES TRANSACTIONS SUPERVISION ACT 1995 (WET TOEZICHT
EFFECTENVERKEER 1995) AND ITS IMPLEMENTING REGULATIONS (WHICH INCLUDE BANKS,
INVESTMENT BANKS, BROKERS, DEALERS, PENSION FUNDS, INSURANCE COMPANIES,
SECURITIES FIRMS, INVESTMENT INSTITUTIONS, OTHER INSTITUTIONAL INVESTORS, AND
OTHER PARTIES INCLUDING INTER ALIA TREASURIES AND FINANCE COMPANIES OF LARGE
ENTERPRISES WHICH REGULARLY, AS AN ANCILLARY ACTIVITY, TRADE OR INVEST IN
SECURITIES).
EXCHANGE NOTES WILL ONLY BE AVAILABLE FOR EXCHANGE IN THE UNITED KINGDOM
PURSUANT TO THE EXCHANGE OFFER BY PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE
THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL
OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES OR OTHERWISE IN CIRCUMSTANCES
THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC IN THE UNITED KINGDOM FOR
PURPOSES OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995.
NO DOCUMENT ISSUED IN CONNECTION WITH THE EXCHANGE OFFER, INCLUDING THIS
PROSPECTUS, MAY BE PASSED ON TO ANY PERSON IN THE UNITED KINGDOM UNLESS THAT
PERSON IS AS DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT OF 1986
(INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1996 (AS AMENDED), OR IS A
PERSON TO WHOM THE DOCUMENT MAY OTHERWISE LAWFULLY BE ISSUED OR PASSED ON.
ACCORDINGLY, BY ACCEPTING DELIVERY OF THIS PROSPECTUS, THE RECIPIENT WARRANTS
AND ACKNOWLEDGES THAT IT IS SUCH A PERSON.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
All statements other than statements of historical facts included in this
prospectus, including, without limitation, statements regarding our future
financial position, business strategy, budgets, projected costs and cost
savings and plans and objectives of management for future operations, are
forward-looking statements. In
ii
<PAGE>
addition, you can generally identify forward-looking statements by the use of
forward-looking terminology, such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue," or the negative thereof,
variations thereon or similar terminology. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from our
expectations are disclosed under "Risk Factors" and elsewhere in this
prospectus, including, without limitation, in conjunction with the forward-
looking statements included in this prospectus. We do not undertake any
obligation to update any forward-looking statements. Given the uncertainties
associated with forward-looking statements, you should not place undue reliance
on them.
EXCHANGE RATES
In this prospectus, references to "dollars," "US$," and "$" are to United
States dollars, and references to "United States" and "U.S." mean the United
States of America, its states, territories, possessions and all areas subject
to its jurisdiction. References herein to "Euro" and "(Euro)" are to the
currency that was introduced at the start of the third stage of economic and
monetary union pursuant to the treaty establishing the European Economic
Community, as amended by the Treaty on European Union, signed at Maastricht,
the Netherlands on February 7, 1992 (the "Treaty"). Except as otherwise stated
herein, conversions of non-U.S. dollar currencies to U.S. dollars in the
financial statements and other information included herein have been
calculated, for income statement purposes, on the basis of average exchange
rates over the related periods and, for balance sheet purposes, on the date of
the balance sheet. These translations should not be construed as
representations that the non-U.S. dollar currency amounts actually represent
such U.S. dollar amounts or could be converted into U.S. dollars at the rates
indicated or at any other rates.
On May 3, 1998, the Council of the European Union adopted Council Regulation
(EC) No. 974/98, which defines the initial participants in Stage III of
European Monetary Union as Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain. This definition of
initial participants does not include England, Denmark and Greece. Thus, their
currencies--the British pound, the Danish krone, and the Greek drachma--were
not among those that were converted to the Euro.
Our business may cause us to encounter currency exchange risks. We may
experience an adverse effect, which may be material, if any local currency we
use devalues against the dollar. You should read "Risk Factors--Risks
Associated with the Operation of the Business--Foreign Currency; Common
European Currency" for a discussion of the impact of the exchange rate
fluctuations on our financial condition and results of operations.
The Euro was introduced on January 1, 1999 at an exchange rate of
(Euro)1.00=$1.17. As of April 26, 1999 the noon buying rate with respect to the
Euro was (Euro)1.00=$1.06. Unless otherwise indicated, the exchange rate used
in this prospectus is (Euro)1.00=$1.1553.
The following table sets forth, for the periods and dates indicated, certain
information concerning the French Franc ("FFR") exchange rate, set forth in FFR
per dollar.
<TABLE>
<CAPTION>
FFR 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 FFR was $1.00 =
FFR 6.20.
We make no representation that the amounts referred to herein could have been
or could be converted into the foregoing currencies at any particular rate or
at all.
iii
<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, "we," "us," "our" and the "Company" refer to
Tokheim Corporation and its subsidiaries after our acquisition of the RPS
Division of Schlumberger Limited (the "RPS Division"), unless otherwise
indicated. "Tokheim" refers to Tokheim Corporation and its subsidiaries prior
to the acquisition of the RPS Division. The market share and other data
contained in this prospectus relating to the petroleum dispenser and related
industries, both in the United States and internationally, have been derived
from industry and other sources available to us. While we believe that our
estimates derived from such sources, including as to market share data, are
reasonable, no assurances can be given as to their accuracy.
Overview
On September 30, 1998, we acquired the RPS Division and became the world's
largest manufacturer and servicer of electronic and mechanical petroleum
dispensing systems. We financed this acquisition by entering into a credit
agreement and issuing various securities, including senior notes, senior
subordinated notes, junior subordinated notes and warrants. On January 29,
1999, we privately placed $123.0 million of 11 3/8% Senior Subordinated Notes
due 2008 and (Euro)75.0 million of 11 3/8% Senior Subordinated Notes due 2008.
We used the proceeds from the placement of these outstanding notes to refinance
the senior notes and the senior subordinated notes issued in connection with
the acquisition of the RPS Division and to reduce borrowings under the
revolving working capital facility of the credit agreement by approximately
$3.4 million. In addition, total availability under the revolving working
capital facility of the credit agreement was permanently reduced from $120.0 to
$110.0 million.
The outstanding notes are, and the exchange notes will be, guaranteed by all
of our existing and future U.S. subsidiaries on a senior subordinated basis
with guarantees that are unsecured and subordinated to existing and future
senior debt of such subsidiaries.
Simultaneously with the private placement, the subsidiary guarantors and the
Company entered into two registration rights agreements with the initial
purchasers of the outstanding notes, one agreement for the notes issued in
dollars and one for the notes issued in Euros. Under these registration rights
agreements, we must deliver this prospectus to the holders of the outstanding
notes and must complete this exchange offer on or before August 12, 1999. If
this exchange offer does not take place on or before August 12, 1999, we must
pay liquidated damages to the holders of the outstanding notes until this
exchange offer is completed. You may exchange your outstanding notes for
exchange notes with substantially the same terms in this exchange offer. You
should read the discussion under the heading "Summary of Terms of the Exchange
Notes" and "Description of the Exchange Notes" for further information
regarding the exchange notes.
We believe that holders may resell the exchange notes without complying with
the registration and prospectus delivery provisions of the Securities Act of
1933 (the "Securities Act") if certain conditions are met. You should read the
discussion under the headings "Summary of the Exchange Offer" and "The Exchange
Offer" for further information regarding the exchange offer and resales of the
exchange notes.
The Company
As a result of our acquisition of the petroleum dispenser business of Sofitam
S.A. ("Sofitam") in September 1996 and the RPS Division in September 1998, we
are the largest global competitor in the petroleum dispenser business, with an
estimated 37% share of the world market, and the ability to provide both
products and services to customers in over 80 countries.
1
<PAGE>
We are the largest supplier of petroleum dispensing systems in Europe,
Africa, Canada and Mexico, and one of the largest suppliers in the United
States. We also have established operations in Asia and Latin America. We
believe that our global capabilities provide us with a competitive advantage to
attract additional business and form alliances with customers.
Before we acquired the RPS Division it was headquartered in France and was a
leading manufacturer and servicer of fuel dispensing systems in western Europe.
In 1992, it established a presence in North America with the acquisition of
Southwest Energy Control Systems and continued to develop its North American
position. The RPS Division is also present in eastern Europe and the former
Soviet Union. The main manufacturing sites for the RPS Division are located in
Dundee, Scotland and in Bonham, Texas, respectively. We recently announced that
we will be closing the Bonham facility.
Our Products
We manufacture and service electronic and mechanical petroleum dispensing
systems. These systems include petroleum dispensers and pumps, retail
automation systems (including point-of-sale systems), dispenser payment or
"pay-at-the-pump" terminals, replacement parts and upgrade kits.
Our Services
We believe that our Company offers superior customer service and support. In
western Europe and Africa, we provide support through our extensive, Company-
direct service organization. Throughout the rest of the world, service is
provided through authorized service representatives and distributors. Customer
service includes the installation, maintenance, certification and calibration
of, and technical support for, petroleum dispensers, pumps, electronic hardware
and software systems. We offer 24-hour, seven day-per-week support by telephone
and over the Internet via our FASRLINK(TM) help desk to authorized service
representatives, distributors and customers in major markets. We believe our
service and support capabilities are important factors in winning supply
contracts and gaining new customers. Additionally, major oil companies ("MOCs")
are more frequently entering into geographically broader service contracts,
which we believe we are well-positioned to win.
Our Industry and Customers
Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations. These owners include MOCs, national oil companies
("nationals"), independent owners operating under a MOC brand ("jobbers"),
independent oil companies ("independents"), convenience store stations,
hypermarkets and other retailers, and to commercial customers. As a result of
industry consolidation, we estimate that the top three manufacturers of
petroleum dispensing equipment account for approximately 75% of worldwide
annual sales. We estimate that the combined annual sales of the top five
manufacturers in our industry is approximately $2 billion.
In 1998, approximately 88% of our sales were to retail owners, such as Arco,
BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell, SuperAmerica, Total and
their affiliated jobbers, and approximately 12% of our sales were to commercial
customers, such as Federal Express, United Parcel Service, Penske Corporation
and municipalities. In the United States, Canada, and western Europe, demand
for our products has been driven by demand for new, more convenient systems,
such as credit/debit card readers, and by environmental regulations, such as
those requiring vapor recovery systems and more secure underground storage
tanks (often with electronic leak detection technology). In emerging markets,
economic growth requires vehicle use and infrastructure development, which
increase the demand for fuel and fuel dispensers. Deregulation of local markets
and privatization of state-owned oil companies have also created additional
growth opportunities in emerging markets.
Growth Through Acquisition
Tokheim was already one of the world's largest manufacturers and servicers of
electronic and mechanical petroleum dispensing systems prior to its acquisition
of the RPS Division. Between 1994 and 1998, Tokheim's revenues grew from
approximately $202.1 million to $466.4 million, and EBITDA (as defined below
under Note 4 to the Summary
2
<PAGE>
Financial Data of Tokheim Corporation and Subsidiaries) increased from
approximately $10.2 million to $43.7 million, in large part due to the
acquisition of Sofitam.
Competitive Strengths
We believe that a number of factors make us a premier manufacturer and
servicer of petroleum dispenser systems. These factors include our:
Global Capabilities. We are the world's largest manufacturer and servicer of
petroleum dispenser systems, supplying products and services in more than 80
countries. As a result, we believe that we are able to satisfy the complete
petroleum dispensing equipment needs of customers throughout the world. Our
global capabilities provide a significant advantage when competing for sales to
MOCs and nationals, including through national, regional and global supply
relationships ("tenders") that MOCs and nationals are awarding more frequently
to meet their fuel dispensing equipment needs.
World's Largest Service Network. We offer service to customers in over 80
countries through our 414 distributors, 319 authorized service representativies
and over 3,800 trained field representatives. We believe our global
distribution and service network also provides a significant advantage when
competing for tenders. We believe that the reach of our European and African
networks for distribution and service makes us a preferred partner for MOCs in
these regions. We also recently launched an Internet-based help desk known as
FASRLINK, which provides authorized service representativies worldwide with 24-
hour access to installation drawings, product updates and diagnostic
procedures.
Our service network enables us to strengthen existing customer relationships,
attract new customers, increase our understanding of competitive products and
customer needs, and augment sales.
Strong Customer Relationships. Our strong relationships with MOCs,
independents and hypermarkets are increasingly valuable. As these customers
expand across regions, they commonly rely on their traditional suppliers to
expand with them. We have established relationships with many such customers,
including Arco, BP Amoco, Carrefour, Elf, Esso, Fina, Intermarche, Repsol,
Shell, Statoil and Total. Furthermore, our ability to customize our equipment
and software to meet customer- and country-specific standards makes us
attractive to MOCs and nationals as a single source of supply.
Broad, Technologically Advanced Product Line. We manufacture and sell a wide
variety of dispensers, pumps, meters, payment and retail automation systems,
including point-of-sale systems (both hardware and software) and fleet fueling
systems. Our acquisition of Management Solutions, Inc. in December 1997
provided additional depth to our retail automation system product line. The RPS
Division's unique microprocessor-driven dispenser electronics platform further
enhances our product portfolio. Our commitment to invest in technology allows
us to continue to satisfy diverse customer- and country-specific requirements.
We consider our Company to be an industry leader in the integration of
electronics and software into our products and believe there is a significant
potential demand for certain existing technologies. For example, in 1997, only
26% of all retail petroleum dispensers in the United States were estimated to
have dispenser payment or "pay-at-the-pump" terminals.
Proven Management Team. Since our current management team was assembled in
1992, it has successfully implemented a strategic plan that has restored
financial viability, strengthened MOC relationships, broadened product lines
and reduced costs. As part of this strategy, we acquired Sofitam in 1996 and
the RPS Division in 1998. Management has been successful to date in integrating
Sofitam's operations into the Company and consolidating our operations in
Europe. In addition, management has already initiated numerous cost-cutting
programs in connection with the acquisition of the RPS Division. See "--
Business Strategy--Realize Operating Synergies and Cost Savings."
Business Strategy
Our business strategy has the following principal components:
Leverage Global Platform. We intend to use our broad product portfolio and
our understanding of the regulatory requirements of the countries where our
customers operate to compete aggressively for
3
<PAGE>
national, regional and global tenders and new customers. We also believe we can
obtain additional customers and increase sales to existing customers by
offering comprehensive sales and service coverage worldwide through our
extensive network.
Enhance Largest Service Organization. Our service organization provides us
with information on customer needs and products, the opportunity to sell new
products to service customers and a stable source of recurring revenues from
product support. We intend to expand our service organization geographically.
Maintain Technological Leadership. In developed markets, such as the United
States, Canada and western Europe, we believe that improved technology will be
the primary driver of sales of petroleum dispensing products. As a result, we
have made a significant effort to maintain our competitive edge technologically
and consider ourselves a leader in the integration of electronics and software
into petroleum dispensing products. For example, our new radio frequency
identification ("RFID") technology (currently being test marketed in the U.S.),
similar to the drive-through payment systems used at toll booths, permits
consumers to pay for fuel purchases without using cash or credit cards. We also
plan to continue to invest in developing new technologies, such as human
interface displays, wireless forecourt systems, improved metering and robotic
fueling.
Maintain Top Quality. We strive to produce the highest quality products and
are committed to continuously improving quality. An aggressive focus on product
quality has reduced Tokheim's defect rate (measured in parts per million) by
approximately 90% since 1995. Another indication of our commitment to quality
is the award of ISO-9000 certification to most of our manufacturing facilities.
Moreover, our automated computerized dispenser testers comprehensively test
each dispenser's electrical and fluid systems before shipment to the customer,
further assuring the delivery of quality products.
Realize Operating Synergies and Cost Savings.
We believe that we will be able to achieve $47.3 million in annual cash cost
savings by the end of the third full year after the acquisition of the RPS
Division, of which we believe $28.7 million can be obtained in the first full
year after this acquisition. The principal components of our cost savings
program are:
. Combine Manufacturing Capabilities. We intend to consolidate
substantially all of our dispenser manufacturing into three modern
facilities. We estimate that we can save $26.0 million on an annual
basis from such consolidation.
. Integrate Service Organizations. We are in the process of streamlining
our European service organization. We plan to further reduce costs and
improve service by integrating Tokheim's and the RPS Division's service
organizations. We estimate that we can save $9.0 million on an annual
basis from such integration.
. Eliminate General and Administrative Redundancies. We expect to achieve
further savings by eliminating redundant administrative staff and
headquarter facilities. We estimate that we can save $5.0 million on an
annual basis from such reductions.
. Reduce Raw Material Costs. We expect to save $5.5 million annually due
to increased purchasing leverage.
. Reduce Foreign Currency Exposure. The RPS Division incurred a $2.5
million loss from currency exchange connected with intercompany
purchases of inventory during fiscal 1997. We expect to reduce these
losses by approximately $1.8 million annually by using hedging
techniques.
To realize the $47.3 million of cost savings, we expect that approximately
$32.2 million of expenditures will be required. We believe that further cost
savings may be achievable from:
. reduced manufacturing costs resulting from product standardization and
elimination of redundant products;
. productivity and efficiency improvements resulting from increased
capacity utilization levels;
4
<PAGE>
. reduced administrative expense items such as insurance premiums and
supplies; and
. cost savings from bringing in-house various manufacturing operations,
such as fabrication, that the RPS Division outsourced before its
acquisition.
The savings described above are based on estimates and assumptions of the
Company that are inherently uncertain, and are subject to significant business,
economic and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond our control. We can give no
assurance as to what extent or when such savings will be achieved. See
"Disclosure Regarding Forward-Looking Statements."
Tokheim was formed in 1901 and our principal executive offices are located at
10501 Corporate Drive, Fort Wayne, Indiana, 46845. Our telephone number is
(219) 470-4600.
The Acquisition
On September 30, 1998, we completed the acquisition of the RPS Division for a
price equal to $330.0 million in cash, notes, and warrants, subject to certain
post-closing adjustments. Of the $330.0 million purchase price, $100.0 million
was paid in cash borrowed under the terms of a new bank credit agreement with a
consortium of banks (the "New Credit Agreement") as well as $22.5 million of
senior notes due 2005 (the "Senior Notes"). The seller note portion of the
purchase price consisted of $40.0 million in ten year, 12.0% junior
subordinated payment-in-kind notes issued to Schlumberger (the "Schlumberger
Junior Subordinated Notes") and $170.0 million in 12.0% senior subordinated
notes due January 29, 1999, issued to Schlumberger (the "Schlumberger Senior
Subordinated Notes" and, together with the Schlumberger Junior Subordinated
Notes, the "Schlumberger Subordinated Notes"). The remaining $20.0 million of
the purchase price was paid with common stock warrants (the "Schlumberger
Warrants") exercisable for five years, beginning January 30, 1999 to purchase
at a nominal price 2,526,923 shares of the Company's common stock. The
Schlumberger Senior Subordinated Notes, along with the Senior Notes, were
repaid on January 29, 1999 with the proceeds from the sale of the outstanding
notes. We have the option, subject to bank approval, to redeem (in whole or in
part) the Schlumberger Junior Subordinated Notes.
The Company is to reimburse Schlumberger for cash that remained in the RPS
Division on the effective date of the acquisition, net of certain adjustments.
We currently estimate this amount to be up to approximately $6.5 million. We
anticipate that this payment to Schlumberger will be made in the second quarter
of 1999 from funds available through the revolving working capital facility
under the New Credit Agreement.
On the closing date of the acquisition of the RPS Division, we entered into a
technology and licensing agreement with Schlumberger, under which Schlumberger
will pay us a minimum fee of approximately $0.9 million a year, regardless of
use, for a period of five years, payable monthly. The payments under the
agreement are due in full even if Schlumberger terminates the agreement or
discontinues use of the services at any time during the five year payment
period.
The New Credit Agreement currently provides for a six year, $110.0 million
revolving working capital facility and a six year, $120.0 million term loan
facility. An additional agreement provides for the assignment of a three year,
$7.6 million ESOP loan facility. At February 28, 1999 the outstanding
borrowings were $65.1 million under the revolving working capital facility,
$120.0 million under the term loan, and $6.3 million under the ESOP facility.
Available borrowings under the revolving working capital facility were $44.9
million at February 28, 1999.
Also, simultaneously with the acquisition of the RPS Division, we entered
into a note purchase agreement, pursuant to which we issued $22.5 million
aggregate principal amount of Senior Notes. Proceeds from the these notes were
used in connection with our refinancing of existing indebtedness.
Also on September 30, 1998, we completed the repurchase of the final $55.0
million of our 11.5% Senior Subordinated Notes that were then outstanding.
These notes were redeemed at an
5
<PAGE>
aggregate premium and consent payment of approximately $12.3 million along with
accrued interest of approximately $1.1 million.
The proceeds from the issuance of the outstanding notes were used to:
(i) redeem the Schlumberger Senior Subordinated Notes; these notes were
redeemed at an aggregate price of $176.7 million, representing
principal of $170.0 million and accrued and unpaid interest thereon of
$6.7 million;
(ii) redeem the Senior Notes; these notes were redeemed at an aggregate
price of $23.2 million, representing principal of $22.5 million,
accrued and unpaid interest thereon of $0.2 million and an applicable
call premium of $0.5 million; and
(iii) reduce borrowings under the revolving working capital facility of the
New Credit Agreement by $3.4 million.
(iv) pay discounts, fees and expenses associated with the Offering of $6.3
million.
In addition, total availability under the revolving working capital facility
of the New Credit Agreement was permanently reduced from $120.0 million to
$110.0 million.
The indentures under which the outstanding notes were, and the exchange notes
will be, issued will permit us, subject to certain conditions, to refinance the
Schlumberger Junior Subordinated Notes and reacquire the Schlumberger Warrants
with junior subordinated debt.
The issuance of the exchange notes contemplated by this prospectus is
referred to as either the "Exchange Offer" or the "exchange offer." The
issuance of the outstanding notes and the application of the proceeds therefrom
are referred to collectively as the "Offering." The exchange offer, the
Offering, along with the execution of the credit agreement, the sale of the
Senior Notes, the Schlumberger Subordinated Notes and Schlumberger Warrants,
and the consummation of the acquisition of the RPS Division are referred to
collectively as the "Transactions." See "The Transactions" and "Description of
Certain Indebtedness."
Risk Factors
See the section entitled "Risk Factors," beginning on page 21, for a
discussion of certain factors that you should consider before deciding whether
to participate in the exchange offer.
Principal Executive Office
Our headquarters are located at 10501 Corporate Drive, Fort Wayne, Indiana
46845, telephone number (219) 470-4600.
6
<PAGE>
Summary of the Exchange Offer
Registration Rights Agreements... We sold the outstanding notes on January
29, 1999 to the initial purchasers--BT
Alex. Brown, Credit Lyonnais Securities,
First Chicago Capital Markets, Inc.,
Gleacher NatWest International, ABN AMRO
Incorporated, PaineWebber Incorporated and
Schroder & Co. Inc. The initial purchasers
then sold the outstanding notes to
institutional investors. Simultaneously
with the initial sale of the outstanding
notes, we entered into two registration
rights agreements, one agreement for the
notes issued in dollars and one for the
notes issued in Euros, each of which
provides for the exchange offer.
You may exchange your outstanding notes for
exchange notes, which have substantially
identical terms. The exchange offer
satisfies your rights under the
registration rights agreements. After the
exchange offer is over, you will not be
entitled to any exchange or registration
rights with respect to your outstanding
notes, except under limited circumstances.
The Exchange Offer............... We are offering to exchange $123.0 million
total principal amount of 11 3/8% Senior
Subordinated Exchange Notes due 2008 and
(Euro)75.0 million total principal amount
of 11 3/8% Senior Subordinated Exchange
Notes due 2008 of the Company, all of which
have been registered under the Securities
Act for your outstanding 11 3/8% Senior
Subordinated Dollar Notes due 2008 or your
outstanding 11 3/8% Senior Subordinated
Euro Notes due 2008 sold in the January
1999 private offering. To exchange your
outstanding notes, you must properly tender
them, and we must accept them. We will
exchange all outstanding notes that you
validly tender and do not validly withdraw.
We will issue registered exchange notes at
or promptly after the end of the exchange
offer.
Resales.......................... We believe that you can offer for resale,
resell and otherwise transfer the exchange
notes without complying with the
registration and prospectus delivery
requirements of the Securities Act if:
. you acquire the exchange notes in
the ordinary course of your
business;
. you are not participating, do not
intend to participate, and have no
arrangement or understanding with
any person to participate, in the
distribution of the exchange notes;
and
. you are not an "affiliate" of ours,
as defined in Rule 405 of the
Securities Act.
7
<PAGE>
By executing the letter of transmittal, or
by agreeing to the terms of the letter of
transmittal, each holder will represent to
us that each of these conditions is
satisfied. If any of these conditions is
not satisfied and you transfer any exchange
note without delivering a proper prospectus
or without qualifying for a registration
exemption, you may incur liability under
the Securities Act. We do not assume or
indemnify you against such liability.
Each broker-dealer acquiring exchange notes
for its own account in exchange for
outstanding notes, which it acquired
through market-making or other trading
activities, must acknowledge that it will
deliver a proper prospectus when any
exchange notes are transferred. A broker-
dealer may use this prospectus for an offer
to resell, a resale or other retransfer of
the exchange notes.
Expiration Date.................. The exchange offer expires at 5:00 p.m.,
New York City time (in the case of
outstanding dollar notes) or 5:00 p.m.,
London time (in the case of outstanding
Euro notes), on , 1999, unless
we extend the expiration date.
Conditions to the Exchange The exchange offer is subject to customary
Offer........................... conditions, some of which we may waive.
Procedures for Tendering We issued the outstanding dollar notes as
Outstanding Notes............... global securities. When the outstanding
dollar notes were issued, the Company
deposited them with U.S. Bank Trust
National Association, as custodian. U.S.
Bank Trust National Association issued a
certificateless depositary interest in the
outstanding dollar notes, which represents
a 100% interest in the outstanding dollar
notes, to The Depositary Trust Company
("DTC"). Beneficial interests in the
outstanding dollar notes, which are held by
direct or indirect participants in DTC
through the certificateless depositary
interest, are shown on records maintained
in book-entry form by DTC. When the
outstanding Euro notes were issued, the
Company deposited them with Midland Bank
plc, as common depositary for the Euroclear
System ("Euroclear"), and Cedel Bank, a
societe anonyme ("Cedel Bank"). Security
entitlements with respect to the
outstanding Euro notes are shown on records
maintained in book-entry form by Euroclear,
Cedel Bank or your securities intermediary.
Each holder of outstanding notes desiring
to accept the exchange offer must, unless
an agent's message is used in connection
with a book-entry transfer, complete and
sign the letter of transmittal or a
facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or deliver the letter of
transmittal,
8
<PAGE>
together with the outstanding notes and any
other required documents, to the
appropriate exchange agent at the addresses
set forth herein and in the letter of
transmittal prior to 5:00 p.m., New York
City time (in the case of outstanding
dollar notes) or 5:00 p.m., London time (in
the case of outstanding Euro notes) on the
expiration date. See "The Exchange Offer--
Procedures for Tendering Outstanding Notes"
for more information.
Do not send letters of transmittal and
certificates representing outstanding notes
to the Company or to DTC or Euroclear or
Cedel Bank. Send these documents only to
the appropriate exchange agent. See "The
Exchange Offer--Exchange Agents" for more
information.
Special Procedures for If you are a beneficial owner whose
Beneficial Owners............... outstanding notes are registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee and wish to
tender your outstanding notes in the
exchange offer, please contact the
registered holder as soon as possible and
instruct it to tender on your behalf and
comply with our instructions set forth
elsewhere in this prospectus.
Guaranteed Delivery Procedures
for Outstanding Notes...........
If you wish to tender your outstanding
notes, and time will not permit your
required documents to reach the appropriate
exchange agent by the expiration date, or
the procedure for book-entry transfer
cannot be completed on time or certificates
for registered notes cannot be delivered on
time, you may tender your outstanding notes
pursuant to the procedures described below
under "The Exchange Offer--Procedures for
Tendering Outstanding Notes-- Guaranteed
Delivery."
Withdrawal Rights................ You may withdraw the tender of your
outstanding notes at any time before 5:00
p.m., New York City time (in the case of
outstanding dollar notes) or 5:00 p.m.,
London time (in the case of outstanding
Euro notes), on , 1999, unless we extend
the date.
Appraisal or Dissenters' Rights.. Holders of outstanding notes do not have
any appraisal or dissenters' rights in the
exchange offer. If you do not tender your
outstanding notes or the Company rejects
your tender, you will not be entitled to
any further registration rights under the
registration rights agreements, except
under limited circumstances. However, your
notes will remain outstanding and entitled
to the benefits of the indentures. Holders
should read the discussion under the
heading "Risk Factors--Consequences of a
Failure to Exchange Outstanding Notes" for
further information.
9
<PAGE>
U.S. Federal Income Tax The exchange of outstanding notes for
Considerations.................. exchange notes is not a taxable exchange
for United States federal income tax
purposes. You will not recognize any
taxable gain or loss or any interest income
as a result of the exchange. For additional
information regarding federal income tax
considerations, you should read the
discussion under the heading "Certain
United States Federal Income Tax
Considerations."
Use of Proceeds.................. We will not receive any proceeds from the
issuance of the exchange notes, and we will
pay the expenses of the exchange offer.
Exchange Agents.................. U.S. Bank Trust National Association is
serving as the exchange agent for the
outstanding dollar notes in the exchange
offer. Midland Bank plc is serving as the
exchange agent for the outstanding Euro
notes in the exchange offer. The addresses,
telephone numbers and facsimile numbers of
the exchange agents are listed in the
section of this prospectus entitled "The
Exchange Offer--Exchange Agents" and in the
letter of transmittal.
You should consider carefully the information set forth under the caption
"Risk Factors" beginning on page 21 and all other information set forth in this
prospectus before deciding whether to participate in the exchange offer.
10
<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.
Securities Offered............... $123.0 million aggregate principal amount
of 11 3/8% Senior Subordinated Exchange
Notes due 2008 and (Euro)75.0 million
aggregate principal amount of 11 3/8%
Senior Subordinated Exchange Notes due
2008.
Issuer........................... Tokheim Corporation.
Maturity Date.................... August 1, 2008.
Interest Rate.................... . Dollar-denominated exchange notes:
11 3/8% per year (calculated using a
360 day year)
. Euro-denominated exchange notes: 11
3/8% per year (calculated using a
360 day year)
Interest Payment Dates........... February 1 and August 1, beginning on
August 1, 1999.
Ranking.......................... The exchange notes will:
. be unsecured senior subordinated
obligations;
. rank junior to our existing and
future senior debt, including our
obligations under the New Credit
Agreement;
. rank equally in right of payment
with any of our other senior
subordinated obligations; and
. rank senior to all of our junior
subordinated indebtedness, including
the Schlumberger Junior Subordinated
Notes.
As of February 28, 1999, on a pro forma
basis for the Offering we had approximately
$212.4 million of senior debt outstanding,
substantially all of which was secured by
our assets and the assets of certain of our
subsidiaries. You should read
"Capitalization" and "Description of the
Exchange Notes--Subordination" for more
information regarding the Company's debt
and the payment ranking of the exchange
notes.
Guarantees....................... All existing and future U.S. subsidiaries
will guarantee the exchange notes on a
senior subordinated basis with guarantees
that will be unsecured and subordinated to
existing and future senior debt of the
guarantor. Our existing U.S. subsidiaries
are: Envirotronic Systems, Inc.; Gasboy
International, Inc.; Management Solutions,
Inc.; Sunbelt Hose & Petroleum Equipment,
Inc.; Tokheim
11
<PAGE>
Automation Corporation; Tokheim Equipment
Corporation; Tokheim Investment Corp.;
Tokheim RPS, LLC; and Tokheim Services LLC.
You should read "Description of the
Exchange Notes--Subordination" and
"Description of the Exchange Notes--
Subsidiary Guarantees" for more information
regarding the guarantees of the exchange
notes.
Optional Redemption.............. Except as described in the next section, we
cannot redeem the exchange notes until
February 1, 2004. Thereafter we may redeem
some or all of the notes at the redemption
prices listed in the "Description of the
Exchange Notes" section under the heading
"Optional Redemption," plus accrued and
unpaid interest.
Optional Redemption after Public
Equity Offerings................
At any time (which may be more than once)
before February 1, 2002, we can choose to
redeem up to 35% of the original principal
amount of the dollar-denominated exchange
notes and up to 35% of the original
principal amount of the Euro-denominated
exchange notes with money that we raise in
one or more public equity offerings, as
long as we redeem the exchange notes within
120 days of completing the public equity
offering, and
. in the case of a redemption of
dollar-denominated exchange notes,
we pay 111.375% of the face amount
of the dollar-denominated exchange
notes, plus interest, and at least
55% of the original principal amount
of the dollar-denominated exchange
notes remains outstanding
afterwards; and
. in the case of a redemption of Euro-
denominated exchange notes, we pay
111.375% of the face amount of the
Euro-denominated exchange notes,
plus interest, and at least 55% of
the original principal amount of the
Euro-denominated exchange notes
remains outstanding afterwards.
Change of Control................ If a change of control of our Company
occurs, you will have the right to require
us to repurchase all of the outstanding
exchange notes held by you at a price equal
to 101% of their face amount plus accrued
and unpaid interest to the date of
repurchase.
We might not be able to pay you the
required price for exchange notes you
present to us at the time of a change of
control of our Company because:
. we might not have enough funds at
that time; or
. the terms of our senior debt may
prevent us from repaying the
exchange notes.
12
<PAGE>
For more information, see "Risk Factors--
Debt Financing Risks--Change of Control"
and "Description of the Exchange Notes--
Change of Control."
Certain Indenture Provisions..... The indentures under which the outstanding
notes have been, and the exchange notes
will be, issued each contain certain
covenants for your benefit limiting our
(and most or all of our subsidiaries')
ability to, among other things:
. incur additional debt;
. pay dividends on capital stock,
repurchase capital stock or make
certain other restricted payments;
. make certain investments;
. create liens on our assets to secure
debt;
. enter into transactions with
affiliates;
. merge or consolidate with another
company; and
. transfer and sell assets.
These covenants are subject to a number of
important limitations and exceptions. See
the "Description of the Exchange Notes"
section under the heading "Certain
Covenants."
Asset Sale Proceeds.............. If we or our subsidiaries engage in certain
asset sales, we generally must either
invest the net cash proceeds from such
sales in our business within a period of
time, prepay senior debt or make an offer
to purchase a principal amount of the
exchange notes equal to the excess net cash
proceeds. The purchase price of the
exchange notes will be 100% of their
principal amount, plus accrued and unpaid
interest.
Trustee, Paying and Transfer
Agent and Registrar.............
U.S. Bank Trust National Association.
Luxembourg Paying and Transfer Bankers Trust Luxembourg S.A. (if the Notes
Agent........................... are listed on the Luxembourg Stock
Exchange).
London Paying Agent and Common
Depositary......................
Midland Bank plc.
Use of Proceeds.................. The Company will not receive any cash
proceeds in the exchange offer.
Form of the Exchange Notes....... The dollar-denominated exchange notes will
be represented by one or more securities in
registered, global form deposited with U.S.
Bank Trust National Association, as
custodian for DTC. The Euro-denominated
exchange notes will be represented by one
or more securities in registered, global
form, deposited with Midland Bank plc as
common depositary for Euroclear and Cedel
Bank. You will not receive notes in
certificated
13
<PAGE>
form unless one of the events set forth
under the heading "Description of the
Exchange Notes--Form of Exchange Notes,
Clearance and Settlement--Certificated
Notes" occurs. Instead:
. beneficial interests in the dollar-
denominated exchange notes will be
shown on, and transfers of these
interests will be effected only
through, records maintained in book-
entry form by DTC with respect to
its participants; and
. security entitlements with respect
to the Euro-denominated exchange
notes will be shown on, and
transfers of these entitlements will
be effected only through, records
maintained in book-entry form by
Euroclear, Cedel Bank or your
securities intermediary.
Absence of a Public Market for
the Exchange Notes..............
While the outstanding dollar notes are
presently eligible for trading in the
Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL")
market of the National Association of
Securities Dealers, Inc. ("NASD") by
qualified institutional buyers, there is no
existing market for the exchange notes. The
initial purchasers of the outstanding notes
have advised the Company that they
currently intend to make a market in the
exchange notes following the exchange
offer, but they are not obligated to do so,
and any market-making may be discontinued
at any time without notice. The Company
does not currently intend to apply for a
listing of the exchange notes on any
securities exchange. We do not know if an
active public market for the exchange notes
will develop or, if developed, will
continue. If an active public market does
not develop or is not maintained, the
market price and liquidity of the exchange
notes may be adversely affected. We cannot
assure you of the liquidity of any markets
that may develop for the exchange notes, of
your ability to sell your exchange notes,
or of the price at which you would be able
to sell your exchange notes.
Risk Factors..................... You should read "Risk Factors," which
begins on page 21, for a description of
certain risks you should consider before
deciding whether to participate in the
exchange offer.
You should read "Description of the Exchange Notes" for additional
information regarding the exchange notes.
14
<PAGE>
Summary Unaudited Pro Forma Consolidated Financial Data
(dollars in thousands)
The following table sets forth summary unaudited pro forma consolidated
financial data of the Company. The summary unaudited pro forma statement of
earnings data and other data give effect to our March 1998 public offering of
our common stock (the "Common Stock Offering") and the Transactions (including
the expected cost savings, as used in the calculation of Adjusted EBITDA (as
defined) and as described under "The Summary--Business Strategy--Realize
Operating Synergies and Cost Savings") as if they had occurred as of December
1, 1997. The summary unaudited pro forma balance sheet data as of February 28,
1999 includes the Transactions and the Offering. The summary unaudited pro
forma consolidated financial data do not purport to represent what our results
of operations actually would have been if the Common Stock Offering and the
Transactions (including the expected cost savings) had occurred as of such
dates and are not necessarily indicative of our future operating results or
financial position. The information contained in this table should be read in
conjunction with "Summary Financial Data of Tokheim Corporation and
Subsidiaries," "Summary Financial Data of the RPS Division," "Unaudited Pro
Forma Financial Statements," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Risk Factors" and the financial
statements of the Company and the RPS Division, including the notes thereto,
appearing elsewhere or incorporated by reference in this prospectus.
<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)(1)......................... 4,313 (886)
Interest expense, net.............................. 50,609 12,421
Loss before income taxes........................... (48,036) (14,685)
Net loss(2)........................................ (46,572) (14,292)
Preferred stock dividends(3)....................... 1,484 374
Net loss applicable to common stock(2)............. (48,056) (14,666)
Other Data:
Capital expenditures............................... $ 20,640 $ 12,341
Depreciation and amortization...................... 24,423 6,892
Interest expense and preferred stock dividends..... 52,930 13,424
EBITDA (as defined)(4)............................. 42,926 5,845
Adjusted EBITDA (as defined)(5).................... 71,626 7,003
Ratio of earnings to fixed charges(6).............. --x --x
<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(7)................................................... 459,259
ESOP preferred stock, net....................................... 12,941
Common shareholders' equity, net(8)............................. 18,572
</TABLE>
- --------
(1) Operating income (loss) equals net sales less cost of sales, selling,
general and administrative expenses, depreciation and amortization, and
merger and acquisition costs and other unusual items.
(2) Excludes extraordinary loss from debt extinguishment of $23,924 for the
twelve months ended November 30, 1998 and $6,249 for the three months ended
February 28, 1999.
(3) Dividends are payable on the Company's ESOP Preferred Stock, the proceeds
of which are used to service the Guaranteed ESOP Obligation.
(4) EBITDA (as used in this prospectus) represents earnings (loss) from
continuing operations before income taxes and extraordinary loss, plus net
interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest.
15
<PAGE>
The following table calculates EBITDA (as defined) using data extracted from
the Unaudited Pro Forma Consolidated Condensed Financial Statements and the
financial statements of the Company and the RPS Division, included elsewhere
herein:
<TABLE>
<CAPTION>
For the Three Months Ended
February 28, 1999
-----------------------------------------
(Amounts in thousands)
Tokheim
Tokheim Corporation
Corporation Offering And Subsidiaries
And Pro Forma Pro Forma
Subsidiaries Adjustments Offering
------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loss before income taxes
and extraordinary loss. $(14,571) $(114) $(14,685)
Interest expense, net... 12,307 114 12,421
Depreciation and
amortization........... 6,892 -- 6,892
Merger and acquisition
costs and other unusual
items.................. 1,123 -- 1,123
Minority interest....... 94 -- 94
-------- ----- --------
EBITDA................. $ 5,845 $ -- $ 5,845
======== ===== ========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended November 30, 1998
--------------------------------------------------------------------------------------------------
(Amounts in thousands)
Tokheim Tokheim
Corporation Corporation
Acquisition And And Subsidiaries
Tokheim And Subsidiaries Pro Forma
RPS RPS Corporation Financing Pro Forma Offering Acquisition,
RPS Division Division And Pro Forma Acquisition Pro Forma Financing
Division Adjustments Adjusted Subsidiaries Adjustments & Financing Adjustments & Offering
-------- ----------- -------- ------------ ----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before
income taxes and
extraordinary loss... $(19,027) $7,987 $(11,040) $(2,698) $(34,316) $(48,054) $ 18 $(48,036)
Interest expense, net. 1,833 -- 1,833 19,257 29,537 50,627 (18) 50,609
Depreciation and
amortization......... 11,126 (3,251) 7,875 13,136 5,487 26,498 -- 26,498
Merger and acquisition
costs and other
unusual items........ -- 1,918 1,918 13,685 -- 15,603 -- 15,603
Minority interest..... 30 (25) -- 327 -- 327 -- 327
-------- ------ -------- ------- -------- -------- ---- --------
EBITDA............... $ (6,038) $6,629 $ 586 $43,707 $ 708 $ 42,926 $-- $ 42,926
======== ====== ======== ======= ======== ======== ==== ========
</TABLE>
EBITDA is used by us as a financial indicator of our ability to service debt,
although the precise definition of EBITDA is subject to variation among
companies. EBITDA should not be construed as an alternative to operating income
or cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of our operating performance or as a measure of liquidity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." For additional information concerning the Company's historical
cash flows, see the consolidated statement of cash flows included elsewhere
herein.
(5) Adjusted EBITDA (as defined) is EBITDA plus $28,700 for the twelve months
ended November 30, 1998 or $1,158 for the three months ended February 28,
1999 of the original $28,700 of anticipated first fiscal year cost savings.
The following table represents the remaining cost savings, which we
believe, can be achieved in the one and three year periods described:
<TABLE>
<CAPTION>
After After
One Full Three Full
Fiscal Year Fiscal Years
----------- ------------
<S> <C> <C>
Estimated annual cost savings:
Combined manufacturing capabilities................. $20,300 $26,000
Integrated European service organizations........... 1,800 9,000
Elimination of general and administrative
redundancies....................................... 2,300 5,000
Reduced raw material cost........................... 2,500 5,500
Reduced foreign currency exposure................... 1,800 1,800
------- -------
Total estimated annual savings.................... $28,700 $47,300
======= =======
</TABLE>
16
<PAGE>
Combined manufacturing capabilities--We intend to consolidate substantially
all of our dispenser manufacturing into three facilities. We expect to
generate approximately $26,000 of annual savings, $20,300 of which is
expected to be achieved in the first full fiscal year after the acquisition
of the RPS Division. These savings include net personnel reductions and
elimination of fixed costs associated with the closed facilities.
Integrated European service organizations--We plan to combine the service
functions of the RPS Division and Tokheim into a single organization. We
expect to generate approximately $9,000 of annual savings, $1,800 of which
is expected in the first full fiscal year after the acquisition of the RPS
Division through a reduction in personnel and the disposition of an
estimated 100 excess vehicles.
Elimination of general and administrative redundancies--We intend to
eliminate redundant administrative staff. We estimate that approximately
$5,000 of annual cost savings are achievable from such reductions, $2,300
of which is expected in the first full fiscal year after the acquisition of
the RPS Division.
Reduced raw material cost--We believe that benefits from the combined
volume purchasing power of the consolidated Company will result in volume
discounts as well as rationalization of products and use of common parts
are expected to reduce the annual cost of materials by an additional 1.5%
or approximately $5,500, $2,500 of which is expected in the first full
fiscal year after the acquisition of the RPS Division.
Reduced foreign currency exposure--In 1997 the RPS Division incurred a
$2,458 loss from currency exchange losses connected with intercompany
purchases of inventory. We believe that the utilization of hedging
techniques would reduce these future losses by approximately $1,800 per
annum.
In addition, we expect to realize savings from other areas, principally:
(i) reduced manufacturing costs resulting from product standardization and
elimination of redundant products; (ii) productivity and efficiency
improvement resulting from increased capacity utilization levels; (iii)
reduced administrative expense items such as insurance and supplies; and
(iv) cost savings from bringing in-house, various manufacturing operations
that the RPS Division currently out sources, such as metal fabrication.
It is anticipated that approximately $32,200 of expenditures will be
required to realize the $47,300 of cost savings. The savings described
above are based on our estimates and assumptions which are inherently
uncertain and are subject to significant business, economic and competitive
uncertainties and contingencies, all of which are difficult to predict and
many of which are beyond our control. There can be no assurance that all
such savings will be achieved. See "Disclosure Regarding Forward-Looking
Statements" and "Risk Factors--Risks Associated with the Operation of the
Business--Integration of Operations."
(6) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance, the portion of rental expense assumed to represent
interest and dividends on the ESOP Preferred Stock, which dividends service
the Guaranteed ESOP Obligation. Earnings were insufficient to cover fixed
charges by $48,036 and $14,685 for the twelve months ended November 30,
1998 and the three months ended February 28, 1999, respectively.
(7) Total debt includes these dollar-denominated exchange notes and these Euro-
denominated exchange notes, long-term borrowings under the New Credit
Agreement and other credit agreements, the current portion of such
borrowings, cash overdraft facilities, the Schlumberger Junior Subordinated
Notes and the guarantee of certain debt incurred by our Employee Stock
Ownership Plan (the "ESOP") to purchase our preferred stock, the dividends
of which are used by the ESOP to service the Guaranteed ESOP Obligation.
(8) Includes amounts attributable to the Schlumberger Warrants. The indentures
under which the outstanding notes were, and the exchange notes will be,
issued will permit the Company, subject to certain conditions, to refinance
the Schlumberger Junior Subordinated Notes and reacquire the Schlumberger
Warrants with junior subordinated debt.
17
<PAGE>
Summary Financial Data of Tokheim Corporation and Subsidiaries
(dollars in thousands)
The following table sets forth summary financial data of the Company. The
summary statement of earnings data, other data and balance sheet data as of and
for each of the fiscal years in the five-year period ended November 30, 1998
were derived from the audited consolidated financial statements of the Company.
The information contained in this table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of the Company, including
the notes thereto, appearing elsewhere or incorporated by reference in this
prospectus. The summary historical financial data as of and for the three
months ended February 28, 1998 and 1999 were derived from unaudited interim
consolidated condensed financial statements of the Company. In the opinion of
management, such unaudited interim consolidated condensed financial statements
contain all adjustments (consisting of only normal recurring items with the
exception of merger and acquisition costs and other unusual items and the
extraordinary items) necessary to present fairly the Company's financial
position and results of operations as of and for the periods presented.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended November 30, February 28,
------------------------------------------------- ------------------
1994 1995 1996(1) 1997 1998(1) 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)(2)............. 3,780 5,811 6,356 20,645 14,769 (966) (886)
Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307
Earnings (loss) before
income taxes(3)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571)
Earnings (loss)(3)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178)
Preferred stock
dividends............. 1,617 1,580 1,543 1,512 1,484 374 374
Earnings (loss)
applicable to common
stock(3).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552)
Other Data:
Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996
Depreciation and
amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892
Interest expense and
preferred stock
dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842
EBITDA (as defined)(4). 10,230 14,126 17,842 34,767 43,707 7,265 5,845
Net cash provided from
(used in) operations.. 2,408 3,347 5,897 21,202 9,790 (5,341) (1,308)
Net cash used in
investing activities.. (2,562) (4,910) (54,079) (10,394) (124,414) (12,526) (4,996)
Net cash provided from
(used in) financing
activities............ (5,063) 754 57,016 (11,795) 125,669 19,806 13,330
Ratio of earnings to
fixed charges(5)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
</TABLE>
<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(6)....................................... 443,331 459,259
ESOP preferred stock, net........................... 12,130 12,941
Common shareholders' equity, net.................... 64,631 18,572
</TABLE>
- --------
(1) Results for 1996 include three months of Sofitam operations and results for
1998 include two months of the RPS Division's operations.
(2) Operating income (loss) equals net sales less cost of sales, selling,
general and administrative expenses, depreciation and amortization, and
merger and acquisition costs and other unusual items.
18
<PAGE>
(3) The amounts for the years ended November 30, 1998 and November 30, 1997 and
the three months ended February 28, 1999 exclude $23,924, $1,886 and
$6,249, respectively, for extraordinary loss from debt extinguishment. The
amounts for the year ended November 30, 1994 exclude the cumulative effect
of change in method of accounting for post-retirement benefits other than
pensions of $13,416.
(4) EBITDA (as used in this prospectus) represents earnings (loss) from
continuing operations before income taxes and extraordinary loss, net
interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest. Management uses EBITDA
as a financial indicator of the Company's ability to service debt, although
the precise definition of EBITDA is subject to variation among companies.
EBITDA should not be construed as an alternative to operating income or
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of the Company's operating performance or as a measure of
liquidity. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." For additional information concerning the
Company's historical cash flows, see the consolidated statement of cash
flows included elsewhere herein.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance expense, the portion of rental expense assumed to
represent interest and dividends on the ESOP Preferred Stock, which
dividends service the Guaranteed ESOP Obligation. Earnings were
insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571
for the fiscal years ended 1996 and 1998 and for the three months ended
February 28, 1998 and 1999, respectively.
(6) Total debt includes the 11.5% Senior Subordinated Notes, the Schlumberger
Senior Subordinated Notes, the Senior Notes, the Schlumberger Junior
Subordinated Notes, long-term borrowings under the old credit agreement and
other credit agreements, the current portion of such borrowings, cash
overdraft facilities and the Guaranteed ESOP Obligation.
19
<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 thereto, appearing elsewhere in this
prospectus.
<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
EBITDA (as defined)(1)..... 1,333 2,004 (274) (4,661) (10,330)
EBITDA (as defined and
adjusted)(2).............. 10,644 11,049 11,941 3,549 (1,328)
Net cash provided from
(used in) operations...... (6,583) 10,432 13,157 (3,241) (22,896)
Net cash used in investing
activities................ (11,997) (36,400) (10,268) 15,976 (4,591)
Net cash provided from
(used in) financing
activities................ 21,630 25,179 (1,013) (16,101) 29,894
</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(3)...................................... 12,614 2,289
Equity and retained earnings (deficit)............. 154,270 178,805
</TABLE>
- --------
(1) EBITDA (as used in this prospectus) represents earnings (loss) from
continuing operations before income taxes and extraordinary loss, net
interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest. Management uses EBITDA
as a financial indicator of the Company's ability to service debt, although
the precise definition of EBITDA is subject to variation among companies.
EBITDA should not be construed as an alternative to operating income or
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of the Company's operating performance or as a measure of
liquidity. See the RPS Division combined statement of cash flows included
elsewhere herein.
(2) EBITDA (as defined and adjusted) is EBITDA (as defined) plus the add back
of operating losses for the Abbeville facility, which was not purchased, of
$700 for each twelve month period and $525 for each nine month period
presented, management and technical fees charged by Schlumberger to its
subsidiaries, of $9,177, $8,345 and $6,949 in 1997, 1996, and 1995,
respectively and $6,080 and $6,559 for the nine months ended 1997 and 1998,
respectively. In addition EBITDA (as defined and adjusted) excludes
expenses, which management believes are non-recurring, of $2,338 and $1,662
for 1997 and 1995, respectively, and $1,605 and $1,918 for the nine months
ended 1997 and 1998, respectively.
(3) Total debt includes bank overdrafts and short-term loans plus the current
portion of long-term debt.
20
<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 notes in the exchange offer.
Debt Financing Risks
Substantial Leverage and Variable Interest Rates
As a result of the Transactions, we have a significant level of debt. As of
February 28, 1999, we had approximately $459.3 million of debt and
approximately $18.6 million of common shareholders' equity. After giving effect
to the Transactions, as if consummated on December 1, 1997, pro forma earnings
before income taxes and fixed charges would have been insufficient to cover
fixed charges by approximately $48.0 million for the year ended November 30,
1998. You should read the discussions under the headings "Capitalization" and
"Unaudited Pro Forma Consolidated Condensed Financial Statements" for further
information regarding the Company's indebtedness.
Our future operating performance and our ability to make cash payments with
respect to the exchange notes and our other debt obligations will depend on
future economic conditions, primarily interest rate levels, and on financial,
business and other factors, many of which are beyond our control. We believe
that, based on current levels of operations and anticipated cost savings and
future growth, our expected cash flow from operations, together with available
borrowings under the New Credit Agreement and our other sources of liquidity
(including leases), will be adequate to meet our anticipated requirements for
working capital, capital expenditures, lease payments and scheduled principal
and interest payments. We can give no assurance, however, that we will continue
to generate cash flow at or above current levels, that estimated cost savings
or growth will be achieved or that we will be able to refinance our existing
indebtedness in whole or in part.
If we are unable to service our indebtedness, we will be forced to adopt an
alternative strategy that may include actions such as:
. reducing or delaying capital or research and development expenditures;
. selling assets;
. restructuring or refinancing our indebtedness; or
. seeking additional equity capital.
We can give no assurance that we would be able to implement any of these
strategies on satisfactory terms, if at all.
In addition, our high level of debt, along with certain covenants in the New
Credit Agreement and the indentures, may limit our ability to:
. make capital and research and development expenditures;
. use available funds for operations as opposed to debt service;
. obtain additional financing for working capital, capital expenditures,
acquisitions or general corporate purposes, including refinancing our
debt;
. pay dividends or make other distributions;
. compete effectively or take advantage of business opportunities; and
. weather economic downturns.
Borrowings under the New Credit Agreement bear interest at variable rates. If
market interest rates increase, variable-rate debt will create higher debt
service requirements, which would adversely affect our cash flow. While we
intend to enter into one or more agreements limiting our exposure, any such
agreements may
21
<PAGE>
not offer complete protection from this risk. You should read "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources" for more information.
The indentures under which the outstanding notes were, and the exchange notes
will be, issued will permit us, subject to certain conditions, to refinance the
Schlumberger Junior Subordinated Notes and the Schlumberger Warrants with
junior subordinated debt.
Subordination
The exchange notes will be general unsecured obligations of the Company, and
will be subordinated in right of payment to all of our existing and future
senior debt, including our obligations under the New Credit Agreement, and to
all existing and future senior debt of our subsidiaries. As of February 28,
1999, we had approximately $212.4 million of senior debt, substantially all of
which was secured by our assets and the assets of certain of our subsidiaries.
We may incur additional senior debt under the indentures. If we declare
bankruptcy, liquidate or reorganize, we must pay all senior debt in full before
our assets will be available to pay our obligations on the exchange notes.
There may not be sufficient assets remaining for us to be able to pay amounts
due on some or all of the exchange notes then outstanding. In addition, under
certain circumstances, we may not pay principal of, premium, if any, interest
on, or any other amounts owing in respect of, the exchange notes, or purchase,
redeem or otherwise retire the exchange notes, if a payment default or a non-
payment default exists with respect to certain senior debt, and, in the case of
a non-payment default, a payment blockage notice has been received by the
trustee from the holders of senior debt.
The exchange notes also will be effectively subordinated to all existing and
future obligations, including trade payables, of our subsidiaries. Our
obligations under the New Credit Agreement are guaranteed, jointly and
severally, by all of our United States subsidiaries. Certain of our non-United
States subsidiaries are direct borrowers under the New Credit Agreement, and we
have guaranteed those borrowings. You should read "Description of the Exchange
Notes" and "Description of Certain Indebtedness" for more information about our
debt.
Restrictions Imposed by Terms of Indebtedness
The indentures and the New Credit Agreement contain a number of significant
covenants. These covenants limit our (and most or all of our subsidiaries')
ability to, among other things:
. incur additional debt;
. pay dividends on capital stock or repurchase capital stock or make
certain other restricted payments;
. use the proceeds of certain asset sales;
. make certain investments;
. create liens on our assets to secure debt;
. enter into transactions with affiliates;
. merge or consolidate with another company; and
. transfer and sell assets.
In addition, the New Credit Agreement prohibits us from prepaying the
exchange notes and requires us to maintain specified financial ratios and
satisfy certain financial tests. Our ability to meet such financial ratios and
tests may be affected by events beyond our control. If we are unable to pay our
debts or to comply with these covenants, we would default under the New Credit
Agreement. If our creditors did not waive this default, our creditors could
accelerate payments on our debt and terminate all commitments under the
revolving credit facility. If we were unable to pay the accelerated debt, the
lenders could proceed against the collateral granted to them. Substantially all
of our assets and the assets of our U.S. subsidiaries are pledged as security
under the
22
<PAGE>
New Credit Agreement. We can give no assurance that our assets would be
sufficient to repay our debt, including the exchange notes, if the New Credit
Agreement indebtedness were to be accelerated. You should read "Description of
the Exchange Notes--Certain Covenants," "Description of Certain Indebtedness,"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for more information on these restrictions.
Change of Control
If there is a change of control (as defined in the indentures), we are
required to make an offer to purchase all outstanding exchange notes at a
purchase price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of purchase. We can give no
assurance that we will have sufficient funds available to purchase the exchange
notes upon a change of control. In addition, any change of control, and any
repurchase of the exchange notes required under the indentures upon a change of
control, will constitute an event of default under the New Credit Agreement
with the result that our obligations thereunder could be accelerated and
declared due and payable by the lenders. The lenders would be entitled to
receive payment of all outstanding amounts thereunder before we could
repurchase any of the exchange notes tendered pursuant to an offer to
repurchase the exchange notes upon such change of control. Upon the occurrence
of an event of default, the lenders under the New Credit Agreement would have
the ability to block repurchases of the exchange notes for a period of time.
You should read "Description of Certain Indebtedness--The New Credit Agreement"
and "Description of the Exchange Notes--Change of Control" for more information
about the effects of a change of control.
Fraudulent Conveyance
Any of our creditors may file a lawsuit objecting to our obligations under
the exchange notes or the use of proceeds of the outstanding notes. A court
could void our obligations under the exchange notes (or the obligations of our
guarantor subsidiaries under their guarantees), subordinate the exchange notes
or guarantees to our or their other debt or order the holders to return any
amounts paid for the outstanding notes to the Company or to a fund benefitting
the creditors if the court finds we or they (1) intended to defraud a creditor
or (2) did not receive fair value for the outstanding notes and we either (A)
were insolvent or became insolvent by offering the outstanding notes, (B) did
not have enough capital to engage in the acquisition of the RPS Division or (C)
intended to or believed that we overextended our debt obligations. Creditors of
the subsidiary guarantors may also object to their guarantee of the exchange
notes. A court could order the relief outlined above for the same reasons
outlined above. In addition, the guarantors' creditors could claim that since
the guarantees were made for our benefit, the guarantors did not receive fair
value for the guarantees.
The measure of insolvency for fraudulent transfer purposes will vary
depending upon the law of the jurisdiction that is being applied in any
proceeding. Generally, however, we or a subsidiary guarantor would be
considered insolvent if, at the time we or they incurred the debt, either (1)
the sum of our or their debts (including contingent liabilities) is greater
than our or their assets, at a fair valuation, or (2) the present fair salable
value of our or their assets is less than the amount required to pay the
probable liability on our or their total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured. We
cannot give any assurance as to what standards a court would use to determine
whether the Company or a subsidiary guarantor was solvent at the relevant time,
or whether, whatever standard was used, the exchange notes would not be voided
or further subordinated on another of the grounds set forth above.
We believe that at the time we and the subsidiary guarantors incurred the
debt constituting the outstanding notes and the subsidiary guarantees, we and
they were (a) neither insolvent nor to be rendered insolvent as a result, (b)
in possession of sufficient capital to run our businesses effectively, and (c)
incurring debts within our ability to pay them as they become due. In addition,
we believe that at such time we and they had sufficient assets to satisfy any
probable money judgment against us in any pending action. In reaching this
conclusion, we have relied upon our analyses of internal cash flow projections
and estimated values of our assets and liabilities. We cannot assure you,
however, that a court passing on the same questions would reach the same
conclusions.
23
<PAGE>
Risks Associated with the Operation of the Business
Integration of Operations
Achieving the full benefits from combining Tokheim and the RPS Division and
capturing the efficiencies and cost reductions expected as a result of the
acquisition of the RPS Division (as well as achieving the remaining benefits to
be derived from the acquisition of Sofitam) depends, in large part, on our
ability to coordinate and integrate the operations of each company. We can give
no assurance that we will be successful in these efforts. The combination will
require substantial attention of management, which has limited experience
integrating the operations of companies the size of Tokheim and the RPS
Division. Completing the integration of Sofitam's operations may be hindered as
a result of the acquisition of the RPS Division. Business, competitive,
financial, general economic and other factors, many of which will be beyond
management's control, will affect the timing and ultimate success of the
integration of the companies and the realization of such benefits. The
diversion of management's attention, as well as any other difficulties which
may be encountered in the transition and integration process, may adversely
affect our business, financial condition or results of operation.
If management is unable to effectively integrate the business of the two
companies, the quality of our products and our business, financial condition or
results of operations could be materially adversely affected. Although we
expect that the business operations of Tokheim and the RPS Division will not be
adversely affected by the acquisition of the RPS Division, we can give no
assurance that there will be no unexpected difficulties that may have a
material adverse effect on the Company.
International Operations
International sales represent a substantial portion of our total sales (pro
forma for the Acquisition, 73% in 1998). Our business strategy includes
continued expansion of international sales activity, which will require
significant management attention and financial resources. In addition, foreign
sales are subject to numerous risks, including:
. political and economic instability in foreign markets;
. restrictive trade policies of foreign governments;
. inconsistent product regulation or sudden policy changes by government
agencies or authorities;
. the imposition of duties, taxes or government royalties;
. foreign exchange rate risks;
. exchange controls;
. national and regional labor strikes;
. potentially longer payment cycles;
. increased costs of maintaining international marketing efforts;
. difficulties in enforcing contractual obligations and intellectual
property rights;
. difficulties in collecting international accounts receivable; and
. the burdens of complying with a wide variety of international and U.S.
export laws and differing regulatory requirements.
Any of these factors could materially adversely affect our business,
financial condition or results of operations. In addition, current local market
conditions have slowed our business in Asia. We currently derive less than 2%
of our net sales from the region as compared to 5% for the year ended November
30, 1997. We cannot predict when or if these market conditions will improve or
whether they will spread to other regions.
Our ability to pay our debt will depend, in substantial part, on our ability
to obtain the cash flow generated by our international operations, including
the RPS Division. We lent certain amounts and made capital
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contributions to our subsidiaries in connection with the acquisition of the RPS
Division. We expect payments of interest by our international subsidiaries on
these intercompany loans to result in the repatriation of a portion of their
cash flow. In addition, certain of our subsidiaries will pay us fees under
management agreements executed at the same time as the acquisition of the RPS
Division. We cannot predict whether these interest payments and management fees
will be recharacterized in a way that has adverse tax or other consequences for
us, or whether they will become subject to restrictions of exchange controls on
the transfer of funds into or out of foreign countries, which would adversely
affect our ability to pay our outstanding indebtedness, including the exchange
notes. In addition, declines in the value of the French franc (or any other
currency in which we make sales) relative to the U.S. dollar reduce the amount
of funds (measured in U.S. dollars) that can be repatriated. Under French law,
the trustee or receiver in bankruptcy or the court in any bankruptcy proceeding
may also be in a position to seek either the nullification or the non-
enforceability, depending on the situation, of any legal acts undertaken by a
company with third parties (such as the increase of intercompany obligations,
including intercompany notes, and the payment of management or other fees).
Such an act may materially adversely affect our ability to satisfy our
obligations, including the exchange notes.
Dependence on the Retail Petroleum Industry
Substantially all of our net sales are derived from the sale and servicing of
petroleum dispensing equipment to the retail petroleum industry. Our results of
operations depend on demand for equipment from the retail petroleum industry in
developed and emerging markets. Several factors affect the demand for our
equipment, including:
. wholesale and retail prices for petroleum products;
. taxation of petroleum products;
. environmental regulations;
. technological improvements;
. consumer demand for new products;
. changing retailing patterns in the retail petroleum industry;
. consolidation trends among retailers in developed markets;
. the pace of development in emerging markets;
. changes in interest rates; and
. general economic and industry conditions.
Any of these factors could adversely affect the prices of or demand for our
products and services and could have a material adverse effect on our business,
financial condition or results of operations.
Our customers include MOCs, nationals, jobbers, independents, convenience
store stations, hypermarkets, other retailers and commercial users. Certain of
these customers contribute a substantial amount to our revenues. The loss of
any such customer, or class of customers, or decreases in such customers'
capital expenditures, could have a material adverse effect on our business,
financial condition or results of operation. Recently, MOCs and nationals have
moved toward granting national, regional and global contracts, or tenders, and
toward creating alliances and preferred supplier relationships with suppliers.
Typically, a customer can terminate these arrangements at any time. The loss of
a customer, or the award of a contract to a competitor, may have a more
significant impact on the Company in the future as these arrangements become
more common. As a result of consolidation in the oil industry, especially among
MOCs, the Company is at risk of losing large customers through merger or
consolidation.
Foreign Currency; Common European Currency
A substantial portion of our expenses and sales are denominated in foreign
currencies. Thus, our revenues, cash flows and earnings are affected by
fluctuations in certain exchange rates, primarily the rates between the U.S.
dollar and the French franc or Euro and between the British pound and the U.S.
dollar and the Euro.
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During 1998, approximately 26% of Tokheim's total revenue was denominated in
French francs, which have significantly depreciated against the U.S. dollar in
recent years. Moreover, as a result of the acquisition of the RPS Division we
conduct a substantial portion of our European manufacturing at our Dundee,
Scotland facility, primarily for export. The British pound has recently
appreciated against other European currencies, which makes exports from the
United Kingdom more expensive for our European customers. If foreign currencies
continue to decline in value relative to the U.S. dollar, our U.S. exports
could become more expensive and potentially less competitive in those markets.
You should read "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for more information on currency risks.
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency, the Euro. We are likely to be financially
affected by the introduction of the Euro because we have subsidiaries and
business in many of the member states. We could face substantial transition
costs as we redesign our software systems to reflect the adoption of the new
currency. In addition, we can give no assurance as to how the adoption of the
Euro will affect our payment obligations under loan agreements denominated in
currencies replaced by the Euro or how it will affect our commercial agreements
denominated in these currencies. Our revenues, cash flows and earnings in
western Europe may be affected by fluctuations of the British pound, because
our Dundee plant is now a primary manufacturing facility, and the British pound
was not replaced by the Euro. We can give no assurance as to how the United
Kingdom's decision not to adopt the Euro will affect the Company. Our products
manufactured in Dundee could become more expensive and potentially less
competitive in markets outside the United Kingdom if the value of the British
pound increases relative to the Euro. On the other hand, the amount of funds
(measured in Euro) that can be repatriated for the service of debt would
decrease if the value of the British pound declines relative to the Euro.
Competition
Competition within the retail petroleum dispensing equipment industry is
intense, and has caused the average price of our products to fall significantly
over the past few years. Prices may continue to fall in the future. Our primary
competitors include, among others:
. Gilbarco Inc. (a division of GEC Plc);
. Wayne (a division of Halliburton Co.);
. Scheidt & Bachmann GmbH; and
. Tatsuno Corporation.
Several of our current and potential future competitors have significantly
greater financial, technical and marketing resources than we do because they
are subsidiaries or divisions of much larger corporations. Our current or
potential competitors may develop products that are superior to ours or
integrate new technologies more quickly than we do. We could potentially lose
market share if competitors are able to form alliances with MOCs or respond to
their tender proposals more quickly or on more favorable terms than we can. Any
of the factors listed above, or any other factors that increase competition,
could cause price reductions, reduced gross margins and loss of market share
for the Company, which could cause a materially adverse effect in our business,
financial condition or results of operations. We cannot assure you that we will
compete effectively.
Application of Technology and Software in Products
Our success depends, in significant part, on the continued market acceptance
of our products. We must also develop and introduce new products and services
and enhanced versions of current products that will be accepted by our
customers. The technology and software being integrated into our products,
including electronic components, point-of-sale systems and related products,
are growing increasingly sophisticated and expensive. We can give no assurance
that we will continue to develop successful new products in a timely fashion or
that our current or future products will be marketed properly or satisfy the
needs of the worldwide market. Certain of our assets could become obsolete or
impaired in value as a result.
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In addition, there is intense competition to develop new products and to
establish proprietary rights to these products and the related technologies.
Competitors may be successful in establishing proprietary rights to new
technologies, and we cannot assure you that we will be able to obtain rights to
such technology or that we will not face claims that our products infringe
patents held by our competitors. Our commitment to customizing products to
address particular needs of our customers could burden our resources or delay
the delivery or installation of products. Any of these factors could adversely
affect our relationship with customers, which in turn could materially
adversely affect our business, financial condition or results of operations.
Dependence on Key Personnel
Our success depends in large part upon our ability to attract, retain and
motivate highly skilled employees from a competitive labor market. We can give
you no assurance that we will be able to continue to attract and retain
sufficient numbers of highly skilled employees for the foreseeable future. The
loss of Douglas K. Pinner, our Chairman of the Board, President and Chief
Executive Officer, or other key personnel, could have a material adverse effect
on our business, financial condition or results of operations.
Product Liability
A product defect could pose a significant risk of injury or environmental
contamination because our products are used primarily in connection with highly
combustible, toxic materials. We also face the possibility of a product recall
if there are defects in the design or manufacture of our products. We can make
no assurance about future losses due to product liability claims or recalls.
Such cases could result in substantial claims against the Company and could
material adversely affect our business, financial condition or results of
operations.
Potential "Year 2000" Problems
Many computer systems, software products and other business systems with
embedded chips or processors use only two digits to represent the year. As a
result, they may be unable to accurately process certain data before, during or
after the year 2000. As a result, business and governmental entities are at
risk for possible miscalculations or system failures causing disruptions in
their operations. This is commonly known as the Year 2000 issue and can arise
at any point in our supply, manufacturing, processing, distribution and
financial chains.
We have conducted a review of our business systems, including our computer
systems, and are querying our customers, vendors and resellers about their
progress in identifying and addressing problems that their computer systems may
face in correctly interrelating and processing date information as the year
2000 approaches and is reached. However, we can give no assurance that we will
identify all such Year 2000 problems in our computer systems or those of our
customers, vendors and resellers in advance of their occurrence or that we will
be able to successfully remedy any problems that are discovered. Our expenses
in identifying and addressing such problems, or the expenses or liabilities to
which we may become subject as a result of such problems, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Furthermore, we rely on outside vendors to provide computer hardware
components that we in turn sell to customers, and many of our products and
services are integrated or interface with other software systems of a customer
at the time of initial installation or thereafter, and so to some degree Year
2000 readiness is beyond our control. As a result, the failure of systems (that
were not designed by the Company) to be Year 2000 ready may also have a
material adverse effect on our business, financial condition and results of
operations. You should read "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" for more
information about Year 2000 issues.
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Government Regulation
Environmental
Our operations, and those of our principal customers, are subject to local,
regional and national regulations, laws and standards, including those
concerning the environment. Changes in environmental regulation of the
petroleum exploration, manufacturing, distribution and sales businesses
(primarily in any of the geographic areas in which we compete) could require
our customers to increase their capital spending to comply with such
regulations and consequently decrease their capital spending on our products.
Although we believe that the cost to comply with environmental regulations will
not have a material adverse effect on the Company's financial condition or
results of operations, we cannot assure you that significant costs and
liabilities will be avoided. You should read "Business--Regulation--
Environment" for more information about environmental regulation. The Company
recently reached a tentative settlement for certain environmental litigation
relating to a building it sold. While the Company believes that it will enter
into a final settlement consistent with the terms of the preliminary
settlement, we cannot assure you that this will happen. You should read
"Business--Legal Proceedings" for more information about this litigation.
Emerging Markets
Future sales to operators in emerging markets will depend upon the continued
privatization and deregulation of energy and retail petroleum markets in
eastern Europe, Latin America, Africa and Asia, as well as the strength of
their local economies. Our operations in emerging markets will be subject to
the inherent risks of doing business in markets with financial, political and
legal systems that may be unstable or unpredictable.
Hypermarkets
A 1996 French regulation restricting the construction of new hypermarkets has
limited new service station growth and our sales to this important segment of
the French market. It is possible that other countries where hypermarkets
operate will also adopt restrictive laws.
Risks Associated with the Exchange Offer
Consequences of a Failure to Exchange Outstanding Notes
The Company did not register the outstanding notes under the Securities Act
or any state securities laws, nor does it intend to after the exchange offer.
As a result, the outstanding notes may only be transferred in limited
circumstances under the securities laws. If the holders of the outstanding
notes do not exchange their notes in the exchange offer, they lose their right
to have the outstanding notes registered under the Securities Act, subject to
certain limitations. A holder of outstanding notes after the exchange offer may
be unable to sell the notes.
To exchange the outstanding notes for the exchange notes, the appropriate
exchange agent must receive:
(i) certificates for the outstanding notes or a book-entry confirmation
of the transfer of the outstanding notes into the appropriate exchange
agent's account at DTC or with Euroclear or Cedel Bank, as applicable;
(ii) a completed and signed letter of transmittal with any required
signature guarantees, or an agent's message in the case of a book-entry
transfer; and
(iii) any other documents required by the letter of transmittal.
Holders of outstanding notes who want to exchange their notes should allow
enough time to guarantee timely delivery. The Company is under no duty to give
notice of defective exchanges.
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Lack of Public Market for Exchange Notes
While the outstanding dollar notes are presently eligible for trading in the
PORTAL market of the NASD by qualified institutional buyers, there is no
existing market for the exchange notes. The initial purchasers of the
outstanding notes have advised the Company that they currently intend to make a
market in the exchange notes following the exchange offer, but they are not
obligated to do so, and any market-making may be discontinued at any time
without notice. The Company does not currently intend to apply for a listing of
the exchange notes on any securities exchange. We do not know if an active
public market for the exchange notes will develop or, if developed, will
continue. If an active public market does not develop or is not maintained, the
market price and liquidity of the exchange notes may be adversely affected. We
cannot assure you of the liquidity of any markets that may develop for the
exchange notes, of your ability to sell your exchange notes, or of the price at
which you would be able to sell your exchange notes. Future trading prices of
the exchange notes will depend on many factors, including, among other things:
. prevailing interest rates;
. our operating results; and
. the market for similar securities.
Procedures for Tender of Outstanding Notes
The exchange notes will be issued in exchange for the outstanding notes only
after timely receipt by the appropriate exchange agent of (i) the outstanding
notes or a book-entry confirmation of the transfer of outstanding notes into
the appropriate exchange agent's account at DTC, Euroclear or Cedel Bank, as
applicable, (ii) a properly completed and executed letter of transmittal or an
agent's message in the case of a book-entry transfer, and (iii) all other
required documentation. If you want to tender your outstanding notes in
exchange for exchange notes, you should allow sufficient time to ensure timely
delivery. Neither the exchange agents nor the Company are under any duty to
give you notification of defects or irregularities with respect to tenders of
outstanding notes for exchange. Outstanding notes that are not tendered or are
tendered but not accepted will, following the exchange offer, continue to be
subject to the existing transfer restrictions. In addition, if you tender the
outstanding notes in the exchange offer to participate in a distribution of the
exchange notes, you will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. For additional information, please refer to the sections
entitled "The Exchange Offer" and "Plan of Distribution" later in this
prospectus.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
On January 29, 1999, the Company privately placed $123.0 million of 11 3/8%
Senior Subordinated Notes due 2008 (the "Outstanding Dollar Notes") and
(Euro)75.0 million of 11 3/8% Senior Subordinated Notes due 2008 (the
"Outstanding Euro Notes" and, together with the Outstanding Dollar Notes, the
"Outstanding Notes"). Simultaneously with the sale of the Outstanding Notes, we
entered into a registration rights agreement relating to the Outstanding Dollar
Notes (the "Dollar Registration Rights Agreement") and a registration rights
agreement relating to the Outstanding Euro Notes (the "Euro Registration Rights
Agreement" and together with the Dollar Registration Rights Agreement, the
"Registration Rights Agreements") with the subsidiary guarantors and the
initial purchasers of the Outstanding Notes--BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder &
Co. Inc. Under these Registration Rights Agreements, we agreed to file a
registration statement regarding the exchange of the Outstanding Notes for
notes (the "Dollar Exchange Notes" and the "Euro Exchange Notes" and,
collectively, the "Exchange Notes") with terms identical in all material
respects (such exchange, the "Exchange Offer"). We also agreed to use our
reasonable best efforts to cause that registration statement to become
effective with the Securities and Exchange Commission. Copies of the
Registration Rights Agreements have been filed as exhibits to our Annual Report
on Form 10-K filed with the Securities and Exchange Commission on March 1, 1999
and are incorporated by reference as exhibits to the registration statement of
which this Prospectus is a part.
We are conducting the Exchange Offer to satisfy our contractual obligations
under the Registration Rights Agreements. The form and terms of the Exchange
Notes are the same as the form and terms of the Outstanding Notes, except that
the Exchange Notes will be registered under the Securities Act. As a result,
the Exchange Notes will not bear legends restricting their transfer and will
not contain the registration rights and liquidated damage provisions contained
in the Outstanding Notes. The Outstanding Notes provide that, if a registration
statement relating to the Exchange Offer has not been filed by April 29, 1999
and declared effective by June 28, 1999, we will pay liquidated damages on the
Outstanding Notes. Upon the completion of the Exchange Offer, holders of
Outstanding Notes will not be entitled to any liquidated damages on the
Outstanding Notes or any further registration rights under the Registration
Rights Agreements, except under limited circumstances. See "Risk Factors--
Consequences of a Failure to Exchange Outstanding Notes" and "Description of
the Exchange Notes" for further information regarding the rights of holders of
Outstanding Notes after the Exchange Offer. The Exchange Offer is not extended
to Outstanding Note holders in any jurisdiction where the Exchange Offer does
not comply with the securities or blue sky laws of that jurisdiction.
In the event that applicable interpretations of the staff of the SEC do not
permit the Company to conduct the Exchange Offer, or if the Exchange Offer is
not consummated on or before August 12, 1999, or if certain holders of the
Outstanding Notes notify the Company that they are not eligible to participate
in, or would not receive freely tradeable Exchange Notes in exchange for
tendered Outstanding Notes in, the Exchange Offer, the Company will use its
best efforts to cause to become effective a shelf registration statement with
respect to the resale of the Outstanding Notes. We also agreed to use our best
efforts to keep the shelf registration statement effective until the earlier of
three years after the issue date of the Outstanding Notes and such time as all
of the applicable Outstanding Notes have been sold thereunder.
The term "holder" as used in this section of the Prospectus entitled "The
Exchange Offer" means (1) any person in whose name the Outstanding Notes are
registered on the books of the Company, or (2) any other person who has
obtained a properly completed bond power from the registered holder, or (3) any
person whose Outstanding Notes are held of record by DTC, Euroclear or Cedel
Bank and who wants to deliver such Outstanding Notes by book-entry transfer at
DTC, Euroclear or Cedel Bank.
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Terms of the Exchange Offer
We are offering to exchange up to $123.0 million total principal amount of
Dollar Exchange Notes for a like total principal amount of Outstanding Dollar
Notes. The Outstanding Dollar Notes must be tendered properly on or before the
Expiration Date (as hereinafter defined) and not withdrawn. In exchange for
Outstanding Dollar Notes properly tendered and accepted, the Company will
issue a like total principal amount of up to $123.0 million in Dollar Exchange
Notes. In addition, we are offering to exchange up to (Euro)75.0 million total
principal amount of Euro Exchange Notes for a like total principal amount of
Outstanding Euro Notes. The Outstanding Euro Notes also must be tendered
properly on or before the Expiration Date and not withdrawn. In exchange for
Outstanding Euro Notes properly tendered and accepted, the Company will issue
a like total principal amount of up to (Euro)75.0 million in Euro Exchange
Notes.
The Exchange Offer is not conditioned upon holders tendering a minimum
principal amount of Outstanding Notes. As of the date of this Prospectus,
$123.0 million aggregate principal amount of Dollar Notes are outstanding and
(Euro)75.0 million aggregate principal amount of Euro Notes are outstanding.
Holders of the Outstanding Notes do not have any appraisal or dissenters'
rights in the Exchange Offer. If holders do not tender Outstanding Notes or
tender Outstanding Notes that the Company does not accept, their Outstanding
Notes will remain outstanding. Any Outstanding Notes will be entitled to the
benefits of the indenture under which the Outstanding Dollar Notes were, and
the Dollar Exchange Notes will be, issued (the "Dollar Notes Indenture") or
the indenture under which the Outstanding Euro Notes were, and the Euro
Exchange Notes will be, issued (the "Euro Notes Indenture" and, together with
the Dollar Notes Indenture, the "Indentures"), as applicable, but will not be
entitled to any further registration rights under the Registration Rights
Agreements, except under limited circumstances. See "Risk Factors--
Consequences of a Failure to Exchange Outstanding Notes" for more information
regarding notes outstanding after the Exchange Offer.
After the Expiration Date, the Company will return to the holder any
tendered Outstanding Notes that the Company did not accept for exchange.
Holders exchanging Outstanding Notes will not have to pay brokerage
commissions or fees or transfer taxes if they follow the instructions in the
Letter of Transmittal. The Company will pay the charges and expenses, other
than certain taxes described below, in the Exchange Offer. See "--Fees and
Expenses" for further information regarding fees and expenses.
Neither the Company nor the Company's board of directors recommends you to
tender or not tender Outstanding Notes in the Exchange Offer. In addition, the
Company has not authorized anyone to make any recommendation. You must decide
whether to tender in the Exchange Offer and, if so, the aggregate amount of
Outstanding Notes to tender.
The expiration date (the "Expiration Date") is 5:00 p.m., New York City time
(in the case of Outstanding Dollar Notes) or 5:00 p.m., London time (in the
case of Outstanding Euro Notes), on , 1999 unless we extend the
Exchange Offer.
The Company has the right, in accordance with applicable law, at any time:
. to delay the acceptance of the Outstanding Notes;
. to terminate the Exchange Offer if the Company determines that any of
the conditions to the Exchange Offer have not occurred or have not been
satisfied;
. to extend the Expiration Date of the Exchange Offer and keep all
Outstanding Notes tendered other than those notes properly withdrawn;
and
. to waive any condition or amend the terms of the Exchange Offer.
If the Company materially changes the Exchange Offer, or if the Company
waives a material condition of the Exchange Offer, the Company will promptly
distribute a prospectus supplement to the holders of the Outstanding Notes
disclosing the change or waiver. The Company also will extend the Exchange
Offer as required by Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
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If the Company exercises any of the rights listed above, it will promptly
give oral or written notice of the action to the Exchange Agents (as defined
below under "--Exchange Agents") and will issue a release to appropriate news
agencies. In the case of an extension, an announcement will be made no later
than 9:00 a.m., New York City time (in the case of Outstanding Dollar Notes) or
9:00 a.m., London time (in the case of Outstanding Euro Notes), on the next
business day after the previously scheduled Expiration Date.
Acceptance for Exchange and Issuance of Exchange Notes
The Company will issue to the Exchange Agents Exchange Notes for Outstanding
Notes tendered and accepted and not withdrawn promptly after the Expiration
Date. The Exchange Agents might not deliver the Exchange Notes to all tendering
holders at the same time. The timing of delivery depends upon when the Exchange
Agents receive and process the required documents.
The Company will be deemed to have exchanged Outstanding Notes validly
tendered and not withdrawn when the Company gives oral or written notice to the
Exchange Agents of their acceptance. The Exchange Agents are agents for the
Company for receiving tenders of Outstanding Notes, Letters of Transmittal and
related documents. The Exchange Agents are also agents for tendering holders
for receiving Outstanding Notes, Letters of Transmittal and related documents
and transmitting Exchange Notes to validly tendering holders. If for any
reason, the Company (1) delays the acceptance or exchange of any Outstanding
Notes, (2) extends the Exchange Offer, or (3) is unable to accept or exchange
notes, then the Exchange Agents may, on behalf of the Company and subject to
Rule 14e-1(c) under the Exchange Act, retain tendered notes. Notes retained by
the Exchange Agents may not be withdrawn, except according to the withdrawal
procedures outlined in the section entitled "--Withdrawal Rights" below.
In tendering Outstanding Notes, you must warrant in the Letter of Transmittal
or in an Agent's Message (described below) that (1) you have full power and
authority to tender, exchange, sell, assign and transfer Outstanding Notes, (2)
the Company will acquire good, marketable and unencumbered title to the
tendered Outstanding Notes, free and clear of all liens, restrictions, charges
and other encumbrances, and (3) the Outstanding Notes tendered for exchange are
not subject to any adverse claims or proxies. You also must warrant and agree
that you will, upon request, execute and deliver any additional documents
requested by the Company or the Exchange Agents to complete the exchange, sale,
assignment, and transfer of the Outstanding Notes.
Procedures for Tendering Outstanding Notes
Valid Tender
You may tender your Outstanding Notes by book-entry transfer or by other
means. For book-entry transfer, you must deliver to the appropriate Exchange
Agent either (1) a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, or (2) an
Agent's Message, meaning a message transmitted to the appropriate Exchange
Agent by DTC, Euroclear or Cedel Bank, as applicable, and forming a part of a
book-entry confirmation, stating that you agree to be bound by the terms of the
Letter of Transmittal. You must deliver your Letter of Transmittal or Agent's
Message by mail, facsimile, hand delivery or overnight carrier to the
appropriate Exchange Agent on or before the Expiration Date. In addition, to
complete a book-entry transfer, you must also either (1) have DTC transfer the
Outstanding Dollar Notes into the Dollar Exchange Agent's account at DTC using
the ATOP procedures for transfer, and obtain a confirmation of such transfer,
or have Euroclear or Cedel Bank transfer the Outstanding Euro Notes into the
Euro Exchange Agent's account at Euroclear or Cedel Bank, as applicable, using
their procedures for transfer, and obtain a confirmation of such transfer, or
(2) follow the guaranteed delivery procedures described below under "--
Guaranteed Delivery."
If you tender fewer than all of your Outstanding Notes, you should fill in
the amount of notes tendered in the appropriate box on the Letter of
Transmittal. If you do not indicate the amount tendered in the appropriate box,
the Company will assume you are tendering all Outstanding Notes that you hold.
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For tendering your Outstanding Notes other than by book-entry transfer, you
must deliver a completed and signed Letter of Transmittal to the appropriate
Exchange Agent. Again, you must deliver the Letter of Transmittal by mail,
facsimile, hand delivery or overnight carrier to the appropriate Exchange
Agent on or before the Expiration Date. In addition, to complete a valid
tender you must either (1) deliver your Outstanding Dollar Notes to the Dollar
Exchange Agent or deliver your Outstanding Euro Notes to the Euro Exchange
Agent, as applicable, on or before the Expiration Date, or (2) follow the
guaranteed delivery procedures set forth below under "--Guaranteed Delivery."
Delivery of required documents by whatever method you choose is at your sole
risk. Delivery is complete when the Exchange Agents actually receive the items
to be delivered. Delivery of documents to DTC, Euroclear or Cedel Bank in
accordance with their procedures or to the Company does not constitute
delivery to the Exchange Agents. If delivery is by mail, registered mail,
return receipt requested, properly insured, or an overnight delivery service
is recommended. In all cases, you should allow sufficient time to ensure
timely delivery.
Signature Guarantees
You do not need to endorse certificates for the Outstanding Notes or provide
signature guarantees on the Letter of Transmittal unless (a) someone other
than the registered holder tenders the certificate or (b) you complete the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" in
the Letter of Transmittal. In the case of (a) or (b) above, you must sign your
Outstanding Note or provide a properly executed bond power, with the signature
on the bond power and on the Letter of Transmittal guaranteed by a firm or
other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution" (an "Eligible Institution"). Eligible Institutions
include: (1) a bank; (2) a broker, dealer, municipal securities broker or
dealer or government securities broker or dealer; (3) a credit union; (4) a
national securities exchange, registered securities association or clearing
agency; or (5) a savings association that is a participant in a securities
transfer association.
Guaranteed Delivery
If a holder wants to tender Outstanding Notes in the Exchange Offer and (1)
the certificates for the Outstanding Notes are not immediately available or
all required documents are unlikely to reach the Exchange Agents on or before
the Expiration Date, or (2) a book-entry transfer cannot be completed in time,
the Outstanding Notes may be tendered if the holder complies with the
following guaranteed delivery procedures:
(a) your tender is made by or through an Eligible Institution;
(b) you deliver a properly completed and signed Notice of Guaranteed
Delivery, like the form provided with the Letter of Transmittal, to the
appropriate Exchange Agent on or before the Expiration Date; and
(c) you deliver the certificates or a confirmation of book-entry transfer
and a properly completed and signed Letter of Transmittal to the
appropriate Exchange Agent within three New York Stock Exchange trading
days after the Notice of Guaranteed Delivery is executed.
You may deliver the Notice of Guaranteed Delivery by hand, facsimile or mail
to the appropriate Exchange Agent and must include a guarantee by an Eligible
Institution in the form described in the notice.
The Company's acceptance of properly tendered Outstanding Notes is a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity
The Company will resolve all questions regarding the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Outstanding Notes. The Company's resolution of these questions
as well as the Company's interpretation of the terms and conditions of the
Exchange Offer
33
<PAGE>
(including the Letter of Transmittal) is final and binding on all parties. A
tender of Outstanding Notes is invalid until all irregularities have been cured
or waived. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agents nor any other person is under any obligation to give notice of
any irregularities in tenders nor will they be liable for failing to give any
such notice. The Company reserves the absolute right, in its sole and absolute
discretion, to reject any tenders determined to be in improper form or
unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Exchange Offer or any condition or irregularity in the tender
of Outstanding Notes by any holder. The Company need not waive similar
conditions or irregularities in the case of other holders.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person must indicate that capacity when signing. In addition, unless
waived by the Company, the person must submit proper evidence satisfactory to
the Company, in its sole discretion, of his or her authority to so act.
A beneficial owner of Outstanding Notes that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian should contact that entity promptly if the holder wants to
participate in the Exchange Offer.
Resales of Exchange Notes
The Company is exchanging the Outstanding Notes for Exchange Notes based upon
the Staff of the Securities and Exchange Commission's position, set forth in
interpretive letters to third parties in other similar transactions. The
Company will not seek its own interpretive letter. As a result, the Company
cannot assure you that the Staff will take the same position on this Exchange
Offer as it did in interpretive letters to other parties. Based on the Staff's
letters to other parties, we believe that holders of Exchange Notes, other than
broker-dealers, can offer the Exchange Notes for resale, resell and otherwise
transfer the Exchange Notes without delivering a prospectus to prospective
purchasers. However, prospective holders must acquire the Exchange Notes in the
ordinary course of business and have no intention of engaging in a distribution
of the Exchange Notes, as a "distribution" is defined by the Securities Act.
Any holder of Outstanding Notes who is an "affiliate" of the Company or who
intends to distribute Exchange Notes, or any broker-dealer who purchased
Outstanding Notes from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act:
. cannot rely on the Staff's interpretations in the above mentioned
interpretive letters;
. cannot tender Outstanding Notes in the Exchange Offer; and
. must comply with the registration and prospectus delivery requirements
of the Securities Act to transfer the Outstanding Notes, unless the sale
is exempt.
In addition, if any broker-dealer acquired Outstanding Notes for its own
account as a result of market-making or other trading activities and exchanges
the Outstanding Notes for Exchange Notes, the broker-dealer must deliver a
prospectus with any resales of the Exchange Notes.
If you want to exchange your Outstanding Notes for Exchange Notes, you will
be required to affirm that:
. you are not an "affiliate" of the Company;
. you are acquiring the Exchange Notes in the ordinary course of your
business;
. you have no arrangement or understanding with any person to participate
in a distribution of the Exchange Notes (within the meaning of the
Securities Act); and
. you are not a broker-dealer, not engaged in, and do not intend to engage
in, a distribution of the Exchange Notes (within the meaning of the
Securities Act).
34
<PAGE>
In addition, the Company may require you to provide information regarding the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) of the Outstanding Notes. Each broker-dealer that receives
Exchange Notes for its own account must acknowledge that it acquired the
Outstanding Notes for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
Exchange Notes. By making this acknowledgment and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" under the
Securities Act. Based on the Staff's position in certain interpretive letters,
we believe that broker-dealers who acquired Outstanding Notes for their own
accounts as a result of market-making activities or other trading activities
may fulfill their prospectus delivery requirements with respect to the Exchange
Notes with a prospectus meeting the requirements of the Securities Act.
Accordingly, a broker-dealer may use this Prospectus to satisfy such
requirements. The Company has agreed that a broker-dealer may use this
Prospectus for a period ending 180 days after the Expiration Date. See "Plan of
Distribution" for further information. A broker-dealer intending to use this
Prospectus in the resale of Exchange Notes must notify the Company, on or prior
to the Expiration Date, that it is a Participating Broker-Dealer. This notice
may be given in the Letter of Transmittal or may be delivered to the
appropriate Exchange Agent. Any Participating Broker-Dealer who is an
"affiliate" of the Company may not rely on the Staff's interpretive letters and
must comply with the registration and prospectus delivery requirements of the
Securities Act when reselling Exchange Notes.
Each Participating Broker-Dealer exchanging Outstanding Notes for Exchange
Notes agrees that, upon receipt of notice from the Company (a) that any
statement contained or incorporated by reference in this Prospectus makes the
Prospectus untrue in any material respect or that this Prospectus omits to
state a material fact necessary to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or (b) of the occurrence of certain other events
specified in the Registration Rights Agreements, the Participating Broker-
Dealer will suspend the sale of Exchange Notes. A Participating Broker-Dealer
will not resell the Exchange Notes until (1) the Company has amended or
supplemented this Prospectus to correct such misstatement or omission and the
Company furnishes copies to the Participating Broker-Dealer or (2) the Company
gives notice that the sale of the Exchange Notes may be resumed. If the Company
gives notice suspending the sale of Exchange Notes, it shall extend the 180-day
period by the number of days between the date the Company gives notice of
suspension and the date Participating Broker-Dealers receive copies of the
amended or supplemented prospectus or the date the Company gives notice
resuming the sale of Exchange Notes.
Withdrawal Rights
You can withdraw tenders of Outstanding Notes at any time on or before the
Expiration Date.
For a withdrawal to be effective, you must deliver a written, telegraphic,
telex or facsimile transmission of a Notice of Withdrawal to the appropriate
Exchange Agent on or before the Expiration Date. The Notice of Withdrawal must
specify the name of the person tendering the Outstanding Notes to be withdrawn,
the total principal amount of Outstanding Notes withdrawn, and the name of the
registered holder of the Outstanding Notes if different from the person
tendering the Outstanding Notes. If you delivered Outstanding Notes to an
Exchange Agent, you must submit the serial numbers of the Outstanding Notes to
be withdrawn and the signature on the Notice of Withdrawal must be guaranteed
by an Eligible Institution, except in the case of Outstanding Notes tendered
for the account of an Eligible Institution. If you tendered Outstanding Notes
as a book-entry transfer, the Notice of Withdrawal must specify the name and
number of the account at DTC, Euroclear or Cedel Bank, as applicable, to be
credited with the withdrawal of Outstanding Notes and you must deliver the
Notice of Withdrawal to the appropriate Exchange Agent by written, telegraphic,
telex or facsimile transmission. You may not rescind withdrawals of tender.
Outstanding Notes properly withdrawn may again be tendered at any time on or
before the Expiration Date.
We will determine all questions regarding the validity, form and eligibility
of withdrawal notices. Our determination will be final and binding on all
parties. Neither the Company, any affiliate or assign of the
35
<PAGE>
Company, the Exchange Agents nor any other person is under any obligation to
give notice of any irregularities in any Notice of Withdrawal, nor will they be
liable for failing to give any such notice. Withdrawn Outstanding Notes will be
returned to the holder after withdrawal.
Interest on Exchange Notes
The Dollar Exchange Notes will bear interest at a rate of 11 3/8% per annum
and the Euro Exchange Notes will bear interest at a rate of 11 3/8% per annum,
both payable semi-annually on February 1 and August 1 of each year, commencing
August 1, 1999. Holders of Exchange Notes will receive interest on August 1,
1999 from the date of initial issuance of the Exchange Notes, plus an amount
equal to the accrued interest on the Outstanding Notes. Interest on the
Outstanding Notes accepted for exchange will cease to accrue upon issuance of
the Exchange Notes.
Conditions to the Exchange Offer
The Company need not exchange any Outstanding Notes, may terminate the
Exchange Offer or may waive any conditions to the Exchange Offer or amend the
Exchange Offer, if any of the following conditions has occurred:
(a) the Staff no longer allows the Exchange Notes to be offered for
resale, resold and otherwise transferred by certain holders without
compliance with the registration and prospectus delivery provisions of the
Securities Act; or
(b) a governmental body passes any law, statute, rule or regulation
which, in the Company's opinion, prohibits or prevents the Exchange Offer;
or
(c) the Securities and Exchange Commission or any state securities
authority issues a stop order suspending the effectiveness of the
registration statement or initiates or threatens to initiate a proceeding
to suspend the effectiveness of the registration statement; or
(d) the Company is unable to obtain any governmental approval that the
Company believes is necessary to complete the Exchange Offer.
If the Company reasonably believes that any of the above conditions has
occurred, it may (1) terminate the Exchange Offer, whether or not any
Outstanding Notes have been accepted for exchange, (2) waive any condition to
the Exchange Offer or (3) amend the terms of the Exchange Offer in any respect.
If the Company's waiver or amendment materially changes the Exchange Offer, the
Company will promptly disclose the waiver or amendment through a prospectus
supplement, distributed to the registered holders of the Outstanding Notes. The
prospectus supplement also will extend the Exchange Offer as required by Rule
14e-1 of the Exchange Act.
Exchange Agents
The Company appointed U.S. Bank Trust National Association as exchange agent
(the "Dollar Exchange Agent") for the Outstanding Dollar Notes for the Exchange
Offer. The Company appointed Midland Bank plc as exchange agent (the "Euro
Exchange Agent" and, together with the Dollar Exchange Agent, the "Exchange
Agents") for the Outstanding Euro Notes for the Exchange Offer. Holders should
direct questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for a Notice of
Guaranteed Delivery to the appropriate Exchange Agent addressed as follows:
36
<PAGE>
Dollar Exchange Agent
By Registered or Certified Confirm By Telephone: By Hand or Overnight
Mail: (651) 244-4512 Delivery:
U.S. Bank Trust National Facsimile Transmissions: U.S. Bank Trust National
Association (651) 244-1537 Association
P.O. Box 64485 (Eligible Institutions Fourth Floor--Bond Drop
St. Paul, Minnesota 55164- Only) Window
9549 180 East Fifth Street
Attention: Specialized St. Paul, Minnesota 55101
Finance Attention: Specialized
Finance
Euro Exchange Agent
By Registered or Certified Confirm by Telephone: By Hand or Overnight
Mail: Delivery:
Midland Bank plc Facsimile Transmissions: Midland Bank plc
Mariner House, Pepys Mariner House, Pepys
Street (Eligible Institutions Street
London, EC3N 4DA Only) London, EC3N 4DA
Attention: Attention:
If you deliver Letters of Transmittal and any other required documents to an
address or facsimile number other than those listed above, your tender is
invalid.
Fees and Expenses
The Company will pay the Exchange Agents reasonable and customary fees for
their services and reasonable out-of-pocket expenses. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries their
reasonable out-of-pocket expenses for sending copies of this Prospectus and
related documents to holders of Outstanding Notes, and for handling or
tendering for their customers.
The Company will pay the transfer taxes for the exchange of the Outstanding
Notes in the Exchange Offer. If, however, Exchange Notes are delivered to or
issued in the name of a person other than the registered holder, or if a
transfer tax is imposed for any reason other than for the exchange of
Outstanding Notes in the Exchange Offer, then the tendering holder will pay the
transfer taxes. If a tendering holder does not submit satisfactory evidence of
payment of taxes or exemption from taxes with the Letter of Transmittal, the
taxes will be billed directly to the tendering holder.
The Company will not make any payment to brokers, dealers or other nominees
soliciting acceptances in the Exchange Offer.
Accounting Treatment
The Exchange Notes will be recorded at the same carrying value as the
Outstanding Notes. Accordingly, the Company will not recognize any gain or loss
on the exchange for accounting purposes. The Company intends to amortize the
expenses of the Exchange Offer and issuance of the Outstanding Notes over the
respective terms of the Dollar Notes and Euro Notes.
37
<PAGE>
THE TRANSACTIONS
The Acquisition and Related Financings
On September 30, 1998, the Company completed the acquisition (the
"Acquisition") of the RPS Division for a price equal to $330.0 million in cash,
notes, and warrants, subject to certain post-closing adjustments. Of the $330.0
million purchase price, $100.0 million was paid in cash borrowed under the
terms of the New Credit Agreement as well as $22.5 million of 12.5% Senior
Notes. The seller note portion of the purchase price consisted of $40.0 million
in ten year, 12.0% Schlumberger Junior Subordinated Notes, payable in kind, and
$170.0 million in 12.0% Schlumberger Senior Subordinated Notes due January 29,
1999. The remaining $20.0 million of the purchase price was paid with warrants
exercisable for five years, beginning January 30, 1999 to purchase at a nominal
price 2,526,923 shares of our common stock. The Schlumberger Senior
Subordinated Notes, along with the Senior Notes, were repaid on January 29,
1999 with the proceeds from the sale of the Outstanding Notes. The Company has
the option, subject to bank approval, to redeem (in whole or in part) the
Schlumberger Junior Subordinated Notes.
The Company is to reimburse Schlumberger for cash that remained in the RPS
Division on the effective date of the Acquisition, net of certain adjustments.
We currently estimate this amount to be up to approximately $6.5 million. We
anticipate that this payment to Schlumberger will be made in the second quarter
of 1999 from funds available through the revolving working capital facility
under the New Credit Agreement.
On the closing date of the Acquisition, the Company entered into a technology
and licensing agreement with Schlumberger under which Schlumberger will pay the
Company a minimum fee of approximately $0.9 million a year, regardless of use,
for a period of five years, payable monthly. The payments under the agreement
are due in full even if Schlumberger terminates the agreement or discontinues
use of the services at any time during the five year payment period.
The New Credit Agreement currently provides for a six year, $110.0 million
revolving working capital facility and a six year, $120.0 million term loan
facility. An additional agreement provides for the assignment of a three year,
$7.6 million ESOP loan facility. At February 28, 1999, the outstanding
borrowings were $65.1 million under the revolving working capital facility,
$120.0 million under the term loan, and $6.3 million under the ESOP facility.
Available borrowings under the revolving working capital facility were $44.9
million at February 28, 1999. See "Description of Certain Indebtedness."
Also, simultaneously with the Acquisition, the Company entered into a note
purchase agreement, pursuant to which the Company issued $22.5 million
aggregate principal amount of 12.5% Senior Notes. Proceeds from the Senior
Notes were used in connection with the Company's refinancing of existing
indebtedness.
Also on September 30, 1998, the Company completed the repurchase of the final
$55.0 million of its 11.5% Senior Subordinated Notes that were then
outstanding. These notes were redeemed at an aggregate premium and consent
payment of approximately $12.3 million along with accrued interest of
approximately $1.1 million.
The Indentures under which the Outstanding Notes were, and the Exchange Notes
will be, issued will permit us, subject to certain conditions, to refinance the
Schlumberger Junior Subordinated Notes and refinance the Schlumberger Warrants
with junior subordinated debt.
Since completing the Acquisition, the Company has begun to implement a plan
to cut costs and integrate the RPS Division. See "Business--Business Strategy--
Realize Operating Synergies and Cost Savings."
38
<PAGE>
SOURCES AND USES OF FUNDS
The Exchange Offer will not generate cash proceeds for the Company. The net
proceeds from the offering of the Outstanding Dollar Notes and the Outstanding
Euro Notes were $119.2 million and $84.0 million (1), respectively, after
discounts and expenses. These proceeds were used to redeem the Schlumberger
Senior Subordinated Notes and the Senior Notes and to repay borrowings under
the New Credit Agreement.
The following table shows the sources and uses of funds for the Offering:
<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% Schlumberger Senior Subordinated Notes.. $170.0
Refinancing of 12.5% Senior Notes............................ 22.5
Payment of accrued interest.................................. 6.9
Premiums paid to redeem 12.5% Senior Notes................... 0.5
Reduce borrowings under the revolving working capital
facility of the New Credit Agreement........................ 3.4
Fees and expenses............................................ 6.3
------
Total uses of funds........................................ $209.6
======
</TABLE>
- --------
(1) Calculated using an exchange rate of (Euro)1.00=$1.1553.
39
<PAGE>
CAPITALIZATION
(dollars in millions)
The following table sets forth the consolidated capitalization of the Company
as of February 28, 1999 which gives effect to the Transactions. This table
should be read in conjunction with the Company's interim Consolidated Condensed
Financial Statements and the Unaudited Pro Forma Consolidated Condensed
Financial Statements, and the respective notes related thereto, appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
As of
February 28,
1999
------------
Actual
------------
<S> <C>
Total debt:
Cash overdraft facilities................................. $ 15.0
New Credit Agreement:
Revolving loans......................................... 65.1
Term loan............................................... 120.0
Guaranteed ESOP Obligation................................ 6.3
Other debt................................................ 6.0
11.375% Outstanding Dollar Notes.......................... 123.0
11.375% Outstanding Euro Notes (1)........................ 82.7
12.0% Schlumberger Junior Subordinated Notes.............. 41.2
------
Total debt............................................ 459.3
Shareholders' equity:
ESOP Preferred Stock, net................................. 12.9
Common shareholders' equity, net (30,000,000 shares
authorized, 12,698,106 shares issued) (2)................ 18.6
------
Total shareholders' equity............................ 31.5
------
Total capitalization................................ $490.8
======
</TABLE>
- --------
(1) Calculated using an exchange rate of (Euro)1.00=$1.077.
(2) Includes amounts attributable to the Schlumberger Warrants. The Indentures
under which the Outstanding Notes were, and the Exchange Notes will be,
issued will permit the Company, subject to certain conditions, to refinance
the Schlumberger Junior Subordinated Notes and reacquire the Schlumberger
Warrants with junior subordinated debt.
40
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Amounts in thousands except amounts per share)
The following unaudited pro forma consolidated condensed financial statements
(the "Pro Forma Financial Statements") of the Company are derived from the
audited and unaudited financial statements of the Company and the RPS Division
(included elsewhere herein) and have been adjusted to illustrate the effects of
the Transactions. The Pro Forma Financial Statements and accompanying notes
should be read in conjunction with the consolidated financial statements of the
Company and the combined financial statements of the RPS Division, including
the notes thereto, appearing elsewhere in this Prospectus. The pro forma
statements of earnings for the year ended November 30, 1998 includes the RPS
Division's combined statement of income for the ten months ended September 30,
1998 and the Company's consolidated statement of earnings for the year ended
November 30, 1998. The Company's unaudited interim balance sheet as of February
28, 1999, appearing elsewhere in this Prospectus, includes the effects of the
Acquisition and related financing and the Offering. The pro forma adjustments
necessary to give effect to the Exchange Offer would be to increase "Other
noncurrent assets and deferred charges" by approximately $1,000 and to reduce
"Cash" by $1,000 to reflect additional fees and expenses associated with this
Exchange Offer. These pro forma statements of earnings give effect to the
Common Stock Offering and the Transactions, and related purchase accounting
adjustments, as if these events had taken place on December 1, 1997. The Pro
Forma Financial Statements are not necessarily indicative of either future
results of operations or the results that might have occurred if the foregoing
Common Stock Offering and the Transactions had been consummated on December 1,
1997.
The Acquisition has been accounted for using the purchase method of
accounting. The allocation of the aggregate purchase price included in the Pro
Forma Financial Statements is preliminary and therefore certain amounts will
change when such allocation is finalized.
41
<PAGE>
Unaudited Pro Forma Consolidated Condensed Statement of Earnings
for the three months ended February 28, 1999
<TABLE>
<CAPTION>
Tokheim
(b) Corporation
Tokheim And
Corporation Offering Subsidiaries
And Pro Forma Pro Forma
Subsidiaries Adjustments Offering
------------ ----------- ------------
<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>
42
<PAGE>
Unaudited Pro Forma Consolidated Condensed Statement of Earnings
for the year ended November 30, 1998
<TABLE>
<CAPTION>
Tokheim
Tokheim Corporation
Corporation And
Acquisition And Subsidiaries
(a) (b) Tokheim And Subsidiaries Pro Forma
RPS RPS Corporation Financing Pro Forma Offering Acquisition,
RPS Division Division and Pro Forma Acquisition Pro Forma Financing &
Division Adjustments Adjusted Subsidiaries Adjustments & Financing Adjustments Offering
-------- ----------- -------- ------------ ----------- ------------ ----------- ------------
<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>
43
<PAGE>
Note 1:
Though not reflected in the Unaudited Pro Forma Consolidated Condensed
Financial Statements, the Company believes that through successful integration
and consolidation of the RPS Division estimated cost savings of approximately
$28,700 in the first year and $47,300 per annum after three years can be
achieved. See Note 5 to the Summary Unaudited Pro Forma Consolidated Financial
Data included elsewhere in this Prospectus. To date, the Company has initiated
and accelerated various closures and consolidations which it believes will
yield first year cost savings of approximately $30,000. These synergy programs
include; the closure of manufacturing facilities in Bohnam, Texas and
Glenrothes, Scotland and the consolidation of operations in Spain, Italy,
France, the Netherlands, Germany and Belgium.
<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 the Company's
presentation and to remove certain costs
associated with operations as a division of
Schlumberger. The details of these
reclassifications and adjustments are as follows:
Cost of sales:
Reclassification of manufacturing depreciation and
amortization to depreciation and amortization..... $-- $(4,200)
Reclassification of personnel reductions to merger
and acquisition costs and other unusual items..... -- --
Reflects an adjustment to operations of
Schlumberger's Abbeville facility for the ten
months of 1998 which was not purchased by Tokheim. -- (700)
Reclassification of nonrecurring warranty cost
associated with design flaws in new product
launches. These design flaws were corrected and
are not expected to impact ongoing operations..... -- (993)
---- -------
Total adjustments and reclassifications from cost
of sales........................................ -- (5,893)
---- -------
Selling, general, and administrative expenses:
Adjustments to management and technical fees
charged by Schlumberger to its subsidiaries net of
expenses Tokheim expects to incur................. -- (4,011)
Reclassification of selling, general and
administrative depreciation and amortization to
depreciation and amortization..................... -- (1,600)
Reclassification of personnel reductions to merger
and acquisition costs and other unusual items..... -- (475)
Reclassification of other miscellaneous items to
merger and acquisition costs and other unusual
items............................................. -- (450)
---- -------
Total adjustments and reclassification from
selling, general and administrative expenses.... -- (6,536)
---- -------
Depreciation and amortization:
Reclassification of manufacturing depreciation and
amortization...................................... -- 4,200
Reclassification of selling, general and
administrative depreciation and amortization ..... -- 1,600
Elimination of preexisting RPS Division goodwill
amortization that Tokheim did not purchase........ -- (3,251)
---- -------
Total adjustments and reclassifications to
depreciation and amortization................... -- 2,549
---- -------
Merger and acquisition costs and other unusual
items:
Reclassification of personnel reductions from
selling, general and administrative expenses...... -- 475
Reclassification of nonrecurring warranty cost
associated with design flaws in new product
launches. These design flaws were corrected and
are not expected to impact ongoing operations..... -- 993
Reclassification of other miscellaneous items from
selling, general and administrative costs......... -- 450
---- -------
Total adjustments and reclassification to merger
and acquisition costs and other unusual items... -- 1,918
---- -------
Other expense (income), net:
Elimination of the minority interest expense in net
earnings. Tokheim acquired 100% of all RPS
subsidiaries...................................... $-- $ (25)
---- -------
Effect of all adjustments on pretax income........... -- (7,987)
Tax effect on adjustments using the RPS Division's
reported tax rate of 35.6%.......................... -- 2,843
---- -------
Effect of all adjustments on net earnings........ $-- $(5,144)
==== =======
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
(expense, (income))
<S> <C> <C>
(b) The Unaudited Pro Forma Consolidated Condensed
Statement of Earnings for the three months ended
February 28, 1999 includes the Acquisition and
related financing and subsequent refinancing of
the initial debt structure on January 29, 1999
with proceeds from the Offering. As such,
interest expense is the only amount for the
three months ended February 28, 1999 that
requires a pro forma adjustment to reflect the
new interest rates. The Unaudited Pro Forma
Consolidated Condensed Statement of Earnings
includes the Company's year ended November 30,
1998 audited Consolidated Statement of Earnings,
which includes two months of operations for the
newly acquired RPS Division since the date of
its acquisition, September 30, 1998.
(c) Reflects a pro forma adjustment for technology
and licensing fees contractually payable by
Schlumberger to Tokheim. These fees relate to
certain services and licenses provided to
Schlumberger by Tokheim. The contract is
noncancelable and requires minimum annual
payments of $850 per annum to Tokheim during the
next 5 years.................................... $-- $708
==== ====
(d) Reflects a pro forma adjustment for the
amortization of purchased goodwill associated
with the Acquisition as follows:
</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 and related financing
were calculated as follows:
The Company's historical interest expense, net...... $-- $19,257
RPS Division's historical interest expense, net..... -- 1,833
---- -------
Total............................................. -- 21,090
Plus: Interest expense for 10 additional months on
borrowings under:
New Credit Agreement (at interest rates ranging
from 7.65% to 9.9%, spread among three different
facilities)....................................... -- 14,836
12.0% Schlumberger Senior Subordinated Notes,
increasing rate by 0.5% after 4 months and every
3 months thereafter............................... -- 17,496
12.5% Senior Notes, increasing rate by 0.5% after
2 months and every 3 months thereafter............ -- 2,550
12.0% Schlumberger Junior Subordinated Notes....... -- 4,117
---- -------
Total............................................. -- 38,999
Less: Interest expense on:
The Company's debt refinanced:
Old credit agreement.............................. -- (1,717)
11.5% Senior Subordinated Notes................... -- (6,325)
RPS Division...................................... -- (1,833)
---- -------
Total............................................. -- (9,875)
---- -------
Sub-total......................................... -- 50,214
Amortization of deferred financing costs:
Remove:
Old credit agreement.............................. -- (1,380)
11.5% Senior Subordinated Notes................... -- (307)
Add:
New Credit Agreement.............................. -- 1,413
12.5% Senior Notes................................ -- 566
12.0% Schlumberger Senior Subordinated Notes...... -- 121
---- -------
Pro forma interest expense, net..................... -- 50,627
---- -------
Pro forma adjustment to interest expense, net....... $-- $29,537
==== =======
</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.
45
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
(f) Represents the incremental weighted average
shares for the Company's March 1998 Common Stock
Offering. In addition, per the terms of the
letter agreement, the Company has financed
$20,000 of the RPS Division purchase price by
issuing Schlumberger Warrants to purchase, for a
nominal value, 2,526,923 shares of Tokheim common
stock. The Schlumberger Warrants are exercisable
at any time up to and including January 29, 2003.
The Company is currently in negotiations with
Schlumberger to repurchase in whole or in part
the outstanding warrants. The Schlumberger
Warrants are considered potential common stock
under the guidelines of SFAS No. 128 "Earnings
Per Share" and will be reflected in the
calculation of shares outstanding when the
Company is in an earnings position.
(g) The pro forma adjustments to interest expense,
net, for the Offering were calculated as follows:
The Company's actual interest expense, net for the
three months ended February 28, 1999............... $12,307 --
Tokheim's pro forma interest expense, net for the
Acquisition and related financing.................. -- $50,627
Plus: two and twelve months, respectively, of
interest expense on borrowings under:
11.375% Senior Subordinated Dollar Notes........... 2,332 13,991
11.375% Senior Subordinated Euro Notes (calculated
using a standard rate of exchange of 1.1553 Euro
to 1 U.S. dollar)................................. 1,643 9,857
------- -------
Less: two and twelve months, respectively, of
interest expense on:
12.0% Schlumberger Senior Subordinated Notes,
increasing rate by 0.5% after 4 months and every
3 months thereafter............................... (3,400) (20,896)
12.5% Senior Notes, increasing rate by 0.5% after
2 months and every 3 months thereafter............ (469) (3,019)
------- -------
Total............................................. (3,869) (23,915)
------- -------
Sub-total......................................... 12,413 50,560
Amortization of deferred financing costs:
Remove:
12.5% Senior Notes................................. (113) (679)
12.0% Schlumberger Senior Subordinated Notes....... (24) (145)
Add:
11.375% Senior Subordinated Dollar Notes........... 82 494
11.375% Senior Subordinated Euro Notes............. 63 379
------- -------
Pro forma interest expense, net for the
refinancing....................................... $12,421 $50,609
======= =======
Pro forma adjustment to interest expense, net...... $ 114 $ (18)
======= =======
</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.
46
<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 the
Company. The statement of earnings data, other data and balance sheet data as
of and for each of the fiscal years in the five-year period ended November 30,
1998 were derived from the audited consolidated financial statements of the
Company. The information contained in this table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements of the Company,
including the notes thereto, appearing elsewhere or incorporated by reference
in this Prospectus. The selected historical financial data as of and for the
three months ended February 28, 1998 and 1999 were derived from unaudited
interim financial statements of the Company. In the opinion of management, such
unaudited interim consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring items with the exception of
merger and acquisition costs and other unusual items and the extraordinary
items) necessary to present fairly the Company's financial position and results
of operations as of and for the periods presented.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended November 30, February 28,
------------------------------------------------- ------------------
1994 1995 1996(1) 1997 1998(1) 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)(2)............. 3,780 5,811 6,356 20,645 14,769 (966) (866)
Interest expense, net.. 2,806 3,319 7,191 16,451 19,257 4,011 12,307
Earnings (loss) before
income taxes(3)....... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571)
Earnings (loss)(3)..... 1,675 3,231 (2,009) 3,980 (3,744) (5,606) (14,178)
Preferred stock
dividends............. 1,617 1,580 1,543 1,512 1,484 374 374
Earnings (loss)
applicable to common
stock(3).............. 58 1,651 (3,552) 2,468 (5,228) (5,980) (14,552)
Other Data:
Capital expenditures... $ 2,757 $ 5,559 $ 3,061 $ 11,154 $ 14,548 $ 1,885 $ 4,996
Depreciation and
amortization.......... 4,672 4,857 5,028 9,232 13,136 2,500 6,892
Interest expense and
preferred stock
dividends............. 4,219 4,604 9,336 18,800 21,563 4,518 12,842
EBITDA (as defined)(4). 10,230 14,126 17,842 34,767 43,707 7,265 5,845
Net cash provided from
(used in) operations.. 2,408 3,347 5,897 21,202 9,790 (5,341) (1,308)
Net cash used in
investing activities.. (2,562) (4,910) (54,079) (10,394) (124,414) (12,526) (4,996)
Net cash provided from
(used in) financing
activities............ (5,063) 754 57,016 (11,795) 125,669 19,806 13,330
Ratio of earnings to
fixed charges(5)...... 1.4x 1.6x -- x 1.3x -- x -- x -- x
</TABLE>
<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(6)....................................... 443,331 459,259
ESOP preferred stock, net........................... 12,130 12,941
Common shareholders' equity, net.................... 64,631 18,572
</TABLE>
- --------
(1)Results for 1996 include three months of Sofitam operations and results for
1998 include two months of the RPS Division's operations.
(2) Operating income (loss) equals net sales less cost of sales, selling,
general and administrative expenses, depreciation and amortization, and
merger and acquisition costs and other unusual items.
(3) The amounts for the years ended November 30, 1998 and November 30, 1997 and
the three months ended February 28, 1999 exclude $23,924, $1,886 and
$6,249, respectively, for extraordinary loss on debt extinguishment. The
amounts for the year ended November 30, 1994 exclude the cumulative effect
of change in method of accounting for post-retirement benefits other than
pensions of $13,416.
47
<PAGE>
(4) EBITDA (as used in this Prospectus) represents earnings (loss) from
continuing operations before income taxes and extraordinary loss, net
interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest. Management uses EBITDA
as a financial indicator of the Company's ability to service debt, although
the precise definition of EBITDA is subject to variation among companies.
EBITDA should not be construed as an alternative to operating income or
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of the Company's operating performance or as a measure of
liquidity. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." For additional information concerning the
Company's historical cash flows, see the consolidated statement of cash
flows included elsewhere herein.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings (loss) before income taxes and extraordinary loss plus
fixed charges. Fixed charges consist of interest expense, amortization of
deferred debt issuance expense, the portion of rental expense assumed to
represent interest and dividends on the ESOP Preferred Stock, which
dividends service the Guaranteed ESOP Obligation. Earnings were
insufficient to cover fixed charges by $1,229, $2,698, $5,306 and $14,571
for the fiscal years ended 1996 and 1998 and for the three months ended
February 28, 1998 and 1999, respectively.
(6) Total debt includes the 11.5% Senior Subordinated Notes, the Schlumberger
Senior Subordinated Notes, the Senior Notes, the Schlumberger Junior
Subordinated Notes, long-term borrowings under the old credit agreement and
other credit agreements, the current portion of such borrowings, cash
overdraft facilities and the Guaranteed ESOP Obligation.
48
<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 thereto, appearing elsewhere in this Prospectus.
<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
EBITDA (as defined)(1)..... 1,333 2,004 (274) (4,661) (10,330)
EBITDA (as defined and
adjusted)(2).............. 10,644 11,049 11,941 3,549 (1,328)
Net cash provided from
(used in) operations...... (6,583) 10,432 13,157 (3,241) (22,896)
Net cash used in investing
activities................ (11,997) (36,400) (10,268) 15,976 (4,591)
Net cash provided from
(used in) financing
activities................ 21,630 25,179 (1,013) (16,101) 29,894
</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(3)...................................... 12,614 2,289
Equity and retained earnings (deficit)............. 154,270 178,805
</TABLE>
- --------
(1) EBITDA (as used in this Prospectus) represents earnings (loss) from
continuing operations before income taxes and extraordinary loss, net
interest expense, depreciation and amortization, merger and acquisition
costs and other unusual items and minority interest. Management uses EBITDA
as a financial indicator of the Company's ability to service debt, although
the precise definition of EBITDA is subject to variation among companies.
EBITDA should not be construed as an alternative to operating income or
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as an
indication of the Company's operating performance or as a measure of
liquidity. See the RPS Division combined statement of cash flows included
elsewhere herein.
(2) EBITDA (as defined and adjusted) is EBITDA (as defined) plus the add back
of operating losses for the Abbeville facility, which was not purchased, of
$700 for each twelve month period and $525 for each nine month period
presented, management and technical fees charged by Schlumberger to its
subsidiaries, of $9,177, $8,345 and $6,949 in 1997, 1996, and 1995,
respectively and $6,080 and $6,559 for the nine months ended September 30,
1997 and 1998, respectively. In addition EBITDA (as defined and adjusted)
excludes expenses, which management believes are non-recurring, of $2,338
and $1,662 for 1997 and 1995 and $1,605 and $1,918 for the nine months
ended 1997 and 1998, respectively.
(3) Total debt includes bank overdrafts and short-term loans plus the current
portion of long-term debt.
49
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
On September 30, 1998, the Company completed the acquisition ("Acquisition")
of the fuel dispenser systems and service business (the "RPS Division") of
Schlumberger Limited ("Schlumberger") for a price equal to $330.0 million in
cash, notes, and warrants, subject to certain post-closing adjustments. Of the
$330.0 million purchase price, $100.0 million was paid in cash borrowed under
the terms of the Company's new bank credit agreement (the "New Credit
Agreement") as well as $22.5 million of 12.5% senior notes due 2005 (the
"Senior Notes"). The $210.0 million seller note portion of the purchase price
consisted of $40.0 million in ten year, 12.0% junior subordinated payment-in-
kind notes (the "Schlumberger Junior Subordinated Notes") and $170.0 million in
12.0% senior subordinated notes due January 29, 1999 (the "Schlumberger Senior
Subordinated Notes"). $20.0 million of the purchase price was paid with
warrants (the "Schlumberger Warrants") exercisable for five years, beginning
January 30, 1999 to purchase at a nominal price, 2,526,923 shares of the
Company's common stock.
The Acquisition has been accounted for using the purchase method of
accounting, and the RPS Division's results of operations have been included in
the consolidated financial statements of the Company from the date of
acquisition. The purchase price has been preliminarily allocated to assets
acquired and liabilities assumed based on the RPS Division's net book value of
assets at September 30, 1998, as adjusted, which is estimated to approximate
fair value. The purchase price allocated under this assumption exceeded the
estimated fair value of the tangible net assets acquired by approximately
$263.4 million, which is recognized as goodwill and is being amortized over
forty years. The current purchase price allocation is preliminary due to the
timing of the acquisition relative to the Company's year end. A more precise
allocation of purchase price is currently being performed at various RPS
Division locations to more accurately identify and value the assets, including
intangibles, and liabilities assumed.
The Company is to reimburse Schlumberger for cash that remained in the RPS
Division on the effective date of the Acquisition, net of certain adjustments.
This amount is currently estimated to be up to approximately $6.5 million. It
is anticipated that this payment to Schlumberger will be made in the second
quarter of 1999 from funds available through the revolving working capital
facility under the New Credit Agreement.
Simultaneously with the Acquisition, the Company entered into a note purchase
agreement, pursuant to which the Company issued $22.5 million aggregate
principal amount of Senior Notes. Proceeds from the Senior Notes were used in
connection with the financing of the Acquisition and the refinancing of
existing indebtedness.
On January 29, 1999, the Company redeemed the Schlumberger Senior
Subordinated Notes and the Senior Notes with the proceeds from the issuance of
$123.0 in million aggregate principal amount of its 11.375% Senior Subordinated
Notes due 2008 (the "Outstanding Dollar Notes") and (Euro)75.0 in million
aggregate principal amount (approximately $87.0 million) of its 11.375% Senior
Subordinated Notes due 2008 (the "Outstanding Euro Notes") in a private
placement pursuant to Rule 144A and Regulation S (the "Offering"). The
Schlumberger Senior Subordinated Notes were redeemed at an aggregate price of
$176.7 million, representing principal of $170.0 million and accrued and unpaid
interest thereon of $6.7 million. The Senior Notes were redeemed at an
aggregate price of $23.2 million, representing principal of $22.5 million,
accrued and unpaid interest thereon of $0.2 million and an applicable call
premium of $0.5 million.
Also simultaneously with the Acquisition, the Company executed the New Credit
Agreement with a consortium of banks to pay a portion of the purchase price and
to refinance previously existing indebtedness.
50
<PAGE>
The New Credit Agreement currently provides for a six year, $110.0 million
revolving working capital facility and a six year $120.0 million term loan
facility. An additional agreement provides for the assignment of a three year
$7.6 million ESOP loan facility.
Also on September 30, 1998, the Company completed the repurchase of the final
$55.0 million of 11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes")
that were then outstanding. These notes were
redeemed at an aggregate premium and consent payment of $12.3 million along
with accrued interest of $1.1 million. The premium and consent payment was
aggregated with the write off of the remaining deferred issuance costs related
to the 11.5% Notes and the Old Credit Agreement and reported as an
extraordinary loss on debt extinguishment of approximately $19.0 million in the
fourth quarter of 1998.
In March 1998, the Company completed an offering of 4,370,000 shares of its
common stock (the "Common Stock Offering"). Net proceeds from the Common Stock
Offering totaled approximately $67.7 million. The Company used $39.4 million of
the proceeds to redeem $35.0 million in aggregate principal amount of its 11.5%
Notes. These 11.5% Notes were redeemed at the call price of 109.857%, expressed
as a percentage of the original face value, resulting in premiums paid of $3.5
million along with accrued interest of $0.9 million. Following the redemption,
$55.0 million in aggregate principal amount of the 11.5% Notes remained
outstanding. The Company recorded an extraordinary loss on the extinguishment
of the 11.5% Notes of approximately $5.0 million during the second quarter of
1998. This loss includes $3.5 million of premiums paid to purchase the 11.5%
Notes and $1.5 million representing the write-off of a proportionate share of
the original unamortized deferred issuance costs. The remaining $28.3 million
was applied toward the Old Credit Agreement and general corporate purposes.
The Company acquired Sofitam in September 1996 for $107.4 million less
certain adjustments. The Company's 1996 financial statements include three
months of Sofitam operations, and the 1997 and 1998 financial statements
include a full year of Sofitam operations. A comparison of sales in 1997 versus
1996 of entities that were part of Tokheim before the acquisition is not
meaningful because certain sales made by these entities were conducted through
Sofitam in 1996 and 1997.
International sales by foreign subsidiaries and exports from the U.S. totaled
approximately 60%, 64%, and 47% of consolidated net sales in 1998, 1997, and
1996, respectively. The acquisition of Sofitam has significantly extended the
Company's international distribution network, reducing its reliance on U.S.
domestic sales. Furthermore the acquisition of the RPS Division will
significantly increase the percentage of international sales in relation to
future consolidated sales.
In December 1997, the Company acquired Management Solutions, Inc. ("MSI").
MSI develops and distributes retail automation systems (including point-of-sale
("POS") software), primarily for the convenience store, petroleum dispensing
and fast food service industries. The Company paid MSI's stockholders an
initial amount of $12.0 million. The Company is also obligated to make
contingent payments of up to $13.2 million over fiscal years 1998, 1999 and
2000 based on MSI's performance. The $13.2 million consists of $8.0 million of
additional purchase price, $2.6 million related to a non-compete agreement, and
$2.6 million of additional employee compensation. The Company borrowed funds
for the initial purchase price under the old credit agreement.
Results of Operations
Quarter Ended February 28, 1999 compared to February 28, 1998
Consolidated sales for the three month period ended February 28, 1999 were
$166.2 million compared to $90.9 million for the 1998 three month period. Sales
for North America, excluding export sales, have increased 38.0% for the three
month period from $36.1 million in 1998 to $49.9 million in 1999. International
sales, including domestic export sales, have increased 112.6% for the three
month period from $54.7 million in 1998 to $116.3 million in 1999. These
increases in sales from the prior year are primarily attributable to the
acquisition of the RPS Division, offset by decreased sales to major oil
companies ("MOC's") due to their
51
<PAGE>
merger activity and the low barrel price of crude oil which has resulted in a
delay of capital spending. Those factors, however, were ameliorated by the
purchasing momentum of the jobber and mini-major market segments, the growing
importance of the hypermarket segments, demand in commercial and consumer
products lines, and increased service revenues.
Gross margins as a percent of sales (defined as net sales less cost of sales
divided by net sales) decreased from 26.3% in the three month period ended
February 28, 1998 to 19.8% in the 1999 three month period. This decline was
primarily driven by historically lower margins recognized in the RPS Division.
In addition, the first quarter sales mix is composed of a larger portion of
service contracts, which provide lower margins than dispenser sales.
Furthermore, the first three months of the Company's business cycle are
generally lower sales volume months creating less opportunity to recover
manufacturing fixed cost to the extent of other quarters.
Selling, general, and administrative expenses as a percent of sales for the
three month period ended February 28, 1999 were 15.5% compared to 17.9% for the
1998 three month period. This decline is primarily due to the inclusion of the
RPS Division, elimination of redundant staffing positions and the closure of
the RPS Division headquarters in Montrouge, France. All remaining Montrouge
personnel and job functions were consolidated at the Company's existing
European headquarters in Trembley, France.
Net interest expense for the three month period ended February 28, 1999 was
$12.3 million compared to $4.0 million in the comparable 1998 period. This
increase is due to increased debt levels associated with the September 1998
acquisition and financing of the RPS Division.
Depreciation and amortization expense for the three month period ended
February 28, 1999 was $6.9 million compared to $2.5 million in the comparable
1998 period. The majority of the increase between periods is associated with
the inclusion of the newly acquired RPS Division and increased amortization
expense related to intangible assets recorded in connection with the
acquisition of the RPS Division.
Merger and acquisition costs and other unusual items for the three month
period ended February 28, 1999 of $1.1 million, relates to closure expenses and
severance payments incurred in connection with the closing and consolidation of
certain pre-acquisition Tokheim facilities.
Foreign currency loss for the three month period ended February 28, 1999 was
$1.4 million compared to loss of less than $0.1 million in the comparable 1998
period. The increase in the loss is driven by short term receivables and
payables being revalued at the currency rate of exchange in effect at February
28, 1999.
Other income, net for the first quarter of 1999 was $0.2 million compared to
net expense of $0.2 million for the comparable 1998 period. This difference is
attributable to various income and expense items, which are individually
insignificant.
Income taxes for the three month period ended February 28, 1999 were a
benefit of $0.4 million compared to an expense of $0.5 million in the
comparable 1998 period. This change is due to earnings in subsidiaries where
net operating loss carryforwards are available to offset book pretax earnings,
and tax benefits being recorded in subsidiaries with first quarter losses who
will recover these benefits in future 1999 quarters.
During the first quarter of 1999, the Company incurred an extraordinary loss
on debt extinguishment of approximately $6.2 million in connection with the
refinancing of the Senior Notes and the Senior Subordinated Seller Notes. This
amount consists of $0.5 million of premiums paid on the redemption of the
Senior Notes and approximately $5.7 million of unamortized deferred issuance
costs that were written off.
As a result of the above mentioned items, loss before extraordinary item was
$14.2 million or $1.15 per diluted common share for the three months ended
February 28, 1999 compared to a loss of $5.6 million or $0.72 per diluted
common share for the same period in 1998. Loss from extraordinary loss on debt
extinguishment was $6.2 million or $0.49 per diluted common share for the three
months ended February 28, 1999. Net loss for the three months ended February
28, 1999 was $1.64 per diluted common share compared to a net loss of $0.72 per
diluted common share for the comparable 1998 period.
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Fiscal Years 1998, 1997 and 1996
Net sales for 1998 were $466.4 million. Net sales excluding the current year
acquisitions of MSI and the RPS Division (the "Acquisitions") were $390.4
million as compared to $385.5 million in 1997.
After excluding the effects of the Acquisitions, net sales for 1998 increased
by 1.3% from 1997 levels. Sales for North America, excluding export sales,
increased 18.4% from $139.9 million in 1997 to $165.6 million in 1998. This
increase was driven by a stronger demand in the Company's retail distribution,
commercial dispensers and service parts sales. This demand was driven by new,
more convenient products, such as credit/debit card readers, and environmental
regulations, such as those requiring vapor recovery systems. During the current
year the oil industry had various major oil companies merge together. It is
currently unknown what the effect, if any, of these mergers will have on the
Company's future sales levels or operations. International sales, including
domestic export sales, were $224.8 million in 1998 compared to $245.5 million
in 1997, representing a decrease of $20.7 million or 8.4%. This decrease is due
in part to the continued decline in foreign currency exchange rates from prior
year levels. International sales would have been $5.9 million higher if average
exchange rates of European and African currencies remained consistent with 1997
rates. The other major contributing factor is a significant decline in current
year domestic export sales to the Asia Pacific and Middle East regions compared
to prior year levels. The depressed sales to the Asia Pacific region compared
to prior year levels has been caused by a significant economic downturn in that
region's economy. There can be no assurance as to when Asian market conditions
will improve or whether they may worsen or spread to other regions.
Net sales for 1997 were $385.5 million, an increase of 37.8% from 1996 sales
of $279.7 million. Substantially all of this increase was due to the inclusion
of a full year of Sofitam's results in 1997 compared to three months of
Sofitam's results in 1996. These increases were offset by the impact of a
decline in revenues due to a decline in foreign currency exchange rates. Sales
for 1997 would have been $20.9 million higher if average exchange rates of
European and African currencies had remained the same as in 1996.
Gross margin as a percent of sales (defined as net sales less cost of sales,
divided by net sales) was 26.0% in 1998 compared to 26.3% in 1997. This decline
is due to the historically lower gross margins in the RPS Division's business,
offset partially by manufacturing improvements made in certain of the Company's
operations. During 1998 the Fort Wayne, Indiana manufacturing facility
implemented operational improvements. The Company's operational excellence
strategy provides an integrated process resulting in what the Company believes
is a true world-class manufacturing facility. This comprehensive approach
utilizes advanced operations techniques encompassing lean manufacturing, six
sigma quality, high performance organizations, supplier partnerships, advanced
materials management and strategies to gain the maximum amount of operational
efficiencies. Once fully implemented at the Fort Wayne, Indiana facility, these
same techniques will be implemented in all other manufacturing facilities.
Gross margin for 1997 was 26.3%, up from 24.8% in 1996. This increase is due
to (i) the inclusion of Sofitam's operations at higher margin levels for a full
year, (ii) personnel reductions and related cost savings, (iii) reduction of
warranty expense in North America, and (iv) the results of concentrated efforts
to improve manufacturing efficiencies globally. These cost reductions were
offset somewhat by decreasing sales prices.
Selling, general and administrative expense ("SG&A") as a percentage of net
sales was 17.1% for 1998. After removing the effects of the Acquisitions SG&A
was 17.6% or $68.9 million in 1998 compared to 17.7% or $68.2 million in 1997.
The slight increase in dollars is primarily attributed to increased costs
associated with year 2000 corrective actions and increased incentive
compensation related to sales and earnings performance. SG&A was 17.7% or $68.2
million in 1997, compared to 18.5% or $51.7 million in 1996. This increase over
1996 is largely attributable to a full year of Sofitam expenses. These
increases were offset by a program implemented by the Company in 1997 to
improve efficiency and reduce personnel, which translated into lower total
compensation cost.
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Net interest expense increased in 1998 to $19.2 million from $16.5 million in
1997. This increase is the direct result of higher levels of debt incurred to
effect the acquisition of the RPS Division. Net interest expense increased in
1997 to $16.5 million from $7.2 million in 1996, reflecting a full year's
interest expense on the Company's 11.5% Senior Subordinated Notes due 2006
issued to finance the acquisition of Sofitam.
A net foreign currency exchange gain of $1.4 million was realized in 1998
compared to a net currency loss of less than $0.1 million in 1997 and a net
currency loss of $0.2 million in 1996. During the second quarter of 1998 the
Company realized a foreign currency gain of $0.8 million associated with the
repayment of various French franc denominated borrowings previously entered
into under the Company's old credit agreement. Due to the decline in the value
of the French franc, the Company was able to repay these borrowings with less
U.S. dollars than it had received when the original contracts were entered
into. During the fourth quarter of 1998 the Company settled a foreign
denominated obligation which resulted in a foreign currency gain of $0.6
million. The 1997 currency loss was due principally to the decline of the
French franc against the U.S. dollar and was partially offset by a foreign
currency gain of $0.5 million on the sale of a foreign currency option
contract.
Other income, net was $0.7 million in 1998 compared to $1.4 million in 1997.
This decrease is principally due to lower gains realized on the sale of
property, plant and equipment. Other income, net was $1.4 million in 1997
compared to $0.2 million in 1996. This increase is partly due to gains on the
sale of property, plant and equipment that were $0.4 million greater in 1997
than 1996 and to the inclusion of Sofitam's other income for the full year. In
addition, other income in 1996 of $0.2 million includes $0.3 million of expense
for a litigation settlement of a non operating nature.
Income tax expense for 1998 was $1.0 million, which is comparable with the
prior year. As in prior years, the majority of this amount is comprised of
foreign taxes and U.S. state taxes. The Company's domestic and foreign
operations benefit from the use of net operating loss carryforwards generated
in prior years. Income tax expense for 1997 was $1.2 million, an increase from
$0.8 million in 1996. The increase was due to higher income, offset partially
by utilization of net operating loss carryforwards and adjustments of prior
year's taxes and refunds. At the end of 1998, the Company recorded a net
deferred tax asset of $40.2 million, which was offset in full by a valuation
allowance due largely to uncertainties associated with the Company's ability to
fully use these tax benefits. The Company is continuing to evaluate the
likelihood that all or part of the deferred tax asset will be realized through
the generation of future taxable earnings. If, in the future, the Company is
able to generate sufficient levels of taxable income, the valuation allowance
will be adjusted accordingly. See Note 15 of the Consolidated Financial
Statements of Tokheim Corporation and Subsidiaries for additional information
concerning the Company's income tax position at November 30, 1998.
Loss before extraordinary loss on debt extinguishment in 1998 was $3.7
million, or $0.46 loss per diluted common share, compared with 1997 earnings
before extraordinary loss on debt extinguishment of $4.0 million or $0.27
earnings per diluted common share and a loss of $2.0 million or $0.45 loss per
diluted common share in 1996. Net loss in 1998 included merger and acquisition
costs and other unusual items of $13.7 million, compared to $3.5 million in
1997 and $6.5 million in 1996. For further discussion see Note 3 to the
Consolidated Financial Statements of Tokheim Corporation and Subsidiaries.
In 1998, the Company incurred a $23.9 million extraordinary loss, or $2.10
loss per diluted common share, as a result of redeeming all outstanding 11.5%
Notes and refinancing borrowings under the old credit agreement. This loss
includes $15.7 million of premiums paid to purchase these notes and $8.2
million of the remaining unamortized deferred issuance costs associated with
the 11.5% Notes and the old credit agreement. In 1997, the Company incurred a
$1.9 million extraordinary loss, or $0.21 loss per diluted common share, as a
result of the open-market purchase and retirement of $10.0 million in aggregate
principal amount of the 11.5% Notes. This loss includes $1.4 million of
premiums paid to purchase the 11.5% Notes and $0.5 million representing the
write-off of a proportionate share of the original unamortized deferred
issuance costs. See further discussions under "--Liquidity and Capital
Resources" and Note 7 to the Consolidated Financial Statements of Tokheim
Corporation and Subsidiaries, "Senior Subordinated Notes."
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On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency, the Euro. The Company conducts business in
member countries. The transition period for the introduction of the Euro is
from January 1, 1999 to June 30, 2002. The Company has been, and is continuing
to, address the issues involved with the introduction of the euro. The more
important issues facing the Company include: converting information technology
systems; reassessing currency exchange rate risk; negotiating and amending
licensing agreements and contracts; product pricing; and processing tax and
accounting records. Conversion to the euro may reduce the Company's intra-
European exposure to changes in foreign currency exchange rates. As a result,
the Company's intra-European foreign currency translation and transaction gains
and losses could be reduced.
Based upon the Company's plans and progress to date, the Company believes
that use of the euro will not have a significant impact on the manner in which
it conducts its business affairs and processes its business and accounting
records. However there can be no certainty that such plans will be successfully
implemented or that external factors will not have an adverse effect on the
Company's operations. Any costs of compliance associated with the adoption of
the euro will be expensed as incurred and the Company does not expect these
costs to be material to its financial condition, results of operations or cash
flows.
Inflation has not had a significant impact on the Company's results of
operations.
The Company is a party to various legal matters, and its operations are
subject to federal, state, and local environmental laws and regulations. For
further details, see Note 20 to the Consolidated Financial Statements of
Tokheim Corporation and Subsidiaries, "Contingent Liabilities."
Liquidity and Capital Resources
Cash used in operations for the three month period ended February 28, 1999
was $1.3 million versus $5.3 million in the comparable period of 1998. During
the first quarter of 1999, the Company was able to collect receivables and
reduce inventory levels by a combined amount of $24.8 million. This cash inflow
was used to reduce the outstanding payables by approximately $17.9 million.
These working capital sources and uses are primarily related to the seasonality
of the business.
Cash used in investing activities for the three month period ended February
28, 1999 was $5.0 million compared to a cash usage of $12.5 million in the
comparable 1998 period. The cash usage in the 1998 period is attributable to
the acquisition of MSI.
Cash provided from financing activities for the three month period ended
February 28, 1999 was $13.3 million compared to cash provided in the comparable
1998 period of $19.8 million. The cash provided in 1998 is largely attributable
to an increase in notes payable to banks of $20.6 million used primarily to
finance the acquisition of MSI and for short term working capital needs. The
most significant item in the 1999 period was the issuance of the Outstanding
Dollar Notes and the Outstanding Euro Notes in the Offering, the proceeds of
which were used to refinance the Schlumberger Senior Subordinated Notes and the
Senior Notes which were originally issued in connection with the acquisition of
the RPS Division and to refinance certain other debt of the Company at the date
of the acquisition.
On January 29, 1999, the Company issued $123.0 million aggregate principal
amount of Outstanding Dollar Notes and Euro 75.0 million ($87.0 million
equivalent) aggregate principal amount of Outstanding Euro Notes in the
Offering. The Outstanding Notes will mature on August 1, 2008, and interest is
payable semi-annually on February 1 and August 1 of each year, commencing
August 1, 1999.
Net proceeds from the issuance of the Outstanding Notes were used to redeem
the Schlumberger Senior Subordinated Notes and the Senior Notes. The
Schlumberger Senior Subordinated Notes were redeemed at an aggregate price of
$176.7 million, representing principal of $170.0 million and accrued and unpaid
interest thereon of $6.7 million. The Senior Notes were redeemed at an
aggregate price of $23.2 million representing
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principal of $22.5 million, accrued and unpaid interest thereon of $0.2 million
and an applicable call premium of $0.5 million. In addition, the Company used
approximately $9.1 million of the net proceeds to reduce borrowings under the
revolving credit facility under the New Credit Agreement and to permanently
reduce the bank working capital commitment from $120.0 million to $110.0
million.
During the first quarter of 1999, the Company incurred an extraordinary loss
on debt extinguishment of approximately $6.2 million in connection with the
refinancing of the Senior Notes and the Schlumberger Senior Subordinated Notes
with proceeds received from the Offering. This amount consists of $0.5 million
of premiums paid on the redemption of the Senior Notes and approximately $5.7
million of unamortized deferred debt issuance costs that were written off.
As part of the purchase price of the RPS Division, the Company has provided
$20.3 million for certain costs it expects to incur to close down redundant
operations in connection with the reorganization and rationalization of the RPS
Division's operations. As of February 28, 1999 the Company has incurred and
charged approximately $2.2 million against this accrual for projects initiated
since the acquisition date, leaving a remaining balance of $18.1 million. The
Company expects to incur approximately $5.0 million of expenditures during the
second quarter of 1999 representing severance and closure costs related to the
Bonham, Texas, Tulla, Ireland and Belgium facilities. In addition, at November
30, 1998 the Company set up a restructuring reserve related to the closure of
its Glenrothes, Scotland facility in the amount of $5.1 million. During the
first quarter of 1999 the Company charged approximately $3.0 million against
the reserve. These charges relate to severance costs, facility closure expenses
and the write down in value of impaired assets. The Company expects the closure
of this facility to be completed during the second quarter of 1999.
The Company has guaranteed loans to the Employees' Stock Ownership Plan
("ESOP") in the amounts of $6.4 million and $7.0 million at February 28, 1999
and November 30, 1998, respectively. The Trustee who holds the ESOP Preferred
Stock, may elect to convert each preferred share to one common share in the
event of a redemption by Tokheim, certain consolidations or mergers of Tokheim,
or a redemption by the Trustee that is necessary to provide for distributions
under the Company's Retirement Savings Plan. A participant may elect to receive
a distribution from the plan in cash or common stock. If redeemed by the
Trustee, the Company is responsible for purchasing the preferred stock at the
twenty-five dollar floor value. The Company may elect to pay the redemption
price in cash or an equivalent amount of common stock. Preferred stock
dividends paid were $0.4 million for the three month periods ended February 28,
1999 and 1998, respectively.
In December 1997, the Company initiated its Year 2000 plan, including the
organization and staffing of a full-time Year 2000 program office. The Company
has organized the process into the following sections: product certification
(ensuring all products sold by the Company are Year 2000 ready); internal
information systems (ensuring all internal hardware and software is Year 2000
ready through upgrades or replacement); suppliers, distributors and external
agents (ensuring all suppliers, distributors and external agents used by the
Company to purchase or sell goods and services are Year 2000 ready); and
manufacturing and infrastructure (ensuring manufacturing and infrastructure
systems are Year 2000 ready).
As of February 28, 1999 most of the Company's products worldwide have been
tested for Year 2000 readiness. A substantial majority of the Company's total
product lines are Year 2000 ready, and the Company believes that the remaining
products will be Year 2000 ready by December 1999. The Company's products
presently being sold are Year 2000 ready. The Company is currently assessing
which products in the field are not Year 2000 ready and its responsibility to
the customers, if any, to remedy non-compliant products. This assessment is
being done for all products sold by each entity with the assessment efforts
focused on the recently acquired RPS Division locations. There is a possibility
that certain third-party networks over which the POS systems must operate may
not be Year 2000 ready, but the Company's products will still allow the pumping
of petroleum products. The Company has surveyed its critical suppliers, and
about half of the respondents have indicated that they are Year 2000 ready. The
other half of those responding have indicated that they are still working to
achieve Year 2000 readiness, but none has indicated that it expects not to be
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ready. The Company believes that all of its information systems will be Year
2000 ready no later than the third quarter of 1999. To date, the Company has
not uncovered any material Year 2000 problems. The total costs associated with
required modifications to become Year 2000 ready are not expected to be
material to the Company's financial position, results of operations or cash
flows. The Company estimates that it will spend a total of approximately $3.7
million by December 31, 1999, of which approximately $1.3 million had been
spent by February 28, 1999, to become Year 2000 ready. The Company has enlisted
the assistance of a third-party consulting company to provide independent
verification and validation of its entire Year 2000 plan.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operation, liquidity, and financial condition. The Company believes
that the most likely failure scenario is that its POS systems that have not
been corrected may fail, but the Company's dispensers will still allow the
pumping of petroleum products. Under such a scenario, purchasers of petroleum
products would still be able to use the dispensers but would be required to pay
for their purchases at the cashier rather than at the pump.
Due to the general uncertainty inherent in the Year 2000 problem, resulting
in part from the uncertainty of the Year 2000 readiness of third-party
suppliers, customers, and devices that interface with the Company's products,
the Company is unable to determine at this time whether the consequences of
Year 2000 failures will have a material impact on the Company's results of
operations, liquidity, or financial condition. The Year 2000 plan is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 readiness of its material
external agents. The Company believes that with the
implementation of new business systems and completion of the Year 2000 plan as
scheduled, the possibility of significant interruptions of normal operations
should be reduced. However, contingency planning for all sections discussed
above commenced in the fourth quarter of 1998, and the Company is currently
focusing on assessing the potential Year 2000 problems that may arise and the
risks of not becoming Year 2000 ready for each section mentioned. The Company
expects to have a contingency plan in place by the end of the second quarter of
1999.
The Future
The Company's principal sources of liquidity in the future are expected to be
cash flow from operations, including cash flow anticipated to be generated from
the RPS Division, and available borrowings under the New Credit Agreement. It
is expected that the Company's principal uses of liquidity will be to provide
working capital, finance capital expenditures, fund costs associated with the
Company's integration and rationalization plan and meet debt service
requirements. As a result of the acquisition of the RPS Division, the Company
has a significant level of debt. Based upon current levels of operations and
anticipated cost savings and future growth, the Company believes that its
expected cash flow from operations, together with available borrowings under
the New Credit Agreement and its other sources of liquidity, including leases,
will be adequate to meet its anticipated requirements for working capital,
capital expenditures, lease payments and scheduled principal and interest
payments. There can be no assurance, however, that the Company's business will
continue to generate cash flows at or above current levels, that estimated cost
savings or growth will be achieved or that the Company will be able to
refinance its existing indebtedness in whole or in part.
The indentures under which the Dollar Notes and the Euro Notes were, and the
Exchange Notes will be, issued (the "Indentures") and the New Credit Agreement
contain a number of significant covenants. The New Credit Agreement requires
the Company to maintain specified financial ratios and satisfy certain
financial tests. The Company's ability to meet such financial ratios and tests
may be affected by events beyond its control. There can be no assurance that
the Company will meet such financial ratios and tests. In addition, the
Indentures limit the ability of the Company and its subsidiaries to, among
other things: incur additional debt; pay dividends on capital stock or
repurchase capital stock or make certain other restricted payments; use the
proceeds of certain asset sales; make certain investments; create liens on
assets to secure debt; enter into transactions with affiliates; merge or
consolidate with another company; and transfer and sell assets.
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New Accounting Pronouncements
The Company has considered the impact that accounting pronouncements recently
issued by the Financial Accounting Standards Board and American Institute of
Certified Public Accountants will have on the Company's financial statements.
None of the pronouncements that have been issued but not yet adopted by the
Company are expected to have a material impact on the Company's financial
position, results of operations or cash flows. See the notes to the
Consolidated Condensed Financial Statements for additional information
regarding recently issued accounting pronouncements.
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BUSINESS
The Company
On September 30, 1998, the Company acquired the RPS Division and became the
world's largest manufacturer and servicer of electronic and mechanical
petroleum dispensing systems. These systems include petroleum dispensers and
pumps, retail automation systems (including POS systems), dispenser payment or
"pay-at-the-pump" terminals, replacement parts and upgrade kits. Customer
service includes the installation, maintenance, certification and calibration
of, and technical support for petroleum dispensers, pumps, electronic hardware
and software systems. The Company provides products and services to customers
in more than 80 countries. The Company is the largest supplier of petroleum
dispensing systems in Europe, Africa, Canada and Mexico, and one of the largest
in the United States. The Company also has established operations in Asia and
Latin America. The Company believes that its global capabilities provide it
with a competitive advantage to attract additional business and form alliances
with customers.
Petroleum dispensing systems are designed for and sold principally to owners
of retail service stations. These owners include MOCs, nationals, jobbers,
independents, convenience store stations, hypermarkets and other retailers, and
to commercial customers. As a result of industry consolidation, management
estimates that the top three manufacturers of petroleum dispensing equipment
account for approximately 75% of worldwide annual sales. The Company estimates
that the combined annual sales of the top five manufacturers in its industry is
approximately $2 billion.
In 1998, approximately 88% of the Company's net sales were to retail
operators, such as Arco, BP Amoco, Elf Aquitaine, Esso, Fina, Marathon, Shell,
SuperAmerica, Total and their affiliated jobbers, and approximately 12% of its
net sales were to commercial customers, such as Federal Express, United Parcel
Service, Penske Corporation and municipalities. In the United States, Canada,
and western Europe, demand for the Company's products has been driven by demand
for new, more convenient systems, such as credit/debit card readers, and by
environmental regulations, such as those requiring vapor recovery systems and
more secure underground storage tanks (often with electronic leak detection
technology). In emerging markets, economic growth requires vehicle use and
infrastructure development, which increase the demand for fuel and fuel
dispensers. Deregulation of local markets and privatization of state-owned oil
companies have also created additional growth opportunities in emerging
markets.
The Company believes that it offers superior customer service and support. In
western Europe and Africa the Company provides support through its extensive,
Company-direct service organization. Throughout the rest of the world, service
is provided through ASRs and distributors. Customer service includes the
installation, maintenance, certification and calibration of, and technical
support for, petroleum dispensers, pumps, electronic hardware and software
systems. The Company offers 24-hour, seven day-per-week support by telephone
and over the Internet via its FASRLINK help desk to ASRs, distributors and
customers in major markets. The Company believes its service and support
capabilities are important factors in winning supply contracts and gaining new
customers. Additionally, MOCs are more frequently entering into geographically
broader service contracts, which the Company believes it is well-positioned to
win.
The Company is the world's largest manufacturer and servicer of electronic
and mechanical petroleum dispensing systems. As of the date of issuance of the
Notes, the Company's U.S. subsidiaries are: Envirotronic Systems, Inc.; Gasboy
International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum
Equipment, Inc.; Tokheim Automation Corporation; Tokheim Equipment Corporation;
Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. As a
result of its acquisition of Sofitam in September 1996 and the RPS Division in
September 1998, the Company has positioned itself as the largest global
competitor in the petroleum dispenser business, with an estimated 37% share of
the world market, and the ability to provide both products and services to
customers in over 80 countries. Tokheim was already one of the world's largest
manufacturers and servicers of electronic and mechanical petroleum dispensing
systems prior to its acquisition of the RPS Division. Between 1994 and 1998,
Tokheim's revenues grew from approximately $202.1 million to
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$466.4 million, and EBITDA (as defined above under Note 4 to the Summary
Financial Data of Tokheim Corporation and Subsidiaries) increased from
approximately $10.2 million to $43.7 million, in large part due to the Sofitam
acquisition.
Prior to the Acquisition, the RPS Division of Schlumberger Limited was
headquartered in France, and was a leading manufacturer and servicer of fuel
dispensing systems in western Europe. In 1992, it established a presence in
North America with the acquisition of Southwest Energy Control Systems and
continued to develop its North American position. The RPS Division is also
present in eastern Europe and the former Soviet Union. The main manufacturing
sites for Europe and North America are located in Dundee, Scotland and in
Bonham, Texas, respectively. The Company recently announced that it will close
the Bonham facility.
History
Tokheim
The Company originated in 1898 in a hardware store in Thor, Iowa. Merchant
John J. Tokheim, while searching to improve on the "drum-and-spigot" method of
dispensing kerosene and gasoline, conceived of the idea of a pump dispenser.
His invention became known as the Tokheim Dome Oil Pump. The pump's popularity
led to the organization of the Tokheim Manufacturing Company in Cedar Rapids,
Iowa in 1901. In 1918, the Company was purchased by a group of businessmen from
Fort Wayne, Indiana. The Company moved to Fort Wayne and was incorporated in
Indiana under the name Tokheim Oil Tank and Pump Company. The present name was
adopted in December 1953. The Common Stock began trading on the New York Stock
Exchange on September 8, 1978. In 1986, the Company acquired the business now
operated as Gasboy International, Inc. ("Gasboy"). Gasboy has been designing
and manufacturing products for fleet fuel dispensing for over 70 years and
fluid management products for over 30 years. Gasboy sells primarily to
commercial and governmental customers that maintain fleets.
In September 1996, the Company acquired Sofitam for $107.4 million less
certain adjustments. The acquisition included Sofitam's in-house service
provider, Sogen S.A., as well as the two distinct brand names--EIN and Satam.
Sofitam had and continues to have a leading market position in France and
northern Africa, as well as a strong market position in southern Europe. In
December 1997, the Company strengthened its offerings of retail automation
systems, including POS systems, with the acquisition of MSI.
The RPS Division
Schlumberger built the RPS Division mainly through acquisitions of other
petroleum dispensing equipment companies. The French RPS Division was
established in 1920 under the name Aster-Boutillon and became part of
Schlumberger in 1972. In 1985, the RPS Division acquired Koppens Automatic, a
manufacturer of fuel dispensers established in the Netherlands. In 1992, the
RPS Division established a presence in North America with the acquisition of
Southwest Energy Control Systems. The RPS Division developed a presence in
Germany through the acquisitions of (i) Schwelm Tanksysteme GmbH and (ii) Paul
Germann GmbH, which became part of the RPS Division in 1990 and 1996,
respectively. The RPS Division expanded its European service business in 1996
by acquiring a leading French service business named Gueant and three Italian
companies (CME Centro denominazione eletronica Srl, Borghetti snc and LA NUOVA
RIMIC Srl). The RPS Division has approximately 125,000 fuel dispensers
operating in the field, over 50,000 operational retail automation systems, over
20,000 operational payment terminals and over 20,000 service stations under a
maintenance service contract. The RPS Division sells to MOCs mainly located in
western Europe, including Shell, BP, Fina, Elf, Total and Repsol, and to
independent retailers, distributors and hypermarkets, such as Palmetto (USA),
Ten Hoeve Bros. (USA), Southwest Convenience (USA), Intermarche (France), Ocean
(France) and Famila (Germany).
Competitive Strengths
The Company believes that a number of factors make it a premier manufacturer
and servicer of petroleum dispensing systems. These factors include the
Company's:
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Global Capabilities. The Company is the world's largest manufacturer and
servicer of petroleum dispenser systems, supplying products and services in
more than 80 countries. As a result, the Company believes that it is able to
satisfy the complete petroleum dispensing equipment needs of customers
throughout the world. The Company's global capabilities provide a significant
advantage when competing for sales to MOCs and nationals, including through
tenders that MOCs and nationals are awarding more frequently to meet their fuel
dispensing equipment needs.
World's Largest Service Network. The Company offers service to customers in
over 80 countries through its 414 distributors, 319 authorized service
representatives ("ASRs") and over 3,800 trained field representatives. The
Company believes its global distribution and service network also provides a
significant advantage when competing for tenders. The Company believes that the
reach of its European and African networks for distribution and service makes
it a preferred partner for MOCs in these regions. The Company also recently
launched an Internet-based help desk known as FASRLINK, which provides ASRs
worldwide with 24-hour access to installation drawings, product updates and
diagnostic procedures.
The Company's service network enables it to strengthen existing customer
relationships, attract new customers, increase its understanding of competitive
products and customer needs, and augment sales.
Strong Customer Relationships. The Company's strong relationships with MOCs,
independents and hypermarkets are increasingly valuable. As these customers
expand across regions, they commonly rely on their traditional suppliers to
expand with them. The Company has established relationships with many such
customers, including Arco, BP Amoco, Carrefour, Elf, Esso, Fina, Intermarche,
Repsol, Shell, Statoil and Total. Furthermore, the Company's ability to
customize its equipment and software to meet customer- and country-specific
standards makes it attractive to MOCs and nationals as a single source of
supply.
Broad, Technologically Advanced Product Line. The Company manufactures and
sells a wide variety of dispensers, pumps, meters, payment and retail
automation systems, including POS systems (both hardware and software) and
fleet fueling systems. The Company's acquisition of MSI in December 1997
provided additional depth to its retail automation system product line. The RPS
Division's unique microprocessor-driven dispenser electronics platform further
enhances the Company's product portfolio. The Company's commitment to invest in
technology allows it to continue to satisfy diverse customer- and country-
specific requirements. The Company considers itself an industry leader in the
integration of electronics and software into its products and believes there is
a significant potential demand for certain existing technologies. For example,
in 1997, only 26% of all retail petroleum dispensers in the United States were
estimated to have dispenser payment or "pay-at-the-pump" terminals.
Proven Management Team. Since the Company's current management team was
assembled in 1992, it has successfully implemented a strategic plan that has
restored financial viability, strengthened MOC relationships, broadened product
lines and reduced costs. As part of this strategy, the Company acquired Sofitam
in 1996 and the RPS Division in 1998. Management has been successful to date in
integrating Sofitam's operations into the Company and consolidating the
Company's operations in Europe. In addition, management has already initiated
numerous cost-cutting programs in connection with the acquisition of the RPS
Division. See "--Business Strategy--Realize Operating Synergies and Cost
Savings."
Business Strategy
The Company's business strategy has the following principal components:
Leverage Global Platform. The Company intends to use its broad product
portfolio and its understanding of the regulatory requirements of the countries
where its customers operate to compete aggressively for national, regional and
global tenders and new customers. The Company also believes it can obtain
additional customers and increase sales to existing customers by offering
comprehensive sales and service coverage worldwide through its extensive
network.
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Enhance Largest Service Organization. The Company's service organization
provides it with information on customer needs and products, the opportunity to
sell new products to service customers and a stable source of recurring
revenues from product support. The Company intends to expand its service
organization geographically.
Maintain Technological Leadership. In developed markets, such as the United
States, Canada and western Europe, the Company believes that improved
technology will be the primary driver of sales of petroleum dispensing
products. As a result, the Company has made a significant effort to maintain
its competitive edge technologically and considers itself a leader in the
integration of electronics and software into petroleum dispensing products. For
example, the Company's new RFID technology (currently being test marketed in
the U.S.), similar to the drive-through payment systems used at toll booths,
permits consumers to pay for fuel purchases without using cash or credit cards.
The Company also plans to continue to invest in developing new technologies,
such as human interface displays, wireless forecourt systems, improved metering
and robotic fueling.
Maintain Top Quality. The Company strives to produce the highest quality
products and is committed to continuously improving quality. An aggressive
focus on product quality has reduced Tokheim's defect rate (measured in parts
per million) by approximately 90% since 1995. Another indication of commitment
to quality is the award of ISO-9000 certification to most of the Company's
manufacturing facilities. Moreover, the Company's automated computerized
dispenser testers comprehensively test each dispenser's electrical and fluid
systems before shipment to the customer, further assuring the delivery of
quality products.
Realize Operating Synergies and Cost Savings. The Company believes that it
will be able to achieve an additional $43.7 million in annual cash cost savings
by the end of the third full year after the acquisition of the RPS Division of
which the Company believes $28.7 million can be obtained in the first full
fiscal year after the Acquisition. The principal remaining components of the
Company's cost savings program are:
. Combine Manufacturing Capabilities. The Company intends to consolidate
substantially all of its dispenser manufacturing into three modern
facilities. Management estimates that the Company can save $26.0 million
on an annual basis from such consolidation.
. Integrate Service Organizations. Tokheim is in the process of
streamlining its European service organization. The Company plans to
further reduce costs and improve service by integrating Tokheim's and
the RPS Division's service organizations. Management estimates that the
Company can save $9.0 million on an annual basis from such integration.
. Eliminate General and Administrative Redundancies. Management expects to
achieve further savings by eliminating redundant administrative staff
and headquarter facilities. Management estimates that the Company can
save $5.0 million on an annual basis from such reductions.
. Reduce Raw Material Costs. Management expects to save $5.5 million
annually due to increased purchasing leverage.
. Reduce Foreign Currency Exposure. The RPS Division incurred a $2.5
million loss from currency exchange connected with intercompany
purchases of inventory during fiscal 1997. Management expects to reduce
these losses by approximately $1.8 million annually by using hedging
techniques.
To realize the $47.3 million of cost savings, management expects that
approximately $32.2 million of expenditures will be required, most of which are
yet to be incurred. Management believes that further cost savings may be
achievable from:
. reduced manufacturing costs resulting from product standardization and
elimination of redundant products;
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. productivity and efficiency improvements resulting from increased
capacity utilization levels;
. reduced administrative expense items such as insurance premiums and
supplies; and
. cost savings from bringing in-house various manufacturing operations,
such as fabrication, that the RPS Division outsourced before the
Acquisition.
The savings described above are based on estimates and assumptions of
the Company that are inherently uncertain, and are subject to
significant business, economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which
are beyond the Company's control. The Company can give no assurance as
to what extent or when such savings will be achieved. See "Disclosure
Regarding Forward-Looking Statements."
Products
The Company's principal product offerings include petroleum dispensers and
pumps, retail automation systems (including POS systems) dispenser payment or
"pay-at-the-pump" terminals, replacement parts and upgrade kits. Petroleum
dispensers and pumps transfer fuel from storage tanks to vehicles or portable
containers. Dispensers include meters, which measure the quantity of fuel
pumped and transfer the information to calculators which determine a sales
price. Retail automation systems control in-store and at-the-pump fuel sales,
pump activation and credit card transactions, monitor inventory, transmit data
to a central management system and perform other management functions. Pay-at-
the-pump terminals automate customer payment at the pump with cash or
credit/debit cards. Upgrade kits permit owners to upgrade a dispenser's
capabilities and functionality without incurring the cost of replacing the
entire dispenser. The Company also offers services for its products through
ASRs and Company-owned facilities.
In the United States, Tokheim's most popular petroleum dispensers are the
Premier(TM) series. Premier dispensers include a variety of sizes and models
that dispense multiple grades of fuel and that offer advanced pay-at-the-pump
terminals. Internationally, the Company offers a range of petroleum pumps,
including its Consommateur, Bernice, ADONIS, Partner 3 and Eurotron Spectra
models.
One of the Company's distinguishing characteristics is its commitment to
adapting products to local needs. For example, the Company produces a dispenser
that permits multiple hoses on the same side of the pump to operate
simultaneously. This model is targeted primarily at urban Asian markets with a
high motorcycle population. The Company has also adapted its products to
accommodate differences among markets which are driven more by custom than by
need. For example, European dispensers usually have retractable hoses and
suction pumps within the dispenser, while dispensers in the United States
usually have high-hose units and pumps located within the underground storage
tank.
The Company provides both the software and hardware required for retail
automation systems. The Company's Columbus(TM) system was introduced on a
commercial basis in 1997. Columbus uses a touch-screen PC monitor and Windows
NT software in an open architecture system that allows full integration with
both existing and new equipment. The user-friendly, touch-screen cashier
interface reduces both employer training time and customer wait time. Other POS
solutions available from Tokheim include the Profit Point System, the Ruby
System and the Check Point System in the United States and the Prisma and S-
2000 systems in the international market.
MSI's principal product is the CVN(TM) (Convenience Management Solution), a
comprehensive retail automation system, including POS, backroom and store
management systems. The CVN integrates such features as advanced gas pump
controls, barcode scanning, credit authorization, commercial and charge
accounts, employee time clock, detailed inventory tracking and cash drawer
controls. Among its dispenser features, the CVN displays up to 32 separate
pumps at all times, with up to two customers per pump. Its "One Touch" controls
allow service station employees to easily authorize, pre-pay and monitor pumps
by pressing one button. The system can also automatically add merchandise
purchases to the customer's fuel bill.
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The CVN has the capacity to work with a monitoring system to automatically
alert station owners of the status, fuel level, temperature, water content and
presence of leaks in underground storage tanks. The system interfaces with
almost every type of dispenser and control currently on the market, including
those not manufactured by the Company. The system permits station owners to
take a physical inventory or spot-check with a hand-held radio frequency
scanner. It also can track customers, even those who pay cash, and can help
manage fleet, commercial and in-house charge accounts.
The Company believes that its retail automation systems comprise one of the
broadest product ranges in the marketplace, from simple pump controllers to
sophisticated convenience store and fast-food functions. The Company believes
that by combining its retail automation resources under the leadership of MSI,
the Company will strengthen its market position and better utilize these
resources.
The Company's newest dispenser payment terminal is INsight(TM), which can be
used with any of the Premier dispenser models now in the market. INsight
provides a flexible platform for merchandising at the dispenser, using a
monitor that prompts the consumer, making transactions easier to initiate and
complete. This product includes an animated graphic display for payment options
(cash, credit card or debit card) and a larger display for text. Non-fuel
items, such as car washes or food, can also be purchased through INsight. The
Company has developed a graphic printer to provide such items as coupons, logos
and barcodes on the consumer's receipt.
In 1997, the Company began market testing of its RFID technology. Similar to
the drive-through payment system at toll booths in major metropolitan areas,
this technology automatically charges a consumer's account, which is read from
either a microchip key ring tag or a microchip window tag. By eliminating the
need to pay for fuel with cash or credit cards, the system speeds gas
purchases, both increasing consumer convenience and enabling stations to fuel
more cars in less time. The technology also permits the gathering of
information about consumer buying habits to improve marketing techniques, such
as promotion of food and car washes on pump-mounted displays. Tokheim's RFID
system is compatible with all POS systems and with other manufacturer's
dispensers (as an upgrade). The Company has entered into an agreement with
Micron Communications to further develop its RFID system, which is currently
being test marketed with consumers.
Also in 1997, Tokheim introduced its Fuel Link(TM) wireless communication
system. Fuel Link transmits information by radio frequency between the point of
sale and the dispenser hardware, eliminating the cost of installing underground
wiring to upgrade the functionality of the dispenser.
For the commercial market, Tokheim's new Gasboy products include Astra(TM)
and Fuel Point(TM). Astra is an electronic dispenser designed for the above-
ground tank market. The Fuel Point system automatically reads information from
the dispenser's nozzle, including vehicle identification, odometer data, fuel
consumption and service record, and other operating and maintenance data,
eliminating the risk of manually misentered data.
In the United States, the RPS Division's most popular petroleum dispensers
are from the Centurion(TM) series. Centurion are the first local area network-
based dispensers with the electronics scheme called EZ BUS(TM) electronics. EZ
BUS's compact design reduces the number of electronic components and connection
points, making maintenance easier. In addition, customers can add options by
simply upgrading the dispenser software without changing electronic hardware.
The Highway POS is a highly sophisticated, open architecture, PC-based POS
system designed to interface with dispensers of other major manufacturers. This
product has the ability to drive multiple dispenser brands at a single site.
In Europe, the RPS Division's most popular petroleum dispensers are the
Eurotron Spectra, which are multiproduct dispensers designed to address the
spectrum of petroleum requirements across European markets. The Eurotron
Spectra dispensers are offered in a range of configurations, and the main
components have approvals for use in all European markets. The OMEGA 2010(TM)
forecourt equipment controller, which has also been designed for use throughout
Europe, can adjust to different national and international regulations
governing weights and measures and safety.
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Service
The Company believes that one of its strongest competitive advantages is its
ability to offer comprehensive customer support and service. Service consists
of installation, maintenance, certification and calibration of petroleum
dispensers, pumps, electronic hardware and software systems. The Company offers
service to customers in over 80 countries through its 414 distributors, 319
ASRs and over 3,800 trained field representatives. The Company's customer
service division, which maintains a help desk in English, Spanish and other
languages, is available 24 hours a day, 365 days a year, to respond immediately
to service needs. Additionally, the customer service division maintains a
continuing program of service clinics for customers and distributors, both in
the field and at the Company's training centers.
To improve efficiency, response time and customer convenience, the Company
has begun to implement a system to collect performance data and coordinate the
dispatch of service technicians. In addition, the Company recently launched an
Internet-based help desk known as FASRLINK, which provides authorized service
representatives worldwide immediate access to installation drawings, product
updates, service bulletins and diagnostic procedures 24 hours a day.
Customers
The Company's products are sold primarily to retail service station operators
and commercial customers which fall into seven categories.
Major Oil Companies. MOCs are typically large multinational companies that
are vertically integrated with retail operations in developed and emerging
markets. They sell "branded" products and typically have standard station
formats, including dispenser design and proprietary credit card networks. The
Company's MOC customers include BP Amoco, Elf Aquitaine, Marathon Oil, Shell
and Total, among others.
National Oil Companies. A national is a non-U.S. oil Company that operates
exclusively (or almost exclusively) in a single national market. Most nationals
are, or until recently were, state-owned. In recent years, a number of
nationals have been privatized or have relinquished their monopolies over the
local retail petroleum markets. For example, in Mexico, the market was
previously controlled by the government-owned oil Company, Petroleos Mexicanos
("Pemex"). Initial deregulation occurred in 1995, allowing MOCs such as Amoco,
Mobil and Conoco to enter that market. Increased local competition as well as
the need for newly-privatized companies to earn profits has made once-insulated
nationals more sensitive to costs and customer service. These new sensitivities
often translate into demand for newer, more sophisticated dispenser equipment.
Additionally, a number of privatized nationals are now expanding across
borders. The Company's national customers include Pemex in Mexico, Petroleo
Brasileiro S.A. ("Petrobras") in Brazil, Paz Oil in Israel and Deltaven S.A. in
Venezuela, among others.
Independent Oil Companies. Independents are usually U.S. companies that sell
"branded" products regionally rather than nationally. They typically have
station and dispenser designs which are standardized, similar to MOCs.
Independents that are Company customers include Merit Oil Corp., Getty
Petroleum Corp., Amerada Hess Corp. and Phillips 66 Company, among others.
Jobbers. Jobbers are independent service station owners that operate under
the brand of a MOC. A station owned by a jobber looks substantially the same as
one owned by a MOC, selling MOC-branded products and using standard MOC station
layouts. Most jobbers own multiple stations. Some jobbers work exclusively with
one MOC, while others have multiple MOC partners. Usually, jobbers are not
required to purchase their petroleum dispensing equipment from the same
manufacturers as their affiliated MOC.
Convenience Store Stations. Convenience store stations are petroleum
retailers who source over 50% of their sales from merchandise rather than from
petroleum products. A significant number of convenience store stations are
owned by MOCs. The Company's convenience store stations customers also include
national and regional operators, as well as small, local businesses.
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Hypermarkets. The Company is the leading supplier to French hypermarkets. The
hypermarket is a retailing format pioneered in France, with a growing presence
in the rest of Europe. A hypermarket is similar to a strip mall in the United
States, with a supermarket as the anchor retailer. Hypermarkets typically offer
competitively-priced, private label petroleum products to attract customers. In
France, more than 50% of retail petroleum sales are through hypermarkets. The
Company's hypermarket customers include Intermarche, Leclerc, Systeme U,
Comptoirs Modernes, Promodes and Carrefour, among others.
Commercial Customers. The commercial market is characterized by companies
whose fuel consumption needs justify maintaining internal fueling capabilities,
such as truck fleets and municipalities. Through its Gasboy subsidiary, the
Company is the leading supplier of fuel dispensing equipment to the U.S.
commercial market. The Company's commercial customers include Federal Express,
United Parcel Service, Penske Corp. and municipalities and state agencies.
Sales, Marketing and Distribution
United States
In the United States, the Company relies on two primary channels of
distribution: (i) direct sales to national accounts such as MOCs and certain
independents and (ii) indirect sales through a large network of independent
distributors. The Company directly markets through national account managers
who call on the MOCs, independents and large convenience store chains. National
account managers work closely with the MOCs to develop technology, pricing and
account strategies. The Company markets to jobbers and convenience stores
through its 261 independent distributors. To coordinate its distributor
marketing, the Company has regional district managers who are responsible for
geographic coverage, training the district sales force and assisting in the
development of sales and marketing strategies.
International Markets
Historically, the petroleum dispenser market outside of the U.S. has been
served by local distributors. The Company has 153 international distributors
serving customers that cannot be served cost-effectively by the Company's
direct sales force. The Company generally requires letters of credit from its
international distributors to limit any risk of non-payment by such
distributor. However, as MOCs expand geographically and as nationals become
more commercially competitive, they increasingly are purchasing directly from
manufacturers, using national, regional and global "tenders," "alliances" and
"preferred supplier" relationships. A "tender" is an award made by a MOC or
national to a manufacturer to supply petroleum dispensing equipment and related
services in a specific country or region (or even globally) for a specific
period at specified prices and quantities. Tenders allow MOCs and nationals to
reduce the number of their suppliers while improving relationships with those
remaining. In response to the advent of tenders, manufacturers have expanded
and adapted their product lines and service capabilities to satisfy the
specific regulatory, marketing, and service demands of each country being
supplied. Tenders are often nonexclusive and cancellable by the customer at any
time.
An "alliance" involves a closer relationship than a tender. Often, a MOC or
national will ask only its alliance partner to submit a tender proposal. As
part of an alliance, manufacturers can assist the MOC or national by tracking
purchases, warranty coverage, service coverage and service response
requirements on behalf of the MOC or national. The Company has also been able
to expand its alliance with Amoco, for example, to obtain its Mexican business.
"Preferred supplier" relationships are less committed arrangements than
alliances. These arrangements typically involve a one-way commitment by the
manufacturer on such matters as prices, service and available inventory.
Usually, the MOC or national does not make any purchasing or other contractual
commitments. Preferred supplier relationships are usually non-exclusive and are
typically cancellable by the customer at any time. A MOC or national seeking to
reduce the number of suppliers with which it deals while increasing volume
purchasing discounts often will identify several manufacturers as preferred
suppliers. The Company has an expanded preferred supplier relationship with
Total. See "Risk Factors--Risks Associated with the Operation of the Business--
Dependence on the Retail Petroleum Industry."
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Manufacturing and Quality
The Company's manufacturing process consists of sheet metal fabrication,
machining, assembly of electronic components and customer-specific painting.
The Company's manufacturing and production are generally to order. To improve
quality and productivity and to reduce costs, the Company employs a cellular
manufacturing format and just-in-time process engineering. The majority of the
Company's manufacturing operations are concentrated in the following cities:
Fort Wayne, Indiana; Washington, Indiana; Lansdale, Pennsylvania; Grentheville,
France; Kya Sand, Randburg, South Africa; Glenrothes, Scotland; Dundee,
Scotland; Bladel, the Netherlands; Chesapeake, Virginia; Tulla, County of
Clare, Ireland; and Bonham, Texas. Bladel and Chesapeake are engineering sites,
and Dundee and Bonham are manufacturing sites. The Tulla facility is used only
for the assembling and testing of electronic components. The headquarters of
the RPS Division was, prior to the Acquisition, located in Montrouge, Paris,
France. The Company recently announced that it will close the facilities in
Glenrothes, Scotland and Bonham, Texas. Management anticipates that the Company
has sufficient production capacity to meet demand over the next several years.
The Company strives to produce the highest quality products and is committed
to continuously improving the quality of its products and processes. An
aggressive focus on product quality has reduced Tokheim's defect rate (measured
in parts per million) by approximately 90% since 1995. One important element in
reducing the defect rate has been the Company's effort to satisfy the standards
for ISO-9000 certification at its manufacturing facilities. The International
Organization for Standardization awards ISO-9000 certification on a facility-
by-facility basis to manufacturers that adhere to strict quality standards.
Companies must maintain these standards and supply supporting documentation to
retain their ISO certification, and certified facilities are audited regularly.
Independent third party registrars must nominate candidates for certification.
Most of the Company's manufacturing facilities are ISO-9000 certified, and the
Company is actively seeking certification for the uncertified manufacturing
facilities.
Another important aspect of the Company's efforts to improve quality is its
automated computerized dispenser tester ("CDT"). The CDT monitors all fluid
paths to detect leakage and, simulating real-world conditions, tests displays,
keypads, valves, pulsers, totalizers, card readers, cash acceptors, printers,
vapor recovery systems and other critical dispenser components. After each
testing cycle, technicians review the data for any potential corrective
actions. The CDT is networked to the Company's mainframe computer, allowing
instantaneous access from the order entry, engineering, customer service and
quality assurance departments, and permitting close monitoring of the
manufacturing process.
The Company has been recognized by third parties for its commitment to
quality. In September 1998, the Company received the Manufacturer of the Year
Award from the 1,639 member Petroleum Equipment Institute ("PEI"). The
Manufacturer of the Year Award is the top honor presented by PEI each year.
This award recognizes the Company's commitment to marketing through
distributors, competitive pricing, honest business practices, good product
availability and responsive customer service. 1998 was the third consecutive
year the Company was recognized. In 1997 and 1996, the Company was one of five
recipients (out of 350 candidates) of PEI's Circle of Excellence Award. The
Company's principal manufacturing facility in Fort Wayne, Indiana and its
electronic assembly plant in Washington, Indiana each received the 1996 State
of Indiana Quality Improvement Award.
Supplies
The principal raw materials essential to the Company's business are flat
sheet steel, aluminum, copper tubing, iron castings and electronics, POS
systems, and computer components, all of which are generally available through
competitive sources of supply. At its U.S. facilities, the Company's purchasing
strategy, which includes a comprehensive supplier quality assurance component,
seeks to ensure that inventories are purchased at the lowest total cost-of-
quality. In making purchasing decisions, the Company considers the quality of
performance of the required items, as well as the supplier's delivery
responsiveness and prices. The Company has significantly reduced the number of
suppliers it uses to develop more effective relationships with
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the remaining suppliers. The Company has also implemented point-of-use programs
so that supplies are delivered directly to the proper usage points at the
factory or to a storage facility.
Properties
The Company owns properties in: Fort Wayne, Indiana; Fremont, Indiana;
Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario, Canada; Kya
Sand, Randburg, South Africa; Glenrothes, Scotland; Weilheim, Germany;
Grentheville, France; Scurzolengo, Italy; Abidjan, Ivory Coast; Bonham, Texas;
Dundee, Scotland; and Bladel, Holland. The Company leases properties in:
Greenwood Village, Colorado; Tremblay, France; Casablanca, Morocco; Solothurn,
Switzerland; West Sussex, United Kingdom; Vilvoorde, Belgium; Barcelona, Spain;
La Soukra, Tunisia; Dakar, Senegal; Douala, Cameroon; Leiderdorp, the
Netherlands; Scurzolengo, Italy; and additional sites in France, Austria,
Denmark, Norway, Great Britain, Czech Republic, Slovakia, Hungary, Italy,
Spain, Switzerland, Ireland, the Netherlands, Germany, Poland and the U.S. The
majority of the Company's manufacturing operations are concentrated in the
following cities: Fort Wayne, Indiana; Washington, Indiana; Lansdale,
Pennsylvania; Grentheville, France; Kya Sand, Randburg, South Africa;
Glenrothes, Scotland; Turnhout, Belgium; Bladel, the Netherlands; Dundee,
Scotland; and Bonham, Texas. The Company recently announced that it will close
the facilities in Glenrothes, Scotland and Bonham, Texas. The Company believes
that it has sufficient production capacity to meet demand over the next several
years. The Company also owns an engineering and design center and a corporate
office building in Fort Wayne, Indiana. The remaining properties owned or
leased by the Company are primarily for warehouse space or sales and service
except that the Colorado facility is for software development. The Company is
currently holding for sale facilities in Falaise, France, Jasper, Tennessee and
Atlanta, Georgia, as well as a 109-acre tract of unimproved land located in
Fort Wayne, Indiana. The Company has entered into a contract for the sale of 34
acres of the 109-acre tract of unimproved land.
Employees
As of February 28, 1999, the Company employed approximately 4,700 persons.
Most employees are involved in manufacturing and production, with the balance
engaged in administration, sales and clerical work. In the United States,
approximately 500 of the employees are union members covered by collective
bargaining agreements. The collective bargaining agreement covering factory
employees expires in 2003, and the collective bargaining agreement covering
office employees expires in 2000. The Company believes its relationship with
its employees is good. It has not recently experienced any work stoppages at
its facilities, and has been able to extend or renegotiate its collective
bargaining agreement without disrupting production.
Research and Development
The Company continually seeks to enhance its existing product lines to offer
increased functionality in new or existing products and has dedicated research
and engineering staffs. The Company, not including the RPS Division for 1997
and 1996, spent approximately $21.1 million, $18.3 million and $15.9 million in
1998, 1997 and 1996, respectively, to improve existing products and
manufacturing methods, develop new products and pursue other applied research
and development. The RPS Division spent $16.6 million and $15.9 million in 1996
and 1997, respectively. The Company has also begun to form exclusive
relationships with the MOCs to develop products that meet their specific needs
and with electronics companies to develop advanced technologies.
The Company revamped its product development process in 1996 to incorporate
formal product development procedures. Each project now includes a cross-
functional team of representatives from the engineering, manufacturing,
quality, marketing, customer service, finance and service parts departments.
The team reviews the project from a variety of aspects, including financial
impact, design and production implications, and required after-sale support.
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Legal Proceedings
The Company is defending various claims and legal actions, including claims
relating to the U.S. Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") and other environmental laws, product liability and
various contract and employee matters. The Company believes that the outcome of
such pending claims will not, individually or in the aggregate, have a material
adverse effect on the Company's business, financial condition or result of
operations.
The Company owns or leases, and has in the past owned or leased, numerous
properties that for many years have been used in industrial and manufacturing
operations. Although the Company has in the past utilized operating and
disposal practices that were standard for the industry at the time, hazardous
substances may have been disposed of or released on or under the properties
owned or leased by the Company, or on or under other locations where such
wastes have been taken for disposal. The Company currently owns a facility near
Atlanta, Georgia that was previously used to refurbish gasoline dispensers. As
part of this operation, chlorinated solvents were inadvertently released to the
soil and groundwater through the facility septic system. Migration of these
releases has caused solvent concentrations above background levels in the
groundwater under an adjacent residential property. The Company has completed
the cleanup of this release under the oversight of the Georgia Environmental
Protection Division of the Georgia Department of Natural Resources and is
currently monitoring the property to ensure that additional cleanup work is not
necessary.
The Company has reached a tentative settlement with respect to certain
environmental liabilities under an indemnity provision of a sale agreement
concerning the sale of the die casting facility of a former subsidiary to a
third party. Pursuant to the settlement agreement, the Company will repurchase
the real property and will enter into a leaseback agreement with the third
party. The Company has agreed to place the facility in the state site
remediation program. Based on the Company's environmental consultant's report,
the Company presently does not anticipate any material costs at the facility.
Regulation
The Company's operations are subject to national, regional and local laws and
regulations, including those concerning product safety, weights and measures,
and pollution and protection of the environment.
Product Safety. In the United States, the Company's products are subject to
standards set by Underwriters' Laboratories ("UL"). Standards for petroleum
product dispensers govern design features such as frame sturdiness, corrosion
resistance and hydrostatics of various parts. UL standards also apply to
electronic devices used in the Company's dispensers. Other countries often
either accept UL product standards or observe the standard of a comparable body
including the Canadian Standards Association and the British Approval Service
for Electrical Equipment and Flammable Atmosphere and Organization of
International Meteorology League ("OIML") in Europe. Individual countries may
vary the standards created by these groups.
Weights and Measures. Meters and displays must meet certain accuracy
standards. In the United States, "Handbook 44" from the National Institute on
Weights and Measures, which all states have adopted, sets forth those
standards. The standards generally require that the meter accurately measure
the amount of fuel pumped to within 0.4%. Meters must be able to measure output
at varying flow rates, ranging from almost zero to fifteen gallons per minute.
Also, pumps must eliminate most of the vapor from the fuel to ensure that what
is being measured is fuel. Dispensers in the U.S. are typically inspected every
year by state inspectors. Outside the United States, similar standards govern
meters and displays. Standards set by OIML are generally accepted throughout
Europe, including in France.
Environment. The Company's operations and properties are subject to a variety
of complex and stringent federal, state, and local laws and regulations,
including those governing the use, storage, handling, generation, treatment,
emission, release, discharge and disposal of certain materials, substances and
wastes, the remediation
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<PAGE>
of contaminated soil and groundwater, and the health and safety of employees.
As such, the nature of the Company's operations exposes it to the risk of
claims with respect to such matters. There can be no assurance that material
costs or liabilities will not be incurred in connection with such claims. Based
upon its experience to date, the Company believes that the future cost of
compliance with existing environmental laws and regulations, and liability for
known environmental claims pursuant to such laws and regulations, will not have
a material adverse effect on the Company's financial condition or results of
operations. However, future events, such as new information, changes in
existing laws and regulations or their interpretation, and more vigorous
enforcement policies of regulatory agencies, may give rise to additional
expenditures or liabilities that could be material. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 18 to the Consolidated Financial Statements of Tokheim Corporation and
Subsidiaries, "Contingent Liabilities."
CERCLA, also known as the "Superfund" law, imposes liability, without regard
to fault or the legality of the original conduct, on certain classes of persons
with respect to the release of a "hazardous substance" into the environment.
These persons include the owner or operator of the disposal site or sites where
the release occurred and companies that disposed of or arranged for the
disposal of the hazardous substances found at the site. Persons who are or were
responsible for releases of hazardous substances under CERCLA may be subject to
joint and several liability for the costs of cleaning up the releases and for
damages to natural resources. It is not uncommon for neighboring landowners and
other third parties to file claims for personal injury or property damages
allegedly caused by the hazardous substances released into the environment. In
addition, where the Company has sold properties used in its prior manufacturing
operations, it may have contractual obligations to the new owner to remediate
environmental contamination on the site arising from prior operations.
The Company also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act ("RCRA") and comparable state statutes. The U.S. Environmental
Protection Agency ("EPA") and various state agencies have promulgated
regulations that limit the disposal options for certain hazardous and
nonhazardous waste. Such regulations may also require corrective action with
respect to contamination of facilities caused by the past handling of
industrial waste.
Although no assurances can be given in this regard, the Company does not
believe that any environmental cleanup activities will have a material adverse
effect on its financial condition or results of operations.
Environmental regulations also affect the Company's customers, their spending
and their demand for the Company's products. In the United States, a number of
states have adopted standards for the recovery of vapor coming from the nozzle
as fuel is pumped. The most rigorous standards are those set by the California
Air Resources Board ("CARB"), which has become the de facto governing body of
such standards in the U.S. CARB's standards apply to vapor recovery systems on
the nozzle. In general, a product that meets CARB's standards will pass the
tests of other states. More recently, the U.S. federal government promulgated
rules that required many gas stations to upgrade their underground tanks and
pipes (to use various corrosion preventing tanks, pipes, materials or devices,
self-containing mechanisms including an interior lining, and leak detection
devices or tests) by the end of 1998. Since these gas stations temporarily
closed to comply with these regulations, the Company believes that many choose
to replace their aging gas pumps at the same time. The international operations
of the Company and its customers are also subject to various environmental
statutes and regulations of the countries in which they operate. In addition,
many of the countries in which the Company and its customers operate are
members of the European Union, which has promulgated and continues to
promulgate environmental directives and regulations. Generally, these
requirements are no more restrictive than those in effect in the United States.
Although environmental protection and safety laws in the countries in which the
Company manufactures and sells its products have an effect on product design,
they apply equally to the Company's competitors and have not had, nor are they
expected to have, a material adverse effect on the Company's competitive
position. Environmental laws and regulations also significantly affect the
Company's customers and their spending levels on Company products. See "Risk
Factors--Risks Associated with the Operation of the Business--Dependence on
Retail Petroleum Industry," "Risk Factors--Government Regulation--
Environmental" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
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Since 1989, the RPS Division has conducted, with the assistance of an outside
environmental consulting firm, extensive investigations on the Bladel site
located in the Netherlands. These investigations have evidenced a significant
level of soil and groundwater contamination with mineral oil and aromatic and
chlorinated hydrocarbons. The RPS Division prepared a remediation plan for
cleaning the premises in 1997. Before implementing the plan, the RPS Division
has requested that local governmental authorities confirm that no further
liabilities for any existing soil contamination will arise for the RPS Division
in the future. Discussions between the RPS Division and the local governmental
authorities are currently in process. The total capital cost of remediation
measures is estimated to be $1.5 million, to be spent over three years.
Operation and related costs for a groundwater treatment system could extend
beyond eight years which is the period during which Schlumberger has agreed to
arrange for and bear the cost for remediation and monitoring for known soil and
groundwater contamination at Bladel.
In addition to Bladel, pursuant to the terms of the purchase agreement,
Schlumberger is required to arrange for and bear the cost of monitoring and
remediating the soil and ground water contamination that Schlumberger knows of
or discovers within a set period of time after the Acquisition, subject to a
deductible limit of $700,000. Schlumberger is to take actions required to
address this contamination in accordance with applicable environmental laws and
under the oversight and with the approval of the appropriate governmental
authorities.
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MANAGEMENT
Directors
The following table sets forth certain information and ages as of February
26, 1999 regarding each of the Company's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Douglas K. Pinner....... 58 Chairman of the Board, President and
Chief Executive Officer
Gerald H. Frieling, 68 Vice Chairman of the Board
Jr.....................
John A. Negovetich...... 53 Executive Vice President, Finance and Administration,
and Chief Financial Officer
Norman L. Roelke........ 49 Vice President, Secretary and General Counsel
Jacques St. Denis....... 41 Executive Vice President, Operations
Scott A. Swogger........ 46 President, Tokheim U.S.
Walter S. Ainsworth..... 70 Director
Robert M. Akin, III..... 63 Director
James K. Baker.......... 67 Director
B. D. Cooper............ 56 Director
Richard W. Hansen....... 61 Director
Leo J. Hawk............. 66 Director
Dr. Winfred M. 58 Director
Phillips...............
Ian M. Rolland.......... 65 Director
</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. Form 1996 to 1997, Mr.
Negovetich was Chief Financial Officer, Tokheim North America. From 1993 to
1995, Mr. Negovetich was Vice President, Finance, Chief Financial Officer and a
member of the Board of Ardco, Inc.
Norman L. Roelke has been Vice President and General Counsel of Tokheim since
1994 and Secretary since 1995. From 1987 to 1994, Mr. Roelke served as
Corporate Counsel and Assistant Secretary.
Jacques St. Denis has been Executive Vice President, Operations since 1998.
From 1996 to 1998, he served as President and Director General of Tokheim-
Sofitam S.A. (the Company subsidiary that was formerly Sofitam). During 1996,
he served as Vice President, Tokheim International. From 1995 to 1996, Mr. St.
Denis was Director of Export and International Operations for the Company. From
1994 to 1995, he was Tokheim's Director of Marketing, and from 1993 to 1994, he
was Director of Worldwide Services. Previously, Mr. St. Denis served as
Managing Director of European Operations, and National Sales and Marketing
Director, USA, for Babson Brothers Company.
Scott A. Swogger has been President, Tokheim U.S., since 1997. From 1995 to
1997, he served as Vice President, Quality Systems. From 1994 to 1995, he was
Tokheim's Director of Quality Assurance. Previously, he served as the Company's
Senior Manager of Quality Assurance.
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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 February 26, 1999, the number of shares
beneficially owned (or deemed to be beneficially owned pursuant to the rules of
the Securities and Exchange Commission) by each director of the Company, each
of the executive officers named in the Summary Compensation Table, included
elsewhere herein, and the current directors and executive officers of the
Company as a group. All references are to Common Stock unless otherwise noted:
Amount and Nature of Beneficial Ownership
<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.............. 3,600 -- -- -- *
B. D. Cooper................ 3,800(2)(3) -- -- -- *
Gerald H. Frieling, Jr...... 8,400 -- -- -- *
Richard W. Hansen........... 27,400 -- -- -- *
Leo J. Hawk................. 8,000 -- -- -- *
John A. Negovetich.......... 10,500 379 600 22,500 *
Winfred M. Phillips......... 5,600 -- -- -- *
Douglas K. Pinner........... 79,034 4,305 1,940 26,250 *
Norman L. Roelke............ 5,464 728 2,780 22,000 *
Ian M. Rolland.............. 6,125 -- -- -- *
Jacques St-Denis............ 11,897 424 1,733 20,000 *
Scott A. Swogger............ -- 323 1,254 7,750 *
Executive Officers and
Directors as a Group (14
persons)................... 185,034 6,159 8,307 98,500 2.3
</TABLE>
- --------
* Represents less than 1% of the Company's outstanding Common Stock.
(1) In addition, Catherine Ainsworth, Mr. Ainsworth's wife, owns 478 shares,
with respect to which Mr. Ainsworth disclaims any beneficial interest.
(2) In addition, Barbara Cooper, Mr. Cooper's wife, owns 1,000 shares, with
respect to which Mr. Cooper disclaims any beneficial interest.
(3) In addition, P.E.S. Inc. Pension Plan owns 2,000 shares. Mr. Cooper is a
participant and trustee of the Plan.
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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 the Company to own more than 5%
of the outstanding shares of Common Stock and the holder of the Company'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
Dimensional Fund Advisors, Inc.......... 718,700 Common Stock 5.7
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- --------
(1) Represents shares of the Company's Preferred Stock held by the Trustee of
the Retirement Savings Plan for Employees of Tokheim Corporation and
Subsidiaries. Pursuant to this qualified plan, shares of Preferred Stock
are to be allocated from time to time to the Company's employees, including
its officers. It is not possible to predict the actual number of shares of
Preferred Stock which will be allocated to officers in the future.
Allocated shares are voted by the participants, including officers, to whom
they are allocated. Unallocated shares are voted by the Trustee in
proportion to the vote by participants with respect to allocated shares.
(2) Represents shares for which Schlumberger Warrants are exercisable.
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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
The New Credit Agreement
Tokheim and certain of its subsidiaries, including certain of the
subsidiaries used to acquire the RPS Division (the "Borrowers"), have entered
into a credit agreement (the "New Credit Agreement") with The First National
Bank of Chicago, as administrative agent (the "Agent"), Credit Lyonnais, as
Collateral Agent, and other institutions party thereto (the "Banks"). The New
Credit Agreement currently consists of a six year working capital/letter of
credit facility in favor of the Borrowers in an aggregate principal amount of
$110.0 million and a six year term loan facility in favor of the Company, in an
aggregate principal amount of $120.0 million. Pursuant to the New Credit
Agreement, $20.0 million of the availability under the working capital facility
may be utilized for issuance of standby letters of credit, and $10.0 million of
the availability under the working capital facility may be utilized for swing
line facilities to be provided to Tokheim and certain of the other Borrowers.
The New Credit Agreement will permit borrowings in U.S. dollars, and, if
certain additional conditions are met, in French francs, British pounds, Dutch
gilders, German deutsche marks and Euros (so long as such non-U.S. currencies
are freely traded, readily available and convertible into U.S. dollars) and
such other currencies as agreed by each Bank. Each loan requested to be made in
a non-U.S. currency which is capable of being made in the Euro will be made in
the Euro unless the Agent otherwise consents.
An additional agreement provides for the assignment of a three year $7.6
million ESOP loan facility with NBD Bank, N.A, and certain other banks (the
"ESOP Credit Agreement") to the Agent and the Banks.
This information relating to the New Credit Agreement is qualified in its
entirety by reference to the complete text of the documents entered into or to
be entered into in connection therewith. The following is a description of the
general terms of the New Credit Agreement.
Indebtedness of the Company under the New Credit Agreement (a) is secured by
(i) a first perfected security interest in and lien on certain of the real and
personal property assets of Tokheim (including claims against certain
subsidiaries to which Tokheim has made intercompany loans) and Tokheim's direct
and indirect material majority-owned U.S. subsidiaries, (ii) a pledge of 100%
of the stock of Tokheim's direct and indirect material majority-owned U.S.
subsidiaries, and (iii) a pledge of 65% of the stock of Tokheim's first-tier
material foreign subsidiaries and (b) is guaranteed by all of Tokheim's direct
and indirect material majority-owned U.S. subsidiaries. Certain indebtedness of
Tokheim's foreign subsidiaries which are borrowers or become borrowers under
the New Credit Agreement will be secured by certain of the personal property of
such foreign subsidiaries.
Indebtedness under the New Credit Agreement bears interest based upon (at the
applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar
denominated loans (defined as the higher of (x) the applicable prime rate and
(y) the federal funds rate (as adjusted pursuant to the New Credit Agreement)
plus 0.50%) plus an applicable margin based upon the Company's leverage ratio
(with a range of 1.50% to 3.00% for Revolving Loans and 3.00% for term loans)
or (ii) the applicable Eurocurrency Rate (as defined in the New Credit
Agreement) for a deposit in the currency of, and for a maturity corresponding
to, the applicable loan and interest period, plus an applicable margin based
upon the Company's leverage ratio (with a range of 2.50% to 4.00% for revolving
loans and 4.00% for term loans). The New Credit Agreement contains customary
provisions relating to yield protection, availability and capital adequacy.
The indebtedness under the New Credit Agreement matures as follows: $110.0
million revolving loans--September 30, 2004, and $120.0 million term loans will
amortize with payments due on a quarterly basis commencing on February 28, 2000
and with a final principal payment due on September 30, 2004. Indebtedness
under the ESOP Credit Agreement will amortize with a final principal payment on
July 1, 2001. The unused portion of the commitment under the New Credit
Agreement will be subject to a commitment fee in the range of 0.375% to 0.50%
depending upon the leverage ratio of the Company.
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<PAGE>
The revolving loan commitment under the New Credit Agreement may be
voluntarily permanently reduced by the Company in whole or in part on one day's
notice without premium or penalty. The Borrower may prepay the term loans
subject to a pre-payment penalty if the Borrowers prepay the entire amount of
the term loans in the first 3 years after September 30, 1998. The Borrowers
will be able to prepay the loans in accordance with the terms of the New Credit
Agreement. Subject to the provisions of the New Credit Agreement, the Borrowers
will be able to, from time to time, borrow, repay and reborrow under the
working capital facility.
The New Credit Agreement requires an amount equal to all net proceeds from
asset sales by Tokheim or any of its subsidiaries (with certain exceptions) to
be applied to repay the loans under the New Credit Agreement. The New Credit
Agreement also requires the Company to prepay the loans under the New Credit
Agreement in an amount equal to (i) all net proceeds from the sale or issuance
of debt (with certain exceptions), (ii) all net proceeds from the sale or
issuance of equity (with certain exceptions) and (iii) a percentage of Excess
Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a
range of 50% to 85%, based upon the Company's leverage ratio, commencing with
the Company's fiscal year ending November 30, 1999.
The New Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum level of consolidated net worth, minimum
level of EBITDA (as defined in the New Credit Agreement), minimum level of
consolidated interest coverage, maximum consolidated leverage ratio and senior
leverage ratio and minimum consolidated fixed charge coverage ratio. The New
Credit Agreement also contains covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with affiliates,
asset sales, acquisitions, investments, mergers and consolidations, prepayments
of certain other Indebtedness (including the Exchange Notes), amendments to
certain other Indebtedness (including the Exchange Notes), liens and
encumbrances and other matters customarily restricted in such agreements. These
covenants are more restrictive than those in favor of holders of the Exchange
Notes as described herein and as set forth in the Indentures.
The New Credit Agreement contains events of default, including payment
defaults, breach of representations and warranties, covenant defaults, cross-
default to certain other indebtedness, certain events of bankruptcy and
insolvency, change in control, ERISA, judgment defaults and failure of any
guarantee or security agreement supporting the New Credit Agreement to be in
full force and effect.
The Schlumberger Junior Subordinated Notes
To pay part of the consideration for the Acquisition, the Company issued
$40.0 million in ten year, 12.0% Schlumberger Junior Subordinated Notes due
2008. Interest on the Schlumberger Junior Subordinated Notes is payable
quarterly and in-kind. All existing U.S. subsidiaries have guaranteed, and all
future U.S. subsidiaries will guarantee, the Schlumberger Junior Subordinated
Notes on a junior subordinated basis with unconditional guarantees that are or
will be unsecured and subordinated to senior debt of such subsidiaries.
The Schlumberger Junior Subordinated Notes are unsecured junior subordinated
obligations of the Company and are junior to the Company's senior debt,
including the Exchange Notes. The Schlumberger Junior Subordinated Notes were
issued under an indenture (the "Junior Indenture") that limits the ability of
the Company and its subsidiaries to, among other things: incur indebtedness;
pay dividends and make certain other payments; make certain investments; sell
certain assets; enter into certain transactions with affiliates; restrict
distributions from subsidiaries; incur liens; and consolidate, merge or
transfer all or substantially all of its or its subsidiaries' assets.
Subject to the terms of the Junior Indenture, the Schlumberger Junior
Subordinated Notes may be redeemed at any time, in whole or in part, at the
option of the Company at a redemption price equal to the unpaid principal
amount thereof plus accrued interest thereon to the redemption date. Upon a
change of control (as defined in the Junior Indenture, and subject to certain
conditions set forth in the Junior Indenture), any holder of Schlumberger
Junior Subordinated Notes will have the right to cause the Company to
repurchase all
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<PAGE>
or any part of the Schlumberger Junior Subordinated Notes of such Holder at a
purchase price equal to 101% of the principal amount of the Schlumberger Junior
Subordinated Notes to be repurchased plus accrued and unpaid interest thereon,
if any, to the date of repurchase. The Schlumberger Junior Subordinated Notes
are subject to a registration rights agreement which can be exercised any time
after 120 days after their date of issuance.
DESCRIPTION OF THE SCHLUMBERGER WARRANTS
As part of the consideration paid in the Acquisition, the Company issued the
Schlumberger Warrants to purchase up to 19.9% of the outstanding shares of the
Company's common stock at an exercise price of $.01 per share. The actual
number of shares issuable upon exercise is 2,526,923. The Schlumberger Warrants
are exercisable for five years beginning January 30, 1999.
The number of shares of the Company's common stock issuable upon exercise of
the Schlumberger Warrants, along with the purchase price of the Schlumberger
Warrants, will be further adjusted to reflect any stock splits, stock
subdivisions or combinations of the Company's common stock, any
reclassification of the Company's common stock, any capital reorganization,
merger or consolidation of the Company, any issuance of common stock by the
Company, and any issuance of convertible securities by the Company.
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<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
The Outstanding Dollar Notes were, and the Dollar Exchange Notes will be,
issued under the Dollar Notes Indenture, dated January 29, 1999, among the
Company, certain subsidiary guarantors and U.S. Bank Trust National
Association, as trustee (the "Dollar Note Trustee"). The Outstanding Euro Notes
were, and the Euro Exchange Notes will be, issued under the Euro Notes
Indenture, dated January 29, 1999, among the Company, certain subsidiary
guarantors and U.S. Bank Trust National Association, as trustee (the "Euro Note
Trustee," and together with the Dollar Note Trustee, the "Trustee"). The terms
of the Exchange Notes are the same as the terms of the Outstanding Notes,
except that (1) the Company registered the Exchange Notes under the Securities
Act of 1933, as amended, and their transfer is not restricted like the
Outstanding Notes and (2) holders of the Exchange Notes are not entitled to
certain rights under the Registration Rights Agreements.
The Outstanding Notes are, and the Exchange Notes will be, unsecured
obligations of the Company, ranking subordinate in right of payment to all
Senior Debt of the Company, including the New Credit Agreement, and senior in
right of payment to the Schlumberger Junior Subordinated Notes and any Warrant
Repurchase Indebtedness.
The Dollar Exchange Notes will be issued in fully registered form only,
without coupons, in denominations of $1,000 and integral multiples thereof. The
Euro Exchange Notes will be issued only in registered form, without coupons, in
denominations of (Euro)1,000 and integral multiples thereof. Initially, the
Trustee will act as principal paying agent and registrar for the Exchange Notes
at its office in New York, New York. The registrar, paying agent and transfer
agent (the "Registrar," "Paying Agent," and "Transfer Agent," respectively) are
appointed in accordance with the Indentures, and initially are as set forth on
the inside back cover page hereof. The Company may change any Paying Agent and
Registrar without notice to holders of the Exchange Notes (the "Holders"),
provided that, for so long as the Exchange Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Company will
cause notice of the change in the Transfer Agent in Luxembourg to be published
in a daily newspaper with general circulation in Luxembourg (which is expected
to be the Luxemburger Wort). Any Outstanding Notes that remain outstanding
after the completion of the Exchange Offer, together with the Exchange Notes
issued in connection with the Exchange Offer, will be treated as a single class
of securities under the applicable Indenture.
The following summary of certain provisions of the Indentures does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to
all of the provisions of the Indentures, including the definitions of certain
terms therein and those terms made a part of the Indentures by reference to the
TIA as in effect on the date of the Indentures. Copies of the Dollar Notes
Indenture, the Euro Notes Indenture and the Registration Rights Agreements can
be obtained by following the instructions contained in this Prospectus under
the headings "Where You Can Find More Information" and "Information
Incorporated by Reference." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." For
purposes of this summary, references to the "Company" include only Tokheim and
not its Subsidiaries. For the purposes of the remainder of this section
entitled "Description of the Exchange Notes," the terms the "Notes," the
"Dollar Notes" and the "Euro Notes" refer to the Exchange Notes, the Dollar
Exchange Notes and the Euro Exchange Notes, respectively.
Principal, Maturity and Interest
The Dollar Notes are limited in aggregate principal amount to $123.0 million
and will mature on August 1, 2008. The Euro Notes are limited in aggregate
principal amount to (Euro)75.0 million and will mature on August 1, 2008. The
Notes will be payable in each case at maturity at par, plus accrued and unpaid
interest, if any. Interest on the Dollar Notes will accrue at the rate of
11.375% and interest on the Euro Notes will accrue at the rate of 11.375%.
Interest on the Notes will be payable semiannually in cash on each February 1
and
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<PAGE>
August 1 commencing on August 1, 1999, to the persons who are registered
Holders at the close of business on January 15 and July 15 immediately
preceding the applicable interest payment date. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from and including the date of issuance of the
Outstanding Notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Where not all of the Notes represented by a certificated Note are the subject
of a transfer, a new certificated Note in respect of the principal amount of
the Notes that have not been so transferred will be issued to the transferor
and will be available at the office of the Registrar in New York City or at the
office of the Transfer Agent in Luxembourg, if any, as applicable.
With respect to the Dollar Notes, payments of principal, premium, if any, and
interest will be made (on presentation of such Notes if in certificated form)
at the corporate trust office of the Paying Agent in New York City or, subject
to any applicable laws and regulations, at the office of either the Paying
Agent in Luxembourg (if the Notes are listed on the Luxembourg Stock Exchange)
or the Paying Agent in London by United States dollar check drawn on, or wire
transfer to a United States dollar account maintained by the Holder with, a
bank located in New York City. Payments of any installment of interest on the
Dollar Notes will be made by a United States dollar check drawn on a bank in
New York City mailed to the Holder at such Holder's registered address or (if
arrangements satisfactory to the Company and the Paying Agents are made) by
wire transfer to a dollar account maintained by the Holder with a bank in New
York City.
With respect to the Euro Notes, payments of principal, premium, if any, and
interest will be made (in the case of payments of principal, on presentation of
such Notes if in certificated form) by credit or transfer to a Euro account
maintained by the Holder in the place of payment specified by the Holder.
Holders of Euro Notes who wish to receive payment in any currency other than
Euros must make arrangements at their own expense.
For so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such stock exchange so require, the Company will maintain a Paying
Agent and Transfer Agent in Luxembourg. If a payment date is not a Business Day
(as defined in the Indentures) at a place of payment, payment may be made at
that place on the next succeeding Business Day and no interest shall accrue for
the intervening period.
The Notes will not be entitled to the benefit of any mandatory sinking fund.
Redemption
Optional Redemption of Dollar Notes. The Dollar Notes will be redeemable, at
the Company's option, in whole at any time or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
<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 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>
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For so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the Company will cause a notice of
redemption of either the Euro Notes or the Dollar Notes to be published in a
daily newspaper with general circulation in Luxembourg (which is expected to be
the Luxemburger Wort).
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to February 1, 2002, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings (as defined below)
to redeem up to 35% of the original principal amount of the Dollar Notes issued
in the Exchange Offer and up to 35% of the original principal amount of the
Euro Notes issued in the Exchange Offer, each at a redemption price equal to
111.375% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 55% of the
original principal amount of the Dollar Notes issued in the Exchange Offer or
the Euro Notes issued in the Exchange Offer, as the case may be, remains
outstanding immediately after any such redemption and the Company shall make
such redemption not more than 120 days after the consummation of any such
Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
Selection and Notice of Redemption
In the event that less than all of the applicable Notes are to be redeemed at
any time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method
as the Trustee shall deem fair and appropriate; provided, however, that no
Notes of a principal amount of $1,000 or (Euro)1,000, as the case may be, or
less shall be redeemed in part; provided, further, that if a partial redemption
is made with the proceeds of a Public Equity Offering, selection of the Notes
or portions thereof for redemption shall be made by the Trustee only on a pro
rata basis or on as nearly a pro rata basis as is practicable (subject to DTC,
Euroclear and Cedel Bank procedures, as applicable), unless such method is
otherwise prohibited. Notice of redemption shall be mailed by first-class mail
at least 30 but not more than 60 days before the redemption date to each Holder
of Notes to be redeemed at its registered address. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
a principal amount equal to the unredeemed portion thereof will be issued in
the name of the Holder thereof upon delivery of the original Note to the Paying
Agent and cancellation of the original Note. On and after the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the Paying Agents in New
York, London and Luxembourg (if the Notes are listed on the Luxembourg Stock
Exchange) funds in satisfaction of the applicable redemption price pursuant to
the Indentures.
Subordination
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Debt, whether outstanding on the Issue Date or thereafter
incurred. Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating
to the Company or its property, whether voluntary or involuntary, all
Obligations due upon all Senior Debt shall first be paid in full in cash or
Cash Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, by the Company or any of its Subsidiaries before any
payment or distribution of any kind or character is made on account of any
Obligations on the Notes, or for the acquisition by the Company or any of its
Subsidiaries of any of the Notes for cash or property. If any default occurs
and is continuing in the payment when due,
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whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character (other than payments by a trust previously
established pursuant to the provisions described under "--Legal Defeasance and
Covenant Defeasance" below) shall be made by the Company or any of its
Subsidiaries with respect to any Obligations on the Notes or to acquire any of
the Notes for cash or property.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instruments creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof, and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the Trustee receives notice
from the Representative for the respective issue of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the
Company nor any of its Subsidiaries shall (x) make any payment of any kind or
character (other than payments by a trust previously established pursuant to
the provisions described under "--Legal Defeasance and Covenant Defeasance"
below) with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property. Notwithstanding anything herein to the contrary, in
no event will a Blockage Period extend beyond 180 days from the date of the
commencement of the Blockage Period, and only one such Blockage Period may be
commenced within any 365 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Blockage Period with
respect to the Designated Senior Debt shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 365 consecutive days,
unless such event of default shall have been cured or waived for a period of
not less than 90 consecutive days (it being acknowledged that any subsequent
action, or any breach of any financial covenants for a period commencing after
the date of commencement of such Blockage Period that, in either case, would
give rise to an event of default pursuant to any provisions under which an
event of default previously existed or was continuing shall constitute a new
event of default for this purpose). The occurrence of a Blockage Period will
not prevent the occurrence of an Event of Default.
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt, including
the Holders of the Notes, may recover less, ratably, than holders of Senior
Debt.
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Debt of the
Company, including the Company's obligations under the New Credit Agreement and
to all indebtedness and other obligations of the Company's Subsidiaries. As of
February 28, 1999 the Company had approximately $212.4 million of Senior Debt,
substantially all of which was secured by the assets of the Company and certain
of its subsidiaries. The Notes will rank senior in right of payment to the
Schlumberger Junior Subordinated Notes and any Warrant Repurchase Indebtedness.
See "Risk Factors--Debt Financing Risks--Substantial Leverage and Variable
Interest Rates" and "Risk Factors--Debt Financing Risks--Subordination."
Subsidiary Guarantees
The Company's payment obligations under the Notes will be fully and
unconditionally, jointly and severally guaranteed (the "Subsidiary Guarantees")
on a senior subordinated basis by the Guarantors. As of the date of issuance of
the Notes, the Guarantors are: Envirotronic Systems, Inc.; Gasboy
International, Inc.; Management Solutions, Inc.; Sunbelt Hose & Petroleum
Equipment, Inc.; Tokheim Automation Corporation; Tokheim Equipment Corporation;
Tokheim Investment Corp.; Tokheim RPS, LLC; and Tokheim Services LLC. The
Subsidiary Guarantee of each Guarantor with respect to the Notes will be
subordinated to the prior payment in full in cash or Cash Equivalents of the
Guarantor Senior Debt to the same extent that the Notes are
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subordinated to Senior Debt of the Company. The obligations of each Guarantor
under its Subsidiary Guarantee will be limited so as not to constitute a
fraudulent conveyance under applicable law. See "Risk Factors--Debt Financing
Risks--Fraudulent Conveyance."
Under the Indentures, so long as no Default or Event of Default has occurred
and is continuing, if the sale or disposal of all of a Guarantor's assets or
its capital stock in accordance with the terms of the Indentures constitutes an
Asset Sale, then that Guarantor or the entity acquiring its property will be
released and relieved of any obligations under its Subsidiary Guarantee.
However, the Net Cash Proceeds of any such sale or other disposition must be
applied in accordance with the Indentures. See "--Certain Covenants--Limitation
on Asset Sales."
Change of Control
The Indentures provide that, upon the occurrence of a Change of Control, each
Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase.
The Indentures provide that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full all Indebtedness and terminate all
commitments under the New Credit Agreement and all other Senior Debt whose
terms require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the New Credit Agreement
and all other such Senior Debt and to repay the Indebtedness owed to each
lender which has accepted such offer or (ii) obtain the requisite consents
under the New Credit Agreement and all other Senior Debt to permit the
repurchase of the Notes as provided below.
Within 30 days following the date upon which the Change of Control occurred,
the Company must send, by first class mail, a notice to each Holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). For so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the Company will cause a
copy of such notice to be published in a daily newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and
the Luxembourg Stock Exchange will be advised of the Change of Control Offer.
Holders electing to have a Note purchased pursuant to a Change of Control Offer
will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to the Paying
Agent, including, if applicable, the Paying and Transfer Agent in Luxembourg,
at the address specified in the notice prior to the close of business on the
third business day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing. In addition,
the New Credit Agreement will restrict the ability of the Company to make a
Change of Control Offer, and a Change of Control may result in an Event of
Default under the New Credit Agreement.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indentures described herein on the ability of the Company
and its Subsidiaries to incur additional Indebtedness, to grant liens on its
property, to make Restricted Payments and to make Asset Sales may also make
more difficult or discourage a takeover of
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the Company, whether favored or opposed by the management of the Company.
Consummation of any such transaction in certain circumstances may require
redemption or repurchase of the Notes, and there can be no assurance that the
Company or the acquiring party will have sufficient financial resources to
effect such redemption or repurchase. Such restrictions and the restrictions on
transactions with Affiliates may, in certain circumstances, make more difficult
or discourage any leveraged buyout of the Company or any of its Subsidiaries by
the management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Indentures may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indentures, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indentures by virtue thereof.
Certain Covenants
The Indentures contain, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, acquire, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for payment of (collectively,
"incur") any Indebtedness (other than Permitted Indebtedness); provided,
however, that if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, the Company may incur Indebtedness (including, without
limitation, Acquired Indebtedness) and Subsidiaries of the Company may incur
Acquired Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.00 to 1.00 if
incurred on or prior to the second anniversary of the Issue Date or greater
than 2.25 to 1.00 if incurred thereafter.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Subsidiaries to, directly or indirectly, (a) declare or
pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock, (b) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any Investment (other than Permitted Investments) or
(d) repurchase or redeem the Schlumberger Junior Subordinated Notes, the
Schlumberger Warrants, any Warrant Repurchase Indebtedness or Refinancing
Indebtedness the proceeds of which are used to repurchase or redeem the
Schlumberger Junior Subordinated Notes, the Schlumberger Warrants or any
Warrant Repurchase Indebtedness (other than a repurchase or redemption using
proceeds of Refinancing Indebtedness), or make any cash payments of interest
thereon during (l) a Blockage Period in effect with respect to any such junior
Indebtedness or (2) the time when the Company could, by the terms of such
Indebtedness, otherwise defer such interest or pay such interest in-kind, (each
of the foregoing actions set forth in clauses (a), (b), (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an Event
of Default shall have occurred and be continuing, or (ii) the Company is not
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "--Limitation on Incurrence of Additional
Indebtedness" covenant or (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash, being the fair
market value of such property as determined reasonably and in good faith by the
Board of Directors of the Company) shall exceed the sum of: (w) 50% of the
cumulative Consolidated Net Earnings (or if cumulative Consolidated Net
Earnings shall be a loss, minus 100% of such
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loss) of the Company earned subsequent to the Issue Date and on or prior to the
date the Restricted Payment occurs (the "Reference Date"), treating such period
as a single accounting period; plus (x) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or
prior to the Reference Date of Qualified Capital Stock of the Company; plus (y)
100% of the net cash proceeds from the sale of Investments by the Company
(other than Permitted Investments), provided that such Investment was made
after the Issue Date; plus (z) without duplication of any amounts included in
clause (iii)(x) above, 100% of the aggregate net cash proceeds of any equity
contribution received by the Company after the Issue Date from a holder of the
Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (z),
any net cash proceeds from a Public Equity Offering to the extent used to
redeem the Notes or from a sale as described in clause (2) (ii) of the next
succeeding paragraph).
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; or (2) the acquisition of any shares
of Capital Stock of the Company or of any of the Indebtedness described in
clause (d) of the immediately preceding paragraph, either (i) solely in
exchange for shares of Qualified Capital Stock of the Company or (ii) through
the application of the net cash proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock of the Company (excluding, in the case of clause 2(ii), any net cash
proceeds from a Public Equity Offering to the extent used to redeem the Notes);
or (3) dividends on, and redemptions of, the shares of the Company's preferred
stock held by the trust of the Company's retirement savings plan in accordance
with the terms thereof on the date of the Indentures; (4) payments to redeem or
repurchase stock or similar rights from management of the Company in connection
with the repurchase provisions under employee stock option or stock purchase
agreements or other agreements to compensate management employees upon the
termination of employment, death or disability of any such person; provided
that such redemptions or repurchases shall not exceed $1.0 million; or (5) the
purchase, redemption or acquisition of the Schlumberger Warrants with proceeds
from the issuance of Warrant Repurchase Indebtedness; or (6) the purchase,
redemption, acquisition, or refinancing of the Schlumberger Junior Subordinated
Notes with Refinancing Indebtedness. In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date in accordance with clause
(iii) of the immediately preceding paragraph, amounts expended pursuant to
clauses (1), (4) and (5) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an officers' certificate stating that such Restricted
Payment complies with the Indentures and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations
may be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value of the assets sold
or otherwise disposed of (as determined in good faith by the Company's Board of
Directors), (ii) with respect to Asset Sales by the Company or any Wholly Owned
Subsidiary of the Company, at least 80% of the consideration received by the
Company or such Subsidiary, as the case may be, from such Asset Sale shall be
in the form of cash or Cash Equivalents and is received at the time of such
disposition and (iii) upon the consummation of an Asset Sale, the Company shall
apply, or cause such Subsidiary to apply, the Net Cash Proceeds relating to
such Asset Sale within 365 days of receipt thereof (A) to prepay any Senior
Debt or Indebtedness of any Subsidiary of the Company, (B) to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties or assets that will be
used in the business of the Company and its Subsidiaries as existing on the
Issue Date or in businesses reasonably related thereto ("Replacement Assets")
or (C) a combination of prepayment and investment permitted by the foregoing
clauses (iii)(A) and (iii)(B). On the 366th day after an Asset Sale or such
earlier date, if any, as the Board of Directors of the Company or of such
Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset
Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next
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preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate
amount of Net Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and
(iii)(C) of the next preceding sentence (each a "Net Proceeds Offer Amount")
shall be applied by the Company or such Subsidiary to make an offer to purchase
(the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date")
not less than 30 nor more than 45 days following the applicable Net Proceeds
Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes
equal to the Net Proceeds Offer Amount at a price equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and unpaid interest
thereon, if any, to the date of purchase. The Company may defer the Net
Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount
equal to or in excess of $5.0 million resulting from one or more Asset Sales
(at which time, the entire unutilized Net Proceeds Offer Amount, and not just
the amount in excess of $5.0 million, shall be applied as required pursuant to
this paragraph).
Notwithstanding the immediately preceding paragraph, the Company and its
Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent (i) at least 80% of the consideration for
such Asset Sale constitutes Replacement Assets and the remainder in cash or
Cash Equivalents and (ii) such Asset Sale is for fair market value; provided
that any consideration not constituting Replacement Assets received by the
Company or any of its Subsidiaries in connection with any Asset Sale permitted
to be consummated under this paragraph shall constitute Net Cash Proceeds
subject to the provisions of the immediately preceding paragraph.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the
register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set
forth in the Indentures. For so long as the Notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Company will
cause a copy of such notice to be published in a daily newspaper with general
circulation in Luxembourg (which is expected to be the Luxemburger Wort) and
the Luxembourg Stock Exchange will be advised of the Net Proceeds Offer. Upon
receiving notice of the Net Proceeds Offer, Holders may elect to tender their
Notes in whole or in part in integral multiples of $1,000 or (Euro)1,000, as
the case may be, in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a pro rata basis (based on amounts tendered). A
Net Proceeds Offer shall remain open for a period of 20 business days or such
longer period as may be required by law.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indentures, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indentures by virtue
thereof.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or pay or
guarantee any Indebtedness or other obligation owed to the Company or any other
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) the
Indentures; (3) customary non-assignment provisions of any contract or any
lease governing a leasehold interest of any Subsidiary of the Company; (4) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so acquired; (5)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (6) the New Credit Agreement or the
ESOP Credit Agreements; or (7) an agreement governing Indebtedness incurred to
Refinance
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the Indebtedness issued, assumed or incurred pursuant to an agreement referred
to in clause (2), (4), (5) or (6) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such Refinancing
Indebtedness are no less favorable to the Company in any material respect as
determined by the Board of Directors of the Company in their reasonable and
good faith judgment than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause (2), (4), (5) or
(6).
Limitation on Preferred Stock of Subsidiaries. The Company will not permit
any of its Subsidiaries to issue any Preferred Stock (other than to the Company
or to a Wholly Owned Subsidiary of the Company) or permit any Person (other
than the Company or a Wholly Owned Subsidiary of the Company) to own any
Preferred Stock of any Subsidiary of the Company.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
or suffer to exist any Liens of any kind against or upon any property or assets
of the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or
otherwise convey any right to receive income or profits therefrom unless (i) in
the case of Liens securing Indebtedness that is expressly subordinate or junior
in right of payment to the Notes, the Notes are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Liens and (ii)
in all other cases, the Notes are equally and ratably secured, except for (A)
Liens existing as of the Issue Date to the extent and in the manner such Liens
are in effect on the Issue Date; (B) Liens securing Senior Debt and Liens
securing Guarantor Senior Debt; (C) Liens securing the Notes and the Subsidiary
Guarantees; (D) Liens of the Company or a Wholly Owned Subsidiary of the
Company on assets of any Subsidiary of the Company; (E) Liens securing
Refinancing Indebtedness which is incurred to Refinance any Indebtedness which
has been secured by a Lien permitted under the Indentures and which has been
incurred in accordance with the provisions of the Indentures; provided,
however, that such Liens (x) are no less favorable to the Holders and are not
more favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced and (y) do not extend to or cover
any property or assets of the Company or any of its Subsidiaries not securing
the Indebtedness so Refinanced; and (F) Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. The Company will not
incur or suffer to exist Indebtedness that is senior in right of payment to the
Notes and subordinate in right of payment to any Senior Debt of the Company.
The Guarantors will not incur or suffer to exist Indebtedness that is senior in
right of payment to any Subsidiary Guarantees and subordinate in right of
payment to any Guarantor Senior Debt.
Merger, Consolidation or Sale of Assets of the Company. The Company will not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Subsidiary of the Company to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of
the Company's assets (determined on a consolidated basis for the Company and
the Company's Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia and (y) shall expressly
assume, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment
of the principal of, and premium, if any, and interest on all of the Notes and
the performance of every covenant contained in the Notes, the Indentures and
the Registration Rights Agreements to be performed or observed on the part of
the Company; (ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company or
such Surviving Entity, as the case may be, shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction; (iii) immediately before and
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immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and (iv) the Company or the Surviving Entity, as the case may be,
shall have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture complies with the applicable provisions of the Indentures and that
all conditions precedent in the Indentures relating to such transaction have
been satisfied.
The Indentures provide that upon any consolidation, combination or merger or
any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, lease or transfer is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indentures and the Notes with the same effect
as if such surviving entity had been named as such.
Each Guarantor (other than any Guarantor whose Subsidiary Guarantee is to be
released in accordance with the terms of the Subsidiary Guarantee and the
Indentures in connection with any transaction complying with the provisions of
"--Limitation on Asset Sales") will not, and the Company will not cause or
permit any Guarantor to, consolidate with or merge with or into any Person
other than the Company or any other Guarantor unless: (i) the entity formed by
or surviving any such consolidation or merger (if other than the Guarantor) or
to which such sale, lease, conveyance or other disposition shall have been made
is a corporation organized and existing under the laws of the United States or
any State thereof or the District of Columbia; (ii) such entity assumes by
supplemental indenture all of the obligations of the Guarantor on the
Subsidiary Guarantee; (iii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to such transaction and
the use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (ii) of the first paragraph of this covenant.
Any merger or consolidation of a Guarantor with and into the Company (with the
Company being the surviving entity) or another Guarantor of the Company need
only comply with clause (iv) of the first paragraph of this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into
or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable to the Company or such Subsidiary than
those that could reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Subsidiary. All Affiliate Transactions (and each series of
related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $1.0 million shall be approved by the Board of Directors of the
Company or such Subsidiary, as the case may be, such approval to be evidenced
by a Board Resolution stating that such Board of Directors has determined that
such transaction complies with the foregoing provisions. If the Company or any
Subsidiary of the Company enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves
aggregate payments or other property with a fair market value of more than $5.0
million, the Company or such Subsidiary, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to: (i)
reasonable fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Subsidiary of the
Company as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively
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between or among the Company and any of its Wholly Owned Subsidiaries or
exclusively between or among such Wholly Owned Subsidiaries; provided such
transactions are not otherwise prohibited by the Indentures; (iii) Restricted
Payments permitted by the Indentures; (iv) transactions permitted by, and
complying with, the provisions of the covenant described under "Merger,
Consolidation and Sale of Assets of the Company" above; (v) transactions with
distributors or other purchases or sales of goods or services, in each case in
the ordinary course of business and otherwise in compliance with the terms of
the Indentures which are fair to the Company, in the reasonable determination
of the Board of Directors of the Company or the senior management thereof, or
are on terms at least as favorable as might reasonably have been obtained at
such time from an unaffiliated party; (vi) any management agreement as in
effect as of the Issue Date or any amendment thereto or any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date and any similar agreements entered
into after the Issue Date; and (vii) intercompany loans or capital
contributions from the Company or any Subsidiary to any of the Company's
Subsidiaries; provided such loans are otherwise in compliance with the terms of
the Indentures.
Reports to Holders. The Indentures provide that the Company will deliver to
the Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents
and other reports, if any, which the Company is required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act. The Indentures
further provide that, notwithstanding that the Company may not be subject to
the reporting requirements of Sections 13 or 15(d) of the Exchange Act, the
Company will file with the Commission, to the extent permitted, and provide the
Trustee and Holders with, such annual reports and such information, documents
and other reports specified in Sections 13 and 15(d) of the Exchange Act. The
Company will also comply with the other provisions of TIA (S) 314(a). For so
long as the Notes are listed on the Luxembourg Stock Exchange and the rules of
such exchange so require, copies of all reports and information described above
will be available during normal business hours at the office of the Transfer
Agent in Luxembourg.
Additional Subsidiary Guarantees. The Indentures provide that the Company
will cause any current and future Subsidiary of the Company that Guarantees any
Senior Debt of the Company or Indebtedness of the Company that is subordinated
to the Notes to simultaneously execute and deliver supplemental indentures
pursuant to which it will become a Guarantor under the Indentures.
Limitation on Amendments to Schlumberger Junior Subordinated Notes and
Warrant Repurchase Indebtedness. The Indentures provide that the Company shall
not amend the indentures or other agreements governing the terms of the
Schlumberger Junior Subordinated Notes or Warrant Repurchase Indebtedness, or
any Refinancing Indebtedness thereof, in any way adverse to the Holders of the
Notes.
Events of Default
The following events are defined in the Indentures as "Events of Default":
(a) the failure to pay interest on, or Liquidated Damages (if any) with
respect to, any Notes when the same become due and payable and the default
continues for a period of 30 days (whether or not such payment shall be
prohibited by the subordination provisions of the Indentures);
(b) the failure to pay the principal on the Notes when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer), whether or
not such payment shall be prohibited by the subordination provisions of the
Indentures;
(c) a default in the observance or performance of any other covenant or
agreement contained in the Indentures which default continues for a period
of 30 days after the Company receives written notice specifying the default
(and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Dollar
Notes or the Holders of at least 25% of the outstanding principal amount of
the Euro Notes, as the case may be, (except in the case of a default with
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respect to the "Merger, Consolidation and Sale of Assets of the Company"
covenant, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(d) there shall be a default under any Indebtedness of the Company or any
Subsidiary, whether such Indebtedness now exists or shall hereinafter be
created, if both (A) such default either (1) results from the failure to
pay any such Indebtedness at its stated final maturity or (2) relates to an
obligation other than the obligation to pay such Indebtedness at its stated
final maturity and results in the holder or holders of such Indebtedness
causing such Indebtedness to become due prior to its stated final maturity
and (B) the amount of such Indebtedness, together with the principal amount
of any other such Indebtedness in default for failure to pay principal at
stated final maturity or the maturity of which has been so accelerated,
aggregates $10.0 million or more at any one time outstanding;
(e) one or more judgments in an aggregate amount in excess of $5.0
million (which are not covered by third party insurance as to which the
insurer has not disclaimed coverage) shall have been rendered against the
Company or any of its Subsidiaries and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
(f) except as permitted by the Indentures, any Subsidiary Guarantee shall
be held in a judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Guarantee; or
(g) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause
(g) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Dollar Notes or the Holders of at least 25% in principal amount of the
outstanding Euro Notes, as the case may be, may declare the principal of and
accrued interest on all the Dollar Notes or the Euro Notes, as the case may be,
to be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the New Credit Agreement or the ESOP Credit Agreements, shall become
immediately due and payable upon the first to occur of an acceleration under
the New Credit Agreement or the ESOP Credit Agreements or 5 business days after
receipt by the Company and the Representative under the New Credit Agreement or
the ESOP Credit Agreements of such Acceleration Notice. If an Event of Default
specified in clause (g) above with respect to the Company occurs and is
continuing, then all unpaid principal of, premium, if any, and accrued and
unpaid interest on all of the outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Indentures provide that, at any time after a declaration of acceleration
with respect to the Notes as described in the preceding paragraph, the Holders
of a majority in principal amount of the outstanding Dollar Notes or the Euro
Notes, as the case may be, may rescind and cancel such declaration and its
consequences if (i) the rescission would not conflict with any judgment or
decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clause (g) of the description of Events of Default above, the Trustee shall
have received an officers' certificate and an opinion of counsel that such
Event of Default has been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
The Holders of a majority in aggregate principal amount of the applicable
Notes then outstanding may waive any existing Default or Event of Default under
the applicable Indenture, and its consequences, except a Default in the payment
of the principal of or interest on any applicable Notes.
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Holders of the Notes may not enforce the applicable Indenture or the Notes
except as provided in the applicable Indenture and under the TIA. Subject to
the provisions of the applicable Indenture relating to the duties of the
Trustee, the Trustee is under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request, order or direction of any
of the applicable Holders, unless such Holders have offered to the Trustee
reasonable indemnity. Subject to all provisions of the applicable Indenture and
applicable law, the Holders of a majority in aggregate principal amount of the
then outstanding applicable Notes have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.
Under the Indentures, the Company will be required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge
of any Default or Event of Default (provided that such officers shall provide
such certification at least annually whether or not they know of any Default or
Event of Default) that has occurred and, if applicable, describe such Default
or Event of Default and the status thereof.
Legal Defeasance and Covenant Defeasance
Under each Indenture the Company may, at its option and at any time, elect to
have its obligations, and the obligations of the Guarantors, discharged with
respect to any outstanding Notes under such Indenture and the related
Subsidiary Guarantees ("Legal Defeasance"). Such Legal Defeasance means that
the Company and each Guarantor shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding applicable Notes and any
Subsidiary Guarantees, except for (i) the rights of Holders of outstanding
applicable Notes to receive payments in respect of the principal of, premium,
if any, and interest on such Notes when such payments are due, (ii) the
Company's obligations with respect to such Notes concerning issuance of
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payments, (iii) the
rights, powers, trust, duties and immunities of the Trustee and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the applicable Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company and each Guarantor
released with respect to certain covenants that are described in the Indentures
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
such Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, reorganization and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to such Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance under the
applicable Indenture, (i) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the applicable Holders, cash in U.S.
dollars, non-callable U.S. government obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the applicable Notes on the stated date for payment
thereof or on the applicable redemption date, as the case may be; (ii) in the
case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
applicable Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the applicable Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or,
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (v) such Legal
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Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under the applicable Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an officers' certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the Company
or others; and (vii) the Company shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with (except that the opinion of counsel
shall speak only to clauses (ii), (iii) and (v) above).
The Company in its sole discretion can defease the Dollar Notes and/or the
Euro Notes.
Satisfaction and Discharge
Each Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes issued under such Indenture, as expressly provided for in the
Indentures), and the Company and the Guarantors will be discharged from their
obligations under the Notes and the Subsidiary Guarantees when: (i) either (a)
all the applicable Notes theretofore authenticated and delivered (except
mutilated, lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and therafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all applicable Notes not theretofore delivered to the
Trustee for cancellation have become due and payable, and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on such Notes
not theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the applicable Notes to the date of such
deposit (in the case of Notes that have become due and payable) or to the
stated maturity or redemption date, as the case may be; (ii) the Company has
paid or caused to be paid all other sums payable under the applicable Indenture
by the Company; and (iii) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent under the applicable Indenture relating to the satisfaction and
discharge of the applicable Indenture have been complied with.
Modification of the Indentures
From time to time, the Company, the Guarantors and the Trustee, without the
consent of the applicable Holders, may amend either Indenture for certain
specified purposes, including, without limitation, curing ambiguities, defects
or inconsistencies, so long as such change does not, in the opinion of the
Trustee, adversely affect the rights of any of the applicable Holders in any
material respect. In formulating its opinion on such matters, the Trustee will
be entitled to rely on such evidence as it deems appropriate, including,
without limitation, solely on an opinion of counsel. Other modifications and
amendments of the Indentures may be made with the consent of the applicable
Holders of a majority in principal amount of the then outstanding applicable
Notes, except that, (A) without the consent of each Holder affected thereby, no
amendment may: (i) reduce the amount of applicable Notes whose applicable
Holders must consent to an amendment; (ii) reduce the rate of or change or have
the effect of changing the time for payment of interest, including defaulted
interest, on any applicable Notes; (iii) reduce the principal of or change or
have the effect of changing the fixed maturity of any applicable Notes, or
change the date on which any applicable Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor; (iv) make
any applicable Notes payable in money other than that stated in the applicable
Notes; (v) make any change in provisions of the applicable Indenture protecting
the right of each applicable Holder to receive payment of principal of,
premium, if any, and interest on such Holder's Notes on or after the due date
thereof or to bring suit to enforce such payment; (vi) modify or change any
provision of the applicable Indenture or the related definitions affecting the
subordination or ranking of the applicable Notes in a manner which adversely
affects the applicable Holders; provided, however, that it is understood that
any amendment, the purpose of which is to
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permit the incurrence of additional Indebtedness under the applicable Indenture
shall not be construed as
adversely affecting the ranking of the applicable Notes or (vii) make any
change to the Subsidiary Guarantees in any manner that adversely affects the
rights of the applicable Holders and (B) without the consent of Holders of not
less than 66 2/3% in aggregate principal amount of Dollar Notes then
outstanding, in the case of the Dollar Notes Indenture, or Holders of not less
than 66 2/3% in aggregate principal amount of Euro Notes then outstanding, in
the case of the Euro Notes Indenture, no such amendment, supplement or waiver
may amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer in the event of a
Change of Control or make and consummate a Net Proceeds Offer with respect to
any Asset Sale or modify any of the provisions or definitions with respect
thereto.
Governing Law
Each Indenture provides that it and the applicable Notes will be governed by,
and construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
Under the Judiciary Law of the State of New York, a judgment or decree in an
action based upon an obligation denominated in a currency other than U.S.
dollars will be rendered in the foreign currency of the underlying obligation
and converted into U.S. dollars at a rate of exchange prevailing on the date of
entry of the judgment or decree.
The Trustee
Each Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the applicable Indenture. During the existence of an Event of Default,
the Trustee will exercise such rights and powers vested in it by the applicable
Indenture, and use the same degree of care and skill in its exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
Each Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indentures and
Registration Rights Agreements without charge by writing to Tokheim
Corporation, 10501 Corporate Drive, Fort Wayne, Indiana, 46845 Attention:
Executive Vice President, Finance and Administration and Chief Financial
Officer. In addition, the Company filed the Registration Rights Agreements as
exhibits to its Form 10-K filed with the SEC on March 1, 1999. The Company
filed the Indentures in substantially final form as exhibits to its Form 10-K
filed with the SEC on March 1, 1999, and will file the Indentures in final form
as exhibits to the registration statement of which this Prospectus forms a
part. See the section in this Prospectus entitled "Where You Can Find More
Information" for information regarding how to obtain documents from the SEC.
Form of Notes, Clearance and Settlement
The Outstanding Dollar Notes are, and the Dollar Exchange Notes will be,
represented by one or more notes in registered, global form (the "Dollar Global
Notes"). The Dollar Global Notes will be deposited on the date of the
acceptance for exchange of the Outstanding Dollar Notes and the issuance of the
Dollar Exchange Notes (the "Closing Date") with the Trustee as custodian for
the Depository Trust Company ("DTC") and registered in the name of Cede & Co.
as nominee of DTC, in each case for credit to the accounts of DTC Participants
and indirect participants (each as defined below) including, without
limitation, Morgan Guaranty
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Trust Company of New York, Brussels office, as operator (the "Euroclear
Operator") of Euroclear, and Cedel Bank. The Outstanding Euro Notes are, and
the Euro Exchange Notes will be, represented by a note in registered, global
form (the "Euro Global Note," and together with the Dollar Global Notes, the
"Global Notes"). The Euro Global Note will be deposited on the date of the
acceptance for exchange of the Outstanding Euro Notes and the issuance of the
Euro Exchange Notes with the Paying Agent in London as common depositary (such
capacity, the "Common Depositary") for Euroclear and Cedel Bank. The Euro
Exchange Notes will not be eligible for clearance through DTC, except
indirectly through DTC's participation in Euroclear or Cedel.
Except in the limited circumstances set forth below, Notes in certificated
form will not be issued.
Investors who purchased Outstanding Euro Notes pursuant to Rule 144A and
investors who purchased Outstanding Euro Notes pursuant to Regulation S who
exchange their Outstanding Euro Notes for Euro Exchange Notes in the Exchange
Offer will each hold their interests through the Euro Global Note.
Depositary Procedures
DTC. DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with it ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
("indirect participants").
Euroclear and Cedel. The Company understands as follows with respect to
Euroclear and Cedel Bank: Euroclear and Cedel Bank each hold securities for
their account holders and facilitate the clearance and settlement of securities
transactions by electronic book-entry transfer between their respective account
holders, thereby eliminating the need for physical movements of certificates
and any risk from lack of simultaneous transfers of securities. Euroclear and
Cedel Bank each provide various services including safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Each of Euroclear and Cedel Bank can settle securities
transactions in any of more than 30 currencies, including Euros. Euroclear and
Cedel Bank each also deal with domestic securities markets in several countries
through established depository and custodial relationships. The respective
systems of Euroclear and Cedel Bank have established an electronic bridge
between their two systems across which their respective account holders may
settle trades with each other. Account holders in both Euroclear and Cedel Bank
are world-wide financial institutions including underwriters, securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to both Euroclear and Cedel Bank is available to other institutions that
clear through or maintain a custodial relationship with an account holder of
either system. An account holder's overall contractual relations with either
Euroclear or Cedel Bank are governed by the respective rules and operating
procedures of Euroclear or Cedel Bank and any applicable laws. Both Euroclear
and Cedel Bank act under such rules and operating procedures only on behalf of
their respective account holders, and have no record of or relationship with
any persons who are not direct account holders.
Dollar Notes. With respect to the Dollar Global Notes, DTC has advised the
Company that pursuant to procedures established by it, (i) upon initial deposit
of a Dollar Global Note, DTC will credit the accounts of DTC Participants,
designated by the Dollar Exchange Agent, with portions of the principal amount
of such Dollar Global Note deposited, (ii) for DTC participants, initial
ownership of interests in such Dollar Global Notes will be shown on, and the
transfer of ownership thereof will be effected through, records maintained by
DTC and (iii) for non-DTC participant owners, ownership interests in such
Dollar Global Notes will only be
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shown on, and the transfer of ownership thereof will only be effected through,
the records of the DTC participants, including Euroclear and Cedel Bank, or
others through which they hold their account. All interests in a Dollar Global
Note deposited with DTC, including those held through Euroclear or Cedel Bank,
are subject to the procedures and requirements of DTC. Those interests held
through Euroclear or Cedel Bank are also subject to the procedures and
requirements of such system.
Euro Notes. With respect to the Euro Global Note, investors who hold accounts
with the Euroclear Operator or Cedel Bank may acquire, hold and transfer
security entitlements with respect to the Euro Global Note against the
Euroclear Operator or Cedel Bank and their respective property by book-entry to
accounts with the Euroclear Operator or Cedel Bank, each of which has an
account with the Common Depositary and subject at all times to the procedures
and requirements of Euroclear or Cedel Bank, as the case may be. "Security
entitlement" means the rights and property interests of an accountholder
against its securities intermediary under applicable law in or with respect to
a security, including any ownership, co-ownership, contractual or other rights.
Investors who do not have accounts with the Euroclear Operator or Cedel Bank
may acquire, hold and transfer security entitlements with respect to the Euro
Global Note against the securities intermediary and its property with which
such investors hold accounts by book-entry to accounts with such securities
intermediary, which in turn may hold a security entitlement with respect to the
Euro Global Note through the Euroclear Operator or Cedel Bank. Investors
electing to acquire security entitlements with respect to the Euro Global Note
through an account with the Euroclear Operator or Cedel Bank or some other
securities intermediary must follow the settlement procedures of their
securities intermediary with respect to the settlement of new issues of
securities. Security entitlements with respect to the Euro Global Note to be
acquired through an account with the Euroclear Operator or Cedel Bank will be
credited to such account as of the settlement date against payment in Euro for
value as of the settlement date. Investors electing to acquire, hold or
transfer security entitlements with respect to a Euro Global Note through an
account with the Euroclear Operator, Cedel Bank or some other securities
intermediary other than in connection with the initial distribution of the Euro
Notes must follow the settlement procedures of their securities intermediary
with respect to the settlement of secondary market transactions in securities.
Except as described below, owners of interests in the Dollar Global Notes and
the Euro Global Note will not have Notes registered in their names, will not
receive physical delivery of Notes in certificated form and will not be
considered the registered owners or holders of Notes for any purpose. So long
as DTC (or its nominee) or the Common Depositary, as the case may be, is the
registered owner or holder of a Global Note, such party will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indentures and the Notes. Accordingly, each person owning a
beneficial interest in a Global Note must rely on the procedures of DTC,
Euroclear and Cedel Bank, as the case may be, and their participants or account
holders to exercise any rights and remedies of a holder of Notes under the
Indentures. Payments of principal and interest on the Global Notes will be made
to DTC or its nominee, or to the Common Depositary on behalf of Euroclear and
Cedel Bank, as the case may be, as the registered owners thereof.
The laws of some countries and some states in the United States require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such persons may be limited to that extent. Because DTC,
Euroclear and Cedel Bank can act only on behalf of their respective
participants or account holders, as the case may be, the ability of a person
having beneficial interests in a Global Note to pledge such interests to
persons or entities that do not participate in the relevant clearing system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
Payments on the Global Notes
Payments in respect of the principal of, premium, if any, and interest on a
Global Note will be made through a paying agent appointed pursuant to the
applicable Indenture and will be payable to DTC (or its nominee) or the Common
Depositary on behalf of Euroclear and Cedel Bank, as the case may be, each in
its
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capacity as the registered holder of such Notes under such Indentures. Under
the terms of the Indentures, the Company and the Trustee will treat the persons
in whose names the Notes, including the Global Notes, are registered as the
owners thereof for the purpose of receiving such payments and for any and all
other purposes whatsoever. Consequently, none of the Company, the Trustee, or
any agent of the Company or the Trustee has or will have any responsibility or
liability for (i) any aspect or accuracy of the records of the relevant
clearing system, the participants therein or the account holders thereof, as
the case may be, relating to payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records of such clearing system, participant or account holder relating to
beneficial ownership interests in the Global Notes, or (ii) any other matter
relating to the actions and practices of the relevant clearing system or the
participants therein or the account holders thereof.
DTC, Euroclear or Cedel Bank, as the case may be, upon receipt of any such
payment, will immediately credit the accounts of their relevant participants or
account holders, as the case may be, with payments in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
relevant Global Note, as shown on the records of DTC, Euroclear or Cedel Bank,
as the case may be. The Company expects that payments by such participants or
account holders, as the case may be, to the beneficial owners of Global Notes
will be governed by standing instructions and customary practices and will be
the responsibility of such participants or account holders. Neither the Company
nor the Trustee will have responsibility or liability for the payment of
amounts owing in respect of beneficial interests in the Global Notes held by
DTC or by the Common Depositary for Euroclear and Cedel Bank.
Transfers of Global Securities and Interests Therein
Unless definitive securities are issued, (i) the Dollar Global Notes may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee, and (ii) the Euro Global Note may be
transferred, in whole and not in part, only by Euroclear and Cedel Bank to the
Common Depositary, as the case may be, or by the Common Depositary to Euroclear
and Cedel Bank, respectively, or to another nominee or successor thereof or a
nominee of such successor.
Transfers of beneficial interests in the Dollar Global Notes will be subject
to the applicable rules and procedures of DTC and its direct and indirect
participants (including, if applicable, those of Euroclear and Cedel Bank),
which are subject to change from time to time. Transfers of beneficial
interests in the Euro Global Note will be subject to the applicable rules and
procedures of Euroclear and Cedel Bank, as the case may be, and their
respective account holders and intermediaries. Any secondary market trading
activity in beneficial interests in the Global Notes is expected to occur
through the participants or account holders and intermediaries, as the case may
be, of DTC, Euroclear and Cedel Bank, and the securities custody accounts of
investors will be credited with their holdings against payment in same-day
funds on the settlement date.
No service charge will be made for any registration of transfer or exchange
of Notes, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Although DTC, Euroclear and Cedel Bank have agreed to certain procedures to
facilitate transfers of interests in the Global Notes among participants in DTC
and account holders in Euroclear and Cedel Bank, they are under no obligation
to perform or to continue to perform such procedures, and such procedures may
be discontinued at any time. None of the Company, the Trustee, nor any agent of
the Company or the Trustee will have any responsibility for the nonperformance
or misperformance (as a result of insolvency, mistake, misconduct or otherwise)
by DTC, Euroclear or Cedel Bank or their respective participants, indirect
participants, account holders or intermediaries of their respective obligations
under the rules and procedures governing their operations.
The Company understands that under existing industry practices, if either the
Company or the Trustee requests any action of holders of Notes, or if an owner
of a beneficial interest in a Global Note desires to give
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instructions or take an action that a holder is entitled to give or take under
the Indentures, DTC, Euroclear or Cedel Bank, as the case may be, would
authorize their respective participants or account holders, as the case may be,
owning the relevant beneficial interest to give instructions or take such
action, and such participants or account holders would authorize indirect
participants or intermediaries to give instructions or take such action, or
would otherwise act upon the instructions of such indirect participants or
intermediaries.
The Company understands that under existing practices of DTC, Euroclear and
Cedel Bank if less than all of the respective class of Notes are to be redeemed
at any time, DTC, Euroclear or Cedel Bank, as the case may be, will credit
their participants' or account holders' accounts on a proportionate basis (with
adjustments to prevent fractions) or by lot or on such other basis as DTC,
Euroclear or Cedel Bank, as the case may be, deems fair and appropriate,
provided that no beneficial interests of less than $1,000 or (Euro)1,000, as
the case may be, may be redeemed in part.
Certificated Notes
Beneficial interests in a Global Note are exchangeable for definitive Notes
in registered certificated form only if: (i) in the case of the Dollar Global
Notes, DTC (x) notifies the Company that it is unwilling or unable to continue
as depositary for such Dollar Global Notes or (y) has ceased to be a "clearing
agency" registered under the Exchange Act and, in each case, the Company
thereupon fails to appoint a successor depositary within 90 days; (ii) in the
case of the Euro Global Note, Euroclear and Cedel Bank are unwilling or unable
to continue as depositary for such Euro Global Note and the Company thereupon
fails to appoint a successor depositary within 90 days; or (iii) there shall
have occurred and be continuing a Default or an Event of Default with respect
to the applicable Notes. In all cases, certificated Notes delivered in exchange
for any Global Note or beneficial interest therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
DTC, Euroclear or Cedel Bank, as the case may be, in accordance with their
customary procedures. The Notes may not be issued in bearer form.
In the case of the issuance of certificated Notes in the limited
circumstances set forth above, the Holder of any such certificated Note may
transfer such Note by surrendering it at the offices or agencies of the Company
maintained for such purpose within the City and State of New York, and at the
office of the transfer agent in London. Until otherwise designated by the
Company, the Company's office or agency in the City and State of New York and
London, England, respectively, will be the offices of the Trustee maintained
for such purpose. In the event of a partial transfer of a holding of Notes
represented by one certificate, or partial redemption of such a holding
represented by one certificate, a new certificate shall be issued to the
transferee in respect of the part transferred or redeemed and a further new
certificate in respect of the balance of the holding not transferred or
redeemed shall be issued to the transferor, provided that no certificate in
denominations less than $1,000 or 1,000 as the case may be, shall be issued.
Each new certificate to be issued shall be available for delivery within ten
business days at the office of the Trustee or the transfer agent in London. The
cost of preparing, printing, packaging and delivering the certificated Notes
shall be borne by the Company.
The Company shall not be required to register the transfer or exchange of
certificated Notes for a period of 15 days preceding (a) the due date for any
payment of principal of or interest on the Notes or (b) a selection of Notes to
be redeemed. Also, the Company is not required to register the transfer or
exchange of any Notes selected for redemption. In the event of the transfer of
any certificated Note, the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Company may
require a Holder to pay any taxes and fees required by law and permitted by the
Indentures and the Notes.
If certificated Notes are issued and a Holder of a certificated Note claims
that the Note has been lost, destroyed or wrongfully taken or if such Note is
mutilated and is surrendered to the Trustee, the Company shall issue and the
Trustee shall authenticate a replacement Note if the Trustee's and the
Company's requirements are met. If required by the Trustee or the Company, an
indemnity bond sufficient in the judgment of both to protect the Company, the
Trustee or any paying agent or authenticating agent appointed pursuant to the
Indentures from any loss which any of them may suffer if a Note is replaced
must be posted. The Company may charge for its expenses in replacing a Note.
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In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be redeemed or purchased by the
Company pursuant to the provisions of the Indentures, the Company in its
discretion may, instead of issuing a new Note, pay, redeem or purchase such
Note, as the case may be.
Registration Rights; Liquidated Damages
The Company, the subsidiary guarantors and BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated and Schroder &
Co. Inc., as initial purchasers in the offering of the Outstanding Notes,
entered into a Dollar Registration Rights Agreement and a Euro Registration
Rights Agreement (together, the "Registration Rights Agreements"), each dated
as of January 29, 1999. Pursuant to the Registration Rights Agreements, the
Company and the subsidiary guarantors agreed to file with the Commission a
registration statement with respect to the Exchange Notes, of which this
Prospectus forms a part (the "Exchange Offer Registration Statement"). If
applicable interpretations of the staff of the Commission do not permit the
Company to effect the Exchange Offer, or if for any other reason the Exchange
Offer is not consummated within 195 days after January 29, 1999, or, under
certain circumstances, if the initial purchasers of the Outstanding Notes so
request, the Company will at its cost (a) as promptly as practicable, file a
shelf registration statement covering resales of the Outstanding Notes (a
"Shelf Registration Statement"), (b) use its best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act and
(c) use its best efforts to keep effective such Shelf Registration Statement
until the earlier of January 29, 2002 and such time as all of the applicable
Outstanding Notes have been sold thereunder. The Company will, in the event of
the filing of a Shelf Registration Statement, provide to each holder of the
applicable Outstanding Notes copies of the prospectus which is a part of such
Shelf Registration Statement, notify each such holder when such Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resales of such Outstanding Notes. A holder
that sells its Outstanding Notes pursuant to a Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver a prospectus to purchasers, will be subject
to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreements which are applicable to such holder (including
certain indemnification obligations).
The Registration Rights Agreements provide that the Company will, at its own
cost, (i) file an Exchange Offer Registration Statement with the Commission
within 90 days after January 29, 1999, (ii) use its best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 150 days after January 29, 1999 and (iii) use its best
efforts to consummate the Exchange Offer within 195 days after January 29,
1999.
If (a) the Company fails to file any of the Registration Statements required
by the Registration Rights Agreements on or before the date specified in the
Registration Rights Agreements for such filing, (b) any of such Registration
Statements is not declared effective on or prior to the date specified in the
Registration Rights Agreements for such effectiveness (the "Effectiveness
Target Date"), (c) the Company fails to exchange all applicable Outstanding
Notes validly tendered in accordance with the terms of the Exchange Offer on or
before the date specified in the Registration Rights Agreements for such
exchange (the "Exchange Target Date") with respect to the Exchange Offer
Registration Statement, or (d) the Shelf Registration Statement or the Exchange
Offer Registration Statement is declared effective but thereafter ceases to be
effective or usable for its intended purpose during the periods specified in
the Registration Rights Agreements (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
liquidated damages in the form of additional interest ("Additional Interest").
In the case of a Registration Default, Additional Interest shall accrue on the
applicable Outstanding Notes over and above the stated interest at a rate of
0.50% per annum for the first 90-day period immediately following the
occurrence of the Registration Default, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each subsequent
90-day period; provided, however, that the Additional Interest rate on the
applicable Outstanding Notes may
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not exceed in the aggregate 1.0% per annum; provided further, that following
the cure of all Registration Defaults, Additional Interest on the applicable
Outstanding Notes as a result of such Registration Default shall cease to
accrue.
Any amounts of Additional Interest due in accordance with the immediately
preceding paragraph will be payable in cash, on the same original interest
payment dates as the applicable Outstanding Notes. The amount of Additional
Interest will be determined by multiplying (x) the applicable Additional
Interest rate by (y) the principal amount of the applicable Outstanding Notes
by (z) a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months), and the denominator of which
is 360.
Holders of Outstanding Notes will be required to make certain representations
to the Company (as described in the Registration Rights Agreements) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreements in order to have their Outstanding Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding liquidated damages set forth above. Holders of Outstanding Notes will
also be required to suspend their use of the prospectus included in the Shelf
Registration Statement under certain circumstances upon receipt of written
notice to that effect from the Company.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indentures. Reference is made to the Indentures for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Acquisition" means the acquisition by the Company of the fuel dispenser,
systems and services business of Schlumberger Limited.
"Affiliate" means, with respect to any specified Person, any other Person who
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Asset Acquisition" means (a) an Investment by the Company or any Subsidiary
of the Company in any other Person pursuant to which such Person shall become a
Subsidiary of the Company or any Subsidiary of the Company, or shall be merged
with or into the Company or any Subsidiary of the Company, or (b) the
acquisition by the Company or any Subsidiary of the Company of the assets of
any Person (other than a Subsidiary of the Company) which constitute all or
substantially all of the assets of such Person or comprise any division or line
of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by the Company or
any of its Subsidiaries (including any Sale and Leaseback Transaction) to any
Person other than the Company or a Wholly Owned Subsidiary of the Company of
(a) any Capital Stock of any Subsidiary of the Company or (b) any other
property or assets of the Company or any Subsidiary of the Company other than
in
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the ordinary course of business; provided, however, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than
$500,000; (ii) sales of accounts receivable that the Company has classified as
uncollectible; (iii) sales or other dispositions of Cash Equivalents; (iv) the
sale of the stock of the Subsidiary of Tokheim Sofitam Applications, S.A. to
which Tokheim Sofitam Applications S.A. has contributed its bulk meter
business; and (v) the sale, lease, conveyance, disposition or other transfer
(w) of all or substantially all of the assets of the Company as permitted under
"Certain Covenants--Merger, Consolidation or Sale of Assets of the Company,"
(x) pursuant to any foreclosure of assets or other remedy provided by
applicable law to a creditor of the Company or any Subsidiary of the Company
with a Lien on such assets, which Lien is permitted under the Indentures;
provided that such foreclosure or other remedy is conducted in a commercially
reasonable manner or in accordance with any bankruptcy law, (y) involving only
Cash Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or (z) involving only the lease or sublease of any real or personal
property in the ordinary course of business.
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit, eurodollar time deposits or bankers'
acceptances maturing within one year from the date of acquisition thereof
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $250.0 million; (v) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clause
(i) above entered into with any bank meeting the qualifications specified in
clause (iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) the approval by the holders of Capital Stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company (whether or
not otherwise in compliance with the provisions of the Indentures); (ii) any
Person or group of related Persons for purposes of Section 13(d) of the
Exchange Act shall become the owner, directly or indirectly, beneficially or of
record, of shares representing either more than 40% of the aggregate ordinary
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voting power represented by the issued and outstanding Capital Stock of the
Company or more than 40% of the aggregate issued and outstanding Common Stock
of the Company; or (iii) the replacement of a majority of the Board of
Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the beginning of such
period, and such replacement shall not have been approved by a vote of at least
a majority of the Board of Directors of the Company then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period, the
sum (without duplication) of (i) Consolidated Net Earnings and (ii) to the
extent Consolidated Net Earnings has been reduced thereby, (A) all income taxes
of such Person and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business or other transactions the effect of
which has been excluded from Consolidated Net Earnings), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Earnings for such period, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person,
the ratio of Consolidated EBITDA of such Person during the four most recent
full fiscal quarters for which financial information is available (the "Four
Quarter Period") ending on or prior to the date of the transaction giving rise
to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in
the ordinary course of business for working capital purposes pursuant to
working capital or revolving credit facilities, occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales
or Asset Acquisitions (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation) as a result of such Person or
one of its Subsidiaries (including any Person who becomes a Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including any Consolidated EBITDA (provided
that such Consolidated EBITDA shall be included only to the extent includable
pursuant to the definition of "Consolidated Net Earnings") attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness)
occurred on the first day of the Four Quarter Period. If such Person or any of
its Subsidiaries directly or indirectly guarantees Indebtedness of a third
Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if such Person or any Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on
a fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to
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the rate of interest on such Indebtedness in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on the Transaction Date
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rates, then
the interest rate in effect on the Transaction Date will be deemed to have been
in effect during the Four Quarter Period; and (3) notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense,
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Subsidiaries (other than dividends
paid in Qualified Capital Stock of the Company or dividends to the extent
payable to the Company or its Subsidiaries) paid, accrued or scheduled to be
paid or accrued during such period times (other than in the case of Preferred
Stock of such Person and its Subsidiaries for which the dividends are tax
deductible for federal income tax purposes) and (y) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (a)
any amortization of debt discount (but excluding the amortization of debt
issuance costs), (b) the net costs under Interest Swap Obligations, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Earnings" means, with respect to any Person, for any
period, the aggregate net earnings (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis (before preferred stock
dividend requirements), determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) after-tax gains or losses from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains or losses, (c) the net earnings of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Subsidiary of the referent Person,
(d) the net earnings (but not loss) of any Subsidiary of the referent Person to
the extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is restricted by a contract, operation of law or
otherwise, (e) the net earnings of any Person, other than a Subsidiary of the
referent Person, except to the extent of cash dividends or distributions paid
to the referent Person or to a Wholly Owned Subsidiary of the referent Person
by such Person, (f) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of
Consolidated Net Earnings accrued at any time following the Issue Date, (g)
income or loss attributable to discontinued operations (including, without
limitation, operations disposed of during such period whether or not such
operations were classified as discontinued), (h) in the case of a successor to
the referent Person by consolidation or merger or as a transferee of the
referent Person's assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets and (i) all gains or losses
from the cumulative effect of any change in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated shareholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Earnings of such
Person and its Subsidiaries for such period, determined on a consolidated
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basis in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an accrual of or a
reserve relating to possible cash charges or expenditures for any future or
past period).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means an event or condition the occurrence of which is, or with the
lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
New Credit Agreement or the ESOP Credit Agreements and (ii) any other
Indebtedness constituting Senior Debt which, at the time of determination, has
an aggregate principal amount of at least $25.0 million and is specifically
designated in the instrument evidencing such Senior Debt as "Designated Senior
Debt" by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the sole option of the holder thereof on or prior to the
final maturity date of the Notes.
"ESOP Credit Agreements" means those certain credit agreements among the
Company, the Tokheim Employee Stock Ownership Plan, NBD Bank, N.A., and certain
other banks, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by the
"Limitation on Incurrence of Additional Indebtedness" covenant above)) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders and any assignments thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.
"Fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Guarantor" means any Subsidiary of the Company which guarantees the Notes
pursuant to the Indentures.
"Guarantor Senior Debt" means with respect to any Guarantor, the principal
of, premium, if any, and interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred
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or assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to the Subsidiary Guarantee of such Guarantor. Without limiting the
generality of the foregoing, "Guarantor Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other monetary obligations of
the Guarantors owing in respect of (x) all monetary obligations of every nature
of the Company under the New Credit Agreement and the ESOP Credit Agreements
including obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) all obligations under Currency Agreements, in each case
whether outstanding on the Issue Date or thereafter incurred. Notwithstanding
the foregoing, "Guarantor Senior Debt" shall not include (i) any Indebtedness
of a Guarantor or any Affiliate of such Guarantor to a Subsidiary of the
Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or
guaranteed on behalf of, any shareholder, director, officer or employee of a
Guarantor or any Subsidiary of the Guarantor (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services,
(iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability
for federal, state, local or other taxes owed or owing by a Guarantor, (vi)
Indebtedness incurred in violation of the provisions set forth under
"Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to a Guarantor, (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment
to any other Indebtedness of a Guarantor and (ix) any guarantees of the
Schlumberger Junior Subordinated Notes or any Warrant Repurchase Indebtedness,
or guarantees of any Refinancing of the Schlumberger Junior Subordinated Notes
or any Warrant Repurchase Indebtedness.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Indebtedness" means with respect to any Person, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all indebtedness of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all indebtedness
or other obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all indebtedness
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all indebtedness of any other Person of
the type referred to in clauses (i) through (vi) which are secured by any lien
on any property or asset of such Person, the amount of such Obligation being
deemed to be the lesser of the fair market value of such property or asset or
the amount of the Obligation so secured, (viii) all indebtedness under Currency
Agreements and Interest Swap Obligations
of such Person and (ix) all Disqualified Capital Stock issued by such Person
with the amount of Indebtedness represented by such Disqualified Capital Stock
being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indentures, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the
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judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person. "Investment" shall exclude extensions of trade
credit by the Company and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Subsidiary, as
the case may be. For the purposes of the "Limitation on Restricted Payments"
covenant, the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by the Company or any of
its Subsidiaries, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment;
provided that no such payment of dividends or distributions or receipt of any
such other amounts shall reduce the amount of any Investment if such payment of
dividends or distributions or receipt of any such amounts would be included in
Consolidated Net Earnings.
"Issue Date" means the date of original issuance of the Outstanding Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest).
"Liquidated Damages" means all liquidated damages owing pursuant to the
Registration Rights Agreements.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by the Company or any of its Subsidiaries from such Asset Sale net of
(a) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting, brokerage and investment
banking fees and sales commissions), (b) taxes paid or payable after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"New Credit Agreement" means the Second Amended and Restated Credit Agreement
among the Company, certain of its Subsidiaries, the lenders party thereto in
their capacities as lenders thereunder, NBD Bank, N.A., as administrative
agent, and Credit Lyonnais, as collateral agent, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or
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otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
increase in borrowings is permitted by the "Limitation on Incurrence of
Additional Indebtedness" covenant above)) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes and the Indentures;
(ii) Indebtedness incurred pursuant to the New Credit Agreement and the
ESOP Credit Agreements in an aggregate principal amount at any time
outstanding not to exceed (A) $7.62 million with respect to the
Indebtedness under the ESOP Credit Agreements, less the amount of all
mandatory principal payments, if any (excluding any such payments to the
extent refinanced at the time of payment under a replaced ESOP Credit
Agreement) and (B) $250.0 million in the aggregate with respect to
Indebtedness under the New Credit Agreement, reduced by any required
permanent repayments, if any (which are accompanied by a corresponding
permanent commitment reduction), thereunder;
(iii) Other Indebtedness of the Company and its Subsidiaries outstanding
on the Issue Date;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Subsidiaries and Interest Swap Obligations of any
Subsidiary of the Company covering Indebtedness of such Subsidiary;
provided, however, that (x) (A) such Interest Swap Obligations are designed
to protect the Company and its Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with the Indentures (and are
used for bona fide hedging, and not speculative, purposes); and (B) the
notional principal amount of such Interest Swap Obligation does not exceed
the principal amount of the Indebtedness to which such Interest Swap
Obligation relates at the time entered into; or (y) such Interest Swap
Obligations are required under the terms of the New Credit Agreement;
(v) Indebtedness under Currency Agreements; provided that in the case of
Currency Agreements which relate to Indebtedness, such Currency Agreements
(x) (A) are designed to protect against fluctuations in currency value (and
are used for bona fide hedging, and not speculative, purposes) and (B) do
not increase the Indebtedness of the Company and its Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation payable
thereunder; or (y) are required under the terms of the New Credit
Agreement;
(vi) Indebtedness of a Wholly Owned Subsidiary of the Company to the
Company or to a Wholly Owned Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Wholly Owned Subsidiary of the
Company, in each case subject to no Lien held by a Person other than the
Company or a Wholly Owned Subsidiary of the Company other than a Lien
required under the New Credit Agreement; provided that if as of any date
any Person other than the Company or a Wholly Owned
Subsidiary of the Company owns or holds any such Indebtedness or holds a
Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned
Subsidiary of the Company, in each case subject to no Lien other than a
Lien required under the New Credit Agreement; provided that (a) any
Indebtedness of the Company to any Wholly Owned Subsidiary of the Company
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Indentures and the Notes and (b) if as of
any date any Person other than a Wholly Owned Subsidiary of the Company
owns or holds any such Indebtedness or any Person holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
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(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within ten business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries represented
by letters of credit for the account of the Company or such Subsidiary, as
the case may be, in order to provide security for workers' compensation
claims, payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness incurred by the Company or any Subsidiary of the
Company in connection with the purchase or improvement of property (real or
personal) or equipment or other capital expenditures in the ordinary course
of business or consisting of Capitalized Lease Obligations, provided that
(i) at the time of the incurrence thereof, such Indebtedness, together with
any other Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (xi) does not exceed, in
the aggregate, 3% of the net sales of the Company and its Subsidiaries
during the most recently completed four fiscal quarter period on a
consolidated basis (calculated on a pro forma basis if the date of
incurrence is prior to the end of the fourth fiscal quarter following the
Issue Date) and (ii) such Indebtedness, together with all then outstanding
Indebtedness incurred in reliance upon this clause (xi) does not exceed, in
the aggregate, 3% of the aggregate net sales of the Company and its
Subsidiaries during the most recently completed twelve fiscal quarter
period on a consolidated basis (calculated on a pro forma basis if the date
of incurrence is prior to the end of the twelfth fiscal quarter following
the Issue Date);
(xii) Indebtedness arising from agreements of the Company or a Subsidiary
of the Company providing for indemnification, adjustment of purchase price
or similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and the Subsidiary in connection with such
disposition;
(xiii) Obligations in respect of performance bonds and completion
guarantees provided by the Company or any Subsidiary of the Company in the
ordinary course of business;
(xiv) Guarantees by the Company or a Subsidiary of the Company of
Indebtedness incurred by the Company or a Subsidiary of the Company so long
as the incurrence of such Indebtedness by the Company or any such
Subsidiary of the Company is otherwise permitted by the terms of the
Indentures;
(xv) Schlumberger Junior Subordinated Notes;
(xvi) Warrant Repurchase Indebtedness;
(xvii) Indebtedness incurred by the Company or any Subsidiary of the
Company in exchange for the use of Traits as collateral made in the
ordinary course of business to financial institutions which Indebtedness
has a value of no less than 90% of the face value of such Traits;
(xviii) Indebtedness of the Company or a Subsidiary of the Company to a
Subsidiary of the Company that is not a Wholly Owned Subsidiary in the
aggregate principal amount not to exceed at any one time $10.0 million;
provided that if as of any date any Person other than a Subsidiary of the
Company that is not a Wholly Owned Subsidiary owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(xix) Indebtedness from bank overdraft facilities not to exceed $15.0
million at any time; and
(xx) $10.0 million of other indebtedness of the Company or any of its
Subsidiaries (which amount may, but need not, be incurred in whole or in
part under the New Credit Agreement).
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"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company in any Person that is or will become immediately
after such Investment a Wholly Owned Subsidiary of the Company or that will
merge or consolidate into the Company or a Wholly Owned Subsidiary of the
Company, (ii) Investments in the Company by any Subsidiary of the Company;
provided that any Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement and to the same extent that the
Notes are subordinated to Senior Debt, to the Company's obligations under the
Notes and the Indentures; (iii) Investments in cash and Cash Equivalents; (iv)
loans and advances to employees and officers of the Company and its
Subsidiaries totaling up to $5.0 million in the aggregate (A) in the ordinary
course of business for bona fide business purposes or (B) to purchase the
Company's Capital Stock; (v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Subsidiaries'
businesses and otherwise in compliance with the Indentures and in compliance
with the New Credit Agreement; (vi) Investments in securities of trade
creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors
or customers; (vii) Investments made by the Company or its Subsidiaries as a
result of consideration received in connection with an Asset Sale made in
compliance with the "Limitation on Asset Sales" covenant; (viii) Investments
existing on the Issue Date; (ix) Investments in an African Subsidiary in an
aggregate amount not to exceed $2.0 million for which the Company is committed
on the Issue Date; and (x) additional Investments in an aggregate amount not
exceeding $5.0 million.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) being contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent for
a period of more than 60 days or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
(iv) Liens securing letters of credit issued in the ordinary course of
business consistent with past practice in connection with the items
referred to in clause (iii), or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(v) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(vi) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
(vii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(viii) purchase money Liens to finance property or assets of the Company
or any Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any
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property or assets of the Company or any Subsidiary of the Company other
than the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(ix) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(x) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(xi) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
(xii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indentures;
(xiii) Liens securing Indebtedness under Currency Agreements;
(xiv) Liens securing Acquired Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant;
provided that (A) such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the Company
or a Subsidiary of the Company and were not granted in connection with, or
in anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Subsidiary of the Company and (B) such Liens do not extend to
or cover any property or assets of the Company or of any of its
Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or a Subsidiary of the Company and are no more
favorable to the lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company;
(xv) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Subsidiaries;
(xvi) Any interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating, other than any
such interest or title resulting from or arising out of a default by the
Company or any of its Subsidiaries on its obligations under such lease;
(xvii) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property
that are otherwise permitted under the Indentures and under which the
Company or any of its Subsidiaries is lessee;
(xviii) Liens placed on Traits used as collateral in exchange for loans
provided to the Company or its Subsidiaries; and
(xix) Liens in favor of the Trustee and any substantially equivalent Lien
granted to any trustee or similar institution under any indenture governing
Indebtedness permitted to be Incurred or outstanding under the Indentures.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Qualified Capital Stock" means any Capital Stock of the Company that is not
Disqualified Capital Stock.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
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"Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Indebtedness incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant (other than
pursuant to clause (iv), (v), (vi), (vii), (viii), (ix), (xi) or (xvii) of the
definition of Permitted Indebtedness), in each case that does not (1) result in
an increase in the aggregate principal amount of Indebtedness of such Person as
of the date of such proposed Refinancing (plus the amount of any premium or
penalty required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable fees and expenses incurred by
the Company in connection with such Refinancing) or (2) create Indebtedness
with (A) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (B) a final
maturity earlier than the final maturity of the Indebtedness being Refinanced;
provided that (x) if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness solely of the
Company and (y) if such Indebtedness being Refinanced is the Schlumberger
Junior Subordinated Notes, Warrant Repurchase Indebtedness or any Refinancing
thereof, then such Refinancing Indebtedness shall (i) be subordinate or junior
to the Notes at least to the same extent and in the same manner as the
Schlumberger Junior Subordinated Notes as in effect on the Issue Date, (ii)
provide for no cash interest payments prior to October 2004, (iii) have
covenants no more adverse to the Company than the Schlumberger Junior
Subordinated Notes and (iv) have an effective interest rate not greater than
14% provided, however, that prior to the incurrence of such Indebtedness,
Moody's Investors Service, Inc. will have affirmed that its rating of the Notes
will not decrease by one or more gradations below its rating in effect on the
Issue Date.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of the Company of any property, whether
owned by the Company or any Subsidiary of the Company at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"Schlumberger Junior Subordinated Notes" means (i) the $40.0 million Junior
Subordinated Notes issued by the Company to Schlumberger in connection with the
Acquisition pursuant to the Junior Subordinated Notes Indenture, as amended up
to the Issue Date, between the Company and Harris Trust and Saving Bank, as
trustee and (ii) additional subordinated notes issued as payment of interest
thereon.
"Schlumberger Warrants" means the warrants issued by the Company to
Schlumberger as part of the consideration for the Acquisition.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute or statutes thereto.
"Senior Debt" means, the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other Obligations with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Debt" shall
also include the principal of, premium, if any, interest (including any
interest accruing subsequent to the filing
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of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other monetary obligations of the Company or any
Subsidiary of the Company owing in respect of, (x) the New Credit Agreement and
the ESOP Credit Agreements, including obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) Obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Subsidiary of the Company,
(ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of the Company or any Subsidiary of the Company (including,
without limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) Indebtedness incurred in violation of the provisions set
forth under "Limitation on Incurrence of Additional Indebtedness," (vii)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (viii) any Indebtedness which is, by its express terms, subordinated
in right of payment to any other Indebtedness of the Company and (ix) the
Schlumberger Junior Subordinated Notes, any Warrant Repurchase Indebtedness or
any Refinancing of the Schlumberger Junior Subordinated Notes or any Warrant
Repurchase Indebtedness.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(v) of
Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" shall mean any guarantee of the Notes by any Guarantor
pursuant to the Indentures.
"Traits" means "traites" (as defined under French law), accounts receivable
or invoices.
"Warrant Repurchase Indebtedness" means (i) up to $20.0 million of
Indebtedness incurred by the Company to repurchase Schlumberger Warrants (or a
pro rata portion of $20.0 million, if less than all the Schlumberger Warrants
are repurchased) plus reasonable fees and expenses incurred in connection
therewith, provided, however, that such Indebtedness (a) is subordinated to the
Notes at least to the same extent as the Schlumberger Junior Subordinated
Notes, (b) contains covenants no more adverse to the Company than the
Schlumberger Junior Subordinated Notes, (c) bears interest at an effective rate
not to exceed 14% per annum, which interest shall not be paid in cash prior to
October 2004, (d) contains no mandatory prepayment provisions and (e) matures
at least 6 months after the maturity of the Notes plus (ii) additional
Indebtedness with the same terms incurred in payment of interest thereon;
provided, however, that prior to the incurrence of such Indebtedness, Moody's
Investors Service, Inc. will have affirmed that its rating of the Notes will
not decrease by one or more gradations below its rating in effect on the Issue
Date.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities (other than in the case of a
foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by such Person or any Wholly Owned Subsidiary of such Person.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain U.S. federal income tax consequences
of the purchase, ownership and disposition of the Exchange Notes as of the date
hereof. It deals only with Exchange Notes held as capital assets by initial
holders of the Outstanding Notes, and does not deal with special situations,
such as those of dealers in securities or currencies, financial institutions,
banks, tax-exempt organizations, insurance companies, holders that are
partnerships or other pass-through entities and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to "straddle,"
"conversion," "hedging" or "constructive sales" transactions. The discussion
below is based upon the Internal Revenue Code of 1986, as amended (the "Code")
and regulations, rulings and judicial decisions thereunder as of the date
hereof, and such authorities may be repealed, revoked or modified (possibly
with retroactive effect) so as to result in federal income tax consequences
different from those discussed below. This discussion is not binding on the
Internal Revenue Service (the "IRS") or the courts. No ruling has been sought
or will be sought from the IRS with respect to the positions and issues
discussed herein, and there can be no assurance that the IRS will not take a
different position concerning the tax consequences of the purchase, ownership
or disposition of the Exchange Notes or that any such position would not be
sustained. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING
OF EXCHANGE NOTES THAT MAY BE SPECIFIC TO THEM, INCLUDING THE TAX CONSEQUENCES
ARISING UNDER ANY STATE, LOCAL OR FOREIGN LAWS.
As used herein, the term "U.S. Holder" means a beneficial owner of an
Exchange Note that is for United States federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation created or
organized under the laws of the United States or any political subdivision
thereof or therein, (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of source, or (iv) a trust if both: (A) a
U.S. court is able to exercise primary supervision over the administration of
the trust, and (B) one or more U.S. persons have the authority to control all
substantial decisions of the trust (a "U.S. Holder"). As used herein, the term
"Non-U.S. Holder" means a holder of an Exchange Note that is not a U.S. Holder.
U.S. Holders
Interest
Interest on the Exchange Notes generally will be taxable to a U.S. Holder as
ordinary interest income at the time accrued or received in accordance with the
U.S. Holder's regular method of accounting for federal income tax purposes.
Under certain circumstances described above, the Company will be required to
pay Additional Interest on the Outstanding Notes if it fails to comply with
certain of its obligations under the Registration Rights Agreements. See
"Description of the Exchange Notes--Registration Rights; Liquidated Damages."
Although not certain, such additional amount should be taxable to a U.S. Holder
as ordinary income at the time it accrues or is received in accordance with
such holder's regular method of accounting for federal income tax purposes. It
is possible, however, that the IRS may take a different position, in which case
the timing and the amount of income on the Notes may be different.
A U.S. Holder who uses the cash method of accounting for federal income tax
purposes and who receives interest on a Euro Exchange Note in Euros will be
required to include in income the U.S. dollar value of such Euros, determined
using the spot rate in effect on the date such payment is received, regardless
of whether the payment is in fact converted to U.S. dollars at that time. No
exchange gain or loss will be recognized by such holder if the Euros are
converted to U.S. dollars on the date received. The U.S. federal income tax
consequences of the conversion of Euros into U.S. dollars are described below.
See "Exchange of Foreign Currencies."
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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
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settlement of such a purchase or sale. In such event, an accrual basis taxpayer
may elect the same treatment required of cash basis taxpayers with respect to
purchases and sales of Euro Exchange Notes, provided the election is applied
consistently. Such election cannot be changed without the consent of the IRS.
Gain or loss realized by a U.S. Holder upon the sale, exchange or retirement
of an Exchange Note that is attributable to fluctuations in the rate of
exchange between the U.S. dollar and the Euro will be ordinary income or loss
and generally will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the foreign currency principal amount of the
Exchange Note, determined on the date such payment is received or the Exchange
Note is disposed of, and the U.S. dollar value of the foreign currency
principal amount of the Exchange Note, determined on the date the U.S. Holder
acquired the Exchange Note. Such foreign currency gain or loss will be
recognized only to the extent of the total gain or loss realized by the U.S.
Holder on the sale, exchange or retirement of the Exchange Note.
For certain non-corporate U.S. Holders (including individuals), the rate of
taxation of capital gains will depend upon (i) the holder's holding period in
the capital asset (with a preferential rate generally available for capital
assets held for more than one year) and (ii) the holder's marginal tax rate for
ordinary income. The deductibility of capital losses is subject to limitations.
Exchange of Foreign Currencies
A U.S. Holder will have a tax basis in any Euros received as interest or on
the sale, exchange, retirement or other disposition of an Exchange Note equal
to their U.S. dollar value at the time the interest is received or at the time
payment is received in consideration of the sale, exchange or retirement. Any
gain or loss realized by a U.S. Holder on a sale or other disposition of Euros
will be ordinary income or loss.
Non-U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of an Exchange Note that is a Non-U.S.
Holder.
Interest
Payments of interest on an Exchange Note to any Non-U.S. Holder will
generally not be subject to U.S. federal income or withholding tax, provided
that (1) the holder is not (i) a direct or indirect owner (taking into account
certain attribution rules) of 10% or more of the total voting power of all
voting stock of the Company or (ii) a controlled foreign corporation related to
the Company through stock ownership, (2) such interest payments are not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States and (3) the Company or its paying agent
receives (i) from the Non-U.S. Holder, a properly completed Form W-8 (or
substitute Form W-8) under penalties of perjury which provides the Non-U.S.
Holder's name and address and certifies that the Non-U.S. Holder of the
Exchange Note is a Non-U.S. Holder or (ii) from a security clearing
organization, bank or other financial institution that holds the Exchange Notes
in the ordinary course of its trade or business (a "financial institution") on
behalf of the Non-U.S. Holder, certification under penalties of perjury that
such a Form W-8 (or substitute Form W-8) has been received by it, or by another
such financial institution, from the Non-U.S. Holder, and a copy of the Form W-
8 (or substitute Form W-8) is furnished to the payor.
A Non-U.S. Holder that does not qualify for exemption from withholding under
the preceding paragraph generally will be subject to withholding of U.S.
federal income tax at the rate of 30% (or lower applicable treaty rate) on
payments of interest on the Exchange Notes.
If the payments of interest on an Exchange Note are effectively connected
with the conduct by a Non-U.S. Holder of a trade or business in the United
States, such payments will be subject to U.S. federal income tax on a net basis
at the rates applicable to United States persons generally (and, with respect
to corporate holders,
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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 the Company or its paying agent
with a properly executed Form 4224.
Non-U.S. Holders should consult any applicable income tax treaties, which may
provide for a lower rate of withholding tax, exemption from or reduction of
branch profits tax, or other rules different from those described above.
Dispositions
Any gain realized by a Non-U.S. Holder on the sale, exchange, retirement or
other disposition of an Exchange Note generally will not be subject to U.S.
federal income or withholding tax, unless (i) such gain is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business
within the United States, (ii) the Non-U.S. Holder is an individual who is
present in the United States for 183 days or more in the taxable year of the
disposition and certain other conditions are satisfied, or (iii) the Non-U.S.
Holder is subject to tax pursuant to the provisions of U.S. tax law applicable
to certain U.S. expatriates.
Federal Estate Tax
In general, Exchange Notes held (or treated as held) by an individual who is
a Non-U.S. Holder at the time of his or her death will not be subject to U.S.
federal estate tax provided that (i) the individual does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the company and (ii) income on the Exchange Notes was not effectively connected
with the conduct by such Non-U.S. Holder of a trade or business within the
United States.
Information Reporting and Backup Withholding
Payments with respect to the Exchange Notes and the proceeds upon the sale or
other disposition of the Exchange Notes may be subject to information reporting
and possibly U.S. backup withholding at a 31% rate. Backup withholding will not
apply to a U.S. Holder who furnishes its correct taxpayer identification number
and provides other certification. Backup withholding and information reporting
will not apply to payments made by the Company in respect to the Exchange Notes
to a Non-U.S. Holder, if the holder certifies, under penalties of perjury, that
it is not a U.S. person and provides its name and address (provided that
neither the Company nor its paying agent has actual knowledge that the holder
is a U.S. person) or the Non-U.S. Holder otherwise establishes an exemption.
Copies of information returns may be made available, under the provisions of a
specific treaty or agreement, to the tax authorities of the country in which
the Non-U.S. Holder resides.
Payment of proceeds from the disposition of Exchange Notes to or through the
United States office of any broker, U.S. or foreign, will be subject to
information reporting and backup withholding unless the owner certifies as to
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of an
Exchange Note to or through a non-U.S. office of a non-U.S. broker that is not
a U.S. related person generally will not be subject to information reporting or
backup withholding. For this purpose, a "U.S. related person" is (i) a
"controlled foreign corporation" for U.S. federal income tax purposes or (ii) a
foreign person 50% or more of whose gross income from all sources for the three
year period ending with the close of its taxable year preceding the payment (or
for such part of the period that the broker has been in existence) is derived
from activities that are effectively connected with the conduct of a U.S. trade
or business. In the case of the payment of proceeds from the disposition of
Exchange Notes to or through a non-U.S. office of a broker that is a U.S.
person or a U.S. related person, the regulations require information reporting,
but not backup withholding, on the payment unless the broker has documentary
evidence in its files that the owner is not a U.S. person and the broker has no
knowledge to the contrary.
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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
Based on interpretations by the SEC set forth in no-action letters issued to
third parties in similar transactions, the Company believes that the Exchange
Notes issued in the Exchange Offer in exchange for the Outstanding Notes may be
offered for resale, resold and otherwise transferred by holders without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the Exchange Notes are acquired in the ordinary
course of such holders' business and the holders are not engaged in, and do not
intend to engage in, and have no arrangement or understanding with any person
to participate in, a distribution of Exchange Notes. This position does not
apply to any holder that is (1) an "affiliate" of the Company within the
meaning of Rule 406 under the Securities Act, (2) a broker-dealer who acquired
Notes directly from the Company or (3) broker-dealers who acquired Notes as a
result of market-making or other trading activities. Any broker-dealers
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
are subject to a prospectus delivery requirement with respect to resales of the
Exchange Notes. To date, the SEC has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as the exchange
pursuant to the Exchange Offer (other than a resale of an unsold allotment from
the sale of the Outstanding Notes to the initial purchasers) with this
Prospectus.
Each broker-dealer receiving Exchange Notes for its own account in the
Exchange Offer must acknowledge that it will deliver a Prospectus in any resale
of the Exchange Notes. Participating Broker-Dealers may use this Prospectus in
reselling Exchange Notes, if the Outstanding Notes were acquired for their own
accounts as a result of market-making activities or other trading activities.
The Company has agreed that a Participating Broker-Dealer may use this
Prospectus in reselling Exchange Notes for a period ending 180 days after the
Expiration Date. A Participating Broker-Dealer intending to use this Prospectus
in the resale of Exchange Notes must notify the Company, on or before the
Expiration Date, that it is a Participating Broker-Dealer. This notice may be
given in the space provided for in the Letter of Transmittal or may be
delivered to the appropriate Exchange Agent. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus, and
any amendment or supplement to this Prospectus, available to any broker-dealer
that requests these documents in the Letter of Transmittal. See "The Exchange
Offer--Resales of Exchange Notes" for more information.
The Company will not receive any cash proceeds from the Exchange Notes.
Broker-dealers acquiring Exchange Notes for their own accounts may sell the
notes in one or more transactions in the over-the-counter market, in negotiated
transactions, through writing options on the Exchange Notes or a combination of
such methods. Any resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of Exchange Notes.
Any broker-dealer reselling Exchange Notes that it received in the Exchange
Offer and any broker or dealer that participates in a distribution of Exchange
Notes may be deemed to be an "underwriter" within the meaning of the Securities
Act. Any profit on any resale of Exchange Notes and any commissions or
concessions received by any persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver any by delivering a Prospectus, a broker-
dealer will not admit that it is an "underwriter" within the meaning of the
Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for the
Company by Norman L. Roelke, Esq., Vice President, Secretary and General
Counsel of the Company.
117
<PAGE>
INDEPENDENT ACCOUNTANTS
The financial statements of Tokheim Corporation and Subsidiaries as of
November 30, 1998 and 1997 and for each of the three years in the period ended
November 30, 1998, included in this Prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given the authority of said firm as experts in auditing and accounting.
The financial statements of Retail Petroleum Systems as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997,
included in this Prospectus have been so included in reliance on the report of
PricewaterhouseCoopers, independent accountants, given the authority of said
firm as experts in auditing and accounting.
118
<PAGE>
GENERAL LISTING INFORMATION
Listing
The Certified Certificate of Incorporation of the Company and the legal
notice relating to the issue of the Exchange Notes will be deposited prior to
any listing on the Luxembourg Stock Exchange with the Registrar of the District
Court in Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a
Luxembourg), where such documents are available for inspection and where copies
thereof can be obtained upon request. As long as the Exchange Notes are listed
on the Luxembourg Stock Exchange, an Agent for making payments on, and
transfers of, Exchange Notes will be maintained in Luxembourg.
Independent Accountants
The consolidated accounts of Tokheim Corporation and Subsidiaries for the
three years ended November 30, 1998 have been prepared in accordance with
United States generally accepted accounting principles ("U.S. GAAP") and have
been audited by PricewaterhouseCoopers LLP in accordance with United States
generally accepted auditing standards. The unaudited consolidated interim
accounts for the three months ended February 28, 1998 and 1999 were prepared in
accordance with U.S. GAAP. PricewaterhouseCoopers LLP has given and not
withdrawn their written consent to the issue of this Prospectus with the
inclusion in it of their report in the form and context in which it is
included.
The consolidated accounts of Retail Petroleum Systems for the three years
ended December 31, 1997 have been prepared in accordance with United States
generally accepted accounting principles and have been audited by
PricewaterhouseCoopers in accordance with United States generally accepted
auditing standards. The unaudited consolidated interim accounts for the nine
months ended September 30, 1997 and 1998 were prepared in accordance with U.S.
GAAP. PricewaterhouseCoopers has given and not withdrawn their written consent
to the issue of this Prospectus with the inclusion in it of their report in the
form and context in which it is included.
Documents for Inspection
For so long as the Exchange Notes are listed on the Luxembourg Stock Exchange
and the rules of such exchange so require, copies of the following documents
may be inspected at the specified office of the Paying Agent and Registrar in
Luxembourg.
.Certified Certificate of Incorporation of the Company; and
.the Indentures relating to the Exchange Notes (which include the forms of
the Exchange Note certificates).
In addition, copies of the most recent consolidated financial statements of
the Company for the preceding financial year, and any interim quarterly
financial statements published by the Company, will be available at the
specified office of the Paying Agent in Luxembourg for so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such exchange so
require. The Company publishes only consolidated financial statements.
Notices
All notices shall be deemed to have been given upon (i) the mailing by first
class mail, postage prepaid, of such notices to Holders of the Exchange Notes
at their registered addresses as recorded in the Register; and (ii) for so long
as the Exchange Notes are listed on the Luxembourg Stock Exchange and it is
required by the rules of the Luxembourg Stock Exchange, publication of such
notice to the Holders of the Exchange Notes in English in a leading newspaper
having general circulation in Luxembourg (which is expected to be the
Luxemburger Wort) or, if such publication is not practicable, in one other
leading English language daily newspaper with general circulation in Europe,
such newspaper being published on each business day in morning editions,
whether or not it shall be published in Saturday, Sunday or holiday editions.
119
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed the Registration Statement regarding the Exchange Notes with
the Commission. This Prospectus does not contain all of the information
included in the Registration Statement. Any statement made in this Prospectus
concerning the contents of any other document is not necessarily complete. If
we have filed any other document as an exhibit to the Registration Statement,
you should read the exhibit for a more complete understanding of the document
or matter. Each statement regarding any other document does not necessarily
contain all of the information important to you.
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any documents we file at
the Commission's public reference rooms at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, New York, New York
10048. Please call the Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Commission filings are also available to the
public at the SEC's web site at http://www.sec.gov. In addition, reports, proxy
statements and other information about the Company (symbol: TOK) can be
reviewed and copied at the offices of the New York Stock Exchange, on which our
common stock is listed, at 20 Broad Street, New York, New York 10005. The
Indentures require us to file reports and other information required to be
filed under the Exchange Act with the Commission and provide such information
to you, upon request, regardless of whether our Company is subject to the
reporting requirements of the Exchange Act. See "Description of the Exchange
Notes--Certain Covenants--Reports to Holders."
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, meaning that we can disclose important information by referring
you to those documents. The information incorporated by reference is considered
to be part of this Prospectus, and information filed later with the Commission
will update and supersede the information then on file. We incorporate by
reference our Commission filings listed below (File No. 001-06018) and any
other documents we file with the Commission under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act until the Exchange Offer is completed.
1. Annual Report on Form 10-K for the fiscal year ended November 30, 1998
(filed March 1, 1999);
2. Current Report on Form 8-K/A filed December 14, 1998; and
3. Quarterly Report on Form 10-Q for the quarter ended February 28, 1999
(filed April 14, 1999).
On the request of any person to whom a copy of this Prospectus is delivered,
we will provide, without charge, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference). Written requests for
such copies should be directed to Tokheim Corporation, 10501 Corporate Drive,
Fort Wayne, Indiana 46845, telephone number (219) 470-4600 Attention: Executive
Vice President, Finance and Administration and Chief Financial Officer. For so
long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the Company's quarterly and annual filings
will be available free of charge in Luxembourg.
You should rely only on the information incorporated by reference or provided
in this Prospectus or any prospectus supplement. The Company has not authorized
anyone to provide you with different or additional information. We are not
making an offer to sell any notes in any state or country where the Exchange
Offer is not permitted. You should not assume that the information in this
Prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of this document.
120
<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-56
Unaudited Combined Condensed Statements of Income for the nine months
ended September 30, 1998 and 1997...................................... F-57
Unaudited Combined Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997............................................ F-58
Notes to the Combined Financial Statements (unaudited).................. F-59
Report of Independent Accountants....................................... F-61
Combined Statements of Income for the years ended December 31, 1997,
1996 and 1995.......................................................... F-62
Combined Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.......................................................... F-63
Combined Balance Sheets as of December 31, 1997 and 1996................ F-64
Combined Statements of Equity for the years ended December 31, 1997,
1996 and 1995.......................................................... F-65
Notes to Financial Statements........................................... F-66
</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 21)
Redeemable convertible preferred stock, at liquidation
value of $25 per share, 1,700 shares authorized, 960
shares issued............................................ 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (ESOP)
obligation............................................... (6,987) (9,429)
Treasury stock, at cost, 195 and 189 shares,
respectively............................................. (4,883) (4,718)
-------- --------
12,130 9,853
-------- --------
Preferred stock, no par value; 3,300 shares authorized and
unissued................................................. -- --
Common stock, no par value; 30,000 shares authorized,
12,698 and 8,232 shares issued, respectively............. 90,354 21,158
Common stock warrants..................................... 20,000 --
Minimum pension liability................................. (3,135) (2,173)
Foreign currency translation adjustments.................. (22,598) (18,048)
Retained earnings (accumulated deficit)................... (19,295) 9,821
-------- --------
65,326 10,758
Treasury stock, at cost, 38 and 9 shares, respectively.... (695) (140)
-------- --------
64,631 10,618
-------- --------
Total liabilities and shareholders' equity............ $776,642 $290,619
======== ========
</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.
Risks and Uncertainties--The Company is not dependent on any single customer,
group of customers, market, geographic area or supplier of materials, labor or
services. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the Consolidated Financial
Statements and accompanying notes. The more significant areas requiring the use
of management's estimates include allowances for obsolete inventory and
uncollectible receivables, product warranty claims, environmental and product
liabilities, postretirement, pension, and other employee benefits, valuation
allowances for deferred tax assets, future obligations associated with the
Company's restructuring plans, future cash flows associated with assets, and
useful lives for depreciation and amortization. Actual results could differ
from these estimates, making it reasonably possible that a change in certain of
these estimates could occur in the near term. Financial instruments which
potentially subject the Company to concentrations of credit risk consist
principally of cash and trade receivables. The Company places its cash with
high credit quality financial institutions. At times, cash in United States
banks may exceed FDIC insurance limits. Concentration of credit risk with
respect to trade receivables is considered to be minimal due to the Company's
large customer base and ongoing control procedures, which monitor the credit
worthiness of customers.
Fair Value of Financial Instruments--The fair value of cash and cash
equivalents, trade receivables, and accounts payable approximates the carrying
value because of the short-term maturities of these financial instruments.
The interest rate on the Company's bank credit agreement (the "New Credit
Agreement") fluctuates with current market rates. Consequently, the carrying
value of the New Credit Agreement approximates the market prices for the same
or similar issues in future periods. The estimated fair value of the Company's
12.0% senior subordinated notes (the "Senior Subordinated Seller Notes") and
the Company's 12.5% senior notes due 2005 (the "Senior Notes") approximated the
carrying value at November 30, 1998 since both notes were redeemed at face
value on January 29, 1999. The Company estimates that the fair value of the
$40,000 Junior
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Subordinated 12.0% Payment-in-Kind notes (the "Junior Notes") approximated the
carrying value at November 30, 1998 as there were no significant changes in the
market conditions or risks related to these notes during the two month period
between the time when the notes were issued on September 30, 1998 and November
30, 1998.
The fair value of the Company's $20,000 common stock warrants (the
"Warrants") approximates $21,795 at November 30, 1998. This amount is computed
based on the Company's November 30, 1998 common stock price of $8.625 per share
less the nominal consideration to be received if exercised.
The fair value of the Company's convertible preferred stock, which is held in
the Trust of the Company's Retirement Savings Plan ("RSP"), approximates the
carrying value, as such stock is not traded in the open market, and the value
at conversion is equal to a fixed redemption value in cash or equivalent
amounts of common stock.
Inventory Valuation--Inventories are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Property and Depreciation--Depreciation of plant and equipment is generally
determined on a straight-line basis over the estimated useful lives of the
assets. Upon retirement or sale of assets, the cost of the disposed assets and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is credited or charged to income. These gains and losses
are accumulated and shown as a component of other income, net in the statement
of earnings. Buildings are generally depreciated over 40 years. Machinery and
equipment are depreciated over periods ranging from five to ten years.
Expenditures for normal repairs and maintenance are charged to expense as
incurred. Expenditures for improving or rebuilding existing assets which extend
the useful life of the assets are capitalized.
Software and Research and Development Costs--Costs incurred to address year
2000 issues are expensed when incurred. Costs incurred related to software
developed or obtained for internal use are capitalized during the application
development stage of the software development and are amortized over 3 years.
Amortization of capitalized software development costs offered for sale is
provided over the estimated economic useful life of the software product on a
straight-line basis, generally three to four years. Unamortized software costs
included in other non-current assets were $8,711, and $1,089 at November 30,
1998 and 1997, respectively. The amounts amortized and charged to expense in
1998, 1997 and 1996 were $2,025, $260 and $163, respectively. Included in
unamortized software costs at November 30, 1998 is approximately $4,850 related
to software technology costs capitalized in connection with the acquisition of
MSI.
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to $21,080,
$18,284 and $15,909 in 1998, 1997 and 1996, respectively. In addition to these
expenses, the Company wrote off $5,879 of in-process research and development
expenses in connection with the acquisition of MSI and the related purchase
price allocation. See Note 2 for additional information.
Goodwill and Other Intangible Assets--Goodwill is amortized on a straight-
line basis over 40 years. The Company will continue to review facts and
circumstances to determine whether the remaining estimated useful life of
goodwill warrants revision or whether the carrying amount may not be
recoverable, using profitability projections to assess whether future operating
income on a non-discounted basis is likely to exceed the amortization over the
remaining life of the goodwill. The amounts amortized and charged to expense in
1998, 1997 and 1996 were approximately $2,709, $1,490 and $420, respectively.
Accumulated amortization of goodwill at November 30, 1998 and 1997 was $4,619
and $1,910, respectively. The Company is in the process of valuing certain
tangible and intangible assets acquired with the RPS Division and will finalize
the
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
preliminary purchase price allocation upon completion of these valuations. The
goodwill recorded in connection with the RPS Division is currently being
amortized over 40 years. The Company will determine the appropriate amounts and
useful lives of the identified intangible assets upon completion of the
valuations. Finalization of the purchase price allocation is not expected to
have a material impact on the Company's financial position or results of
operations as of and for the year ended November 30, 1998.
Other non-current assets and deferred charges consist primarily of debt
issuance costs. These costs are amortized over the terms of the related debt
agreements on a straight-line basis, which is not materially different from the
effective interest method, with periods ranging from six to eight years.
Amortization of these deferred charges included in interest expense at November
30, 1998, 1997 and 1996 was $1,658, $1,623, and $401, respectively. During
1998, the Company capitalized $16,160 of debt issuance costs incurred in
connection with the acquisition of the RPS Division and related financing and
charged $6,666 of deferred debt issuance costs to extraordinary loss on debt
extinguishment. During 1997, the Company charged $496 of deferred bond issuance
costs to extraordinary loss on debt extinguishment. This amount represents the
write-off of a proportionate share of the original unamortized deferred
issuance cost incurred in connection with the issuance of the senior
subordinated notes for the acquisition of Sofitam. During 1996, the Company
wrote-off approximately $233 of deferred debt issuance costs and capitalized
approximately $11,506 of costs incurred in connection with the refinancing of
the Company's preexisting debt and issuance of senior subordinated notes.
Accumulated amortization of other non-current assets and deferred charges at
November 30, 1998 and 1997 was $420 and $2,520, respectively.
Advertising and Promotion--All costs associated with advertising and product
promotion are expensed in the period incurred. These expenses amounted to
$3,577, $2,687 and $2,268 in 1998, 1997 and 1996, respectively.
Income Taxes--The Company accounts for income taxes under the liability
method in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 109 "Accounting for Income Taxes." The provision for income taxes includes
federal, foreign, state and local income taxes currently payable as well as
deferred taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. If it is more
likely than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized. No additional U.S. income taxes
or foreign withholding taxes have been provided on accumulated earnings of
foreign subsidiaries approximating $20,543 which are expected to be reinvested
indefinitely. (See Note 15).
Environmental Cleanup Matters--The Company adopted The American Institute of
Certified Public Accountants ("AICPA") Statement of Position ("SOP") No. 96-1,
"Environmental Remediation Liabilities" during 1998. This SOP did not have a
material impact on the Company's financial position, results of operations or
cash flows for 1998. The Company expenses environmental expenditures related to
existing conditions resulting from past or current operations and from which no
current or future benefit is discernible. Expenditures which extend the life of
the related property or mitigate or prevent future environmental contamination
are capitalized. The Company determines its liability on a site by site basis
and records a liability at the time when the associated expenses can be
reasonably estimated.
New Accounting Pronouncements
SFAS No. 129, "Disclosure of Information about Capital Structure," was
adopted during the first quarter of the fiscal year ended November 30, 1998.
This statement did not have a material impact on the Company's financial
position, results of operations or cash flows as disclosure requirements did
not change for the
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Company with this new statement. SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," and SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," are effective
for the year ending November 30, 1999. In the opinion of management, these
statements will not have a material impact on the Company's financial position,
results of operations, or cash flows since they are "disclosure only"
standards. The Company is currently evaluating the impact that SFAS No. 131
will have on its current segment groupings. SFAS No. 130, "Reporting
Comprehensive Income," is effective for the year ending November 30, 1999. Due
to the significance of the foreign currency translation adjustments recorded,
comprehensive income would have been less than reported net earnings or reduced
net loss had SFAS No. 130 been adopted. SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was issued in June 1998 and is
effective for the year ending November 30, 2000. SFAS No. 133 establishes a new
model for accounting for derivatives in the balance sheet as either assets or
liabilities and measures them at fair value. Certain disclosures concerning the
designation and assessment of hedging relationships are also required.
Management has not yet determined the impact of this statement on the Company's
consolidated financial statements.
SOP No. 97-2 "Software Revenue Recognition," is effective for the Company for
the year ended November 30, 1999. SOP No. 97-2 supersedes SOP No. 91-1 and
provides more specific guidance on revenue recognition related to software
products. The Company does not expect the adoption of SOP No. 97-2 to have a
material impact on the Company's financial position, results of operations or
cash flows.
Product Warranty Costs--Anticipated costs related to product warranty are
expensed in the period of sale.
Cash Flows--For purposes of the Statement of Cash Flows, the Company
considers all highly liquid investments purchased with an initial maturity of
90 days or less to be cash equivalents.
Supplemental disclosures of cash flow information:
<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.
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The MSI acquisition has been accounted for as a purchase, and accordingly,
the results of operations of MSI have been included in the Company's
Consolidated Financial Statements since the date of acquisition. Assets of
approximately $2,700 were acquired and liabilities of approximately $1,400 were
assumed and have been recorded at their determined fair values. An independent
valuation was performed for intangible assets acquired. As such, intangible
software technology was recorded which is being amortized over four years and
$5,879 was allocated to in-process research and development projects that have
not reached technological feasibility and have no alternative future use. This
amount was charged to operations at the date of acquisition and is included in
merger and acquisition costs and other unusual items in the consolidated
statement of earnings. The portion of the contingent payments that do not
relate to employee compensation will be allocated to various intangible assets
and goodwill and amortized over periods ranging from four to twelve years, if
payments are required. The Company was not required to make any contingent
purchase price payments for the year ended November 30, 1998.
As of the acquisition date, MSI was developing the CVN POS(TM) for Windows(R)
solution (CVN Windows) in order to provide a next-generation comprehensive
point of sale (POS) software application in the convenience store, petroleum
dispensing and fast food service industries. CVN Windows will incorporate a
graphical user interface with touch screen controls and allow the system to be
used with most POS systems. CVN Windows was under development for approximately
two years and was in the alpha testing stage at the time of the acquisition. At
the date of acquisition, approximately 85% of the research and development
costs related to CVN Windows had been incurred, based on remaining costs to
complete development, testing and quality assurance. The Company expects to
complete the development tasks for CVN Windows remaining at November 30, 1998
by May 31, 1999, with projected expenditures of approximately $1,000.
To determine the fair value of acquired IPR&D and other identifiable
intangible assets, the Company used an independent appraisal which utilized
standard appraisal methodologies. The appraisal procedures performed to
establish the fair value of IPR&D involved projected cash flows for CVN Windows
over the next five years, commensurate with its useful life, net of capital
charges for all employed intangible and tangible assets, and discounted to
present value, using a discount rate that reflected a 700 basis point risk
premium reflective of the in process nature of the remaining activities. This
risk assessment reflects uncertainty related to the Company's ability to
successfully integrate remaining functionality and performance features into
the CVN Windows product, combined with the added complexity of porting legacy
DOS functionality onto a Windows platform. If the Company is delayed in its
market entry with the completed CVN Windows product, it could adversely affect
future operations.
RPS Division Acquisition--On September 30, 1998 the Company completed the
Acquisition of the RPS Division for a purchase price equal to $330,000, of
which $100,000 of which was paid in cash borrowed under the terms of the New
Credit Agreement as well as $22,500 of Senior Notes. The $210,000 seller note
portion of the purchase price consisted of $40,000 in Junior Notes, and
$170,000 in Senior Subordinated Seller Notes. $20,000 of the purchase price was
paid in the form of Warrants. See Note 7, 8 and 12 for additional information
on the debt and warrant instruments used to finance the Acquisition.
The RPS Division is a leading manufacturer and servicer of fuel dispensing
systems in Western Europe.
The Acquisition has been accounted for as a purchase and the RPS Division's
results of operations have been included in the Consolidated Financial
Statements of the Company from the date of acquisition. The purchase price has
been preliminarily allocated to assets acquired and liabilities assumed based
on the RPS Division's net book value of assets as of September 30, 1998, as
adjusted, which is estimated to approximate fair value. The purchase price
allocated under this assumption is preliminary and exceeded the estimated fair
value of tangible net assets acquired by $263,389, which has been recorded as
goodwill. The Company is in the
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
process of valuing certain tangible and intangible assets acquired with the RPS
Division and will finalize the preliminary purchase price allocation upon
completion of these valuations. The goodwill recorded in connection with the
RPS Division is currently being amortized over 40 years. The Company will
determine the appropriate amounts and useful lives of the identified intangible
assets upon completion of the valuations. Finalization of the purchase price
allocation is not expected to have a material impact on the Company's financial
position or results of operations as of and for the year ended November 30,
1998. The Company is to reimburse Schlumberger Limited for cash (net of
adjustments) that remained in the RPS Division at the date of closing of the
Acquisition. This amount is currently estimated to be approximately $6,500. It
is anticipated that this payment will be made in the second quarter of 1999
using the revolving working capital facility under the New Credit Agreement.
Included in accrued liabilities are certain costs the Company will incur to
effect an integration and rationalization plan for the RPS Division's
operations. These costs represent involuntary termination costs and other
closure costs in connection with closing redundant manufacturing and service
operations. These accrued costs do not include costs associated with
consolidation of previously existing Tokheim subsidiaries, which will be
expensed as incurred or separately accrued once all criteria for accrual are
met, nor do these costs benefit future periods. The Company expects the
integration and rationalization plan to be completed by the end of the year
2001. The table below summarizes the accrued liability by major category and
initiatives:
<TABLE>
<S> <C>
Involuntary employee termination benefits for approximately 540
employees.......................................................... $18,617
Facility closure and other closure costs............................ 482
Lease and contract termination fees................................. 1,195
-------
Total accrued integration and rationalization costs............... $20,294
=======
</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.
F-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The following unaudited pro forma information summarizes consolidated results
of operations of Tokheim, the RPS Division and MSI as if the acquisitions had
occurred at the beginning of 1998 and 1997. These unaudited pro forma results
include certain adjustments, such as additional amortization expense as a
result of goodwill and other intangible assets and increased interest expense
on acquisition debt. They do not purport to be indicative of the results of
operations which actually would have resulted had the acquisition occurred on
December 1, 1997 or 1996, or future results of operations. The Company is in
the process of closing several redundant manufacturing, sales, service and
administrative operations as part of the integration and rationalization plans
discussed above. Anticipated synergies from the merger of Tokheim, the RPS
Division and MSI have been excluded from the amounts included in the pro forma
summary information presented below.
<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 $7,700 in 1998. Of this amount, approximately $2,815
relates to employee severance and related costs for approximately 136 employees
that served in various manufacturing, sales, service and administrative
capacities. The other $4,885 represents accrued exit costs for the write off of
certain assets and other miscellaneous closure costs. During 1997 and 1996 the
Company implemented several corporate realignment initiatives, including work
force reductions and reorganization of its domestic and international
operations, related to the consolidation of Sofitam. Amounts charged to
operations as incurred for the matters described above for the years ended
November 30, 1997 and 1996 approximated $1,736 and $2,035, respectively.
Litigation/Other--In connection with the purchase of MSI in the first quarter
of fiscal 1998, the Company recorded a $5,879 charge relating to the write-off
of in-process research and development ("IPR&D"). This amount represents the
estimated fair value of acquired incomplete research and development projects
of MSI at the date of acquisition. See Note 2 for additional information on the
IPR&D. During 1997, the Company settled a claim against it directly associated
with the purchase of Sofitam related to a personnel matter that resulted in an
outcome adverse to the Company. The Company also favorably settled a claim that
involved a former supplier, which resulted in the reversal of an accrued
liability which had been charged to "Merger and acquisition costs and other
unusual items" in 1996. In addition, during 1997 the Company recorded a charge
for an impaired asset related to license technology. In 1996 the Company
settled claims related to a prior distributor and a foreign distributor to
extinguish an exclusive sales representative agreement. The Company also
incurred a charge to operations for the adverse outcome in a Pension Benefit
Guarantee Corporation inquiry with respect to a terminated benefit plan payout
from 1991. In addition, the Company incurred charges
F-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
in 1996 related to customer satisfaction programs relating to dispensers sold
in prior years. Amounts charged to merger and acquisition costs and other
unusual items relating to litigation/other for 1998, 1997 and 1996 were $5,985,
$1,757, and $4,424, respectively.
4. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1998 and 1997:
<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 a six year working capital/letter of credit
facility and a six year term loan facility, each in an aggregate principal
amount of $120,000. Pursuant to the New Credit Agreement, $20,000 of the
availability under the working capital facility may be utilized for issuance of
standby letters of credit, and $10,000 of the availability under the working
capital facility may be utilized for swing line facilities to be provided to
Tokheim and certain of the other Borrowers. The New Credit Agreement permits
borrowings in U.S. dollars, and, if certain additional conditions are met, in
French francs, British pounds, Dutch guilders, German marks and euros (so long
as such non-U.S. currencies are freely traded, readily available and
convertible into U.S. dollars) and such other currencies as agreed by each
Bank.
An additional agreement provides for the assignment of a three year $7,600
ESOP loan facility with certain banks (the "ESOP Credit Agreement").
At November 30, 1998, the outstanding borrowings were $62,145 under the
revolving working capital facility, $120,000 under the term loan, and $6,987
under the ESOP facility. The term loan calls for equal quarterly principal
payments aggregating to $7,500 in year 2000; $10,000 in year 2001; $12,500 in
year 2002; $15,000 in year 2003; $37,500 in a single payment due first quarter
2004; and the remainder due at maturity. The revolving working capital facility
is due on September 30, 2004. Available borrowings under the revolving working
capital facility were $57,900 at November 30, 1998 subject to a borrowing base
limitation and certain other loan covenant restrictions.
Indebtedness of the Company under the New Credit Agreement (a) is secured by
(i) a first perfected security interest in and lien on certain of the real and
personal property assets of Tokheim (including claims
F-27
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
against certain subsidiaries to which Tokheim has made intercompany loans) and
Tokheim's direct and indirect material majority-owned U.S. subsidiaries, (ii) a
pledge of 100% of the stock of Tokheim's direct and indirect material majority-
owned U.S. subsidiaries, and (iii) a pledge of 65% of the stock of Tokheim's
first-tier material foreign subsidiaries and (b) is guaranteed by all of
Tokheim's direct and indirect material majority-owned U.S. subsidiaries.
Certain indebtedness of Tokheim's foreign subsidiaries which are Borrowers or
become Borrowers under the New Credit Agreement will be secured by certain of
the personal property of such foreign subsidiaries.
Indebtedness under the New Credit Agreement bears interest based upon (at the
applicable Borrower's option) (i) the Base Rate in the case of U.S. dollar
denominated loans (defined as the higher of (x) the applicable prime rate and
(y) the federal funds rate (as adjusted pursuant to the New Credit Agreement)
plus 0.50%) plus an applicable margin based upon the Company's leverage ratio
(with a range of 1.50% to 3.00% for revolving loans and 3.00% for term loans)
or (ii) the applicable Eurocurrency Rate (as defined in the New Credit
Agreement) for a deposit in the currency of, and for a maturity corresponding
to, the applicable loan and interest period, plus an applicable margin based
upon the Company's leverage ratio (with a range of 2.50% to 4.00% for revolving
loans and 4.00% for term loans). The unused portion of the commitment under the
New Credit Agreement will be subject to a commitment fee in the range of 0.375%
to 0.50% depending upon the leverage ratio of the Company.
Indebtedness under the ESOP Credit Agreement will amortize with a final
principal payment on July 1, 2001.
The revolving loan commitment under the New Credit Agreement may be
voluntarily permanently reduced by the Company in whole or in part on one day's
notice without premium or penalty. The Borrower may prepay the term loans
subject to a pre-payment penalty if the Borrowers prepay the entire amount of
the term loans in the first 3 years after September 30, 1998. The Borrowers
will be able to prepay the loans in accordance with the terms of the New Credit
Agreement. Subject to the provisions of the New Credit Agreement, the Borrowers
will be able to, from time to time, borrow, repay and reborrow under the
working capital facility.
The New Credit Agreement requires an amount equal to all net proceeds from
asset sales by the Company or any of its subsidiaries (with certain exceptions)
to be applied to repay the loans under the New Credit Agreement. The New Credit
Agreement also requires the Company to prepay the loans under the New Credit
Agreement in an amount equal to (i) all net proceeds from the sale or issuance
of debt (with certain exceptions), (ii) all net proceeds from the sale or
issuance of equity (with certain exceptions) and (iii) a percentage of Excess
Cash Flow (as defined in the New Credit Agreement) for each fiscal year with a
range of 50% to 85%, based upon the Company's leverage ratio, commencing with
the Company's fiscal year ending November 30, 1999.
The New Credit Agreement requires the Company to meet certain consolidated
financial tests, including minimum level of consolidated net worth, minimum
level of EBITDA (as defined in the New Credit Agreement), minimum level of
consolidated interest coverage, maximum consolidated leverage ratio and senior
leverage ratio and minimum consolidated fixed charge coverage ratio. The New
Credit Agreement also contains covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with affiliates,
asset sales, acquisitions, investments, mergers and consolidations, prepayments
of certain other indebtedness, amendments to certain other indebtedness, liens
and encumbrances and other matters customarily restricted in such agreements.
At November 30, 1998 and 1997, the aggregate amounts outstanding under
working capital facilities were $62,145 and $24,090, respectively. These
amounts are classified as long-term debt because the Company had the ability
(under the terms of the facility) and the intent to finance these obligations
beyond one year. The total line of credit under the working capital facility
was approximately $120,000 and $67,768, of which $57,855
F-28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
and $43,678 was unused at November 30, 1998 and 1997, respectively. The
weighted average annual interest rates for these lines of credit were 7.1% and
7.6% for 1998 and 1997, respectively. The range of rates at November 30, 1998
and 1997 was 5.1% to 7.5% and 7.6% to 8.9%, respectively.
6. SENIOR NOTES
As part of the financing for the acquisition of the RPS Division, the Company
entered into a note purchase agreement, pursuant to which the Company issued
$22,500 million aggregate principal amount of Senior Notes bearing an interest
rate starting at 12.5% and increasing by 0.5% on December 1, 1998, and every
three months thereafter to a maximum of 14.5%. The Company has the option,
subject to bank approval, to redeem (in whole or in part) the Senior Notes. The
Note Purchase Agreement is subject to certain restrictions and covenants common
to such agreements. On January 29, 1999 the Senior Notes were repaid. See Note
21 for additional information.
7. SENIOR SUBORDINATED NOTES
As part of the financing for the Acquisition of the RPS Division, the Company
issued $170,000 in Senior Subordinated Seller Notes due one hundred twenty days
after the Acquisition closing date. The Company has the option, subject to bank
approval, to redeem (in whole or in part) the Senior Subordinated Seller Notes.
Under the terms of the Senior Subordinated Seller Notes, to the extent the
Company has not refinanced the Senior Subordinated Seller Notes within one
hundred twenty days of the Acquisition closing date, such notes convert into an
equal principal amount of eight year notes with an interest rate starting at
12.0% and increasing by 0.5% every three months to a maximum of 14.5%. Interest
exceeding 12.0% will be payable in kind. The Senior Subordinated Seller Notes
are subject to certain restrictions and covenants common to such agreements. On
January 29, 1999 the Senior Subordinated Seller Notes were repaid. See Note 21
for additional information.
In August 1996 the Company issued $100,000 aggregate principal amount of
11.5% Senior Subordinated Notes due 2006 (the "11.5% Notes") to finance the
acquisition of Sofitam. Interest on these notes accrues at the rate of 11.5%
per annum and is payable semi-annually in cash on each February 1 and August 1
to the registered holders at the close of business on January 15 and July 15
immediately preceding the applicable interest payment date.
During the fourth quarter of 1997, the Company used proceeds from its Old
Credit Agreement to purchase $10,000 face value of the 11.5% Notes. The Company
purchased these 11.5% Notes on the open market at an aggregate price of $11,390
plus accrued interest and recorded an extraordinary loss of $1,886. This amount
includes $1,390 of premiums paid to repurchase the 11.5% Notes and $496
representing the write-off of a proportionate share of the original unamortized
deferred issuance costs.
The Company used proceeds from the March 1998 Common Stock Offering of
$39,356 to redeem $35,000 in aggregate principal amount of the 11.5% Notes.
These 11.5% Notes were redeemed at a call price of 109.857%, expressed as a
percentage of the original face value, resulting in premiums paid of $3,450
along with accrued interest of $906. Following the redemption, $55,000 in
aggregate principal amount of the 11.5% Notes remained outstanding. The Company
recorded an extraordinary loss on the extinguishment of the 11.5% Notes of
approximately $4,965 during the second quarter of 1998. This loss includes
$3,450 of premiums paid to purchase the 11.5% Notes and $1,515 representing the
write-off of a proportionate share of the original unamortized deferred
issuance costs.
On September 30, 1998, the Company completed the repurchase of the final
$55,000 of 11.5% Notes that were then outstanding. These 11.5% Notes were
redeemed at an aggregate premium and consent payment of $12,332 along with
accrued interest of $1,072. The company recorded an extraordinary loss on the
extinguishment of the 11.5% Notes of approximately $14,940 in the fourth
quarter of 1998. These notes were repurchased with proceeds from borrowings
under the New Credit Agreement. See also Note 21.
F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
8. JUNIOR SUBORDINATED PIK NOTES
In connection with the acquisition of the RPS Division, the Company issued
$40,000 million in Junior Notes. Interest on the Junior Notes is payable
quarterly in cash or in-kind at the Company's option. All existing U.S.
subsidiaries have guaranteed, and all future U.S. subsidiaries will guarantee,
the Junior Notes on a junior subordinated basis with unconditional guarantees
that are or will be unsecured and subordinated to senior debt of such
subsidiaries.
The Junior Notes are unsecured junior subordinated obligations of the Company
and are junior to the Company's senior debt. The Junior Notes were issued under
an indenture (the "Junior Indenture") that limits the ability of the Company
and its subsidiaries to, among other things: incur indebtedness; pay dividends
and make certain other payments; make certain investments; sell certain assets;
enter into certain transactions with affiliates; restrict distributions from
subsidiaries; incur liens; and consolidate, merge or transfer all or
substantially all of its or its subsidiaries' assets.
Subject to the terms of the Junior Indenture, the Junior Notes may be
redeemed at any time, in whole or in part, at the option of the Company at a
redemption price equal to the unpaid principal amount thereof plus accrued
interest thereon to the redemption date. Upon a change of control (as defined
in the Junior Indenture, and subject to certain conditions set forth in the
Junior Indenture), any holder of Junior Notes will have the right to cause the
Company to repurchase all or any part of the Junior Notes of such Holder at a
purchase price equal to 101% of the principal amount of the Junior Notes to be
repurchased plus accrued and unpaid interest thereon, if any, to the date of
repurchase. The Junior Notes are subject to a registration rights agreement,
with registration rights that can be exercised any time after the date that is
120 days after the issue date of the Junior Notes.
9. OTHER LONG TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (ESOP)
OBLIGATION
Term debt at November 30, 1998 and 1997 consisted of the following:
<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>
F-30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Aggregate scheduled maturities of the above term debt and Guaranteed Employees'
Stock Ownership Plan (ESOP) obligation during the upcoming five years
approximate $4,747; $4,418; $2,272; $637; and $482, respectively.
(a) Aggregate cost of plant and equipment pledged as collateral under revenue
bonds and lease obligations is $6,231.
(b) Per the New Credit Agreement as described in Note 5, the ESOP obligation
matures on September 3, 2002.
10. OPERATING LEASES
The Company leases certain manufacturing equipment, office equipment,
computers, vehicles, and office and warehousing space under operating leases.
These leases generally expire in periods ranging from one to five years.
Amounts charged to expenses under operating leases in 1998, 1997 and 1996
were $6,364, $4,104, and $2,835, respectively. Future minimum rental payments
under noncancelable operating leases during the upcoming five years approximate
$6,158, $5,020, $2,865, $2,371 and $2,260.
11. STOCK OPTION PLANS
The Company has three separate Stock Option Plans, as outlined below:
1992 Stock Incentive Plan (SIP)
The Plan contains both incentive stock options (ISOs) and non-qualified stock
options (NSOs). The price of each share under this Plan for an ISO or NSO shall
not be less than the fair market value of Tokheim Corporation Common Stock on
the date the option is granted.
Options granted under the SIP become exercisable at the rate of 25% of the
total options granted per year, beginning one year after the grant date. All
options expire within ten years from the date on which they were granted.
In addition, the SIP provides for the granting of Stock Appreciation Rights
(SARs) and Restricted Stock Awards (RSAs). During 1998, there were no SARs or
RSAs granted.
1982 Incentive Stock Option Plan (ISOP) and 1982 Unqualified Stock Option Plan
(USOP)
Effective January 21, 1992, no additional shares could be granted under these
plans. All options expire within ten years from the date on which they were
granted.
The price of each share under the ISOP was not less than fair market value of
Tokheim Corporation Common Stock on the date the option was granted, and under
the USOP was not less than 85% of the fair market value of Tokheim Corporation
Common Stock on the date the option was granted.
Options granted under the respective plans during 1998, 1997, and 1996, are
as follows:
<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>
F-31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The following table sets forth the status of all outstanding options at
November 30, 1998:
<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.
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-32
<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-33
<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-34
<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-35
<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-36
<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-37
<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.
F-38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
At November 30, 1998, the Company recorded a net deferred tax asset of
approximately $40,240, which was offset in full by a valuation allowance due
largely to uncertainties associated with the Company's ability to fully use
these tax benefits. The Company is continuing to evaluate the likelihood that
all or part of the deferred tax asset will be realized through the generation
of future taxable earnings. If, in the future, the Company is able to generate
sufficient levels of taxable income, the valuation allowance will be adjusted
accordingly.
16. GEOGRAPHICAL SEGMENTS
Domestic and foreign operations information for the years ended November 30,
1998, 1997, and 1996 is as follows:
<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.
F-39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
17. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
<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>
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>
F-40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
The net periodic pension expense amounts were based on the following
actuarial assumptions:
<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.
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>
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%
</TABLE>
F-41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
<TABLE>
<S> <C> <C> <C>
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 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>
F-42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides defined benefit postretirement health and life insurance
benefits to most of its U.S. employees. Covered employees become eligible for
these benefits at retirement, after meeting minimum age and service
requirements. The Company continues to fund benefits on a pay-as-you-go basis,
with some retirees paying a portion of the costs.
The accumulated postretirement benefit obligations as of November 30, 1998
and 1997, respectively, consisted of unfunded obligations as follows:
<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>
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
F-43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
of the Company's operations exposes it to the risk of claims with respect to
such matters. There can be no assurance that material costs or liabilities will
not be incurred in connection with such claims. Based upon its experience to
date, the Company believes that the future costs of compliance with existing
environmental laws and regulations, and liabilities for known environmental
claims pursuant to such laws and regulations, will not have a material adverse
effect on the Company's business, financial condition, results of operations or
cash flows. However, future events, such as new information, changes in
existing laws and regulations or their interpretation, or more vigorous
enforcement policies of regulatory agencies may give rise to additional
expenditures or liabilities that could be material.
The U.S. Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, imposes liability, without
regard to fault or the legality of the original conduct, on certain classes of
persons with respect to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of the disposal site
or sites where the release occurred and companies that disposed of or arranged
for the disposal of the hazardous substances found at the site. Persons who are
or were responsible for releases of hazardous substances under CERCLA may be
subject to joint and several liability for the costs of cleaning up the
releases and for damages to natural resources. It is not uncommon for
neighboring landowners and other third parties to file claims for personal
injury or property damages allegedly caused by the hazardous substances
released into the environment. In addition, where the Company has sold
properties used in its prior manufacturing operations, it may have contractual
obligations to the new owner to remediate environmental contamination on the
site arising from prior operations.
The Company also generates or has in the past generated waste, including
hazardous waste, that is subject to the federal Reserve Conservation and
Recovery Act and comparable state statutes. The U.S. Environmental Protection
Agency ("EPA") and various state agencies have promulgated regulations that
limit the disposal options for certain hazardous and non-hazardous waste. Such
regulations may also require corrective action with respect to contamination of
facilities caused by the past handling of industrial waste.
The Company has been named as a potentially responsible party ("PRP") under
CERCLA or similar state Superfund laws at three sites: the Fort Wayne Reduction
Site in Fort Wayne, Indiana; the Moyer Landfill Site in Collegeville,
Pennsylvania; and the I. Jones Recycling Site in Fort Wayne, Indiana. The
Company believes that the clean-ups at these three sites are largely complete
and that it has paid, or has currently accrued sufficient funds to pay, any
liabilities it may have associated with the clean-up of these sites. The
Company also owns or leases, and has in the past owned or leased, numerous
properties that for many years have been used in industrial and manufacturing
operations. Although the Company has in the past utilized operating and
disposal practices that were standard for the industry at the time, hazardous
substances may have been disposed of or released on or under the properties
owned or leased by the Company, or on or under other locations where such
wastes have been taken for disposal. The Company currently owns a facility near
Atlanta, Georgia that was previously used to refurbish gasoline dispensers. As
part of this operation, chlorinated solvents were inadvertently released to the
soil and groundwater through the facility septic system. Migration of these
releases has caused solvent concentrations above background levels in the
groundwater under an adjacent residential property. The Company has completed
the cleanup of this release under the oversight of the Georgia Environmental
Protection Division of the Georgia Department of Natural Resources, and is
currently monitoring the property to ensure that additional cleanup work is not
necessary.
The Company is also involved in one lawsuit with respect to environmental
liabilities under an indemnity provision of a sale agreement concerning the
sale of the die casting facility of a former subsidiary to a third party. The
Company has reached a settlement in this matter. Pursuant to the settlement
agreement, the Company will repurchase the real property and then lease the
property to the third party. The Company has agreed to place the facility into
the state remediation program. The Company presently does not anticipate any
material costs as a result of submitting the facility to the state site
remediation program.
F-44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
Total amounts included in accrued expenses related to environmental matters
were $717 and $990 at November 30, 1998 and 1997, respectively. During 1995,
the Company settled two actions with the EPA. In one matter, the Company
settled for $627 as part of a global settlement with other PRPs, and the
Company recorded the liability in full at November 30, 1994. The EPA approved
this settlement in late 1997, and the Company paid one-half of the settlement
amount in December 1997. The final payment was made in December 1998. The
Company is pursuing recovery of these amounts from its insurance carriers and
has received $150 to date. In the other matter, the Company settled as a
participating generator as part of a global settlement. The Company received a
favorable judgment with respect to the environmental oversight costs from the
U.S. Court of Appeals for the 7th Circuit; the only outstanding liability is
the potential natural resource damages. The Company's portion of these damages
is estimated to be immaterial.
Product Liability and Other Matters--The Company is subject to various other
legal actions arising out of the conduct of its business, including actions
relating to product liability, and claims for damages alleging violations of
federal, state, or local statutes or ordinances dealing with civil rights,
equal pay, and sex discrimination. Total amounts included in accrued expenses
related to these actions were $1,718 and $1,330 at November 30, 1998 and 1997,
respectively. The Company is also seeking to recover in excess of $1.0 million
from its former outside legal firm for malpractice in handling a litigation
matter for the Company. In addition the Company successfully appealed a jury
verdict of $350 with respect to an equal pay act and sexual discrimination
claim to the 7th U.S. Court of Appeals.
In the opinion of the Company, amounts accrued for awards or assessments in
connection with these matters at this time are adequate, and the ultimate
resolution of environmental, product liability, and other legal matters will
not have a material effect on the Company's consolidated financial position,
results of operations, or cash flows. The Company is not able to estimate
accurately the additional loss or range of loss that is reasonably possible, in
addition to the amounts accrued. The Company reassesses these matters as new
facts and cases are brought to management's attention.
21. SUBSEQUENT EVENTS
On January 26, 1999, the Company issued $123,000 aggregate principal amount
of 11.375% Senior Subordinated Notes due 2008 (the "Dollar Notes") and
(Euro)75,000 ($87,000 equivalent) aggregate principal amount of 11.375% Senior
Subordinated Notes due 2008 (the "Euro Notes") in a private placement pursuant
to Rule 144A (the "Offering"). The Notes will mature on August 1, 2008, and
interest is payable semi-annually on February 1 and August 1 of each year,
commencing August 1, 1999. The Company used the net proceeds from the Offering
to redeem in whole, the $170,000 Senior Subordinated Seller Notes and the
$22,500 Senior Notes. In addition, the Company used approximately $9,100 of the
net proceeds to reduce borrowings under the revolving credit facility under the
New Credit Agreement and to permanently reduce the bank working capital
commitment from $120,000 to $110,000.
During the first quarter of 1999, the Company incurred an extraordinary loss
on debt extinguishment of approximately $6,500 in connection with the
refinancing of the Senior Notes and the Senior Subordinated Seller Notes with
proceeds received from the Offering. This amount consists of $500 of premiums
on the Senior Notes and approximately $6,000 of unamortized deferred issuance
costs.
Each of the Dollar Notes and the Euro Notes will be redeemable, at the
Company's option, in whole at any time, or in part from time to time, on and
after February 1, 2004, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
February 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
F-45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
<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) within 90 days after the Issue Date, file a registration
statement on the appropriate registration form (the "Exchange Offer
Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to the Exchange Offer to exchange the Euro and
Dollar for the Exchange Notes which will have terms substantially identical in
all material respects to the Dollar Notes or the Euro Notes, as the case may
be, (except that the Exchange Notes will not contain terms with respect to
transfer restrictions or liquidated damages), (ii) use its best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 150 days after the Issue Date and (iii) use its best
efforts to consummate the Exchange Offer within 195 days after the Issue Date.
Upon the Exchange Offer Registration Statement being declared effective, the
Company will offer the Exchange Notes in exchange for surrender of the Euro and
Dollar Notes.
Although the Company intends to file the registration statement described
above, there can be no assurance that such registration statement will be
filed, or, if filed, that it will become effective. If the Company fails to
comply with the above provisions or if such registration statement fails to
become effective, then, as liquidated damages, additional interest (the
"Additional Interest") shall become payable with respect to the applicable Euro
and Dollar Notes at an increasing rate of 0.5% for every ninety days that the
Company fails to register such notes.
22. SHAREHOLDER RIGHTS PLAN
On January 22, 1997, the Board of Directors of the Company approved the
extension of the benefits afforded by the Company's then-existing rights plan
by adopting a new shareholder rights plan. Pursuant to the new Rights
Agreement, dated as of January 22, 1997, and as amended by Amendment No. 1,
dated as of
F-46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Amounts in thousands except dollars per share)
September 30, 1998, by and between the Company and Harris Trust and Savings
Bank, as Rights Agent, one Right was issued for each outstanding share of
Common Stock upon the expiration of the Company's then-existing rights
(February 9, 1997). Each of the new Rights entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Preferred Stock at a price of $44.00 per one-thousandth of a share. The Rights
will not become exercisable, however, unless and until, among other things,
certain persons acquire 15% or more of the outstanding Common Stock of the
Company or the Board of Directors of the Company determines that a person is an
Adverse Person.
A person who beneficially owns 10% or more of the outstanding shares of
Common Stock of the Company will be declared an Adverse Person if the Board of
Directors determines (a) that such beneficial ownership is intended to cause
the Company to repurchase the Common Stock beneficially owned by such person or
to pressure the Company to take action or enter into transactions intended to
provide such person with short-term financial gain that are not in the best
long-term interests of the Company and its shareholders or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse impact on
the Company to the detriment of the Company's shareholders, employees,
suppliers, customers or community. If certain persons acquire 15% or more of
the outstanding Common Stock or is declared an Adverse Person (subject to
certain conditions and exceptions more fully described in the Rights
Agreement), each Right will entitle the holder (other than the person who
acquired 15% or more of the outstanding Common Stock or is declared an Adverse
Person) to purchase Common Stock of the Company having a market value equal to
twice the exercise price of a Right. The new Rights are redeemable under
certain circumstances at $0.01 per Right and will expire, unless earlier
redeemed, on February 9, 2007.
23. GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS
In connection with the Acquisition and as part of the subsequent financing,
the Company issued and sold $123,000 of 11.375% US dollar-denominated senior
subordinated notes and (Euro)75,000 of 11.375% Euro denominated senior
subordinated notes (together the "Outstanding Notes") in a private placement
pursuant to Rule 144A and Regulation S. The Outstanding Notes are, and the
Exchange Notes which will be issued in this Exchange Offer will be, general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness of the Company, and guaranteed on a
full, unconditional, joint and several basis by the Company's domestic
subsidiaries.
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements as of November 30, 1998
and 1997 and for the years ended November 30, 1998, 1997 and 1996, of (a)
Tokheim Corporation, the parent; (b) the guarantor subsidiaries; (c) the
nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and
(2) Elimination entries necessary to consolidate Tokheim Corporation, the
parent, with guarantor and nonguarantor subsidiaries.
Investments in subsidiaries are accounted for by the parent using the equity
method of accounting. The guarantor and nonguarantor subsidiaries are presented
on a combined basis. The principal elimination entries eliminate investments in
subsidiaries and intercompany balances and transactions.
Separate financial statements for the guarantor subsidiaries and the
nonguarantor subsidiaries are not presented because management believes that
such financial statements would not be meaningful to investors.
F-47
<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-48
<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-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, 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-50
<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-51
<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-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, 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-53
<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-54
<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-55
<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-56
<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-57
<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-58
<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-59
<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-60
<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. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers
July 6, 1998
Paris, France
F-61
<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-62
<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-63
<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-64
<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-65
<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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management believes
that the estimates are reasonable.
Translation of Non-U.S. Currencies
All assets and liabilities recorded in functional currencies other than US
dollars are translated at current exchange rates. The resulting adjustments are
charged or credited directly to the equity section of the balance sheet.
Revenue and expenses are translated at the weighted-average exchange rates for
the period. All realized
F-66
<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-67
<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-68
<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-69
<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-70
<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-71
<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-72
<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-73
<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-74
<PAGE>
PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
Tokheim Corporation
10501 Corporate Drive
Fort Wayne, Indiana 46801
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
490 Lincoln Tower
Fort Wayne, Indiana 46802
LEGAL ADVISORS
To the Company
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
TRUSTEE, REGISTRAR, PRINCIPAL PAYING AND TRANSFER AGENT
U.S. Bank Trust National Association
100 Wall Street
16th Floor
New York, New York 10005
LISTING AGENT, PAYING AND TRANSFER AGENT
(if the Notes are listed on the Luxembourg Stock Exchange)
Bankers Trust Luxembourg S.A.
P.O. Box 807
14, Boulevard F.D. Roosevelt
L-2450 Luxembourg
PAYING AGENT AND COMMON DEPOSITARY
Midland Bank plc
Mariner House, Pepys Street
London, EC3N 4DA
<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.............................................................. 21
Debt Financing Risks...................................................... 21
Risks Associated with the Operation of the Business....................... 24
Government Regulation..................................................... 28
Risks Associated with the Exchange Offer.................................. 28
The Exchange Offer........................................................ 30
The Transactions.......................................................... 38
Sources and Uses of Funds................................................. 39
Capitalization............................................................ 40
Unaudited Pro Forma Consolidated Condensed Financial Statements........... 41
Selected Financial Data of Tokheim Corporation and Subsidiaries........... 47
Selected Financial Data of the RPS Division............................... 49
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 50
Business.................................................................. 59
Management................................................................ 72
Principal Shareholders.................................................... 74
Description of Certain Indebtedness....................................... 76
Description of the Schlumberger Warrants.................................. 78
Description of the Exchange Notes......................................... 79
Certain United States Federal Income Tax Considerations................... 112
Plan of Distribution...................................................... 117
Legal Matters............................................................. 117
Independent Accountants................................................... 118
General Listing Information............................................... 119
Where You Can Find More Information....................................... 120
Information Incorporated by Reference..................................... 120
Index to Financial Statements............................................. F-1
</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 (to be filed by amendment).
4.26 Euro Notes Indenture, dated as of January 29, 1999, among Tokheim
Corporation, BT Alex. Brown, Credit Lyonnais Securities, First
Chicago Capital Markets, Inc., Gleacher NatWest International, ABN
AMRO Incorporated, PaineWebber Incorporated, Schroder & Co. Inc.
and certain subsidiary guarantors of Tokheim Corporation (to be
filed by amendment).
4.27 Dollar Registration Rights Agreement, dated as of January 29,
1999, among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated,
Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim
Corporation (incorporated herein by reference to the Registrant's
Annual Report on Form 10-K, for the year ended September 30, 1998,
filed March 1, 1999).
4.28 Euro Registration Rights Agreement, dated as of January 29, 1999,
among Tokheim Corporation, BT Alex. Brown, Credit Lyonnais
Securities, First Chicago Capital Markets, Inc., Gleacher NatWest
International, ABN AMRO Incorporated, PaineWebber Incorporated,
Schroder & Co. Inc. and certain subsidiary guarantors of Tokheim
Corporation (incorporated herein by reference to the Registrant's
Annual Report on Form 10-K, for the year ended September 30, 1998,
filed March 1, 1999).
5.1 Opinion of Norman L. Roelke, Vice President, Secretary and General
Counsel of the Registrant.
10.1 Tokheim Corporation 1992 Stock Incentive Plan, established
December 15, 1992 (incorporated herein by reference to the
Registrant's Registration Statement on Form S-8, File No. 33-
52167, dated February 4, 1994).
</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.
</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 April 26, 1999.
Tokheim Corporation
/s/ Douglas K. Pinner
By: _________________________________
Name: Douglas K. Pinner
Title:Chairman, President and Chief
Executive Officer
Envirotronic Systems, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Gasboy International, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Management Solutions, Inc.
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Sunbelt Hose & Petroleum Equipment,
Inc.
/s/ Norman L. Roelke
By: ________________________________
Name: Norman L. Roelke
Title:Secretary
Tokheim Automation Corporation
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
Tokheim Equipment Corporation
/s/ Norman L. Roelke
By: _________________________________
Name: Norman L. Roelke
Title:Secretary
II-12
<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 3.3
-----------
ARTICLES OF INCORPORATION
-------------------------
OF
--
MONITEC CORPORATION
-------------------
The undersigned incorporator, desiring to form a corporation
(hereinafter referred to as the "Corporation") pursuant to the provisions of the
Indiana Business Corporation Law, as amended (hereinafter referred to as the
"Corporation Law"), executes the following Articles of Incorporation.
ARTICLE I
Name
The name of the Corporation is Monitec Corporation.
ARTICLE II
Purposes and Powers
Section 2.1 Purposes of the Corporation. The purposes for which the
----------- ---------------------------
Corporation is formed are (a) to engage in the general business of marketing
leak detectors for underground gasoline tanks and to carry on such activities of
every kind or nature as may be allied or incidental to such general business,
and (b) to engage in the transaction of any or all lawful business for which
corporations may now or hereafter be incorporated under the Corporation Law.
Section 2.2 Powers of the Corporation. The Corporation shall have
----------- -------------------------
(a) all powers now or hereafter authorized by or vested in corporations pursuant
to the provisions of the Corporation Law, (b) all powers now or hereafter vested
in corporations by common law or any other statute or act, and (c) all powers
authorized by or vested in the Corporation by the provisions of these Articles
of Incorporation or by the provisions of its By-Laws as from time to time in
effect.
ARTICLE III
<PAGE>
Term of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered office is Baker &
Daniels & Shoaff, 2400 Fort Wayne National Bank Building, Fort Wayne, Indiana
46802 and the name of its registered agent at such office is Lawrence E. Shine.
ARTICLE V
Shares
Section 5.1 Authorized Class and Number of Shares. The capital
----------- -------------------------------------
stock of the Corporation shall be of one class and kind, which may be referred
to as common shares. The total number of shares which the Corporation has
authority to issue shall be 1000 shares. The Corporation's shares do not have
any par or stated value, except that, solely for the purpose of any statute or
regulation of any jurisdiction imposing any tax or fee based upon the
capitalization of the Corporation, each of the Corporation's shares shall be
deemed to have a par value of $1.00 per share.
Section 5.2 Voting Rights of Shares. Except as otherwise provided
----------- -----------------------
by the Corporation Law and subject to such shareholder disclosure and
recognition procedures (which may include voting prohibition sanctions) as the
Corporation may by action of its Board of Directors establish, the Corporation's
shares have unlimited voting rights and each outstanding share shall, when
validly issued by the Corporation, entitle the record holder thereof to one vote
at all shareholders' meetings on all matters submitted to a vote of the
shareholders of the Corporation.
Section 5.3 Other Terms of Shares. The Corporation's shares shall
----------- ---------------------
be equal in every respect insofar as their relationship to the Corporation is
concerned (but such equality of rights shall not imply equality of treatment as
to redemption or other acquisition of shares by the Corporation). The holders
of shares shall be entitled to share ratably in such dividend or other
distributions (other than purchases, redemptions or other acquisitions of shares
by the Corporation), if any, as are declared and paid from time to time on the
shares at the discretion of the Board of
2
<PAGE>
Directors. In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of shares shall be
entitled to share, ratably according to the number of shares held by them, in
all remaining assets of the Corporation available for distribution to its
shareholders.
When the Corporation receives the consideration specified in a
subscription agreement entered into before incorporation, or for which the Board
of Directors authorized the issuance of shares, as the case may be, the shares
issued therefor shall be fully paid and nonassessable.
The Corporation shall have the power to declare and pay dividends or
other distributions upon the issued and outstanding shares of the Corporation,
subject to the limitation that a dividend or other distribution may not be made
if, after giving it effect, the Corporation would not be able to pay its debts
as they become due in the usual course of business or the Corporation's total
assets would be less than its total liabilities. The Corporation shall have the
power to issue shares as a share dividend or other distribution in respect of
issued and outstanding shares.
The Corporation shall have the power to acquire (by purchase,
redemption or otherwise), hold, own, pledge, sell, transfer, assign, reissue,
cancel or otherwise dispose of the shares of the Corporation in the manner and
to the extent now or hereafter permitted by the laws of the State of Indiana
(but such power shall not imply an obligation on the part of the owner or holder
of any share to sell or otherwise transfer such share to the Corporation),
including the power to purchase, redeem or otherwise acquire the Corporation's
own shares, directly or indirectly, and without pro rata treatment of the owners
or holders thereof, unless, after giving effect thereto, the Corporation would
not be able to pay its debts as they become due in the usual course of business
or the Corporation's total assets would be less than its total liabilities.
Shares of the Corporation purchased, redeemed or otherwise acquired by it shall
constitute authorized but unissued shares, unless the Board of Directors adopts
a resolution providing that such shares constitute authorized and issued but not
outstanding shares.
The Board of Directors of the Corporation may dispose of, issue and
sell shares in accordance with, and in such amounts as may be permitted by, the
laws of the State of Indiana and the provisions of these Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or
3
<PAGE>
approval by any shareholders of the Corporation. Shares may be disposed of,
issued and sold to such persons, firms or corporations as the Board of Directors
may determine, without any preemptive or other right on the part of the owners
or holders of other shares of the Corporation to acquire such shares by reason
of their ownership of such other shares.
ARTICLE VI
Directors
Section 6.1 Number. The initial Board of Directors shall be
----------- ------
comprised of three (3) members, which number may be changed by amendment to the
By-Laws.
Section 6.2 Qualifications. Directors need not be shareholders of
----------- --------------
the Corporation or residents of this or any other state in the United States.
Section 6.3 Vacancies. Vacancies occurring in the Board of
----------- ---------
Directors shall be filled in the manner provided in the By-Laws or, if the By-
Laws do not provide for the filling of vacancies, in the manner provided by the
Corporation Law. The By-Laws may also provide that in certain circumstances
specified therein, vacancies occurring in the Board of Directors may be filled
by vote of the shareholders at a special meeting called for that purpose or at
the next annual meeting of shareholders.
Section 6.4 Liability of Directors. A Director's responsibility to
----------- ----------------------
the Corporation shall be limited to discharging his or her duties as a Director,
including his duties as a member of any committee of the Board of Directors upon
which he or she may serve, in good faith, with the care an ordinarily prudent
person in a like position would exercise under similar circumstances, and in a
manner the Director reasonably believes to be in the best interests of the
Corporation, all based on the facts then known to the Director.
In discharging his or her duties, a Director is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
4
<PAGE>
(a) One (1) or more officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent in the
matters presented;
(b) Legal counsel, public accountants, or other persons as to
matters the Director reasonably believes are within such person's
professional or expert competence; or
(c) A committee of the Board of which the Director is not a
member if the Director reasonably believes the Committee merits confidence;
but a Director is not acting in good faith if the Director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
this Section 6.4 unwarranted. A Director may, in considering the best interests
-----------
of the Corporation, consider the effects of any action on shareholders,
employees, suppliers and customers of the Corporation, and communities in which
offices or other facilities of the Corporation are located, and any other
factors the Director considers pertinent.
A Director shall not be liable for any action taken as a Director, or
any failure to take any action, unless (a) the Director has breached or failed
to perform the duties of the Director's office in compliance with this Section
-------
6.4, and (b) the breach or failure to perform constitutes willful misconduct or
- ---
recklessness.
Section 6.5 Removal of Directors. Any one or more of the members
----------- --------------------
of the Board of Directors may be removed, with or without cause, only at a
meeting of the shareholders called expressly for that purpose, by the
affirmative vote of the holders of outstanding shares representing at least a
majority of all the votes then entitled to be cast at an election of Directors.
No Director may be removed except as provided in this Section 6.5.
-----------
ARTICLE VII
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 7.1 Meetings of Shareholders. Meetings of the shareholders
----------- ------------------------
of the Corporation shall be held at such time and at such place, either within
or without the State of Indiana, as may be stated in or fixed in accordance with
the By-
5
<PAGE>
Laws of the Corporation and specified in the respective notices or waivers of
notice of any such meetings.
Section 7.2 Special Meetings of Shareholders. Special meetings of
----------- --------------------------------
the shareholders, for any purpose or purposes, unless otherwise prescribed by
the Corporation Law, may be called at any time by the Board of Directors or the
person or persons authorized to do so by the By-Laws and shall be called by the
Board of Directors if the Secretary of the Corporation receives one (1) or more
written, dated and signed demands for a special meeting, describing in
reasonable detail the purpose or purposes for which it is to be held, from the
holders of shares representing at least twenty-five percent (25%) of all the
votes entitled to be cast on any issue proposed to be considered at the proposed
special meeting. If the Secretary receives one (1) or more proper written
demands for a special meeting of shareholders, the Board of Directors may set a
record date for determining shareholders entitled to make such demand.
Section 7.3 Meetings of Directors. Meetings of the Board of
----------- ---------------------
Directors of the Corporation shall be held at such place, either within or
without the State of Indiana, as may be authorized by the By-Laws and specified
in the respective notices or waivers of notice of any such meetings or
otherwise specified by the Board of Directors. Unless the By-Laws provide
otherwise (a) regular meetings of the Board of Directors may be held without
notice of the date, time, place, or purpose of the meeting and (b) the notice
for a special meeting need not describe the purpose or purposes of the special
meeting.
Section 7.4 Action Without Meeting. Any action required or
----------- ----------------------
permitted to be taken at any meeting of the Board of Directors or shareholders,
or of any committee of such Board, may be taken without a meeting, if the action
is taken by all members of the Board or all shareholders entitled to vote on the
action, or by all members of such committee, as the case may be. The action
must be evidenced by one (1) or more written consents describing the action
taken, signed by each Director, or all the shareholders entitled to vote on the
action, or by each member of such committee, as the case may be, and, in the
case of action by the Board of Directors or a committee thereof, included in the
minutes or filed with the corporate records reflecting the action taken or, in
the case of action by the shareholders, delivered to the Corporation for
inclusion in the minutes or filing with the corporate records. Action taken
under this Section 7.4 is effective when the last director, shareholder or
-----------
committee member, as the case may be, signs the consent, unless the consent
specifies a different prior or subsequent effective date, in which case the
6
<PAGE>
action is effective on or as of the specified date. Such consent shall have the
same effect as a unanimous vote of all members of the Board, or all
shareholders, or all members of the committee, as the case may be, and may be
described as such in any document.
Section 7.5 By-Laws. The Board of Directors shall have the
----------- -------
exclusive power to make, alter, amend or repeal, or to waive provisions of, the
By-Laws of the Corporation by the affirmative vote of a majority of the entire
number of Directors at the time, except as expressly provided by the Corporation
Law. Any provisions for the regulation of the business and management of the
affairs of the Corporation not stated in these Articles of Incorporation may be
stated in the By-Laws. The Board of Directors may adopt Emergency By-Laws of
the Corporation and shall have the exclusive power (except as may otherwise be
provided therein) to make, alter, amend or repeal, or to waive provisions of,
the Emergency By-Laws by the affirmative vote of a majority of the entire number
of Directors at such time.
Section 7.6 Interest of Directors.
----------- ---------------------
(a) A conflict of interest transaction is a transaction with
the Corporation in which a Director of the Corporation has a direct or
indirect interest. A conflict of interest transaction is not voidable
by the Corporation solely because of the Director's interest in the
transaction if any one (1) of the following is true:
(1) The material facts of the transaction and the
Director's interest were disclosed or known to the Board of Directors or a
committee of the Board of Directors and the Board of Directors or
committee authorized, approved, or ratified the transaction.
(2) The material facts of the transaction and the
Director's interest were disclosed or known to the shareholders entitled to
vote and they authorized, approved, or ratified the transaction.
(3) The transaction was fair to the Corporation.
(b) For purposes of this Section 7.6, a Director of the
-----------
Corporation has an indirect interest in a transaction if:
7
<PAGE>
(1) Another entity in which the Director has a material financial
interest or in which the Director is a general partner is a party to the
transaction; or
(2) Another entity of which the Director is a director, officer,
or trustee is a party to the transaction and the transaction is, or is
required to be, considered by the Board of Directors of the Corporation.
(c) For purposes of Section 7.6(a)(1), a conflict of interest
-----------------
transaction is authorized, approved, or ratified if it receives the
affirmative vote of a majority of the Directors on the Board of Directors
(or on the committee) who have no direct or indirect interest in the
transaction, but a transaction may not be authorized, approved, or ratified
under this section by a single Director. If a majority of the Directors who
have no direct or indirect interest in the transaction vote to authorize,
approve, or ratify the transaction, a quorum shall be deemed present for
the purpose of taking action under this Section 7.6. The presence of, or a
-----------
vote cast by, a Director with a direct or indirect interest in the
transaction does not affect the validity of any action taken under Section
-------
7.6(a)(1), if the transaction is otherwise authorized, approved, or
---------
ratified as provided in such subsection.
(d) For purposes of Section 7.6(a)(2), shares owned by or voted
-----------------
under the control of a Director who has a direct or indirect interest in
the transaction, and shares owned by or voted under the control of an
entity described in Section 7.6(b), may be counted in such a vote of
--------------
shareholders to determine whether to authorize, approve or ratify a
conflict of interest transaction.
Section 7.7 Nonliability of Shareholders. Shareholders of the
----------- ----------------------------
Corporation are not personally liable for the acts or debts of the Corporation,
nor is private property of shareholders subject to the payment of corporate
debts.
Section 7.8 Indemnification of Officers, Directors and Other
----------- ------------------------------------------------
Eligible Persons.
- ----------------
8
<PAGE>
(a) To the extent not inconsistent with applicable law, every
Eligible Person shall be indemnified by the Corporation against all
Liability and reasonable Expense that may be incurred by him or her in
connection with or resulting from any Claim, (i) if such Eligible Person is
Wholly Successful with respect to the Claim, or (ii) if not Wholly
Successful, then if such Eligible Person is determined, as provided in
either Section 7.8(f) or 7.8(g), to have acted in good faith, in what he or
she reasonably believed to be the best interests of the Corporation or at
least not opposed to its best interests and, in addition, with respect to
any criminal claim is determined to have had reasonable cause to believe
that his or her conduct was lawful or had no reasonable cause to believe
that his or her conduct was unlawful. The termination of any Claim, by
judgment, order, settlement (whether with or without court approval), or
conviction or upon a plea of guilty or of nolo contendere, or its
---- ----------
equivalent, shall not create a presumption that an Eligible Person did not
meet the standards of conduct set forth in clause (ii) of this subsection
(a). The actions of an Eligible Person with respect to an employee benefit
plan subject to the Employee Retirement Income Security Act of 1974 shall
be deemed to have been taken in what the Eligible Person reasonably
believed to be the best interests of the Corporation or at least not
opposed to its best interests if the Eligible Person reasonably believed he
or she was acting in conformity with the requirements of such Act or he or
she reasonably believed his or her actions to be in the interests of the
participants in or beneficiaries of the plan.
(b) The term "Claim" as used in this Section 7.8 shall include
-----------
every pending, threatened or completed claim, action, suit or proceeding
and all appeals thereof (whether brought by or in the right of this
Corporation or any other corporation or otherwise), civil, criminal,
administrative or investigative, formal or informal, in which an Eligible
Person may become involved, as a party or otherwise;
(i) by reason of his or her being or having been an Eligible
Person, or
(ii) by reason of any action taken or not taken by him or her
in his or her capacity as a Eligible Person,
9
<PAGE>
whether or not he or she continued in such capacity at the time such
Liability or Expense shall have been incurred.
(c) The term "Eligible Person" as used in this Section 7.8 shall
-----------
mean every person (and the estate, heirs and personal representatives
of such person) who is or was a Director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, agent or fiduciary of
another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other organization or entity, whether
for profit or not. An Eligible Person shall also be considered to have
been serving an employee benefit plan at the request of the
Corporation if his or her duties to the Corporation also imposed
duties on, or otherwise involved services by, him or her to the plan
or to participants in or beneficiaries of the plan.
(d) The terms "Liability" and "Expense" as used in this Section
-------
7.8 shall include, but shall not be limited to, counsel fees and
---
disbursements and amounts of judgments, fines or penalties against
(including excise taxes assessed with respect to an employee benefit
plan), and amounts paid in settlement by or on behalf of, an Eligible
Person.
(e) The term "Wholly Successful" as used in this Section 7.8
-----------
shall mean (i) termination of any Claim against the Eligible Person in
question without any finding of liability or guilt against him, (ii)
approval by a court or agency, with knowledge of the indemnity herein
provided, or a settlement of any Claim, or (iii) the expiration of a
reasonable period of time after the threatened making of any Claim
without commencement of an action, suit or proceeding and without any
payment or promise made to induce a settlement.
(f) Every Eligible Person claiming indemnification hereunder
(other than one who has been Wholly Successful with respect to any
Claim) shall be entitled to indemnification (i) if special independent
legal counsel, which may be regular counsel of the Corporation or
other disinterested person or persons, in either case selected by the
Board of Directors, whether or not a disinterested quorum exists (such
counsel or person or persons being hereinafter called the "Referee"),
10
<PAGE>
shall deliver to the Corporation a written finding that such Eligible
Person has met the standards of conduct set forth in Section
-------
7.8(a)(ii), and (ii) if the Board of Directors, acting upon such
----------
written finding, so determines. The Board of Directors shall, if an
Eligible Person is found to be entitled to indemnification pursuant to
the preceding sentence, also determine the reasonableness of the
Eligible Person's Expenses. The Eligible Person claiming
indemnification shall, if requested, appear before the Referee, answer
questions that the Referee deems relevant and shall be given ample
opportunity to present to the Referee evidence upon which he or she
relies for indemnification. The Corporation shall, at the request of
the Referee, make available facts, opinions or other evidence in any
way relevant to the Referee's finding that are within the possession
or control of the Corporation.
(g) If an Eligible Person claiming indemnification pursuant to
Section 7.8(f) is found not to be entitled thereto, or if the Board of
--------------
Directors fails to select a Referee under Section 7.8(f) within a
--------------
reasonable amount of time following a written request of an Eligible
Person for the selection of a Referee, or if the Referee or the Board
of Directors fails to make a determination under Section 7.8f) within
a reasonable amount of time following the selection of a Referee, the
Eligible Person may apply for indemnification with respect to a Claim
to a court of competent jurisdiction, including a court in which the
Claim is pending against the Eligible Person. On receipt of an
application, the court, after giving notice to the Corporation and
giving the Corporation ample opportunity to present to the court any
information or evidence relating to the claim for indemnification that
the Corporation deems appropriate, may order indemnification if it
determines that the Eligible Person is entitled to indemnification
with respect to the Claim because such Eligible Person met the
standards of conduct set forth in Section 7.8(a)(ii). If the court
------------------
determines that the Eligible Person is entitled to indemnification,
the court shall also determine the reasonableness of the Eligible
Person's Expenses.
(h) The rights of indemnification provided in this Section 7.8
-----------
shall be in addition to any rights to which any Eligible Person may
otherwise be entitled. Irrespective of the provisions of this Section
--------
7.8, the Board of Directors may, at any time and from time to time,
---
(i) approve indemnification of any Eligible Person to the full extent
11
<PAGE>
permitted by the provisions of applicable law at the time in effect,
whether on account of past or future transactions, and (ii) authorize the
Corporation to purchase and maintain insurance on behalf of any Eligible
Person against any Liability asserted against him or any Liability or
Expense incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power
to indemnify him against such Liability or Expense.
(i) Expenses incurred by an Eligible Person with respect to any
Claim, may be advanced by the Corporation (by action of the Board of
Directors, whether or not a disinterested quorum exists) prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
Eligible Person to repay such amount if he or she is determined not to be
entitled to indemnification.
(j) The provisions of this Section 7.8 shall be deemed to be a
-----------
contract between the Corporation and each Eligible Person, and an Eligible
Person's rights hereunder shall not be diminished or otherwise adversely
affected by any repeal, amendment or modification of this Section 7.8
-----------
that occurs subsequent to such person becoming an Eligible Person.
(k) The provisions of this Section 7.8 shall be applicable to
-----------
Claims made or commenced after the adoption hereof, whether arising from
acts or omissions to act occurring before or after the adoption hereof.
ARTICLE VII
Initial Board of Directors
The name and post office address of the members of the first Board of
Directors of the Corporation are as follows:
<TABLE>
<CAPTION>
Number and Street City, State
Name or Building Zip Code
- -------------------------------- ----------------------------- -----------------------
- ------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
John E. Overmyer P.O. Box 360 Fort Wayne, IN
10501 Corporate Dr. 46801
Norman D. Hottman P.O. Box 360 Fort Wayne, IN
10501 Corporate Dr. 46801
James H. Gavin P.O. Box 360 Fort Wayne, IN
10501 Corporate Dr. 46801
</TABLE>
ARTICLE IX
Incorporator
The name and post office address of the incorporator of the
Corporation is as follows:
<TABLE>
<CAPTION>
Number and Street City, State
Name or Building Zip Code
- -------------------------------- ----------------------------- -----------------------
<S> <C> <C>
Lawrence E. Shine 2400 Fort Wayne Fort Wayne, IN
National Bank Bldg. 46802
</TABLE>
ARTICLE X
Miscellaneous Provisions
Section 10. Amendment or Repeal. Except as otherwise expressly
----------- -------------------
provided for in these Articles of Incorporation, the Corporation shall be
deemed, for all purposes, to have reserved the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation to the
extent and in the manner now or hereafter permitted or prescribed by statute,
and all rights herein conferred upon shareholders are granted subject to such
reservation.
Section 10.2 Headings. The headings of the Articles and Sections of
------------ --------
these Articles of Incorporation have been inserted for convenience of reference
only and do not in any way define, limit, construe or describe the scope or
intent of any Article or Section hereof.
13
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the incorporator designated
in Article IX, executes these Articles of Incorporation this 26/th/ day of
October, 1988.
/s/ Lawrence E. Shine
---------------------
Lawrence E. Shine
This instrument was prepared by Lawrence E. Shine, attorney at law,
Baker & Daniels & Shoaff, 2400 Fort Wayne National Bank Building, Fort Wayne,
Indiana 46802.
14
<PAGE>
Exhibit 3.4
-----------
<TABLE>
<S> <C>
ARTICLES OF AMENDMENT OF THE Provided by EVAN BAYH
ARTICLES OF INCORPORATION Secretary of State
State Form 38333 (R3 / 1-88) Room 155 State House
"Approved by State Board of Accounts, (Revised) 1988" Indianapolis, Indiana 46204
INSTRUCTIONS: Use 8 1/2 x 11 inch white paper for in (317) 232-6576
serts. Filing requirements - Present Indiana Code 23-1-38-1 et seq.
original and one copy to address in
upper right corner of this form. FILING FEE $30.00
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF:
- -----------------------------------------------------------------------------------------------------
MONITEC CORPORATION
- -----------------------------------------------------------------------------------------------------
The undersigned officers of
Monitec Corporation
- -----------------------------------------------------------------------------------------------------
(hereinafter referred to as the "Corporation") existing pursuant to the provisions of:
(Indicate appropriate act)
[X] Indiana Business Corporation Law [ ] Indiana Professional Corporation Act of 1983
as amended (hereinafter referred to as the "Act"), desiring to give notice of corporate action effectuating amendment of
certain provisions of its Articles of Incorporation, certify the following facts:
- -----------------------------------------------------------------------------------------------------
ARTICLE 1 Amendment(s)
- -----------------------------------------------------------------------------------------------------
SECTION 1 The date of incorporation of the corporation is:
October 28, 1988
- -----------------------------------------------------------------------------------------------------
SECTION 2 The name of the corporation following this amendment to the Articles of Incorporation is:
Envirotronic Systems, Inc.
- -----------------------------------------------------------------------------------------------------
SECTION 3
l
The exact text to Article(s)___________________________ of the Articles of Incorporation is now as follows:
ARTICLE I
Name
The name of the Corporation is Envirotronic Systems, Inc.
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 3.5
-----------
BY-LAWS
OF
ENVIROTRONIC SYSTEMS, INC.
ARTICLE I
Meetings of Shareholders
------------------------
Section 1.1 Annual Meetings. Annual meetings of the shareholders of
----------- ---------------
the Corporation shall be held on such date between January 1/st/ and May 1/st/
of each year as the Board of Directors shall determine, beginning in the year
1989, at such hour and at such place within or without the State of Indiana as
shall be designated by the Board of Directors. In the absence of designation,
the meeting shall be held on the date established hereby at the principal office
of the Corporation at 11:00 a.m., local time. The Board of Directors may, by
resolution, change the date or time of such annual meeting. If the day fixed
for any annual meeting of shareholders shall fall on a legal holiday, then such
annual meeting shall be held on the first following day that is not a legal
holiday.
Section 1.2 Special Meetings. Special meetings of the shareholders
----------- ----------------
of the Corporation may be called at any time by the Board of Directors or the
Chairman of the Board and shall be called by the Board of Directors if the
Secretary receives written, dated and signed demands for a special meeting,
describing in reasonable detail the purpose or purposes for which it is to be
held, from the holders of shares representing at least twenty-five percent (25%)
of all votes entitled to be cast on any issue proposed to be considered at the
proposed special meeting. If the Secretary receives one (1) or more proper
written demands for a special meeting of shareholders, the Boards of Directors
may set a record date for determining shareholders entitled to make such demand.
The Board of Directors or the Chairman of the Board, as the case may be, calling
a special meeting of shareholders shall set the date, time and place of such
meeting, which may be held within or without the State of Indiana.
Section 1.3 Notices. A written notice, stating the date, time and
----------- -------
place of any meeting of the shareholders, and in the case of a special meeting
the
<PAGE>
purpose or purposes for which such meeting is called, shall be delivered or
mailed by the Secretary of the Corporation, to each shareholder of record of the
Corporation entitled to notice of or to vote at such meeting not less than ten
(10) nor more than sixty (60) days before the date of the meeting. In the event
of a special meeting of shareholders required to be called as the result of a
demand therefor made by shareholders, such notice shall be given no later than
the sixtieth (60/th/) day after the Corporation's receipt of the demand
requiring the meeting to be called. Notice of shareholders' meetings, if mailed,
shall be mailed, postage prepaid, to each shareholder at his or her address
shown in the Corporation's current record of shareholders.
A shareholder or his or her proxy may at any time waive notice of a
meeting if the waiver is in writing and is delivered to the Corporation for
inclusion in the minutes or filing with the Corporation's records. A
shareholder's attendance at a meeting, whether in person or by proxy, (a) waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder or his or her proxy at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting, and (b) waives
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
shareholder or his or her proxy objects to considering the matter when it is
presented. Each shareholder who has in the manner above provided waived notice
or objection to notice of a shareholders' meeting shall be conclusively presumed
to have been given due notice of such meeting, including the purpose or purposes
thereof.
If an annual or special shareholders' meeting is adjourned to a
difference date, time or place, notice need not be given of the new date, time
or place if the new date, time or place is announced at the meeting before
adjournment, unless a new record date is or must be established for the
adjourned meeting.
Section 1.4 Voting. Except as otherwise provided by the Indiana
----------- ------
Business Corporation Law of the Corporation's Articles of Incorporation, each
share of the capital stock of any class of the Corporation that is outstanding
at the record date established for any annual or special meeting of shareholders
and is outstanding at the time of and represented in person or by proxy at the
annual or special meeting, shall entitle the record holder thereof, or his or
her proxy, to one (1) vote on each matter voted on at the meeting.
Section 1.5 Quorum. Unless the Corporation's Articles of
----------- ------
Incorporation or the Indiana Business Corporation Law provide otherwise, at all
meetings of shareholders holders a majority of the votes entitled to be cast on
a matter, repre-
2
<PAGE>
sented in person or by proxy, constitutes a quorum for action on the matter.
Action may be taken at a shareholders' meeting only on matters with respect to
which a quorum exists; provided, however, that any meeting of shareholders,
including annual and special meetings and any adjournments thereof, may be
adjourned to a later date although less than a quorum is present. Once a share
is represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
Section 1.6 Vote Required to Take Action. if a quorum exists as to a
----------- ----------------------------
matter to be considered at a meeting of shareholders, action on such matter
(other than the election of Directors) is approved if the votes properly cast
favoring the action exceed the votes properly cast opposing the action, except
as the Corporation's Articles of Incorporation or the Indiana Business
Corporation Law require a greater number of affirmative votes. Directors shall
be elected by a plurality of the votes properly cast.
Section 1.7 Record Date. Only those persons shall be entitled to
----------- -----------
notice of or to vote, in person or by proxy, at any shareholders' meeting who
appear as shareholders upon the books of the Corporation as of the record date
for such meeting set by the Board of Directors, which date may not be earlier
than the date seventy (70) days immediately preceding the meeting. In the
absence of such determination, the record date shall be the thirtieth (30/th/)
day immediately preceding the date of such meeting. Unless otherwise provided
by the Board of Directors, shareholders shall be determined as of the close of
business on the record date.
Section 1.8 Proxies. A shareholder may vote his or her shares either
----------- -------
in person or by proxy. A shareholder may appoint a proxy to vote or otherwise
act for the shareholder (including authorizing the proxy to receive, or to
waive, notice of any shareholders' meetings within the effective period of such
proxy) by signing an appointment form, either personally or by the shareholder's
attorney-in-fact. An appointment of a proxy is effective when received by the
Secretary or other officer or agent authorized to tabulate votes and is
effective for eleven (11) months unless a shorter or longer period is expressly
provided in the appointment form. The proxy's authority may be limited to a
particular meeting or may be general and authorize the proxy to represent the
shareholder at any meeting of shareholders held within the time provided in the
appointment form. Subject to the Indiana Business Corporation Law and to any
express limitation on the proxy's authority appearing on the face of the
appointment form, the Corporation is entitled to accept the proxy's vote or
other action as that of the shareholder making the appointment.
3
<PAGE>
Section 1.9 Removal of Directors. Any one or more of the members of
----------- --------------------
the Board of Directors may be removed, with or without cause, only at a meeting
of the shareholders called expressly for that purpose, by a vote of the holders
of shares representing a majority of the votes then entitled to be cast at an
election of Directors.
Section 1.1 Written Consents. Any action required or permitted to be
----------- ----------------
taken at a shareholders' meeting may be taken without a meeting if the action is
taken by all the shareholders entitled to vote on the action. The action must
be evidenced by one (1) or more written consents describing the action taken,
signed by all the shareholders entitled to vote on the action, and delivered to
the Corporation for inclusion in the minutes or filing with the corporate
records. Action taken under this Section 1.10 is effective when the last
shareholder signs the consent, unless the consent specifies a different prior or
subsequent effective date, in which case the action is effective on or as of the
specified date. Such consent shall have the same effect as a unanimous vote of
all shareholders and may be described as such in any document.
Section 1.1 Participation by Conference Telephone. The President may
----------- -------------------------------------
authorize any or all shareholders to participate in any shareholders' meeting
by, or through the use of, any means of communication, such as conference
telephone, by which all shareholders participating may simultaneously hear each
other during the meeting. Any shareholder participating in a meeting by such
means is deemed to be present in person for all purposes at the meeting.
ARTICLE II
Directors
---------
Section 2.1 Number and Term The business and affairs of the
----------- ---------------
Corporation shall be managed under the direction of a Board of Directors. The
number of Directors comprising the Board of Directors is four.
Each Director shall be elected for a term of office to expire at the
annual meeting of shareholders next following his or her election. Despite the
expiration of a Director's term, the Director shall continue to serve until his
or her successor is elected and qualified, or until the earlier of his or her
death, resignation, disqualification or removal, or until there is a decrease in
the number of Directors by action of the Board of Directors. Any vacancy
occurring in the Board of Directors,
4
<PAGE>
from whatever cause arising, shall be filled by selection of a successor by a
majority vote of the remaining members of the Board of Directors (although less
than a quorum); provided, however, that if such vacancy or vacancies leave the
Board of Directors with no members or if the remaining members of the Board are
unable to agree upon a successor or determine not to select a successor, such
vacancy may be filled by a vote of the shareholders at a special meeting called
for that purpose or at the next annual meeting of shareholders. The term of a
Director elected or selected to fill a vacancy shall expire at the end of the
term for which such Director's predecessor was elected.
The Directors and each of them shall have no authority to bind the
Corporation except when acting as a Board.
Section 2.2 Quorum and Vote Required to Take Action. A majority of
----------- ---------------------------------------
the whole Board of Directors shall be necessary to constitute a quorum for the
transaction of any business, except the filling of vacancies. If a quorum is
present when a vote is taken, the affirmative vote of a majority of the
Directors present shall be the act of the Board of Directors, unless the act of
a greater number is required by the Indiana Business Corporation Law, the
Corporation's Articles of Incorporation or these By-Laws.
Section 2.3 Annual and Regular Meetings. The Board of Directors
----------- ---------------------------
shall meet annually, without notice, immediately following the annual meeting of
the shareholders, for the purpose of transacting such business as properly may
come before the meeting. Other regular meetings of the Board of Directors, in
addition to said annual meeting, shall be held on such dates, at such times and
at such places as shall be fixed by resolution adopted by the Board of Directors
and specified in a notice of each such regular meeting, or otherwise
communicated to the Directors. The Board of Directors may at any time alter the
date for the next regular meeting of the Board of Directors.
Section 2.4 Special Meetings. Special meetings of the Board of
----------- ----------------
Directors may be called by any member of the Board of Directors upon not less
than twenty-four (24) hours' notice given to each Director of the date, time and
place of the meeting, which notice need not specify the purpose or purposes of
the special meeting. Such notice may be communicated in person (either in
writing or orally), by telephone, telegraph, teletype or other form of wire or
wireless communication, or by mail, and shall be effective at the earlier of the
time of its receipt or, if mailed, five (5) days after its mailing. Notice of
any meeting of the Board may be waived in writing at any time if the waiver is
signed by the Director entitled to the notice and is
5
<PAGE>
filed with the minutes or corporate records. A Director's attendance at or
participation in a meeting waives any required notice to the Director of the
meeting, unless the Director at the beginning of the meeting (or promptly upon
the Director's arrival) objects to holding the meeting or transacting business
at the meeting and does not thereafter vote for or assent to action taken at the
meeting.
Section 2.5 Written Consents. Any action required or permitted to be
----------- ----------------
taken at any meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members of the Board. The action must be evidenced
by one (1) or more written consents describing the action taken, signed by each
Director, and included in the minutes or filed with the corporate records
reflecting the action taken. Action taken under this Section 2.5 is effective
-----------
when the last Director signs the consent, unless the consent specifies a
different prior or subsequent effective date, in which cases the action is
effective on or as of the specified date. A consent signed under this Section
-------
2.5 shall have the same effect as a unanimous vote of all members of the board
- ---
and may be described as such in any document.
Section 2.6 Participation by Conference Telephone. The Board of
----------- -------------------------------------
Directors may permit any or all Directors to participate in a regular or special
meeting by, or through the use of, any means of communication, such as
conference telephone, by which all Directors participating may simultaneously
hear each other during the meeting. A Director participating in a meeting by
such means shall be deemed to be present in person at the meeting.
Section 2.7 Committees. (a) The Board of Directors may create one
----------- ----------
(1) or more committees and appoint members of the Board of Directors to serve on
them, by resolution of the Board of Directors adopted by a majority of all the
Directors in office when the resolution is adopted. Each committee may have one
(1) or more members, and all the members of a committee shall serve at the
pleasure of the Board of Directors.
(b) to the extent specified by the Board of Directors in the
resolution creating a committee, each committee may exercise all of the
authority of the Board of Directors; provided, however, that a committee may
not:
(1) authorize dividends or other distributions, except a
committee (or an executive officer of the Corporation designated by the
Board of Director) may authorize or approve a reacquisition of shares or
other distribution if done according to a
6
<PAGE>
formula or method, or within a range, prescribed by the Board of Directors;
(2) approve or propose to shareholders action that is required to
be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its
committees;
(4) except to the extent permitted by subdivision (7), amend the
Corporation's Articles of Incorporation under IC 23-1-38-2;
(5) adopt, amend, repeal, or waive provisions of these By-Laws;
(6) approve a plan of merger not requiring shareholder approval;
or
(7) authorize or approve the issuance or sale or a contract for
sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except the
Board of Directors may authorize a committee (or an executive officer of
the Corporation designated by the Board of Directors) to take action
described in this subdivision within limits prescribed by the Board of
Directors.
(c) Except to the extent inconsistent with the resolutions creating a
committee, Sections 2.1 through 2.6 of these By-Laws, which govern meetings,
action without meetings, notice and waiver of notice, quorum and voting
requirements and telephone participation in meetings of the Board of Directors,
apply to each committee and its members as well.
Section 2.8 Compensation. The Board of Directors may fix the
----------- ------------
compensation of Directors.
7
<PAGE>
ARTICLE III
Officers
--------
Section 3.1 Designation, Selection and Terms. The officers of the
----------- --------------------------------
Corporation shall consist of the President, the Secretary and the Treasurer.
The Board of Directors may also elect such Vice Presidents, Assistant
Secretaries, Assistant Treasurers, and other officers or assistant officers as
it may from time to time determine by resolution creating the office and
defining the duties thereof. In addition, the President may, by a certificate
of appointment creating the office and defining the duties thereof delivered to
the Secretary for inclusion with the corporate records, from time to time create
and appoint such assistant officers as the President deems desirable. The
officers of the Corporation shall be elected by the Board of Directors (or in
the case of assistant officers appointed by the President as provided above) and
need not be selected from among the members of the Board of Directors. Any two
(2) or more offices may be held by the same person. All officers shall serve at
the pleasure of the Board of Directors and, with respect to the assistant
officers appointed by the President, also at the pleasure of such officer. The
election or appointment of an officer does not itself create contract rights.
Section 3.2 Removal. The Board of Directors may remove any officer
----------- -------
at any time with or without cause. An assistant officer appointed by the
President may also be removed at any time, with or without cause, by such
officer. Vacancies in such offices, however occurring, may be filled by the
Board of Directors at any meeting of the Board of Directors (or by appointment
by the President, to the extent provided in Section 3.1 of these By-Laws).
-----------
Section 3.3 President. The President shall exercise the powers and
----------- ---------
perform the duties which ordinarily appertain to that office and shall manage
and operate the business and affairs of the Corporation in conformity with the
policies established by the Board of Directors, or as may be provided for in
these By-Laws.
Section 3.4 Vice Presidents. Each Vice President, if any, shall have
----------- ---------------
such powers and perform such duties as the Board of Directors may, from time to
time, prescribe and as the President may, from time to time, delegate to him or
her.
Section 3.5 Treasurer. The Treasurer shall perform all of the duties
----------- ---------
customary to that office, including the duty of supervising the keeping of the
records of the receipts and disbursements of the Corporation. The Treasurer
shall submit to the Board of Directors at such times as the Board may require
full statements
8
<PAGE>
showing in detail the financial condition and affairs of the Corporation. The
Treasurer shall submit to the Board of Directors at such times as the Board may
require full statements showing in detail the financial condition and affairs of
the Corporation.
Section 3.6 Assistant Treasurer. In the absence or inability of the
----------- -------------------
Treasurer, the Assistant Treasurer, if any, shall perform only such duties as
are specifically assigned to him or her, in writing, by the Board of Directors,
the President, or the Treasurer.
Section 3.7 Secretary. The Secretary shall be the custodian of the
----------- ---------
books, papers and records of the Corporation and of its corporate seal, if any,
and shall be responsible for seeing that the Corporation maintains the records
required by the Indiana Business Corporation Law (other than accounting records)
and that the Corporation files with the Indiana Secretary of State the annual
report required by the Indiana Business Corporation Law. The Secretary shall be
responsible for preparing minutes of the meetings of the shareholders and of the
Board of Directors and for authenticating records of the Corporation, and shall
perform all of the other duties usual in the office of Secretary of a
corporation.
Section 3.8 Assistant Secretary. In the absence or inability of the
----------- -------------------
Secretary, the Assistant Secretary, if any, shall perform only such duties as
are provided herein or specifically assigned to him or her, in writing, by the
Board of Directors, the President or the Secretary.
Section 3.9 Salary. The Board of Directors may, at its discretion,
----------- ------
from time to time, fix the salary of any officer by resolution included in the
minute book of the Corporation.
ARTICLE IV
Checks
------
All checks, drafts or other orders for payment of money shall be
signed in the name of the Corporation by such officers or persons as shall be
designated from time to time by resolution adopted by the Board of Directors and
included in the minute book of the Corporation; and in the absence of such
designation, such checks, drafts or other orders for payment shall be signed by
either the President or the Treasurer.
9
<PAGE>
ARTICLE V
Loans
-----
Such of the officers of the Corporation as shall be designated from
time to time by any resolution adopted by the Board of Directors and included in
the minute book, and in the absence of any such designation, the President of
the Corporation shall have the power, with such limitations thereon as may be
fixed by the Board of Directors, to borrow money in the Corporation's behalf, to
establish credit, to discount bills and papers, to pledge collateral and to
execute such notes, bonds, debentures or other evidences of indebtedness, and
such mortgages, trust indentures and other instruments in connection therewith,
as may be authorized from time to time by such Board of Directors.
ARTICLE VI
Execution of Documents
----------------------
The President may, in the Corporation's name, sign all deeds, leases,
contracts or similar documents that may be authorized by the Board of Directors
unless otherwise directed by the Board of Directors or otherwise provided herein
or in the Corporation's Articles of Incorporation, or as otherwise required by
law.
ARTICLE VII
Stock
-----
Section 7.1 Execution. Certificates for shares of the capital stock
----------- ---------
of the Corporation shall be signed by the President and the Secretary and the
seal of the Corporation (or a facsimile thereof), if any, may be thereto
affixed. Where any such certificate is also signed by a transfer agent or a
registrar, or both, the signatures of the officers of the Corporation may be
facsimiles. The Corporation may issue and deliver any such certificate
notwithstanding that any such officer who shall have signed, or whose facsimile
signature shall have been imprinted on, such certificate shall have ceased to be
such officer.
Section 7.2 Contents. Each certificate shall state on its face the
----------- --------
name of the Corporation and that it is organized under the laws of the State of
Indiana, the name of the person to whom it is issued, the number and class of
shares
10
<PAGE>
that the certificate represents and such other information as may be required
from time to time by resolution of the Board of Directors.
Section 7.3 Transfers. Except as otherwise provided by law or by
----------- ---------
resolution of the Board of Directors, transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof in person or by duly authorized attorney, on payment of all taxes
thereon and surrender for cancellation of the certificate or certificates for
such shares (except as hereinafter provided in the case of loss, destruction or
mutilation of certificates) properly endorsed by the holder thereof or
accompanied by the proper evidence of succession, assignment or authority to
transfer, and delivered to the Secretary or Assistant Secretary, if any.
Section 7.4 Stock Transfer Records. There shall be entered upon the
----------- ----------------------
stock records of the Corporation the number of each certificate issued, the name
and address of the registered holder of such certificate, the number, kind and
class of shares represented by such certificate, the date of issue, whether the
shares are originally issued or transferred, the registered holder from whom
transferred and such other information as is commonly required to be shown by
such records. The stock records of the Corporation shall be kept at its
principal office.
Section 7.5 Loss, Destruction or Mutilation of Certificates. The
----------- -----------------------------------------------
holder of any of the capital stock of the Corporation shall immediately notify
the Corporation of any loss, destruction or mutilation of the certificate
therefor, and the Board of Directors may, in its discretion, cause to be issued
to him a new certificate or certificates of stock, upon the surrender of the
mutilated certificate, or, in the case of loss or destruction, upon satisfactory
proof of such loss or destruction. The Board of Directors may, in its
discretion, require the holder of the lost or destroyed certificate or his or
her legal representative to give the Corporation a bond in such sum and in such
form, and with such surety or sureties as it may direct, to indemnify the
Corporation, its transfer agents and registrars, if any, against any claim that
may be made against them or any of them with respect to the capital stock
represented by the certificate or certificates alleged to have been lost or
destroyed, but the Board of Directors may, in its discretion, refuse to issue a
new certificate or certificates, save upon the order of a court having
jurisdiction in such matters.
Section 7.6 Form of Certificates. The form of the certificates for
----------- --------------------
shares of the capital stock of the Corporation shall conform to the requirements
of Section 7.2 of these By-Laws and be in such printed form as shall from time
-----------
to time be approved by resolution of the Board of Directors.
11
<PAGE>
ARTICLE VII
Seal
----
The corporate seal of the Corporation shall, if the Corporation elects
to have one, be in the form of a disc, with the name of the Corporation and
"INDIANA" on the periphery thereof and the word "SEAL" in the center.
ARTICLE IX
Miscellaneous
-------------
Section 9.1 Indiana Business Corporation Law. The provisions of the
----------- --------------------------------
Indiana Business Corporation Law, as amended, applicable to all matters relevant
to, but not specifically covered by, these By-Laws are hereby, by reference,
incorporated in and made a part of these By-Laws.
Section 9.2 Fiscal year. The fiscal year of the Corporation shall
----------- -----------
end on the 30/th/ of November of each year.
Section 9.3 Amendments. These By-Laws may be rescinded, changed or
----------- ----------
amended, and provisions hereof may be waived, at any meeting of the Board of
Directors by the affirmative vote of a majority of the entire number of
Directors at the time, except as otherwise required by the Corporation's
Articles of Incorporation or by the Indiana Business Corporation Law.
Section 9.4 Definition of Articles of Incorporation. The term
----------- ---------------------------------------
"Articles of Incorporation" as used in these By-Laws means the Articles of
Incorporation, the Amended or Restated Articles of Incorporation of the
Corporation as from time to time are in effect.
12
<PAGE>
Exhibit 3.6
-----------
ARTICLES OF AMENDMENT
---------------------
TO THE DEPARTMENT OF STATE
COMMONWEALTH OF PENNSYLVANIA
In compliance with the requirements of Article VIII of the Business
Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended,
providing for amendments to the Articles of Incorporation of Pennsylvania
corporations, WILLIAM M. WILSON'S SONS, INC., desiring to amend its Articles of
Incorporation, hereby certifies under its corporate seal that:
1. The name of the corporation is WILLIAM M. WILSON'S SONS, INC.
2. The location of the corporation's registered office is 8/th/
Street and Franconia Avenue, Lansdale, Montgomery County, Pennsylvania.
3. The corporation was formed under the Act of May 5, 1933, P.L.
364, as amended.
4. The date of incorporation is July 30, 1945.
5. The following Amendments to the corporation's Articles of
Incorporation authorizing the capital stock to be increased by 8,500 shares of
Class A
<PAGE>
Preferred Stock and setting forth the Articles of Incorporation in their
entirety were adopted by consents in writing signed by all the holders of Common
Stock and all the holders of Preferred Stock, being all the shareholders
entitled to vote thereon, which consents have been filed with the Secretary of
the corporation.
6. At the time of the action of the shareholders 485 shares of
Common Stock and 1105 shares of Preferred Stock of the corporation were issued
and outstanding.
7. In the action taken by written consents of shareholders approving
the said Amendments, 485 shares of Common Stock, as a class, and 1105 shares of
Preferred Stock, as a class, were voted in favor of the adoption of the said
Articles of Amendment and no shares of either class of stock were voted against
such adoption.
8. The said Amendments, set forth in full, are as follows:
RESOLVED, that the Articles of William M. Wilson's Sons, Inc. be and
hereby are amended and restated in their entirety so as to read in full as
follows:
ARTICLES OF AMENDMENT
---------------------
These Articles of Amendment set forth in their entirety the Articles
of Incorporation of William M. Wilson's Sons, Inc. as the same shall exist upon
the date these Articles of Amendment are approved and filed in the Department of
State of the Commonwealth of Pennsylvania.
ARTICLE 1 The name of the corporation is WILLIAM M. WILSON'S SONS,
---------
INC.
2
<PAGE>
ARTICLE 2 The location and post office address of the registered
---------
office of this corporation is 8/th/ Street and Franconia Avenue, Lansdale,
Montgomery County, Pennsylvania, 19446.
ARTICLE 3 This corporation has been organized and is existing under
---------
the Act of the General Assembly of Pennsylvania of May 5, 1933, P.L. 364, as
amended. The purposes for which this corporation has been organized are:
A. To buy, sell, manufacture, distribute, repair and lease equipment
for the petroleum and chemical industries.
B. To acquire, hold, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, trademarks, and
trade names, relating to or useful in connection with any business of
the corporation.
C. To transact such other business as may be necessary or desirable
in connection with the foregoing purposes.
ARTICLE 4 The term of this corporation's existence is perpetual.
---------
ARTICLE 5 The authorized capital stock of this corporation is
---------
$1,010,500, divided into (A) 500 shares of Common Stock, par value $100.00 per
share, (B) 1,105 shares of Preferred Stock, par value $100.00 per share, and (C)
8,500 shares of Class A Preferred Stock, par value $100.00 per share. The
powers, preferences and rights of the shares of each class of this corporation's
capital stock, and the qualifications, limitations and restrictions thereof, are
as follows:
A. Common Stock.
------------
1. Each outstanding share of Common Stock of this corporation
shall be entitled to one vote at all meetings of shareholders and as
otherwise provided by law, and may be voted cumulatively at all elections
of directors at which such shares are entitled to vote. The right of the
holders of Common Stock to vote for the election or removal of directors
shall be suspended upon the happening of any event described in Subsection
C.9 of this Article 5 for such duration as is specified therein.
3
<PAGE>
B. Preferred Stock.
---------------
1. Each share of Preferred Stock shall be entitled to cumulative
dividends, as and when declared by the Board of Directors out of the
surplus of the corporation available for dividends, at the rate of 5% of
the par value per annum, before any dividends shall be paid upon the Class
A Preferred Stock or upon the Common Stock. In addition thereto, each
share of Preferred Stock shall be entitled to participate equally with each
share of Common Stock in all dividends declared by the Board of Directors
for any fiscal year after there has been paid (or provision made for
payment) upon each share of Common Stock dividends for such year at the
rate of 27 1/2% of the par value thereof; it being the intention hereof
that the participating rights of the Preferred Stock shall afford return on
investment, by way of dividends, equal to that received by the Common Stock
after the Common Stock has received 27 1/2% of par value, subject to the
right of Preferred Stock to a preference in cumulative dividends as above
provided.
2. The corporation may at any time, or from time to time, as
shall be permitted under the laws of the Commonwealth of Pennsylvania,
redeem the whole or any part of the Preferred Stock at the par value
thereof plus accumulated unpaid dividends to the date of redemption. At
least thirty days notice of every redemption shall be given to the holders
of record of the Preferred Stock to be redeemed, in such manner as shall be
provided from time to time by resolution of the Board of Directors. If at
any time the corporation shall determine to redeem less than the whole
amount of the Preferred Stock then outstanding, the shares to be redeemed
shall be ascertained in such equitable manner as shall be provided, from
time to time, by the Board of Directors. The Board of Directors shall have
full discretion to prescribe and regulate, from time to time, the procedure
to be followed in and all details concerning the redemption of the
Preferred Stock. If on or before the redemption date named in the notice
of redemption the funds necessary for such redemption shall have been set
aside by the corporation so as to be available for payment on demand to the
holders of the Preferred Stock so called for redemption, then,
notwithstanding that any certificate of the Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the right to
dividends and all other rights in respect of such stock shall cease and
determine from and after the date of redemption so designated, except only
the right of the holder to receive the redemption price therefor but
without interest. Certificates for shares redeemed shall be
4
<PAGE>
surrendered to the corporation and the number of shares redeemed shall be
cancelled.
3. Except as otherwise provided by law, no holder of Preferred
Stock shall be entitled to cast any vote on account of ownership thereof or
to receive notice of meetings of shareholders.
4. In the event of any liquidation, dissolution or winding up of
the corporation, the assets available for distribution to shareholders
shall be distributed first to the holders of Preferred Stock to the extent
of the par value thereof plus unpaid dividends accumulated to the end of
the calendar or fiscal year of the corporation immediately preceding the
distribution or the first installment thereof before any sum shall be paid
to, or assets distributed among, the holders of Class A Preferred Stock or
the holders of Common Stock.
C. Class A Preferred Stock.
-----------------------
1. The holders of record of each outstanding share of Class A
Preferred Stock shall be entitled to receive out of the funds legally
available for dividends, when and as declared by the Board of Directors,
dividends in cash thereon at the rate of 5% of the par value thereof per
annum, payable quarterly on the first day of January, April, July and
October of each year, commencing April 1, 1966. All such dividends on the
Class A Preferred Stock shall be cumulative so that, if for any quarterly
period dividends at the rate of 5% per share per annum shall not have been
declared and paid or set apart for payment on the Class A Preferred Stock
outstanding, the deficiency shall be declared and paid or set apart for
payment prior to the making of any dividend or other distribution on
outstanding shares of Common Stock. Dividends on the Class A Preferred
Stock shall accrue from the date of issue.
2. Anything in the foregoing Subsection C.1 to the contrary
notwithstanding, the corporation shall be under no obligation to set apart
or pay any dividends on Class A Preferred Stock prior to July 1, 1968.
Dividends which, but for the provisions of Subsection C.1, would otherwise
be payable before July 1, 1968 on each share of Class A Preferred Stock may
be deferred by the corporation, at the option of the Board of Directors,
and to the extent deferred shall accumulate during such period, and such
dividends, hereafter called "accumulated deferred dividends," shall be
payable in twenty
5
<PAGE>
substantially equal quarterly installments to the holders of such shares
beginning July 1, 1968.
3. Whenever but only when dividends, including the full
accumulated deferred dividends for all past quarterly dividend periods, on
all shares of Class A Preferred Stock at the time outstanding shall have
been paid and the full dividend for the then current dividend period shall
have been declared and a sum sufficient to pay same set apart therefor,
then dividends may be declared and paid on the Common Stock out of funds
available for dividends without the declaration or payment of any
additional dividends on the Class A Preferred Stock.
4. Upon the dissolution or liquidation of the corporation or a
sale of all of its assets, whether voluntary or involuntary, the holders of
Class A Preferred Stock shall be paid in cash $100 per share plus an amount
equal to all accrued and unpaid dividends thereon to the date of payment,
including accumulated deferred dividends, whether or not such dividends
shall have been earned or declared, and premium payable, if any; but no
more, before any sum shall be paid to, or assets distributed among, the
holders of Common Stock. Only after the holders of Class A Preferred Stock
shall have been paid such amounts as they are entitled to receive may the
remaining assets and funds of the corporation be paid to, or distributed
among, the holders of Common Stock. In case the net assets of the
corporation are insufficient to pay the holders of all outstanding shares
of Class A Preferred Stock the full amount to which they are entitled, the
entire net assets of the corporation shall be distributed ratably among the
holders of all outstanding shares of Class A Preferred Stock. A
consolidation or merger of the corporation with any other corporation or
corporations shall not be deemed a dissolution or liquidation within the
meaning of this Subsection C.4.
5. The corporation, at the option of its Board of Directors, may
redeem at any time or from time to time all or any of the outstanding
shares of Class A Preferred Stock upon payment in case of the redemption
price of (i) the par value per share so to be redeemed, plus (ii) accrued
dividends thereon to the date fixed for redemption, including all
accumulated deferred dividends, whether or not same have been earned or
declared, plus (iii) the following premium stated in percentage of par
value:
6
<PAGE>
If redeemed on or before January 1, 1967 ............... 5%
or thereafter but on or before January 1, 1968 ......... 4%
or thereafter but on or before January 1, 1969 ......... 3%
or thereafter but on or before January 1, 1970 ......... 2%
or thereafter but on or before January 1, 1971.......... 1%
or thereafter .........................................none
provided, however, that not less than thirty days prior to the date fixed
for such redemption, written notice of the time and place thereof shall be
mailed to the holders of record of the shares of Class A Preferred Stock so
to be redeemed at their respective addresses as the same appear upon the
books of the corporation. In case of redemption of less than all of the
outstanding Class A Preferred Stock, the shares to be redeemed shall be
chosen in such equitable manner as the Board of Directors may determine;
provided, however, that at the option of any holder of Class A Preferred
Stock called for redemption, the corporation shall redeem the entire amount
of Class A Preferred Stock held by such holder.
6. Upon the death of any holder of Class A Preferred Stock the
corporation shall upon the written request of the personal representative
of such decedent redeem such number of shares of Class A Preferred Stock
held by the decedent as may be necessary to pay estate, inheritance, legacy
and succession taxes imposed because of the decedent's death and funeral
and administration expenses incurred by the decedent's estate. Upon any
such redemption, the redemption price shall not include the amount of
premium specified in Subsection C.5, but shall otherwise be the redemption
price stated therein.
7. At any time after notice of redemption has been given in the
manner herein prescribed or, in the case of redemption of all the
outstanding Class A Preferred Stock, after the corporation shall have
delivered to any bank or trust company having its principal office in
Philadelphia, Pennsylvania, and having capital and surplus of at least
$5,000,000, an instrument in writing irrevocably authorizing such bank or
trust company to give notice of redemption of Class A Preferred Stock in
the name of the corporation and in the manner herein prescribed, the
corporation may deposit the amount of the aggregate redemption price with
any such bank or trust company named in such notice, in trust for the
holders of the shares so to be redeemed, payable on the date fixed for
redemption as aforesaid and in the amounts aforesaid to
7
<PAGE>
the respective order of such holders on endorsement of their certificates
to the corporation or otherwise, as may be required, and upon surrender of
the certificates for such shares. Upon deposit of the aggregate redemption
price as aforesaid or, if no such deposit be made, upon the date fixed for
redemption (unless the corporation shall default in providing monies for
payment of the redemption price as set forth in said notice) all dividends
on the shares called for redemption shall cease to accrue and the holders
thereof shall cease to accrue and the holders thereof shall cease to be
shareholders with respect to said shares and shall be entitled only to
receive the redemption price pursuant to notice as aforesaid, from such
bank or trust company or from the corporation, without interest thereon,
upon endorsement of certificates, if required, and upon the surrender of
the certificates for such shares, and the corporation shall cancel the
number of shares redeemed. Any moneys deposited for redemption and which
shall remain unclaimed at the end of six years from the date fixed for
redemption shall be repaid to the corporation upon its request, after which
repayment the holders of such shares so called for redemption shall look
only to the corporation for payment of the redemption price thereof. Any
interest accrued on any funds so deposited shall belong to the corporation
and shall be paid to it from time to time.
8. So long as any of the Class A Preferred Stock shall be
outstanding, the corporation shall not, without the written consent or
affirmative vote of the holders of at least 50% of the number of shares of
Class A Preferred Stock at the time outstanding, such vote to be taken at a
meeting duly called and held for that purpose:
a. alter, change or repeal any of the provisions of the
Articles of Incorporation or of any amendment thereto; or
b. authorize or increase the authorized number of shares of
any class of stock, or issue any shares of any class of stock, whether
or not the same have any preference over the Class A Preferred Stock;
or
c. merge or consolidate with any other corporation, or
sell, lease or convey all or substantially all of the property or the
business of the corporation or sell or lease for a period longer than
five years any of the real estate of the
8
<PAGE>
corporation, or voluntarily dissolve, liquidate or wind up the
corporation; or
d. enter into loan agreements or incur debts for a term of
longer than twelve months the aggregate principal amount of which
shall exceed $190,000, at any one time outstanding.
Upon any failure to comply with the provisions of this Subsection C.8, and
upon the demand of any holders of Class A Preferred Stock, the par value of
all outstanding shares of Class A Preferred Stock held by such holder,
dividends accrued thereon, including accumulated deferred dividends, and
premium, if any, shall become due and payable as a debt to such holder of
the Class A Preferred Stock.
9. Holders of outstanding shares of Class A Preferred Stock shall
have no right to vote such shares except (i) as provided by law (ii) as
provided by Subsection C.8 above and (iii) as hereinafter stated. If any
of the following events, hereinafter called "defaults", shall occur, to
wit:
a. dividends on the Class A Preferred Stock shall be in
arrears and such arrears shall aggregate an amount equal to four
quarterly dividends, which need not be consecutive; or
b. the corporation shall during the period from and after
July 1, 1968 to March 1, 1973 inclusive, default in the payment of any
installment due with respect to accumulated deferred dividend; or
c. the assets of the corporation shall at the end of any
fiscal quarter be less than two times the corporation's liabilities;
or
d. the amount of the corporation's cash and receivables,
the latter adjusted for bad debt loss, shall at the end of any fiscal
quarter be less than the amount of the corporation's current
liabilities; or
9
<PAGE>
e. the amount of the corporation's unconsolidated net
working capital shall at the end of any fiscal quarter be less than
$790,000, the term "net working capital" to mean the excess of current
assets of the corporation over its current liabilities, both to be
determined as to classification and amount of items by reference to
generally accepted accounting principles theretofore consistently
applied to the corporation; or
f. the corporation's net earnings in each of any two
consecutive fiscal years, after deduction for all taxes, shall be less
than two times the dividend requirements for such year and the
redemption premiums if any, due on the Class A Preferred Stock in such
year;
then upon the request of the holders of not less than 10% of the shares of
Class A Preferred Stock at the time outstanding filed in writing with the
Secretary of the corporation, a special stockholders' meeting shall be
called to be held within fifteen days after receipt of such request, at
which meeting the holders of the outstanding shares of the Class A
Preferred Stock, voting separately as a class, shall be entitled to elect
all directors of the corporation, and the tenure of office of the then
existing directors shall cease. Such voting rights of the holders of the
Class A Preferred Stock shall continue until all dividends thereon which
are unpaid and in arrears shall have been fully paid and the corporation
shall have declared the dividend thereon for the then current period and
set aside funds for the payment thereof, and until all due and unpaid
installments of deferred accumulated dividends have been paid in full and
the corporation shall have provided for the payment of the installment due
for the then current period, and until any default with respect to
paragraphs c. through f. of this Subsection C.9. shall have been cured,
whereupon such voting rights shall cease, subject to being again revived
from time to time upon the recurrence of any condition above described as
giving rise thereto.
10. The corporation shall furnish to any holder of Class A
Preferred Stock upon request as soon as available and in no event later
than thirty days after the end of each fiscal quarter a balance sheet of
the corporation as of the end of such period, setting forth in reasonable
detail the financial condition of corporation, together with a statement of
the earnings of the
10
<PAGE>
corporation for such quarter, none of which need be audited, but which
shall be certified by an authorized financial officer of the corporation.
Such financial reports shall be accompanied by the certificate of such
officer (i) setting forth a computation in reasonable detail of all ratios
or financial requirements required to be maintained under the provisions of
the foregoing Subsection C.9, and (ii) stating that to the best of such
officer's knowledge and belief the corporations not in default in
performance or observance of any of the terms or conditions of the
foregoing Subsections C.8 or C.9, or if the corporation be in default,
specifying the same.
11. As soon as available and in any event within ninety days
after the end of a fiscal year the corporation will send to each holder of
Class A Preferred Stock an auditor's report of the financial condition of
the corporation, including balance sheets, profit and loss statement and
reconciliation of surplus statement of the corporation for such year,
setting forth in each case in comparative form corresponding figures from
the proceeding annual audit, all in reasonable detail and certified by
independent pubic accountants selected by the corporation. Such
certificate shall include or be accompanied by the written statement of
such accountants which shall (i) include a computation in reasonable detail
of all ratios or financial requirements required to be maintained under the
provisions of the forgoing Subsection C.9, and (ii) which shall state that
in making the examination necessary to said certification they have
obtained no knowledge of any default by the corporation in the performance
or observance of any of the terms or conditions of the foregoing Subsection
C.9, or if the accountants shall have obtained knowledge of any such
default, they shall disclose such default in such statement.
12. A representative of the holders of at least 25% of the shares
of outstanding Class A Preferred Stock may at such shareholders' expense
inspect any of the properties, corporate books and financial records of the
corporation and any subsidiary thereof and discuss the affairs, finances
and accounts of such corporations with the principal officers at such times
and as often as they may reasonably request.
13. Waiver by any holder of Class A Preferred Stock of his right
to receive any dividend, or of his right to remove and elect directors upon
the happening of any event described in Subsection C.9 above, or of his
right to receive financial reports as provided in Subsections C.10 and
C.11, shall not operate as a waiver of successive rights accruing to such
holder.
11
<PAGE>
IN WITNESS WHEREOF, the corporation has caused these Articles of
Amendment to be signed by its President and its corporate seal, duly attested by
its Secretary, to be hereunto affixed this 29th day of December, 1965.
WILLIAM M. WILSON'S SONS, INC.
By /s/ Ronald M. Wilson
-------------------------------------------------
Ronald M. Wilson, President
Corporate Seal
Attest:
/s/ Raymond C. Williamson
- -----------------------------------------------
Raymond C. Williamson, Secretary
Approved and filed in the Department of State on the 29th day of
December, 1965.
__________________________________
Secretary of the Commonwealth
12
<PAGE>
Exhibit 3.7
------------
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
Articles of Amendment
In compliance with the requirements of Article VIII of the Business
Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended, the
applicant desiring to amend its Articles hereby certifies, under its corporate
seal that:
1. The name of the corporation is: William M. Wilson's Sons, Inc.
2. The location of its registered office is: 8/th/ and Franconia Avenue,
Lansdale, Pennsylvania 19446
3. The corporation was formed under the Act of: May 5, 1933, P.L. 364,
as amended
4. Its date of incorporation is: July 30, 1945
5. (Strike out (a) or (b) below, whichever is not applicable)
(b) The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote
thereon and filed with the Secretary of the corporation.
6. At the time of the action of the shareholders:
(a) The total number of shares outstanding was: 144 shares of Common Stock;
8,070 shares of Class A Preferred Stock and 412 shares of Preferred
Stock
(b) The number of shares entitled to vote was:* 144 shares of Common
Stock; 8,070 shares of Class A Preferred Stock
7. In the action taken by the shareholders:
<PAGE>
(a) The number of shares voted in favor of the amendment was:**
144 shares of Common Stock; 8,070 shares of Class A Preferred Stock
(b) The number of shares voted against the amendment was:**
-0-
* If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other classes
entitled to vote should be set forth.
** If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted for and
against such amendment respectively should be set forth.
NOTE: If the effect of the amendment is to increase the authorized capital stock
of the corporation, excise tax at the rate of 1/5 of 1% on the amount of
increase will be due and payable with the filing of the amendment.
NOTE: Filing fee - $30.00. (In addition to any amount of excise tax due and
owing.)
8. The amendment adopted by the shareholders, set forth in full, is attached
hereto as Exhibit A.
IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment
to be signed by its President or Vice President and its corporate seal, duly
attested by its Secretary or Treasurer, to be hereunto affixed this 2/nd/ day of
February, 1970.
William M. Wilson's Sons, Inc.
--------------------------------------------
By:
----------------------------------------
(President)
Attest:
- --------------------------
(Secretary)
Approved and filed in the Department of State on the 4/th/ day of February A.D.
1970.
--------------------------------
Secretary of the Commonwealth
2
<PAGE>
Exhibit A
WILLIAM M. WILSON'S SONS, INC.
____________________________________________
RESOLUTION RELATING TO AMENDMENT
OF ARTICLE 5/TH/ OF THE ARTICLES OF
THE CORPORATION
____________________________________________
RESOLVED, that Article 5/th/ of the Articles of the Corporation be and
hereby is amended so that it reads in its entirety as follows:
ARTICLE 5/th/. The authorized capital stock of this corporation is
--------------
$1,010,500, divided into (A) 500 shares of Common Stock, par value $100.00 per
share, (B) 1,105 shares of Preferred Stock, par value $100.00 per share, and (C)
8,500 shares of Class A Preferred Stock, par value $100.00 per share. The
powers, preferences and rights of the shares of each class of this corporation's
capital stock, and the qualifications, limitations and restrictions thereof, are
as follows:
A. Common Stock.
------------
Each outstanding share of Common Stock of this corporation shall be
entitled to one vote at all meetings of shareholders and as otherwise provided
by law, and may be voted cumulatively at all elections of directors at which
such shares are entitled to vote. The right of the holders of Common Stock to
vote for the election or removal of directors shall be suspended upon the
happening of any event described in Subsection C.9 of this Article 5/th/ for
such duration as is specified therein.
B. Preferred Stock.
---------------
1. Each share of Preferred Stock shall be entitled to cumulative
dividends, as and when declared by the Board of Directors out of the surplus of
the corporation available for dividends, at the rate of 5% of the par value per
annum,
3
<PAGE>
before any dividends shall be paid upon the Class A Preferred Stock or upon the
Common Stock. In addition thereto, each share of Preferred Stock shall be
entitled to participate equally with each share of Common Stock in all dividends
declared by the Board of Directors for any fiscal year after there has been paid
(or provision made for payment) upon each share of Common Stock dividends for
such year at the rte of 27 1/2% of the par value thereof; it being the intention
hereof that the participating rights of the Preferred Stock shall afford return
on investment, by way of dividends, equal to theat received by the Common Stock
after the Common Stock has received 27 1/2% of par value, subject to the right
of Preferred Stock to a preference in cumulative dividends as above provided.
2. The corporation may at any time, or from time to time, as shall be
permitted under the laws of the Commonwealth of Pennsylvania, redeem the whole
or any part of the Preferred Stock at the par value thereof plus accumulated
unpaid dividends to the date of redemption. At least thirty days' notice of
every redemption shall be given to the holders of record of the Preferred Stock
to be redeemed, in such manner as shall be provided from time to time by
resolution of the Board of Directors. If at any time the corporation shall
determine to redeem less than the whole amount of the Preferred Stock then
outstanding, the shares to be redeemed shall be ascertained in such equitable
manner as shall be provided, from time to time, by the Board of Directors. The
Board of Directors shall have full discretion to prescribe and regulate, from
time to time, the procedure to be followed in and all details concerning the
redemption of the Preferred Stock. If on or before the redemption date named in
the notice of redemption the funds necessary for such redemption shall have been
set aside by the corporation so as to be available for payment on demand to the
holders of the Preferred Stock so called for redemption, then, notwithstanding
that any certificate of the Preferred Stock so called for redemption shall not
have been surrendered for cancellation, the right to dividends and all other
rights in respect of such stock shall cease and determine from and after the
date of redemption so designated, except only the right of the holder to receive
the redemption price therefor but without interest. Certificates for shares
redeemed shall be surrendered to the corporation, and the number of shares
redeemed shall be cancelled.
3. Except as otherwise provided by law, no holder of Preferred Stock
shall be entitled to cast any vote on account of ownership thereof or to receive
notice of meetings of shareholders.
4
<PAGE>
4. In the event of any liquidation, dissolution or winding up of the
corporation, the assets available for distribution to shareholders shall be
distributed first to the holders of Preferred Stock to the extent of the par
value thereof plus unpaid dividends accumulated to the end of the calendar or
fiscal year of the corporation immediately preceding the distribution or the
first installment thereof before any sum shall be paid to, or assets distributed
among, the holders of Class A Preferred Stock or the holders of Common Stock.
C. Class C Preferred Stock.
-----------------------
1. The holders of record or each outstanding share of Class A
Preferred Stock shall be entitled to receive out of the funds legally available
for dividends, when and as declared by the Board of Directors, dividends in cash
thereon at the rate of 5% of the par value thereof per annum, payable quarterly
on the first day of January, April, July and October of each year, commencing
April 1, 1996. All such dividends on the Class A Preferred Stock shall be
cumulative so that, if for any quarterly period dividends at the rate of 5% per
share per annum shall not have been declared and paid or set apart for payment
on the Class A Preferred Stock outstanding, the deficiency shall be declared and
paid or set apart for payment prior to the making of any dividend or other
distribution on outstanding shares of Common Stock. Dividends on the Class A
Preferred Stock shall accrue from the date of issue.
2. Anything in the foregoing Subsection C.1 to the contrary
notwithstanding, the corporation shall be under no obligation to set apart or
pay any dividends on Class A Preferred Stock prior to July 1, 1968. Dividends
which, but for the provisions of Subsection C.1 would otherwise be payable
before July 1, 1968 on each share of Class A Preferred Stock may be deferred by
the corporation, at the option of the Board of Directors, and to the extent
deferred shall accumulate during such period, and such dividends, hereafter
called "accumulated deferred dividends," shall be payable in twenty
substantially equal quarterly installments to the holders of such shares
beginning July 1, 1968.
3. Whenever but only when dividends, including the full accumulated
deferred dividends for all past quarterly dividend periods, on all shares of
Class A Preferred Stock at the time outstanding shall have been paid and the
full dividend for the then current dividend period shall have been declared and
a sum sufficient to py same set apart therefor, then dividends may be declared
and paid on the Common
5
<PAGE>
Stock out of funds available for dividends without the declaration or payment of
any additional dividends on the Class A Preferred Stock.
4. Upon the dissolution or liquidation of the corporation or a sale
of all of its assets, whether voluntary of involuntary, the holders of Class A
Preferred Stock shall be paid in cash $100 per share plus an amount equal to all
accrued and unpaid dividends thereon to the date of payment, including
accumulated deferred dividends, whether or not such dividends shall have been
earned or declared, and premium payable, if any, but no more, before any sum
shall be paid to, or assets distributed among, the holders of Common Stock.
Only after the holders of Class A Preferred Stock shall have been paid such
amounts as they are entitled to receive may the remaining assets and funds for
the corporation be paid to, or distributed among, the holders of Common Stock.
In case the net assets of the corporation are insufficient to pay the holders of
all outstanding shares of Class A Preferred Stock the full amount to which they
are entitled, the entire net assets of the corporation shall be distributed
ratably among the holders of all outstanding shares of Class A Preferred Stock.
A consolidation or merger of the corporation with any other corporation or
corporations shall not be deemed a dissolution or liquidation within the meaning
of this Subsection C.4.
5. The corporation, at the option of its Board of Directors, may
redeem at any time or from time to time all or any of the outstanding shares of
Class A Preferred Stock upon payment in cash of the redemption price of (i) the
par value per share so to be redeemed, plus (ii) accrued dividends thereon to
the date fixed for redemption, including all accumulated deferred dividends,
whether or not same have been earned or declared, plus (iii) the following
premium stated in percentage of par value:
If redeemed on or before January 1, 1967 ...................... 5%
or thereafter but on or before January 1, 1968 ................ 4%
or thereafter but on or before January 1, 1969 ................ 3%
or thereafter but on or before January 1, 1970 ................ 2%
or thereafter but on or before January 1, 1971 ................ 1%
or thereafter ................................................ none
provided, however, that not less than thirty days prior to the date fixed for
such redemption, written notice of the time and place thereof shall be mailed to
the holders of record of the shares of Class A Preferred Stock so to be redeemed
at their respective addresses as the same appear upon the books of the
corporation. In case
6
<PAGE>
of redemption of less than all of the outstanding Class A Preferred Stock, the
shares to be redeemed shall be chosen in such equitable manner as the Board of
Directors may determine; provided, however, that at the option of any holder of
Class A Preferred Stock called for redemption, the corporation shall redeem the
entire amount of Class A Preferred Stock held by such holder.
6. Upon the death of any holder of Class A Preferred Stock the
corporation shall upon the written request of the personal representative of
such decedent redeem such number of shares of Class A Preferred Stock held by
the decedent as may be necessary to pay estate, inheritance, legacy and
succession taxes imposed because of the decedent's death and funeral and
administration expenses incurred by the decedent's estate. Upon any such
redemption, the redemption price shall not include the amount of premium
specified in Subsection C.5 but shall otherwise be the redemption price stated
therein.
7. At any time after notice of redemption has been given in the
manner herein prescribed or, in the case of redemption of all the outstanding
Class A Preferred Stock, after the corporation shall have delivered to any bank
or trust company having its principal office in Philadelphia, Pennsylvania, and
having capital and surplus of at least $5,000,000, an instrument in writing
irrevocably authorizing such bank or trust company to give notice of redemption
of Class A Preferred Stock in the name of the corporation and in the manner
herein prescribed, the corporation may deposit the amount of the aggregate
redemption price with any such bank or trust company named in such notice, in
trust for the holders of the shares so to be redeemed, payable on the date fixed
for redemption as aforesaid and in the amounts aforesaid to the respective order
of such holders on endorsement of their certificates to the corporation or
otherwise, as may be required, and upon surrender of the certificates for such
shares. Upon deposit of the aggregate redemption price as aforesaid or, if no
such deposit be made, upon the date fixed for redemption (unless the corporation
shall default in providing monies for payment of the redemption price as set
forth in said notice) all dividends on the shares called for redemption shall
cease to accrue and the holders thereof shall cease to be shareholders with
respect to said shares and shall be entitled only to receive the redemption
price pursuant to notice as aforesaid, from such bank or trust company or from
the corporation, without interest thereon, upon endorsement of certificates, if
required, and upon the surrender of the certificates for such shares, and the
corporation shall cancel the number of shares redeemed. Any moneys deposited
for redemption and which shall remain unclaimed at the end of six years from the
date fixed for redemption shall be repaid to the corporation upon its request,
after which repayment the holders
7
<PAGE>
of such shares so called for redemption shall look only to the corporation for
payment of the redemption price thereof. Any interest accrued on any funds so
deposited shall belong to the corporation and shall be paid to it from time to
time.
8. So long as any of the Class A Preferred Stock shall be
outstanding, the corporation shall not, without the written consent or
affirmative vote of the holders of at least 50% of the number of shares of Class
A Preferred Stock at the time outstanding, such vote to be taken at a meeting
duly called and held for that purpose:
(a) authorize or increase the authorized number of shares of any class
of stock, or issue any shares of any class of stock, whether or not the same
have any preference over the Class A Preferred Stock; or
(b) merge or consolidate with any other corporation, or sell, lease or
convey all or substantially all of the property or the business of the
corporation or sell or lease for a period longer than five years any of the real
estate of the corporation, or voluntarily dissolve, liquidate or wind up the
corporation.
Upon any failure to comply with the provisions of this Subsection C.8, and upon
the demand of any holders of Class A Preferred Stock, the par value of all
outstanding shares of Class A Preferred Stock held by such holder, dividends
accrued thereon, including accumulated deferred dividends, and premium, if any,
shall become due and payable as a debt to such holder of the Class A Preferred
Stock.
9. Holders of outstanding shares of Class A Preferred Stock shall
have no right to vote such shares except (i) as provided by law, (ii) as
provided by Subsection C.8 above and (iii) as hereinafter stated. If any of the
following events, hereinafter called "defaults," shall occur, to wit:
(a) dividends on the Class A Preferred Stock shall be in arrears and
such arrears shall aggregate an amount equal to four quarterly dividends, which
need not be consecutive, or
(b) the corporation shall, during the period from and after July 1,
1968 to March 1, 1973 inclusive, default in the payment of any installment due
with respect to accumulated deferred dividend,
8
<PAGE>
then upon the request of the holders of not less than 10% of the shares of Class
A Preferred Stock at the time outstanding filed in writing with the Secretary of
the corporation, a special stockholders' meeting shall be called to be held
within fifteen days after receipt of such request, at which meeting the holders
of the outstanding shares of the Class A Preferred Stock, voting separately as a
class, shall be entitled to elect all directors of the corporation, and the
tenure of office of the then existing directors shall cease. Such voting rights
of the holders of the Class A Preferred Stock shall continue until all dividends
thereon which are unpaid and in arrears shall have been fully paid and the
corporation shall have declared the dividend thereon for the then current period
and set aside funds for the payment thereof, and until all due and unpaid
installments of deferred accumulated dividends have been paid in full and the
corporation shall have provided for the payment of the installment due for the
then current period, whereupon such voting rights shall cease, subject to being
again revived from time to time upon the recurrence of any condition above
described as giving rise thereto.
10. The corporation shall furnish to any holder of Class A Preferred
Stock upon request as soon as available and in no event later than thirty days
after the end of each fiscal quarter a balance sheet of the corporation as of
the end of such period, setting forth in reasonable detail the financial
condition or the corporation, together with a statement of the earnings of the
corporation for such quarter, none of which need be audited, but which shall be
certified by an authorized financial officer of the corporation. Such financial
reports shall be accompanied by the certificate of such officer stating that to
the best of such officer's knowledge and belief the corporation is not in
default in performance or observance of any of the terms or conditions of the
foregoing Subsection C.8 or C.9 or, if the corporation be in default, specifying
the same.
11. As soon as available and in any event within ninety days after the
end of a fiscal year the corporation will send to each holder of Class A
Preferred Stock an auditor's report of the financial condition of the
corporation, including balance sheets, profit and loss statement and
reconciliation of surplus statement of the corporation for such year, setting
forth in each case in comparative form corresponding figures from the preceding
annual audit, all in reasonable detail and certified by independent public
accountants selected by the corporation. Such certificate shall include or be
accompanied by the written statement of such accountants which shall state that
in making the examination necessary to said certification they have obtained no
knowledge of any default by the corporation in the performance or observance of
any of the terms or conditions of the foregoing Subsection
9
<PAGE>
C.9, or if the accountants shall have obtained knowledge of any such
default, they shall disclose such default in such statement.
12. A representative of the holders of at least 25% of the shares of
outstanding Class A Preferred Stock may at such shareholders' expense inspect
any of the properties, corporate books and financial records of the corporation
and any subsidiary thereof and discuss the affairs, finances and accounts of
such corporations with the principal officers at such times and as often as they
may reasonably request.
13. Waiver by any holder of Class A Preferred Stock of his right to
receive any dividend, or his right to remove and elect directors upon the
happening of any event described in Subsection C.9 above, or of his right to
receive financial reports as provided in Subsections C.10 and C.11, shall not
operate as a waiver of successive rights accruing to such holder.
10
<PAGE>
Exhibit 3.8
-----------
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
Articles of Amendment
In compliance with the requirements of Article VIII of the Business
Corporation Law approved the 5/th/ day of May, 1933, P.L. 364, as amended, the
applicant desiring to amend its Articles hereby certifies, under its corporate
seal that:
1. The name of the corporation is: William M. Wilson's Sons, Inc.
2. The location of its registered office is: 8/th/ and Franconia Avenue,
Lansdale, Pennsylvania 19446
3. The corporation was formed under the Act of: May 5, 1933, P.L. 364, as
amended
4. Its date of incorporation is: July 30, 1945
5. (Strike out (a) or (b) below, whichever is not applicable)
(b) The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote
thereon and filed with the Secretary of the corporation.
6. At the time of the action of the shareholders:
(a) The total number of shares outstanding was: 144 shares of Common Stock;
5,758 shares of Class A Preferred Stock and 412 shares of Preferred
Stock
(b) The number of shares entitled to vote was:* 144 shares of Common
Stock; 5,758 shares of Class A Preferred Stock
7. In the action taken by the shareholders:
<PAGE>
(a) The number of shares voted in favor of the amendment was:**
144 shares of Common Stock; 5,758 shares of Class A Preferred Stock
(b) The number of shares voted against the amendment was:**
-0-
* If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other classes
entitled to vote should be set forth.
** If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted for and
against such amendment respectively should be set forth.
NOTE: If the effect of the amendment is to increase the authorized capital stock
of the corporation, excise tax at the rate of 1/5 of 1% on the amount of
increase will be due and payable with the filing of the amendment.
NOTE: Filing fee - $30.00. (In addition to any amount of excise tax due and
owing.)
8. The amendment adopted by the shareholders, set forth in full, follows:
RESOLVED, that Subsection C.6 of Article 5th of the Articles of the
Corporation be and hereby is amended so that it reads in its entirety as
follows:
"6. At any time during a period of two years after the death of any
holder of Class A Preferred Stock the corporation may redeem, and at any time
after such period of two years has elapsed the corporation shall redeem, upon
the written request of the personal representative of such decedent, such number
of shares of Class A Preferred Stock held by the decedent as may be necessary to
pay estate, inheritance, legacy and succession taxes imposed because of the
decedent's death and funeral and administration expenses incurred by the
decedent's estate. Upon any such redemption, the redemption price shall not
included the amount of premium specified in Subsection C.5, but shall otherwise
be the redemption price stated therein."
2
<PAGE>
IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment
to be signed by its President or Vice President and its corporate seal, duly
attested by its Secretary or Treasurer, to be hereunto affixed this 24th day of
June, 1970.
William M. Wilson's Sons, Inc.
--------------------------------------------
By:_______________________________________________
(President)
Attest:
- ----------------------------------
(Secretary)
Approved and filed in the Department of State on the 29th day of June, 1970.
----------------------------------
Secretary of the Commonwealth
3
<PAGE>
Exhibit 3.9
-----------
WILLIAM M. WILSON'S SONS, INC.
UNANIMOUS CONSENT OF ALL DIRECTORS
November 13, 1992
The undersigned, being all the Directors of WILLIAM M. WILSON'S SONS,
INC., and being entitled to vote upon the resolution stated herein if the same
had been submitted at a Board of Directors' Meeting duly called and held for
the purpose of acting upon said resolution, do hereby consent that the
resolution stated herein is adopted to the same extent and has the same force
and effect as if adopted by unanimous vote at a Board of Directors' Meeting of
said Corporation.
RESOLVED, That the Articles of Incorporation be amended to change the
name of the Corporation to Gasboy International, Inc.
FURTHER RESOLVED, That the Officers of the Corporation are authorized
to take all actions necessary and to execute the appropriate documents to
change the name of the Corporation to Gasboy International, Inc.
/s/ Jess B. Ford /s/ Raymond A. Geiger
- ------------------------------------ -----------------------------
Jess B. Ford Raymond A. Geiger
/s/ Douglas K. Pinner /s/ Raymond C. Williamson
- ------------------------------------ -----------------------------
Douglas K. Pinner Raymond C. Williamson
/s/ Stanley Wuic
-----------------------------
Stanley Wuic
Effective: November 13, 1992
<PAGE>
Exhibit 3.10
------------
RESTATED
BYLAWS
AS OF FEBRUARY 28, 1982
ARTICLE I - OFFICERS
1. The registered office of the corporation shall be at 8/th/ Street and
Valley Forge Road, Landsdale, Montgomery County, Pennsylvania.
2. The corporation may also have offices at such other places as the Board
of Directors may, from time to time, appoint or the business of the corporation
may require.
ARTICLE II - SEAL
1. The corporate seal shall have described thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Pennsylvania."
ARTICLE III - SHAREHOLDERS' MEETING
1. Meetings of the shareholders shall be held at the office of the
corporation at Lansdale, Montgomery County, Pennsylvania, or at such other place
or places, either within or without the Commonwealth of Pennsylvania, as may,
from time to time be selected.
2. The annual meeting of the shareholders shall be held on or before the
end of April in each year, at such time as may be fixed in the call for such
meeting, when they shall select a Board of Directors, and transact such other
business as may properly be brought before the meeting. If the annual meeting
shall not be called and
<PAGE>
held within six months after the designated time, any shareholder may call such
meeting.
3. The presence, in person or by proxy, of the holders of a majority of
the outstanding shares entitled to vote shall constitute a quorum at all
meetings of the shareholders for the transaction of business except as otherwise
provided by law, by Articles of Incorporation or by these Bylaws. If however,
such quorum shall not be present or represented at any meeting of the
shareholders, those entitled to vote thereat, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite number of
shares shall be present. In the case of any meeting called for the election of
directors, adjournment or adjournments may be taken only from day to day until
such directors have been elected, and those who attend the second of such
adjourned meetings, although less than a quorum, shall nevertheless constitute a
quorum for the purpose of electing directors.
4. At each meeting of the shareholders every shareholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and delivered to the
secretary at the meeting. No unrevoked proxy shall be valid after eleven months
from the date of its execution, unless a longer time is expressly provided
therein, but in no event shall a proxy, unless coupled with an interest, be
voted on after three years from the date of its execution. In all elections for
directors cumulative voting shall be allowed. Upon demand made by a shareholder
at any election for directors before the voting begins, the election shall be by
ballot. No share shall be voted at any meeting upon which any installment is
due and unpaid. The original share ledger or transfer book or a
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<PAGE>
duplicate thereof kept in this Commonwealth shall be prima facie evidence of the
right of the person named therein to vote thereon.
5. Written notice of the annual meeting shall be mailed to each
shareholder entitled to vote thereat, at such address as appears on the books of
the corporation, at least 10 days prior to the meeting.
6. In advance of any meeting of shareholders, the Board of Directors may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election be not appointed, the
chairman of any such meeting may and, on the request of any shareholder or his
proxy, shall make such appointment at the meeting. The number of judges shall
be one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares present and entitled to vote
shall determine whether one or three judges are to be appointed. On request of
the chairman of the meeting, or of any shareholder or his proxy, the judges
shall make a report in writing of any challenge or question or matter determined
by them and execute a certificate of any fact found by them. No person who is a
candidate for office shall act as a judge.
7. Special meetings of the shareholders may be called at any time by the
President, or the Board of Directors, or the holders of not less than one-fifth
of all the shares outstanding and entitled to vote. At any time, upon written
request of any person entitled to call a special meeting, it shall be the duty
of the Secretary to call a special meeting of the shareholders, to be held at
such time as the secretary may fix not less than ten nor more than sixty days
after receipt of the request.
8. Business transacted at all special meetings shall be confined to
objects stated in the call and matters germane thereto.
3
<PAGE>
9. Written notice of a special meeting of shareholders stating the time
and place and object thereof shall be mailed, postage prepaid, to each
shareholder entitled to vote thereat at such address as appears on the books of
the corporation, at least 10 days before such meeting, unless a greater period
of notice is required by statute in a particular case.
10. The officer or agent having charge of the transfer books shall make, at
least five days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list shall be
kept on file at the registered office of the corporation, and shall be subject
to inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original share ledger or transfer book, or a duplicate
thereof kept in this Commonwealth, shall be prima facie evidence as to who are
the shareholders entitled to examine such list or share ledger or transfer book,
or to vote in person or by proxy, at any meeting of shareholders.
ARTICLE IV - DIRECTORS
1. The business of this corporation shall be managed by its Board of
Directors which shall be comprised of a minimum of 5 directors in number and a
maximum of 7 directors in number, who need not be residents of this Commonwealth
or shareholders in the corporation. They shall be elected by the shareholders,
at the annual meeting of shareholders of the corporation, and each director
shall be
4
<PAGE>
elected for a term of one year, and until his successor shall be elected and
shall qualify.
2. In addition to the powers and authorities by these Bylaws expressly
conferred upon them, the Board may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
or by these Bylaws directed or required to be exercised or done by the
shareholders.
3. The meetings of the Board of Directors may be held at such place within
the Commonwealth, or elsewhere, as a majority of the directors may from time to
time appoint, or as may be designated in the notice calling the meeting.
4. Each newly elected Board may meet at such place and time as shall be
fixed by the shareholders at the meeting at which such directors are elected,
and no notice shall be necessary to the newly elected directors in order legally
to constitute the meeting, or they may meet at such place and time as may be
fixed by the consent in writing of all the directors.
5. In lieu of or in addition to the meeting referred to in section 4, a
regular meeting of the newly elected Board shall be held during their terms of
office at the call of the President, at the registered office of the company, or
at such other time and places as shall be determined by the Board.
6. Special meetings of the Board may be called by the President on 10
days' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of two directors.
7. A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business and the acts of a majority of the
directors
5
<PAGE>
present at a meeting at which a quorum is present shall be the acts of the Board
of Directors. If all the directors shall severally and collectively consent in
writing to any action to be taken by the corporation, such action shall be as
valid corporate action as though it had been authorized at a meeting of the
Board of Directors.
8. Directors as such shall not receive any stated salary for their
services, but by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board, provided, that nothing herein contained shall be construed
to preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE V - OFFICERS
1. The executive officers of the corporation shall be chosen by the
directors and shall be a President, Secretary, and Treasurer. The Board of
Directors may also choose a Vice President and such other officers and agents as
it shall deem necessary, who shall hold their offices for such terms and shall
have such authority and shall perform such duties as from time to time shall be
prescribed by the Board. Any two or more offices may be held by the same person,
except the offices of President and Secretary. It shall not be necessary for
the officers to be directors.
2. The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
3. The officers of the corporation shall hold office for one year and
until their successors are chosen and have qualified. Any officer elected or
appointed by the Board of Directors may be removed by the Board of Directors
whenever in their judgment the best interests of the corporation will be served
thereby.
6
<PAGE>
4. The President shall be the chief executive officer of the corporation;
he shall preside at all meetings of the shareholders and directors; he shall
have general and active management of the business of the corporation, shall see
that all orders and resolutions of the board are carried into effect, subject,
however, to the right of the directors to delegate any specific powers, except
such as may be by statute exclusively conferred on the President, to any other
officer or officers of the corporation. He shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the corporation. He shall
be ex officio a member of all committees, and shall have the general powers and
duties of supervision and management usually vested in the office of President
of a corporation.
5. The Secretary or Assistant Secretary shall attend all sessions of the
Board and all meetings of the shareholders and act as clerk thereof and record
all the votes of the corporation and the minutes of all its transactions in a
book to be kept for this purpose; and shall perform like duties for all
committees of the Board of Directors when required. He shall give, or cause to
be given, notice of all meetings of the shareholders and of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, and under whose supervision he shall be. He shall
keep in safe custody the corporate seal of the corporation and, when authorized
by the Board, affix the same to any instrument requiring it.
6. The Treasurer shall have custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation, and shall keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall disburse the funds
of the corporation as may be ordered by the Board, taking proper vouchers for
such disbursements,
7
<PAGE>
and shall render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the corporation.
ARTICLE VI - VACANCIES
1. If the office of any officer or agent, one or more, becomes vacant for
any reason, the Board of Directors may choose a successor or successors, who
shall hold office for the unexpired term in respect of which such vacancy
occurred.
2. Vacancies in the Board of Directors shall be filled by a majority of
the remaining members of the Board though less than a quorum, and each person so
elected shall be a director until his successor is elected by the shareholders,
who may make such election at the next annual meeting of the shareholders or at
any special meeting duly called for that purpose and held prior thereto.
ARTICLE VII - CORPORATE RECORDS
1. There shall be kept at the registered office of the corporation an
original or duplicate record of the proceedings of the shareholders and of the
directors, and the original or a copy of its bylaws, including all amendments or
alterations thereto to date, certified by the Secretary of the corporation. An
original or duplicate share register shall also be kept at the registered
office, or at the office of a transfer agent or registrar within this
Commonwealth, giving the names of the shareholders in alphabetical order, and
showing their respective addresses, the number and classes of shares held by
each, the number and date of certificates issued for the shares and the number
and date of cancellation of every certificate surrendered for cancellation.
8
<PAGE>
2. Every shareholder shall have a right to examine, in person or by agent
or attorney, at any reasonable time or times, for any reasonable purpose, the
share register, books or records of account, and records of the proceedings of
the shareholders and directors, and make extracts therefrom.
ARTICLE VII - SHARE CERTIFICATES, DIVIDENDS, ETC.
1. The share certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation, as they
are issued. They shall be signed by the President and the Secretary and shall
bear the corporate seal.
2. Transfers of shares shall be made on the books of the corporation upon
surrender of the certificates therefor, endorsed by the person named in the
certificate or by attorney, lawfully confirmed in writing. No transfer shall be
made inconsistent with the provisions of Article 8 of the Uniform Commercial
Code (Act No. 1) of the Commonwealth as amended from time to time.
3. The Board of Directors may fix a time not more than fifty days prior to
the date of any meeting of shareholders, or the date fixed for the payment of
any dividend or distribution, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of, and to vote at any such meeting, or entitled to receive payment of
any such dividend or distribution or to receive any such allotment or rights, to
exercise the rights in respect of any change, conversion, or exchange of shares.
In such case, only such shareholders as shall be shareholders of record on the
date so fixed shall be entitled to notice of, and to vote at, such meeting, or
to receive payment of such dividend or to receive such
9
<PAGE>
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
any record date fixed as aforesaid. The Board of Directors may close the books
of the corporation against transfers of shares during the whole or any part of
such period, and in such case written or printed notice thereof shall be mailed
at least ten days before the closing thereof to each shareholder of record at
the address appearing on the records of the corporation or supplied by him to
the corporation for the purpose of notice. While the stock transfer books of the
corporation are closed, no transfer of shares shall be made thereon. If no
record date is fixed for the determination of shareholders entitled to receive
notice of, or vote at, a shareholders' meeting, transferees of shares which are
transferred on the books of the corporation within ten days next preceding the
date of such meeting shall not be entitled to notice of or vote at such meeting.
4. Any person claiming a share certificate to be lost or destroyed and
make an affidavit or affirmation of that fact and advertise the same in such
manner as the Board of Directors may require, and shall give the corporation a
bond of indemnity with sufficient surety to protect the corporation or any
person injured by the issue of a new certificate from any liability or expense
which it or they may incur by reason of the original certificate remaining
outstanding, whereupon a new certificate may be issued of the same tenor and for
the same number of shares as the one alleged to be lost or destroyed, but always
subject to the approval of the Board of Directors.
5. Subject to the provisions of the statutes, the Board of Directors may
declare and pay dividends upon the outstanding shares of the corporation out of
its surplus from time to time and to such extent as they deem advisable, in
cash, property or in shares of the corporation.
10
<PAGE>
6. Before payment of any dividend there may be set aside out of the net
profits of the corporation such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
1. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers as the Board of Directors may from time to
time designate.
2. The fiscal year shall end the 30/th/ day of November in each year or at
the end of any other month as the directors may from time to time determine.
3. Whenever written notice is required to be given to any person, it may
be given to such person, either personally or by sending a copy thereof through
the mail, or by telegram, charges prepaid, to his address appearing on the books
of the corporation, or supplied by him to the corporation for the purpose of
notice. If the notice is sent by mail or by telegraph, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States mail or with a telegraph office for transmission to such person. Such
notice shall specify the place, day and hour of the meeting and, in the case of
a special meeting, the general nature of the business to be transacted.
11
<PAGE>
4. Whenever any written notice is required by statute, or by the Articles
or Bylaws of this corporation, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Except in the
case of a special meeting, neither the business to be transacted at nor the
purpose of the meeting need be specified in the waiver of notice of such
meeting. Attendance of a person, either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting, except where a person
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
ARTICLE X - ANNUAL STATEMENT
1. The President and Board of Directors shall present at each annual
meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
1. These Bylaws may be altered, amended or repealed by the affirmative
vote of a majority of the shares issued and outstanding and entitled to vote
thereat at any regular or special meeting of the shareholders if notice of
proposed alteration, amendment or repeal be contained in the notice of the
meeting, or by unanimous written consent of all the shareholders.
12
<PAGE>
Exhibit 3.11
------------
ARTICLES OF INCORPORATION
OF
MANAGEMENT SOLUTIONS OF COLORADO, INC.
The undersigned natural person of the age of twenty-one years or more does
hereby act as an incorporator of Management Solutions of Colorado, Inc., by
signing, verifying and delivering in duplicate to the Secretary of State of the
State of Colorado these articles of incorporation for such corporation.
ARTICLE 1
---------
The name of the corporation is:
Management Solutions of Colorado, Inc.
ARTICLE 11
----------
The period of duration of the corporation is perpetual.
ARTICLE III
-----------
The purposes for which the corporation is organized are:
1. To provide management services and consultation to various businesses.
2. To engage in all lawful businesses and occupations permitted by law
and for which a corporation may be organized under the Colorado Corporation
Code.
3. To do all things necessary or convenient in connection with
implementing and carrying out the aforementioned purposes of the corporation.
ARTICLE IV
----------
The corporation shall have each and every one of the corporate powers
conferred as general powers upon each corporation incorporated under the
Colorado Corporation Code as said Code exists on the date of issuance of the
Certificate of Incorporation of the corporation and such additional or broader
powers as may be subsequently granted by law to corporations organized under the
Colorado Corporation Code.
<PAGE>
ARTICLE V
---------
The aggregate number of shares which the corporation shall have power to
create and issue shall be 1,000,000 shares. Such shares shall consist of one
class only and said class of shares is designated as the common stock of the
corporation. All shares shall have no par value.
ARTICLE VI
----------
Cumulative voting shall not be allowed in the election of directors.
ARTICLE VII
-----------
Shareholders shall have no pre-emptive right to acquire unissued or
treasury shares of the corporation or securities convertible into shares.
ARTICLE VIII
------------
The address of the initial registered office of the corporation is 6500
South Quebec, Suite 250, Englewood, Colorado 80111. The name of the initial
registered agent at such address is Arthur B. Walsh.
ARTICLE IX
----------
The affairs of the corporation shall be governed by a Board of Directors
who shall be elected in accordance with the Bylaws of the Corporation. The
number of directors shall be not less than three (3) nor more than nine (9) as
fixed by or in the manner provided in the Bylaws; provided, however, that there
need be only as many directors as there are shareholders in the event that the
outstanding shares are held of record by fewer than three (3) shareholders. The
names and addresses of the persons who are to serve as directors until the first
annual meeting of shareholders or until their successors be elected and qualify
are:
Arthur Elston, 16418 B East Rice Place, Aurora, Colorado 80015
William McCabe, 3945 East Warren Avenue, Denver, Colorado 80210
Ronald H. Elston, 600 Paseo Del Curso, Green Valley, Arizona.
2
<PAGE>
ARTICLE X
---------
The name and the address of the incorporator is:
Arthur B. Walsh, 6500 South Quebec, Suite 250, Englewood, Colorado 80111.
ARTICLE XI
----------
The Corporation may indemnify any director or officer or former director or
officer of the Corporation, or any person who may have served at its request as
a director or officer of another corporation in which it owns shares of capital
stock or of which it is a creditor, and the personal representatives of all such
persons, against expenses actually and necessarily incurred by him or her in
connection with the defense of any claim or demand against him or her or any
action, suit or proceeding in which he or she is made a party by reason of
having been or being such a director or officer, and against any judgment for
damages rendered therein, except in relation to matters as to which he or she
shall be adjudged in such action, suit or proceeding to be liable for willful
negligence or intentional misconduct in the performance of duty. In the event of
a settlement of any such action, suit or proceeding, or of any claim or demand
which was precursor of any such action, suit or proceeding, indemnification
shall be provided but only in relation to matters as to which and then only if
and when the Corporation shall be advised by counsel that the person to be
indemnified was not guilty of willful negligence or intentional misconduct in
the performance of duty.
3
<PAGE>
WITNESS the signature of the incorporator affixed at Englewood, Colorado,
this 4th day of December, 1985.
/s/ Arthur B. Walsh
--------------------------------
Arthur B. Walsh
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
Arthur B. Walsh, being sworn severally, deposes and says that he is the
person who executed the foregoing instrument, which are the Articles of
Incorporation for Management Solutions of Colorado, Inc., that he has read the
same and knows the contents therein, and that the matters stated therein are
true to his own best knowledge.
/s/ Arthur B. Walsh
--------------------------------
Arthur B. Walsh
SUBSCRIBED AND SWORN to before me this 4th day of December, 1985.
Witness my hand and official seal.
My commission expires:
--------------------------------
Notary Public
4
<PAGE>
Exhibit 3.12
------------
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to the
Articles of Incorporation:
FIRST: The name of the corporation is (note 1) Management Solutions
of Colorado, Inc..
SECOND: The following amendment to the Articles of Incorporation was
adopted on December 4, 1987, as permitted by the Colorado Corporation Code, in
the manner marked with an X below:
X Such amendment was adopted by the board of directors where no
-------- shares have been issued.
Such amendment was adopted by a vote of the shareholders. The
-------- number of shares voted for the amendment was sufficient for
approval.
The name of the corporation will be changed from "Management
Solutions of Colorado, Inc." to:
Management Solutions, Inc.
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected as follows:
FOURTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:
Management Solutions of Colorado, Inc.
By
-------------------------------
and
------------------------------
---------------------------------
<PAGE>
Exhibit 3.13
------------
BYLAWS
OF
MANAGEMENT SOLUTIONS, INC.
ARTICLE I
SHAREHOLDERS' MEETING
Section 1. Annual Meeting. The annual meeting of the shareholders for the
--------------
election of directors and the transaction of such other business as may properly
come before it shall be held at the principal office of the Corporation or at
such place within or without the State of Colorado as shall be set forth in the
notice of meeting. The meeting shall be held on the last Monday in the month of
December of each and every year, at 2:30 p.m. The Secretary shall give
personally or by mail, not less than ten nor more than 50 days before the date
of the meeting to each shareholder entitled to vote at such meeting, written
notice stating the place, date, and hour of the meeting. If mailed, the notice
shall be addressed to the shareholder at his address as it appears on the record
of shareholders of the Corporation unless he shall have filed with the Secretary
of the Corporation a written request that notices intended for him be mailed to
a different address, in which case it shall be mailed to the address designated
in the request. Any notice of meetings may be waived by a shareholder by
submitting a signed waiver either before or after the meeting, or by attendance
at the meeting.
Section 2. Special Meeting. Special meetings of shareholders, other than
---------------
those regulated by statute, may be called at any time by a majority of the
directors or the President, and must be called by the President upon written
request of the holders of 10% of the outstanding shares entitled to vote at such
meeting. Written notice of such meetings stating the place within or without the
State of Colorado, the date and hour of the meeting, the purpose or purposes for
which it is called, and the name of the person by whom or at whose director the
meeting is called shall be given not less than ten nor more than 50 days before
the date set for the meeting. The notice shall be given to each shareholder of
record in the same manner as notice of the annual meeting. No business other
than that specified in the notice of meeting shall be transacted at any such
special meeting. Notice of special meeting may be waived by submitting a signed
waiver or by attendance at the meeting.
<PAGE>
Section 3. Quorum. The presence, in person or by proxy, of the holders of a
------
majority of the outstanding shares entitled to vote thereat shall be necessary
to constitute a quorum for the transaction of business at all meetings of
shareholders. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting to a future date at which a quorum shall be present or represented. At
such adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally called.
Section 4. Record Date. The directors may fix in advance a date not less
-----------
than ten nor more than 50 days, prior to the date of any meeting of the
shareholders or prior to the last day on which the consent or dissent of or
action by the shareholders may be effectively expressed for any purpose without
a meeting, as the record date for the determination of shareholders.
Section 5. Voting. A shareholder entitled to vote at a meeting may vote at
------
such meeting in person or by proxy. Except as otherwise provided by law or the
Certificate of Incorporation, every shareholder shall be entitled to one vote
for each share standing in his name on the record of shareholders. Except as
herein or in the Certificate of Incorporation otherwise provided, all corporate
action shall be determined by vote of a majority of the votes cast at a meeting
of shareholders by the holders of shares entitled to vote thereon.
Section 6. Proxies. Every proxy must be dated and signed by the
-------
shareholder or by his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date of its execution, unless otherwise
provided therein. Every proxy shall be revocable at the pleasure of the
shareholder executing it.
Section 7. Consents. Whenever by a provision of statute or of the
--------
Certificate of Incorporation or by these Bylaws the vote of shareholders is
required or permitted to be taken at a meeting thereof in connection with any
corporate action, the meeting and the vote of shareholders may be dispensed
with, if all the shareholders who would have been entitled to vote upon the
action if such meeting were held shall consent in writing to such corporate
action being taken.
ARTICLE II
DIRECTORS
Section 1. Number and Qualifications. The entire Board of Directors shall
-------------------------
consist of three persons all of whom shall be of full age unless the shares of
the
2
<PAGE>
Corporation are owned by less than three shareholders, in which instance the
number of directors shall equal the number of its shareholders. The directors
need not be shareholders of the Corporation. The number of directors may be
changed by an amendment to the Bylaws, adopted by the shareholders.
Section 2. Manner of Election. The directors shall be elected at the annual
------------------
meeting of shareholders by a plurality vote.
Section 3. Term of Office. The term of office of each director shall be
--------------
until the next annual meeting of the shareholders and until his successor has
been duly elected and has qualified.
Section 4. Duties and Powers. The Board of Directors shall have control and
-----------------
management of the affairs and business of the Corporation. The directors shall
in all cases act as a Board, regularly convened, and, in the transaction of
business the act of a majority present at a meeting except as otherwise provided
by law or the Certificate of Incorporation shall be the act of the Board,
provided a quorum is present. The directors may adopt such rules and regulations
for the conduct of their meetings and the management of the Corporation as they
may deem proper, not inconsistent with law or these Bylaws.
Section 5. Meetings. The Board of Directors shall meet for the election or
--------
appointment of officers and for the transaction of any other business as soon as
practicable after the adjournment of the annual meeting of the shareholders, and
other regular meetings of the Board shall be held at such times as the Board may
from time to time determine.
Special meetings of the Board of Directors may be called by the President
at any time; and he must, upon the written request of any two directors, call a
special meeting to be held not more than seven days after the receipt of such
request.
Section 6. Notice of Meetings. No notice need be given of any regular
------------------
meeting of the Board. Notice of special meetings shall be served upon each
director in person or by mail addressed to him at his last-known post office
address, at least two days prior to the date of such meeting, specifying the
time and place of the meeting and the business to be transacted thereat. At any
meeting at which all of the directors shall be present, although held without
notice, any business may be transacted which might have been transacted if the
meeting had been duly called.
Section 7. Place of Meeting. The Board of Directors may hold its meeting
----------------
either within or without the State of Colorado, at such place as may be
designated in the notice of any such meeting.
3
<PAGE>
Section 8. Quorum. At any meeting of the Board of Directors, the presence
------
of a majority of the Board shall be necessary to constitute a quorum for the
transaction of business. However, should a quorum not be present, a lesser
number may adjourn the meeting to some further time, not more than seven days
later.
Section 9. Voting. At all meetings of the Board of Directors, each director
------
shall have one vote irrespective of the number of shares that he may hold.
Section 10. Compensation. Each director shall be entitled to receive for
------------
attendance at each meeting of the Board or of any duly constituted committee
thereof which he attends such fee as is fixed by the Board.
Section 11. Vacancies. Any vacancy occurring in the Board of Directors by
---------
death, resignation, or otherwise shall be filled promptly by a majority vote of
the remaining directors at a special meeting which shall be called for that
purpose within 30 days after the occurrence of the vacancy. The director thus
chosen shall hold office for the unexpired term of his predecessor and the
election and qualification of his successor.
Section 12. Removal of Directors. Any director may be removed either with
--------------------
or without cause, at any time, by a vote of the shareholders holding a majority
of the shares then issued and outstanding and who were entitled to vote for the
election of the director sought to be removed, at any special meeting called for
that purpose, or at the annual meeting. Except as otherwise prescribed by
statute, a director may be removed for cause by vote of a majority of the entire
Board.
Section 13. Resignation. Any director may resign his office at any time,
-----------
such resignation to be made in writing and to take effect immediately without
acceptance.
ARTICLE III
OFFICERS
Section 1. Officers and Qualifications. The officers of the Corporation
---------------------------
shall be a President, and a Secretary/Treasurer, and such other officers as the
Board of Directors may determine. Any two offices, except the offices of
President and Secretary, may be held by the same person.
Section 2. Election. All officers of the Corporation shall be elected
--------
annually by the Board of Directors at its meeting held immediately after the
annual meeting of share holders. The initial officers to serve until the first
annual meeting may be elected at the organization meeting.
4
<PAGE>
Section 3. Term of Office. All officers shall hold office until their
--------------
successors have been duly elected and have qualified, or until removed as
hereinafter provided.
Section 4. Removal of Officers. Any officer may be removed either with or
-------------------
without cause by the vote of a majority of the Board of Directors.
Section 5. Duties of Officers. The duties and powers of the officers of the
------------------
Corporation shall be as follows and as shall hereafter be set by resolution of
the Board of Directors:
President
A. The President shall preside at all meetings of the Board of Directors.
He shall also preside at all meetings of the shareholders.
B. He shall present at each annual meeting of the shareholders and
directors a report of the condition of the business of the Corporation.
C. He shall cause to be called regular and special meetings of the
shareholders and directors in accordance with the requirements of the statute
and of these Bylaws.
D. He shall appoint, discharge, and fix the compensation of all employees
and agents of the Corporation other than the duly elected officers, subject to
the approval of the Board of Directors.
E. He shall sign and execute all contracts in the name of the Corporation,
and all notes, drafts, or other orders for the payment of money.
F. He shall sign all certificates representing shares.
G. He shall cause all books, reports, statements, and certificates to be
properly kept and filed as required by law.
H. He shall enforce these Bylaws and perform all the duties incident to
his office and which are required by law, and, generally, he shall supervise and
control the business and affairs of the Corporation.
Secretary/Treasurer
A. The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the shareholders in appropriate books.
5
<PAGE>
B. He shall attend to the giving of notice of special meetings of the
Board of Directors and of all the meetings of the shareholders of the
Corporation.
C. He shall be custodian of the records and seal of the Corporation and
shall affix the seal to the certificates representing shares and other corporate
papers when required.
D. He shall keep at the principal office of the Corporation a book or
record containing the names, alphabetically arranged, of all persons who are
shareholders of the Corporation, showing their places of residence, the number
and class of shares held by them respectively, and the dates when they
respectively became the owners of record thereof. He shall keep such book or
record and the minutes of the proceedings of its shareholders open daily during
the usual business hours, for inspection, within the limits prescribed by Law,
by any person duly authorized to inspect such records. At the request of the
person entitled to an inspection thereof, he shall prepare and make available a
current list of the officers and directors of the Corporation and their current
resident addresses.
E. He shall sign all certificates representing shares and affix the
corporate seal thereto.
F. He shall attend to all correspondence and present to the Board of
Directors at its meetings all official communications received by him.
G. He shall perform all the duties incident to the office of Secretary of
the Corporation.
H. The Treasurer shall have the care and custody of and be responsible for
all the funds and securities of the Corporation, and shall deposit such funds
and securities in the name of the Corporation in such banks or safe deposit
companies as the Board of Directors may designate.
I. He shall make, sign, and endorse in the name of the Corporation all
checks, drafts, notes, and other orders for the payment of money, and pay out
and dispose of such under the direction of the President or the Board of
Directors.
J. He shall keep at the principal office of the Corporation accurate books
of account of all its business and transactions and shall at all reasonable
hours exhibit books and accounts to any director upon application at the office
of the Corporation during business hours.
6
<PAGE>
K. He shall render a report of the condition of the finances of the
Corporation at each regular meeting of the Board of Directors and at such other
times as shall be required by him, and he shall make a full financial report at
the annual meeting of the shareholders.
L. He shall further perform all duties incident to the office of Treasurer
of the Corporation.
M. If required by the Board of Directors, he shall give such bond as it
shall determine appropriate for the faithful performance of his duties.
Other Officers
Other officers shall perform such duties and have such powers as may be
assigned to them by the Board of Directors.
Section 6. Vacancies. All vacancies in any office shall be filled promptly
---------
by the Board of Directors, either at regular meetings or at a meeting specially
called for that purpose.
Section 7. Compensation of Officers. The officers shall receive such salary
------------------------
or compensation as may be fixed by the Board of Directors.
ARTICLE IV
Seal
Section 1. Seal. The seal of the Corporation shall be as follows:
----
[Affix an imprint of the corporation seal]
ARTICLE V
Shares
Section 1. Certificates. The shares of the Corporation shall be represented
------------
by certificates prepared by the Board of Directors and signed by the President
or the Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation
or a facsimile. The certificates shall be numbered consecutively and in the
order in which they are issued; they shall be bound in a book and shall be
issued in consecutive order therefrom, and in the margin thereof shall be
entered the name of the person to whom the shares represented by each such
certificate are issued, the number and class or series of such
7
<PAGE>
shares, and the date of issue. Each certificate shall state the registered
holder's name, the number and class of shares represented thereby, the date of
issue, the par value of such shares, or that they are without par value.
Section 2. Subscriptions. Subscriptions to the share shall be paid at such
-------------
times and in such installments as the Board of Directors may determine. If
default shall be made in the payment of any installment as required by such
resolution, the Board may declare the shares and all previous payments thereon
forfeited for the use of the Corporation, in the manner prescribed by statute.
Section 3. Transfer of Shares. The shares of the Corporation shall be
------------------
assignable and transferable only on the books and records of the Corporation by
the registered owner, or by his duly authorized attorney, upon surrender of the
certificate duly and properly endorsed with proper evidence of authority to
transfer. The Corporation shall issue a new certificate for the shares
surrendered to the person or persons entitled hereto.
Section 4. Return Certificates. All certificates for shares changed or
-------------------
returned to the Corporation for transfer shall be marked by the Secretary
"Cancelled," with the date of cancellation, and the transaction shall be
immediately recorded in the certificate book opposite the memorandum of their
issue. The returned certificate may be inserted in the certificate book.
ARTICLE VI
DIVIDENDS
Section 1. Declaration of Dividends. The Board of Directors at any regular
------------------------
or special meeting may declare dividends payable out of the surplus of the
Corporation, whenever in the exercise of its discretion it may deem such
declaration advisable. Such dividends may be paid in cash, property, or shares
of the Corporation.
ARTICLE VII
BILLS, NOTES, ETC.
Section 1. Execution. All bills payable, notes, checks, drafts, warrants,
---------
or other negotiable instruments of the Corporation shall be made in the name of
the Corporation and shall be signed by such officer or officers as the Board of
Directors shall from time to time by resolution direct.
No officer or agent of the Corporation, either singly or jointly with
others, shall have the power to make any bill payable, note, check, draft, or
warrant, or other negotiable instrument, or endorse the same in the name of the
Corporation, or contract
8
<PAGE>
or cause to be contracted any debt or liability in the name and on behalf of the
Corporation except as herein expressly prescribed and provided.
ARTICLE VIII
OFFICES
The principal office of the Corporation shall be located in the City of
Aurora, County of Arapaho, State of Colorado. The Board of Directors may change
the location of the principal office of the Corporation and may, from time to
time, designate other offices within or without the state as the business of the
Corporation may require.
ARTICLE IX
AMENDMENTS
Section 1. Manner of Amending. These Bylaws may be altered, amended,
------------------
repealed, or added to by the affirmative vote of the holders of a majority of
the shareholders entitled to vote in the election of any director at an annual
meeting or at a special meeting called for that purpose, provided that a written
notice shall have been sent to each shareholder of record entitled to vote at
such meeting at his last-known post office address at least ten days before the
date of such annual or special meeting, which notice shall state the
alterations, amendments,, additions, or changes which are proposed to be made in
such Bylaws. Only such changes shall be made as have been specified in the
notice. The Bylaws may also be altered, amended, repealed, or new Bylaws adopted
by a majority of the entire Board of Directors at a regular or special meeting
of the Board. However, any Bylaws adopted by the Board may be altered, amended,
or repealed by the shareholders.
9
<PAGE>
ARTICLE X
WAIVER OF NOTICE
Section 1. Authority to Waive Notice. Whenever under the provisions of
-------------------------
these Bylaws or of any statute any shareholder or director is entitled to notice
of any regular or special meeting or of any action to be taken by the
Corporation, such meeting may be held or such action may be taken without the
giving of such notice, provided every shareholder or director entitled to such
notice in writing waives the requirements of these Bylaws in respect thereto.
-----------------------------
Secretary
Approved:
- -------------------------------
Chairman
10
<PAGE>
Exhibit 3.14
------------
ARTICLES OF INCORPORATION
OF
ESCIA, INC.
I.
The name of the Corporation is:
"ESCIA, INC."
II.
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III
The Corporation has perpetual duration.
IV.
The Corporation is a corporation for profit and is organized for the
following purposes:
To distribute gasoline pumps and other types of equipment;
To do any and all acts and things necessary, convenient, expedient,
ancillary or helpful to the accomplishment of the foregoing; and
<PAGE>
To engage in any other lawful act or activity for which corporations
may be organized under the Georgia Business Corporation Code.
V.
The Corporation has authority to issue not more than 10,000 shares of
common stock of $.10 par value.
VI.
None of the holders of shares of common stock shall be entitled as a
matter of preemptive right to purchase, subscribe for or otherwise acquire any
new or additional shares of stock of the corporation of any class, or any
options or warrants to purchase, subscribe for or otherwise acquire any such new
or additional shares, or any shares, evidences of indebtedness or other
securities convertible into or carrying options or warrants to purchase,
subscribe for or otherwise acquire any such new or additional shares.
VII.
The Corporation shall not commence business until it shall have
received not less than five hundred ($500.00) dollars in payment for the issue
of shares of stock.
2
<PAGE>
VIII.
The initial registered office of the Corporation is 771 Spring Street,
N.W., Atlanta, Georgia 30308. The initial registered agent of the Corporation is
Scott D. Calhoun.
IX.
The initial Board of Directors shall consist of one who is:
J.E. Overmyer
P.O. Box 360
Fort Wayne, Indiana 46801
X.
The name and address of the Incorporator is;
Scott D. Calhoun
771 Spring Street, N.W.
Atlanta, Georgia 30308
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation.
/s/ Scott D. Calhoun
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Incorporator
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Exhibit 3.15
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ARTICLES OF AMENDMENT OF
ESCIA, INC.
(HENCEFORTH KNOWN AS
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.)
The Sole shareholder of ESCIA, Inc., a corporation organized and
existing under the laws of the State of Georgia, did on August 27, 1986 adopt an
Amendment to the Articles of Incorporation of said Corporation as follows:
I.
The name of the Corporation is ESCIA, INC.
II.
An Amendment to the Articles of Incorporation of said Corporation has
been adopted, changing the name of the Corporation to "SUNBELT HOSE & PETROLEUM
EQUIPMENT, INC."
III.
Said Amendment was adopted by the written consent of the sole holder
of all shares of the capital stock of the Corporation currently issued and
outstanding.
IV.
From and after the effective date of these Articles of Amendment, each
share of the outstanding capital stock of ESCIA, Inc. shall be automatically
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reclassified as a share of the same class in Sunbelt Hose & Petroleum Equipment,
Inc., and each holder shall be entitled to receive a certificate representing
shares in Sunbelt hose & Petroleum Equipment, Inc. upon presentation and
surrender to the Corporation of shares in ESCIA, Inc. Notwithstanding any
failure of any Shareholder to present and surrender any such shares, each
unsurrendered share certificate shall be deemed to represent the same number of
shares in Sunbelt Hose & Petroleum Equipment, Inc. as it represented in ESCIA,
Inc. prior to the effective date of these Articles of Amendment.
IN WITNESS WHEREOF, ESCIA, INC. has caused these Articles of Amendment
to be executed and its corporate seal to be affixed and has caused the foregoing
to be attested, all by its duly authorized officers on the 27th day of August,
1986.
ESCIA, INC. (Henceforth known as
SUNBELT HOSE & PETROLEUM
EQUIPMENT, INC.)
By:
------------------------------------
Its President
Attest:
- --------------------------------
Secretary
[Corporate Seal]
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Exhibit 3.16
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BY-LAWS
OF
SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.
ARTICLE 1
OFFICES
1.1 The corporation shall at all times maintain a registered office
and a registered agent in the State of Georgia, both of which may be changed by
resolution of the Board of Directors.
1.2 The corporation may have offices at such place or places (within
or without the State of Georgia) as the Board of Directors may from time to time
appoint or the business of the corporation may require or make desirable.
ARTICLE 2
SHAREHOLDERS MEETINGS
2.1 All meetings of the stockholders shall be held at the registered
office of the corporation in the State of Georgia or at such other place within
or without the State of Georgia or as may be determined by the Board of
Directors or the President and as shall be designated in the notice of said
meeting.
2.2 An annual meeting of the shareholders shall be held on the second
Wednesday in April in each year, if not a legal holiday, and if a legal holiday,
then on the next following day not a legal holiday, at 10:00 o'clock a.m., at
which the shareholders shall elect by a plurality vote a Board of Directors and
transact such other business as may properly be brought before the meeting.
2.3 Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or the Articles of
Incorporation, may be called by the President, and shall be called by the
President or the Secretary when
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so directed by the Board of Directors, or at the request in writing of any two
or more directors, or at the request in writing of shareholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
2.4 Except as otherwise required by statute or the Articles of
Incorporation, written notice of each meeting of the shareholders, whether
annual or special, shall be served, either personally or by mail, upon each
shareholder of record entitled to vote at such meeting, not less than ten nor
more than fifty days before such meeting. If mailed, such notice shall be
directed to a shareholder at his post office address last shown on the records
of the corporation. Notice of any special meeting of shareholders shall state
the purpose or purposes for which the meeting is called. Notice of any meeting
of shareholders shall not be required to be given to any shareholder who, in
person or by his attorney thereunto authorized, either before or after such
meeting, shall waive such notice. Attendance of a shareholder at a meeting,
either in person or by proxy, shall of itself constitute waiver of notice and
waiver of any and all objections to the place of the meeting, the time of the
meeting, and the manner in which it has been called or convened, except when a
shareholder attends a meeting solely for the purpose of stating, at the
beginning of the meeting, any such objection or objections to the transaction of
business. No waiver of notice of a shareholders meeting with respect to a plan
of merger or a plan of consolidation shall be effective unless the provisions of
paragraph (1) of subsection (d) of Section 14-2-113 of the Georgia Business
Corporation Code are followed. Notice of any adjourned meeting need not be
given otherwise than by announcement at the meeting at which the adjournment is
taken.
2.5 The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by law, by the
Articles of Incorporation, or by these By-Laws. If, however, such majority
shall not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall be
present. At such adjourned meeting at which a quorum shall be present in person
or by proxy, any business may be transacted that might have been transacted at
the meeting as originally called.
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2.6 At every meeting of the shareholders, including (but without
limitation of the generality of the foregoing language) meetings of the
shareholders for the election of directors, any shareholder having the right to
vote shall be entitled to vote in person, or by proxy, but no proxy shall be
voted after eleven months from its date, unless said proxy provides for a longer
period. Each shareholder shall have one vote for each share of stock having
voting power, registered in his name on the books of the corporation. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, except as otherwise provided by law, by the
Articles of Incorporation or by these By-Laws.
2.7 Whenever the vote of shareholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action, the
meeting and vote of the shareholders may be dispensed with if all of the
shareholders who would have been entitled to vote upon the action if such
meeting were held shall consent in writing to such corporate action being taken.
No such consent shall be effective as approval of a plan of merger or plan of
consolidation unless the provisions of subparagraph (d) of Section 14-2-112 of
the Georgia Business Corporation Code are followed.
ARTICLE 3
DIRECTORS
3.1 Except as may be otherwise provided by any legal agreement among
shareholders, the property and business of the corporation shall be managed by
its Board of Directors. In addition to the powers and authority by these By-
Laws expressly conferred upon it, the Board of Directors may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
law, by any legal agreement among shareholders, by the Articles of
Incorporation, or by these By-Laws directed or required to be exercised or done
by the shareholders.
3.2 The Board of Directors shall consist of at least one (but if the
Board of Directors consists of only one member then at least fifty-one percent
of the stock of the corporation must be held by one person) but not more than
eleven members, the precise number to be fixed by resolution of the shareholders
from time to time. Each director (whether elected at an annual meeting of
shareholders or otherwise) shall hold office until the annual meeting of
shareholders held next after
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his election and until a qualified successor shall be elected, or until his
earlier death, resignation, incapacity to serve or removal. Directors need not
be shareholders.
3.3 If any vacancy shall occur among the directors by reason of
death, resignation, incapacity to serve, increase in the number of directors, or
otherwise, the remaining directors shall continue to act, and such vacancies may
be filled by a majority of the directors then in office, though less than a
quorum, and, if not theretofore filled by action of the directors, may be filled
by the shareholders at any meeting held during the existence of such vacancy.
3.4 The Board of Directors may hold its meetings at such place or
places (within or without the State of Georgia) as it or the President may from
time to time determine and as shall be designated in the notice of said meeting.
3.5 Directors may be allowed such compensation for attendance at
regular or special meetings of the Board of Directors and of any special or
standing committees thereof as may be from time to time determined by resolution
of the Board of Directors.
3.6 Any director may be removed from office, with or without cause,
upon the majority vote of the shareholders, at a meeting with respect to which
notice of such purpose is given.
ARTICLE 4
COMMITTEES
4.1 (a) The Board of Directors may by resolution adopted by a
majority of the entire Board, designate an Executive Committee of three or more
directors. Each member of the Executive Committee shall hold office until the
first meeting of the Board of Directors after the annual meeting of shareholders
next following his election and until his successor member of the Executive
Committee is elected or until his death, resignation, or removal, or until he
shall cease to be a director.
(b) During the intervals between the meetings of the Board of
Directors, the Executive Committee may exercise all of the powers of the Board
of Directors in the management of the business affairs of the corporation,
including all powers herein or in the Articles of Incorporation specifically
granted to the Board of
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Directors, and may authorize the seal of the corporation to be affixed to all
papers which may require it; provided, however, that the Executive Committee
shall not have the power to amend or repeal any resolution of the Board of
Directors that by its terms shall not be subject to amendment or repeal by the
Executive Committee, and the Executive Committee shall not have the authority of
the Board of Directors in reference to (1) amending the Articles of
Incorporation or By-Laws of the corporation; (2) adopting a plan of merger or
consolidation; (3) the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the corporation; or (4) a voluntary
dissolution of the corporation or a revocation of any such voluntary
dissolution.
(c) The Executive committee shall meet from time to time on call of
the President or of any two or more members of the Executive Committee. Meetings
of the Executive Committee may be held at such place or places, within or
without the State of Georgia, as the Executive Committee shall determine or as
may be specified or fixed in the respective notices or waivers of such meetings.
The Executive Committee may fix its own rules of procedure, including provision
for notice of its meetings. It shall keep a record of its proceedings and shall
report these proceedings to the Board of Directors at the meeting thereof held
next after they have been taken, and all proceedings shall be subject to
revision or alteration by the Board of Directors except to the extent that
action shall have been taken pursuant to or in reliance upon such proceedings
prior to any such revision or alteration.
(d) The Executive Committee shall act by majority vote of its
members.
(e) The Board of Directors, by resolution adopted in accordance with
paragraph (a) of this section, may designate one or more directors as alternate
members of any such committee, who may act in the place and stead of any absent
member or members or any meeting of such committee.
4.2 The Board of Directors, by resolution adopted by a majority of
the entire Board, may designate one or more additional committees, each
committee to consist of two or more of the directors of the corporation, which
shall have such name or names and shall have and may exercise such powers of the
Board of Directors, except the powers denied to the Executive Committee, as may
be determined from time to time by the Board of Directors.
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4.3 The Board of Directors shall have power at any time to remove any
member of any committee, with or without cause, and to fill vacancies in and to
dissolve any such committee.
ARTICLE 5
MEETINGS OF THE BOARD OF DIRECTORS
5.1 Each newly elected Board of Directors shall meet at the place and
time which shall have been determined, in accordance with the provisions of
these By-laws, for the holding of the regular meeting of the Board of Directors
scheduled to be held next following the annual meeting of the shareholders at
which the newly elected Board of Directors shall have been elected, or, if no
place and time shall have been fixed for the holding of such meeting of the
Board of Directors, then immediately following the close of such annual meeting
of shareholders and at the place thereof, or such newly elected Board of
Directors may hold such meeting at such place and time as shall be fixed by the
consent in writing of all the directors. In any such case no notice of such
meeting to the newly elected directors shall be necessary in order legally to
constitute the meeting.
5.2 Regular meetings of the Board of Directors may be held without
notice at such time and place (within or without the State of Georgia) as shall
from time to time be determined by the Board of Directors.
5.3 Special meetings of the Board of Directors may be called by the
President on not less than two days' notice by mail, telegram, cablegram or
personal delivery to each director and shall be called by the President or the
Secretary in like manner and on like notice on the written request of any two or
more directors. Any such special meeting shall be held at such time and place
(within or without the State of Georgia) as shall be stated in the notice of
meeting.
5.4 No notice of any meeting of the Board of Directors need state the
purposes thereof.
5.5 At all meetings of the Board of Directors, the presence of one-
third of the authorized number of directors, but not less than two directors,
shall be necessary and sufficient to constitute a quorum for the transaction of
business. The act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically
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provided by law, by the Articles of Incorporation or by these By-Laws. In the
absence of a quorum, a majority of the directors present at any meeting may
adjourn the meeting from time to time until a quorum be had. Notice of any
adjourned meeting need only be given by announcement at the meeting at which the
adjournment is taken.
5.6 Any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all members of the Board or of
such committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board or committee.
5.7 Members of the Board of Directors, or any committee designate by
such Board, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this paragraph shall constitute presence in person at such
meeting.
ARTICLE 6
OFFICERS
6.1 The Board of Directors at the first meeting after each annual
meeting of shareholders shall elect the following officers: a President, one or
more Vice-Presidents (one of whom may be designated Executive Vice-President),
if desired, a Secretary and a Treasurer. The Board of Directors at any time and
from time to time may appoint such other officers as it shall deem necessary,
including one or more Assistant Vice-Presidents, one ore more Assistant
Treasurers, and one or more Assistant Secretaries, who shall hold their offices
for such terms as shall be determined by the Board of Directors and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
6.2 Any person may hold any two or more offices, except that no
person may hold both the officers of President and Secretary. No officer need
be a shareholder.
6.3 The salaries of the officers of the corporation shall be fixed by
the Board of Directors, except that the Board of Directors may delegate to any
officer
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or officers the power to fix the compensation of any officer appointed in
accordance with the second sentence of Section 6.1 of these By-Laws.
6.4 Each officer of the corporation shall hold office until his
successor is chosen or until his earlier resignation, death or removal, or the
termination of his office. Any officer may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation will be served
thereby.
PRESIDENT
6.5 The President shall be the chief executive officer of the
corporation and shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall be ex officio a member of all
standing committees, unless otherwise provided in the resolution appoint the
same. The President shall call meetings of the shareholders, the Board
Directors, and the Executive Committee to order and shall act as Chairman of
such meetings.
VICE-PRESIDENTS
6.6 The Vice-President shall perform such duties as are generally
performed by vice-presidents. The Vice-Presidents shall perform such other
duties and exercise such other powers as the Board of Directors shall request or
delegate. The Assistant Vice-Presidents shall have such powers, and shall
perform such duties, as may be prescribed from time to time by the Board of
Directors, or the President.
SECRETARY
6.7 The Secretary shall attend all sessions of the Board of Directors
and all meetings of the shareholders and record all votes and the minutes of all
proceedings in books to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
any notice required to be given of any meetings of the shareholders and of the
Board of Directors, and shall perform such other duties is may be prescribed by
the Board of Directors, under whose supervision he shall be. The Assistant
Secretary or Assistant Secretaries shall, in the absence or disability of the
Secretary, or at his request, perform his duties and exercise his powers and
authority.
TREASURER
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6.8 The Treasurer shall have charge of and be responsible for all
funds, securities, receipts and disbursements of the corporation, and shall
deposit, or cause to be deposited, in the name of the corporation, all monies or
other valuable effects, in such banks, trust companies or other depositories as
shall, from time to time, be selected by the Board of Directors, he shall render
to the President and to the Board of Directors, whenever requested, an account
of the financial condition of the corporation, and in general, he shall perform
all the duties incident to the office of a Treasurer of a corporation, and shall
perform such other duties as may be assigned to him by the Board of Directors,
or the President.
6.9 In case of the absence of any officer of the corporation, or for
any other reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, any or all the powers or duties of
such officer to any officer or to any director.
ARTICLE 7
CAPITAL STOCK
7.1 The interest of each shareholder shall be evidenced by a
certificate or certificates representing shares or stock of the corporation
which shall be in such form as the Board of Directors may from time to time
adopt and shall be numbered and shall be entered in the books of the corporation
as they are issued. Each certificate shall exhibit the holder's name, the number
of shares and class of shares and series, if any, represented thereby, a
statement that the corporation is organized under the laws of the State of
Georgia, and the par value of each share or a statement that the shares are
without par value. Each certificate shall be signed by the President or a Vice-
President and the Secretary or an Assistant Secretary and shall be sealed with
the seal of the corporation; provided, however, that where such certificate is
signed by a transfer agent, or by a transfer clerk acting on behalf of the
corporation and a registrar, the signature of any such officer and such seal,
may be facsimile. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates may nevertheless be delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signature or signatures shall have been used thereon had not ceased to be such
officer or officers.
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7.2 The corporation shall keep a record of the shareholders of the
corporation which readily shows, in alphabetical order or by alphabetical index,
and by classes of stock, the names of the shareholders entitled to vote, with
the address of and the number of shares held by each. Said record shall be
presented at all meetings of the shareholders.
7.3 Transfers of stock shall be made on the books of the corporation
only by the person named in the certificate, or by attorney lawfully constituted
in writing, and upon surrender of the certificate therefor, or in the case of a
certificate alleged to have been lost, stolen or destroyed, upon compliance with
the provisions of Section 7.7 of these By-Laws.
7.4 (a) For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed fifty days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than fifty days, and in
case of a meeting of shareholders, not less than ten days, prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken.
7.5 The corporation shall be entitled to treat the holder of any
share of stock of the corporation as the person entitled to vote such share, to
receive any dividend or other distribution with respect to such share, and for
all other purposes and accordingly shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.6 The Board of Directors may appoint one or more transfer agents
and one or more registrars and may require each stock certificate to bear the
signature or signatures of a transfer agent or a registrar or both.
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7.7 Any person claiming a certificate of stock to be lost, stolen, or
destroyed shall make an affidavit or affirmation of the fact in such manner as
the Board of Directors may require and shall, if the directors so require, give
the corporation a bond or indemnity in form and amount and with one or more
sureties satisfactory to the Board of Directors, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.
ARTICLE 8
MISCELLANEOUS
Inspection of Books
8.1 (a) No shareholder of the corporation shall be permitted to
copy, examine, inspect or have access to any of the books or records of the
corporation, except as is herein provided.
(b) The Minute Books, Stock Transfer Ledger and Main Account
Ledger (excluding all subsidiary account ledgers) of the corporation shall be
open for examination by any shareholder only under and upon the following
conditions:
(1) Any shareholder desiring to copy, examine, inspect or
have access to the aforesaid records shall submit to the Secretary of the
corporation a written request, accompanied by a sworn affidavit; (1) that
he has been a shareholder of record for not less than six calendar months
preceding the date of the request, or that he is the holder of record of or
has certified authorizations from the holders of record of, not less than
five percent of all the outstanding shares of any class or series of the
corporation; (2) stating in full detail the purpose or purposes of the
inspection and that the inspection is not desired for a purpose which is in
the interest of a business or object other than the business of this
corporation; and (3) that neither he nor any of those under whose authority
he is proceeding, if any, have within five years preceding the date of the
affidavit and request, sold, offered for sale or aided or abetted any
person in selling or offering for sale, any list of the shareholders of any
corporation, nor do they, or any of them, currently plan to sell or offer
for sale any list of the shareholders of the corporation.
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(2) If the Secretary or a majority of the Directors or
members of the Executive Committee of the corporation find the request
proper, the Secretary shall notify the shareholder within thirty days after
receipt of said request of the time, which shall not be more than thirty
days after such notification, and place at which the inspection may be
conducted.
(3) If said request is found by the Secretary, the Board
of Directors or the Executive Committee not to be proper, the Secretary
shall so notify the requesting shareholder within thirty days after receipt
of the request. The Secretary shall specify in said notice the basis for
rejection of the shareholder's request.
(4) The Secretary, the Board of Directors and the
Executive Committee shall at all times be entitled to rely on the
corporation records in making any determination hereunder.
(c) Each paragraph and subparagraph contained in this Section 8.1
is separable and in the event any paragraph is held invalid it shall not affect
the validity of any other paragraph or subparagraph.
Fiscal Year
8.2 The fiscal year of the corporation shall be determined by the
appropriate officers of the corporation upon such outside advice and counsel as
they may deem necessary.
Seal
8.3 The corporate seal shall be in such form as the Board of
Directors may from time to time determine but now exists as follows:
Annual Statements
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8.4 Not later than four months after the close of each fiscal year,
and, in any case, prior to the next annual meeting of shareholders, the
corporation shall prepare:
(1) A balance sheet showing in reasonable detail the financial
condition of the corporation as of the close of its fiscal year; and
(2) A profit and loss statement showing the results of its
operation during its fiscal year.
Upon written request, the corporation promptly shall mail to any shareholders of
record a copy of the most recent such balance sheet and profit and loss
statement.
Appointments of Agents
8.5 The President or any Vice-President shall be authorized and
empowered in the name and as the act and deed of the corporation to name and
appoint general and special agents, representatives and attorneys to represent
the corporation in the United State or in any foreign country or countries and
to name and appoint attorneys and proxies to vote any shares of stock in any
other corporation as any time owned or held of record by the corporation, and to
prescribe, limit and define the powers and duties of such agents,
representatives, attorneys and proxies and to make substitution, revocation or
cancellation in whole or in part of any power or authority conferred on any such
agent, representative, attorney or proxy. All powers of attorney or other
instruments under which such agents, representatives, attorneys or proxies shall
be so named and appointed shall be signed and executed by the President or a
Vice-President, and the corporate seal shall be affixed thereto. Any
substitution, revocation or cancellation shall be signed in like manner,
provided always that any agent, representative, attorney or proxy when so
authorized by the instrument appointing him may substitute or delegate his
powers in whole or in part and revoke and cancel such substitutions or
delegations. No special authorization by the Board of Directors shall be
necessary in connection with the foregoing, but this By-Law shall be deemed to
constitute full and complete authority to the officers above designated to do
all the acts and things as they deem necessary or incidental thereto or in
connection therewith.
Indemnification
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8.6 (a) Under the circumstances prescribed in paragraphs (c) and (d)
of this Section, the corporation shall indemnify and hold harmless any person
who was or is a party or is threatened to be made a party of any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
unlawful. the termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, or with respect to any criminal action or
proceeding, in a manner which he had reasonable cause to believe was lawful.
(b) Under the circumstances prescribed in paragraphs (c) and (d)
of this section, the corporation shall indemnify and hold harmless any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact he is or was serving at
the request of the corporation as a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the corporation,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
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(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
(d) Except as provided in paragraph (c) of this section and except as
may be ordered by a court, any indemnification under paragraphs (a) and (b) of
this section shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested directors so directs, by the firm of independent
legal counsel then employed by the corporation, in a written opinion, or (3) the
affirmative vote of a majority of the shares entitled to vote thereon.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this section.
(f) The indemnification provided by this section shall not be deemed
exclusive or any other right to which the persons indemnified hereunder shall be
entitled and shall inure to the benefit of the heirs, executors or
administrators of such persons.
(g) The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation
15
<PAGE>
would have the power to indemnify him against such liability under the
provisions of this section.
(h) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or by an insurance carrier
pursuant to insurance maintained by the corporation, the corporation shall, not
later than the next annual meeting of the shareholders, unless such meeting is
held within three months from the date of such payment, and, in any event,
within fifteen months from the date of such payment, sent by first class mail to
its shareholders of record at the time entitled to vote for the election of
directors, a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
Disallowed Deductions
8.7 Any payments made to an officer of the corporation such as a
salary, commission, bonus, interest, rent, or entertainment expense incurred by
him which shall be disallowed in whole or in part as a deductible expense by the
Internal Revenue Service shall be reimbursed by such officer to the corporation
to the full extent of such disallowances. It shall be the duty of the
Directors, as a Board, to enforce payment of each such amount disallowed. In
lieu of payment by the officer, subject tot he determination of the Directors,
proportionate amounts may be withheld from his future compensation payments
until the amount owed to the corporation has been recovered.
ARTICLE 9
NOTICES: WAIVERS OF NOTICE
9.1 Except as otherwise specifically provided by these By-Laws,
whenever under the provisions of these By-Laws notice is required to be given to
any shareholder, director or officer, it shall not be construed to mean personal
notice, but such notice may be given either by personal notice or by radio,
cable or telegraph, or by mail by depositing the same in the post office or
letter box in a postpaid sealed wrapper, addressed to such shareholder, officer
or director at such address as appears on the books of the corporation, and such
notice shall be deemed to be given at the time when the same shall be thus sent
or mailed.
16
<PAGE>
9.2 When any notice whatever is required to be given by law, by the
Articles of Incorporation or by these By-Laws, a waiver thereof by the person or
persons entitled to said notice given before or after the time stated therein,
in writing, which shall include a waiver given by telegraph, radio, or cable,
shall be deemed equivalent thereto. No notice of any meeting need be given to
any person who shall attend such meeting, except when a shareholder attends a
meeting solely for the purpose of stating at the beginning of the meeting any
objection to the transaction of business, and so states his objection at the
beginning of the meeting, or when a director states, at the beginning of the
meeting, any such objection to the transaction of business.
ARTICLE 10
EMERGENCY POWERS
10.1 The Board of Directors may adopt emergency By-Laws subject to
repeal or change by action of the shareholders, which shall, notwithstanding any
provision of law, the Articles of Incorporation or these By-Laws, be operative
during any emergency in the conduct of the business of the corporation resulting
from an attack on the United States or on a locality in which the corporation
conducts its business or customarily holds meetings of its Board of Directors or
its shareholders, or during any nuclear or atomic disaster, or during the
existence of any catastrophe, or other similar emergency condition, as a result
of which a quorum of the Board of Directors or a standing committee thereof
cannot readily be convened for action. The emergency By-Laws may make any
provision that may be practical and necessary for the circumstances of the
emergency.
10.2 The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
corporation shall for any reason be rendered incapable of discharging their
duties.
10.3 The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the head office or designate
several alternative head offices or regional offices, or authorize the officers
so to do.
10.4 To the extent not inconsistent with any emergency By-Laws so
adopted, these By-Laws shall remain in effect during any such emergency and upon
its termination the emergency By-Laws shall cease to be operative.
17
<PAGE>
10.5 Unless otherwise provided in emergency By-Laws, notice of any
meeting of the Board of Directors during any such emergency may be given only to
such of the directors as it may be feasible to reach at the time, and by such
means as may be feasible at the time, including publication, radio or
television.
10.6 To the extent required to constitute a quorum at any meeting of
the Board of Directors during any such emergency, the officers of the
corporation who are present shall, unless otherwise provided by emergency By-
Laws, be deemed, in order of rank and within the same rank in order of
seniority, directors for such meeting.
10.7 No officer, director, agent or employee acting in accordance
with any emergency By-Laws shall be liable except for willful misconduct. No
officer, director, agent, or employee shall be liable for any action taken by
him in good faith in such an emergency in furtherance of the ordinary business
affairs of the corporation even though not authorized by the By-Laws then in
effect.
ARTICLE 11
AMENDMENTS
11.1 The By-Laws of the corporation may be altered or amended and new
By-Laws may be adopted by the shareholders at any annual or special meeting of
the shareholders or by the Board of Directors at any regular or special meeting
of the Board of Directors; provided, however, that if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the By-Laws shall have been given in the notice of the meeting. Any
By-Laws adopted by the Board of Directors may be altered, amended or repealed,
and new By-Laws adopted, by the shareholders. The shareholders may prescribe
that any By-Law or By-Laws adopted by them shall not be altered, amended or
repealed by the Board of Directors.
18
<PAGE>
Exhibit 3.17
------------
ARTICLES OF INCORPORATION
OF
TOKHEIM BASE SYSTEMS, INC.
The undersigned, a natural person of the age of eighteen (18) years or
more, acting as incorporator of a corporation under the Texas Business
Corporation Act, hereby adopts the following Articles of incorporation:
ARTICLE I
NAME
----
The name of the corporation is Tokheim Base Systems, Inc.
ARTICLE II
DURATION
--------
The period of the corporation's duration is perpetual.
ARTICLE III
PURPOSE
-------
The purpose or purposes for which the corporation is organized are to
transact any and all lawful business for which corporations may be incorporated
under the Texas Business Corporation Act; to buy, sell, lease, own, and deal in
and to transact
<PAGE>
business with respect to real and personal property and services; and in
general, to have and exercise all the powers conferred by the laws of Texas upon
corporations formed under the Texas Business Corporation Act, and to do any and
all of the things hereinbefore set forth to the same extent as natural persons
might or could.
ARTICLE IV
AUTHORIZED SHARES
-----------------
The aggregate number of shares which the corporation shall have
authority to issue is 10,000 shares at no par value per share. The shares are
designated as Common Stock and have identical rights and privileges in every
respect.
ARTICLE V
COMMENCEMENT OF BUSINESS
------------------------
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of $1,000 consisting of
money, labor done, or property actually received,
ARTICLE VI
PREEMPTIVE RIGHTS AND CUMULATIVE VOTING
---------------------------------------
The shareholders of the corporation shall not have preemptive rights
to acquire additional, unissued, or treasury shares of the corporation or
securities of the corporation convertible into or carrying a right to subscribe
to or acquire shares. Cumulative voting of shares of the corporation shall not
be permitted.
2
<PAGE>
ARTICLE VII
AGENT FOR PROCESS
-----------------
The address of the corporation's initial registered office is 10857
Rockley Road, Houston, Texas 77099, and the name of its initial registered agent
at such address is Donald J. Drapp.
ARTICLE VII
DIRECTORS
---------
The number of directors constituting the initial board of directors of
the corporation is three (3), and the name and address of the persons who are to
serve as directors until the first meeting of the shareholders or until their
successors are elected and have qualified are:
NAME ADDRESS
---- -------
Randolph J. Straka 10857 Rockley Road
Houston, Texas 77099
John E. Overmyer 10857 Rockley Road
Houston, Texas 77099
Donald J. Drapp 10857 Rockley Road
Houston, Texas 77099
A director of the corporation shall not be liable to the corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director of the corporation, except for:
3
<PAGE>
(1) a breach of a director's duty of loyalty to the corporation
or its shareholders:
(2) an act or omission not in good faith or that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which a director receives an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office;
(4) an act or omission for which the liability of a director is
expressly provided for by statute; or
(5) an act related to an unlawful stock repurchase or payment
of a dividend.
ARTICLE IX
INCORPORATORS
-------------
The name and address of the incorporator of the corporation is:
NAME ADDRESS
---- -------
Edward K. Clark 1300 Capitol Center
919 Congress Avenue
Austin, Texas 78701
4
<PAGE>
EXECUTED on the 26th day of September, 1988.
/s/ Edward K. Clark
_________________________________________
Edward K. Clark, Incorporator
STATE OF TEXAS (S)
(S)
COUNTY OF TRAVIS (S)
Before me, a Notary Public, on the ______ day of September, 1988,
personally appeared Edward K. Clark, who, being by me first duly sworn, said
that he is the person who signed the foregoing document as incorporator, and
that the statements therein contained are true and correct.
_________________________________________
Notary Public, State of Texas
5
<PAGE>
Exhibit 3.18
------------
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
TOKHEIM BASE SYSTEMS, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which changes the name of the
corporation.
I.
NAME
----
The name of the corporation is TOKHEIM BASE SYSTEMS, INC.
II.
DATE OF ADOPTION
----------------
The following amendment to the Articles of Incorporation was adopted
by the shareholders and the Board of Directors of the corporation on the 17th
day of October, 1988.
Articles I of the Articles of Incorporation is hereby amended to
change the name of the corporation to read as follows:
The name of the corporation is MINI BASE SYSTEMS, INC.
1
<PAGE>
III.
SHAREHOLDER VOTE
----------------
The number of the shares of the corporation outstanding at the time of
the adoption of this Amendment was 1,000 shares of the common capital stock of
the corporation; and the number of shares entitled to vote thereon was 1,000
shares of the common capital stock of the corporation. The holders of all of the
shares of common capital stock outstanding and entitled to vote an the foregoing
Amendment have signed a Consent in Writing adopting this Amendment.
SIGNED this 17th day of October, 1988.
/s/ Vickroy E. Stone
--------------------
VICKROY E. STONE
President
/s/ Carol Bell
--------------
CAROL BELL
Assistant Secretary
THE STATE OF TEXAS (S)
COUNTY OF HARRIS (S)
I, the undersigned Notary Public, do hereby certify that on the 18th
day of October, 1988, personally appeared before me VICKROY E. STONE, who
declared to me that he is the President of TOKHEIM BASE SYSTEMS, INC., a Texas
corporation, and being first duly sworn, acknowledged that he executed the
foregoing instrument in the capacity therein set forth and declares that the
statements contained therein are true and correct.
2
<PAGE>
IN WITNESS WHEREOF, I hereunto set my hand and seal the day and year
before written.
------------------------------------
NOTARY PUBLIC, STATE OF TEXAS
------------------------------------
(printed name of notary)
Commission Expires
------------------
3
<PAGE>
Exhibit 3.19
------------
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
MINI BASE SYSTEMS, INC.
- -------------------------------------------------------------------------------
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which changes the name of the
corporation.
I.
NAME
----
The name of the corporation is MINI BASE SYSTEMS, INC.
II.
DATE OF ADOPTION
----------------
The following amendment to the Articles of Incorporation was adopted
by the shareholders and the Board of Directors of the corporation on the 28th
day of November, 1989.
Article I of the Articles of Incorporation is hereby amended to change
the name of the corporation to read as follows:
The name of the corporation is TOKHEIM AUTOMATION CORPORATION.
<PAGE>
III
SHAREHOLDER VOTE
----------------
The number of the shares of the corporation outstanding at the time of
the adoption of this Amendment was 10,000 shares of the common capital stock of
the corporation; and the number of shares entitled to vote thereon was 10,000
shares of the common capital stock of the corporation. The holders of all of the
shares of common capital stock outstanding and entitled to vote on the foregoing
Amendment have signed a Consent in Writing adopting this Amendment.
SIGNED this 28th day of November, 1989.
/s/ Donald J. Drapp
--------------------------
DONALD J. DRAPP
Chairman of the Board and
Chief Executive Officer
THE STATE OF TEXAS (S)
COUNTY OF HARRIS (S)
I, the undersigned Notary Public, do hereby certify that on the 28th
day of November, 1989, personally appeared before me DONALD J. DRAPP, who
declared to me that he is the Chairman of the Board and Chief Executive Officer
of MINI BASE SYSTEMS, INC., a Texas corporation, and being first duly sworn,
acknowledged that he executed the foregoing instrument in the capacity therein
set forth and declares that the statements contained therein are true and
correct.
2
<PAGE>
IN WITNESS WHEREOF, I hereunto set my hand and seal the day and year
before written.
/s/ Carol Bell
--------------------------------
NOTARY PUBLIC, STATE OF TEXAS
Carol Bell
--------------------------------
(printed name of notary)
Commission Expires 4/23/92
-----
3
<PAGE>
Exhibit 3.20
------------
BYLAWS OF
TOKHEIM AUTOMATION CORPORATION
ARTICLE 1
OFFICES
-------
1.01 The registered and principal office of the Corporation is 10857
Rockley Road, and the name of the registered agent of the Corporation at such
address is Donald J. Drapp. The Corporation may also have offices at such other
places both within and without the State of Texas as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE 2
SHAREHOLDERS' MEETINGS
----------------------
Place of Meetings
2.01 All meetings of the Shareholders shall be held at the registered
office of the Corporation, or any other place within or without this State, as
may be designated for that purpose from time to time by the Board of Directors.
Time of Annual Meeting
2.02 The annual meeting of the Shareholders shall be held each year
within one hundred fifty (150) days after the end of the Corporation's fiscal
year on such date as the Board of Directors shall designate.
Special Meetings
2.03 Special meetings of the Shareholders for any purpose or purposes
whatsoever may be called at any time by the CEO or President; or by the Board of
<PAGE>
Directors; or by any two (2) or more Directors, or if there are two or less
Directors, by any Director; or by one or more Shareholders, holding not less
than one-tenth (1/10th) of all the shares entitled to vote at the meeting.
Notice of Meeting
2.04 Notice of a meeting of the Shareholders, stating the place, day
and hours of the meeting, and, in case of a special meeting, the purpose or
purposes for which the meeting is called, unless waived in writing, shall be
given in writing to each Shareholder entitled to vote at the meeting at least
ten (10) but not more than fifty (50) days before the date of the meeting either
personally or by mail or other means of written communication, addressed to the
Shareholder at his address appearing on the books of the Corporation or given by
him to the Corporation for the purpose of notice. Notice of the adjourned
meetings is not necessary unless the meeting is adjourned for thirty (30) days
or more, in which case notice of the adjourned meeting shall be given as in the
case of any special meeting.
Quorum
2.05 A majority of the voting shares represented in person or by proxy
constitutes a quorum for the transaction of business. Business may be continued
until adjournment after withdrawal of enough Shareholders to leave less than a
quorum.
Voting
2.06 When a quorum is present at a meeting, the vote of a majority of
the shares having voting power, present in person, or represented by proxy,
shall decide any question brought before the meeting, unless the question is one
on which a higher vote is required by statutes, the Articles of Incorporation,
or these Bylaws, in which case the express provision shall govern. Only persons
in whose names shares appear on the share records of the Corporation on the date
on which notice of the meeting is mailed shall be entitled to vote at such
meeting, unless some other day is fixed by the Board of Directors for the
determination of Shareholders of record. Cumulative voting denied to all
Shareholders. Each Shareholder of record may cast one vote for each director's
position for each share of stock of which he is the record owner. The
candidates receiving the highest number of votes up to the number of Directors
to be elected are elected.
2
<PAGE>
Voting by Voice or Ballot
2.07 Voting for the election of Directors shall be by voice unless any
Shareholder demands a ballot vote before the voting begins.
Proxies
2.08 Every person entitled to vote or execute consents may do so
either in person or by written proxy executed in writing by the Shareholder or
his duly authorized attorney in fact. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided in the proxy.
Each proxy shall be revocable unless expressly provided therein to be
irrevocable or unless otherwise made irrevocable by law.
Consent of Absentees
2.09 No defect in the calling or noticing of a Shareholders' meeting
will affect the validity of any action at the meeting if a quorum was present,
and if each Shareholder not present in person or by proxy signs a written waiver
of notice, consents to the holding of the meeting, or approval of the minutes,
either before or after the meeting, and such waivers, consents, or approvals are
filed with the corporate records or made a part of the minutes of the meeting.
Action Without Meeting
2.10 Any action required to be taken at a meeting of the Shareholders,
or any other action which may be taken at a meeting of the Shareholders, may be
taken by Shareholder without a meeting if each Shareholders entitled to vote
signs a written consent to the action and such consents are filed with the
Secretary of the Corporation.
Telephone and Similar Meetings
2.11 Shareholders, Directors and committee members may participate in
and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at the meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
3
<PAGE>
Conduct of Meetings
2.12 At every meeting of the Shareholders, the CEO, or in his or her
absence, the President or Vice President designated by the CEO, or, in the
absence of such designation, a chairperson (who shall be the President or one of
the Vice Presidents, if any is present) chosen by a majority in interest of the
Shareholders of the Corporation present in person or by proxy and entitled to
vote, shall act as chairperson. The Secretary of the Corporation, or in his or
her absence, an Assistant Secretary, shall act as Secretary of all meetings of
the Shareholders. In the absence at such meeting of the Secretary or Assistant
Secretary, the chairperson may appoint another person to act as Secretary of the
meeting. The chairperson of any meeting of Shareholders shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seen to him or her in
order.
ARTICLE 3
DIRECTORS
---------
Powers
3.01 The Directors shall act only as a board, and an individual
Director shall have no power as such unless there is at the time only one
Director. All corporate powers of the Corporation shall be exercised by, or
under the authority of, and the business and affairs of the Corporation shall be
controlled by, the Board of Directors, subject, however, to such limitations as
are imposed by law, the Articles of Incorporation, or these Bylaws, as to
actions to be authorized or approved by the Shareholders. The Board of
Directors may be contract or otherwise, give general or limited or special power
and authority to the officers and employees of the Corporation to transact the
general business, or any special business, of the Corporation to transact any
special business requiring such authorization.
Number and Qualification of Directors
3.02 The authorized number of Directors of this Corporation shall be
three (3). The Directors need not be Shareholders of this Corporation or
residents of Texas. The number of Directors may be increased or decreased from
time to time by
4
<PAGE>
amendment to these Bylaws, but an decrease shall have the effect of shortening
the term of any incumbent Director. Any directorship to be filled by election at
an annual meeting or at a special meeting of Shareholders called for that
purpose.
Election and Term of Office
3.03 The Directors shall be elected annually by the Shareholders
entitled to vote and shall hold office until their respective successor are
elected, or until their death, resignation or removal.
Vacancies
3.04 Vacancies in the Board of Directors may be filled by a majority
of the remaining Directors, though less than a quorum, or by a sole remaining
Director. The Shareholders may elect a Director at any time to fill any vacancy
not filled by the Directors. A Director elected to fill a vacancy shall be for
the unexpired term of the predecessor Director.
Removal of Directors
3.05 The entire Board of Directors or any individual Director may be
removed from office by a vote of Shareholders holding a majority of the
outstanding shares entitled to vote at an election of Directors. If any or all
Directors are so removed, new Directors may be elected at the same meeting.
Place of Meetings
3.06 All meetings of the Board of Directors shall be held at the
principal office of the Corporation or at such place within or without the state
as may be designated from time to time by resolution of the Board or by written
consent of all of the members of the Board.
Regular Meetings
3.07 Regular meetings of the Board of Directors shall be held, without
call or notice, immediately following each annual meeting of the Shareholders of
this Corporation, and at such other times as the Directors may determine. The
meetings may be held by conference telephone.
5
<PAGE>
Special Meetings--Call and Notice
3.08 Special meetings of the Board of Directors for any purpose shall
be called at any time by the President, or if he or she is absent or unable or
refuses to act, by any Vice President or any two Directors, or if there are two
or less Directors, by any Director. Written notices of the special meetings,
stating the time, and, in general, the purpose or purposes thereof, shall be
mailed or telegraphed or personally delivered to each Director, as provided
below, not later than three days before the day appointed for the meetings.
Special meetings of the Board may be held by conference telephone. If the
address or a Director is not shown on the records and is not readily
ascertainable, notice shall be addressed to him at his last known address.
Validation of Meeting Defectively Called or Noticed
3.09 The transactions of any meeting of the Board of Directors,
however called and noticed or wherever held, are valid as though a meeting had
been duly held after regular call and notice, if a quorum is present and if,
either before or after the meeting, each of the Directors not present signs a
waiver of notice, a consent to holding the meeting, or an approval of the
minutes thereof. All such waivers, consents, or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting. Attendance
by a Director at the meeting shall constitute a waiver of notice of the meeting,
unless the express purpose for such attendance is to present the objection that
the meeting is not lawfully called or convened.
Quorum
3.10 A majority of the authorized number of Directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the Directors present shall be regarded as the act of the Board of
Directors, unless a greater number be required by law or by the Articles of
Incorporation. Each Director who is present at a meeting will be deemed to have
assented to any action taken at such meeting unless his or her dissent to such
action is entered in the minutes of the meeting, or unless he or she shall file
his or her written dissent thereto with the Secretary of the meeting or shall
forward such dissent by registered mail to the Secretary of the Corporation
immediately after such meeting.
6
<PAGE>
Board Action Without Meeting
3.11 Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting and shall have the same force and
effect as a unanimous vote of Directors, if all members of the Board shall
individually consent in writing to such action. As permitted by Article 9.10C
of the Texas Business Corporation Act, members of the Board of Directors, or
members of any committee designated by such Board, may participate and hold a
meeting of the Board of Directors or any committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in such
meeting pursuant to a conference call or similar communications equipment shall
constitute presence in person at such meeting.
Adjournment--Notice
3.12 A quorum of the Directors may adjourn any Directors' meeting to
meet again at a stated day and hour. Notice of the time and place of holding an
adjourned meeting need not be given to absent Directors if the time and place is
fixed at the meeting adjourned, but shall be supplied on request. In the
absence of a quorum, a majority of the Directors present at any Directors'
meeting, either regular or special, may adjourn from time to time until the time
fixed for the next regular meeting of the Board.
Conduct of Meetings
3.13 The President, or, in his or her absence, any Director selected
by the Directors present, shall preside at meetings of the Board of Directors.
The Secretary of the Corporation, or in his absence, any person appointed by the
presiding officer, shall act as Secretary of the Board of Directors.
Compensation
3.14 Directors shall serve without compensation for their services as
directors, but may receive from the Corporation such fees for attendance at
meetings and such reimbursement for expenses as may be fixed or determined by
resolution of the Board. Any Director may serve the Corporation in any other
capacity as an officer, agent, employee or otherwise and receive compensation
therefor.
7
<PAGE>
ARTICLE 4
OFFICERS
--------
Title and Appointment
4.01 The officers of the Corporation shall be a President, Vice
President, Secretary, and Treasurer and such other assistants and other
officers as the Board of Directors shall from time to time determine. Any two
offices, except President and Secretary, may be held by one person. All
officers shall be elected by and hold office at the pleasure of the Board of
Directors, which shall fix compensation (if any) and tenure of all officers.
Vacancies
4.02 If the office of the President, Vice President, Secretary,
Assistant Secretary (if any), Treasurer, or Assistant Treasurer (if any) becomes
vacant by reason of death, resignation, removal, or otherwise, the Board of
Directors shall elect a successor who shall hold office for the unexpired term,
and until his or her successor is elected.
President
4.03 The CEO shall be the chief executive officer of the Corporation
shall, subject to the control of the Board of Directors, have general
supervision, direction, and control of the business and officers of the
Corporation, and shall have the general powers and duties of management usually
vested in the general powers and duties of management usually vested in the
office of CEO of a Corporation, and shall have such other powers and duties as
may be prescribed by the Board of Directors or the Bylaws. Within this
authority and in course of his or duties he or she shall:
(1) Preside at all meetings of the Shareholders and at all meetings of
the Board of Directors, and shall be ex officio a member of all the standing
committees, if any.
(2) Sign all certificates of stock of the Corporation, in conjunction
with the Secretary or Assistant Secretary, unless otherwise ordered by the Board
of Directors.
(3) When authorized by the Board of Directors or required by law,
execute, in the name of the Corporation, deeds, conveyances, notices, leases,
checks,
8
<PAGE>
drafts, bills of exchange, warrants, promissory notes, bonds, debentures,
contracts, and other papers and instruments in writing, and unless the Board of
Directors shall order otherwise by resolution, make such contracts as the
ordinary conduct of the Corporation's business may require.
(4) Appoint and remove, employ and discharge, and prescribe the duties
and fix the compensation of all agents, employees, and clerks of the Corporation
other than the duly appointed officers, subject to the approval of the Board of
Directors, and control, subject to the direction of the Board of Directors, all
of the officers, agents, and employees of the Corporation.
4.04 The President shall be the Chief Operating Officer of the
Corporation and shall, subject to the control of the Board of Directors and the
CEO, have day to day supervision, direction, and control of the business and
officers of the Corporation. The President shall have such other powers and
duties as prescribed by the Board of Directors, the CEO or the Bylaws.
Vice President
4.05 In the absence or disability of the President, the Vice
Presidents, in order of their rank as fixed by the Board of Directors or, if not
ranked, the Vice President designated by the Board of Directors, shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions on, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board of Directors
of the Bylaws.
Secretary
4.06 The Secretary shall:
(1) Sign, with the CEO, or President or a Vice President, certificates
for shares of the Corporation.
(2) Attest and keep at the principal office of the Corporation the
original or a copy of its Bylaws as amended or otherwise altered to date.
(3) Keep at the principal office of the Corporation or such other
place as the Board of Directors may order, a book of minutes of all meetings of
its Directors
9
<PAGE>
and Shareholders, executive committee, and other committees, with the time and
place of holding, whether regular or special, and, if special, how authorized,
the notice thereof given, the names of those present or represented at
Shareholders' meetings, and the proceedings thereof.
(4) Sign or attest such documents as may be required by law or the
business of the Corporation, and keep the corporate seal and affix it to such
instruments as may be necessary or proper.
(5) See that all notices are duly given in accordance with the
provisions of these Bylaws as required by law.
(6) Be custodian of the records and of the seal of the Corporation and
see that it is engraved, lithographed, printed, stamped, impressed upon or
affixed to all certificates for shares prior to their issuance.
(7) Keep at the principal office of the Corporation a share register
or duplicate share register showing the names of the Shareholders and their
addresses; the number, date of issue, and class of shares represented by each
outstanding share certificate; and the number and date of cancellation of each
certificate surrendered for cancellation.
(8) See that the books, reports, statements, certificates and all
other documents and recordi required by law are properly kept and filed.
(9) In general, perform all duties incident to the office of
Secretary, and such other duties as from time to time may be assigned to him or
her by the Board of Directors.
(10) In case of the absence or disability of the Secretary or his or
her refusal or neglect to act, the Assistant Secretary may perform all of the
functions of the Secretary. In the absence or inability to act, or refusal or
neglect to act of both the Secretary and the Assistant Secretary, any person
there unto authorized by the President or Vice President or by the Board of
Directors may perform the functions of the Secretary.
Assistant Secretary
10
<PAGE>
4.07 At the request of the Secretary, or in his or her absence or
disability, the Assistant Secretary, shall perform all the duties of the
Secretary, and when so acting, he or she shall have all the powers of, and be
subject to all the restrictions on, the Secretary. The Assistant Secretary
shall perform such other duties as from time to time may be assigned to him or
her by the Board of Directors, or the Secretary.
Treasurer
4.08 The Treasurer shall:
(1) Be the custodian of the corporate funds and securities, keep full
and accurate accounts of receipts and disbursements of the Corporation, and
deposit all moneys and other valuables in the name and to the credit of the
Corporation in depositories designated by the Board of Directors.
(2) Disburse the funds of the Corporation as ordered by the board of
Directors, and prepare financial statements as they direct.
(3) If required by the Board of Directors, give the Corporation a bond
(in such form, in such sum, and with such surety or sureties as shall be
satisfactory to the Board of Directors) for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement, or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the Corporation.
(4) Perform such other duties and have such other authority and powers
as the Board of Directors may from time to time prescribe or as the President
may from time to time delegate.
Assistant Treasurer
4.09 The assistant treasurers in the order of their seniority, unless
otherwise determined by the Board of Directors, shall in the absence or
disability of the Treasurer, perform the duties and have the authority and
exercise the powers of the Treasurer. They shall perform such other duties and
have such other powers as the Board of Directors may from time to time prescribe
or the President may from time to time delegate.
11
<PAGE>
ARTICLE 5
EXECUTION OF INSTRUMENTS
------------------------
Authority for Execution of Instruments
5.01 The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, agent or agents, to enter into
any contract or execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and, unless so authorized (including authorization by other
provisions of these Bylaws), no officer, agent, or employee shall have any power
or authority to bind the Corporation by any contract or engagement or to pledge
its credit or to render it liable pecuniarily for any purpose or in any amount.
Execution of Instruments
5.02 Unless otherwise specifically determined by the Board of
Directors or otherwise required by law, formal contracts of the Corporation,
promissory notes, deeds of trust, mortgages and other evidences of indebtedness
of the Corporation, and other corporate instruments or documents, and
certificates of shares of stock owned by the Corporation, shall be executed,
signed or endorsed by a Director, CEO, or the President or any Vice President
and by the Secretary or any Assistant Secretary, and may have the corporate seal
affixed thereto.
ARTICLE 6
ISSUANCE AND TRANSFER OF SHARES
-------------------------------
Certificates for Paid and Unpaid Shares
6.01 Certificates for shares (both treasury and authorized but
unissued) of the Corporation shall be issued for such consideration (not less
than par value) and to such persons as the Board of Directors may determine from
time to time. Shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been fully paid.
12
<PAGE>
Share Certificates
6.02 The Corporation shall deliver certificates representing all
shares to which Shareholders are entitled, which certificates shall be in such
form not inconsistent with that required by law and the Articles of
Incorporation, as shall be approved and provided by the Board of Directors.
Each certificate shall bear upon its face the statement that the Corporation is
organized in Texas, the name in which it is issued, the number and class of
shares and series, and the par value. Certificates shall be consecutively
numbered and shall be entered in the books of the Corporation as they are
issued. The certificate shall be signed by the President or a Vice President
and a Secretary or an Assistant Secretary, which signatures may be in facsimile
if the certificates are to be countersigned by a transfer agent or registered by
a registrar, (either of which is other than the Corporation or an employee of
the Corporation), and the seal of the Corporation shall be affixed thereto. The
certificates shall contain on the faces or backs such recitations or references
as are required by law.
Share Certificates If More Then One
Class of Shares Ever Authorized
6.03 If the Corporation is ever authorized to issue more than one
class of shares, then each certificate of stock representing shares issued by
the Corporation shall contain the information required by Article 2.19B of the
Texas Business Corporation Act in the form prescribed by said Article.
Payment for Shares
6.04 The consideration for the issuance of shares shall consist of
money paid, labor done (including services actually performed for the
Corporation, or property (tangible or intangible) actually received. Neither
promissory notes nor the promise of future services shall constitute payment for
shares. In the absence of fraud in the transaction, the judgment of the Board
of Directors as to the value of consideration received shall be conclusive.
When consideration, fixed as provided by law, has been paid, the share shall be
deemed to have been issued and shall be considered fully paid and nonassessable.
The consideration received for shares shall be allocated by the Board of
Directors, in accordance with law, between stated capital and capital surplus
accounts.
13
<PAGE>
Replacement of Certificates
6.05 No new certificates shall be issued until the former certificate
for the share represented thereby shall have been surrendered and cancelled,
except in the case of lost or destroyed certificates for which the Board of
Directors may order new certificates to be issued upon such terms, conditions,
and guarantees as the Board may see fit to impose, including the filing of
sufficient indemnity.
Transfer of Shares
6.06 Share of the Corporation may be transferred by endorsement by the
signature of the owner, his or her agent, attorney, or legal representative, and
the delivery of the certificate. The transferee in any transfer of shares shall
be deemed to have full notice of, and to consent to, the Bylaws of the
Corporation to the same extent as if he or she had signed a written assent
thereto.
Conditions of Transfer
6.07 A person in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof as regards the Corporation;
provided that whenever any transfer of shares shall be made for collateral
security, and not absolutely, and written notice thereof shall be given to the
Secretary of the Corporation or its transfer agent, if any, such fact shall be
stated in the entry of the transfer.
Reasonable Doubts as to Right to Transfer
6.08 When a transfer of shares is requested and there is reasonable
doubt as to the right of the person seeking the transfer, the Corporation or its
transfer agent, before recording the transfer of the share on its books or
issuing any certificate therefor, may require from the person seeking the
transfer reasonable proof of his or her right to the transfer, the Corporation
may refuse a transfer unless the person gives adequate security or a bond of
indemnity executed by a corporate surety or by two individual sureties
satisfactory to the Corporation as to form, amount, and responsibility of
sureties. The bond shall be agents, and registrars, or any of them, against any
loss, damage, expense, or other liability to the owner of the shares by reason
of the recordation of the transfer or the issuance of a new certificate for
shares.
14
<PAGE>
ARTICLE 7
DIVIDENDS
---------
7.01 The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares, in cash or property.
However, no dividends may be declared which would render the Corporation
insolvent. Dividends may be declared and paid only out of the unreserved and
unrestricted earned surplus of the Corporation. Dividends may be paid with the
shares of the Corporation's stock, whether Treasury shares or unissued shares,
upon compliance with the provisions of Article 2.38 of the Texas Business
Corporation Act.
Corporate Seal
7.02 The Board of Directors shall provide a suitable seal, containing
the name of the Corporation. The Secretary shall have charge of the seal.
Relation to Articles of Incorporation
7.03 These Bylaws are subject to, and governed by, the Articles of
Incorporation.
ARTICLE 8
AMENDMENT OF BYLAWS
-------------------
8.01 The power to alter, amend, or reveal these Bylaws is vested in
the Directors by majority vote, subject to repeal or charge by action of the
Shareholders.
15
<PAGE>
Signatures and Attestation
Adopted by the Board of Directors on ___________________, 19__, but
effective back to _____________________, 19__, the date of incorporation of the
Corporation.
---------------------------------------------
CEO
---------------------------------
ATTEST
- ------------------------------------
Secretary
- -------------------------
CORPORATE SEAL
16
<PAGE>
Exhibit 3.21
------------
CERTIFICATE OF INCORPORATION
OF
TOKHEIM EQUIPMENT CORPORATION
FIRST: The name of the Corporation is Tokheim Equipment
-----
Corporation (hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation
------
in the State of Delaware is 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful
-----
act or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation
------
shall have authority to issue is One Thousand (1000) shares of Common Stock,
each having a par value of one penny ($.01).
FIFTH: The name and mailing address of the Sole Incorporator is
-----
as follows:
Name Address
---- -------
Mary E. Keogh P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the management
-----
of the business and the conduct of the affairs of the Corporation, and for
further
<PAGE>
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless
the By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this Article
SIXTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time
of such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
2
<PAGE>
SEVENTH: Meetings of stockholders may be held within or without
-------
the State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
------
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
21st day of September, 1998.
/s/ Mary Keogh
----------------------------------
Mary Keogh
Sole Incorporator
3
<PAGE>
Exhibit 3.22
------------
BY-LAWS
OF
TOKHEIM EQUIPMENT CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of the
--------- -----------------
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
--------- -------------
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. Meetings of the stockholders for the
--------- -----------------
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
<PAGE>
Section 2. Annual Meetings. The Annual Meetings of Stockholders for
--------- ---------------
the election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
Section 3. Special Meetings. Unless otherwise required by law or by
--------- ----------------
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, (iii) any Vice President, if
there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be
one, and shall be called by any such officer at the request in writing of (i)
the Board of Directors, (ii) a committee of the Board of Directors that has been
duly designated by the Board of Directors and whose powers and authority include
the power to call such meetings or (iii) stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting. At a
Special Meeting of Stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto).
Section 4. Notice. Whenever stockholders are required or permitted
--------- ------
to take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
special
2
<PAGE>
meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
Section 5. Adjournments. Any meeting of the stockholders may be
--------- ------------
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the
--------- ------
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to
3
<PAGE>
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, in the manner provided in Section 5,
until a quorum shall be present or represented.
Section 7. Voting. Unless otherwise required by law, the Certificate
--------- ------
of Incorporation or these By-laws, any question brought before any meeting of
stock holders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class.
Unless otherwise provided in the Certificate of Incorporation, and subject to
Section 5 of Article V hereof, each stock holder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Such votes may be cast
in person or by proxy but no proxy shall be voted on or after three years from
its date, unless such proxy provides for a longer period. The Board of
Directors, in its discretion, or the officer of the Corporation presiding at a
meeting of stockholders, in such officer's discretion, may require that any
votes cast at such meeting shall be cast by written ballot.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless
--------- ------------------------------------------
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
4
<PAGE>
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8 to
the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its registered
office in the state of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had
5
<PAGE>
been the date that written consents signed by a sufficient number of holders to
take the action were delivered to the Corporation as provided above in this
section.
Section 9. List of Stockholders Entitled to Vote. The officer of the
--------- -------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder of the Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation shall
---------- ------------
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Conduct of Meetings. The Board of Directors of the
---------- -------------------
Corporation may adopt by resolution such rules and regulations for the conduct
of
6
<PAGE>
the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
7
<PAGE>
ARTICLE III
DIRECTORS
---------
Section 1. Number and Election of Directors. The Board of Directors
--------- --------------------------------
shall consist of not less than one nor more than fifteen members, the exact
number of which shall initially be fixed by the Incorporator and thereafter from
time to time by the Board of Directors. Except as provided in Section 2 of this
Article III, directors shall be elected by a plurality of the votes cast at the
Annual Meetings of Stockholders and each director so elected shall hold office
until the next Annual Meeting of Stockholders and until such director's
successor is duly elected and qualified, or until such director's earlier death,
resignation or removal. Any director may resign at any time upon written notice
to the Corporation. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise required by law or the
--------- ---------
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining direc tor, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the
--------- -----------------
Corporation shall be managed by or under the direction of the Board of Directors
8
<PAGE>
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors may hold meetings, both
--------- --------
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or by any director. Notice thereof stating the
place, date and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the meeting, by
telephone or telegram on twenty-four (24) hours' notice, or on such shorter
notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
--------- ------
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the
9
<PAGE>
meeting from time to time, without notice other than announcement at the meeting
of the time and place of the adjourned meeting, until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise provided in
--------- --------------------------
the Certificate of Incorporation, or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
--------- -----------------------------------------
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate one or
--------- ----------
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of
10
<PAGE>
a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
--------- ------------
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
---------- --------------------
the Corporation and one or more of its directors or officers, or between the
Corpora-
11
<PAGE>
tion and any other corporation, partnership, association, or other organization
in which one or more of its directors or officers are directors or officers or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because the director or officer's vote is
counted for such purpose if (i) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to the director or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or ratified
by the Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
12
<PAGE>
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen
--------- -------
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, also may choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law or
the Certificate of Incorporation. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting
--------- --------
held after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the affirmative vote of the Board of
Directors. Any vacancy occurring in any
13
<PAGE>
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
--------- ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
--------- ----------------------------------
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the
14
<PAGE>
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as may from time to
time be assigned by these By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of
--------- ---------
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The
President
15
<PAGE>
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these By-Laws or by the Board
of Directors.
Section 6. Vice Presidents. At the request of the President or in
--------- ---------------
the President's absence or in the event of the President's inability or refusal
to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
--------- ---------
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The
16
<PAGE>
Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors, the Chairman
of the Board of Directors or the President, under whose supervision the
Secretary shall be. If the Secretary shall be unable or shall refuse to cause to
be given notice of all meetings of the stockholders and special meetings of the
Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest to the affixing by such officer's signature. The Secretary shall see
that all books, reports, statements, certificates and other documents and
records required by law to be kept or filed are properly kept or filed, as the
case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
--------- ---------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in
17
<PAGE>
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all transactions as Treasurer and
of the financial condition of the Corporation. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of the Treasurer and for
the restoration to the Corporation, in case of the Treasurer's death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the Treasurer's possession or under
the Treasurer's control belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if there be
--------- ---------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
18
<PAGE>
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
---------- --------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging to
the Corporation.
Section 11. Other Officers. Such other officers as the Board of
---------- --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
19
<PAGE>
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
--------- --------------------
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate
--------- ----------
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a
--------- -----------------
new certificate to be issued in place of any certificate theretofore issued by
the Corpo ration alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof,
20
<PAGE>
require the owner of such lost, stolen or destroyed certificate, or the owner's
legal representative, to advertise the same in such manner as the Board of
Directors shall require and/or to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable
--------- ---------
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
Section 5. Record Date.
--------- -----------
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than
21
<PAGE>
ten days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preced ing the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; providing, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having
22
<PAGE>
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolutions
taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to
--------- -------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls
23
<PAGE>
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise required by law.
ARTICLE VI
NOTICES
-------
Section 1. Notices. Whenever written notice is required by law, the
--------- -------
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
--------- -----------------
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance
of a person at a meeting,
24
<PAGE>
present in person or represented by proxy, shall constitute a waiver of notice
of such meeting, except where the person attends the meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in its absolute discretion, deems proper
as a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
25
<PAGE>
Section 2. Disbursements. All checks or demands for money and notes
--------- -------------
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
--------- -----------
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
--------- --------------
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
--------- ---------------------------------------------------------
than Those by or in the Right of the Corporation. Subject to Section 3 of this
- ------------------------------------------------
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, em-
26
<PAGE>
ployee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
--------- ---------------------------------------------------------
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
- -------------------------------
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director,
27
<PAGE>
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation; except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
--------- --------------------------------
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by inde-
28
<PAGE>
pendent legal counsel in a written opinion or (iii) by the stockholders. To the
extent, however, that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination
--------- ------------------
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceed ing, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture,
29
<PAGE>
trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
--------- --------------------------
determination in the specific case under Section 3 of this Article VIII, and
notwith standing the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indem nification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If
30
<PAGE>
successful, in whole or in part, the director or officer seeking indemnification
shall also be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
--------- ---------------------------
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement of
--------- ----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or
- --------
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the
31
<PAGE>
Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
--------- ---------
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
--------- -------------------
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the
32
<PAGE>
same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
---------- -------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 11. Limitation on Indemnification. Notwithstanding anything
---------- -----------------------------
contained in this Article VIII to the contrary, except for proceedings to
enforce
33
<PAGE>
rights to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a pro ceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
---------- ---------------------------------------
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
----------
Section 1. Amendments. These By-Laws may be altered, amended or
--------- ----------
repealed, in whole or in part, or new By-Laws may be adopted by the stockholders
or by the Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
34
<PAGE>
Section 2. Entire Board of Directors. As used in this Article IX and
--------- -------------------------
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
35
<PAGE>
Exhibit 3.23
------------
ARTICLES OF INCORPORATION
OF
TOKHEIM INVESTMENT CORP.
The undersigned, a natural person of the age of eighteen years or
more, acting as sole incorporator of a corporation under the provisions of the
Texas Business Corporation Act, adopts the following Articles of Incorporation:
ARTICLE I
The name of the Corporation is TOKHEIM INVESTMENT CORP.
ARTICLE II
The period of duration of the Corporation is perpetual.
ARTICLE III
The purposes for which the Corporation is organized are as follows:
(1) Subject to Part Four of the Texas Miscellaneous Corporation Act,
to buy or otherwise acquire, own, hold, manage and(or) control real and personal
property of every kind, nature and description and securities and interests of
every kind and nature, including its own stock and stock in any of its
subsidiaries or other corporations, and to sell, convey, mortgage, pledge, lease
or otherwise dispose of such property or any part thereof;
<PAGE>
(2) To transact the business of investing, on behalf of itself or
others, any part of its capital and such additional funds as it may have or
obtain, or any interest therein, howsoever held, and to sell or otherwise
dispose of the same or any part thereof and(or) any interest therein;
(3) To coordinate, manage, oversee and otherwise deal with both the
domestic and international interests of the Corporation, including any and all
subsidiaries thereof, as may be permitted by law and deemed to be in the
interests of the Corporation;
(4) To secure and employ such investment counseling or services as it
may deem appropriate and to maintain such brokerage, trading, investment,
security, banking or other interests, seats or accounts as it shall deem
appropriate and of assistance in the management, control, acquisition, transfer
or divestiture of investments on behalf of the Corporation;
(5) To do any and all of the acts and interests herein set forth, and
every other act and thing incidental thereto or connected therewith, to the same
extent as a natural person could do, and in any part of the world, to act as
principal, factor, agent, or otherwise, either alone or in partnership with any
person, association, corporation, or others, to exercise all or any of its
corporate powers and rights in the State of Texas, and in any and all other
states, territories, districts, possessions, or other countries or places,
provided that the same not be forbidden by law; and
2
<PAGE>
(6) To do any and transact all lawful business.
ARTICLE IV
Section 4.1 Authorized Shares. The aggregate number of shares of all
-----------------
classes of stock which the corporation has authority to issue is 5,000 shares of
common stock with a par value of $1.00 per share.
Section 4.2 Denial of Preemptive Rights. No shareholder or other
---------------------------
person shall have any preemptive right whatsoever.
Section 4.3 Denial of Cumulative Voting. Cumulative voting shall not
---------------------------
be permitted.
ARTICLE V
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of at least $1,000.
ARTICLE VI
Without necessity for action by its shareholders, the Corporation may
purchase, directly or indirectly, its own shares to the extent of the aggregate
of unrestricted capital surplus available therefor and unrestricted reduction
surplus available therefor.
ARTICLE VII
Section 7.1 Voting Requirement. Notwithstanding any provision of the
------------------
Texas Business Corporation Act which requires the vote or concurrence of the
3
<PAGE>
holders of more than a majority of the shares of the Corporation entitled to
vote to take an action, the vote or concurrence of the holders of a majority of
the shares of the Corporation entitled to vote shall be sufficient to take such
action.
Section 7.2 Quorum Requirement. The holders of at least fifty
------------------
percent of the shares of the Corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at any meeting of shareholders of the
Corporation.
Section 7.3 Interested Transactions. No contract or other
-----------------------
transaction between the Corporation and one or more of its directors, officers
or securityholders or between the Corporation and another corporation,
partnership, joint venture, trust or other enterprise of which one or more of
the Corporation's directors, officers or securityholders are members, officers,
securityholders, directors or employees or in which they are otherwise
interested, directly or indirectly, shall be invalid solely because of such
relationship, or solely because such a director, officer or security holder is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or other transaction, or solely because
his or their votes are counted for such purpose, if (A) the material facts as to
his relationship or interest and as to the contract or other transaction are
known or disclosed to the Board of Directors or committee thereof, and such
board or committee in good faith aurhorizes the contract or other transaction by
the affirmative vote of a majority of the disinterested directors even though
the disinterested directors be
4
<PAGE>
less than a quorum, or (B) the material facts as to his relationship or interest
and as to the contract or other transaction are known or disclosed to the
shareholders entitled to vote thereon, and the contract or other trans action is
approved in good faith by vote of the shareholders, or (C) as of the time it is
entered into, the contract or other transaction is fair as to the Corporation.
ARTICLE VIII
Section 8.1 Indemnification. The Corporation, by action of its Board
---------------
of Directors, may indemnify any director or officer of the Corporation, and any
person who may have served at the request of the Corporation as a director or
officer of another corporation in which it owns shares or of which it is a
creditor, against any costs and expenses, including counsel fees, actually and
necessarily incurred (or reasonably expected to be incurred) in connection with
the defense of any civil, criminal, administrative, investigative or other
action, suit or proceeding (whether by or in the right of the Corporation or
otherwise) in which he may become involved or with which he may be threatened,
by reason of his being or having been such a director or officer, and against
any payments in settlement of any such action, suit or proceeding or in
satisfaction of any related judgment, fine or penalty, provided that the Board
of Directors shall, in the exercise of its business judgment, determine that
such indemnification is in the best interests of the Corporation.
5
<PAGE>
Section 8.2 Advance Payment of Expenses. Expenses incurred in
---------------------------
defending a civil, criminal, administrative, investigative or other action,
suit, or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case on receipt of an undertaking by or on behalf of
the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation.
Section 8.3 Non-Exclusivity. The agreement of the Corporation to
---------------
indemnify any officer, director or other person pursuant to Section 8.1 of this
Article 8 shall not be deemed exclusive of any other rights to which any such
director, officer or other person may be entitled under any other agreement,
pursuant to a vote of shareholders, as a matter of law or otherwise, either as
to action in his official capacity or as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. No person shall be entitled to indemnification
pursuant to this Article 8 in relation to any matter as to which indemnification
shall not be permitted by law.
6
<PAGE>
ARTICLE IX
In performing his duties, a director of the Corporation shall be
entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by (A) one or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the matters
presented, (B) counsel, public accountants or other persons as to matters which
the director reasonably believes to be within such person's professional or
expert competence, or (C) a committee of the Board of Directors upon which he
does not serve, duly designated in accordance with a provision of the by-laws,
as to matters within its designated authority, which committee the director
deems to merit confidence, but he shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A person who so performs his duties shall have
no liability to the Corporation (whether asserted directly or derivatively) by
reason of being or having been a director of the Corporation.
ARTICLE X
The address of the initial registered office of the Corporation is 811
Dallas Avenue, Houston, Texas 77002, and the name of the initial registered
agent of the Corporation at such address is C T Corporation System.
7
<PAGE>
ARTICLE XI
The initial Board of Directors shall consist of three members who
shall serve as directors until the first annual meeting of shareholders or until
their successors shall have been elected and qualified, and whose names and
addresses are as follows:
Name Address
---- -------
Richard S. Doner 10412 Antelope Court
Fort Wayne, Indiana 46804
Joseph J. Guidrey 6829 Mohican Trail
Fort Wayne, Indiana 46804
J. E. Overmyer Route 1
Spencerville, Indiana 46788
8
<PAGE>
ARTICLE XII
The name and address of the incorporator of the Corporation are as
follows;
Name Address
---- -------
C. Christopher Scruggs 2900 South Tower Pennzoil Place
Houston, Texas 77002
IN WITNESS WHEREOF, I have hereunto set my hand this 11/th/ day of
November, l980.
/s/ G/ Christopher Scruggs
--------------------------------
G. Christopher Scruggs
Sworn to on November 11/th/, 1980 by the above named incorporator.
/s/ Ruthanne Rauls
--------------------------------
Notary Public in and for
[SEAL] Harris County, Texas
Ruthanne Rauls
--------------------------------
Print Name
My commission expires:
11/30/84
--------------------------------
9
<PAGE>
Exhibit 3.24
------------
BY-LAWS OF
TOKHEIM INVESTMENT CORP.
ARTICLE I
Offices and Agent
The Corporation may have such offices, either within or without the
State of Texas, as the Board of Directors may designate or as the business of
the Corporation may require from time to time.
The registered office of the Corporation required by the Texas
Business Corporation Act to be maintained in the State of Texas may be, but need
not be, identical with the principal office in the State of Texas, as designated
by the Board of Directors. The address of the registered office or the
identity of the registered agent may be changed from time to time by the Board
of Directors.
The address of the initial registered office of the Corporation is 811
Dallas Avenue, Houston, Texas 77002, and the name of the initial registered
agent of the Corporation at such address is C T Corporation System.
ARTICLE II
Shareholders
SECTION 1. Annual Meeting. The annual meeting of the shareholders
--------------
shall be held on such date in each year and at such time and place as may be
determined by the Board of Directors, for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the State of
Texas, such meeting shall be held on the next succeeding business day. If the
election of directors shall not be held on the day designated for any annual
meeting of the shareholders or at any adjournment thereof, the Board of
Directors shall cause the
<PAGE>
election to be held at a special meeting of the shareholders as soon thereafter
as may be convenient.
SECTION 2. Special Meetings. Special meetings of the shareholders,
----------------
for any purpose or purposes, may be called by the President or by the Board of
Directors, and shall be called by the President at the request of the holders of
not less than one-tenth of all the outstanding shares of the Corporation
entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate
----------------
any place, either within or without the State of Texas, as the place of meeting
for any annual or special meeting called by the Board of Directors. If no
designation is made, or if a special meeting be called otherwise than by the
Board of Directors, the place of meeting shall be the registered office of the
Corporation in the State of Texas.
SECTION 4. Notice of Meeting. Written or printed notice stating the
-----------------
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. Attendance by the shareholder,
whether in person or by proxy, at a shareholder's meeting shall constitute a
waiver of notice of such meeting of which he has had no notice.
SECTION 5. Closing of Transfer Books and Fixing of Record Date. For
---------------------------------------------------
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period not to exceed fifty days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may, by resolution, fix in advance a date as the
record date for any such determination of shareholders, such
2
<PAGE>
date in any case to be not more than fifty days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of closing
has expired.
SECTION 6. Voting Lists. The officer or agent having charge of the
------------
stock transfer books of the Corporation shall make, at least ten days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address and the number of shares held by each, which list, for a
period of ten days prior to such meeting, shall be kept on file at the
registered office of the Corporation, and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall also be
produced and opened at the time and place of the meeting and shall be subject to
the inspection by any shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
SECTION 7. Quorum. A majority of the outstanding shares of the
------
Corporation entitled to vote, and represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders unless a lesser number is
specified in the Articles of Incorporation of the Corporation (Quorum). If less
than a Quorum is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a Quorum shall be present or represented, any
business may be transacted which might have been transacted as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a Quorum.
3
<PAGE>
SECTION 8. Proxies. At all meetings of shareholders, a shareholder
-------
may vote by proxy executed in writing by the shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy. Each proxy shall be revocable unless expressly provided therein to be
irrevocable.
SECTION 9. Voting of Shares. Unless otherwise expressly provided in
----------------
the Articles of Incorporation of the Corporation, each outstanding share
entitled to vote shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders.
SECTION 10. Actions Without a Meeting. Any action required or
-------------------------
permitted to be taken at a meeting of shareholders, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof, and such consent shall have the same force and effect as a
unanimous vote of the shareholders. Such writing, which may be in counterparts,
shall be manually executed if practicable; provided, however, that if
circumstances so require, effect shall be given to written consent transmitted
by telegraph, telex, telecopy or similar means of visual data transmission.
SECTION 11. Telephone Meetings. Meetings of the shareholders of the
------------------
Corporation may be conducted by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear and speak to each other.
ARTICLE III
Board of Directors
SECTION 1. General Power. The business and affairs of the Corporation
-------------
shall be managed by its Board of Directors except as the Board of Directors
shall delegate the power to so manage to the Executive Committee or other
committee.
SECTION 2. Number, Tenure and Qualifications. The number of directors
---------------------------------
composing the initial Board of Directors shall be three. Upon resolution of
4
<PAGE>
the Board of Directors the number of directors may be increased or decreased,
but no decrease shall have the effect of shortening the term of any incumbent
director. Each director shall hold office until the next annual meeting of
shareholders, unless earlier removed, and until his successor shall have been
elected and qualified. A director need not be a resident of the State of Texas
or a shareholder of the Corporation.
SECTION 3. Regular Meetings. A regular meeting of the Board of
----------------
Directors shall be held without notice other than this by-law immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Texas, for the holding of additional regular meetings
without notice other than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by or at the request of the President or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Texas, as the place for holding any special meeting called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
------
least two days prior thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram, telex, telecopy or
similar means of visual date transmission. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, telex, telecopy or
similar means of visual data transmission, such notice shall be deemed to be
delivered when transmitted for delivery to the recipient. Any director may
waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because that meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice, or waiver of notice of such
meeting.
SECTION 6. Quorum. A majority of the number of directors fixed in
------
accordance with Section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the directors present
may adjourn
5
<PAGE>
the meeting from time to time without further notice.
SECTION 7. Manner of Acting.
----------------
(a) Actions at the Meeting. Except as provided in Paragraph (b) of
----------------------
this Section 7, the act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
(b) Actions Without a Meeting. Any action required or permitted to
-------------------------
be taken at a meeting of the Board of Directors or the Executive Committee or
any other committee may be taken without a meeting, if a consent in writing,
setting forth the action so taken, is signed by all of the members of the Board
of directors, Executive Committee or other committee, as the case may be. Such
consent shall have the same force and effect as a unanimous vote at a meeting.
Such writing, which may be in counterparts, shall be manually executed if
practicable; provided, however, that if circumstances so require, effect shall
be given to written consent transmitted by telegraph, telex, telecopy, or
similar means of visual data transmission.
(c) Telephone Meetings. Meetings of the Board of Directors of the
------------------
Corporation may be conducted by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear and speak to each other.
SECTION 8. Vacancies. Any vacancy occurring in the Board of Directors
---------
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall be filled only by action of the shareholders.
A vacancy shall be deemed to exist by reason of the death or resignation of
the person elected, or upon the failure of shareholders to elect directors to
fill the unexpired term of directors removed in accordance with the provisions
of Section 9 of this Article III.
SECTION 9. Removal. At any meeting of shareholders called expressly
-------
for the purpose of removal, any director or the entire Board of Directors may be
removed, with or without cause, by a vote of the holders of a majority of the
6
<PAGE>
shares then entitled to vote at an election of directors. Removal of directors
with or without cause may also be accomplished by unanimous written consent of
the shareholders without a meeting. In the case the entire board or any one or
more of the directors are so removed, new directors may be elected at the same
meeting, or
by the same written consent, for the unexpired term of the director or directors
so removed. Failure to elect directors to fill the unexpired term of the
directors so removed shall be deemed to create a vacancy or vacancies in the
Board of Directors.
SECTION 10. Compensation. By resolution of the Board of Directors,
------------
the directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 11. Presumption of Assent. A director of the Corporation who
---------------------
is present at a meeting of the Board of Directors in which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting, or unless he
shall file his written dissent to such action with the person acting as
Secretary of the meeting before the adjournment thereof, or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
SECTION 12. Executive and Other Committees. There may be established
------------------------------
an Executive Committee, and one or more other committees, composed of one or
more directors designated by resolution adopted by majority of the full number
of directors of the Board of Directors as fixed in accordance with Section 2 of
this Article III. The Executive Committee or such other committees may meet at
stated times, or on notice to all members by any one member. Vacancies in the
membership of the Executive Committee or such other committees shall be filled
by a majority vote of the full number of directors on the Board of Directors at
a regular meeting or at a special meeting called for that purpose. During the
intervals between meetings of the Board, the Executive Committee, if it shall
have been established, may advise and aid the officers of the Corporation in all
matters concerning its interest and the management of its business, and shall
generally perform such duties and exercise such powers as may be directed or
delegated by the Board of Directors from time to time. The Board of Directors
may delegate to the Executive Commit-
7
<PAGE>
tee or such other committees the authority to exercise all the powers of the
Board of Directors, including the power to declare dividends or to authorize the
issuance of shares of the Corporation except where action of the full Board of
Directors is required by the Texas Business Corporation Act. The designation of
and delegation of power to the Executive Committee shall not operate to relieve
the Board of Directors, or any members thereof, of any responsibility imposed
upon it or him by law.
ARTICLE IV
Officers
SECTION 1. Number. The officers of the corporation shall be a
------
President, one or more Vice-Presidents (the number thereof to be determined by
the Board of Directors), a Secretary, and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person except the
offices of President and Secretary.
SECTION 2. Election and Term of Office. The officers of the
---------------------------
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be convenient. Each
officer shall hold office until his successor shall have been duly elected and
shall have been qualified, or until his death, or until he shall resign or shall
have been removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer may be removed by the Board of
-------
Directors whenever in its judgment the best interests of the Corporation would
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal
---------
8
<PAGE>
executive officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
SECTION 6. The Vice Presidents. In the absence of the President or in
-------------------
the event of his death, inability or refusal to act, the Vice President (or
should there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation
then in the order of their election) shall perform the duties of President, and
when so acting, shave have all the powers of and be subject to all the
restrictions upon the President. He shall perform such other duties as from
time to time may be assigned to him by the President or the Board of Directors.
SECTION 7. The Secretary. The Secretary shall: (a) keep the minutes
-------------
of the shareholders' and the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws, or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation, and see that the seal
of the Corporation is affixed to all documents as may be necessary or
appropriate; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) have general
charge of the stock transfer books of the Corporation; and (f) in general,
perform all duties incident to the office of Secretary, and such other duties as
from time to time may be designated to him by the President or the Board of
Directors.
SECTION 8. The Treasurer. If required by the Board of Directors, the
-------------
Treasurer shall give a bond for the faithful discharge of his duties in such
sum, and with such surety or sureties, as the Board of Directors shall
determine. He shall: (a) have charge and custody of, and be responsible for,
all funds and securities of the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such banks, trust
companies, or other depositories as shall be selected by the Board of Directors;
and (b) in general perform all of the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
9
<PAGE>
SECTION 9. Assistant Secretaries and Assistant Treasurers. The
----------------------------------------------
Assistant Secretaries when authorized by the Board of Directors may sign with
the President, or a Vice President, certificates for shares of the Corporation
the issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
SECTION 10. Salaries. The salaries, if any, of the officers shall be
--------
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
ARTICLE V
Certificate for Shares, Transfer and Replacement
SECTION 1. Certificate for Shares. Certificate representing shares of
----------------------
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President, and by the Secretary or an Assistant Secretary. If such certificates
are signed or countersigned by a transfer agent or registrar, other than the
Corporation, such signature of the President or a Vice President and Secretary
or Assistant Secretary, and the seal of the Corporation, or any of them, may be
executed in facsimile, engraved or printed. If any officer who has signed or
whose facsimile signature has been placed on any certificate shall have ceased
to be such officer before the certificate is issued, it may be issued by the
Corporation with the same effect as if the officer has not ceased to be such at
the date of issue. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, stolen or destroyed certificate a new one may be issued therefor
provided in Section 3 of this Article V.
10
<PAGE>
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
------------------
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof, or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney, duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
SECTION 3. Lost, Stolen or Destroyed Certificates. The Corporation
--------------------------------------
shall issue a new certificate in place of any certificate for shares previously
issued if the registered owner of the certificate: (a) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (b) requests the
issuance of a new certificate before the Corporation has notice that the
certificate has been acquired by a purchaser for value in good faith and without
notice of an adverse claim; (c) gives a bond in such form, and with such surety
or sureties, with fixed or open penalty, as the Corporation may direct, to
indemnify the Corporation (and its transfer agent and registrar, if any) against
any claim that may be made on account of the alleged loss, destruction or theft
of the certificate; and (d) satisfies any other reasonable requirements imposed
by the Corporation. When a certificate has been lost, apparently destroyed or
wrongfully taken, and the holder of record fails to notify the Corporation
within a reasonable time after he has notice of it, and the Corporation
registers a transfer of the Shares represented by the certificate before
receiving such notification, the holder of record is precluded from making any
claim against the Corporation for the transfer or for a new certificate.
ARTICLE VI
Fiscal Year
The Board of Directors shall, by resolution, fix the fiscal year of
the corporation.
ARTICLE VII
Dividends
11
<PAGE>
The Board of Directors or the Executive Committee, if so authorized by
a resolution of the Board of Directors, may from time to time declare that the
Corporation may pay dividends on its outstanding shares in the manner provided
by law.
ARTICLE VII
Seal
The Board of Directors shall provide a corporate seal, which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation, and the five-pointed Texas star.
ARTICLE IX
Waiver of Notice
Whenever any notice is required to be given to any shareholder or
director of the Corporation under the provisions of these by-laws, the Articles
of Incorporation or the Texas Business Corporation Act, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE X
Procedure
Meetings of the shareholders and of the Board of Directors shall be
conducted in accordance with the procedure as contained in Robert's Rules of
Order, to the extent applicable.
ARTICLE XI
Participation of Directors and Officers in Related Business
Unless otherwise provided by contract, officers and directors of this
12
<PAGE>
Corporation may hold positions as officers and directors of other corporations,
in related businesses, and their efforts to advance the interest of those
corporations will not create a breach of fiduciary duty to this Corporation in
the absence of bad faith.
ARTICLE XII
Amendments
The power to alter, amend, or repeal the By-Laws or adopt new By-Laws
shall be vested in the Board of Directors.
13
<PAGE>
Exhibit 3.25
------------
CERTIFICATE OF FORMATION
OF
TOKHEIM RPS, LLC
1. The name of the limited liability company is Tokheim RPS, LLC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of Tokheim RPS, LLC on this 21st day of September, 1998.
TOKHEIM RPS, LLC
By: /s/ Mary E. Keogh
-----------------------------------
Name: Mary E. Keogh
Title: Authorized Person
<PAGE>
Exhibit 3.26
------------
LIMITED LIABILITY COMPANY AGREEMENT
OF
TOKHEIM RPS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
The undersigned Member hereby forms a limited liability company
pursuant to and in accordance with the Delaware Limited Liability Company Act, 6
Del. (S) 18-101, et seq. (the "Act"), and hereby agrees and declares as follows:
-- ---
1. Name. The name of the limited liability company formed hereby is
----
Tokheim RPS, LLC (the "LLC").
2. Purpose. The purpose of the LLC is to engage in any and all
-------
lawful activities to which the Members deem appropriate.
3. Registered Office. The registered office of the LLC in the State
-----------------
of Delaware is located at 1209 Orange Street, Wilmington, Delaware.
4. Registered Agent. The name and address of the registered agent
----------------
of the LLC for service of process on the LLC in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware.
5. Capital Accounts. An account shall be established in the LLC's
----------------
books for each Member (each a "Capital Account") in accordance with the rules of
Section 704 of the Internal Revenue Code of 1986 and Treasury Regulation Section
1.704-1(b)(2)(iv).
6. Percentage Interest and Allocations of Profits and Losses. Each
---------------------------------------------------------
Member's interest in the LLC shall be expressed as a percentage equal to the
ratio on any date of such Member's Capital Account on such date to the aggregate
Capital Accounts of all Members on such date, such Capital Accounts to be
determined after giving effect to all contributions of property or money,
distributions and allocations for all periods ending on or prior to such date
(as to any Member, his or her "Percentage Interest"). The LLC's profits and
losses shall be allocated in accordance with the Percentage Interests of the
Members. Each member's Capital Account and Percentage Interest will be
reflected on Schedule A hereto.
<PAGE>
7. Admission and Capital Contributions. Simultaneously with the
-----------------------------------
execution and delivery of this Agreement, Gasboy International, Inc. is admitted
as the initial Member of the LLC. The address of Gasboy International, Inc. is:
707 North Valley Forge Road, Lansdale, PA 19446. The initial Member's initial
capital contribution is listed on Schedule A hereto, which will be updated as
appropriate.
8. Additional Contributions. Except as otherwise required by law or
------------------------
agreed in writing by all of the Members, no Member shall be required to make any
additional capital contributions to the LLC. Each additional capital
contribution shall be made payable to the LLC, in immediately available funds,
at its principle office. No Member shall be entitled to receive interest on its
capital contributions.
9. Distributions. From time to time, as determined by the Members
-------------
owning a majority of the Percentage Interests (the "Majority Members"), the
Majority Members shall have the right to cause the LLC to distribute to the
Members, pro rata based on their respective Percentage Interests, any cash held
by it which is neither reasonably necessary for the operation of the LLC nor in
violation of Sections 18-607 or 18-804 of the Act.
10. Managers. The number of Managers shall initially be three (3),
--------
and thereafter shall be such number as shall be fixed from time to time by the
Majority Members.
The initial Managers shall be Douglas K. Pinner, John A. Negovetich
and Norman L. Roelke. The Managers shall hold office during the lifetime of the
LLC until its termination as herein provided; except any Manager (a) may resign
or retire by written instrument signed by him and delivered to each other
Manager, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) who be comes physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be removed
by written instrument signed in good faith by at least two-thirds (2/3) of the
other Managers, specifying the date of his removal; or (c) may be removed by the
Majority Members at any meeting of the Members duly called for such purpose.
The death of a Manager shall end his or her term and create an automatic
vacancy. Any vacancy among the Managers, whether created by an increase in the
number of Managers, by the death, resignation or removal of a Manager or
otherwise, shall be filled by the Majority Members.
Except as otherwise provided herein or by law, the Managers shall have
exclusive and absolute control over the business of the LLC. The Managers shall
have the power to conduct the business of the LLC and to carry on its operations
in any and all of its offices and to do all such other things and execute all
such instruments as they deem necessary, proper or desirable in order to promote
the interests of the LLC, although such things are not herein specifically
mentioned. Any determination as to
2
<PAGE>
what is in the interests of the LLC made by the Managers in good faith shall be
conclusive.
All instruments, contracts, agreements and documents providing for the
acquisition, mortgage or disposition of property of the LLC shall be valid and
binding on the LLC if executed by Douglas K. Pinner, John A. Negovetich, Norman
L. Roelke or Mary E. Keogh, each of whom shall be an "authorized person" within
the meaning of the Act for purposes of executing the LLC's Certificate of
Formation. All actions previously taken by Mary E. Keogh in forming the LLC are
hereby ratified and approved.
11. Powers of Members. The number of Members shall initially be one
-----------------
(1), and thereafter shall be such number as shall be fixed from time to time by
the Majority Members. The Members shall have the right and authority to take
all actions specifically enumerated in the Certificate of Formation or this
Agreement.
12. Compensation. No Member shall receive compensation for services
------------
rendered to the LLC. Managers shall receive such compensation for services
rendered to the LLC as the Majority Members shall determine.
13. Term. The LLC shall dissolve, and its affairs shall be wound up,
----
upon the earliest to occur of (a) the execution of a written consent by all
Members or (b) an event of dissolution of the LLC under the Act.
14. Assignments. No Member may assign, pledge and/or otherwise
-----------
encumber its ownership or control of all or any part of, or any interest in, the
Member's Percentage Interest, without the prior written consent of each other
Member. Any permitted assignee of a Member's Percentage Interest shall, as a
condition to such assignment, comply with the requirements for becoming an
additional Member set forth in Section 17.
15. Withdrawal. Any Member may withdraw from the LLC only with the
----------
prior written consent of all other Members. Upon any such permitted withdrawal,
the withdrawing Member shall receive the lesser of (x) the book value of such
Member's then-current Percentage Interest in the LLC and (y) the aggregate
amount of any contributions of property or money made by such Member to the LLC.
16. Limited Liability. No Member shall have liability for the
-----------------
obligations of the LLC, except to the extent provided in the Act.
17. Additional Members. No additional Member shall be admitted to
------------------
the LLC without the prior written consent of each of the other Members, which
consent may be evidenced by, among other things, the execution of an amendment
to
3
<PAGE>
this Agreement. Each additional Member, as a condition to its admission,
shall (i) execute and deliver to each of the other Members a counterpart to this
Agreement, agreeing for the benefit of the other Members to be bound by this
Agreement to the same extent as if the additional Member had been an original
party to the Agreement as a Member and (ii) take all action and execute all
instruments required by the LLC in order to comply with any applicable federal
or state law and regulations.
18. Amendments. This Agreement may be amended only in a writing
----------
signed by all of the Members.
19. Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Limited
Liability Company Agreement as of the 21st day of September, 1998.
GASBOY INTERNATIONAL, INC.
/s/ Norman L. Roelke
--------------------------
By: Norman L. Roelke
Its: Secretary
5
<PAGE>
Schedule A
Capital Account
Member Capital Account Percentage Interest
- ------ --------------- -------------------
Gasboy International, Inc. $250.2 million 100%
6
<PAGE>
EXHIBIT 3.27
------------
ARTICLES OF ORGANIZATION
OF
TOKHEIM SERVICES LLC
The undersigned person, acting as an organizer of the limited
liability company hereinafter named, sets forth the following statements:
FIRST: The name of the limited liability company (the "Company") is
-----
Tokheim Services LLC.
SECOND: The address of its registered office in the State of Indiana
------
and the name of the Company's registered agent at that address are Corporation
Service Company, 251 East Ohio Street, Suite 500, Indianapolis, Indiana 46204.
THIRD: The duration of the Company is perpetual until dissolution in
------
accordance with the provisions of the Indiana Business Flexibility Act.
FOURTH: The management of the business and affairs of
-------
the Company is vested in a board of managers.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Organization this 18th day of November, 1998.
By /s/ M. Martha Sherry
-----------------------------
Name: M. Martha Sherry
Title: Authorized Person
<PAGE>
Exhibit 3.28
------------
LIMITED LIABILITY COMPANY AGREEMENT
OF
TOKHEIM SERVICES LLC
AN INDIANA LIMITED LIABILITY COMPANY
The undersigned Members hereby form a limited liability company
pursuant to and in accordance with the Indiana Business Flexibility Act, 23 Ind.
(S) 18-1-1, et seq. (the "Act"), and hereby agree and declare as follows:
-- ---
1. Name. The name of the limited liability company formed hereby is
----
Tokheim Services LLC (the "LLC").
2. Purpose. The purpose of the LLC is to engage in any and all
-------
lawful activities to which the Members deem appropriate.
3. Registered Office. The registered office of the LLC in the State
-----------------
of Indiana is located at 251 East Ohio Street, Suite 500, Indianapolis, Indiana
46204.
4. Registered Agent. The name and address of the registered agent
----------------
of the LLC for service of process on the LLC in the State of Indiana is
Corporation Trust Company, 251 East Ohio Street, Suite 500, Indianapolis,
Indiana 46204.
5. Capital Accounts. An account shall be established in the LLC's
----------------
books for each Member (each a "Capital Account") in accordance with the rules of
Section 704 of the Internal Revenue Code of 1986 and Treasury Regulation Section
1.704-1(b)(2)(iv).
6. Percentage Interest and Allocations of Profits and Losses. Each
---------------------------------------------------------
Member's interest in the LLC shall be expressed as a percentage equal to the
ratio on any date of such Member's Capital Account on such date to the aggregate
Capital Accounts of all Members on such date, such Capital Accounts to be
determined after giving effect to all contributions of property or money,
distributions and allocations for all periods ending on or prior to such date
(as to any Member, his or her "Percentage Interest"). The LLC's profits and
losses shall be allocated in accordance with the Percentage Interests of the
Members. Each member's Percentage Interest will be reflected on Schedule A
hereto.
<PAGE>
7. Admission and Capital Contributions. Simultaneously with the
-----------------------------------
execution and delivery of this Agreement, Tokheim Corporation and Tokheim
Investment Corp. are admitted as the initial Members of the LLC. The address of
Tokheim Corporation is: 10501 Corporate Drive, Fort Wayne, IN 46845. The
address of Tokheim Investment Corp. is: c/o CT Corporation System, 350 North St.
Paul Street, Dallas, TX 75201.
8. Additional Contributions. Except as otherwise required by law or
------------------------
agreed in writing by all of the Members, no Member shall be required to make any
additional capital contributions to the LLC. Each additional capital
contribution shall be made payable to the LLC, in immediately available funds,
at its principle office. No Member shall be entitled to receive interest on its
capital contributions.
9. Distributions. From time to time, as determined by the Members
-------------
owning a majority of the Percentage Interests (the "Majority Members"), the
Majority Members shall have the right to cause the LLC to distribute to the
Members, pro rata based on their respective Percentage Interests, any cash held
by it which is neither reasonably necessary for the operation of the LLC nor in
violation of Sections 18-5-4, 18-5-5 or 18-9-6 of the Act.
10. Managers. The number of Managers shall initially be three (3),
--------
and thereafter shall be such number as shall be fixed from time to time by the
Majority Members.
The initial Managers shall be Douglas K. Pinner, John A. Negovetich
and Norman L. Roelke. The Managers shall hold office during the lifetime of the
LLC until its termination as herein provided; except any Manager (a) may resign
or retire by written instrument signed by him and delivered to each other
Manager, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) who be comes physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be removed
by written instrument signed in good faith by at least two-thirds (2/3) of the
other Managers, specifying the date of his removal; or (c) may be removed by the
Majority Members at any meeting of the Members duly called for such purpose.
The death of a Manager shall end his or her term and create an automatic
vacancy. Any vacancy among the Managers, whether created by an increase in the
number of Managers, by the death, resignation or removal of a Manager or
otherwise, shall be filled by the Majority Members.
Except as otherwise provided herein or by law, the Managers shall have
exclusive and absolute control over the business of the LLC. The Managers shall
have the power to conduct the business of the LLC and to carry on its operations
in any and all of its offices and to do all such other things and execute all
such instruments as they deem necessary, proper or desirable in order to promote
the interests of the LLC,
2
<PAGE>
although such things are not herein specifically mentioned. Any determination as
to what is in the interests of the LLC made by the Managers in good faith shall
be conclusive.
All instruments, contracts, agreements and documents providing for the
acquisition, mortgage or disposition of property of the LLC shall be valid and
binding on the LLC if executed by Douglas K. Pinner, John A. Negovetich, Norman
L. Roelke or M. Martha Sherry. All actions previously taken by M. Martha Sherry
in forming the LLC are hereby ratified and approved.
11. Powers of Members. The number of Members shall initially be two
-----------------
(2), and thereafter shall be such number as shall be fixed from time to time by
the Majority Members. The Members shall have the right and authority to take
all actions specifically enumerated in the Certificate of Organization or this
Agreement.
12. Compensation. No Member shall receive compensation for services
------------
rendered to the LLC. Managers shall receive such compensation for services
rendered to the LLC as the Majority Members shall determine.
13. Term. The LLC shall dissolve, and its affairs shall be wound up,
----
upon the earliest to occur of (a) the execution of a written consent by all
Members or (b) an event of dissolution of the LLC under the Act.
14. Assignments. No Member may assign, pledge and/or otherwise
-----------
encumber its ownership or control of all or any part of, or any interest in, the
Member's Percentage Interest, without the prior written consent of each other
Member. Any permitted assignee of a Member's Percentage Interest shall, as a
condition to such assignment, comply with the requirements for becoming an
additional Member set forth in Section 17.
15. Withdrawal. Any Member may withdraw from the LLC only with the
----------
prior written consent of all other Members. Upon any such permitted withdrawal,
the withdrawing Member shall receive the lesser of (x) the book value of such
Member's then-current Percentage Interest in the LLC and (y) the aggregate
amount of any contributions of property or money made by such Member to the LLC.
16. Limited Liability. No Member shall have liability for the
-----------------
obligations of the LLC, except to the extent provided in the Act.
17. Additional Members. No additional Member shall be admitted to
------------------
the LLC without the prior written consent of each of the other Members, which
consent may be evidenced by, among other things, the execution of an amendment
to this Agreement. Each additional Member, as a condition to its admission,
shall (i)
3
<PAGE>
execute and deliver to each of the other Members a counterpart to this
Agreement, agreeing for the benefit of the other Members to be bound by this
Agreement to the same extent as if the additional Member had been an original
party to the Agreement as a Member and (ii) take all action and execute all
instruments required by the LLC in order to comply with any applicable federal
or state law and regulations.
18. Amendments. This Agreement may be amended only in a writing
----------
signed by all of the Members.
19. Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Indiana.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Limited
Liability Company Agreement as of the _____ day of January, 1999.
TOKHEIM CORPORATION
/s/ John A. Negovetich
----------------------
By: John A. Negovetich
Its: Executive Vice President, Finance &
Administration & CFO
TOKHEIM INVESTMENT CORP.
/s/ John A. Negovetich
------------------------------------------
By: John A. Negovetich
Its: Executive Vice President, Finance &
Administration & CFO
5
<PAGE>
Schedule A
Percentage Interest
Member Percentage Interest
- ------ -------------------
Tokheim Corporation 99.0%
Tokheim Investment Corp. 1.0%
6
<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.
I am admitted to the practice of law in the State of Indiana.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that:
1. When (i) the Registration Statement becomes effective and the
Indentures have been qualified under the Trust Indenture Act of 1939, as amended
(the "TIA"), and (ii) the Exchange Notes have been duly executed and
authenticated in accordance with the terms of the Indentures and delivered in
exchange for the Outstanding Notes in accordance with the Exchange Offer, the
Exchange Notes will constitute valid and binding obligations of the Company,
entitled to the benefits of the Indentures and enforceable against the Company
in accordance with their terms, except that (a) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law ) or the discretion of the court before which any proceeding therefor may be
brought, (b) the enforceability of the indemnification and contribution
provisions thereof may be limited by applicable law or public policy, and (c) I
express no opinion as to the enforceability of Section 4.09 of the Indentures.
2. When (i) the Registration Statement becomes effective and the
Indentures have been qualified under the TIA and (ii) the Exchange Notes have
been duly executed and authenticated and the Subsidiary Guarantees endorsed
thereon have been executed by the Subsidiary Guarantors in accordance with the
terms of the Indentures and delivered in exchange for the Outstanding Notes in
accordance with the Exchange Offer, the Subsidiary Guarantees will be valid and
binding obligations of the Subsidiary Guarantors entitled to the benefits of the
Indentures and enforceable against the Subsidiary Guarantors in accordance with
their terms, except that (a) the enforcement thereof may be subject to (i)
<PAGE>
Tokheim Corporation
April 28, 1999
Page 4
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, (ii) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law ) or the
discretion of the court before which any proceeding therefor may be brought, (b)
the enforceability of the indemnification and contribution provisions thereof
may be limited by applicable law or public policy, and (c) I express no opinion
as to the enforceability of Section 4.09 of the Indentures.
I hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. I also consent to the reference to me
under the caption "Legal Matters" in the Registration Statement. In giving this
consent, I do not thereby admit that I am included in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
Very truly yours,
/s/ Norman L. Roelke
<PAGE>
Exhibit 12.1
------------
Tokheim Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(Amounts in thousands except ratios)
<TABLE>
<CAPTION>
Three
Months Ended
Year Ended November 30, February 28,
1994 1995 1996 1997 1998 1998 1999
------ ------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense....................... $3,058 $3,588 $ 7,793 $17,288 $20,079 $ 4,144 $ 12,468
Rent expense........................... 359 662 945 1,368 2,121 530 513
Preferred stock dividends.............. 1,617 1,580 1,543 1,512 1,484 374 374
------ ------ ------- ------- ------- ------- --------
Total fixed charges.................. 5,034 5,830 10,281 20,168 23,684 5,048 13,355
------ ------ ------- ------- ------- ------- --------
Earnings available for fixed charges:
Earnings (loss) before income taxes.... 1,932 3,270 (1,229) 5,197 (2,698) (5,306) (14,571)
Add: fixed charges..................... 5,034 5,830 10,281 20,168 23,684 5,048 13,355
------ ------ ------- ------- ------- ------- --------
Total earnings available for fixed
charges............................ $6,966 $9,100 $ 9,052 $25,365 $20,986 $ (258) $ (1,216)
====== ====== ======= ======= ======= ======= ========
Ratio of earnings to fixed charges....... 1.4x 1.6x 0.9x 1.3x 0.9x (0.1)x (0.1)x
====== ====== ======= ======= ======= ======= ========
</TABLE>
Note: For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges. Fixed charges consist
of interest expense, amortization of debt issuance costs, the portion of rental
expense assumed to represent interest and dividends on the ESOP Preferred Stock
which services the Guaranteed ESOP Obligation. Earnings were insufficient to
cover fixed charges by $1,229, $2,698, $5,306, and $14,571 for the fiscal years
ended November 30, 1996 and 1998, and the three months ended February 28, 1998
and 1999, respectively.
<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
April 27, 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
April 27, 1999
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
FORM T - 1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
13-3781471
(I. R. S. Employer
Identification No.)
100 Wall Street, New York, NY 10005
(Address of principal executive offices) (Zip Code)
----------------
For information, contact:
Dennis Calabrese, President
U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, NY 10005
Telephone: (212) 361-2506
TOKHEIM CORPORATION
(Exact name of obligor as specified in its charter)
Indiana 35-0712500
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
10501 Corporate Drive 46845
Fort Wayne, Indiana
(Address of principal executive offices) (Zip Code)
----------------
DEBT SECURITIES
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee --
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
Exhibit 1. Articles of Association of U.S. Bank Trust National
Association, incorporated herein by reference to Exhibit 1 of
Form T-1, Registration No. 333-51961.
Exhibit 2. Certificate of Authority to Commence Business for First Trust
of New York, National Association now known as U.S. Bank Trust
National Association, incorporated herein by reference to
Exhibit 2 of Form T-1, Registration No. 33-83774.
Exhibit 3. Authorization to exercise corporate trust powers for U.S. Bank
Trust National Association, incorporated herein by reference
to Exhibit 3 of Form T-1, Registration No. 333-51961.
Exhibit 4. By-Laws of U.S. Bank Trust National Association, incorporated
herein by reference to Exhibit 4 of Form T-1, Registration
No. 333-51961.
Exhibit 5. Not applicable.
Exhibit 6. Consent of First Trust of New York, National Association now
known as U.S. Bank Trust National Association, required by
Section 321(b) of the Act, incorporated herein by reference to
Exhibit 6 of Form T-1, Registration No. 33-83774.
<PAGE>
Exhibit 7. Report of Condition of U.S. Bank Trust National Association,
as of the close of business on December 31, 1998, published
pursuant to law or the requirements of its supervising or
examining authority.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, U.S. Bank Trust National Association, a national banking
association organized and existing under the laws of the United States, has duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 23rd day of April, 1999.
U.S. BANK TRUST
NATIONAL ASSOCIATION
By: /s/ Glenn W. Andersen
---------------------
Glenn W. Andersen
Vice President
<PAGE>
Exhibit 7
---------
U.S. Bank Trust National Association
Statement of Financial Condition
As of 12/31/98
($000's)
<TABLE>
<CAPTION>
12/31/98
--------
<S> <C>
Assets
Cash and Due From Depository Institutions $ 42,823
Federal Reserve Stock 3,384
Fixed Assets 486
Intangible Assets 68,104
Other Assets 7,261
--------
Total Assets $122,058
Liabilities
Other Liabilities $ 9,462
--------
Total Liabilities $ 9,462
Equity
Common and Preferred Stock $ 1,000
Surplus 120,932
Undivided Profits (9,336)
--------
Total Equity Capital $112,596
Total Liabilities and Equity Capital $122,058
</TABLE>
- ---------------------------------------------------------------
To the best of the undersigned's determination, as of this date the above
financial information is true and correct.
U.S. Bank Trust National Association
/s/ Glenn W. Andersen
By: _____________________
Vice President
Date: April 23, 1999
<PAGE>
Exhibit 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------
FORM T - 1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305 (b) (2) _________
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
13-3781471
(I. R. S. Employer
Identification No.)
100 Wall Street, New York, NY 10005
(Address of principal executive offices) (Zip Code)
-------------------
For information, contact:
Dennis Calabrese, President
U.S. Bank Trust National Association
100 Wall Street, 16th Floor
New York, NY 10005
Telephone: (212) 361-2506
TOKHEIM CORPORATION
(Exact name of obligor as specified in its charter)
Indiana 35-0712500
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
10501 Corporate Drive 46845
Fort Wayne, Indiana
(Address of principal executive offices) (Zip Code)
-------------------
DEBT SECURITIES
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee --
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Controller of the Currency Washington, D. C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
Exhibit 1. Articles of Association of U.S. Bank Trust National
Association, incorporated herein by reference to Exhibit 1 of
Form T-1, Registration No. 333-51961.
Exhibit 2. Certificate of Authority to Commence Business for First Trust
of New York, National Association now known as U.S. Bank Trust
National Association, incorporated herein by reference to
Exhibit 2 of Form T-1, Registration No. 33-83774.
Exhibit 3. Authorization to exercise corporate trust powers for U.S. Bank
Trust National Association, incorporated herein by reference
to Exhibit 3 of Form T-1, Registration No. 333-51961.
Exhibit 4. By-Laws of U.S. Bank Trust National Association, incorporated
herein by reference to Exhibit 4 of Form T-1, Registration No.
333-51961.
Exhibit 5. Not applicable.
Exhibit 6. Consent of First Trust of New York, National Association now
known as U.S. Bank Trust National Association, required by
Section 321(b) of the Act, incorporated herein by reference to
Exhibit 6 of Form T-1, Registration No. 33-83774.
<PAGE>
Exhibit 7. Report of Condition of U.S. Bank Trust National Association,
as of the close of business on December 31, 1998, published
pursuant to law or the requirements of its supervising or
examining authority.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, U.S. Bank Trust National Association, a national banking
association organized and existing under the laws of the United States, has duly
caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 23rd day of April, 1999.
U.S. BANK TRUST
NATIONAL ASSOCIATION
/s/ Glenn W. Andersen
By: _____________________
Glenn W. Andersen
Vice President
<PAGE>
Exhibit 7
---------
U.S. Bank Trust National Association
Statement of Financial Condition
As of 12/31/98
($000's)
<TABLE>
<CAPTION>
12/31/98
--------
<S> <C>
Assets
Cash and Due From Depository Institutions $ 42,823
Federal Reserve Stock 3,384
Fixed Assets 486
Intangible Assets 68,104
Other Assets 7,261
--------
Total Assets $122,058
Liabilities
Other Liabilities $ 9,462
--------
Total Liabilities $ 9,462
Equity
Common and Preferred Stock $ 1,000
Surplus 120,932
Undivided Profits (9,336)
--------
Total Equity Capital $112,596
Total Liabilities and Equity Capital $122,058
</TABLE>
- ----------------------------------------------------------------
To the best of the undersigned's determination, as of this date the above
financial information is true and correct.
U.S. Bank Trust National Association
/s/Glenn W. Andersen
By: ____________________
Vice President
Date: April 23, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TOKHEIM CORPORATION
Offer to Exchange its
Series B 11 3/8% Senior Subordinated Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Notes due 2008
Pursuant to the Prospectus dated , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS
EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
The Exchange Agent for The Exchange Offer Is:
U.S. Bank Trust National Association
Facsimile Transmissions
By Registered or Certified Mail: (Eligible Institutions Only)
U.S. Bank Trust National Association Attn: Specialized Finance
P.O. Box 64485 (651) 244-1537
St. Paul, Minnesota 55164-9549
Attention: Specialized Finance To Confirm by Telephone
or for Information Call:
By Hand or Overnight Delivery
(651) 244-4512
U.S. Bank Trust National Association
Fourth Floor--Bond Drop Window
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Specialized Finance
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed either if (a) certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-
entry confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at The Depository Trust Company ("DTC"), as well as
this Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required
<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 Notes due 2008 (the "Outstanding Notes") in
exchange for an equivalent amount of the Company's Series B 11 3/8% Senior
Subordinated Notes due 2008 (the "Exchange Notes") which have been registered
under the Securities Act of 1933 (the "Securities Act"), upon the terms and
subject to the conditions set forth in the Prospectus dated
, 1999 (as the same may be amended or supplemented from
time to time, the "Prospectus"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Prospectus, constitute
the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) subject only
to the right of withdrawal described in the Prospectus, to (i) deliver
Certificates for Outstanding Notes to the Company together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of
the Series B Notes to be issued in exchange for such Outstanding Notes, (ii)
present Certificates for such Outstanding Notes for transfer, and to transfer
the Outstanding Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Outstanding Notes, all in accordance with the
terms and conditions of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the
Outstanding Notes tendered hereby and that, when the same are accepted for
exchange, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Outstanding Notes tendered hereby are not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be
necessary or desirable to complete the exchange, assignment and transfer of the
Outstanding Notes tendered hereby, and the undersigned will comply with its
obligations under the Dollar Registration Rights Agreement. The undersigned has
read and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Outstanding
Notes. The Certificate number(s) and the Outstanding Notes that the undersigned
wishes to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at DTC), without expense to the
tendering Holder, promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions attached
hereto will, upon the Company's acceptance for exchange of such tendered
Outstanding
5
<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)
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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): __________________________________________________________________
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(Please Print)
Capacity (full title): ____________________________________________________
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Address: __________________________________________________________________
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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: __________________________________________________________________
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(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 Institution (as defined below); (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form made available by the Company, must be received by the Exchange Agent
on or prior to the Expiration Date; and (iii) the Certificates (or a book-
entry confirmation) representing all tendered Outstanding Notes, in proper
form for transfer, together with a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer-- Procedures for Tendering
Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery. For Outstanding Notes to be properly tendered pursuant to the
guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Institution" means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association.
The method of delivery of Certificates, this Letter of Transmittal and all
other required documents is at the option and sole risk of the tendering
Holder, and the delivery will be deemed made only when actually received by
the Exchange Agent. If delivery is by mail, registered mail with return
receipt requested, properly insured, or overnight delivery service is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance
of such tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if:
i. this Letter of Transmittal is signed by the registered Holder (which
term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the
10
<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 Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description
of Outstanding Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Outstanding Notes and any other required information should
be listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will
be accepted only in integral multiples of $1,000. If less than all the
Outstanding Notes evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Outstanding Notes which are to be tendered in
the box entitled "Principal Amount of Outstanding Notes Tendered." In such
case, new Certificate(s) for the remainder of the Outstanding Notes that were
evidenced by your old Certificate(s) will only be sent to the Holder of the
Outstanding Note, promptly after the Expiration Date. All Outstanding Notes
represented by Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in
the Prospectus on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Outstanding
Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to
be withdrawn, and (if Certificates for Outstanding Notes have been tendered)
the name of the registered Holder of the Outstanding Notes as set forth on the
Certificate for the Outstanding Notes, if different from that of the person who
tendered such Original Notes. If Certificates for the Outstanding Notes have
been delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Outstanding Notes, the tendering
Holder must submit the serial numbers shown on the particular Certificates for
the Outstanding Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Outstanding Notes tendered for the account of an Eligible Institution. If
Outstanding Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in the Prospectus under "The Exchange Offer--Procedures for
Tendering Outstanding Notes," the notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawal of
Outstanding Notes, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Outstanding Notes may not be rescinded.
Outstanding Notes properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer--Procedures for Tendering Outstanding
Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or
any other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Outstanding Notes which have been tendered
but which are withdrawn will be returned to the Holder thereof without cost to
such Holder promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered Holder(s) of the Outstanding
Notes tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
11
<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 Institution.
If this Letter of Transmittal is signed by a person other than the registered
owner(s) of the Outstanding Notes listed, the Certificates must be endorsed or
accompanied by appropriate bond powers, signed exactly as the name or names of
the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee for the Outstanding Notes may require in
accordance with the restrictions on transfer applicable to the Outstanding
Notes. Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Institution.
6. Special Issuance and Delivery Instructions. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Notes not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. Irregularities. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the
Exchange Offer set forth in the Prospectus under "The Exchange Offer--
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Outstanding Notes of any particular Holder whether or not similar
conditions or irregularities are waived in the case of other Holders. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Outstanding Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. The Company, any affiliates or assigns of the Company, the
Exchange Agent, or any other person shall not be under any duty to give
notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
12
<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 Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Notes due 2008
Pursuant to the Prospectus dated , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's Series A 11 3/8% Senior Subordinated Notes due
2008 (the "Outstanding Notes") are not immediately available, (ii) Outstanding
Notes, the Letter of Transmittal and all other required documents cannot be
delivered to U.S. Bank Trust National Association (the "Exchange Agent") on or
prior to the Expiration Date or (iii) the procedures for delivery by book-
entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand, overnight courier or mail, or
transmitted by facsimile transmission, to the Exchange Agent. See "The
Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus.
In addition, in order to utilize the guaranteed delivery procedure to tender
Outstanding Notes pursuant to the Exchange Offer, a completed, signed and
dated Letter of Transmittal relating to the Outstanding Notes (or facsimile
thereof) must also be received by the Exchange Agent on or prior to the
Expiration Date. Capitalized terms not defined herein have the meanings
assigned to them in the Prospectus.
The Exchange Agent For The Exchange Offer Is:
U.S. Bank Trust National Association
By Registered or Certified Mail: Facsimile Transmissions
(Eligible Institutions Only)
U.S. Bank Trust National Association
P.O. Box 64485 Attn: Specialized Finance
St. Paul, Minnesota 55164-9549 (651) 244-1537
Attn: Specialized Finance
To Confirm by Telephone
By Hand or Overnight Delivery or for Information Call:
U.S. Bank Trust National Association (651) 244-4512
Fourth Floor--Bond Drop Window
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Specialized Finance
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<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): ---------------------------------------------------------------------
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Capacity: ---------------------------------------------------------------------
Address(es):
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GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii)
a broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer Association
(each of the foregoing being referred to as an "Eligible Institution"), hereby
guarantees to deliver to the Exchange Agent, at one of its addresses set forth
above, either the Outstanding Notes tendered hereby in proper form for
transfer, or confirmation of the book-entry transfer of such Outstanding Notes
to the Exchange Agent's account at The Depository Trust Company ("DTC"),
pursuant to the procedures for book-entry transfer set forth in the
Prospectus, in either case together with one or more properly completed and
duly executed Letter(s) of Transmittal (or facsimile thereof) and any other
required documents within three New York Stock Exchange trading days after the
date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Outstanding Notes tendered hereby
to the Exchange Agent within the time period set forth above and that failure
to do so could result in a financial loss to the undersigned.
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- -------------------------------------
Address Title
- ------------------------------------- -------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone Number: _____ Date: _______________________________
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<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 Notes due 2008
for any and all of its outstanding
Series A 11 3/8% Senior Subordinated Notes due 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS
EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
To Registered Holder and/or Depository Trust Company Participant:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Tokheim Corporation, an Indiana
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its Series B 11 3/8% Senior Subordinated Notes
Due 2008 (the "Exchange Notes") for all of its outstanding Series A 11 3/8%
Senior Subordinated Notes Due 2008 (the "Outstanding Notes"). Capitalized terms
used but not defined herein have the meanings ascribed to them in the
Prospectus.
This will instruct you, the registered holder and/or Depository Trust Company
Participant, as to the action to be taken by you relating to the Exchange Offer
with respect to the Outstanding Notes held by you for the account of the
undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
$ of the 11 3/8% Senior Subordinated Notes Due
2008.
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[_] To TENDER the following Outstanding Notes held by you for the
account of the undersigned (INSERT PRINCIPAL AMOUNT OF ORIGINAL NOTES
TO BE TENDERED (IF LESS THAN ALL)): $
[_] NOT to TENDER any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i)
the undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes
to be received by the undersigned are being acquired in the ordinary course of
its business, (iii) the undersigned has no arrangement or understanding with
any person to participate in a distribution (within the meaning of the
Securities Act) of Exchange Notes to be received in the Exchange Offer, and
(iv) if the undersigned is not a broker-dealer, the undersigned is not engaged
in, and does not intend to engage in, a
<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
