Exhibit 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - x
:
In re: : Chapter 11
:
TOKHEIM CORPORATION, et al., : Case No. 00-_____(____)
:
Debtors. : Jointly Administered
:
- - - - - - - - - - - - - - - x
DISCLOSURE STATEMENT WITH RESPECT TO
JOINT PREPACKAGED PLAN OF REORGANIZATION OF TOKHEIM CORPORATION
AND ITS SUBSIDIARY DEBTORS
David S. Kurtz (IL 03126561)
Felicia Gerber Perlman (IL 06210753)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
Dated:August 16, 2000
TABLE OF CONTENTS
PAGE
I. INTRODUCTION....................................................1
A. Holders of Claims Entitled to Vote........................10
B. Voting Procedures.........................................11
C. Confirmation Hearing......................................12
II. OVERVIEW OF THE PLAN..........................................12
A. General Information Concerning Treatment of Claims and
Interests.................................................13
B. Summary of Distributions..................................13
C. Prepetition Notes.........................................19
D. Impaired Unsecured Claims.................................19
E. KSOP Claims...............................................20
F. Management Option Plan....................................21
G. Terms of New Credit Agreement/Exit Facility...............21
H. Terms of Securities to Be Issued Pursuant to the Plan.....22
1. New Common Stock....................................22
2. New Junior Warrants.................................22
3. New Warrants........................................22
4. Bank Warrants.......................................22
5. New Preferred Stock.................................23
I. Board of Directors of Reorganized Tokheim.................23
J. Value of Reorganized Debtors..............................24
K. Retention of Lazard.......................................24
III. GENERAL INFORMATION..........................................25
A. Description and History of Debtors' Business..............25
1. The Debtors.........................................25
2. The Business........................................25
3. History.............................................25
4. Industry............................................28
B. Significant Funded Indebtedness...........................28
C. Events Leading to Chapter 11 Filings......................30
IV. THE ANTICIPATED CHAPTER 11 CASES..............................31
A. Motions to Be Filed.......................................31
B. Debtor in Possession Financing............................34
C. Timetable for Chapter 11 Cases............................34
V. THE PLAN OF REORGANIZATION.....................................34
A. Overview of Chapter 11....................................35
B. Overall Structure of the Plan.............................36
C. Classification and Treatment of Claims and Interests......36
1. Fee Claims..........................................37
2. Administrative Claims...............................38
3. Priority Tax Claims.................................39
4. Class 1 - Non-Tax Priority Claims...................39
5. Class 2 - Other Secured Claims......................40
6. Class 3 - Unimpaired Unsecured Claims...............41
7. Class 4 - Secured Lender Claims.....................41
8. Class 5A - Impaired Unsecured Claims................42
10. Class 6 - KSOP Claims...............................42
11. Class 7 - Old Common Stock..........................42
12. Class 8 - Securities Claims.........................43
13. Class 9 - Other Old Equity..........................43
14. Special Provision Regarding Unimpaired Claims.......43
D. Method of Distribution Under the Plan.....................43
1. Sources of Cash for Plan Distributions..............43
2. Distributions for Claims or Interests Allowed as
of the Effective Date...............................44
3. Interest on Claims..................................44
4. Distributions by the Reorganized Debtors............44
5. Delivery of Distributions and Undeliverable or
Unclaimed Distributions.............................45
6. Record Date for Distributions.......................46
7. Allocation of Plan Distributions Between Principal
and Interest........................................46
8. Means of Cash Payment...............................46
9. Withholding and Reporting Requirements..............46
10. Setoffs.............................................47
11. Fractional Shares...................................47
12. Surrender of Cancelled Securities...................48
13. Lost, Stolen, Mutilated or Destroyed Debt
Securities..........................................49
E. Resolution of Disputed, Contingent and Unliquidated
Claims....................................................49
1. Objection Deadline; Prosecution of Objections.......49
2. No Distributions Pending Allowance..................49
3. Disputed Claims Reserve; Disputed Interest Reserve..50
4. Distributions After Allowance.......................50
F. Means for Implementation of the Plan......................51
1. Continued Corporate Existence and Vesting of
Assets in Reorganized Debtors....................51
2. Corporate Governance, Directors and Officers and
Corporate Action....................................52
3. Substantive Consolidation...........................53
4. Issuance of New Securities and Related Documents....57
5. Issuance of New Common Stock, New Preferred
Stock, New Junior Warrants and New Warrants.........58
6. New Credit Agreement................................58
7. Exit Financing......................................58
8. Registration Rights Agreement.......................58
9. Management Option Plan..............................58
G. Treatment of Executory Contracts and Unexpired Leases.....59
1. Assumption of Executory Contracts and Unexpired
Leases..............................................59
2. Claims Based on Rejection of Executory Contracts
or Unexpired Leases.................................59
3. Cure of Defaults of Assumed Executory Contracts
and Unexpired Leases................................60
4. Indemnification of Directors, Officers and
Employees...........................................60
5. Compensation and Benefit Programs...................60
H. Confirmation and Effectiveness of the Plan................62
1. Conditions to Confirmation..........................62
2. Conditions to Effective Date........................62
3. Waiver of Conditions................................64
4. Consequences of Non-Occurrence of Effective Date....64
I. Effect of Plan Confirmation...............................64
1. Preservation of Rights of Action; Settlement of
Litigation Claims...................................64
2. Releases............................................65
3. Discharge of Claims and Termination of Interests....67
4. Exculpation and Limitation of Liability.............67
5. Injunction..........................................68
6. Termination of Subordination Rights and Settlement
of Related Claims...................................68
J. Summary of Other Provisions of the Plan...................70
1. Exemption from Certain Transfer Taxes...............70
2. Cancellation of Notes, Instruments, Debentures and
Common Stock........................................70
3. Effectuating Documents, Further Transactions and
Corporate Action....................................71
4. Bar Date for Administrative Claims..................71
5. Severability of Plan Provisions.....................71
6. Revocation, Withdrawal or Non-Consummation..........72
7. Section 1145 Exemption..............................72
8. Plan Supplement.....................................72
9. Amendment or Modification of the Plan...............73
10. Jurisdiction Over the Reorganized Debtor.........73
VI. CONFIRMATION AND CONSUMMATION PROCEDURE.......................73
A. Solicitation of Votes.....................................74
B. The Confirmation Hearing..................................77
C. Confirmation..............................................78
1. Unfair Discrimination and Fair and Equitable Tests..78
2. Best Interests Test.................................79
3. Feasibility.........................................81
VII. RISK FACTORS TO BE CONSIDERED................................83
A. Certain Bankruptcy Considerations.........................83
1. Failure to Satisfy Vote Requirement.................83
2. Non-Confirmation or Delay of Confirmation of the
Plan................................................84
3. Non-Consensual Confirmation.........................84
4. Risk of Non-Occurrence of the Effective Date........84
5. General Effect......................................84
6. Effect of Tokheim's Chapter 11 Case on Relations
with Trade Vendors..................................85
7. Risk of Failure to Obtain Authority to Pay
Prepetition Unsecured Claims in the Ordinary
Course of Business..................................85
8. Methods of Solicitation.............................85
9. Classification and Treatment of Claims and Equity
Interests...........................................86
B. Factors Affecting the Value of the Securities to Be
Issued Under the Plan.....................................88
1. Speculative Nature..................................88
2. Competitive Conditions..............................88
3. Variances from Projections..........................88
4. Disruption of Operations............................89
5. Lack of Trading Market..............................89
6. Dividend Policies...................................90
C. Risks Relating to the Reorganized Debtors.................90
1. Leverage and Debt Service...........................90
2. Debtors' Employees..................................90
3. New Credit Agreement................................91
VIII. CERTAIN OTHER LEGAL CONSIDERATIONS..........................91
A. Section 4(2) of the Securities Act........................91
B. Section 1145 of the Bankruptcy Code.......................92
C. Registration..............................................93
IX. ..............................................................93
A. General...................................................93
B. Federal Income Tax Consequences to the Debtors............94
1. Cancellation of Indebtedness Income.................94
2. Net Operating Losses................................95
3. Federal Alternative Minimum Tax.....................97
C. Federal Income Tax Consequences to Holders of Claims......98
1. Holders of Secured Lender Claims (Class 4)..........98
2. Holders of Impaired Unsecured Claims (Classes 5A
and 5B) ...........................................100
D. Information Reporting and Backup Withholding.............101
E. Importance of Obtaining Professional Tax Assistance......101
X. ALTERNATIVES TO CONFIRMATION AND
CONSUMMATION OF THE PLAN.......................................102
A. Alternative Plan(s) of Reorganization....................102
B. Liquidation Under Chapter 7 or Chapter 11................103
XI. CONCLUSION AND RECOMMENDATION................................104
EXHIBITS
EXHIBIT A JOINT PREPACKAGED PLAN OF REORGANIZATION OF
TOKHEIM CORPORATION AND ITS SUBSIDIARY
DEBTORS
EXHIBIT B ANNUAL REPORT ON FORM 10-K
EXHIBIT C QUARTERLY REPORT ON FORM 10-Q
EXHIBIT D REORGANIZATION VALUATION ANALYSIS
EXHIBIT E LIQUIDATION ANALYSIS
EXHIBIT F PROJECTIONS
I. INTRODUCTION
Tokheim Corporation ("Tokheim" or the "Company") and the other
above-captioned debtors (collectively with Tokheim, the "Debtors") submit
this disclosure statement (the "Disclosure Statement") to holders of claims
against the Debtors in connection with the solicitation of acceptances of
the Joint Prepackaged Plan of Reorganization of Tokheim Corporation and Its
Subsidiary Debtors, dated August 16, 2000, as the same may be amended (the
"Plan"). Unless otherwise defined herein, all capitalized terms contained
herein have the meanings ascribed to them in the Plan.
THE DEADLINE FOR VOTING ON THE PLAN IS 12:00 P.M. EASTERN TIME
ON AUGUST 28, 2000. VOTING INSTRUCTIONS ARE SET FORTH ON PAGES 10 THROUGH
12 HEREIN.
THE DEBTORS HAVE NOT COMMENCED CASES UNDER CHAPTER 11 OF THE
BANKRUPTCY CODE AT THIS TIME.
BECAUSE NO BANKRUPTCY CASE HAS BEEN COMMENCED, THIS DISCLOSURE
STATEMENT HAS NOT BEEN APPROVED BY ANY BANKRUPTCY COURT WITH RESPECT TO
WHETHER IT CONTAINS ADEQUATE INFORMATION WITHIN THE MEANING OF SECTION
1125(a) OF THE BANKRUPTCY CODE, 11 U.S.C. ss. 1125(a). NONETHELESS, IF
CHAPTER 11 CASES SUBSEQUENTLY ARE COMMENCED, THE DEBTORS EXPECT TO SEEK
PROMPTLY AN ORDER OF THE BANKRUPTCY COURT THAT THE SOLICITATION OF VOTES ON
THE PLAN BY MEANS OF THIS DISCLOSURE STATEMENT WAS IN COMPLIANCE WITH
SECTION 1126(b) OF THE BANKRUPTCY CODE, 11 U.S.C. ss. 1126(b).
NEITHER THE SECURITIES OFFERED NOR THIS DISCLOSURE STATEMENT OR
THE PLAN HAS BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR
ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN
OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES OR CLAIMS OF
ANY OF THE OTHER DEBTORS SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE
PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED.
This Disclosure Statement describes certain aspects of the
Plan, the Debtors' operations, the Debtors' projections and other related
matters. FOR A COMPLETE UNDERSTANDING OF THE PLAN, YOU SHOULD READ THE
DISCLOSURE STATEMENT, THE PLAN AND THE EXHIBITS AND SCHEDULES THERETO IN
THEIR ENTIRETY.
The Plan provides for the restructuring of the Debtors'
liabilities in a manner designed to maximize recoveries to all creditors
and equity holders and to enhance the financial viability of the
Reorganized Debtors. The Plan contemplates the restructuring of all of the
Debtors' senior secured debt obligations and the elimination of the
Debtors' unsecured subordinated debt obligations and certain other
liabilities.
Tokheim negotiated the terms of the Plan with the lenders under
the Debtors' Prepetition Credit Agreement (the "Prepetition Lenders") and
an ad hoc committee of Prepetition Noteholders (the "Bondholder
Committee"), many of whose members have agreed in principle to the
restructuring described in the Plan. The members of the Bondholder
Committee have informed the Company that they collectively hold or control
approximately 40% of the outstanding principal amount of the Senior
Subordinated Notes and 75% of the outstanding principal amount of the
Junior Subordinated Notes. The Prepetition Lenders have retained Policano &
Manzo as their financial advisors and Mayer, Brown & Platt as their legal
advisors. The Bondholder Committee has retained Houlihan, Lokey, Howard &
Zukin as its financial advisors and Wachtell, Lipton, Rosen & Katz as its
legal advisors.
THE BOARD OF DIRECTORS OF TOKHEIM BELIEVES THAT THE PLAN IS IN
THE BEST INTEREST OF CREDITORS AND EQUITY HOLDERS. ACCORDINGLY, CREDITORS
ENTITLED TO VOTE ON THE PLAN ARE URGED TO VOTE IN FAVOR OF THE PLAN.
If the Plan becomes effective then, on the Effective Date, the
Holders of Claims under the Prepetition Credit Agreement (the "Secured
Lender Claims") will receive their share of the New Tranche A Term Notes
and the New Tranche B Term Notes, as set forth more fully in the Plan, the
New Special Notes, the New Preferred Stock and the Bank Warrants. In
addition, the Holders of Senior Subordinated Notes, in full satisfaction of
the Debtors' obligations under the Senior Subordinated Notes, and the
Holders of General Impaired Unsecured Claims will receive their pro rata
share of 4,410,000 shares of New Common Stock. The Holders of Junior
Subordinated Notes will receive, in full satisfaction of the Debtors'
obligations under the Junior Subordinated Notes, (i) their pro rata share
of 90,000 shares of New Common Stock and (ii) their pro rata share of the
New Junior Warrants. In addition, on the Effective Date, all of the issued
and outstanding shares of Tokheim's Old Common Stock will be cancelled, and
each Holder of Old Common Stock and any Securities Claim will receive its
pro rata share of the New Warrants.
The Debtors believe that the Plan will enable the Debtors to
successfully reorganize and accomplish the objectives of chapter 11 and
that acceptance of the Plan is in the best interests of the Debtors and
their creditors. The Debtors urge holders of Claims entitled to vote to
accept the Plan.
THE DEBTORS INTEND TO SEEK A COURT ORDER AUTHORIZING THEM TO
CONTINUE OPERATING THEIR BUSINESS IN CHAPTER 11 IN THE ORDINARY COURSE AND
TO PAY THEIR EMPLOYEES, TRADE CREDITORS AND CERTAIN OTHER CREDITORS IN FULL
AND ON TIME DURING THE PENDENCY OF THEIR CHAPTER 11 CASE. THE CLAIMS OF THE
DEBTORS' EMPLOYEES AND OTHER SECURED CREDITORS ARE NOT IMPAIRED UNDER THE
PLAN.
The Plan contemplates and is predicated upon the substantive
consolidation of the Debtors only for the purpose of treating Class 4, 5A
and 5B Claims under the Plan, including voting, confirmation and
distribution purposes. The Plan does not contemplate the substantive
consolidation of the Debtors with respect to other Classes of Claims or
Interests.
The board of directors of Tokheim held a meeting by conference
call to consider the Plan. At the meeting the Plan was presented to the
board, and the board was given the opportunity to ask any questions
concerning the Plan from its legal and financial advisors. The directors on
the board approved the Plan by a unanimous vote.
Attached as Exhibits to this Disclosure Statement are copies of
the following:
o The Plan (Exhibit A);
o Annual Report on Form 10-K for the fiscal year ended November 30,
1999 (Exhibit B);
o Quarterly Report on Form 10-Q for the fiscal quarter ended May 31,
2000 (Exhibit C);
o Reorganization Valuation Analysis (Exhibit D);
o Liquidation Analysis (Exhibit E);
o Projections (Exhibit F).
In addition, a Ballot for the acceptance or rejection of the
Plan is enclosed with the Disclosure Statement submitted to the Holders of
Claims entitled to vote to accept or reject the Plan.
This Disclosure Statement does not constitute an offer to
exchange or sell, or the solicitation of an offer to exchange or buy, any
securities that may be deemed to be offered hereby with respect to any
creditor that is not an "accredited investor" as defined in Regulation D
under the Securities Act. Any ballot submitted by any such creditor will be
deemed a rejection of the Plan for purposes of determining whether
requisite votes for acceptance of the Plan have been received. In any state
or other jurisdiction (domestic or foreign) in which any securities that
may be deemed to be offered hereby are required to be qualified for
offering in such jurisdiction, no offer is hereby being made to, and the
receipt of ballots will not be accepted from, residents of such
jurisdiction unless and until such requirements, in the sole and final
determination of the Debtors, have been fully satisfied. Until such time,
any ballot submitted with respect to any such creditor will be deemed null
and void and will not constitute a rejection or acceptance for purposes of
determining whether requisite votes for acceptance of the Plan have been
received.
NO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY OTHER FEDERAL OR STATE SECURITIES OR
"BLUE SKY" LAWS HAS BEEN FILED WITH THE SEC OR ANY OTHER AGENCY BY THE
DEBTORS WITH RESPECT TO THE NEW TERM NOTES, NEW SPECIAL NOTES, NEW
WARRANTS, NEW JUNIOR WARRANTS, NEW COMMON STOCK, BANK WARRANTS AND NEW
PREFERRED STOCK THAT WILL BE ISSUED ON THE EFFECTIVE DATE AND THAT MAY BE
DEEMED TO BE OFFERED BY VIRTUE OF THE SOLICITATION. THE DEBTORS ARE RELYING
ON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 4(2) OF THE
SECURITIES ACT AND THE REGULATIONS PROMULGATED THEREUNDER AND SIMILAR STATE
LAW PROVISIONS TO EXEMPT FROM REGISTRATION UNDER THE SECURITIES LAWS THE
OFFER OF THE NEW TERM NOTES, NEW SPECIAL NOTES, BANK WARRANTS, NEW
WARRANTS, NEW JUNIOR WARRANTS, THE NEW COMMON STOCK AND NEW PREFERRED STOCK
THAT MAY BE DEEMED TO BE MADE PURSUANT TO THE SOLICITATION.
FOLLOWING SOLICITATION OF IMPAIRED CREDITORS' ACCEPTANCES OF
THE PLAN AND THE DEBTORS' COMMENCEMENT OF CHAPTER 11 CASES, THE DEBTORS
FURTHER EXPECT, PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE, TO SEEK
BANKRUPTCY COURT APPROVAL OF THIS DISCLOSURE STATEMENT.
NO PERSON IS AUTHORIZED BY ANY OF THE DEBTORS IN CONNECTION
WITH THE PLAN OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION REGARDING THIS DISCLOSURE
STATEMENT OR THE PLAN OTHER THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT
AND THE EXHIBITS AND SCHEDULES ATTACHED HERETO OR INCORPORATED BY REFERENCE
OR REFERRED TO HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ANY OF
THE DEBTORS.
THE ACCURACY OF THE ACCOUNTING, FINANCIAL, ECONOMIC AND OTHER
INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS THE EXCLUSIVE
RESPONSIBILITY OF THE DEBTORS.
THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS,
FINANCIAL OR TAX ADVICE. ANY CREDITOR DESIRING ANY SUCH ADVICE OR OTHER
ADVICE SHOULD CONSULT WITH ITS OWN ADVISORS.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE
AS OF THE DATE HEREOF UNLESS ANOTHER TIME IS SPECIFIED HEREIN, AND THE
DELIVERY OF THIS DISCLOSURE STATEMENT SHALL NOT CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION STATED SINCE THE DATE HEREOF.
HOLDERS OF CLAIMS SHOULD CAREFULLY READ THIS DISCLOSURE STATEMENT IN ITS
ENTIRETY, INCLUDING THE PLAN, PRIOR TO VOTING ON THE PLAN.
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT,
INCLUDING THE INFORMATION REGARDING THE HISTORY, BUSINESS AND OPERATIONS OF
THE DEBTORS AND THE HISTORICAL FINANCIAL INFORMATION REGARDING THE DEBTORS
IS INCLUDED FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN BUT, AS TO
CONTESTED MATTERS AND ADVERSARY PROCEEDINGS, IS NOT TO BE CONSTRUED AS
ADMISSIONS OR STIPULATIONS BUT RATHER AS STATEMENTS MADE IN SETTLEMENT
NEGOTIATIONS.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, ALL INFORMATION
CONTAINED HEREIN HAS BEEN PROVIDED BY THE DEBTORS.
Article VI of the Disclosure Statement specifies the deadlines,
procedures and instructions for voting to accept or reject the Plan, the
record date for voting purposes and the applicable standards for tabulating
Ballots. In addition, detailed voting instructions accompany each Ballot.
Each Holder of a Claim entitled to vote on the Plan should read the
Disclosure Statement, the Plan and the instructions accompanying the
Ballots in their entirety before voting on the Plan. These documents
contain, among other things, important information concerning the
classification of Claims for voting purposes and the tabulation of votes.
FOR THE CONVENIENCE OF HOLDERS OF CREDITORS, THIS DISCLOSURE
STATEMENT SUMMARIZES THE TERMS OF THE PLAN, BUT THE PLAN ITSELF QUALIFIES
ALL SUMMARIES. IF ANY INCONSISTENCY EXISTS BETWEEN THE PLAN AND THE
DISCLOSURE STATEMENT, THE TERMS OF THE PLAN ARE CONTROLLING. THE DISCLOSURE
STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE
WHETHER TO VOTE TO ACCEPT OR TO REJECT THE PLAN, AND NOTHING STATED HEREIN
SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE
ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER PARTY, OR
BE DEEMED CONCLUSIVE EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN
ON THE DEBTORS OR HOLDERS OF CLAIMS OR INTERESTS. CERTAIN OF THE STATEMENTS
CONTAINED IN THIS DISCLOSURE STATEMENT, BY NATURE, ARE FORWARD-LOOKING AND
CONTAIN ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH
STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES. ALL HOLDERS OF CLAIMS
SHOULD CAREFULLY READ AND CONSIDER FULLY ARTICLE VII, "RISK FACTORS TO BE
CONSIDERED," OF THIS DISCLOSURE STATEMENT BEFORE VOTING TO ACCEPT OR REJECT
THE PLAN.
SUMMARIES OF CERTAIN PROVISIONS OF AGREEMENTS REFERRED TO IN
THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO,
AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, THE FULL TEXT OF THE
APPLICABLE AGREEMENT, INCLUDING THE DEFINITIONS OF TERMS CONTAINED IN SUCH
AGREEMENT.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Disclosure Statement contains forward-looking statements
within the meaning of section 27A of the Securities Act and section 21C of
the Securities Exchange Act of 1934, including statements concerning
possible or assumed future results of operations of the Debtors and those
preceded by, followed by or that include the word may, will, should, could,
expects, plans, anticipates, believes, estimates, predicts, potential, or
continue or the negative of such terms and other comparable terminology.
You should understand that the factors described below, in addition to
those discussed elsewhere in this Disclosure Statement, could affect the
Debtors' future results and could cause those results to differ materially
from those expressed in such forward-looking statements. These factors
include:
o material adverse changes in economic conditions in the markets we
serve;
o future regulatory actions and conditions in our operating areas;
o competition from others in the industry;
o increases in labor costs and relations with union bargaining units
representing our employees;
o the integration of our operations with those of businesses we have
acquired or may acquire in the future and the realization of the
expected benefits;
o failure to obtain new customers or retain existing customers;
o inability to carry out strategies to accelerate new product
development programs; and
o other risks and uncertainties as may be detailed from time to time
in our public announcements and SEC filings.
NO PROJECTIONS OR OTHER FORWARD-LOOKING ANALYSES CONTAINED
HEREIN WERE PREPARED WITH A VIEW TO COMPLYING WITH THE GUIDELINES FOR
PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS. TOKHEIM'S INDEPENDENT ACCOUNTANTS HAVE
NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING PROSPECTIVE FINANCIAL
INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND, ACCORDINGLY, HAVE
NOT EXPRESSED AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT
THERETO. FOR ADDITIONAL INFORMATION ABOUT TOKHEIM AND ITS OPERATING AND
FINANCIAL CONDITIONS, PLEASE SEE TOKHEIM'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED NOVEMBER 30, 1999 FILED WITH THE SEC AND ANNEXED AS
EXHIBIT B.
A. HOLDERS OF CLAIMS ENTITLED TO VOTE
Pursuant to the provisions of the Bankruptcy Code, classes of
claims in which the holders of claims are unimpaired under a chapter 11
plan are deemed to have accepted the plan and are not entitled to vote to
accept or reject the plan. Classes of claims which are not entitled to
receive a distribution on account of their claims are deemed to have
rejected the plan and are not entitled to vote to accept or reject the
plan.
The Bankruptcy Code defines "acceptance" of a plan by a class
of claims as acceptance by creditors in that class that hold at least
two-thirds in dollar amount and more than one-half in number of the claims
that cast ballots for acceptance or rejection of the plan. Acceptance of a
plan by a class of interests requires acceptance by at least two-thirds of
the number of shares in such class that cast ballots for acceptance or
rejection of the plan. For a more detailed description of the requirements
for confirmation of the Plan, see Article VI, "Means for Implementation of
the Plan - Confirmation and Effectiveness of the Plan."
The Disclosure Statement (and the exhibits hereto), together
with the accompanying form of ballot (the "Ballot"), form of master ballot
(the "Master Ballot") and the related materials delivered together
herewith, is being furnished for purposes of soliciting votes on the Plan
to Holders of Secured Lender Claims, Impaired Unsecured Claims and Junior
Subordinated Note Claims as of the Voting Record Date (as defined below). A
vote to accept the Plan shall be deemed a vote to accept the Management
Option Plan.
The Debtors are not soliciting votes from Holders of Old Common
Stock and will ask the Bankruptcy Court to waive the solicitation
requirement with respect to Holders of such Interests, although they are
impaired and will receive a distribution under the Plan, and to deem the
Holders of Class 7 Old Common Stock Interests to have rejected the Plan.
The Holders of Secured Lender Claims, Impaired Unsecured Claims
and Junior Subordinated Note Claims as of August 11, 2000 (the "Voting
Record Date"), are entitled to vote on the Plan. Votes on the Plan are not
being solicited from Holders of Other Secured Claims, Unimpaired Unsecured
Claims, KSOP Claims, Old Common Stock , Securities Claims or Other Old
Equity. Holders of such Claims and Interests will be conclusively presumed
to have accepted or rejected the Plan as set forth herein and in the Plan.
Section 1129(b) permits the confirmation of a plan
notwithstanding the non-acceptance of a plan by one or more impaired
classes of claims or interests. Under that section, a plan may be confirmed
by a bankruptcy court if it does not "discriminate unfairly" and is "fair
and equitable" with respect to each non-accepting class. For a more
detailed description of the requirements for confirmation of a non-
consensual plan, see Section VI.C, "Confirmation and Consummation Procedure
- Confirmation." Accordingly, the Debtors intend to seek confirmation
pursuant to section 1129(b) of the Bankruptcy Code with respect to Classes
8 and 9, as well as Class 7 if the Bankruptcy Court grants the Debtors'
motion to waive any obligation to solicit their votes and Class 7 is deemed
to reject the Plan.
B. VOTING PROCEDURES
If you are entitled to vote to accept or reject the Plan, a
Ballot is enclosed for the purpose of voting on the Plan. Please vote and
return your Ballot(s) to:
TOKHEIM CORPORATION
c/o Logan & Company, Inc.
546 Valley Road
Upper Montclair, New Jersey 07043
Attn: Tokheim Balloting Center
provided, however, that, pursuant to the terms of the Plan, beneficial
owners of Senior Subordinated Notes who receive a Ballot from a bank or
brokerage firm (or its agent) shall return the Ballot to such bank or
brokerage firm (or its agent).
TO BE COUNTED, YOUR BALLOT INDICATING ACCEPTANCE OR REJECTION
OF THE PLAN MUST BE RECEIVED BY LOGAN & COMPANY, INC. ("LOGAN") NO LATER
THAN 12:00 P.M., PREVAILING EASTERN TIME, ON AUGUST 28, 2000 (THE "VOTING
DEADLINE"). PLEASE NOTE: IF YOU RECEIVED A BALLOT FROM A BANK OR BROKERAGE
FIRM, YOUR BALLOT MUST BE RETURNED TO SUCH BANK OR BROKERAGE FIRM NO LATER
THAN 5:00 P.M., PREVAILING EASTERN TIME, ON AUGUST 25, 2000 (THE
"BENEFICIAL HOLDERS' VOTING DEADLINE").
ANY EXECUTED BALLOT THAT DOES NOT INDICATE EITHER AN ACCEPTANCE
OR REJECTION OF THE PLAN OR INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF
THE PLAN SHALL BE DEEMED TO CONSTITUTE AN ACCEPTANCE OF THE PLAN.
If you are a holder of a Claim entitled to vote on the Plan and
did not receive a Ballot, received a damaged Ballot or lost your Ballot, or
if you have any questions concerning the Disclosure Statement, the Plan or
the procedures for voting on the Plan, please call Tokheim Balloting Center
Logan & Company, Inc. at (973) 509-3190. For additional information on
voting, see Section VI.A, "Confirmation and Consummation Procedure -
Solicitation of Votes."
C. CONFIRMATION HEARING
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy
Court, after notice, to hold a Confirmation Hearing. Section 1128(b) of the
Bankruptcy Code provides that any party in interest may object to
confirmation of the Plan.
When the Debtors file petitions for relief under chapter 11 of
the Bankruptcy Code, they will request the Bankruptcy Court schedule a
Confirmation Hearing. Notice of the Confirmation Hearing will be provided
to holders of Claims and Equity Interests or their representatives (the
"Confirmation Notice") as set forth in an order of the Bankruptcy Court.
Objections to confirmation must be filed with the Bankruptcy Court by the
date designated in the notice of confirmation and are governed by
Bankruptcy Rules 3020(b) and 9014 and local rules of the Bankruptcy Court.
UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT
BE CONSIDERED BY THE BANKRUPTCY COURT.
II. OVERVIEW OF THE PLAN
The following is an overview of certain material provisions of
the Plan, which is attached hereto as Exhibit A. The following summaries of
the material provisions of the Plan do not purport to be complete and are
qualified in their entirety by reference to all the provisions of the Plan,
including all exhibits thereto, all documents described therein and the
definitions therein of certain terms used below. Wherever defined terms of
the Plan not otherwise defined in this Disclosure Statement are used, such
defined terms shall have the meanings ascribed thereto in the Plan. See
Article VII, "Risk Factors to be Considered" for a description of certain
risk factors related to the Plan.
A. GENERAL INFORMATION CONCERNING TREATMENT OF CLAIMS AND INTERESTS
The Plan provides for payment in full of Administrative Claims,
Priority Tax Claims, Non-Tax Priority Claims, Other Secured Claims and
Unimpaired Unsecured Claims or such other treatment that will not impair
such Holders under section 1124 of the Bankruptcy Code. Holders of KSOP
Claims will be Unimpaired. The Plan also provides that (i) Holders of
Secured Lender Claims will receive the New Tranche A Term Notes and the
Tranche B Term Notes, as set forth in the Plan, their pro rata share of the
New Special Notes, the New Preferred Stock and the Bank Warrants and (ii)
Holders of Impaired Unsecured Claims will receive their pro rata share of
4,410,000 shares of New Common Stock. Holders of Junior Subordinated Note
Claims will receive (i) their pro rata share of 90,000 shares of New Common
Stock and (ii) their pro rata shares of the New Junior Warrants. In
addition, Holders of Old Common Stock and Securities Claims (although the
Debtors believe there are no Securities Claims) will receive their pro rata
share of the New Warrants.
The Debtors intend to seek to consummate the Plan and cause the
Effective Date to occur by October 15, 2000. There can be no assurance,
however, as to when or whether the Effective Date will occur.
The Debtors believe that the Plan provides distributions to all
Classes of Claims and Interests that reflect an appropriate resolution of
the Claims and Interests, taking into account the differing nature and
priority of such Claims and Interests.
B. SUMMARY OF DISTRIBUTIONS
Under the Plan, Claims against and Interests in the Debtors are
divided into Classes. Certain unclassified Claims, including Administrative
Claims and Priority Tax Claims, will be paid in full in Cash once their
Claims become Allowed Claims or receive such other treatment that will not
impair the Holders of such Claims under section 1124 of the Bankruptcy
Code. All other Claims and all Interests will be divided into ten Classes
and will receive the distributions and recoveries (if any) described in the
table below.
The following table briefly summarizes the classification and
treatment of Claims and Interests under the Plan.
ALTHOUGH THE DEBTORS BELIEVE THAT THE ESTIMATED PERCENTAGE
RECOVERY FOR HOLDERS OF CLASS 5A CLAIMS ARE REASONABLE AND WITHIN THE RANGE
OF ASSUMED RECOVERY USED IN THE NEGOTIATIONS OF THE PLAN, THERE IS NO
ASSURANCE THAT THE ACTUAL AMOUNTS OF ALLOWED CLAIMS IN CLASS 5A WILL NOT
EXCEED THE ESTIMATED AGGREGATE AMOUNT SHOWN IN THE TABLE BELOW. The actual
recoveries under the Plan by the creditors in Class 5A will be dependent
upon a variety of factors including, but not limited to, whether, and in
what amount, contingent claims against the Debtors become non-contingent
and fixed and whether, and to what extent, Disputed Claims are resolved in
favor of the Debtors rather than the claimants. Accordingly, no
representation can be or is being made with respect to whether the
Estimated Percentage Recovery shown in the table below will be realized by
the holder of an Allowed Claim in Class 5A.
Description and Amount
of Claims or Interests Summary of Treatment
-------------------------------------------------------------------------------
Class 1 (Non-Tax Priority Claims) Class 1 is unimpaired by the
Plan. Each holder of an Allowed
A Claim (other than an Non-Tax Priority Claim is
Administrative Claim or a conclusively presumed to have
Priority Tax Claim) that is accepted the Plan and is not
entitled to priority in payment entitled to vote to accept or
pursuant to section 507(a) of the reject the Plan.
Bankruptcy Code.
The legal and equitable rights of
the Holders of Non-Tax Priority
Claims are unaltered by the Plan.
On, or as soon as reasonably
practicable after (i) the
Distribution Date if such Non-Tax
Priority Claim is an Allowed
Non-Tax Priority Claim as of the
Effective Date or (ii) the date
on which such Non-Tax Priority
Claim becomes an Allowed Non-Tax
Priority Claim, each Holder of an
Allowed Non-Tax Priority Claim
shall receive in full
satisfaction, settlement and
release of and in exchange for
such Allowed Non-Tax Priority
Claim at the election of the
Debtors (a) Cash equal to the
amount of such Allowed Non-Tax
Priority Claim; (b) such other
treatment as to which the Debtors
or the Reorganized Debtors and
the holder of such Allowed
Non-Tax Priority Claim have
agreed upon in writing; or (c)
such Claim will be otherwise
treated in any other manner such
that it will not be impaired
pursuant to section 1124 of the
Bankruptcy Code, provided,
however, any Allowed Non-Tax
Priority Claim not due and owing
on the Effective Date will be
paid in accordance with this
section when such Claim becomes
due and owing.
Estimated Percentage Recovery: 100%
Class 2 (Other Secured Claims)
A Claim (other than an Class 2 is unimpaired by the
Administrative Claim or a Secured Plan. Each Holder of an Allowed
Lender Claim) that is secured by Other Secured Claim is
a lien on property in which a conclusively presumed to have
Debtor's Estate has an interest accepted the Plan and is not
or that is subject to setoff entitled to vote to accept or
under section 553 of the reject the Plan.
Bankruptcy Code, to the extent of
the value of the Claim holder's The legal, equitable and
interest in the applicable contractual rights of the Holders
Estate's interest in such of Allowed Other Secured Claims
property or to the extent of the are unaltered by the Plan. On, or
amount subject to setoff, as as soon as reasonably practicable
applicable, as determined after (i) the Distribution Date
pursuant to section 506(a) of the if such Other Secured Claim is an
Bankruptcy Code or, in the case Allowed Other Secured Claim on
of the setoff, pursuant to the Effective Date or (ii) the
section 553 of the Bankruptcy date on which such Other Secured
Code. Claim becomes an Allowed Other
Secured Claim, each Holder of an
Allowed Other Secured Claim shall
receive at the election of the
Debtors in full satisfaction,
settlement and release of and in
exchange for such Allowed Other
Secured Claim (a) Cash equal to
the amount of such Allowed Other
Secured Claim; (b) such other
treatment as to which the Debtors
or Reorganized Debtors have
agreed upon in writing; or (c)
such other treatment that will
not impair the Holder of such
claim pursuant to section 1124 of
the Bankruptcy Code.
Estimated Percentage Recovery: 100%
Class 3 (Unimpaired Unsecured Claims) Class 3 is unimpaired by the
Plan. Each Holder of an Allowed
Class 3 consists of all Unsecured Unimpaired Unsecured Claim is
Non-priority Claims that are not conclusively presumed to have
Administrative Claims, Priority accepted the Plan and is not
Tax Claims, Non-Tax Priority entitled to vote to accept or
Claims, Other Secured Claims, reject the Plan.
Secured Lender Claims or Impaired
Unsecured Claims.
The legal, equitable and
contractual rights of the Holders
of Unimpaired Unsecured Claims
are unaltered by the Plan. On (i)
the Distribution Date if such
Unimpaired Unsecured Claim is an
Allowed Unimpaired Unsecured
Claim on the Effective Date or
(ii) the date on which such
Unimpaired Unsecured Claim
becomes an Allowed Unimpaired
Unsecured Claim, each Holder of
an Allowed Unimpaired Unsecured
Claim shall receive in full
satisfaction, settlement of, and
in exchange for, such Allowed
Unsecured Claim, at the election
of the Debtors: (a) to the extent
due and owing on the Effective
Date, Cash in accordance with the
terms thereof; (b) to the extent
not due and owing on the
Effective Date, Cash when and as
such Claim becomes due and owing
in the ordinary course of
business in accordance with the
terms thereof; (c) such other
treatment as to which the Holder
of such Claim and the Debtors or
Reorganized Debtors agree in
writing; or (d) such Claim will
be otherwise treated in any other
manner such that it will not be
impaired pursuant to section 1124
of the Bankruptcy Code.
Estimated Percentage Recovery: 100%
Class 4 (Secured Lender Claims) Class 4 is impaired and therefore
entitled to vote on the Plan.
Class 4 consists of all Secured
Lender Claims. On, or as soon as reasonably
practicable after, the
Distribution Date, each holder of
an Allowed Class 4 Claim shall
receive (i) to the extent
designated by the Prepetition
Agent prior to the Effective
Date, its share of the New
Tranche A Term Notes; (ii) its
pro rata share of the Tranche B
Term Notes up to such Prepetition
Lenders' pro rata share of the
New Term Notes minus the amount
of Tranche A Term Notes received
by such Prepetition Lender; (iii)
its pro rata share of the New
Special Notes; (iv) its pro rata
share of the Bank Warrants; and
(v) its pro rata share of the New
Preferred Stock. All
distributions on account of
Secured Lender Claims shall be
made to the Prepetition Agent for
distribution to the Holders of
Allowed Secured Lender Claims.
Estimated Percentage Recovery: 100%
Class 5A (Impaired Unsecured Claims) Class 5A is impaired and
therefore entitled to vote on the
Class 5A consists of all Senior Plan.
Subordinated Note Claims and
General Impaired Unsecured On or as soon as reasonably
Claims. practicable after (i) the
Distribution Date if such
Impaired Unsecured Claim is an
Allowed Impaired Unsecured Claim
as of the Effective Date or (ii)
the date on which such Impaired
Unsecured Claim becomes an
Allowed Impaired Unsecured Claim,
each Holder of an Allowed
Impaired Unsecured Claim shall
receive its pro rata share of
4,410,000 shares of New Common
Stock.
Estimated Amount of Allowed Claims: Estimated Percentage Recovery:
$200 million to $240 million 9.2% to 33%
Class 5B (Junior Subordinated Note Class 5B is impaired and therefore
Claims) entitled to vote on the Plan.
Class 5B consists of all Junior On or as soon as reasonably
Subordinated Note Claims. practicable after (i) the
Distribution Date if such
Impaired Unsecured Claim is an
Allowed Impaired Unsecured Claim
as of the Effective Date or (ii)
the date on which such Impaired
Unsecured Claim becomes an
Allowed Impaired Unsecured Claim,
each Holder of an Allowed
Impaired Unsecured Claim shall
receive (a) its pro rata share of
90,000 shares of New Common Stock
and (b) its pro rata share of the
New Junior Warrants.
Estimated Amount of Allowed Claims: Estimated Percentage Recovery:
$40 million 3.2% to 5.5%
Class 6 (KSOP Claims) Class 6 is unimpaired by the
Plan. Each Holder of an Allowed
KSOP Claims consist of any Claim KSOP Claim is conclusively
arising from, under, or in any presumed to have accepted the
way relating to the KSOP, Plan and is not entitled to vote
including the Old Preferred Stock to accept or reject the Plan.
associated therewith.
Estimated Percentage Recovery:
100% of what Holders of Class 6
Interests are entitled to receive
under the KSOP.
Class 7 (Old Common Stock Interests) Class 7 is impaired. If the
Bankruptcy Court approves the
Old Common Stock consists of Class 7 Solicitation Order, Class
common stock of Tokheim 7 will be deemed to have rejected
Corporation outstanding the Plan and, therefore, will not
immediately prior to the Petition be entitled to vote on the Plan.
Date, including treasury stock. If solicitation is required, and
Class 7 votes to reject the Plan,
the Debtors will seek to obtain
confirmation of the Plan
notwithstanding such negative
vote pursuant to the provisions
of section 1129(b) of the
Bankruptcy Code.
On or as soon as reasonably
practicable after (i) the
Distribution Date if such Old
Common Stock Interest is an
Allowed Old Common Stock Interest
or (ii) the date on which such
Old Common Stock Interest becomes
an Allowed Old Common Stock
Interest, each Holder of an
Allowed Old Common Stock Interest
shall receive its pro rata share
of the New Warrants together with
the Holders of any Allowed
Securities Claims.
Class 8 (Securities Claims) Class 8 is impaired and deemed to
reject the Plan.
Securities Claims consist of all
claims arising from recession of On or as soon as practicable
a purchase or sale of a security after (i) the Distribution Date
of the Debtors, for damages if such Securities Claim is an
arising from the purchase or sale Allowed Securities Claim or (ii)
of such security, or for the date on which such Securities
reimbursement or contribution Claim becomes an Allowed
allowed under section 502 of the Securities Claim, each Holder of
Bankruptcy Code on account of an Allowed Securities Claim shall
such Claim, provided however, receive its pro rata share of the
Claims arising pursuant to an New Warrants together with the
executory contract assumed Holder of Allowed Old Common
pursuant to Article VII of the Stock Interests.
Plan shall not be Securities
Claims. The Debtors do not believe there
are any Securities Claims and,
therefore, any Securities Claims
Filed will be objected to by the
Debtors.
Class 9 (Other Old Equity Interests) Class 9 is impaired and deemed to
reject the Plan.
Other Old Equity consists of the
Old Rights and Warrants. Holders of Class 9 Interests will
receive or retain no property on
account of such Interests.
C. PREPETITION NOTES
Pursuant to the terms of the Junior Subordinated Notes, the
Junior Subordinated Notes are "subordinated in right of payment . . . to
the prior payment in full in cash or Cash Equivalent of all Obligations on
Senior Debt." See Junior Subordinated Note Indenture at section 10.01.
Senior Debt under the Junior Subordinated Note Indenture includes the
"principal of, premium, if any, and interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy . . .) on,
and all other Obligations with respect to, any Indebtedness of the Company
. . . ." See Junior Subordinated Note Indenture at p. 10. The term
Indebtedness in the Junior Subordinated Note Indenture includes the Senior
Subordinated Notes. Therefore, the Junior Subordinated Notes are
subordinate to the Senior Subordinated Notes. Accordingly, to effectuate
this subordination, the Junior Subordinated Notes have been placed in a
separate Class which will receive a different distribution with a
substantially smaller recovery. While Holders of Senior Subordinated Note
Claims and General Impaired Unsecured Claims will receive their pro rata
share of 4,410,000 shares of New Common Stock, Holders of Junior
Subordinated Note Claims will receive (i) their pro rata share of 90,000
shares of New Common Stock and (ii) their pro rata share of the New Junior
Warrants exercisable at a price of $30.00 per share to purchase 555,556
shares of New Common Stock.
D. IMPAIRED UNSECURED CLAIMS
The Class of Impaired Unsecured Claims consists of the Holders
of Senior Subordinated Notes and a limited number of General Impaired
Unsecured Claims. The Claims of the Debtors' employees and trade creditors
will be Unimpaired. The Unimpaired Unsecured Claims are held by trade
creditors that will continue to do business with the Debtors. The
Unimpaired trade creditors are vendors that the Debtors still utilize in
the ordinary course of their business and, therefore, are critical to the
Debtors' operations. The General Impaired Unsecured Claims that will be
Impaired are Claims that do not represent ongoing business relationships
and that, in the Debtors' business judgment, can be Impaired without
affecting the Debtors' business. In addition, certain Claims against the
Debtors that are disputed by the Debtors are also included in the General
Impaired Unsecured Claims. Litigation Claims between the Debtors and
current vendors with whom the Debtors plan to continue their business
relationship, and Claims involving the Debtors' employees, are classified
as Unimpaired Unsecured Claims and will not be affected by the Chapter 11
Cases. All General Impaired Unsecured Claims are listed on Exhibit A to the
Plan. The largest such Claim arises from a dispute between Tokheim and the
Management Solutions, Inc. ("MSI"). On February 10, 1999, Tokheim
terminated Rusty Elston ("Elston"), the former president of MSI, for cause,
including Elston's failure to follow specific instructions given to him by
Tokheim executives regarding the business operations. Pursuant to the terms
of the Stock Purchase Agreement between Elston, Ronald Elston, Eric Burwell
and Curt Burwell (collectively, the "MSI Claimants") and Tokheim dated
December 29, 1997, Elston is entitled to no recovery if he was terminated
for cause. If, however, Elston was terminated without cause, then Elston
would be entitled to approximately $5 million under his employment
agreement, and Elston and the three other former shareholders of MSI may be
entitled to certain other contingent purchase price adjustments of
approximately $8 million. Elston and the three other former shareholders
filed an arbitration proceeding alleging that Elston was terminated without
cause, and, therefore they are entitled to damages of up to $30 million.
Tokheim counterclaimed against Elston for personal expenses paid by MSI,
excess tax distributions and damage to MSI. On August 11, 2000, Tokheim,
MSI and the former shareholders reached a settlement of certain of these
issues. Pursuant to the settlement, the MSI Claimants have a Class 5A Claim
against Tokheim in the amount of $7,000,000, subject to Tokheim's right to
argue that the Claims are limited by section 502(b)(7) of the Bankruptcy
Code.
E. KSOP CLAIMS
Pursuant to the terms of the Debtors' employee stock ownership
plan ("KSOP"), the Debtors contribute shares of Old Preferred Stock to
employees' retirement accounts based on the employees' salaries. When
employees leave the Debtors' employment, they are entitled to convert their
shares of Old Preferred Stock to shares of Old Common Stock or to receive
$25.00 per share of Old Preferred Stock. The employees' rights under the
KSOP will remain unaltered by the Plan. The Reorganized Debtors will
continue to make the required contributions to employees' KSOP. In
addition, when employees leave the Debtors' employment, they will be
entitled to receive either $25.00 per share of Old Preferred Stock or, if
they elect to convert their shares of Old Preferred Stock to Old Common
Stock, the employees will receive the number of New Warrants which they
would have been entitled to receive under the Plan if they held Old Common
Stock on the Effective Date.
F. MANAGEMENT OPTION PLAN
On the Effective Date, pursuant to the terms of the Plan, the
Reorganized Debtors will execute a Management Option Plan. Pursuant to the
Management Option Plan, options to acquire an aggregate of 500,000 shares
of New Common Stock will be reserved for distribution to selected members
of Reorganized Tokheim's management. Douglas Pinner will receive options
for an aggregate of 100,000 shares of New Common Stock at an exercise price
of $10 per share which is the midpoint estimate of the value of each share
of Reorganized Tokheim's common equity on the Effective Date. These options
will vest over a three (3) year period with one-third (1/3) of the options
vesting each year. The allocation of the remaining options will be
determined by the board of directors of Reorganized Tokheim. Half of these
options (for 200,000 shares) will be exercisable at $10 per share. The
remainder of the options will be exercisable at a price or prices to be
determined by the board of directors of Reorganized Tokheim. The terms of
the Management Option Plan will be set forth more fully in the Plan
Supplement.
G. TERMS OF NEW CREDIT AGREEMENT/EXIT FACILITY
On the Effective Date, the Debtors will enter into the New
Credit Agreement governing the Exit Facility, the New Special Notes and the
New Term Notes. The terms of the New Credit Agreement shall be
substantially similar to the following: The Exit Lenders will provide the
Reorganized Debtors an Exit Facility in the aggregate principal amount of
approximately $50 million, subject to a borrowing base. The availability
will be reduced to approximately $40 million on December 15, 2001 and
approximately $30 million on December 15, 2002. The interest rate on the
Exit Facility will be approximately prime rate plus 2.50% or LIBOR plus
4.00%. The New Tranche A Term Notes and the New Tranche B Term Notes will
be issued in the aggregate principal amount of approximately $140 million
plus interest accruing pursuant to the Prepetition Credit Agreement during
the Chapter 11 Cases. The interest rate on the New Term Notes will be
either the prime rate plus 3.50% or LIBOR plus 5.00%. In addition, pursuant
to the New Credit Agreement, the Reorganized Debtors will issue the New
Special Notes in the aggregate principal amount of $100 million. Interest
will accrue on the New Special Notes at 16.00% compounded quarterly in
kind. The New Credit Agreement will terminate by December 31, 2005. The
lenders under the New Credit Agreement will have a lien on substantially
all of the Reorganized Debtors' assets. The lien of the Lenders under the
New Term Notes will be second to the lien of the Exit Lenders. The liens of
the lenders under the New Tranche A Notes will be senior to the liens of
the lenders under the New Tranche B Notes. Further, the liens of the
lenders under the New Special Notes will be junior to the liens of the
lenders under the New Term Notes. The Debtors reserve the right to modify
the terms of the Exit Facility as set forth herein without resolicitating
acceptances of the Plan.
H. TERMS OF SECURITIES TO BE ISSUED PURSUANT TO THE PLAN
1. NEW COMMON STOCK
On the Effective Date, Reorganized Tokheim will issue 4,500,000
in New Common Stock pursuant to Section 4.6 of the Plan, representing 90%
of the equity value of Reorganized Tokheim on the Effective Date, subject
to dilution., to be distributed to Holders of Class 5A and 5B Claims on a
pro rata basis.
2. NEW JUNIOR WARRANTS
On the Effective Date, Reorganized Tokheim will issue New
Junior Warrants with a five (5) year term to purchase an aggregate of
555,556 shares of New Common Stock at an exercise price of $30.00 per
share. The New Junior Warrants will be issued to the Holders of Junior
Subordinated Notes and pursuant to the terms of the New Junior Warrant
Agreement.
3. NEW WARRANTS
On the Effective Date, Reorganized Tokheim will issue New
Warrants with a six (6) year term to purchase an aggregate of 549,451
shares of New Common Stock at an exercise price of $49.50 per share. The
New Warrants will be issued to the Holders of Old Common Stock and
Securities Claims, if any, and pursuant to the terms of the New Warrant
Agreement.
4. BANK WARRANTS
On the Effective Date, Reorganized Tokheim will issue Bank
Warrants with a five (5) year term to purchase 678,334 shares of New Common
Stock at an exercise price of $0.01 per share. The Bank Warrants will be
issued to the Holders of Secured Lender Claims and pursuant to the terms of
the Bank Warrant Agreement.
5. NEW PREFERRED STOCK
On the Effective Date, Reorganized Tokheim will issue the New
Preferred Stock with a liquidation preference of $100,000 and quarterly
dividends at an annual rate of 16.00%. The holders of the New Preferred
Stock will be entitled to elect two (2) directors to the board of directors
of Reorganized Tokheim, voting as a separate class. If the Reorganized
Debtors default under the New Credit Agreement, the holders of the New
Preferred Stock, voting as a separate class, will be entitled to elect a
majority of the directors on the board of directors of Reorganized Tokheim.
The New Preferred Stock will not be detachable from the New Special Notes.
I. BOARD OF DIRECTORS OF REORGANIZED TOKHEIM
Subject to any requirement of Bankruptcy Court approval
pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective
Date, the initial officers of Reorganized Tokheim shall be the officers of
the Debtors immediately prior to the Effective Date. On the Effective Date,
the board of directors of Reorganized Tokheim shall have nine (9) members
including Douglas K. Pinner, six (6) directors designated by the Bondholder
Committee and two (2) directors designated by the Prepetition Lenders. The
board of directors of the Reorganized Subsidiary Debtors shall remain the
same as prior to the Effective Date. Pursuant to section 1129(a)(5), the
Debtors will disclose, on or prior to the Confirmation Date, the identity
and affiliations of any person proposed to serve on the initial board of
directors of Reorganized Tokheim (including those persons designated by the
Bondholder Committee and the Prepetition Lenders), and, to the extent such
person is an insider, other than by virtue of being a director, the nature
of any compensation for such person. In addition, the Bondholder Committee,
on or prior to the Confirmation Date, shall designate the length of term of
each director, which length of term shall be 1, 2 or 3 years. The term of
Douglas K. Pinner shall be three (3) years (but in no event longer than his
term of employment). The classification and composition of the board of
directors of each of the Reorganized Debtors shall be consistent with the
Amended Certificates of Incorporation. Each such director and officer shall
serve from and after the Effective Date pursuant to the terms of the
Amended Certificates of Incorporation, the other constituent documents of
the Reorganized Debtors, and applicable law. The board of directors of
Tokheim will be deemed to have resigned on the Effective Date.
J. VALUE OF REORGANIZED DEBTORS
In connection with formulating the Plan, the Debtors determined
that it was necessary to estimate a post confirmation going concern
enterprise value for the Reorganized Debtors in order to, among other
things, estimate the recovery to the Debtors' Impaired Creditors.
Accordingly, the Debtors directed Lazard Freres & Co, LLC ("Lazard") to
prepare such a valuation. A summary of the valuation prepared by Lazard is
attached as Exhibit D to the Disclosure Statement.
As shown in the valuation, Lazard has determined pursuant to
various well established valuation methods that the enterprise value of
Reorganized Tokheim and its subsidiaries and affiliates is in the range of
$300 million to $350 million, with a midpoint value of $325 million. Given
the proposed capital structure, the equity value of Reorganized Tokheim is
in the range of $25 million to $75 million, with a midpoint value of $50
million. On the Effective Date, the Debtors will issue 4,500,000 shares of
New Common Stock for distribution to Holders of Class 5A and 5B Claims
which represents 90% of the equity value Reorganized Tokheim (the remaining
10% of the equity value of Reorganized Tokheim is embodied in the Bank
Warrants). Therefore, the estimated common equity value of Reorganized
Tokheim will be $22.5 million to 67.5 million, or $5 to $15 on a per share
basis with a midpoint of $10 per share. The value of the Bank Warrants will
be approximately $6.8 million, or $5 to $15 per share with a midpoint of
$10. The value of the New Warrants is approximately $622,000 or $1.13 per
warrant share. The value of the New Junior Warrants is approximately
$800,000 or $1.44 per warrant share.
K. RETENTION OF LAZARD
In April 2000, Tokheim retained Lazard Freres & Co. LLC
("Lazard") to provide investment banking services regarding the
restructuring of Tokheim's capital structure. Lazard's services have
included negotiating with the Prepetition Lenders and Prepetition
Noteholders regarding the refinancing of their debt and assisting in
negotiating new financing. Pursuant to a retention agreement dated as of
April 19, 2000, Lazard is entitled to a monthly fee of $150,000 and a
success fee equal to 1.0% of the prepetition debt obligations of the
Debtors (approximately $5 million) upon the completion of a successful
reorganization. After receiving 3 months of the monthly fee, however, all
subsequent monthly fees will be credited to the success fee. As of August
16, 2000, Lazard has been paid $450,000.
III. GENERAL INFORMATION
A. DESCRIPTION AND HISTORY OF DEBTORS' BUSINESS
1. THE DEBTORS
Tokheim operates its business through a group of affiliated
entities. The Debtors, in addition to Tokheim, are: (1) Tokheim RPS,
L.L.C., a Delaware limited liability corporation; (2) Tokheim Investment
Corporation, a Texas corporation; (3) Management Solutions, Inc., a
Colorado corporation; (4) Gasboy International, Inc., a Pennsylvania
corporation; (5) Tokheim Services, L.L.C., an Indiana limited liability
corporation; and (6) Sunbelt Hose & Petroleum Equipment, Inc., a Georgia
corporation. Tokheim is the parent corporation of the Subsidiary Debtors
and of other non-debtor U.S. and foreign corporations and entities.
2. THE BUSINESS
Tokheim is a publically-traded company which, with its directly
or indirectly owned domestic and foreign subsidiaries, is the world's
largest designer, manufacturer and seller of electronic and mechanical
petroleum marketing systems, including service station equipment,
point-of-sale ("POS") systems and credit card and cash activated
transactions systems. In fiscal 1999 Tokheim had revenues of $694 million.
The majority of Tokheim's revenues comes from the manufacture and sale of
petroleum dispensers and POS systems. Tokheim, however, also earns revenue
from servicing and upgrading existing systems manufactured by Tokheim and
its competitors. In 1999 Tokheim's revenues from its servicing operations
were $272 million or 39% of its total revenues.
Tokheim operates eight (8) manufacturing facilities in the
United States and abroad and has a sales or service presence in over 80
countries. It operates through 138 U.S. and 114 international distributors
and 298 service companies, employing approximately 1,400 field
representatives. As of January 31, 2000, Tokheim employed approximately
4,500 persons.
3. HISTORY
Tokheim was founded in 1898 by John J. Tokheim. The Company was
originally incorporated in Iowa in 1901 as Tokheim Manufacturing Company.
In 1918 Tokheim Manufacturing Company was purchased by an Indiana
businessman and moved to Ft. Wayne, Indiana, where it was reincorporated
under Tokheim Oil Tank and Pump Company. The Company changed its name to
Tokheim Corporation in 1953. In 1954 Tokheim Corporation was listed on the
New York Stock Exchange. Tokheim was delisted on July 14, 2000 for failure
to meet New York Stock Exchange listing requirements.
Through the 1980s, Tokheim established itself as a market
leader and was known for excellent design and high manufacturing standards.
Beginning in 1992, however, after several years of declining sales volumes
and lowered profitability caused, in part, by Tokheim's entry into poorly
performing non-core businesses (e.g., dental x-ray equipment and automation
controls), the current management team, led by Douglas K. Pinner (the
present chairman, president, and CEO of Tokheim Corporation), was brought
in by the board of directors. The new management team refocused Tokheim on
its core petroleum dispensing business and took other steps to stem
operating losses and reestablish Tokheim as a market leader. Between 1992
and 1995, Tokheim divested itself of all non-core businesses, consolidated
its North American manufacturing operations, redesigned its premier product
lines and focused on its working capital management and on reducing
outstanding receivables and inventory levels.
In September 1996 Tokheim's focused strategic expansion began
with the purchase of French-based Sofitam S.A. ("Sofitam") for
approximately $107 million. Sofitam was the world's fifth largest petroleum
dispenser manufacturing company. Sofitam's strong market presence in France
and northern Africa and competitive position in southern Europe
complemented Tokheim's presence in Germany and the United Kingdom. The
Sofitam acquisition also included Sofitam's in house service provider Sogen
S.A.
In 1997 Tokheim acquired Management Solutions, Inc. ("MSI").
MSI is a Denver-based company that develops and distributes retail
automation systems (including POS systems) to the convenience store,
petroleum dispensing, and fast-food service industries. Tokheim paid MSI's
stockholders an initial amount of $12 million. Tokheim is also obligated to
make payments of up to $13.2 million through 2000, based on MSI's
performance. Tokheim was not obligated to make any performance payments in
1998 or 1999 under the terms of the purchase agreement. Tokheim is
currently in arbitration with the former shareholders of MSI. See Section
II.D. "Overview of the Plan - Impaired Unsecured Claims - MSI Litigation."
Tokheim's purchase of MSI, a recognized leader in integrated POS systems,
accelerated Tokheim's ability to extend its strong technological position
across its product lines.
In September 1998 Tokheim completed the acquisition of the
Retail Petroleum Services ("RPS") Division of Schlumberger, Ltd., for
approximately $330 million in cash, notes, and warrants. RPS engages in
both the manufacture and sale of petroleum dispensing equipment and the
servicing of petroleum dispensing equipment manufactured by RPS and others.
As a result of the acquisition of RPS, then the industry's third-largest
company, Tokheim became the largest supplier of petroleum dispensing
systems in Europe, Africa, Canada, and Mexico, with presences in Asia and
Latin America, and the second largest supplier in the United States.
Tokheim's global market share is 37%, significantly higher than its chief
competitor with a 29% market share.
In recent years, approximately 50% of Tokheim's sales revenues
were derived from the sale of dispensers and related equipment, 10% from
POS systems and 40% from service contracts, spare parts and work in the
petroleum industry. Tokheim's customers include: (1) major oil companies
("MOCs"), which are typically large multinational companies that are
vertically integrated with retail operations in both developing and
emerging markets; (2) national oil companies ("Nationals"), which are
non-U.S. oil companies that operate almost exclusively in a single national
market; (3) jobbers, which are independent service station owners that
operate under the brand name of a MOC; (4) convenience store stations,
which are petroleum retailers whose sales are over 50% from merchandise
rather than petroleum products; and (5) hypermarkets, a retail format
(similar to a stripmall in the U.S.), pioneered in France with a growing
presence in the rest of Europe. In recent years, the MOCs and the Nationals
have been moving toward granting national, regional and global contracts
and creating alliances with preferred suppliers. Tokheim believes that its
acquisition of Sofitam and RPS, which increased its global sales and
service capabilities, position it to take advantage of this trend. At
present Tokheim is allied with BP Amoco (which is allied with ARCO), Shell
Oil Company, Kuwait (Q8), Total/EIF/Fina and Repsol on a world wide basis.
In addition, on a national basis, Tokheim is allied with various companies
including Pilot Corporation (U.S.), Kwik Trip (U.S.), Travel Center America
(U.S.), Uni-Mart (U.S.), United Refining (U.S.), CPC (Asia), HPCC (India),
Cenex, Alon (Israel), Paz Oil (Israel), Palestine Oil, Oeg (U.K.), Texaco
(Benelux), Carrafour Hyper (France), Intermarche Hyper (France), Promodes
Hyper (France), Auchan Hyper (France), Safeway Hyper (U.K.), Esso (France),
and Esso (Benelux).
4. INDUSTRY
Tokheim competes principally against, among others, Gilbarco,
Inc., Wayne (a division of Halliburton Co.), Scheidt & Bachmann GmbH and
Tatsuno Corporation. Tokheim is the largest global manufacturer and
servicer of petroleum dispensing equipment.
Tokheim believes that a number of factors make it unique in the
industry. These factors include the Company's: (1) global capabilities,
which allow it to satisfy the complete petroleum dispensing equipment needs
of customers throughout the world; (2) a service network which is the
world's largest; (3) strong customer relationships; (4) broad,
technologically advanced product line; and (5) a proven management team.
The petroleum dispenser industry is driven by a number of
factors including environmental regulation, technological improvements and
general economic conditions. Historically, environmental regulation has
been the most important driver. As regulations change - typically, becoming
more stringent - MOCs and other gas station operators are forced to upgrade
dispenser systems to remain in compliance. While in the United States much
of the upgrading has been completed over the past decade, developed and
developing foreign markets are following the U.S. regulatory lead. As a
result, environmental upgrading will continue to drive much of the market
in the next few years.
Technology has been and will continue to be another major
industry factor. Consumers' demand for faster and more versatile service
has resulted in the development of "pay at the pump" technology. In
addition, station operators' need for improved data collection and
management and inventory control led to the development of new technology
that would connect the pumps to the stations' business systems, including
their accounting and inventory systems. The Debtors believe that continued
technological development will increase sales over the next several years.
B. SIGNIFICANT FUNDED INDEBTEDNESS
In 1998 Tokheim entered into a credit agreement (as amended,
the "Prepetition Credit Agreement") with a consortium of lenders (the
"Prepetition Lenders") . The Prepetition Credit Agreement originally
consisted of a six year $120 million term loan facility and a $120 million
revolving working capital facility due 2004. The Prepetition Credit
Agreement was amended in 1999, to among other things, change the maturity
to September 30, 2003 and to provide an additional revolving loan facility
in the amount of $10 million which expires on December 22, 2001.
An additional agreement dated September 30, 1998, was entered
into by the Prepetition Lenders and Tokheim for a three year $24 million
loan facility to fund Tokheim's employee stock ownership plan ("ESOP"). The
final payment with respect to the ESOP loan is due on May 31, 2001. As of
August 28, 2000, the aggregate obligations under the ESOP loan facility
will be approximately $4 million.
The aggregate obligations under the Prepetition Credit
Agreement, as of August 28, 2000, will be approximately $230 million,
including $116 million on the revolving facility, including the additional
revolving loan facility (both fully drawn) and a term loan balance of
approximately $110 million.
The primary obligors under the Prepetition Credit Agreement are
Tokheim Corporation and Gasboy International, Inc. The other Subsidiary
Debtors are guarantors under the Prepetition Credit Agreement. The
Prepetition Credit Agreement is secured by (a) a first priority security
interest in certain real and personal property of Tokheim Corporation and
the Subsidiary Debtors, (b) a pledge of 100% of the stock of the Subsidiary
Debtors, and (c) a pledge of 65% of the stock of the first tier foreign
subsidiaries held by Tokheim Corporation and the other Subsidiary Debtors.
The RPS acquisition was funded in part through the issuance of
$40 million of 12.0% junior subordinated payment-in-kind notes due 2008
(the "Junior Subordinated Notes"). The Junior Subordinated Notes are
unsecured obligations that are junior in payment to the Senior Subordinated
Notes (defined below). As of August 28, 2000, an aggregate amount of $50
million will be outstanding under the Junior Subordinated Notes. The Junior
Subordinated Notes are guaranteed by the Subsidiary Debtors.
In January 1999 Tokheim issued approximately $200 million in
11.375% Senior Subordinated Notes due 2008, comprised of $123 million in
aggregate principal amount of dollar notes (the "Dollar Notes") and Euro 75
million in aggregate principal amount (valued at approximately $75 million)
of euro notes (the "Euro Notes" and, collectively with the Dollar Notes,
the "Senior Subordinated Notes"). As of August 28, 2000, an aggregate
amount of approximately $191 million in principal and $13 million in
accrued interest was outstanding under the Senior Subordinated Notes. The
Senior Subordinated Notes are guaranteed by the Subsidiary Debtors.
C. EVENTS LEADING TO CHAPTER 11 FILINGS
Beginning in early 1999, shortly after the RPS acquisition,
Tokheim's sales slowed as a result of a decrease in sales to the MOCs.
During 1999 the MOCs underwent unprecedented consolidation. With the
mergers or alliances of BP Amoco and ARCO, Exxon and Mobile, Repsol and
YPF, and Shell and Texaco, the number of MOCs fell from 12 to 6. During
this period of consolidation, the MOCs devoted much of their resources to
corporate and systems integration, divestment of redundant operations and
reevaluation of global strategies, rather than capital expenditures on
dispensers and POS operations. At the same time, depressed crude oil prices
through out 1999 decreased MOCs' profitability and, therefore, reduced
their budgeted capital expenditures for equipment. Economies in certain
emerging markets, such as Venezuela, Mexico and Eastern Europe, were
particularly hard hit. As a result, in significant part, of these factors,
Tokheim's pro forma revenues fell from $743 million in fiscal 1998 to $694
million in fiscal 1999 and are projected to be $525 million in fiscal year
2000.
Due to the decrease in revenues, Tokheim determined that it
would not be able to make the interest payment on the Senior Subordinated
Notes due on August 1, 2000. Tokheim also determined that it would be
unable to meet certain financial covenants in the Prepetition Credit
Agreement.
On May 31, 2000, the Debtors were in violation of several of
the financial covenants under the Prepetition Credit Agreement. Therefore,
in June 2000, Tokheim sought and obtained a waiver with respect to these
violations and entered into discussions with the Prepetition Lenders and
the Holders of Tokheim's Senior Subordinated Notes and Junior Subordinated
Notes (collectively, the "Prepetition Noteholders"). Tokheim concluded,
after exploring various out of court restructuring alternatives, that the
best vehicle to achieve a restructuring of its indebtedness was through a
prepackaged chapter 11 process. Tokheim also concluded that to return to
viability it would have to emerge from any restructuring with significantly
less debt than currently on its books.
Tokheim initially presented its restructuring proposal to
representatives of both the Prepetition Lenders and the Prepetition
Noteholders on June 21, 2000. After this proposal was presented, Tokheim
and the Prepetition Lenders and Prepetition Noteholders entered into
negotiations regarding the terms of the Plan. On July 31, 2000, Tokheim
reached an agreement in principle with the Prepetition Lenders and the
Prepetition Noteholders the terms of which are set forth in the attached
Plan.
IV. THE ANTICIPATED CHAPTER 11 CASES
If the Debtors receive the requisite votes for acceptance of
the Plan, the Debtors intend to file voluntary petitions for relief under
chapter 11 of the United States Bankruptcy Code. At that time, all actions
and proceedings against the Debtors and all acts to obtain property from
the Debtors will be stayed under section 362 of the Bankruptcy Code. The
Debtors will continue to operate their businesses and manage their
properties as debtors-in-possession pursuant to sections 1107(a) and 1108
of the Bankruptcy Code.
The Debtors do not expect the Chapter 11 Cases to be
protracted. To expedite their emergence from chapter 11, the Debtors on the
Petition Date, in addition to filing the Disclosure Statement and the Plan,
will file motions seeking the relief detailed below, among other relief,
from the Bankruptcy Court. Such relief, if granted, will facilitate the
administration of the Chapter 11 Cases; there can be no assurance, however,
that the Bankruptcy Court will grant the relief sought.
A. MOTIONS TO BE FILED
APPLICATIONS FOR RETENTION OF DEBTORS' PROFESSIONALS; ORDINARY COURSE
PROFESSIONALS
The Debtors intend to seek retention of certain professionals
to represent them and assist them in connection with the Chapter 11 Cases.
These professionals were intimately involved with the negotiation and
development of the Plan. These professionals include, among others: (i)
Skadden, Arps, Slate, Meagher & Flom (Illinois), as counsel for the
Debtors; (ii) Lazard Freres & Co. LLC, as investment banker for the
Debtors; and (iii) PricewaterhouseCoopers LLP, as restructuring consultants
to the Debtors. The Debtors also intend to seek authority to retain certain
professionals to assist with the operation of Debtors' businesses in the
ordinary course; these so-called "ordinary course professionals" will not
be involved in the administration of the Chapter 11 Cases.
MOTION TO APPROVE NOTICE OF THE COMBINED DISCLOSURE STATEMENT AND
CONFIRMATION HEARING, AND TO SCHEDULE COMBINED DISCLOSURE STATEMENT AND
CONFIRMATION HEARING TO CONFIRM JOINT PLAN OF REORGANIZATION
The Debtors intend to seek an order scheduling a combined
Confirmation Hearing and hearing on the Disclosure Statement at which time
the Debtors will seek approval of the Disclosure Statement and confirmation
of the Plan pursuant to sections 1125, 1128 and 1129 of the Bankruptcy Code
on the earliest date which is convenient for the Bankruptcy Court to
conduct such hearing, approximately one (1) month after the filing of the
Petitions.
Pursuant to the Bankruptcy Rules, the Debtors must provide
notice of the hearing to approve the Disclosure Statement and confirmation
of the Plan to creditors and equity holders. Because several classes of
Claims, with a multitude of creditors, are not Impaired under the Plan and
will pass through the Chapter 11 Cases unaffected, the Debtors shall
request that they be authorized to provide only publication notice of the
events set forth above in several newspapers of national circulation to
Holders of Unimpaired Claims.
Additionally, the Debtors will seek the Bankruptcy Court's
approval of its prepetition solicitation procedures, including the
Disclosure Statement used to solicit acceptances of the Plan from Holders
of Class 4, 5A and 5B Claims, as well as a Bankruptcy Court Order waiving
the solicitation requirement with respect to Class 7 and deeming such Class
to have rejected the Plan.
MOTION TO CONTINUE USING EXISTING CASH MANAGEMENT SYSTEMS
Because the Debtors expect the Chapter 11 Cases to be pending
for less than two (2) months, and because of the administrative hardship
that any operating changes would impose on them, the Debtors intend to seek
authority to continue using their existing cash management system, bank
accounts and business forms and to follow their internal investment and
deposit guidelines. Absent the Bankruptcy Court's authorization of the
continued use of the cash management system, cash flow among the Debtors
would be impeded to the detriment of their estates and their creditors.
Continued use of their existing cash management system will
facilitate the Debtors' smooth and orderly transition into chapter 11,
minimize the disruption of their businesses while in chapter 11 and
expedite their emergence from chapter 11. As a result of set-up time and
expenses, requiring the Debtors to adopt and implement a new cash
management system would likely increase the costs of the Chapter 11 Cases.
For the same reasons, requiring the Debtors to cancel their existing bank
accounts and establish new accounts or requiring the Debtors to create new
business forms would only frustrate the Debtors' efforts to reorganize
expeditiously.
MOTION FOR AUTHORITY TO ENTER INTO DIP FINANCING FACILITY; USE OF CASH
COLLATERAL
The Debtors believe that the DIP Financing Facility is critical
to the Debtors' operations during the pendency of the Chapter 11 Cases. The
Debtors thus will seek authorization to enter into the DIP Financing
Facility and to use cash collateral, as that term is defined in section
363(a) of the Bankruptcy Code. See Section 4.B. of this Disclosure
Statement, "The Anticipated Chapter 11 Cases - Debtor in Possession
Financing."
MOTION FOR AUTHORITY TO PAY PREPETITION UNIMPAIRED UNSECURED CLAIMS
The Debtors believe that good relationships with their Vendors
are necessary to the viability of their business during the Chapter 11
Cases. Notwithstanding provisions of the Bankruptcy Code that would
otherwise require the Debtors to defer payment of Unimpaired Unsecured
Claims until the Effective Date, the Debtors intend to seek authority from
the Bankruptcy Court to pay Unimpaired Unsecured Claims in the ordinary
course of their businesses if the claimant continues to extend trade credit
to the Debtors on ordinary and customary terms. The relief sought in this
motion is critical to ensure the uninterrupted flow of goods and services
to the Debtors.
MOTION FOR AUTHORITY TO PAY PREPETITION EMPLOYEE WAGES AND ASSOCIATED BENEFITS
The Debtors believe that they have a valuable asset in their
work force and that any delay in paying prepetition compensation or
benefits to their employees would destroy the Debtors' relationships with
employees and irreparably harm employee morale at a time when the
dedication, confidence and cooperation of the Debtors' employees is most
critical. Accordingly, the Debtors will seek authority to pay compensation
and benefits which were accrued but unpaid as of the Petition Date.
MOTION FOR AN ORDER ESTABLISHING BAR DATE
The Debtors intend to seek an order setting a date by which
proofs of claims and proofs of interest must be filed in the Chapter 11
Cases with respect to Class 5A, 5B and 8 Claims and Class 7 Interests. The
Debtors will attach as Exhibits to the Bar Date Motion a list of the
Impaired Unsecured Claims and a list of the parties on the Debtors' stock
register reflected as owning Old Common Stock. Holders of Class 5A and 5B
Claims and Class 7 Interests do not need to file proofs of claim or proofs
of interest unless they dispute the amounts listed of these Exhibits. The
Debtors believe there are no Class 8 Securities Claims. If any creditor
believes it holds a Class 8 Securities Claim, such creditor must file a
proof of claim by the Bar Date or such Claim will be disallowed. Holders of
Claims or Interests in Classes 1, 2, 3, 4, 5A, 5B and 9 do not need to file
proofs of claim or proofs of interest.
B. DEBTOR IN POSSESSION FINANCING
The Debtors will enter into debtor in possession financing on
terms substantially similar to those set forth herein and shall otherwise
be in form and substance satisfactory to the Debtors, the Bondholder
Committee and the Prepetition Agent. The DIP Credit Agreement will provide
up to $50 million of borrowing, subject to a borrowing base. On the
Petition Date, the Debtors will request that an interim facility be
approved. The interest rate on the borrowing will be prime rate plus 2.50%
or LIBOR plus 4.00%. The DIP Credit Agreement will expire on the earlier of
(i) the Effective Date or (ii) December 31, 2000.
C. TIMETABLE FOR CHAPTER 11 CASES
Assuming that the Bankruptcy Court approves the Debtors'
scheduled motion with respect to the Disclosure Statement and Confirmation
Hearing, the Debtors anticipate that the Disclosure Statement and
Confirmation Hearing would occur within 2 months of the Petition Date.
There can be no assurance, however, that the Bankruptcy Court's orders to
be entered on the Petition Date will permit the Chapter 11 Cases to proceed
as expeditiously as anticipated.
V. THE PLAN OF REORGANIZATION
The primary objectives of the Plan are to (a) alter the
Debtors' debt and capital structures to permit them to emerge from their
Chapter 11 Cases with a viable capital structure; (b) maximize the value of
the ultimate recoveries to all creditor groups on a fair and equitable
basis; and (c) settle, compromise or otherwise dispose of certain Claims
and Interests on terms that the Debtors believe to be fair and reasonable
and in the best interests of their respective estates and creditors. The
Plan provides for, among other things: (i) the cancellation of certain
indebtedness in exchange for new debt or equity, (ii) the discharge of
certain Claims and cancellation of Interests, and (iii) the compromise and
settlement of certain contingent Claims and exchange of mutual releases
among the Debtors and holders of Claims and Interests.
The Debtors believe that (a) through the Plan, holders of
Allowed Claims and Allowed Interests will obtain a substantially greater
recovery from the estates of the Debtors than the recovery they would
receive if the Debtors filed their chapter 11 petitions without approval of
the Plan on a "free fall" basis, and (b) the Plan will afford the Debtors
the opportunity and ability to continue its business as a viable going
concern and preserve ongoing employment for the Debtors' employees.
The statements contained in this Disclosure Statement include
summaries of the provisions contained in the Plan and in documents referred
to therein. The statements contained in this Disclosure Statement do not
purport to be precise or complete statements of all the terms and
provisions of the Plan or documents referred to therein, and reference is
made to the Plan and to such documents for the full and complete statements
of such terms and provisions.
The Plan itself and the documents referred to therein control
the actual treatment of claims against and interests in the Debtors under
the Plan and will, upon the Effective Date, be binding upon all holders of
claims against and interests in the Debtors and their Estates, the
Reorganized Debtors and other parties in interest. In the event of any
conflict between this Disclosure Statement, on the one hand, and the Plan
or any other operative document, on the other hand, the terms of the Plan
and such other operative document are controlling.
A. OVERVIEW OF CHAPTER 11
Chapter 11 is the principal business reorganization chapter of
the Bankruptcy Code. Under chapter 11 of the Bankruptcy Code, a debtor is
authorized to reorganize its business for the benefit of itself, its
creditors and interest holders. Another goal of chapter 11 is to promote
equality of treatment for similarly situated creditors and similarly
situated interest holders with respect to the distribution of a debtor's
assets.
The commencement of a chapter 11 case creates an estate that is
comprised of all of the legal and equitable interests of the debtor as of
the filing date. The Bankruptcy Code provides that the debtor may continue
to operate its business and remain in possession of its property as a
"debtor-in-possession."
The consummation of a plan of reorganization is the principal
objective of a chapter 11 case. A plan of reorganization sets forth the
means for satisfying claims against and interests in a debtor. Confirmation
of a plan of reorganization by the Bankruptcy Court makes the plan binding
upon the debtor, any issuer of securities under the plan, any person or
entity acquiring property under the plan and any creditor of or equity
security holder in the debtor, whether or not such creditor or equity
security holder (i) is impaired under or has accepted the plan or (ii)
receives or retains any property under the plan. Subject to certain limited
exceptions and other than as provided in the plan itself or the
confirmation order, the confirmation order discharges the debtor from any
debt that arose prior to the date of confirmation of the plan and
substitutes therefor the obligations specified under the confirmed plan,
and terminates all rights and interests of equity security holders.
B. OVERALL STRUCTURE OF THE PLAN
The Debtors believe that the Plan provides the best and most
prompt possible recovery to the Debtors' Claim Holders. Under the Plan,
Claims against and Interests in the Debtors are divided into different
classes. If the Plan is confirmed by the Bankruptcy Court and consummated,
on the Distribution Date, and at certain times thereafter as Claims and
Interests are resolved, liquidated or otherwise allowed, the Debtors will
make distributions in respect of certain Classes of Claims and Interests as
provided in the Plan. The Classes of Claims against and Interests in the
Debtors created under the Plan, the treatment of those Classes under the
Plan and distributions to be made under the Plan are described below.
C. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
The Plan classifies Claims and Interests separately and
provides different treatment for different Classes of Claims and Interests
in accordance with the Bankruptcy Code. As described more fully below, the
Plan provides, separately for each Class, that Holders of certain Claims
and Interests will receive types of consideration based on the different
rights of the Holders of Claims and Interests in each Class. A Claim or
Interest is placed in a particular Class only to the extent that the Claim
or Interest falls within the description of that Class and is classified in
other Classes to the extent that any portion of the Claim or Interest falls
within the description of such other Classes. A Claim or Interest is also
placed in a particular Class for the purpose of receiving distributions
pursuant to the Plan only to the extent that such Claim or Interest is an
Allowed Claim or Interest in that Class and such Claim or Interest has not
been paid, released or otherwise settled prior to the Effective Date.
Procedures for the distributions pursuant to the Plan,
including matters that are expected to affect the timing of the receipt of
distributions by Holders of Claims or Interests in certain Classes and that
could affect the amount of distributions ultimately received by such
Holders, are described in Section V.D. of this Disclosure Statement, "The
Plan of Reorganization - Method of Distribution Under the Plan."
In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims (including Fee Claims) and Priority Tax Claims have
not been classified.
1. FEE CLAIMS
Fee Claims are Administrative Claims under sections 330(a),
331, 503, or 1103 of the Bankruptcy Code for compensation of Professionals
or other entities for professional services rendered or expenses incurred
in the Cases on or prior to the Effective Date. All payments to
Professionals for Fee Claims will be made in accordance with the procedures
established by the Bankruptcy Code, the Bankruptcy Rules and the Bankruptcy
Court relating to the payment of interim and final compensation for
services rendered and reimbursement of expenses. The Bankruptcy Court will
review and determine all applications for compensation for services
rendered and reimbursement of expenses.
In addition, section 503(b) of the Bankruptcy Code provides for
payment of compensation to (a) creditors, indenture trustees and other
entities making a "substantial contribution" to a chapter 11 case and (b)
attorneys for and other professional advisors to such entities. The
amounts, if any, which may be sought by entities for such compensation are
not known by the Debtors at this time. Requests for compensation must be
approved by the Bankruptcy Court after a hearing on notice at which the
Debtors and other parties in interest may participate and, if appropriate,
object to the allowance of any compensation and reimbursement of expenses.
All final applications for Professional Fees for services
rendered in connection with the Chapter 11 Cases prior to the Confirmation
Date shall be filed no later than thirty (30) days after the Effective
Date; provided, however, that the Debtors shall pay any unpaid fees and
expenses of the Bondholder Committee's counsel and financial advisor on the
Effective Date and such professionals need not file fee applications.
2. ADMINISTRATIVE CLAIMS
Administrative Claims are Claims for costs and expenses of
administration of the Cases Allowed under section 503(b), 507(b) or
1114(e)(2) of the Bankruptcy Code. Such Claims include (a) any actual and
necessary costs and expenses incurred after the Petition Date of preserving
the Debtors' Estates and operating the businesses of the Debtors (such as
wages, salaries, commissions for services and payments for inventories,
leased equipment and premises), and Claims of governmental units for taxes
(including tax audit Claims related to tax years commencing after the
Petition Date, but excluding Claims relating to tax periods, or portions
thereof, ending on or before the Petition Date); (b) compensation for
legal, financial, advisory, accounting and other services and reimbursement
of expenses Allowed by the Bankruptcy Court under section 330, 331 or
503(b) of the Bankruptcy Code to the extent incurred prior to the Effective
Date; (c) all fees and charges assessed against the Debtors' Estates under
section 1930, chapter 123 of title 28, United States Code; and (d) Claims
under the DIP Credit Agreement.
Subject to the provisions of sections 330(a), 331 and 503(b) of
the Bankruptcy Code, each Administrative Claim shall be paid by the
Debtors, at their election, (a) in full, in Cash, in such amounts as are
incurred in the ordinary course of business by the Debtors, or in such
amounts as such Administrative Claim is Allowed by the Bankruptcy Court
upon the later of the Effective Date or the date upon which there is a
Final Order allowing such Administrative Claim, (b) upon such other terms
as may exist in the ordinary course of such Debtor's business or (c) upon
such other terms as may be agreed upon between the Holder of such
Administrative Claim and the Debtors.
The Confirmation Order will establish an Administrative Claims
Bar Date for filing Administrative Claims, which date will be thirty (30)
days after the Confirmation Date. Holders of asserted Administrative Claims
not paid prior to the Confirmation Date must submit proofs of Claim on or
before such Administrative Claims Bar Date or be forever barred from doing
so. The notice of Confirmation to be delivered pursuant to Fed. R. Bankr.
P. 3020(c) and 2002(f) will set forth such date and constitute notice of
this Administrative Claims Bar Date. The Debtors, or the Reorganized
Debtors, as the case may be, will have thirty (30) days (or such longer
period as the Bankruptcy Court may allow) following the Administrative
Claims Bar Date to review and object to such Administrative Claims before a
hearing for determination of allowance of such Administrative Claims.
3. PRIORITY TAX CLAIMS
Federal Priority Tax Claims are Claims for taxes entitled to
priority in payment under sections 502(i) and 507(a)(8) of the Bankruptcy
Code.
The legal and equitable rights of the Holders of Priority Tax
Claims are unaltered by the Plan. On, or as soon as reasonably practicable
after (i) the Distribution Date if such Priority Tax Claim is an Allowed
Priority Tax Claim as of the Effective Date or (ii) the date on which such
Priority Tax Claim becomes an Allowed Priority Tax Claim, each holder of an
Allowed Priority Tax Claim shall receive in full satisfaction, settlement
and release of and in exchange for such Allowed Priority Tax Claim at the
election of the Debtors (A) Cash equal to the amount of such Allowed
Priority Tax Claim; (B) such other treatment as to which the Debtors or the
Reorganized Debtors and the holder of such Allowed Priority Tax Claims
shall have agreed upon in writing; or (C) such Claim will be otherwise
treated in any other manner such that it will not be impaired pursuant to
section 1124 of the Bankruptcy Code; further provided, any Allowed Priority
Tax Claim not due and owing on the Effective Date will be paid in
accordance with Section 3.1(b) of the Plan when such Claim becomes due and
owing.
4. CLASS 1 - NON-TAX PRIORITY CLAIMS
Non-Tax Priority Claims are Claims, other than Administrative
Claims or Priority Tax Claims, that are entitled to priority in payment
pursuant to section 507(a) of the Bankruptcy Code. Such Claims include (a)
Claims for accrued employee compensation earned within ninety (90) days
prior to the Petition Date to the extent of $4,300 per employee and (b)
contributions to employee benefit plans arising from services rendered
within one hundred eighty (180) days prior to the Petition Date, but only
for each such plan to the extent of (i) the number of employees covered by
such plan multiplied by $4,300, less (ii) the aggregate amount paid to such
employees from the estates for wages, salaries or commissions.
The legal and equitable rights of the Holders of Non-Tax
Priority Claims are unaltered by the Plan. On, or as soon as reasonably
practicable after (i) the Distribution Date if such Non-Tax Priority Claim
is an Allowed Non-Tax Priority Claim as of the Effective Date or (ii) the
date on which such Non-Tax Priority Claim becomes an Allowed Non-Tax
Priority Claim, each Holder of an Allowed Non-Tax Priority Claim shall
receive in full satisfaction, settlement and release of and in exchange for
such Allowed Non-Tax Priority Claim at the election of the Debtors (A) Cash
equal to the amount of such Allowed Non-Tax Priority Claim; (B) such other
treatment as to which the Debtors or the Reorganized Debtors and the holder
of such Allowed Non-Tax Priority Claim have agreed upon in writing; or (C)
such Claim will be otherwise treated in any other manner such that it will
not be impaired pursuant to section 1124 of the Bankruptcy Code, provided,
however, any Allowed Non-Tax Priority Claim not due and owing on the
Effective Date will be paid in accordance with Section 3.2(a) of the Plan
when such Claim becomes due and owing.
5. CLASS 2 - OTHER SECURED CLAIMS
Secured Claims are Claims (other than an Administrative Claim
or a Secured Lender Claim) that are secured by a lien on property in which
a Debtor's Estate has an interest or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of the value of the Claim
holder's interest in the applicable Estate's interest in such property or
to the extent of the amount subject to setoff, as applicable, as determined
pursuant to section 506(a) of the Bankruptcy Code or, in the case of the
setoff, pursuant to section 553 of the Bankruptcy Code.
The legal, equitable and contractual rights of the Holders of
Allowed Other Secured Claims are unaltered by the Plan. On, or as soon as
reasonably practicable after (i) the Distribution Date if such Other
Secured Claim is an Allowed Other Secured Claim on the Effective Date or
(ii) the date on which such Other Secured Claim becomes an Allowed Other
Secured Claim, each Holder of an Allowed Other Secured Claim shall receive
at the election of the Debtors in full satisfaction, settlement and release
of, and in exchange for, such Allowed Other Secured Claim (A) Cash equal to
the amount of such Allowed Other Secured Claim; (B) such other treatment as
to which the Debtors or Reorganized Debtors have agreed upon in writing or
(C) such other treatment that will not impair the Holder of such claim
pursuant to section 1124 of the Bankruptcy Code.
6. CLASS 3 - UNIMPAIRED UNSECURED CLAIMS
Unimpaired Unsecured Claims are Unsecured Non-Priority Claims
that are not Administrative Claims, Priority Tax Claims, Non-Tax Priority
Claims, Other Secured Claims, Secured Lender Claims, Junior Subordinated
Note Claims or Impaired Unsecured Claims.
The legal, equitable and contractual rights of the Holders of
Unimpaired Unsecured Claims are unaltered by the Plan. On (i) the
Distribution Date if such Unimpaired Unsecured Claim is an Allowed
Unimpaired Unsecured Claim on the Effective Date or (ii) the date on which
such Unimpaired Unsecured Claim becomes an Allowed Unimpaired Unsecured
Claim, each Holder of an Allowed Unimpaired Unsecured Claim shall receive
in full satisfaction, settlement of, and in exchange for such, Allowed
Unsecured Claim, at the election of the Debtors: (A) to the extent due and
owing on the Effective Date, Cash in accordance with the terms thereof; (B)
to the extent not due and owing on the Effective Date, Cash when and as
such Claim becomes due and owing in the ordinary course of business in
accordance with the terms thereof; (C) such other treatment as to which the
Holder of such Claim and the Debtors or Reorganized Debtors agree in
writing; or (D) such Claim will be otherwise treated in any other manner
such that it will not be impaired pursuant to section 1124 of the
Bankruptcy Code.
7. CLASS 4 - SECURED LENDER CLAIMS
Secured Lender Claims means the Claims of the Prepetition
Lenders under the Prepetition Credit Agreement.
On, or as soon as reasonably practicable after, the
Distribution Date, each holder of an Allowed Class 4 Claim shall receive
(A) to the extent designated by the Prepetition Agent prior to the
Effective Date, its share of the New Tranche A Term Notes; (B) its pro rata
share of the Tranche B Term Notes up to such Prepetition Lenders' pro rata
share of the New Term Notes minus the amount of Tranche A Term Notes
received by such Prepetition Lender; (C) its pro rata share of the New
Special Notes; (D) its pro rata share of the Bank Warrants; and (E) its pro
rata share of the New Preferred Stock. All distributions on account of
Secured Lender Claims shall be made to the Prepetition Agent for
distribution to the Holders of Allowed Secured Lender Claims.
The rights and interests of Prepetition Lenders under and with
respect to the New Term Notes, the New Special Notes, the Bank Warrants and
the New Preferred Stock shall be provided in and governed by the New Credit
Agreement, the New Term Notes, the New Special Notes and the Bank Warrant
Agreement.
8. CLASS 5A - IMPAIRED UNSECURED CLAIMS
Impaired Unsecured Claim means any General Impaired Unsecured
Claim or Senior Subordinated Note Claim.
On or as soon as practicable after (i) the Distribution Date if
such Impaired Unsecured Claim is an Allowed Impaired Unsecured Claim on the
Effective Date or (ii) the date on which such Impaired Unsecured Claim
becomes an Allowed Impaired Unsecured Claim, each Holder of an Allowed
Impaired Unsecured Claim shall receive its pro rata share of 4,410,000
shares of New Common Stock.
9. CLASS 5B - JUNIOR SUBORDINATED NOTE CLAIMS
Junior Subordinated Note Claims means Claims arising from or
related to Junior Subordinated Notes.
On or as soon as practicable after (i) the Distribution Date if
such Junior Subordinated Note Claim is an Allowed Impaired Unsecured Claim
on the Effective Date or (ii) the date on which such Junior Subordinated
Note Claim becomes an Allowed Junior Subordinated Note Claim , each Holder
of an Allowed Junior Subordinated Note Claim shall receive (a) its pro rata
share of 90,000 shares of New Common Stock and (b) its pro rata share of
New Junior Warrants.
10. CLASS 6 - KSOP CLAIMS
The legal, equitable and contractual rights of the Holders of
KSOP Claims will be unaltered by the Plan.
11. CLASS 7 - OLD COMMON STOCK INTERESTS
On the Effective Date, the Old Common Stock shall be cancelled.
On or as soon as practicable after (i) the Distribution Date if such Old
Common Stock Interest is an Allowed Old Common Stock Interest as of the
Effective Date or (ii) the date such Old Common Stock Interest becomes an
Allowed Old Common Stock Interest, each Holder of an Allowed Old Common
Stock Interest shall receive its pro rata share of the New Warrants,
together with the Holders of any Allowed Securities Claims.
12. CLASS 8 - SECURITIES CLAIMS
On or as soon as practicable after (i) the Distribution Date if
such Securities Claim is an Allowed Securities Claim or (ii) the date on
which such Securities Claim becomes an Allowed Securities Claim, each
Holder of an Allowed Securities Claim shall receive its pro rata share of
the New Warrants together with the Holder of Allowed Old Common Stock
Interests. The Debtors do not believe there are any Securities Claims and,
therefore, any Securities Claims Filed will be objected to by the Debtors.
13. CLASS 9 - OTHER OLD EQUITY INTERESTS
On the Effective Date, the Other Old Equity will be cancelled
and the Holders of the Other Old Equity will not receive or retain any
distribution on account of the Other Old Equity.
14. SPECIAL PROVISION REGARDING UNIMPAIRED CLAIMS
Except as otherwise provided in the Plan, nothing shall affect
the Debtors' or the Reorganized Debtors' rights and defenses, both legal
and equitable, with respect to any Unimpaired Claims, including, but not
limited to, all rights with respect to legal and equitable defenses to
setoffs or recoupments against Unimpaired Claims.
D. METHOD OF DISTRIBUTION UNDER THE PLAN
1. SOURCES OF CASH FOR PLAN DISTRIBUTIONS
Except as otherwise provided in the Plan or the Confirmation
Order, all Cash necessary for Reorganized Debtors to make payments pursuant
to the Plan shall be obtained from existing Cash balances, the operations
of the Debtors and the Reorganized Debtors or the New Credit Agreement. The
Reorganized Debtors may also make such payments using Cash received from
their subsidiaries through the Reorganized Debtors' consolidated cash
management systems.
2. DISTRIBUTIONS FOR CLAIMS OR INTERESTS ALLOWED AS OF THE EFFECTIVE
DATE
Except as otherwise provided herein or as ordered by the
Bankruptcy Court, distributions to be made on account of Claims or
Interests that are Allowed Claims as of the Effective Date shall be made on
the Distribution Date or as soon thereafter as is practicable. Any
distribution to be made on the Effective Date pursuant to this Plan shall
be deemed as having been made on the Effective Date if such distribution is
made on the Effective Date or as soon thereafter as is practicable. Any
payment or distribution required to be made under the Plan on a day other
than a Business Day shall be made on the next succeeding Business Day.
Distributions on account of Claims or Interests that first become Allowed
Claims or Interests after the Effective Date shall be made pursuant to
Articles III, VI and VIII of the Plan. Notwithstanding the date on which
any distribution of securities is made to a Holder of a Claim or Interest
that is an Allowed Claim or Allowed Interest on the Effective Date, as of
the date of the distribution such Holder shall be deemed to have the rights
of a Holder of such securities distributed as of the Effective Date.
3. INTEREST ON CLAIMS
Unless otherwise specifically provided for in the Plan or
Confirmation Order, or required by applicable bankruptcy law, postpetition
interest shall not accrue or be paid on any Claims other than Secured
Lender Claims as provided in the Prepetition Credit Agreement, and no
holder of a Claim shall be entitled to interest accruing on or after the
Petition Date on any Claim.
4. DISTRIBUTIONS BY THE REORGANIZED DEBTORS
Reorganized Debtors or the Disbursing Agent shall make all
distributions required to be distributed under the Plan. Distribution on
account of Secured Lender Claims shall be made to the Prepetition Agent.
Distribution on account of Senior Subordinated Note Claims and Junior
Subordinated Note Claims shall be made to the Senior Subordinated Note
Trustee and the Junior Subordinated Note Trustee, respectively. The
Reorganized Debtors may employ or contract with other entities to assist in
or make the distributions required by the Plan.
5. DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
DISTRIBUTIONS
a. Delivery of Distributions in General. Distributions to
holders of Allowed Claims and Allowed Interests shall be made at the
addresses set forth in the Debtors' records unless such addresses are
superseded by proofs of claim or transfers of claim filed pursuant to
Bankruptcy Rule 3001.
b. Undeliverable and Unclaimed Distributions.
i. Holding and Investment of Undeliverable and Unclaimed
Distributions. If the distribution to any Holder of an Allowed Claim or
Interest is returned to the Disbursing Agent as undeliverable or is
otherwise unclaimed, no further distributions shall be made to such Holder
unless and until the Disbursing Agent is notified in writing of such
Holder's then current address.
ii. After Distributions Become Deliverable. The Reorganized
Debtors shall make all distributions that have become deliverable or have
been claimed since the Distribution Date as soon as practicable after such
distribution has become deliverable.
iii. Failure to Claim Undeliverable Distributions. Any holder
of an Allowed Claim or Interest that does not assert a claim pursuant to the
Plan for an undeliverable or unclaimed distribution within one (1) year
after the Effective Date shall be deemed to have forfeited its claim for
such undeliverable or unclaimed distribution and shall be forever barred
and enjoined from asserting any such claim for an undeliverable or
unclaimed distribution against the Debtors or their Estates, Reorganized
Debtor or their property. In such cases, any Cash for distribution on
account of such claims for undeliverable or unclaimed distributions shall
become the property of the Estates free of any restrictions thereon and
notwithstanding any federal or state escheat laws to the contrary, subject
to the liens of the Prepetition Lenders. Any New Common Stock held for
distribution on account of such Claim shall be canceled and of no further
force or effect. Any New Warrant or New Junior Warrant held for
distribution on account of such Interest shall be cancelled and of no full
force or effect. Nothing contained in the Plan shall require any Disbursing
Agent, including, but not limited to, the Reorganized Debtors, to attempt
to locate any holder of an Allowed Claim or Interest.
6. RECORD DATE FOR DISTRIBUTIONS
As of the close of business on the Distribution Record Date,
the transfer register for the Senior Subordinated Notes, the Junior
Subordinated Notes and the Old Common Stock, as maintained by the Debtors,
the Senior Subordinated Trustee, the Junior Subordinated Trustee, any other
applicable trustee or their respective agents shall be closed and the
transfer of such securities or any interest thereon prohibited. The
Disbursing Agent will have no obligation to recognize the transfer of, or
the sale of any participation in, any Allowed Claim or Interest that occurs
after the close of business on the Distribution Record Date, and will be
entitled for all purposes herein to recognize and distribute only to those
Holders of Allowed Claims and Interests who are Holders of such Claims or
Interest, or participants therein, as of the close of business on the
Distribution Record Date. The Disbursing Agent and the Reorganized Debtors
shall instead be entitled to recognize and deal for all purposes under the
Plan with only those record holders stated on the official claims register
as of the close of business on the Distribution Record Date.
7. ALLOCATION OF PLAN DISTRIBUTIONS BETWEEN PRINCIPAL AND INTEREST
To the extent that any Allowed Claim entitled to a distribution
under the Plan is comprised of indebtedness and accrued but unpaid interest
thereon, such distribution shall, for federal income tax purposes, be
allocated to the principal amount of the Claim first and then, to the
extent the consideration exceeds the principal amount of the claim, to the
portion of such Claim representing accrued but unpaid interest.
8. MEANS OF CASH PAYMENT
Payments of Cash made pursuant to the Plan shall be in U.S.
dollars and shall be made, at the option and in the sole discretion of the
Reorganized Debtors, by (a) checks drawn on or (b) wire transfer from a
domestic bank selected by the Reorganized Debtors. Cash payments to foreign
creditors may be made, at the option of the Reorganized Debtors, in such
funds and by such means as are necessary or customary in a particular
foreign jurisdiction.
9. WITHHOLDING AND REPORTING REQUIREMENTS
In connection with the Plan and all distributions thereunder,
the Reorganized Debtors shall comply with all withholding and reporting
requirements imposed by any federal, state, local or foreign taxing
authority, and all distributions hereunder shall be subject to any such
withholding and reporting requirements. The Reorganized Debtors shall be
authorized to take any and all actions that may be necessary or appropriate
to comply with such withholding and reporting requirements. Notwithstanding
any other provision of the Plan (i) each Holder of an Allowed Claim or
Interest that is to receive a distribution of New Common Stock, New
Warrants, New Junior Warrants or Bank Warrants pursuant to the Plan shall
have sole and exclusive responsibility for the satisfaction and payment of
any tax obligations imposed by any governmental unit, including income,
withholding and other tax obligations, on account of such distribution, and
(ii) no distribution shall be made to or on behalf of such Holder pursuant
to the Plan unless and until such holder has made arrangements satisfactory
to the Reorganized Debtors for the payment and satisfaction of such tax
obligations. Any New Common Stock, New Warrants, New Junior Warrants or
Bank Warrants to be distributed pursuant to the Plan shall, pending the
implementation of such arrangements, be treated as an undeliverable
distribution pursuant to Section 6.4(b) of the Plan.
10. SETOFFS
The Reorganized Debtors may, pursuant to section 553 of the
Bankruptcy Code or applicable nonbankruptcy laws, but shall not be required
to, set off against any Claim and the payments or other distributions to be
made pursuant to the Plan in respect of such Claim, claims of any nature
whatsoever that the Debtors or the Reorganized Debtors may have against the
holder of such Claim; provided, however, that neither the failure to do so
nor the allowance of any Claim hereunder shall constitute a waiver or
release by the Reorganized Debtors of any such claim that the Debtors or
the Reorganized Debtors may have against such holder.
11. FRACTIONAL SHARES
No fractional shares of New Common Stock, New Preferred Stock,
New Warrants, New Junior Warrants or Bank Warrants shall be distributed.
When the issuance of a fractional share of New Common Stock, New Preferred
Stock, New Warrants, New Junior Warrants or Bank Warrants would otherwise
be called for, the actual issuance shall reflect a rounding up (in the case
of .50 or more than .50) of such fraction to the nearest whole New Common
Stock share, New Preferred Stock, New Warrant, New Junior Warrant or Bank
Warrant or a rounding down of such fraction (in the case of less than .50).
12. SURRENDER OF CANCELLED SECURITIES
As a condition precedent to receiving any distribution pursuant
to the Plan on account of an Allowed Claim or Interest evidenced by the
instruments, securities or other documentation cancelled pursuant to
Section 6.4 of the Plan, the Holder of such Claim or Interest shall tender
the applicable instruments, securities or other documentation evidencing
such Claim to the Reorganized Debtors unless waived in writing by the
Debtors or the Reorganized Debtors. Any New Common Stock and any New
Warrants or New Junior Warrants to be distributed pursuant to the Plan on
account of any such Claim or Interest shall, pending such surrender, be
treated as an undeliverable distribution pursuant to Section 6.4(b) of the
Plan.
a. Notes and Common Stock. Each Holder of a Senior Subordinated
Note Claim, a Junior Subordinated Note Claim or Old Common Stock
shall tender its Senior Subordinated Notes, Junior Subordinated Notes
or Old Common Stock relating to such Claim or Interest to the
Reorganized Debtors in accordance with written instructions to be
provided to such Holders by the Reorganized Debtors or the applicable
trustee as promptly as practicable following the Effective Date. Such
instructions shall specify that delivery of such Senior Subordinated
Notes, Junior Subordinated Notes or Old Common Stock will be
effected, and risk of loss and title thereto will pass, only upon the
proper delivery of such Senior Subordinated Notes, Junior
Subordinated Notes or Old Common Stock with a letter of transmittal
in accordance with such instructions. All surrendered Senior
Subordinated Notes, Junior Subordinated Notes or Old Common Stock
shall be marked as cancelled.
b. Failure to Surrender Cancelled Instruments. Any Holder of
Senior Subordinated Notes, Junior Subordinated Notes or Old Common
Stock that fails to surrender or is deemed to have failed to
surrender the applicable Senior Subordinated Notes, Junior
Subordinated Notes or Old Common Stock required to be tendered
hereunder within one year after the Effective Date shall have its
Claim or Interest and its distribution pursuant to the Plan on
account of such Senior Subordinated Notes, Junior Subordinated Notes
or Old Common Stock discharged and shall be forever barred from
asserting any such Claim or Interest against the Reorganized Debtors
or their respective property. In such cases, any New Common Stock,
New Junior Warrants or New Warrants held for distribution on account
of such Claim shall be disposed of pursuant to Section 6.4 of the
Plan.
13. LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES
In addition to any requirements under the Senior Subordinated
Note Indentures, Junior Subordinated Note Indenture or any other applicable
agreement, any Holder of a Claim or Interest evidenced by a Senior
Subordinated Note, Junior Subordinated Note or Old Common Stock that has
been lost, stolen, mutilated or destroyed shall, in lieu of surrendering
such Senior Subordinated Note, Junior Subordinated Note or Old Common Stock
deliver to the Reorganized Debtors: (i) evidence reasonably satisfactory to
the Reorganized Debtors of the loss, theft, mutilation or destruction; and
(ii) such security or indemnity as may be required by Reorganized Debtors
to hold the Reorganized Debtors harmless from any damages, liabilities or
costs incurred in treating such individual as a Holder of an Allowed Claim
or Interest. Upon compliance with Article VI of the Plan by a Holder of a
Claim or Interest evidenced by a Senior Subordinated Note, Junior
Subordinated Note or Old Common Stock, such Holder shall, for all purposes
under the Plan, be deemed to have surrendered such note, debenture or
equity.
E. RESOLUTION OF DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS
1. OBJECTION DEADLINE; PROSECUTION OF OBJECTIONS
No later than the Claims Objection Deadline (unless extended by
an order of the Bankruptcy Court), the Debtors or the Reorganized Debtors,
as the case may be, shall file objections to Claims and Interests with the
Bankruptcy Court and serve such objections upon the holders of each of the
Claims and Interests to which objections are made; provided, however, the
Debtors and Reorganized Debtors shall not object to Claims Allowed pursuant
to the Plan. Nothing contained herein, however, shall limit the Reorganized
Debtors' right to object to Claims or Interests, if any, filed or amended
after the Claims Objection Deadline. The Debtors and the Reorganized
Debtors shall be authorized to, and shall, resolve all Disputed Claims or
Interests by withdrawing or settling such objections thereto, or by
litigating to judgment in the Bankruptcy Court or such other court having
jurisdiction the validity, nature and/or amount thereof.
2. NO DISTRIBUTIONS PENDING ALLOWANCE
Notwithstanding any other provision of the Plan, no payments or
distributions shall be made with respect to all or any portion of a
Disputed Claim or Interest unless and until all objections to such Disputed
Claim or Interest have been settled or withdrawn or have been determined by
Final Order, and the Disputed Claim or Interest, or some portion thereof,
has become an Allowed Claim or Interest.
3. DISPUTED CLAIMS RESERVE; DISPUTED INTEREST RESERVE
On the Effective Date (or as soon thereafter as is
practicable), the Reorganized Debtors shall establish the Disputed Claims
Reserve and the Disputed Interest Reserve by withholding from the initial
distribution (i) with respect to the Disputed Claims Reserve, an amount of
New Common Stock and New Junior Warrants calculated as if all Class 5A and
5B Claims were Allowed Class 5A and 5B Claims, in an amount equal to one
hundred percent (100%) of the distributions to which Holders of Disputed
Class 5A and 5B Claims would be entitled if their Claim was allowed in the
Disputed Claim Amount; and (ii) with respect to the Disputed Interest
Reserve, an amount of New Warrants calculated as if all Class 7 Interests
were Allowed Class 7 Interests and all Class 8 Claims were Allowed Class 8
Claims, in an amount equal to one hundred percent (100%) of the
distributions to which Holders of Disputed Class 7 Interests and Disputed
Class 8 Claims would be entitled if their Interest or Claim was allowed in
the Disputed Interest Amount; provided, however, that the Debtors and the
Reorganized Debtors shall have the right to file a motion seeking to modify
any Disputed Claim Amounts or Disputed Interest Amounts.
4. DISTRIBUTIONS AFTER ALLOWANCE
The Reorganized Debtors shall make payments and distributions
from the Disputed Claims Reserve or Disputed Interest Reserve, as
appropriate to the Holder of any Disputed Claim or Disputed Interest that
has become an Allowed Claim or Interest, as soon as practicable after the
date such Disputed Claim or Interest becomes an Allowed Claim or Interest.
Such distributions shall be based upon the cumulative distributions that
would have been made to the Holder of such Claim or Interest under the Plan
if the Disputed Claim or Interest had been Allowed on the Effective Date
and shall not be limited by the Disputed Claim Amounts or Disputed Interest
Amounts previously reserved with respect to such Disputed Unsecured Claim
to the extent that additional amounts are available therefor from the
Disputed Claims Reserve or the Disputed Interest Reserve, as appropriate,
but only to the extent that such additional amounts have not yet been
distributed to Holders of Allowed Claims or Interest. After a Final Order
has been entered, or other Final resolution has been reached, with respect
to each Disputed Claim or Disputed Interest, any New Common Stock, New
Junior Warrants or New Warrants that remain in the Disputed Claims Reserve
or Disputed Interest Reserve, as applicable, shall be distributed as
applicable, pro rata, to (i) with respect to the Disputed Claims Reserve,
Holders of Allowed Class 5A and 5B Claims; and (ii) with respect to the
Disputed Interest Reserve, Holders of Allowed Class 7 Interests and Allowed
Class 8 Claims. All distribution made under Section 8.4 of the Plan shall
be made together with any payments or distributions made on account of the
distributed property, as if such Allowed Class 5 Claim or Allowed Class 7
Interest and Allowed Class 8 Claims had been Allowed on the Effective Date.
F. MEANS FOR IMPLEMENTATION OF THE PLAN
1 . CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN
REORGANIZED DEBTORS
After the Effective Date the Reorganized Debtors shall continue
to exist as separate corporate entities in accordance with the applicable
law in the respective jurisdiction in which they are incorporated and
pursuant to their respective certificates or articles of incorporation and
by-laws in effect prior to the Effective Date, except to the extent such
certificates or articles of incorporation and by-laws are amended under
this Plan. Notwithstanding anything to the contrary in this Plan, including
Article 4.1 of the Plan as to substantive consolidation, the Unimpaired
Claims of a particular Debtor or Reorganized Debtor shall remain the
obligations solely of such Debtor or Reorganized Debtor and shall not
become obligations of any other Debtor or Reorganized Debtor by virtue of
the Plan, the Chapter 11 Cases or otherwise. Except as otherwise provided
in the Plan, on and after the Effective Date, all property of the Estate of
the Debtors, including all claims, rights and causes of action and any
property acquired by the Debtors or the Reorganized Debtors under or in
connection with the Plan, shall vest in the Reorganized Debtors free and
clear of all Claims, liens, charges, other encumbrances and Interests. On
and after the Effective Date, the Reorganized Debtors may operate their
businesses and may use, acquire and dispose of property and compromise or
settle any Claims without supervision of or approval by the Bankruptcy
Court and free and clear of any restrictions of the Bankruptcy Code or the
Bankruptcy Rules, other than restrictions expressly imposed by the Plan or
the Confirmation Order. Without limiting the foregoing, the Reorganized
Debtors may pay the charges that they incur on or after the Effective Date
for Professionals' fees, disbursements, expenses or related support
services without application to the Bankruptcy Court.
2. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS AND CORPORATE
ACTION
a. Certificates of Incorporation and By-laws. The certificates
or articles of incorporation and by-laws of each of the Debtors shall
be amended as necessary to satisfy the provisions of the Plan and the
Bankruptcy Code, and shall include, among other things, (i) pursuant
to section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting
the issuance of non-voting equity securities, but only to the extent
required by section 1123(a)(6) of the Bankruptcy Code; and (ii)
authorize the issuance of New Common Stock, New Preferred Stock, New
Warrants, New Junior Warrants and Bank Warrants in amounts not less
than the amounts necessary to permit the distributions thereof
required or contemplated by the Plan. After the Effective Date, the
Reorganized Debtors may amend and restate the Amended Certificates of
Incorporation and Bylaws as permitted by applicable law.
b. Directors and Officers of the Reorganized Debtors. Subject
to any requirement of Bankruptcy Court approval pursuant to section
1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the
initial officers of the Reorganized Tokheim shall be the officers of
the Debtors immediately prior to the Effective Date. On the Effective
Date, the board of directors of Reorganized Tokheim shall have nine
(9) members including Douglas K. Pinner, six (6) directors designated
by the Bondholder Committee and two (2) directors designated by the
Prepetition Lenders. The board of directors of the Reorganized
Subsidiary Debtors shall remain the same as prior to the Effective
Date. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the
Debtors will disclose, on or prior to the Confirmation Date, the
identity and affiliations of any person proposed to serve on the
initial board of directors of Reorganized Tokheim (including those
persons designated by the Bondholder Committee and the Prepetition
Lenders), and, to the extent such person is an insider, other than by
virtue of being a director, the nature of any compensation for such
person. In addition, the Bondholder Committee, on or prior to the
Confirmation Date, shall designate the length of term of each
director, which length of term shall be either 1, 2 or 3 years. The
term of Douglas K. Pinner shall be three (3) years (but in no event
longer than the term of his employment). The classification and
composition of the board of directors of each of the Reorganized
Debtors shall be consistent with the Amended Certificates of
Incorporation. Each such director and officer shall serve from and
after the Effective Date pursuant to the terms of the Amended
Certificates of Incorporation, the other constituent documents of the
Reorganized Debtors, and applicable law. The board of directors of
Tokheim will be deemed to have resigned on the Effective Date.
c. Corporate Action. On the Effective Date, the adoption of the
Amended Certificates of Incorporation or similar constituent
documents, the adoption of the Amended By-Laws, the selection of
directors and officers for the Reorganized Debtors, and all other
actions contemplated by the Plan shall be authorized and approved in
all respects (subject to the provisions of the Plan). All matters
provided for in the Plan involving the corporate structure of the
Debtors or the Reorganized Debtors, and any corporate action required
by the Debtors or the Reorganized Debtors in connection with the
Plan, shall be deemed to have occurred and shall be in effect,
without any requirement of further action by the security holders or
directors of the Debtors or the Reorganized Debtors. On the Effective
Date, the appropriate officers of the Reorganized Debtors and members
of the boards of directors of the Reorganized Debtors are authorized
and directed to issue, execute and deliver the agreements, documents,
securities and instruments contemplated by the Plan in the name of
and on behalf of the Reorganized Debtors.
3. SUBSTANTIVE CONSOLIDATION
a. Substantive Consolidation of the Debtors' Estates. The Plan
contemplates and is predicated upon entry of an order substantively
consolidating the Debtors solely for the purposes of treating Class
4, 5A and 5B Claims under the Plan, including for voting,
confirmation and distribution purposes. The Plan does not contemplate
the substantive consolidation of the Debtors with respect to the
other Classes of Claims or Interests set forth in the Plan or for any
other purpose. On the Effective Date, (i) all guaranties of any
Debtor of the payment, performance or collection of another Debtor
with respect to Class 4, 5A or 5B Claims shall be deemed eliminated
and cancelled, (ii) any obligation of any Debtor and all guarantees
with respect to Class 4, 5A or 5B Claims thereof executed by one (1)
or more of the other Debtors shall be treated as a single obligation
and any obligation of two or more Debtors, and all multiple Impaired
Claims against such entities on account of such joint obligations
shall be treated and Allowed only as a single Impaired Claim against
the consolidated Debtors, and (iii) each Class 4, 5A or 5B Claim
filed or to be filed against any Debtor shall be deemed filed against
the consolidated Debtors and shall be deemed a single Class 4, 5A or
5B Claim against and a single obligation of the consolidated Debtors.
On the Confirmation Date, and in accordance with the terms of the
Plan and the consolidation of the assets and liabilities of the
Debtors, all Class 4, 5A or 5B Claims based upon guarantees of
collection, payment or performance made by the Debtors as to the
obligations of another Debtor shall be released and of no further
force and effect. Except as set forth in Section 4.1 of the Plan,
such substantive consolidation shall not (other than for purposes
related to the Plan) (i) affect the legal and corporate structures of
the Reorganized Debtors, (ii) cause any Debtor to be liable for any
Impaired Claim or Unimpaired Claim under the Plan for which it
otherwise is not liable, and the liability for any such Claim shall
not be affected by such substantive consolidation, (iii) affect
Intercompany Claims of Debtors against Debtors, and (iv) affect
Interests in Subsidiary Debtors. On the Effective Date, the
Intercompany Claims of Debtors against Debtors shall be reinstated or
discharged and satisfied, at the option of the Reorganized Debtors by
contributions, distributions or otherwise. On the Effective Date,
except as otherwise expressly provided for in the Plan, the Interests
in the Subsidiary Debtors shall remain outstanding.
Unless the Bankruptcy Court has approved the substantive
consolidation of the Chapter 11 Cases by a prior order, this Plan
shall serve as, and shall be deemed to be, a motion for entry of an
order substantively consolidating the Debtors as provided in Section
4.1(a) of the Plan. If no objection to substantive consolidation is
timely filed and served by any holder of an Impaired Claim affected
by the Plan as provided herein on or before the deadline for
objection to confirmation of the Plan, the Substantive Consolidation
Order (which may be the Confirmation Order) may be entered by the
Bankruptcy Court. If any such objections are timely filed and served,
a hearing with respect to the substantive consolidation of the
Chapter 11 Cases and the objections thereto shall be scheduled by the
Bankruptcy Court, which hearing may, but is not required to, coincide
with the Confirmation Hearing.
b. Discussion of Substantive Consolidation
i. General Description. Substantive consolidation of the
estates of multiple debtors in a bankruptcy case effectively combines the
assets and liabilities of the multiple debtors for certain purposes under a
plan. The effect of consolidation is the pooling the assets of, and claims
against, the consolidated debtors; satisfying liabilities from a common
fund; and combining the creditors of the debtors for purposes of voting on
reorganization plans. In re Augie/Restivo Baking Co., 860 F.2d 515, 518 (2d
Cir. 1988). There is no statutory authority specifically authorizing
substantive consolidation. The authority of a bankruptcy court to order
substantive consolidation is derived from its general equitable powers
under section 105(a) of the Bankruptcy Code, which provides that the court
may issue orders necessary to carry out the provisions of the Bankruptcy
Code. In re DRW Property Co. 82, 54 B.R. 489, 494 (Bankr. N.D. Tex. 1985).
Nor are there statutorily prescribed standards for substantive
consolidation. Instead judicially developed standards control whether
substantive consolidation should be granted in any given case.
ii. Legal Standards for Substantive Consolidation. The
propriety of substantive consolidation must be made on a case-by-case
basis. E.g., FDIC v. Colonial Realty Co., 966 F.2d 57 (2d Cir. 1992). In
deciding whether to consolidate, a number of earlier cases relied on the
presence or absence of certain "elements" that are similar to factors
relevant to piercing the corporate veil under applicable state law. E.g.,
In re Gulfco Inv. Corp., 593 F.2d 921 (10th Cir. 1979). More recent cases,
however, while not ignoring these elements, have applied a less mechanical
approach. Thus, for example, the Second Circuit Court of Appeals, in In re
Augie/Restivo, concluded that the extensive list of elements and factors
frequently cited and relied upon by other courts in determining the
propriety of substantive consolidation are "merely variants on two critical
factors," namely, "(1) whether creditors dealt with the entities as a
single economic unit and 'did not rely on their separate identity in
extending credit, . . .' or (ii) whether the affairs of the debtors are so
entangled that consolidation will benefit all creditors . . . ." 860 F.2d
at 518. More recently the Eleventh Circuit, in Eastgroup Properties v.
Southern Motel Assoc., Ltd., 935 F.2d 245 (11th Cir. 1991), viewed those
elements and factors "as examples of information that may be useful to
courts charged with deciding whether there is substantial identity between
the entities to be consolidated and whether consolidation is necessary to
avoid some harm or to realize some benefit." Id. at 250. Under the
Eastgroup test, a proponent of substantive consolidation must show
that there is substantial identity between the entities to be
consolidated and that consolidation is necessary to avoid some harm or
realize some benefit. Once the proponent makes this showing, a presumption
arises that creditors have not relied solely on the credit of one of the
entities involved, and the burden shifts to an objecting creditor to show
that (i) it has relied on the separate credit of one of the entities to be
consolidated and (ii) it will be prejudiced by substantive consolidation.
Eastgroup, 935 F.2d at 251; Reider v. FDIC (In re Reider), 31 F.3d 1102,
1108 (11th Cir. 1994).
Regardless of which of the "two similar but not identical tests
. . . for assessing the propriety of substantive consolidation in the
corporate context" is applied, In re Reider, 31 F.3d at 1107, the
"elements" enumerated in the earlier cases remain relevant, but not
necessarily dispositive, as to whether substantive consolidation should be
granted. These elements include:
o the degree of difficulty in segregating and ascertaining the
individual assets and liabilities of the entities to be
consolidated;
o the presence or absence of consolidated financial statements
among the entities to be consolidated;
o the commingling of assets and business functions among the
entities to be consolidated;
o the unity of interests and ownership among the various
entities;
o the existence of parent and intercorporate guarantees on loans
to the various entities; and
o the transfer of assets to and from the various entities
without formal observance of corporate formalities.
In re Vecco Constr. Indus., 4 B.R. 407, 410 (Bankr. E.D. Va. 1980).
iii. Factual Basis for and Result of a Substantive
Consolidation of the Debtors' Estates. The facts and circumstances
surrounding the historical business operations of Tokheim and the
Subsidiary Debtors support substantive consolidation in these Chapter 11
Cases. Tokheim and the Subsidiary Debtors historically have issued
consolidated financial statements and filed consolidated tax returns.
Management Solutions, Inc., Tokheim Investment Corporation and Tokheim
Services, LLC are direct, wholly-owned subsidiaries of Tokheim; Gasboy
International, Inc. and Sunbelt Hose & Petroleum Equipment, LLC are direct
wholly-owned subsidiaries of Tokheim Investment Corporation; and, Tokheim
RPS, L.L.C. is a direct wholly-owned subsidiary of Gasboy International,
Inc. Tokheim and its Subsidiary Debtors have common officers and directors,
and have shared key employees and outside professionals, including, but not
limited to, employees of Tokheim who performed human resources, legal, and
risk management services for the benefit of all the Debtors and accounting
firms, law firms, engineers and consultants who rendered services to all of
the Debtors.
In addition, the Debtors' cash management system is effectively
centralized. While the Subsidiary Debtors maintain their own bank accounts,
Tokheim reviews the cash balances of all accounts for all entities on a
weekly basis and coordinates the movement of funds in excess of those
needed for local operations. In addition, Tokheim has approval of all major
expenditures, and funds are moved into and through Tokheim on an "as
needed" basis to meet the short and long term cash requirements of all of
the Debtors. As an outgrowth of this consolidated cash management system,
intercompany loans routinely are made by and between Tokheim and the
Subsidiary Debtors (and by and between the Subsidiary Debtors themselves)
in the ordinary course of the Debtors' business. All of Tokheim's loans are
guaranteed by each of the Subsidiary Debtors and used to fund the
operations of all of the Debtors.
Substantive consolidation is an equitable remedy that a
bankruptcy court may be asked to apply in chapter 11 cases involving
affiliated debtors. Substantive consolidation involves the pooling of the
assets and liabilities of the affected debtors. All of the debtors in the
substantively consolidated group are treated as if they were a single
corporate and economic entity. Consequently, a creditor of one of the
substantively consolidated debtors is treated as a creditor of the
substantively consolidated group of debtors, and issues of individual
corporate ownership of property and individual corporate liability on
obligations are ignored. Substantive consolidation of two or more debtors'
estates generally results in the deemed consolidation of the assets and
liabilities of the debtors, the elimination of multiple and duplicative
creditor claims, joint and several liability claims and guarantees and the
payment of allowed claims from a common fund. Absent such substantive
consolidation, payment of such duplicative claims would be dilutive of the
amounts ultimately payable to holders of Other Allowed Class Claims against
the Debtors. The Debtors believe that substantive consolidation is
warranted in light of the criteria established by the courts in ruling on
the propriety of substantive consolidation in other cases.
4. ISSUANCE OF NEW SECURITIES AND RELATED DOCUMENTS
On the Effective Date, the Reorganized Debtors shall issue New
Common Stock, New Preferred Stock, New Warrants, New Junior Warrants and
Bank Warrants to be distributed pursuant to the Plan without further act or
action under applicable law, regulation, order or rule. All documents,
agreements and instruments entered into on or as of the Effective Date
contemplated by or in furtherance of the Plan, including without
limitation, the New Credit Agreement, the New Warrant Agreement, the New
Junior Warrant Agreement, the Bank Warrant Agreement, the Management Option
Agreement and any other agreement entered into in connection with the
foregoing, shall become effective and binding in accordance with their
respective terms and conditions upon the parties thereto.
5. ISSUANCE OF NEW COMMON STOCK, NEW PREFERRED STOCK, NEW
JUNIOR WARRANTS AND NEW WARRANTS
On or as soon as reasonably practicable after the Effective
Date, Reorganized Tokheim shall issue, in accordance with the terms of the
Plan, 4,500,000 shares of the New Common Stock to be distributed to Holders
of Impaired Unsecured Claims. In addition, Reorganized Tokheim shall issue
the New Preferred Stock to be distributed to Holders of Secured Lender
Claims. The New Warrant Agreement and the Bank Warrant Agreement shall be
executed and delivered by Reorganized Tokheim. The issuance of the New
Common Stock, New Preferred Stock, New Warrants, New Junior Warrants and
Bank Warrants is hereby authorized without the need for any further
corporate action.
6. NEW CREDIT AGREEMENT
On the Effective Date, the Reorganized Debtors are authorized
and directed to execute and deliver the New Credit Agreement to govern the
Exit Facility, New Term Notes, and the New Special Notes.
7. EXIT FINANCING
On the Effective Date, the Reorganized Debtors shall be
authorized and directed to enter into the Exit Facility and to enter into
and execute any notes, documents or agreements in furtherance thereof.
8. REGISTRATION RIGHTS AGREEMENT
On the Effective Date, Reorganized Tokheim shall be authorized
and directed to enter into the Registration Rights Agreement.
9. MANAGEMENT OPTION PLAN
On the Effective Date, the Reorganized Debtors shall be
authorized and directed to enter into and execute the Management Option
Agreement. The Management Option Plan and Management Option Agreement may
be amended or modified by the board of directors of Reorganized Tokheim in
accordance with their terms and any such amendment or modification shall
not require an amendment of this Plan.
G. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
1. ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Immediately prior to the Effective Date, all executory
contracts or unexpired leases of the Reorganized Debtors will be deemed
assumed in accordance with the provisions and requirements of sections 365
and 1123 of the Bankruptcy Code except those executory contracts and
unexpired leases that (1) have been rejected by order of the Bankruptcy
Court, (2) are the subject of a motion to reject pending on the Effective
Date, (3) are identified on a list to be filed with the Bankruptcy Court on
or before the Confirmation Date as to be rejected, or (4) are rejected
pursuant to the terms of the Plan. Entry of the Confirmation Order by the
Bankruptcy Court shall constitute approval of such assumptions and
rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code.
Each executory contract and unexpired lease assumed pursuant to Article VII
of the Plan shall revest in and be fully enforceable by the respective
Reorganized Debtor in accordance with its terms, except as modified by the
provisions of the Plan, or any order of the Bankruptcy Court authorizing
and providing for its assumption or applicable federal law.
2. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED
LEASES.
All proofs of claim with respect to Claims arising from the
rejection of executory contracts or unexpired leases, if any, must be filed
with the Bankruptcy Court within thirty (30) days after the date of entry
of an order of the Bankruptcy Court approving such rejection. Any claims
arising from the rejection of an executory contract or unexpired lease not
filed within such times will be forever barred from assertion against the
Debtors or Reorganized Debtors, their Estates and property unless otherwise
ordered by the Bankruptcy court or provided for in this Plan. All such
Allowed Claims for which proofs of claim are required to be filed will be,
and will be treated as, Allowed General Impaired Unsecured Claims subject
to the provisions of Article III of the Plan, subject to any limitation on
allowance of such Claims under section 502(b) of the Bankruptcy Code or
otherwise.
3. CURE OF DEFAULTS OF ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED
LEASES.
Any monetary amounts by which each executory contract and
unexpired lease to be assumed pursuant to the Plan is in default shall be
satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment
of the default amount in Cash on the Effective Date or on such other terms
as the parties to such executory contracts or unexpired leases may
otherwise agree. In the event of a dispute regarding: (1) the amount of any
cure payments, (2) the ability of the Reorganized Debtors or any assignee
to provide "adequate assurance of future performance" (within the meaning
of section 365 of the Bankruptcy Code) under the contract or lease to be
assumed, or (3) any other matter pertaining to assumption, the cure
payments required by section 365(b)(1) of the Bankruptcy Code shall be made
following the entry of a Final Order resolving the dispute and approving
the assumption.
4. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
The obligations of the Debtors to indemnify any Person or
Entity serving at any time on or prior to the Effective Date as one of
their directors, officers or employees by reason of such Person's or
Entity's service in such capacity, or as a director, officer or employee of
any other corporation or legal entity, to the extent provided in the
Debtors' constituent documents or by a written agreement with the Debtors
or the applicable states' general corporation law, each as applicable,
shall be deemed and treated as executory contracts that are assumed by the
Debtors pursuant to the Plan and section 365 of the Bankruptcy Code as of
the Effective Date. Accordingly, such indemnification obligations shall be
treated as Unimpaired Unsecured Claims, and shall survive unimpaired and
unaffected by entry of the Confirmation Order, irrespective of whether such
indemnification is owed for an act or event occurring before or after the
Petition Date. The Plan contemplates that Reorganized Tokheim will obtain
sufficient directors' and officers' liability insurance to provide the
necessary coverage to such former directors, officers and employees.
5. COMPENSATION AND BENEFIT PROGRAMS.
Except as otherwise expressly provided hereunder, all
employment and severance policies, and all compensation and benefit plans,
policies, and programs of the Debtors applicable to their employees,
retirees and non-employee directors and the employees and retirees of its
subsidiaries, including, without limitation, all savings plans, retirement
plans, healthcare plans, disability plans, severance benefit plans,
incentive plans, life, accidental death and dismemberment insurance plans
and the SERP are treated as executory contracts under the Plan and on the
Effective Date will be assumed pursuant to the provisions of sections 365
and 1123 of the Bankruptcy Code. All employment contracts assumed pursuant
to Section 7.5 of the Plan shall be deemed modified such that the
transactions contemplated by the Plan shall not be a "change of control" as
defined in the relevant employment contracts.
The executive employment contracts being assumed include the
contracts of four (4) executives and twelve (12) managers. The significant
terms of the executives employment agreements are set forth below:
a. Douglas K. Pinner (Chairman, President and Chief Executive
Officer). The employment contract between Tokheim and Douglas K.
Pinner ("Pinner") provides Pinner with a base annual salary of
$483,600. In addition, Pinner is entitled to bonuses that may be made
available and is eligible to participate in all benefit plans
including the SERP. Pinner's employment contract will be deemed
modified such that he will be entitled to 24 months of severance if
he is terminated without cause. If, however, Pinner is entitled to
severance as the result of a change in control, Pinner will be
entitled to 36 months of severance payable in a lump sum as set forth
in his employment contract.
b. Robert L. Macdonald (Executive Vice President Finance and
Chief Financial Officer). The employment contract between Tokheim and
Robert L. Macdonald ("Macdonald") provides Macdonald with a base annual
salary of $325,000. In addition, Macdonald is entitled to bonuses
that may be made available and is eligible to participate in all
benefit plans including the SERP. Macdonald is entitled to 18 months
of severance if he is terminated without cause.
c. Jacques St. Denis (Executive Vice President Operations). The
employment contract between Tokheim and Jacques St. Denis ("St.
Denis") provides St. Denis with a base annual salary of $288,960. In
addition, St. Denis is entitled to bonuses that may be made available
and is eligible to participate in all benefit plans including the
SERP. St. Denis is entitled to 18 months of severance if he is
terminated without cause.
d. Norman L. Roelke (Vice President, Secretary and General
Counsel). The employment contract between Tokheim and Norman Roelke
("Roelke") provides Roelke with a base annual salary of $186,000. In
addition, Roelke is entitled to bonuses that may be made available
and is eligible to participate in all benefit plans including the
SERP. Roelke is entitled to 18 months of severance is he is
terminated without cause.
H. CONFIRMATION AND EFFECTIVENESS OF THE PLAN
1. CONDITIONS TO CONFIRMATION.
The Bankruptcy Court shall not enter the Confirmation Order
unless and until the Confirmation Order shall be reasonably acceptable in
form and substance to the Debtors, the Bondholder Committee and the
Prepetition Agent.
2. CONDITIONS TO EFFECTIVE DATE.
a. The Effective Date shall occur on or before December 31,
2000.
b. The Confirmation Order confirming the Plan, as such Plan may
have been modified, shall have been entered and become a Final Order
in form and substance reasonably satisfactory to the Debtors and
shall provide that:
i. the Debtors and Reorganized Debtors are authorized and
directed to take all actions necessary or appropriate to enter into,
implement and consummate the contracts, instruments, releases, leases,
indentures and other agreements or documents created in connection with the
Plan;
ii. the provisions of the Confirmation Order are nonseverable
and mutually dependent;
iii. the Reorganized Debtors are authorized to issue the New
Common Stock, New Preferred Stock, New Warrants, New Bank Warrants, New
Junior Warrants and Management Options and enter into the New Credit Agreement;
and
iv. the New Tranche A Notes, New Tranche B Notes, New
Special Notes, New Common Stock, New Preferred Stock, New Warrants, New
Junior Warrants and Bank Warrants issued under the Plan in exchange for
Claims against and Interests in the Debtors are exempt from registration
under the Securities Act of 1933 pursuant to section 1145 of the Bankruptcy
Code, except to the extent that Holders of the New Tranche A Notes, New
Tranche B Notes, New Special Notes, New Common Stock, New Preferred Stock,
New Warrants, New Junior Warrants or Bank Warrants are "underwriters," as
that term is defined in section 1145 of the Bankruptcy Code.
c. The Reorganized Debtors shall have credit availability under
the Exit Facility, in an amount, form and substance acceptable to the
Reorganized Debtors, the Bondholder Committee and the Prepetition
Agent.
d. The following agreements, in form and substance satisfactory
to the Reorganized Debtors, the Bondholder Committee and the
Prepetition Agent shall have been executed and delivered, and all
conditions precedent thereto shall have been satisfied:
i. Amended Certificates of Incorporation and By-laws of the
Reorganized Debtors;
ii. New Credit Agreement and all similar documents
provided for therein or contemplated thereby;
iii. New Warrant Agreement, and all similar documents
provided for therein or contemplated thereby;
iv. New Bank Warrant Agreement;
v. New Junior Warrant Agreement;
vi. Management Option Agreement; and
vii. Registration Rights Agreement.
e. The Amended Certificates of Incorporation and By-laws of the
Reorganized Debtors, as necessary, shall have been filed with the
applicable authority of each entity's jurisdiction of incorporation
in accordance with such jurisdiction's corporation laws.
f. All actions, documents and agreements necessary to implement
the Plan shall have been effected or executed.
g. The new board of directors of Reorganized Tokheim shall have
been appointed.
3. WAIVER OF CONDITIONS.
Each of the conditions set forth in Section 9.2 of the Plan may
be waived in whole or in part by the Debtors, with consent of the
Bondholder Committee and the Prepetition Agent, without any other notice to
parties in interest or the Bankruptcy Court and without a hearing. The
failure to satisfy or waive a condition to the Effective Date may be
asserted by the Debtors or the Reorganized Debtors regardless of the
circumstances giving rise to the failure of such condition to be satisfied
(including any action or inaction by a Debtor or Reorganized Debtor). The
failure of a Debtor or Reorganized Debtor to exercise any of the foregoing
rights shall not be deemed a waiver of any other rights, and each right
shall be deemed an ongoing right that may be asserted at any time.
4. CONSEQUENCES OF NON-OCCURRENCE OF EFFECTIVE DATE.
If the Effective Date does not occur within ninety (90) days of
the Confirmation Date, or by such later date, after notice and hearing, as
is proposed by the Debtors, then upon motion by the Debtors and upon notice
to such parties in interest as the Bankruptcy Court may direct, the
Confirmation Order will be vacated by the Bankruptcy Court; provided,
however, that, notwithstanding the filing of such motion, the Confirmation
Order may not be vacated if the Effective Date occurs before the Bankruptcy
Court enters an order granting such motion. If the Confirmation Order is
vacated pursuant to Section 9.4 of the Plan, (a) the Plan shall be null and
void in all respects; (b) any settlement of Claims and Interests provided
for hereby shall be null and void without further order of the Bankruptcy
Court; and (c) the time within which the Debtors may assume and assign or
reject all executory contracts and unexpired leases shall be extended for a
period of thirty (30) days after the date the Confirmation Order is
vacated.
I. EFFECT OF PLAN CONFIRMATION
1. PRESERVATION OF RIGHTS OF ACTION; SETTLEMENT OF LITIGATION CLAIMS
a. Preservation of Rights of Action. Except as otherwise
provided in the Plan, the Confirmation Order or in any document,
instrument, release or other agreement entered into in connection
with the Plan, in accordance with section 1123(b) of the Bankruptcy
Code, the Debtors and their Estates shall retain the Litigation
Claims. The Reorganized Debtors, as the successors in interest to the
Debtors and the Estates, may enforce, sue on, settle or compromise
(or decline to do any of the foregoing) any or all of the Litigation
Claims. Notwithstanding the foregoing, the Debtors and the
Reorganized Debtors shall not file, commence or pursue any claim,
right or cause of action under sections 544 through 550 of the
Bankruptcy Code; provided, however, that notwithstanding any statute
of limitations (including, without limitation, section 544 of the
Bankruptcy Code), the Debtors and Reorganized Debtors shall have the
right to assert or raise such causes of action (a) as defenses or
counterclaims (up to the amount asserted in the Claims against the
Debtors); and (b) in connection with the Claims objection process, in
which case such causes of action can be raised as an objection to a
Claim and not as defenses or counterclaims.
b. Settlement of Litigation Claims. At any time after the
Confirmation Date and before the Effective Date, notwithstanding
anything in this Plan to the contrary, the Reorganized Debtors may
settle any or all of the Litigation Claims with the approval of the
Bankruptcy Court pursuant to Fed. R. Bankr. P. 9019.
2. RELEASES
a. Releases by the Debtors. As of the Effective Date, for good
and valuable consideration, the adequacy of which is hereby
confirmed, the Debtors and Reorganized Debtors in their individual
capacities and as debtors in possession will be deemed to release
forever, waive and discharge all claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action and
liabilities (other than the rights of the Debtors or Reorganized
Debtors to enforce the Plan and the contracts, instruments, releases,
indentures and other agreements or documents delivered thereunder)
whether liquidated or unliquidated, fixed or contingent, matured or
unmatured, known or unknown, foreseen or unforeseen, then existing or
thereafter arising, in law, equity or otherwise that are based in
whole or part on any act, omission, transaction, event or other
occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Reorganized Debtors, the parties
released pursuant to Section 10.2 of the Plan, the Chapter 11 Cases,
or the Plan or the Disclosure Statement, and that could have been
asserted by or on behalf of the Debtors or their Estates or the
Reorganized Debtors against (i) the current and former directors,
officers and employees of the Debtors, (other than for money borrowed
from or owed to the Debtors or their subsidiaries by any such
directors, officers or employees as set forth in the Debtors' books
and records) and the Debtors' agents and professionals, (ii) the
Prepetition Lenders and the Prepetition Agent, (iii) the Bondholder
Committee, (iv) the DIP Lenders and agents, (v) any individual,
corporation or other entity that was at any time formerly one of the
foregoing released parties identified in (ii) - (iv) of Section
10.2(a) of the Plan, and (vi) the respective affiliates, current and
former officers, directors, employees, agents, members, shareholders
and professionals (including the current and former officers,
directors, employees, agents, members, shareholders and professionals
of the released professionals) of the entities released in (ii) -
(iv) of Section 10.2(a) of the Plan acting in such capacity; provided
that notwithstanding the foregoing, neither the Debtors nor the
Reorganized Debtors shall be deemed to release any person or entity
that holds a Claim that is listed on the General Impaired Unsecured
Claims List.
b. Releases by Holders of Claims and Interests. On the
Effective Date, (i) each Holder of a Claim or Interest that voted to
accept the Plan and (ii) to the fullest extent permissible under
applicable law, as such law may be extended or interpreted subsequent
to the Effective Date, all other Holders of Claims and Interests, in
consideration for the obligations of the Debtors and the Reorganized
Debtors under the Plan and the Cash and other contracts, instruments,
releases, agreements or documents to be delivered in connection with
the Plan, each entity (other than a Debtor) that has held, holds or
may hold a Claim or Interest, as applicable, will be deemed to
forever release, waive and discharge all claims, demands, debts,
rights, causes of action or liabilities (other than the right to
enforce the Debtors' or the Reorganized Debtors' obligations under
the Plan), and the contracts, instruments, releases, agreements and
documents delivered under the Plan, whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter arising,
in law, equity or otherwise that are based in whole or in part on any
act or omission, transaction, event or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors,
the Chapter 11 Cases, the Plan or the Disclosure Statement and that
could have been asserted by or on behalf of the Debtors or their
Estates or the Reorganized Debtors against (i) the current and former
directors, officers and employees of the Debtors (other than for
money borrowed from or owed to the Debtors or their subsidiaries by
any such directors, officers or employees as set forth in the
Debtors' books and records) and the Debtors' agents and
professionals, (ii) the Prepetition Lenders, (iii) the Bondholder
Committee, (iv) the DIP Lenders, (v) any individual, corporation or
other entity that was at any time formerly one of the foregoing
released parties identified in (ii) - (iv) of Section 10.2(b) of the
Plan, and (vi) the respective affiliates, current and former
officers, directors, employees, agents, members, shareholders and
professionals (including the current and former officers, directors,
employees, agents, members, shareholders and professionals of the
released professionals) of the entities released in (ii) - (iv) of
Section 10.2(b) of the Plan acting in such capacity; provided that
notwithstanding the foregoing, neither the Debtors nor the
Reorganized Debtors shall be deemed to release any person or entity
that holds a Claim that is listed on the General Impaired Unsecured
Claims List.
c. Injunction Related to Releases. The Confirmation Order will
permanently enjoin the commencement or prosecution by any entity,
whether directly, derivatively or otherwise, of any claims,
obligations, suits, judgments, damages, demands, debts, rights,
causes of action or liabilities released pursuant to the Plan,
including but not limited to the claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action or
liabilities released in Section 10.2 of the Plan.
3. DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS
Except as otherwise provided herein or in the Confirmation
Order, all consideration distributed under the Plan shall be in exchange
for, and in complete satisfaction, settlement, discharge and release of,
all Claims (other than those Claims that are Unimpaired under the Plan) of
any nature whatsoever against the Debtors or any of their assets or
properties, and regardless of whether any property shall have been
distributed or retained pursuant to the Plan on account of such Claims.
Upon the Effective Date, the Debtors, and each of them, shall be deemed
discharged and released under section 1141(d)(1)(A) of the Bankruptcy Code
from any and all Claims (other than Claims that are not Impaired),
including, but not limited to, demands and liabilities that arose before
the Confirmation Date, and all debts of the kind specified in section
502(g), 502(h) or 502(i) of the Bankruptcy Code, Old Common Stock and Other
Old Equity Interests shall be terminated.
4. EXCULPATION AND LIMITATION OF LIABILITY
Neither the Debtors, the Bondholder Committee, the Prepetition
Lenders, nor any of their respective present or former members, officers,
directors, shareholders, employees, advisors, attorneys or agents acting in
such capacity, shall have or incur any liability to, or be subject to any
right of action by, any holder of a Claim or an Interest, or any other
party in interest, or any of their respective agents, shareholders,
employees, representatives, financial advisors, attorneys or affiliates, or
any of their successors or assigns, for any act or omission in connection
with, relating to, or arising out of, the Debtors' Chapter 11 Cases, the
pursuit of confirmation of the Plan, the consummation of the Plan or the
administration of the Plan or the property to be distributed under the
Plan, except for their willful misconduct or gross negligence, and in all
respects shall be entitled to rely reasonably upon the advice of counsel
with respect to their duties and responsibilities under the Plan.
5. INJUNCTION
Except as otherwise provided in the Plan, the Confirmation
Order shall provide, among other things, that from and after the
Confirmation Date all Persons who have held, hold or may hold Claims
against or Interests in the Debtors are (i) permanently enjoined from
taking any of the following actions against the Estate(s), or any of their
property on account of any such Claims or Interests and (ii) preliminarily
enjoined from taking any of the following actions against any of the
Debtors, the Reorganized Debtors or their property on account of such
Claims or Interests: (A) commencing or continuing, in any manner or in any
place, any action or other proceeding; (B) enforcing, attaching, collecting
or recovering in any manner any judgment, award, decree or order; (C)
creating, perfecting or enforcing any lien or encumbrance; (D) asserting a
setoff, right of subrogation or recoupment of any kind against any debt,
liability or obligation due to the Debtors; and (E) commencing or
continuing, in any manner or in any place, any action that does not comply
with or is inconsistent with the provisions of the Plan; provided, however,
that nothing contained herein shall preclude such persons from exercising
their rights pursuant to and consistent with the terms of the Plan.
By accepting distributions pursuant to the Plan, each holder of
an Allowed Claim or Interest will be deemed to have specifically consented
to the injunctions set forth in this Section 10.6 of the Plan.
6. TERMINATION OF SUBORDINATION RIGHTS AND SETTLEMENT OF RELATED
CLAIMS
The classification and manner of satisfying all Claims and
Interests under the Plan take into consideration all subordination rights,
whether arising by contract or under general principles of equitable
subordination, section 510(b) or 510(c) of the Bankruptcy Code, or
otherwise. All subordination rights that a Holder of a Claim or Interest
may have with respect to any distribution to be made pursuant to the Plan
will be discharged and terminated, and all actions related to the
enforcement of such subordination rights will be permanently enjoined.
Accordingly, distributions pursuant to the Plan to Holders of Allowed
Claims or Allowed Interests will not be subject to payment to a beneficiary
of such terminated subordination rights, or to levy, garnishment,
attachment or other legal process by a beneficiary of such terminated
subordination rights.
All Claims of Holders of Senior Debt, as defined in the Senior
Subordinated Note Indentures and the Junior Subordinated Note Indenture
(collectively, the "Senior Debt Holders") against the Debtors, and all
rights and claims between or among the Senior Debt Holders and Senior
Subordinated Note Holders or Junior Subordinated Note Holders relating in
any manner whatsoever to claimed subordination rights, "make-whole" rights,
rights to postpetition or default interest or similar rights, if any
(collectively "Subordination-Related Rights"), shall be deemed satisfied by
the distributions under, described in, contemplated by, and/or implemented
by this Plan to holders of such Claims (i.e., Holders of Secured Lender
Claims, Senior Subordinated Note Claims and Junior Subordinated Note
Claims), and such rights shall be deemed waived, released, discharged and
terminated as of the Effective Date, and all actions related to the
enforcement of such Subordination-Related Rights shall be permanently
enjoined. Distributions under, described in, contemplated by and/or
implemented by the Plan shall not be subject to levy, garnishment,
attachment or like legal process by any holder of a Claim, including, but
not limited to, Holders of Secured Lender Claims, Senior Subordinated Note
Claims and Junior Subordinated Note Claims, by reason of any claimed
Subordination-Related Rights or otherwise, so that each Holder of a Claim
shall have and receive the benefit of the distributions in the manner set
forth and described in the Plan.
Pursuant to Bankruptcy Rule 9019 and in consideration of the
distributions and other benefits provided under the Plan, the provisions of
the Plan will constitute a good faith compromise and settlement of all
claims or controversies relating to the subordination rights that a Holder
of a Claim including, but not limited to, a Holder of a Secured Lender
Claim, Senior Subordinated Note Claim or a Junior Subordinated Note Claim
may have or any distribution to be made pursuant to the Plan on account of
such Claim. Entry of the Confirmation Order will constitute the Bankruptcy
Court's approval, as of the Effective Date, of the compromise or settlement
of all such claims or controversies and the Bankruptcy Court's finding that
such compromise or settlement is in the best interests of the Debtors, the
Reorganized Debtors, and their respective properties and holders of Claims
and Interests, and is fair, equitable and reasonable.
J. SUMMARY OF OTHER PROVISIONS OF THE PLAN
The following paragraphs summarize certain other significant
provisions of the Plan. The Plan should be referred to for the complete
text of these and other provisions of the Plan.
1. EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to section 1146(c) of the Bankruptcy Code, any
transfers from the Debtors to Reorganized Debtors or otherwise pursuant to
the Plan shall not be subject to any document recording tax, stamp tax,
conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real
estate transfer tax, mortgage recording tax or other similar tax or
governmental assessment, and the Confirmation Order shall direct the
appropriate state or local governmental officials or agents to forgo the
collection of any such tax or governmental assessment and to accept for
filing and recordation any of the foregoing instruments or other documents
without the payment of any such tax or governmental assessment.
2. CANCELLATION OF NOTES, INSTRUMENTS, DEBENTURES AND COMMON
STOCK
On the Effective Date, except as otherwise provided for herein,
(i) the Senior Subordinated Notes, Junior Subordinated Notes, Old Common
Stock, Other Old Equity, any other notes, bonds (with the exception of
surety bonds outstanding), indentures or other instruments or documents
evidencing or creating any indebtedness or obligations of a Debtor, except
such notes or other instruments evidencing indebtedness or obligations of a
Debtor that are reinstated or amended and restated under the Plan, shall be
cancelled, and (ii) the obligations of the Debtors under any agreements,
indentures or certificates of designation governing the Senior Subordinated
Notes, Junior Subordinated Notes, Old Common Stock and Other Old Equity,
and any other notes, bonds, indentures or other instruments or documents
evidencing or creating any indebtedness or obligations of a Debtor, except
such notes or other instruments evidencing indebtedness or obligations of a
Debtor that are reinstated or amended and restated under the Plan, as the
case may be, shall be discharged. As of the Effective Date, all Old Common
Stock and Other Old Equity that has been authorized to be issued but that
has not been issued shall be deemed cancelled and extinguished without any
further action of any party.
3. EFFECTUATING DOCUMENTS, FURTHER TRANSACTIONS AND CORPORATE
ACTION
Each of the Debtors or the Reorganized Debtors is authorized to
execute, deliver, file or record such contracts, instruments, releases and
other agreements or documents and take such actions as may be necessary or
appropriate to effectuate, implement and further evidence the terms and
conditions of the Plan and any notes or securities issued pursuant to the
Plan.
Prior to, on or after the Effective Date (as appropriate), all
matters provided for under the Plan that would otherwise require approval
of the stockholders or directors of one (1) or more of the Debtors or the
Reorganized Debtors shall be deemed to have occurred and shall be in effect
prior to, on or after the Effective Date (as appropriate) pursuant to the
applicable general corporation law of the states in which the Debtors or
the Reorganized Debtors are incorporated without any requirement of further
action by the stockholders or directors of the Debtors or the Reorganized
Debtors.
4. BAR DATE FOR ADMINISTRATIVE CLAIMS
The Confirmation Order will establish an Administrative Claims
Bar Date for filing Administrative Claims, except for Claims under the DIP
Credit Agreement as provided in Section 3.1 (a)(ii) of the Plan which date
will be thirty (30) days after the Confirmation Date. Holders of asserted
Administrative Claims not paid prior to the Confirmation Date shall submit
proofs of Claim on or before such Administrative Claims Bar Date or forever
be barred from doing so. The notice of Confirmation to be delivered
pursuant to Fed. R. Bankr. P. 3020(c) and 2002(f) will set forth such date
and constitute notice of this Administrative Claims Bar Date. The Debtors
and the Reorganized Debtors shall have thirty (30) days (or such longer
period as may be allowed by order of the Bankruptcy Court) following the
Administrative Claims Bar Date to review and object to such Administrative
Claims before a hearing for determination of allowance of such
Administrative Claims.
5. SEVERABILITY OF PLAN PROVISIONS
If, prior to the Confirmation Date, any term or provision of
the Plan is determined by the Bankruptcy Court to be invalid, void or
unenforceable, the Bankruptcy Court will have the power to alter and
interpret such term or provision to make it valid or enforceable to the
maximum extent practicable, consistent with the original purpose of the
term or provision held to be invalid, void or unenforceable, and such term
or provision will then be applicable as altered or interpreted.
Notwithstanding any such holding, alteration or interpretation, the
remainder of the terms and provisions of the Plan will remain in full force
and effect and will in no way be affected, impaired or invalidated by such
holding, alteration or interpretation. The Confirmation Order will
constitute a judicial determination and will provide that each term and
provision of the Plan, as it may have been altered or interpreted in
accordance with the foregoing, is valid and enforceable pursuant to its
terms.
6. REVOCATION, WITHDRAWAL OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan as
to any or all of the Debtors prior to the Confirmation Date and to file
subsequent plans of reorganization. If the Debtors revoke or withdraw the
Plan as to any or all of the Debtors, or if Confirmation or Consummation as
to any or all of the Debtors does not occur, then, with respect to such
Debtors, (a) the Plan shall be null and void in all respects, (b) any
settlement or compromise embodied in the Plan (including the fixing or
limiting to an amount certain any Claim or Interest or Class of Claims or
Interests), assumption or rejection of executory contracts or leases
affected by the Plan, and any document or agreement executed pursuant to
the Plan, shall be deemed null and void, and (c) nothing contained in the
Plan shall (i) constitute a waiver or release of any Claims by or against,
or any Interests in, such Debtors or any other Person, (ii) prejudice in
any manner the rights of such Debtors or any other Person, or (iii)
constitute an admission of any sort by the Debtors or any other Person.
7. SECTION 1145 EXEMPTION
Pursuant to section 1145(a) of the Bankruptcy Code, the offer,
issuance, transfer or exchange of any security under the Plan, or the
making or delivery of an offering memorandum or other instrument of offer
or transfer under this Plan, shall be exempt from section 5 of the
Securities Act or any similar state or local law requiring the registration
for offer or sale of a security or registration or licensing of an issuer
or a security.
8. PLAN SUPPLEMENT
The Plan Supplement shall be filed with the Bankruptcy Court
not later than five (5) days prior to the Confirmation Hearing. Upon its
filing, the Plan Supplement may be inspected in the office of the clerk of
the Bankruptcy Court or its designee during normal business hours. Holders
of Claims and Interests may obtain a copy of the Plan Supplement upon
written request to the Debtor. The documents contained in the Plan
Supplement shall be approved by the Bankruptcy Court pursuant to the
Confirmation Order.
9. AMENDMENT OR MODIFICATION OF THE PLAN
Subject to section 1127 of the Bankruptcy Code and, to the
extent applicable, sections 1122, 1123 and 1125 of the Bankruptcy Code, the
Debtors reserve the right, to alter, amend or modify the Plan with consent
of the Bondholder Committee and the Prepetition Agent at any time prior to
or after the Confirmation Date but prior to the substantial consummation of
the Plan. A Holder of a Claim or Interest that has accepted the Plan shall
be deemed to have accepted the Plan, as altered, amended or modified, if
the proposed alteration, amendment or modification does not materially and
adversely change the treatment of the Claim or Interest of such Holder.
10. JURISDICTION OVER THE REORGANIZED DEBTOR
Notwithstanding the jurisdiction retained in Article XI of the
Plan, from and after the Effective Date, the Bankruptcy Court shall not
have the power to issue any order which modifies the New Common Stock, New
Preferred Stock, New Warrants, New Junior Warrants or Bank Warrants or the
rights of the Holders thereof with respect to such New Common Stock, New
Preferred Stock, New Warrants, New Junior Warrants or Bank Warrants.
VI. CONFIRMATION AND CONSUMMATION PROCEDURE
The Bankruptcy Court may confirm the Plan only if it determines
that the Plan complies with the technical requirements of Chapter 11,
including, among other things, that (a) the Plan has properly classified
Claims and Interests, (b) the Plan complies with applicable provisions of
the Bankruptcy Code, (c) the Debtors have complied with applicable
provisions of the Bankruptcy Code, (d) the Debtors have proposed the Plan
in good faith and not by any means forbidden by law, (e) disclosure of
"adequate information" as required by section 1125 of the Bankruptcy Code
has been made, (f) the Plan has been accepted by the requisite votes of all
classes of creditors (except to the extent that "cramdown" is available
under section 1129(b) of the Bankruptcy Code), (g) the Plan is in the "best
interests" of all holders of Claims or Interests in an Impaired Class, and
(h) all fees and expenses payable under 28 U.S.C. ss. 1930, as determined
by the Bankruptcy Court at the Confirmation Hearing, have been paid or the
Plan provides for the payment of such fees on the Consummation Date.
Under the Bankruptcy Code, the following steps must be taken to
confirm the Plan:
A. SOLICITATION OF VOTES
Under the Bankruptcy Code, only Classes of Claims and Interests
that are "impaired" (as that term is defined in section 1124 of the
Bankruptcy Code) under the Plan are entitled to vote to accept or reject
the Plan. A Class is impaired if the legal, equitable or contractual rights
to which the holders of Claims or Interests are entitled are modified,
other than by curing defaults and reinstating the debt. Pursuant to
sections 1126(f) and (g) of the Bankruptcy Code, Classes of Claims and
Interests that are not impaired are conclusively presumed to have accepted
the Plan and are not entitled to vote on the Plan, and Classes of Claims
and Interests whose holders will receive or retain no property under the
Plan are deemed to have rejected the Plan and are not entitled to vote on
the Plan. Creditors who hold disputed Claims are not entitled to vote to
accept or reject the Plan. The classification of Claims and Interests is
summarized, together with notations as to whether each Class of Claims or
Interests is Impaired or Unimpaired, under the caption "The Plan of
Reorganization - Summary of Distributions." Additional information
regarding voting is contained in the instructions accompanying the Ballots.
This Disclosure Statement and an appropriate Ballot are being
distributed to all holders of Claims who are entitled to vote on the Plan.
Because of the complexity and difficulty associated with reaching
beneficial owners of publicly traded securities, many of which hold their
securities in brokerage accounts and through several layers of ownership,
the Debtors are distributing a Ballot (i) to each holder of record of the
Senior Subordinated Notes as of the Record Date and (ii) to each bank or
brokerage firm (or the agent therefor) identified by Logan as an entity
through which beneficial owners hold the Senior Subordinated Notes. The
banks, brokerage firms or agents shall forward a beneficial owner ballot to
each beneficial owner of the Senior Subordinated Notes for voting, along
with a return envelope provided by and addressed to the bank, brokerage
firm or agent, so that the beneficial owner may return the completed
beneficial owner ballot to that entity. The bank, brokerage firm or agent
shall summarize the individual votes of its respective beneficial owners
from their individual beneficial owner ballot on a master ballot and shall
return such master ballot to Logan. This procedure enables the Debtors to
transmit materials to the holders of their publicly traded securities and
affords beneficial owners of the Senior Subordinated Notes a fair and
reasonable opportunity to vote. All Ballots and Master Ballots received
from the Debtors shall be returned to Logan by the Voting Deadline as
indicated on the Ballots. Beneficial Holders' Ballots received from banks
or brokerage firms (the "Beneficial Holder Voting Deadline"). A vote to
accept the Plan shall be deemed a vote to accept the Management Option
Plan.
Classes 1, 2, 3 and 6 of the Plan are unimpaired, and holders
of Claims in such Classes are conclusively presumed to have accepted the
Plan. Classes 8 and 9 are conclusively presumed to have rejected the Plan.
The Debtors intend to request that the Bankruptcy Court waive the
requirement of soliciting the Holders of Old Common Stock and deem Class 7
to have rejected the Plan. Therefore, in accordance with sections 1126 and
1129 of the Bankruptcy Code, the Debtors are soliciting acceptances only
from holders of Allowed Claims in Classes 4, 5A and 5B.
As to classes of claims entitled to vote on a plan, the
Bankruptcy Code defines acceptance of a plan by a class of creditors as
acceptance by holders of at least two-thirds in dollar amount and more than
one-half in number of the claims entitled to vote in that class that have
timely voted to accept or reject a plan.
A vote may be disregarded if the Bankruptcy Court determines,
after notice and a hearing, that acceptance or rejection was not solicited
or procured in good faith or in accordance with the provisions of the
Bankruptcy Code.
The Debtors will request that the Bankruptcy Court order that
any non-voting holder of a Claim who is a member of an Impaired Class
entitled to vote on the Plan, but in which no votes are actually cast, will
be deemed to have accepted the Plan for purposes of sections 1129(a)(8) and
1129(b) of the Bankruptcy Code.
The Debtors will also request that the Court order that, solely
for purposes of voting to accept or reject the Plan and not for the purpose
of allowance of, or distribution on account of, a Claim and without
prejudice to the rights of the Debtors or other parties in interest in any
other context, each Claim within a Class of Claims to be entitled to vote
to accept or reject the Plan will be temporarily Allowed in an amount equal
to the amount of such Claim as set forth (i) on the General Impaired
Unsecured Claims List if such Claim is on the General Impaired Unsecured
Claims List or (ii) on the Ballot or Master Ballot; provided, however, that
the Debtors reserve the right to object to the amount of any Claim set
forth for voting purposes on a Ballot. If a Claim is listed in the Plan or
on the General Unsecured Claims List as contingent, unliquidated or
disputed, such Claim will be disallowed for voting purposes only, and not
for purposes of allowance of distribution.
The Debtors intend to seek an order of the Bankruptcy Court
ordering that any creditor who seeks to challenge the allowance of its
Claim for voting purposes in accordance with the above procedures is
directed to serve on the Debtors and File on or before the tenth (10th) day
after the Petition Date, a motion for an order pursuant to Bankruptcy Rule
3018(a) temporarily allowing such Claim in a different amount for purposes
of voting to accept or reject the Plan.
Any Ballot that is properly completed, executed and timely
returned to Logan but does not indicate an acceptance or rejection of the
Plan, or indicates both an acceptance and a rejection of the Plan, is
deemed to be a vote to accept the Plan. If no votes to accept or reject the
Plan are received with respect to a particular Class, such Class is deemed
to have voted to accept the Plan. Whenever a creditor casts more than one
Ballot voting the same Claim before the Voting Deadline, the last Ballot
received before the Voting Deadline is deemed to reflect the voter's intent
and thus to supersede any prior Ballots. Creditors must vote all of their
Claims within a particular Class under the Plan either to accept or reject
the Plan and may not split their vote, and thus a Ballot that partially
accepts and partially rejects the Plan will not be counted.
The following types of Ballots will not be counted in
determining whether the Plan has been accepted or rejected:
a. any Ballot received after the Voting Deadline unless the
Debtors have granted an extension of the Voting Deadline with respect
to such Ballot;
b. any Ballot that is illegible or contains insufficient
information to permit the identification of the creditor or interest
holder;
c. any Ballot cast by a person or entity that does not hold a
Claim in a Class that is entitled to vote to accept or reject the
Plan; and
d. any unsigned Ballot.
By signing and returning the Ballot, each Holder of a Class 4,
Class 5A or Class 5B Claim will be representing to the Debtors that either
(a) such Holder is an "accredited investor" as defined in Rule 501(a) under
the Securities Act or (b) that such Holder has sufficient knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of its participating in the Plan and is
capable of bearing the economic risks of such investment, including a
complete loss of its investment. See the Ballots for a more detailed
description of "accredited investors."
By signing and returning the Ballot, each Holder of a Class 4,
Class 5A or 5B Claim will also be confirming that (i) such holder and/or
legal and financial advisors acting on its behalf has had the opportunity
to ask questions of, and receive answers from, the Debtors concerning the
terms of the Plan, the businesses of the Debtors and other related matters,
(ii) the Debtors have made available to such holder or its agents all
documents and information relating to the Plan and related matters
reasonably requested by or on behalf of such holder and (iii) except for
information provided by the Debtors in writing, and by its own agents, such
holder has not relied on any statements made or other information received
from any person with respect to the Plan.
By signing and returning the Ballot each Holder of a Class 4,
Class 5A or 5B Claim also acknowledges that the securities being offered
pursuant to the Plan are not being offered pursuant to a registration
statement filed with the Securities and Exchange Commission and represents
that any such securities will be acquired for its own account and not with
a view to any distribution of such securities in violation of the
Securities Act. It is expected that when issued pursuant to the Plan such
securities will be exempt from the registration requirements of the
Securities Act by virtue of section 1145 of the Bankruptcy Code and may be
resold by the holders thereof subject to the provisions of such section
1145.
B. THE CONFIRMATION HEARING
The Bankruptcy Code will schedule a hearing on the confirmation
of the Plan. At that hearing the Bankruptcy Court will consider whether the
Plan satisfies the various requirements of the Bankruptcy Code, including
whether the Plan is feasible and whether the Plan is in the best interests
of the creditors of the Debtors. At that time, the Debtors will submit a
report to the Bankruptcy Court concerning the votes for acceptance or
rejection of the Plan by the parties entitled to vote thereon.
Section 1128(b) of the Bankruptcy Court provides that any party
in interest may object to confirmation of the Plan. Any objection to
confirmation of the Plan must be made in writing and filed with the
Bankruptcy Court and served on all required parties by the objection
deadlines set by the Bankruptcy Court. Unless an objection to confirmation
is timely served and filed, it may not be considered by the Bankruptcy
Court.
C. CONFIRMATION
At the Confirmation Hearing, the Bankruptcy Court will confirm
the Plan only if all of the requirements of section 1129 of the Bankruptcy
Code are met. Among the requirements for confirmation of a plan are that
the plan is (a) accepted by all impaired classes of claims and equity
interests or, if rejected by an impaired class, that the plan "does not
discriminate unfairly" and is "fair and equitable" as to such class, (b)
feasible and (c) in the "best interests" of creditors and stockholders that
are impaired under the plan.
1. UNFAIR DISCRIMINATION AND FAIR AND EQUITABLE TESTS
To obtain non-consensual confirmation of the Plan, it must be
demonstrated to the Bankruptcy Court that the Plan "does not discriminate
unfairly" and is "fair and equitable" with respect to each impaired,
non-accepting Class. The Bankruptcy Code provides a non-exclusive
definition of the phrase "fair and equitable." The Bankruptcy Code
establishes "cramdown" tests for secured creditors, unsecured creditors and
equity holders, as follows:
a. Secured Creditors. Either (i) each impaired secured creditor
retains its liens securing its secured claim and receives on account
of its secured claim deferred cash payments having a present value
equal to the amount of its allowed secured claim, (ii) each impaired
secured creditor realizes the "indubitable equivalent" of its allowed
secured claim, or (iii) the property securing the claim is sold free
and clear of liens, with such liens to attach to the proceeds of the
sale and the treatment of such liens on proceeds to be as provided in
clause (i) or (ii) of this subparagraph.
b. Unsecured Creditors. Either (i) each impaired unsecured
creditor receives or retains, under the plan, property of a value
equal to the amount of its allowed claim or (ii) the holders of
claims and interests that are junior to the claims of the dissenting
class will not receive any property under the plan.
c. Equity Interests. Either (i) each holder of an equity
interest will receive or retain, under the plan, property of a value
equal to the greatest of the fixed liquidation preference to which
such holder is entitled, the fixed redemption price to which such
holder is entitled or the value of the interest or (ii) the holder of
an interest that is junior to the non-accepting class will not
receive or retain any property under the plan.
As described above, Holders of Interests in Classes 7, 8 and 9,
under section 1126(g) of the Bankruptcy Code, are presumed to have rejected
the Plan. The Debtors request confirmation of the Plan under section
1129(b) of the Bankruptcy Code notwithstanding the deemed rejection of the
Plan by Classes 7, 8 and 9. The Debtors believe that the Plan may be
confirmed pursuant to the above-described "cramdown" provisions, over the
dissent of Classes 7 and 9 Interests and Class 8 Claims, in view of the
treatment proposed for such Classes. The Debtors believe that the treatment
under the Plan of the holders of Claims and Interests in Classes 7, 8 and 9
satisfies the "fair and equitable" test since there is no class junior to
such non-accepting Classes that will receive or retain any property under
the Plan. In addition, the Debtors do not believe that the Plan unfairly
discriminates against Classes 7, 8 or 9.
2. BEST INTERESTS TEST
With respect to each impaired Class of Claims and Interests,
confirmation of the plan requires that each Holder of a Claim or Interest
either (a) accept the Plan or (b) receive or retain under the Plan property
of a value, as of the Effective Date, that is not less than the value such
holder would receive or retain if the Debtors were liquidated under chapter
7 of the Bankruptcy Code. The Debtors believe that Holders of Impaired
Claims and Interests would receive significantly less under a chapter 7
liquidation than under the Plan. The following liquidation analysis
prepared by Lazard is an estimate of the proceeds that may be generated as
a result of a hypothetical chapter 7 liquidation commencing on the Petition
Date. The analysis is based on a number of significant assumptions that may
not be realized in an actual liquidation.
To calculate the probable distribution to holders of each
impaired class of claims and interests if the Debtors were liquidated under
chapter 7, a bankruptcy court must first determine the aggregate dollar
amount that would be generated from a debtor's assets if its chapter 11
cases were converted to chapter 7 cases under the Bankruptcy Code. This
"liquidation value" would consist primarily of the proceeds from a forced
sale of the debtor's assets by a chapter 7 trustee.
The amount of liquidation value available to unsecured
creditors would be reduced by, first, the claims of secured creditors to
the extent of the value of their collateral, and, second, by the costs and
expenses of liquidation, as well as by other administrative expenses and
costs of both the chapter 7 cases and the chapter 11 cases. Costs of
liquidation under chapter 7 of the Bankruptcy Code would include the
compensation of a trustee, as well as of counsel and other professionals
retained by the trustee, asset disposition expenses, all unpaid expenses
incurred by the debtor in its chapter 11 cases (such as compensation of
attorneys, financial advisors and accountants) that are allowed in the
chapter 7 cases, litigation costs, and claims arising from the operations
of the debtor during the pendency of the chapter 11 cases. The liquidation
itself would trigger certain priority claims that otherwise would be due in
the ordinary course of business. Those priority claims would be paid in
full from the liquidation proceeds before the balance would be made
available to pay general claims or to make any distribution in respect of
equity interests. The liquidation would also prompt the rejection of a
large number of executory contracts and unexpired leases and thereby create
a significantly higher number of unsecured creditors.
The Debtors believe that the Plan meets the "best interests of
creditors" test of section 1129(a)(7) of the Bankruptcy Code. The Debtors
believe that the members of each Impaired Class will receive greater value
under the Plan than they would in a liquidation. The Liquidation Analysis
provides that in the event of a liquidation as described therein, the
proceeds available for Senior Subordinated Noteholders and Holders of
genreal unsecured Claims (except Junior Subordinated Noteholders, after
payment of the Secured Lender Claims would be $25.2 million which, based on
the estimate of Unsecured Claims, would result in a recovery of 7.7%.
Junior Subordinated Noteholders would receive no distribution in a chapter
7 liquidation. Under the Plan, Holder of Unimpaired Unsecured Claims
received 100% recovery and Holders of Impaired Unsecured Claims will
receive 9.2% - 33%. Holders of Junior Subordinated Note Claims will receive
3.2% to 5.5% under the Plan. Therefore, Holders Unsecured Claims will
receive substantially more under the Plan than in a liquidation. The
Liquidation Analysis also provides that no distribution would be available
to Holders of Class 7 Old Common Stock. Therefore, because the Plan
provides for distributions for Class 7, such Holders of Old Common Stock
will receive a greater recovery under the Plan than they would in a
liquidation. Although the Debtors believe that the Plan meets the "best
interests test" of section 1129(a)(7) of the Bankruptcy Code, there can be
no assurance that the Bankruptcy Court will determine that the Plan meets
this test.
The liquidation analysis (the "Liquidation Analysis") is set
forth as Exhibit E to the Disclosure Statement.
3. FEASIBILITY
The Bankruptcy Code requires that the Bankruptcy Court
determine that confirmation of a Plan is not likely to be followed by
liquidation or the need for further financial reorganization of the Debtor.
For purposes of showing that this Plan meets this feasibility standard,
Tokheim and Lazard have analyzed the ability of the Reorganized Debtors to
meet their obligations under the Plan and retain sufficient liquidity and
capital resources to conduct their business.
The Debtors believe that with a significantly deleveraged
capital structure their business will be able to return to viability. The
decrease in the amount of debt on Tokheim's balance sheet will
substantially improve the Debtors' cash flow and reduce their interest
expense. Based on the terms of the Plan, at emergence Tokheim will have
$265 million of debt in contrast to more than $500 million of debt prior to
the restructuring. In addition there will be no cash payment required on
the New Special Notes until December 31, 2002.
In addition, the conditions in the industry that contributed to
Tokheim's financial problems have improved. In recent months steady
increases in oil prices have eased the pressure on MOCs, and although oil
industry mergers are expected to continue through 2000, Tokheim anticipates
that the MOCs' capital expenditures will increase as oil prices rise or
stabilize at higher prices and the MOCs' consolidation programs are
completed. Therefore, Tokheim believes that the market for its petroleum
dispensing equipment and related services, including in particular the
service and maintenance operations of RPS, will improve dramatically in the
near future. Furthermore, Tokheim has developed and is presently test-
marketing the next generation of petroleum dispensing/POS systems,
incorporating internet and e-business technologies that will enhance the
consumer's buying experience while broadening Tokheim's revenue base.
Tokheim also has improved its own operations, substantially
reducing cost and improving efficiency. Since the RPS acquisition, Tokheim
has engaged in an ambitious and successful operational consolidation
program that is expected to result in $68 million in annual cost-savings
when fully implemented. The program includes plant and service facility
closings, elimination of operational redundancies and improved efficiencies
in purchasing and manufacturing. As of November 30, 1999, 14 months after
the acquisition, the company had realized $36.5 million in annualized
savings. Tokheim intends to continue this program through and after
emerging from chapter 11. Tokheim anticipates additional cost savings of
$20 million in 2000 and $12 million in 2001.
To support their belief in the feasibility of the Plan, the
Debtors have relied upon Pro Forma Financial Projections for Fiscal Years
2000 through 2004, as set forth in Exhibit F of the Disclosure Statement.
The Projections indicate that the Reorganized Debtors should
have sufficient cash flow to pay and service their debt obligations,
including the New Credit Agreement and to fund their operations.
Accordingly, the Debtors believe that the Plan complies with the financial
feasibility standard of section 1129(a)(11) of the Bankruptcy Code.
The Projections were not prepared with a view toward compliance
with the published guidelines of the American Institute of Certified Public
Accountants or any other regulatory or professional agency or body or
generally accepted accounting principles. Furthermore, the Debtors'
independent certified public accountants have not complied or examined the
Projections and accordingly do not express any opinion or any other form of
assurance with respect thereto and assume no responsibility for the
Projections.
The Projections assume that (i) the Plan will be confirmed and
consummated in accordance with its terms, (ii) there will be no material
change in legislation or regulations, or the administration thereof,
including environmental legislation or regulations, that will have an
unexpected effect on the operations of the Reorganized Debtors, (iii) there
will be no change in United States generally accepted accounting principles
that will have a material effect on the reported financial results of the
Reorganized Debtors, and (iv) there will be no material contingent or
unliquidated litigation or indemnity claims applicable to the Reorganized
Debtors. To the extent that the assumptions inherent in the Projections are
based upon future business decisions and objectives, they are subject to
change. In addition, although they are presented with numerical specificity
and considered reasonable by the Debtors when taken as a whole, the
assumptions and estimates underlying the Projections are subject to
significant business, economic and competitive uncertainties and
contingencies, many of which will be beyond the control of the Reorganized
Debtors. Accordingly, the Projections are only an estimate that are
necessarily speculative in nature. It can be expected that some or all of
the assumptions in the Projections will not be realized and that actual
results will vary from the Projections, which variation may be material and
are likely to increase over time. The Projections should therefore not be
regarded as a representation by the Debtors or any other person that the
results set forth in the Projections will be achieved. In light of the
foregoing, readers are cautioned not to place undue reliance on the
Projections. The Projections should be read together with the information
in Article VII of this Disclosure Statement entitled "Risk Factors to be
Considered," which sets forth important factors that could cause actual
results to differ from those in the Projections.
Tokheim is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith
files periodic reports and other information with the SEC relating to its
business, financial statements and other matters. Such filings will not
include projected financial information. The Debtors do not intend to
update or otherwise revise the Projections, including any revisions to
reflect events or circumstances existing or arising after the date of this
Disclosure Statement or to reflect the occurrence of unanticipated events,
even if any or all of the underlying assumptions do not come to fruition.
Furthermore, the Debtors do not intend to update or revise the Projections
to reflect changes in general economic or industry conditions.
VII. RISK FACTORS TO BE CONSIDERED
Holders of Claims against and Interests in the Debtors should
read and consider carefully the information set forth below, as well as the
other information set forth in this Disclosure Statement (and the documents
delivered together herewith and/or incorporated by reference), prior to
voting to accept or reject the Plan. This information, however, should not
be regarded as the only risks involved in connection with the Plan and its
implementation.
A. CERTAIN BANKRUPTCY CONSIDERATIONS
1. FAILURE TO SATISFY VOTE REQUIREMENT
If Tokheim obtains the requisite votes to accept the Plan in
accordance with the requirements of the Bankruptcy Code, the Debtors intend
to file voluntary petitions for reorganization under chapter 11 of the
Bankruptcy Code and to seek, as promptly as practicable thereafter,
confirmation of the Plan. In the event that sufficient votes are not
received, Tokheim will likely file a petition for relief under chapter 11
of the Bankruptcy Code. In such event, Tokheim may seek to accomplish an
alternative restructuring of its capitalization and its obligations to
creditors and equity holders. The terms of any such alternative
restructuring are not likely to be as favorable to creditors or equity
holders as those proposed in the Plan.
2. NON-CONFIRMATION OR DELAY OF CONFIRMATION OF THE PLAN
Even if the Plan were uncontested, it is estimated that the
Plan would take approximately 1-2 months to confirm. The Bankruptcy Court,
which sits as a court of equity, may exercise substantial discretion.
Section 1129 of the Bankruptcy Code sets forth the requirements for
confirmation and requires, among other things, that the confirmation of the
Plan not be followed by a need for further financial reorganization and
that the value of distributions to dissenting creditors and shareholders
not be less than the value of distributions such creditors and shareholders
would receive if the Company were liquidated under chapter 7 of the
Bankruptcy Code. Although the Company believes that the Plan will meet such
tests, there can be no assurance that the Bankruptcy Court would reach the
same conclusion.
3. NON-CONSENSUAL CONFIRMATION
In the event any impaired Class of Claims does not accept a
plan, a bankruptcy court may nevertheless confirm such plan at the
proponent's request if at least one impaired class of claims has accepted
the plan (with such acceptances being determined without including the vote
of any "insider" in such class), and, as to each impaired class that has
not accepted the plan, the bankruptcy court determines that the plan of
reorganization "does not discriminate unfairly" and is "fair and equitable"
with respect to the dissenting impaired classes. Because the Plan deems
Classes 7, 8 and 9 to reject the Plan, these requirements must be satisfied
with respect to such Classes. Tokheim believes that the Plan satisfies
these requirements.
4. RISK OF NON-OCCURRENCE OF THE EFFECTIVE DATE
Although Tokheim believes that the Effective Date will occur
soon after the Confirmation Date, there can be no assurance as to such
timing.
5. GENERAL EFFECT
The filing of a bankruptcy petition by the Debtors, and the
publicity attendant thereto, may adversely affect the Debtors' business.
The Debtors believe that any such adverse effects may worsen during the
pendency of a protracted bankruptcy case if the Plan is not confirmed as
expected.
6. EFFECT OF TOKHEIM'S CHAPTER 11 CASE ON RELATIONS WITH TRADE
VENDORS
The commencement of a chapter 11 case by Tokheim may adversely
affect its business and cause certain trade suppliers and vendors to cease
shipping goods to Tokheim. Although Tokheim believes that it has good
relationships with its suppliers and trade vendors and intends to seek
authority from the Bankruptcy Court on the Petition Date to pay all
prepetition claims of suppliers and trade vendors on the condition that
they continue to provide customary goods and services to Tokheim on
customary credit and shipping terms, there can be no assurance that such
suppliers and vendors will continue to provide such goods and services to
Tokheim after the commencement of the Chapter 11 Cases.
7. RISK OF FAILURE TO OBTAIN AUTHORITY TO PAY PREPETITION UNSECURED
CLAIMS IN THE ORDINARY COURSE OF BUSINESS
Under the Plan, Unimpaired Unsecured Claims are Unimpaired. In
order to effectuate this treatment, the Debtors intend to seek authority
from the Bankruptcy Court to continue to satisfy their obligations to
unsecured creditors in the ordinary course of business, including
obligations which arise prior to the filing of the Debtors' Chapter 11
Cases. If the Debtors are unable to obtain such authority, the Plan may
have to be amended to provide different treatment for the Holders of
Unimpaired Unsecured Claims.
8. METHODS OF SOLICITATION
Section 1126(b) of the Bankruptcy Code provides that the holder
of a claim against, or interest in, a debtor who accepts or rejects a plan
of reorganization before the commencement of a chapter 11 case is deemed to
have accepted or rejected such plan under the Bankruptcy Code so long as
the solicitation of such acceptance was made in accordance with applicable
non-bankruptcy law governing the adequacy of disclosure in connection with
such solicitations, or, if such laws do not exist, such acceptance was
solicited after disclosure of "adequate information," as defined in section
1125 of the Bankruptcy Code. This Disclosure Statement is being presented
to all Holders of Claims in impaired Classes in order to satisfy the
requirements of section 1126(b) of the Bankruptcy Code.
In addition, Bankruptcy Rule 3018(b) states that a holder of a
claim or interest who has accepted or rejected a plan before the
commencement of the case under the Bankruptcy Code shall not be deemed to
have accepted or rejected the plan if the court finds after notice and a
hearing that the plan was not transmitted in accordance with reasonable
solicitation procedures. Section 1126(b) of the Bankruptcy Code provides
that a holder of a claim or interest that has accepted or rejected a plan
before the commencement of a case under the Bankruptcy Code is deemed to
have accepted or rejected the plan if (i) the solicitation of such
acceptance or rejection was in compliance with applicable nonbankruptcy
law, rule or regulation governing the adequacy of disclosure in connection
with such solicitation or (ii) there is no such law, rule or regulation,
and such acceptance or rejection was solicited in accordance with section
1125(b) of the Bankruptcy Code.
The Debtors are requesting that the Bankruptcy Court enter the
Class 7 Solicitation Order waiving any requirement that the Debtors solicit
acceptances of the Plan from Holders of Old Common Stock and, therefore,
deem the Holders of Old Common Stock to have rejected the Plan. The Debtors
believe there is a reasonable basis for the Bankruptcy Court to determine
that deeming the Class of Old Common Stock not to have accepted the Plan is
permissible under the Bankruptcy Code and the Bankruptcy Rules. The Debtors
also believe that their solicitation of votes to accept or reject the Plan
from Classes 4, 5A and 5B was proper under applicable nonbankruptcy law,
rules and regulations. The Debtors cannot be certain, however, that their
solicitation of acceptances or rejections will be approved by the
Bankruptcy Court. If such approval is not obtained, then the Debtors may
have to solicit votes to accept or reject the Plan from one or more Classes
of Claims or Interests that were not previously solicited. There is also a
risk that confirmation of the Plan would be denied by the Bankruptcy Court.
The Debtors believe that the use of the Disclosure Statement
and of Ballots and Master Ballots for the purpose of obtaining acceptances
of the Plan and the Solicitation is in compliance with the Bankruptcy Code.
However, there can be no assurance that the Bankruptcy Court will decide
that the Solicitation meets the requirements of section 1126(b) of the
Bankruptcy Code. If the Bankruptcy Court determines that the solicitation
does not comply with the requirements of section 1126(b) of the Bankruptcy
Code, the Company may seek to resolicit acceptances, and, in such event,
Confirmation of the Plan could be delayed and possibly jeopardized.
9. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS
Section 1122 of the Bankruptcy Code requires that the Plan
classify Claims against, and Interests in, the Company. The Bankruptcy Code
also provides that, except for certain Claims classified for administrative
convenience, the Plan may place a Claim or Interest in a particular Class
only if such Claim or Interest is substantially similar to the other Claims
or Interests of such Class. The Debtors believe that all Claims and
Interests have been appropriately classified in the Plan. The Debtors have
elected to separately classify Unimpaired Unsecured Claims because these
Classes are composed largely of trade creditors and litigation claims that
will not be Impaired by the Chapter 11 Cases. Many of the creditors are key
suppliers of products and services used by the Debtors. Accordingly, any
impairment of these Claims would be detrimental to the ability of the
Debtors to obtain essential trade credit and could substantially impair the
ability of the Debtors to do business with trade creditors whose goods and
services are essential for the Debtors.
To the extent that the Bankruptcy Court finds that a different
classification is required for the Plan to be confirmed, the Debtors
presently anticipate that they would seek (i) to modify the Plan to provide
for whatever classification might be required for Confirmation and (ii) to
use the acceptances received from any creditor pursuant to this
solicitation for the purpose of obtaining the approval of the Class or
Classes of which such creditor ultimately is deemed to be a member. Any
such reclassification of creditors, although subject to the notice and
hearing requirements of the Bankruptcy Code, could adversely affect the
Class in which such creditor was initially a member, or any other Class
under the Plan, by changing the composition of such Class and the vote
required for approval of the Plan. There can be no assurance that the
Bankruptcy Court, after finding that a classification was inappropriate and
requiring a reclassification, would approve the Plan based upon such
reclassification. Except to the extent that modification of classification
in the Plan requires resolicitation, the Debtors will, in accordance with
the Bankruptcy Code and the Bankruptcy Rules, seek a determination by the
Bankruptcy Court that acceptance of the Plan of any Holder of Claims
pursuant to this solicitation will constitute a consent to the Plan's
treatment of such Holder regardless of the Class as to which such Holder is
ultimately deemed to be a member. The Debtors believe that under the
Federal Rules of Bankruptcy Procedure the Debtors would be required to
resolicit votes for or against the Plan only when a modification adversely
affects the treatment of the claim of any creditor or equity holder.
The Bankruptcy Code also requires that the Plan provide the
same treatment for each Claim or Interest of a particular Class unless the
Holder of a particular Claim or Interest agrees to a less favorable
treatment of its Claim or Interest. The Debtors believe that they have
complied with the requirement of equal treatment. To the extent that the
Bankruptcy Court finds that the Plan does not satisfy such requirement, the
Bankruptcy Court could deny Confirmation of the Plan.
Issues or disputes relating to classification and/or treatment
could result in a delay in the Confirmation and Consummation of the Plan
and could increase the risk that the Plan will not be consummated.
B. FACTORS AFFECTING THE VALUE OF THE SECURITIES TO BE ISSUED UNDER THE PLAN
1. SPECULATIVE NATURE
The New Common Stock, New Warrants, New Junior Warrants and the
Bank Warrants are speculative securities. Under their terms, the New
Warrants, New Junior Warrants and Bank Warrants are exercisable at a
specified exercise price and will expire five (5) years from the Effective
Date. There can be no assurance that the market value of the New Common
Stock will exceed the exercise price of the New Warrants, New Junior
Warrants or the Bank Warrants. The New Warrants, New Junior Warrants and
the Bank Warrants will have no voting rights and no right to share in
dividends, if any, paid with respect to the New Common Stock and will have
no rights on liquidation of the Reorganized Debtors. There can be no
assurance that the New Common Stock, New Warrants, New Junior Warrants or
the Bank Warrants will have access to a liquid trading market.
2. COMPETITIVE CONDITIONS
Tokheim competes with several other manufacturers and servicers
of petroleum dispensing equipment. Some of Tokheim's competitors have
greater financial resources than Tokheim and could use those resources to
take steps that would adversely affect Tokheim's competitive position.
3. VARIANCES FROM PROJECTIONS
The fundamental premise of the Plan is the deleveraging of
Tokheim and the implementation and realization of Tokheim's business plan,
as reflected in the Projections contained in this Disclosure Statement. The
Projections reflect numerous assumptions concerning the anticipated future
performance of the Reorganized Debtors, some of which may not materialize.
Such assumptions include, among other items, assumptions concerning the
general economy, the petroleum industry and the ability to stabilize and
grow the Reorganized Debtors' business and control future operating
expenses. Tokheim believes that the assumptions underlying the Projections
are reasonable. However, unanticipated events and circumstances occurring
subsequent to the preparation of the Projections may affect the actual
financial results of the Reorganized Debtors. Therefore, the actual results
achieved throughout the periods covered by the Projections necessarily will
vary from the projected results, and such variations may be material and
adverse.
Moreover, the estimated percentage recovery by Holders of
Prepetition Notes, Secured Lender Claims, Impaired Unsecured Claims, and
Junior Subordinated Note Claims is based upon Tokheim's estimate of the
values of the New Common Stock, the Bank Warrants, the New Warrants, and
the New Junior Warrants respectively. Because the market and economic
conditions upon which such values are based are beyond the control of
Tokheim, the actual results achieved necessarily will vary from the
estimate. Such variations may be material and adverse.
4. DISRUPTION OF OPERATIONS
The commencement and pendency of Tokheim's chapter 11 case
could adversely affect Tokheim's relationship with its customers and
suppliers, as well as Tokheim's ability to retain or attract high-quality
employees. In such event, weakened operating results that could give rise
to variances from Tokheim's projections may occur.
5. LACK OF TRADING MARKET
The New Common Stock, the New Warrants, the New Junior Warrants
and the Bank Warrants are new issues of securities with no established
trading market or prior trading history. There can be no assurance
regarding the future development of a market for the New Common Stock, the
New Warrants, the New Junior Warrants or the Bank Warrants, the ability of
holders thereof to sell their New Common Stock, the New Warrants, the New
Junior Warrants or the Bank Warrants or the price for which such holders
may be able to sell their New Common Stock, the New Warrants, the New
Junior Warrants or the Bank Warrants. If a market were to develop, the New
Common Stock, the New Warrants, the New Junior Warrants and the Bank
Warrants could trade at prices lower than their initial values. The trading
prices of such securities will depend on many factors, including factors
beyond the Reorganized Debtors' control. Furthermore, the liquidity of, and
trading market for, the New Common Stock, the New Warrants, the New Junior
Warrants and the Bank Warrants may be adversely affected by price declines
and volatility in the market for similar securities, as well as by any
changes in the Reorganized Debtors' financial condition or results of
operations.
6. DIVIDEND POLICIES
Tokheim does not anticipate that any dividends will be paid on
the New Common Stock in the foreseeable future. In addition, the covenants
in the Exit Facility may limit the ability of the Reorganized Debtors to
pay dividends. Certain institutional investors may invest only in
dividend-paying equity securities or may operate under other restrictions
which may prohibit their ability to invest in the New Common Stock.
C. RISKS RELATING TO THE REORGANIZED DEBTORS
1. LEVERAGE AND DEBT SERVICE
After giving effect to the reorganization contemplated under
the Plan, the Reorganized Debtors will be a competitively capitalized
company relative to its reorganized stockholders' equity and other leverage
ratios. As of the Effective Date, on a pro forma basis after giving effect
to the reorganization, the Reorganized Debtors would have had an aggregate
net indebtedness of $265 million including amounts funded under the Exit
Facility, capital leases, mortgages and industrial revenue bonds of which
$100 million would be non-cash pay until December 31, 2002.
The Reorganized Debtors' capitalization could have important
consequences to the holders of the New Common Stock, including: (i) the
Reorganized Debtors' ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate purposes
may be impaired and (ii) a substantial portion of the Reorganized Debtors'
cash flow from operations must be dedicated to the payment of principal and
interest on its indebtedness, thereby reducing the funds available to the
Reorganized Debtors for other purposes.
2. DEBTORS' EMPLOYEES
One of the Debtors' primary assets is their group of highly
skilled professionals, who have the ability to leave the Debtors and so
deprive them of the skill and knowledge essential for performance of new
and existing contracts. The Debtors operate a service business which is
highly dependent on their customers' and potential customers' belief that
the Debtors will perform professional tasks of the highest standards over
an extended period of time. Continued deterioration of the Debtors'
business, or loss of a significant number of key professionals, will have a
material adverse effect on the Debtors and may threaten their ability to
survive as going concerns.
3. NEW CREDIT AGREEMENT
The terms of the New Credit Agreement are still subject to the
negotiation of definitive documentation. There is no guaranty that the
parties will reach agreement on the terms or what the terms of the New
Credit Agreement will be.
VIII. CERTAIN OTHER LEGAL CONSIDERATIONS
A. SECTION 4(2) OF THE SECURITIES ACT
The Debtors have not filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") or any other
federal or state securities laws with respect to the New Term Notes, New
Special Notes, New Common Stock, New Warrants, New Junior Warrants and Bank
Warrants that may be deemed to be offered by virtue of the solicitation.
The Debtors are relying on section 4(2) and/or any other applicable section
of the Securities Act and similar state law provisions, and to the extent
applicable, on Regulation D and/or any other applicable regulation, similar
state law provisions, to exempt from registration under the Securities Act
and any applicable state securities laws the offer of any securities that
may be deemed to be made pursuant to the solicitation. Section 4(2) exempts
form the registration provisions of the Securities Act any transaction by
an issuer not involving any public offering. Regulation D similarly exempts
from the registration provisions under the Securities Act offerings of
securities to "accredited investors," as such term is defined under
Regulation D, and a limited number of other investors. Section 1145(a) of
the Bankruptcy Code exempts from the registration provisions under the
Securities Act, and any state or local law requiring registration for offer
or sale of a security, certain offers or sales of securities of a debtor
under a plan of reorganization, or of securities of any of its affiliates
participating in a joint plan of reorganization. Based in part upon
representations expected to be made by Holders in the Ballots, the Debtors
believe that the offer of the New Term Notes, New Special Notes, New Common
Stock, New Warrants, New Junior Warrants and Bank Warrants to the holders
of Secured Lender Claims, Old Common Stock and Prepetition Notes qualifies
for the exemptions from registration under the Securities Act provided by
section 4(2) and for the exemptions from state law registration
requirements provided by similar state law provisions, and may also qualify
for the exemptions from such registration provided by Regulation D and
similar state law provisions. The Debtors also believe that such offers may
qualify for the exemptions from such registration provided by section
1145(a). Each holder will be requested to make representations that are set
forth in the Ballot regarding its qualifications to be an offeree in a
private offering exempt from registration under the Securities Act by
virtue of Section 4(2) or that such holder is an "accredited investor." See
Section VI.A. "Confirmation and Consummation Procedures - Solicitation of
Votes."
B. SECTION 1145 OF THE BANKRUPTCY CODE
Tokheim intends to rely on section 1145(a) of the Bankruptcy
Code to exempt from registration under the Securities Act, and any
applicable state securities laws, the issuance of any New Common Stock, New
Warrants, New Junior Warrants or Bank Warrants pursuant to the Plan to
Holders of Claims and Interests in exchange for their Claims or Interests.
Generally, section 1145(a)(1) of the Bankruptcy Code exempts the offer and
sale of securities from the registration requirements of the Securities Act
if the following conditions are satisfied: (i) the securities are issued by
a debtor (or its affiliate or successor) under a plan of reorganization;
(ii) the recipients of the securities hold a claim against, and interest
in, or a claim for administrative expense or interest in the debtor; and
(iii) the securities are issued entirely in exchange for the recipient's
claim against or interest in the debtor, or principally in such an exchange
for cash or property. Tokheim believes that, as the issuer of the security
and a debtor under the Plan, it is entitled to the exemption from
registration under section 1145(a) of the Bankruptcy Code.
The New Common Stock, New Warrants, New Junior Warrants and
Bank Warrants, subject to the exemption from registration under Bankruptcy
Code section 1145(a) may be resold by the holders thereof without
restriction, except for any such holder that is deemed to be an
"underwriter" as defined in section 1145(b) of the Bankruptcy Code. An
"underwriter" is defined as any person who (i) purchases a claim against,
or an interest in, a debtor with a view toward distribution of any security
issued pursuant to a plan of reorganization for the holders of such
securities, (ii) offers to sell securities issued pursuant to a plan of
reorganization for the holders of such securities, (iii) offers to buy
securities, if the offer to buy is made with a view toward distribution of
such securities or (iv) is an issuer within the meaning of section 2(11) of
the Securities Act. Section 2(11) of the Securities Act provides that the
term "issuer" includes all persons who, directly or indirectly, through one
or more intermediaries, control, are controlled by or are under common
control with an issuer of securities. Under Rule 405 of Regulation C under
the Securities Act, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the policies of
a person, whether through the ownership of voting securities, by contract
or otherwise. Moreover, the legislative history of section 1145 of the
Bankruptcy Code suggests that a creditor who owns at least 10% of the
voting securities of a reorganized debtor may be presumed to be a control
person.
C. REGISTRATION
Holders of securities who are deemed to be "underwriters"
within the meaning of section 1145(b)(1) of the Bankruptcy Code or who may
otherwise be deemed to be "underwriters" of, or to exercise "control" over,
the Debtors within the meaning of Rule 405 of Regulation C under the
Securities Act may, under certain circumstances, be able to sell their
securities pursuant to the more limited safe harbor resale provisions of
Rule 144 under the Securities Act. Generally, Rule 144 provides that, if
certain conditions are met (e.g., one year holding period with respect to
"restricted securities," volume limitations, manner of sale, availability
of current information about the issuer, etc.), (a) any person who resells
"restricted securities" and (b) any "affiliate" of the issuer of the
securities sought to be resold will not be deemed to be an "underwriter" as
defined in section 2(11) of the Securities Act. Under paragraph (k) of Rule
144, the aforementioned conditions to resale will no longer apply to
restricted securities sold for the account of a holder who is not an
affiliate of the company at the time of such resale and who has not been
such during the three-month period next preceding such resale, so long as a
period of at least two years has elapsed since the later of (i) the
Effective Date and (ii) the date on which such holder acquired his or its
securities from an affiliate of the Debtors.
IX. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
A. GENERAL
THE FOLLOWING DISCUSSION SUMMARIZES CERTAIN ANTICIPATED U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS PROPOSED IN THE PLAN
FOR THE DEBTORS AND FOR THE HOLDERS OF CLAIMS WHO ARE ENTITLED TO VOTE TO
CONFIRM OR REJECT THE PLAN. THE SUMMARY IS PROVIDED FOR INFORMATIONAL
PURPOSES ONLY AND IS BASED ON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), THE TREASURY REGULATIONS PROMULGATED THEREUNDER, JUDICIAL
AUTHORITY, AND CURRENT ADMINISTRATIVE RULINGS AND PRACTICE, ALL AS IN
EFFECT AS OF THE DATE HEREOF AND ALL OF WHICH ARE SUBJECT TO CHANGE,
POSSIBLY WITH RETROACTIVE EFFECTS THAT COULD ADVERSELY AFFECT THE FEDERAL
INCOME TAX CONSEQUENCES DESCRIBED BELOW.
THE SUMMARY DOES NOT ADDRESS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF A CLAIM IN LIGHT OF
ITS PARTICULAR FACTS AND CIRCUMSTANCES OR TO CERTAIN TYPES OF HOLDERS OF
CLAIMS SUBJECT TO SPECIAL TREATMENT UNDER THE CODE (FOR EXAMPLE, NON-U.S.
TAXPAYERS, FINANCIAL INSTITUTIONS, BROKER-DEALERS, LIFE INSURANCE
COMPANIES, AND TAX-EXEMPT ORGANIZATIONS). THE SUMMARY ALSO DOES NOT DISCUSS
ANY ASPECTS OF STATE, LOCAL, OR NON-U.S. TAXATION. THE SUMMARY FURTHERMORE
DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS
WHO ARE NOT ENTITLED TO VOTE.
IN ADDITION, A SUBSTANTIAL AMOUNT OF TIME MAY ELAPSE BETWEEN
THE CONFIRMATION DATE AND THE RECEIPT OF A FINAL DISTRIBUTION UNDER THE
PLAN. EVENTS SUBSEQUENT TO THE DATE OF THIS DISCLOSURE STATEMENT, SUCH AS
ADDITIONAL TAX LEGISLATION, COURT DECISIONS, OR ADMINISTRATIVE CHANGES,
COULD AFFECT THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN AND THE
TRANSACTIONS CONTEMPLATED THEREUNDER. NO RULING WILL BE SOUGHT FROM THE
INTERNAL REVENUE SERVICE ("IRS") WITH RESPECT TO ANY OF THE TAX ASPECTS OF
THE PLAN AND NO OPINION OF COUNSEL HAS HERETOFORE BEEN OBTAINED BY THE
DEBTORS WITH RESPECT THERETO. ACCORDINGLY, EACH HOLDER OF A CLAIM IS
STRONGLY URGED TO CONSULT WITH ITS OWN TAX ADVISOR REGARDING THE FEDERAL,
STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE PLAN TO SUCH HOLDER.
B. FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTORS
1. CANCELLATION OF INDEBTEDNESS INCOME
Under the Code, a U.S. taxpayer generally must generally
include in gross income the amount of any discharged indebtedness ("COD")
realized during the taxable year. COD generally equals the difference
between the amount of debt discharged and the fair market value of any
property transferred in exchange therefor. Upon implementation of the Plan,
the Debtors expect to realize a substantial amount of COD upon the exchange
of Allowed Impaired Unsecured Claims for New Issued Common Stock in
satisfaction of Allowed Class 5A Claims and New Issued Common Stock and New
Junior Warrants in satisfaction of Class 5B Claims.
The Debtors will not include such COD in gross income, however,
if they discharge such debt while they are under the jurisdiction of a
court in a title 11 case. Instead, such COD generally will generally reduce
certain tax attributes of the Debtors as prescribed by the Code, including
net operating losses ("NOLs"), NOL carryforwards, and tax basis in property
held by a debtor (collectively, "Tax Attributes"). Reduction of tax basis
in a debtor's property is limited to the excess of the aggregate tax bases
of the property held by the debtor immediately after discharge over the
aggregate of the debtor's liabilities immediately after the discharge. Any
remaining COD will not have any further federal income tax consequences.
The Debtors may elect to avoid the prescribed order of
attribute reduction and instead reduce the basis of depreciable property
prior to reducing other Tax Attributes. This election extends to the stock
of a subsidiary if the subsidiary consents to reduce the basis of its
depreciable property, but may be made only to the extent of the aggregate
adjusted bases of the Debtors' depreciable property. The Debtors have not
yet determined whether to make this election.
Although not free from doubt, based on existing authorities,
the Debtors believe that any reduction in Tax Attributes will generally
occur on a separate company basis even though the Debtors file a
consolidated federal income tax return. The IRS has recently taken the
position, however, that consolidated NOLs must be reduced irrespective of
the source of those losses. The current IRS position as to the impact of
the attribute reduction rules on other tax attributes of consolidated group
members is unclear.
2. NET OPERATING LOSSES
The Debtors have an NOL carryforward of approximately $51
million for the taxable year ending December 31, 1999, and expect to incur
operating losses of approximately $40-45 million during the current taxable
year. Current year NOLs and the NOL carryforward may be reduced or
eliminated by COD to be realized on implementation of the Plan. If the
current year NOLs and the existing NOL carryforward are not so eliminated,
however, Section 382 of the Code ("Section 382") may substantially limit
the Debtors' ability to use such loss carryforward in future years.
When a corporation undergoes an "ownership change," which the
Debtor will undergo pursuant to implementation of the Plan, Section 382
generally limits the ability of the corporation to utilize historic NOLs
and subsequently recognized "built-in" losses, i.e., losses economically
accrued but unrecognized as of the date of the ownership change ("Annual
Section 382 Limitation"). An "ownership change" is generally defined as a
more than 50 percentage point change in ownership during a three year
period ending on the date on which such change in ownership is tested.
As a general rule, the Annual Section 382 Limitation equals the
product of the value of the stock of the corporation (with certain
adjustments) immediately before the ownership change and the applicable
"long-term tax-exempt rate" (currently 5.79%). Any unused portion of the
Annual Section 382 Limitation is generally available in subsequent years. A
corporation must meet certain continuity of business enterprise
requirements for at least two years following an ownership change in order
to preserve the Annual Section 382 Limitation.
Section 382 provides an exception to the application of the
Annual Section 382 Limitation for corporations under the jurisdiction of a
court in a title 11 case (the "Bankruptcy Exception"). The Bankruptcy
Exception could apply to the Debtors if the Debtors' historic shareholders
and creditors that held certain "qualified indebtedness" (as defined by
regulation) prior to implementation of the Plan were to own more than 50%
of the total voting power and total value of the stock of the Debtors after
such implementation. The continuity of business enterprise requirement
described above would not apply to the Debtors under the Bankruptcy
Exception.
The Bankruptcy Exception could reduce the Debtors' pre-change
losses and excess credits that may be carried over to a post-change year
for any interest paid or accrued on any Allowed Impaired Unsecured Claims
exchanged for New Issued Common Stock. The Bankruptcy Exception also
provides that a second ownership change occurring during the two-year
period immediately following the first ownership change would eliminate any
NOL carryforwards that arose before the first ownership change.
Section 382 provides that a corporation under the jurisdiction
of a court in a title 11 case may elect out of the Bankruptcy Exception
even if the corporation meets all of the requirements thereof. The Debtors
do not know whether they will qualify for the Bankruptcy Exception or, if
they do so qualify, whether it would be advantageous to elect out. If the
Bankruptcy Exception provides a specific benefit to the Debtors with
respect to their existing NOL carryforward and current year NOLs, they may
choose not to elect out. The Debtors are studying this issue and will make
a timely decision on the best course of action.
Assuming that the Debtors do not qualify for the Bankruptcy
Exception or elect out as discussed above, a special rule under Section 382
applicable to corporations under the jurisdiction of a court in a title 11
case that are not subject to the Bankruptcy Exception will apply in
calculating the Debtors' Annual Section 382 Limitation. Under this special
rule, the limitation will be calculated by reference to the lesser of the
value of the Debtor's stock (with certain adjustments) immediately after
the ownership change (as opposed to immediately before the ownership
change, as discussed above) or the value of the Debtor's assets (determined
without regard to liabilities) immediately before the ownership change.
Although such calculation may substantially increase the Annual Section 382
Limitation, the Debtors' use of any NOL carryforward still may be
substantially limited after the ownership change. If there is a second
ownership change within two years of implementation of the Plan, the Annual
Section 382 Limitation would not be affected.
3. FEDERAL ALTERNATIVE MINIMUM TAX
The Debtors project that they will continue to incur operating
losses during each of the next several taxable years. Accordingly, the
Debtors do not anticipate any taxable income in such taxable years.
However, should the Debtors have taxable income in a given taxable year
following implementation of the Plan, they may be able to offset all such
taxable income with any NOL carryforward to the extent generally permitted
under the Code for purposes of determining their regular tax liability. The
Debtors may nonetheless be subject in such a taxable year to the
alternative minimum tax ("AMT"), which generally equals the amount by which
20% of a corporation's alternative minimum taxable income ("AMTI") exceeds
its regular tax liability, because of differences in the way AMTI is
calculated as compared to regular taxable income.
The Code calculates AMTI pursuant to specific rules that
eliminate or limit the availability of certain tax deductions and which
include as income certain amounts not generally included in computing
regular tax liability. Of particular importance is the AMT limitation
permitting a corporation to offset only 90% of its AMTI by any available
NOL carryforward (as computed for AMT purposes). This AMT limitation
generally applies on a group basis to consolidated groups. Thus, in any
year in which 20% of the Debtors' AMTI exceeded their regular tax
liability, the Debtors would be subject to AMT, regardless of the size of
any NOL carryforward they might have. Any AMT incurred by the Debtors in
such a taxable year generally would be allowable as a non-refundable credit
against the Debtors' regular federal income tax liability in future taxable
years when they are no longer subject to AMT.
C. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS
1. HOLDERS OF SECURED LENDER CLAIMS (CLASS 4)
a. Exchange of Allowed Secured Lender Claims. The Debtors do
not believe that the Allowed Secured Lender Claims will be classified
as securities for federal income tax purposes. A Holder will
therefore be required to recognize gain or loss for federal income
tax purposes equal to the difference between its adjusted tax basis
in its Allowed Secured Lender Claims and the fair market value of its
pro rata share of (i) the New Term Notes, (ii) the New Special Notes,
(iii) the New Preferred Stock, and (iv) the Bank Warrants. The Holder
will take a basis in each of the Bank Warrants and New Preferred
Stock equal to their respective fair market values and take a basis
in each New Term Note and New Special Note equal to the issue price
thereof, as determined under OID provisions of the Code. Holders will
have a holding period for each of the above-described instruments as
determined by reference to the date of the above-described exchange.
If the Allowed Secured Lender Claims were classified as
securities for federal income tax purposes, then the above-described
exchange would be respected as a tax-free reorganization in which no gain
or loss would be recognized to the extent that the aggregate principal
amount of the New Term Notes, New Special Notes, New Preferred Stock, and
Bank Warrants does not exceed the principal amount of the Allowed Secured
Lender Claims. A Holder would take a basis in each of the New Term Notes,
New Special Notes, New Preferred Stock, and Bank Warrants equal to the
proportion that their respective fair market values (or issue price, in the
case of the New Term Notes and New Special Notes) bears to the Holder's
basis in the Allowed Secured Lender Claims. The Holder would have a holding
period for such instruments determined by reference to the holding period
for its Allowed Secured Lender Claims.
b. Tax Consequences of the Exercise, Sale or Exchange, or
Expiration of Bank Warrants. The Bank Warrants may be classified as
stock for federal income tax purposes because of the nominal strike
price. If the Bank Warrants are so classified, then the exchange of
Bank Warrants for New Issued Common Stock would not have any federal
income tax consequences and the holding period of such New Issued
Common Stock would be determined by reference to the date a Holder
acquired its Bank Warrants.
If the Bank Warrants are not classified as stock for federal
income tax purposes, a Holder thereof would not recognize gain or loss upon
the exercise of such instruments for shares of New Issued Common Stock. The
Holder instead would take a basis in each share of New Issued Common Stock
equal to the sum of the exercise price for such share plus a ratable
portion of the Holder's basis in the Bank Warrant. The Holder's holding
period for New Issued Common Stock would begin on the day after the Bank
Warrants are exercised.
Upon a taxable sale or exchange of a Bank Warrant not otherwise
classified as stock for federal income tax purposes, a Holder would
recognize gain or loss equal to the difference between the amount realized
and the Holder's basis in the Bank Warrant. If such a Bank Warrant were to
lapse without having been exercised or sold or exchanged, the Holder
thereof would recognize a loss equal to its basis in such Bank Warrant. The
character of a Holder's gain or loss generally would depend upon whether
such Holder would hold the New Issued Common Stock underlying the Bank
Warrant as a capital asset.
c. Tax Consequences of Holding New Special Notes and the Sale,
Exchange, or Retirement Thereof. The New Special Notes will be
treated for federal income tax purposes as having been issued with
OID because additional New Special Notes paid thereon will not be
treated as payments of interest. Any additional New Special Notes
paid with respect to a New Special Note instead will be aggregated
with such New Special Note and treated as a single integrated debt
instrument for purposes of computing and accruing OID. The amount of
such OID will be determined by using a constant yield to maturity
method that reflects the compounding of interest and a Holder will
include such OID in income as it accrues, regardless of the Holder's
method of accounting for tax purposes.
In general, the amount of OID for a New Special Note will equal
the "stated redemption price at maturity" of such New Special Note over its
"issue price." The stated redemption price at maturity of a New Special
Note will equal the sum of all payments required to be made on the New
Special Note and on all additional New Special Notes to be paid thereon
through the maturity date of the New Special Note. The issue price of the
New Special Notes will be determined under the principles of Section 1274
of the Code. A Holder's aggregate adjusted basis in each integrated debt
instrument consisting of New Special Notes and additional New Special Notes
paid thereon will initially equal the issue price of the New Special Note
and will thereafter increase as OID is included in income.
Upon the sale, exchange, or retirement of a New Special Note or
an additional New Special Note, a Holder will recognize gain or loss equal
to the difference between the amount realized upon such sale, exchange, or
retirement and the portion of such Holder's adjusted tax basis allocable
(as described below) to such New Special Note or additional New Special
Note. The character of a Holder's gain or loss will depend upon whether
such instruments are held as capital assets by the Holder. Unless a Holder
disposes of a New Special Note together with all additional New Special
Notes paid thereon, such Holder must allocate the adjusted tax basis of the
integrated debt instrument consisting of a New Special Note and all
additional New Special Notes paid thereon among the instruments retained
and the instruments disposed of (based on their respective principal
amounts) in order to determine gain or loss recognized on the instruments
disposed of and OID with respect to the instruments retained.
2. HOLDERS OF IMPAIRED UNSECURED CLAIMS (CLASSES 5A AND 5B)
The federal income tax consequences to Holders of the exchange
of Allowed Impaired Unsecured Claims for New Issued Common Stock depends on
whether such Claims are classified as "securities" for federal income tax
purposes. The Debtors believe that the Senior Subordinated Notes, which are
Class 5A Claims, and Junior Subordinated Notes, which are Class 5B Claims,
will be treated as securities for federal income tax purposes and that the
General Impaired Unsecured Claims, which are Class 5A Claims, will not be
treated as securities for federal income tax purposes.
Assuming that the Senior Subordinated Notes and Junior
Subordinated Notes are treated as securities for federal income tax
purposes, the exchange of Senior Subordinated Notes for New Issued Common
Stock and Junior Subordinated Notes for New Issued Common Stock and New
Junior Warrants, respectively, will be respected as a tax-free
reorganization in which no gain or loss is recognized. A Holder of Senior
Subordinated Notes will take a basis in each share of New Issued Common
Stock equal to a ratable portion of such Holder's basis in its Senior
Subordinated Notes. A Holder of Junior Subordinated Notes will allocate its
basis in such Junior Subordinated Notes between its New Issued Common Stock
and New Junior Warrants based on the relative fair market values thereof.
A Holder receiving New Issued Common Stock in exchange for
Senior Subordinated Notes will have a holding period in such New Issued
Common Stock determined by reference to a Holder's holding period for its
Senior Subordinated Notes. Similarly, a Holder receiving New Issued Common
Stock and New Junior Warrants in exchange for Junior Subordinated Notes
will have a holding period therein determined by reference to such Holder's
holding period for its Junior Subordinated Notes. If the Senior
Subordinated Notes and Junior Subordinated Notes are not treated as
securities for federal income tax purposes, Holders of these instruments
will incur federal income tax consequences as discussed below with respect
to Holders of General Unsecured Claims.
The exchange of General Unsecured Claims for New Issued Common
Stock will be a taxable exchange in which a Holder will realize gain or
loss on the difference between the fair market value of the New Issued
Common Stock and the Holder's basis, if any, in its Allowed Impaired
Unsecured Claims. Holders will take a basis in their New Issued Common
Stock equal to the fair market value thereof and will have a holding period
in such New Issued Common Stock determined by reference to the date of such
exchange.
D. INFORMATION REPORTING AND BACKUP WITHHOLDING
Certain payments, including the payments of Claims pursuant to
the Plan, are generally subject to information reported by the payor (the
Debtors) to the IRS. Moreover, such reportable payments are subject to
backup withholding under certain circumstances. Under the Code's backup
withholding rules, a Holder of a Claim may be subject to backup withholding
at a rate of thirty-one percent (31%) with respect to distributions or
payments made pursuant to the Plan, unless the Holder: (a) comes within
certain exempt categories (which generally include corporations) and, when
required, demonstrates this fact or (b) provides a correct taxpayer
identification number and certifies under penalty of perjury that the
taxpayer identification number is correct and that the taxpayer is not
subject to backup withholding because of a failure to report all dividend
and interest income.
E. IMPORTANCE OF OBTAINING PROFESSIONAL TAX ASSISTANCE
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN AND IS NOT A SUBSTITUTE
FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE ABOVE DISCUSSION IS
FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES
ARE IN MANY CASES UNCERTAIN AND MAY VARY DEPENDING ON A HOLDER'S INDIVIDUAL
CIRCUMSTANCES. ACCORDINGLY, HOLDERS ARE URGED TO CONSULT WITH THEIR TAX
ADVISORS ABOUT THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
CONSEQUENCES OF THE PLAN.
X. ALTERNATIVES TO CONFIRMATION AND
CONSUMMATION OF THE PLAN
The Debtors believe that the Plan affords holders of Claims and
Interest the potential for the greatest recovery and, therefore, is in the
best interests of such holders. The Plan as presented is the result of
considerable negotiations among the Debtors, the Prepetition Lenders and
the Bondholder Committee.
If, however, the requisite acceptances are not received, or the
Plan is not confirmed and consummated, the theoretical alternatives
include: (a) formulation of an alternative plan of reorganization or (b)
liquidation of the Debtors under chapter 7 or 11 of the Bankruptcy Code.
A. ALTERNATIVE PLAN(S) OF REORGANIZATION
If the requisite acceptances are not received or if the Plan is
not confirmed, the Debtors would file their chapter 11 petitions and
attempt to formulate and propose a different plan or plans or
reorganization. Such a plan or plan(s) might involve either a
reorganization and continuation of the Debtor' businesses or an orderly
liquidation of assets. The Debtors do not have sufficient liquidity to
negotiate a new out-of-court restructuring.
The Debtors' business could suffer from increased costs,
erosion of customer confidence and liquidity difficulties if they remained
debtors in possession during a lengthy chapter 11 process while trying to
negotiate a plan of reorganization.
The Debtors believe that the Plan, as described herein, the
result of extensive negotiations between the Debtors and various creditor
constituencies, enables creditors to realize the greatest possible value
under the circumstances and that, compared to any later alternative plan of
reorganization, the Plan has the greatest chance to be confirmed and
consummated.
B. LIQUIDATION UNDER CHAPTER 7 OR CHAPTER 11
If no plan is confirmed, the Debtors may be forced to liquidate
under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would
be elected or appointed to liquidate the Debtors' assets for distribution
to creditors in accordance with the priorities established by the
Bankruptcy Code. It is impossible to predict precisely how the proceeds of
the liquidation would be distributed to the respective holders of Claims
against or Interests in the Debtors.
The Debtors believe that in a liquidation under chapter 7,
before creditors received any distribution, additional administrative
expenses involved in the appointment of a trustee or trustees and
attorneys, accountants and other professionals to assist such trustees
would cause a substantial diminution in the value of the Debtors' Estates.
The assets available for distribution to creditors would be reduced by such
additional expenses and by Claims, some of which would be entitled to
priority, which would arise by reason of the liquidation and from the
rejection of leases and other executory contracts in connection with the
cessation of operations and the failure to realize the greater going
concern value of the Debtors' assets.
The Debtors could also be liquidated pursuant to the provisions
of a chapter 11 plan of reorganization. In a liquidation under chapter 11,
the Debtors' assets could be sold in an orderly fashion over a more
extended period of time than in a liquidation under chapter 7. Thus, a
chapter 11 liquidation might result in larger recoveries than in a chapter
7 liquidation, but the delay in distributions could result in lower present
values received and higher administrative costs. Because a trustee is not
required in a chapter 11 case, expenses for professional fees could be
lower than in a chapter 7 case, in which a trustee must be appointed. Any
distribution to the holders of Claims under a chapter 11 liquidation plan
probably would be delayed substantially.
Although preferable to a chapter 7 liquidation, the Debtors
believe that any alternative liquidation under chapter 11 is a much less
attractive alternative to creditors than the Plan because of the greater
return the Debtors anticipate is provided by the Plan.
XI. CONCLUSION AND RECOMMENDATION
The Debtors believe that confirmation and implementation of the
Plan is preferable to any of the alternatives described above because it
will result in the greatest recoveries to holders of Claims and Interests.
Other alternatives would involve significant delay, uncertainty and
substantial additional administrative costs.
Consequently, the Debtors urge all holders of Claims to vote to
accept the Plan and to evidence their acceptance by duly completing and
returning their Ballots so that they will be received on or before 12:00
p.m., prevailing Eastern Time, on August 28, 2000.
Dated:August 16, 2000
Respectfully submitted,
TOKHEIM CORPORATION.
(for itself and on behalf of the Subsidiary
Debtors)
By: /s/ Douglas K. Pinner
---------------------------------------
Name: Douglas K. Pinner
Title: President, Chairman and Chief Executive
Officer
COUNSEL:
/s/ David S. Kurtz
--------------------------------------
David S. Kurtz (IL 03126561)
Felicia Gerber Perlman (IL 06210753)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
EXHIBIT A
JOINT PREPACKAGED PLAN OF REORGANIZATION OF
TOKHEIM CORPORATION AND ITS SUBSIDIARY DEBTORS
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - x
In re: :
TOKHEIM CORPORATION, et al., : Chapter 11
: Case No. 00- ( )
Debtors. : Jointly Administered
- - - - - - - - - - - - - - - - - - - x
JOINT PREPACKAGED PLAN OF REORGANIZATION
OF TOKHEIM CORPORATION AND ITS SUBSIDIARY DEBTORS
David S. Kurtz (IL 03126561)
Felicia Gerber Perlman (IL 06210753)
SKADDEN ARPS SLATE MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
Dated: August 16, 2000
INTRODUCTION
Tokheim Corporation ("Tokheim" or the "Company"), and the other
above-captioned debtors (collectively with Tokheim, the "Debtors"), propose
the following joint prepackaged plan of reorganization for the resolution
of the outstanding claims against and interests in the Debtors. Reference
is made to the Disclosure Statement (as that term is defined herein),
distributed contemporaneously herewith, for a discussion of the Debtors'
history, business, properties and operations, projections for those
operations, risk factors, a summary and analysis of the Plan, and certain
related matters including, among other things, the securities to be issued
under the Plan and the proposed substantive consolidation of the Debtors'
cases for certain limited purposes. Subject to certain restrictions and
requirements set forth in section 1127 of the Bankruptcy Code and Fed. R.
Bankr. P. 3019, the Debtors reserve the right to alter, amend, modify,
revoke or withdraw this plan prior to its substantial consummation.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
Defined Terms: As used herein, capitalized terms have the
meanings set forth below. Any term that is not otherwise defined herein,
but that is used in the Bankruptcy Code or the Bankruptcy Rules, will have
the meaning given to that term in the Bankruptcy Code or the Bankruptcy
Rules, as applicable.
1.1 ADMINISTRATIVE CLAIM means a Claim for costs and expenses
of administration of the Chapter 11 Cases Allowed under section 503(b),
507(b) or 1114(e)(2) of the Bankruptcy Code, including: (a) any actual and
necessary costs and expenses incurred after the Petition Date of preserving
the Debtors' Estates and operating the businesses of the Debtors (such as
wages, salaries, commissions for services and payments for inventories,
leased equipment and premises) and Claims of governmental units for taxes
(including tax audit Claims related to tax years commencing after the
Petition Date, but excluding Claims relating to tax periods, or portions
thereof, ending on or before the Petition Date); (b) compensation for
legal, financial, advisory, accounting and other services and reimbursement
of expenses Allowed by the Bankruptcy Court under section 330, 331 or
503(b) of the Bankruptcy Code to the extent incurred prior to the Effective
Date; (c) all fees and charges assessed against the Debtors' Estates under
section 1930, chapter 123 of title 28, United States Code; and (d) Claims
under the DIP Credit Agreement.
1.2 ALLOWED means an Allowed Claim or Interest in a particular
Class or category specified. Any reference herein to a particular Allowed
Claim includes both the secured and unsecured portions of such Claim.
1.3 ALLOWED CLAIM means a Claim: (a) as to which no objection
or request for estimation has been filed on or before the Claims Objection
Deadline or the expiration of such other applicable period fixed by the
Bankruptcy Court; (b) as to which any objection has been settled, waived,
withdrawn or denied by a Final Order; or (c) that is Allowed (i) by a Final
Order; (ii) by an agreement between the Holder of such Claim and the
Debtors or Reorganized Debtors; or (iii) pursuant to the terms of this
Plan.
The term "Allowed Claim" shall not, for purposes of computing
distributions under this Plan, include interest on such Claim from and
after the Petition Date, except as provided in section 506(b) of the
Bankruptcy Code or as otherwise expressly set forth in this Plan.
1.4 ALLOWED INTEREST means any interest that: (a) is registered
as of the Distribution Record Date in a stock register maintained by or on
behalf of the Debtors and (b) is not a Disputed Interest.
1.5 AMENDED CERTIFICATES OF INCORPORATION AND BY-LAWS means the
Reorganized Debtors' certificates of incorporation and by-laws, as amended
by the Plan.
1.6 BALLOT means each of the ballot forms distributed to each
holder of an Impaired Claim on which the holder is to indicate acceptance
or rejection of this Plan.
1.7 BANK WARRANTS means the 5 year warrants to purchase an
aggregate of 678,334 shares of New Common Stock at an exercise price of
$.01 per share, to be issued pursuant to, and exercised in accordance with,
the terms of the Bank Warrant Agreement, which terms shall be substantially
similar to those set forth in the New Credit Agreement and shall otherwise
be in form and substance satisfactory to the Debtors, the Bondholder
Committee and the Prepetition Agent.
1.8 BANK WARRANT AGREEMENT means the warrant agreement
governing the issue of the Bank Warrants, the material terms of which are
described in the Disclosure Statement. A copy of the Bank Warrant Agreement
will be filed with the Plan Supplement.
1.9 BANKRUPTCY CODE means title 11, United States Code, as now
in effect or hereafter amended.
1.10 BANKRUPTCY COURT means the United States District Court
having jurisdiction over the Chapter 11 Cases and, to the extent any
reference is made pursuant to Section 157 of Title 28 of the United States
Code or the General Order of the District Court pursuant to Section 151 of
Title 28 of the United States Code, the bankruptcy unit of such District
Court.
1.11 BANKRUPTCY RULES means the Federal Rules of Bankruptcy
Procedure and the local rules of the Bankruptcy Court, as now in effect or
hereafter amended.
1.12 BAR DATE means the bar date for Filing proofs of claim or
proofs of interest in the Chapter 11 Cases.
1.13 BONDHOLDER COMMITTEE means the ad hoc committee of
Prepetition Noteholders.
1.14 BUSINESS DAY means any day, other than a Saturday, Sunday
or "legal holiday" (as defined in Bankruptcy Rule 9006(a)).
1.15 CASH means legal tender of the United States of America
and equivalents thereof.
1.16 CHAPTER 11 CASES means (a) when used with reference to a
particular Debtor, the case under chapter 11 of the Bankruptcy Code
commenced by the Debtor in the Bankruptcy Court and (b) when used with
reference to all Debtors, the cases under chapter 11 of the Bankruptcy Code
commenced by Debtors in the Bankruptcy Court.
1.17 CLAIM means a "claim," as defined in section 101(5) of the
Bankruptcy Code.
1.18 CLAIMS OBJECTION DEADLINE means the last day for Filing
objections to Claims or Interests, which day shall be the later of (a) the
Effective Date or (b) sixty (60) days after the Filing of a proof of claim
or interest for, or request for payment of, such Claim or Interest or such
other date as the Bankruptcy Court may order.
1.19 CLASS means a category of holders of Claims or Interests,
as described in Article II hereof.
1.20 CLASS 7 SOLICITATION ORDER means a Final Order of the
Bankruptcy Court or other court of competent jurisdiction providing that
Class 7 is deemed to have rejected the Plan and is not entitled to vote on
the Plan.
1.21 COLLATERAL means any property or interest in property of
the Debtors' Estates that is subject to a valid and enforceable lien to
secure a Claim.
1.22 CONFIRMATION DATE means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket of the
Bankruptcy Court.
1.23 CONFIRMATION HEARING means the hearing held by the
Bankruptcy Court pursuant to section 1128 of the Bankruptcy Code to
consider confirmation of this Plan, as such hearing may be adjourned or
continued from time to time.
1.24 CONFIRMATION ORDER means the order of the Bankruptcy Court
confirming this Plan pursuant to section 1129 of the Bankruptcy Code.
1.25 DEBTOR(S) means, individually, Tokheim or any of the
Subsidiary Debtors and, collectively, all of the above-captioned debtors
and debtors in possession.
1.26 DELAWARE GENERAL CORPORATE LAW means title 8 of the
Delaware Code, in effect as of the date hereof.
1.27 DIP CREDIT AGREEMENT means the $50 million debtor in
possession credit facility to be entered into by Tokheim, as borrower, the
Subsidiary Debtors, as guarantors, and those entities identified as
"Lenders" therein, as amended, modified or supplemented in form and
substance approved by the Bondholder Committee and the Prepetition Lenders,
with terms substantially similar to the terms set forth herein and shall
otherwise be in form and substance satisfactory to the Debtors, the
Bondholder Committee and the Prepetition Agent.
1.28 DIP LENDERS means those entities identified as "Lenders"
in the DIP Credit Agreement and their respective successors and assigns.
1.29 DISBURSING AGENT means the Reorganized Debtor, or any
party designated by the Reorganized Debtors, to serve as disbursing agent
under the Plan.
1.30 DISCLOSURE STATEMENT means that certain disclosure
statement (including all exhibits and schedules thereto) dated August 16,
2000, relating to this Plan, that was distributed to Holders of Secured
Lender Claims and Impaired Unsecured Claims in reliance on the exemption
specified in Section 4(2) of the Securities Act.
1.31 DISPUTED CLAIM means: (a) any Claim as to which the
Debtors have interposed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules, or any claim
otherwise disputed by the Debtors in accordance with applicable law, which
objection has not been withdrawn or determined by a Final Order and (b) any
Securities Claim.
1.32 DISPUTED CLAIM AMOUNT means: (a) with respect to
contingent or unliquidated Claims, the amount estimated by the Bankruptcy
Court for purposes of distributions in respect of such Claim in accordance
with section 502(c) of the Bankruptcy Code; (b) the amount set forth in a
timely Filed proof of claim; or (c) with respect to a Securities Claim, $0.
1.33 DISPUTED CLAIMS RESERVE means the reserve of New Common
Stock and New Junior Warrants established and maintained by the Reorganized
Debtors for Holders of Classes 5A and 5B Claims on account of Disputed
Class 5A and 5B Claims.
1.34 DISPUTED INTEREST means an Interest as to which the
Debtors interposed a timely objection or request for estimation in
accordance with the Bankruptcy Code and the Bankruptcy Rules or any
Interest otherwise disputed by the Debtors in accordance with applicable
law, which objection has not been withdrawn or determined by a Final Order.
1.35 DISPUTED INTEREST AMOUNT means, with respect to a Disputed
Interest, the number of shares set forth in a timely Filed proof of
interest.
1.36 DISPUTED INTEREST RESERVE means the reserve of New
Warrants established and maintained by the Reorganized Debtors for Holders
of Class 7 Interests and Class 8 Claims on account of Disputed Class 7
Interests and Class 8 Claims.
1.37 DISTRIBUTION DATE means the date, within 30 days after the
Effective Date, upon which the initial distributions will be made to
holders of Allowed Claims and Allowed Interests.
1.38 DISTRIBUTION RECORD DATE means the Confirmation Date.
1.39 EFFECTIVE DATE means the Business Day the Plan becomes
effective as provided in Article IX hereof.
1.40 ESTATE(S) means, individually, the estate of Tokheim or
any of the Subsidiary Debtors and, collectively, the estates of all of the
Debtors created under section 541 of the Bankruptcy Code.
1.41 EXCHANGE ACT means the Exchange Act of 1934, as amended.
1.42 EXIT FACILITY means that certain exit revolving credit
facility in the aggregate principal amount of $50 million to be provided to
the Reorganized Debtors, on the Effective Date governed by the New Credit
Agreement with terms substantially similar to the terms set forth herein
and shall otherwise be in form and substance satisfactory to the Debtors,
the Bondholder Committee and the Prepetition Agent.
1.43 EXIT LENDERS means those entities identified as "Lenders"
with respect to the Exit Facility in the New Credit Agreement and their
respective successors and assigns.
1.44 FEE CLAIM means an Administrative Claim under section
330(a), 331, 503 or 1103 of the Bankruptcy Code for compensation of a
Professional or other entity for services rendered or expenses incurred in
the Chapter 11 Cases on or prior to the Effective Date.
1.45 FILE, FILED OR FILING means file, filed or filing with the
Bankruptcy Court or its authorized designee in the Chapter 11 Cases.
1.46 FINAL ORDER means an order of the Bankruptcy Court as to
which the time to appeal, petition for certiorari or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for reargument or rehearing shall then be pending or as
to which any right to appeal, petition for certiorari, reargue or rehear
shall have been waived in writing in form and substance satisfactory to the
Debtors or the Reorganized Debtors or, in the event that an appeal, writ of
certiorari or reargument or rehearing thereof has been sought, such order
of the Bankruptcy Court shall have been determined by the highest court to
which such order was appealed, or certiorari, reargument or rehearing shall
have been denied and the time to take any further appeal, petition for
certiorari or move for reargument or rehearing shall have expired;
provided, however, that the possibility that a motion under Rule 59 or Rule
60 of the Federal Rules of Civil Procedure, or any analogous rule under the
Bankruptcy Rules, may be filed with respect to such order shall not
preclude such order from being a Final Order.
1.47 GENERAL IMPAIRED UNSECURED CLAIM means an unsecured claim
listed on the General Impaired Unsecured Claims List.
1.48 GENERAL IMPAIRED UNSECURED CLAIMS LIST means the list of
General Impaired Unsecured Claims attached hereto as Exhibit A, as may be
amended or supplemented from time to time with the consent of the
Bondholder Committee.
1.49 HOLDER means an entity holding a Claim or Interest and,
with respect to Senior Subordinated Note Claims and Junior Subordinated
Note Claims, the beneficial holder as of the applicable Voting Record Date
or any authorized agent who has completed and executed a Ballot or on whose
behalf a Master Ballot has been completed and executed in accordance with
the voting instruction.
1.50 IMPAIRED means, when used in reference to a Claim or
Interest, a Claim or Interest that is impaired within the meaning of
section 1124 of the Bankruptcy Code.
1.51 IMPAIRED UNSECURED CLAIM means any General Impaired
Unsecured Claim or Senior Subordinated Note Claim.
1.52 INTERCOMPANY CLAIM means (a) any account reflecting
intercompany book entries by one (1) Debtor with respect to any other
Debtor or (b) any Claim that is not reflected in such book entries and is
held by a Debtor against any other Debtor.
1.53 INTEREST means the legal, equitable, contractual and other
rights of the holders of Old Equity, including the rights of any entity to
purchase or demand the issuance of any of the foregoing, including (a)
conversion, exchange, voting, participation and dividend rights; (b)
liquidation preferences; (c) stock options, warrants and put rights; and
(d) share-appreciation rights.
1.54 IRC means the Internal Revenue Code of 1986, as amended.
1.55 IRS means Internal Revenue Service of the United States of
America.
1.56 JUNIOR SUBORDINATED NOTE means the 12% Junior Subordinated
Notes due 2008 issued by Tokheim under the Junior Subordinated Note
Indenture.
1.57 JUNIOR SUBORDINATED NOTE CLAIM means a claim arising from
or related to the Junior Subordinated Notes, which Claim shall be Allowed
in an amount equal to $40 million plus interest accrued as of the Petition
Date as agreed by the Debtors and the Bondholder Committee.
1.58 JUNIOR SUBORDINATED NOTEHOLDERS means the Holders of Junior
Subordinated Note Claims.
1.59 JUNIOR SUBORDINATED NOTE INDENTURE means the Indenture
dated as of September 30, 1998, between Tokheim, as issuer, the Subsidiary
Debtors, as guarantors, and the Harris Trust and Savings Bank, as trustee,
relating to the Junior Subordinated Notes, as amended from time to time.
1.60 JUNIOR SUBORDINATED NOTE TRUSTEE means the trustee under the
Junior Subordinated Note Indenture.
1.61 KSOP means the Retirement Savings Plan for Employees of
Tokheim Corporation and Subsidiaries, effective July 1, 1989, as amended.
1.62 KSOP CLAIM means any Claim arising from, under, or in any
way relating to, the KSOP including the Old Preferred Stock associated
therewith.
1.63 LITIGATION CLAIMS means the claims, rights of action,
suits or proceedings, whether in law or in equity, whether known or
unknown, that any Debtor or Estate may hold against any person.
1.64 MANAGEMENT OPTION AGREEMENT means the Stock Option
Agreement to be entered into by the Reorganized Debtors and Management
Option Plan Participants, in form and substance reasonably satisfactory to
the Bondholder Committee and the Prepetition Agent, pursuant to which
Management Options will be granted.
1.65 MANAGEMENT OPTION PLAN means a stock option plan to be
adopted by the board of directors of the Reorganized Debtors on the
Effective Date.
1.66 MANAGEMENT OPTIONS means the options to be issued by the
Reorganized Debtors to the Management Option Plan Participants to purchase
500,000 shares of New Common Stock pursuant to the terms of the Management
Option Agreement to be entered into under the Management Option Plan.
1.67 MANAGEMENT OPTION PLAN PARTICIPANTS means the employees of
the Reorganized Debtors entitled to participate in the Management Option
Plan.
1.68 MASTER BALLOT means the ballot distributed to holders of
record of the Prepetition Notes to record the votes of the beneficial
holders of the Prepetition Notes.
1.69 NEW COMMON STOCK means the common stock of Reorganized
Tokheim to be authorized pursuant to Section 4.6 of the Plan.
1.70 NEW CREDIT AGREEMENT means that certain credit agreement
governing the Exit Facility, the New Term Notes and the New Special Notes
between Tokheim, Gasboy International, Inc., Tokheim-Sofitam S.A.,
Tokheim-Sofitam Applications S.A., Tokheim Services France and Tokheim U.K.
Limited as borrowers, those entities identified as "Guarantors" in the New
Credit Agreement, the Exit Lenders and the Prepetition Lenders with terms
substantially similar to the terms set forth herein and shall otherwise be
in form and substance satisfactory to the Debtors, the Bondholder Committee
and the Prepetition Agent.
1.71 NEW JUNIOR WARRANT AGREEMENT means the warrant agreement
governing the issue of the New Junior Warrants, the material terms of which
are described in the Disclosure Statement. A copy of the New Junior Warrant
Agreement will be attached to the Plan Supplement.
1.72 NEW JUNIOR WARRANTS means the five (5) year warrants to
purchase an aggregate of 555,556 shares of New Common Stock at an exercise
price of $30.00 per share to be issued pursuant to, and exercisable in
accordance with the terms of the New Junior Warrant Agreement.
1.73 NEW PREFERRED STOCK means the preferred stock of Tokheim
issued to the Prepetition Lenders with an aggregate liquidation preference
of $100,000 and quarterly dividends at an annual rate of 16.00%. The
holders of the New Preferred Stock shall be entitled to elect two (2)
directors to the board of directors of Reorganized Tokheim, voting as a
separate class. If the Reorganized Debtors default under the New Credit
Agreement, the holders of the New Preferred Stock, voting as a separate
class, will be entitled to elect a majority of the directors on the board
of directors of Reorganized Tokheim. The New Preferred Stock shall not be
detachable from the New Special Notes. The terms of the New Preferred Stock
will be set forth in the New Credit Agreement and shall otherwise be in
form and substance satisfactory to the Debtors, the Bondholder Committee
and the Prepetition Agent.
1.74 NEW SPECIAL NOTES means the 16% secured notes due 2005 of
the Reorganized Debtors in the aggregate principal amount of $100 million,
to be issued and distributed pursuant to the Plan on the Effective Date to
the Prepetition Lenders and governed by the terms of the New Credit
Agreement.
1.75 NEW TERM NOTES means, collectively, the New Tranche A Term
Notes and the New Tranche B Term Notes.
1.76 NEW TRANCHE A TERM NOTES means the secured tranche A term
notes issued to certain Prepetition Lenders by the Reorganized Debtors in
aggregate principal amount not to exceed $50 million to be issued and
distributed pursuant to the Plan on the Effective Date to certain of the
Prepetition Lenders and governed by the terms of the New Credit Agreement.
The aggregate amount of the New Tranche A Term Notes to be received by each
of the Prepetition Lenders will be designated by the Prepetition Agent
prior to the Effective Date.
1.77 NEW TRANCHE B TERM NOTES means the secured tranche B term
notes issued to certain Prepetition Lenders by the Reorganized Debtors in
an aggregate principal amount equal to the New Tranche B Term Note Amount
to be issued and distributed pursuant to the Plan on the Effective Date and
governed by the terms of the New Credit Agreement.
1.78 NEW TRANCHE B TERM NOTES AMOUNT means an amount equal to
the aggregate amount payable to the Prepetition Lenders pursuant to the
Prepetition Credit Agreement on the Effective Date minus the sum of (a) the
aggregate principal amount of the New Tranche A Term Notes plus (b) the
aggregate principal amount of the New Special Notes.
1.79 NEW WARRANT AGREEMENT means the warrant agreement
governing the issue of the New Warrants, the material terms of which are
described in the Disclosure Statement. A copy of the New Warrant Agreement
will be attached to the Plan Supplement.
1.80 NEW WARRANTS means the six (6) year warrants to purchase
an aggregate of 549,451 shares of New Common Stock at an exercise price of
$49.50 per share to be issued pursuant to, and exercisable in accordance
with the terms of the New Warrant Agreement.
1.81 NON-TAX PRIORITY CLAIM means a Claim, other than an
Administrative Claim or Priority Tax Claim, that is entitled to priority in
payment pursuant to section 507(a) of the Bankruptcy Code.
1.82 OLD BANK WARRANTS means the warrants issued to the
Prepetition Lenders to purchase up to 16.50% of the Old Common Stock
pursuant to a Warrant and Registration Agreement dated as of October 22,
1999.
1.83 OLD COMMON STOCK means the common stock outstanding
immediately prior to the Petition Date, including treasury stock.
1.84 OLD EQUITY means, collectively, the Old Common Stock, the Old
Preferred Stock and the Other Old Equity.
1.85 OLD JUNIOR PREFERRED STOCK means the Series A Junior
Participating Preferred Stock authorized by the articles of incorporation
of Tokheim, including treasury stock and all options, warrants, calls,
rights, puts, awards, commitments or any other agreements of any character
to acquire such preferred stock.
1.86 OLD PREFERRED STOCK means the ESOP Convertible Voting
Preferred Stock outstanding immediately prior to the Petition Date,
including treasury stock and all options, warrants, calls, rights, puts,
awards, commitments or any other agreements of any character to acquire
such preferred stock.
1.87 OLD RIGHTS AGREEMENT means the Rights Agreement granting
the right to acquire Old Junior Preferred Stock, dated as of January 22,
1997, as amended.
1.88 OLD RIGHTS AND WARRANTS means all options, warrants, call,
rights, puts, awards or other agreements to acquire the Old Common Stock
and Old Junior Preferred Stock outstanding immediately prior to the
Petition Date including, but not limited to, the Schlumberger Limited
Warrants, the Old Bank Warrants and the Old Rights Agreement.
1.89 OTHER OLD EQUITY means the Old Rights and Warrants.
1.90 OTHER SECURED CLAIM means a Claim (other than an
Administrative Claim) that is secured by a lien on property in which a
Debtor's Estate has an interest or that is subject to setoff under section
553 of the Bankruptcy Code, to the extent of the value of the Claim
holder's interest in the applicable Estate's interest in such property or
to the extent of the amount subject to setoff, as applicable, as determined
pursuant to section 506(a) of the Bankruptcy Code or, in the case of the
setoff, pursuant to section 553 of the Bankruptcy Code.
1.91 PETITION DATE means the date on which the Debtors file
their Petitions for relief commencing the Chapter 11 Cases.
1.92 PLAN means this chapter 11 plan of reorganization,
including the Plan Supplement and all supplements, appendices and schedules
thereto, either in its present form or as the same may be altered, amended
or modified from time to time.
1.93 PLAN SUPPLEMENT means the compilation of documents and
form of documents specified in the Plan to be filed as set forth in Section
12.9 hereof.
1.94 PREPETITION AGENT means the agent under the Prepetition
Credit Agreement.
1.95 PREPETITION CREDIT AGREEMENT means the credit agreement
dated as of December 14, 1998, among Tokheim as borrower, the Subsidiary
Debtors as guarantors, and the entities identified as the "Lenders"
therein, as amended.
1.96 PREPETITION LENDERS means the entities identified as
"lenders" under the Prepetition Credit Agreement and their respective
successors and assigns.
1.97 PREPETITION NOTEHOLDERS means collectively the Junior
Subordinated Noteholders and the Senior Subordinated Noteholders.
1.98 PREPETITION NOTES means collectively the Junior Subordinated
Notes and the Senior Subordinated Notes.
1.99 PRIORITY TAX CLAIM means a Claim of a governmental unit of
the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.100 PROFESSIONAL means (a) any professional employed in the
Chapter 11 Cases pursuant to section 327 or 1103 of the Bankruptcy Code or
otherwise and (b) any professional or other entity seeking compensation or
reimbursement of expenses in connection with the Chapter 11 Cases pursuant
to section 503(b)(4) of the Bankruptcy Code.
1.101 REGISTRATION RIGHTS AGREEMENT means an agreement to be
entered into between Reorganized Tokheim and certain Holders of Prepetition
Notes with respect to rights of registration as to the New Common Stock,
substantially in the form to be included in the Plan Supplement.
1.102 REORGANIZED DEBTORS means the Debtors or any successors
thereto by merger, consolidation, or otherwise, on or after the Effective
Date.
1.103 REORGANIZED TOKHEIM means Tokheim, on or after the Effective
Date.
1.104 SCHEDULES means the schedules of assets and liabilities,
the list of Holders of Interests and the statements of financial affairs,
if any, Filed by the Debtors pursuant to Section 521 of the Bankruptcy Code
and Bankruptcy Rules, as such schedules have been or may be further
modified, amended or supplemented in accordance with Fed. R. Bankr. P. 1009
or Orders of the Bankruptcy Court.
1.105 SCHLUMBERGER LIMITED WARRANTS means the warrants issued
to Schlumberger Limited to purchase up to 19.9% of the Old Common Stock
pursuant to a Warrant Agreement dated as of September 30, 1998.
1.106 SECURED LENDER CLAIM means individually, a Claim of a
Prepetition Lender under the Prepetition Credit Agreement and,
collectively, the Claims of the Prepetition Lenders under the Prepetition
Credit Agreement, including Claims for principal, accrued but unpaid
interest through the Effective Date and fees and expenses incurred by the
Prepetition Lenders. The Secured Lender Claim shall be allowed in an amount
equal to the amount of principal and accrued but unpaid interest
outstanding as of the Effective Date as agreed by the Debtors and the
Prepetition Agent.
1.107 SECURITIES ACT means the Securities Act of 1933, 15
U.S.C. ss. 77c-77aa, as now in effect or hereafter amended.
1.108 SECURITIES CLAIMS means a claim arising from rescission
of a purchase or sale of a security of the Debtors, for damages arising
from the purchase or sale of such security, or for reimbursement or
contribution allowed under section 502 of the Bankruptcy Code on account of
such Claim, provided however, Claims arising from executory contracts
assumed pursuant to Article VII hereof shall not be Securities Claims.
1.109 SENIOR SUBORDINATE NOTE CLAIMS means a claim arising from
or related to the Senior Subordinated Notes which claim shall be Allowed in
the amount of principal plus interest accrued but unpaid as of the Petition
Date as agreed by the Debtors and the Bondholders Committee.
1.110 SENIOR SUBORDINATED NOTEHOLDERS means the Holders of the
Senior Subordinated Note Claims.
1.111 SENIOR SUBORDINATED NOTE INDENTURES means the Indentures
dated as of January 27, 1999, between Tokheim, as issuer, the Subsidiary
Debtors, as guarantors, and U.S. Bank Trust National Association, as
trustee, relating to the Senior Subordinated Notes as amended from time to
time.
1.112 SENIOR SUBORDINATED NOTES means the 11.375% Senior
Subordinated Notes due 2008 issued by Tokheim under the Senior Subordinated
Note Indentures.
1.113 SENIOR SUBORDINATED NOTE TRUSTEE means the trustee under the
Senior Subordinated Note Indenture.
1.114 SERP means the Supplemental Executive Retirement Plan,
effective April 28, 1999.
1.115 SOLICITATION ORDER means the order entered by the
Bankruptcy Court establishing procedures with respect to the solicitation
and tabulation of votes to accept or reject this Plan.
1.116 SUBSIDIARY DEBTORS means, individually or collectively, a
Debtor or Debtors other than Tokheim, as applicable.
1.117 SUBSIDIARY INTERESTS means, collectively, the issued and
outstanding shares of stock of the Subsidiary Debtors, as of the Petition
Date.
1.118 SUBSTANTIVE CONSOLIDATION ORDER means the order, or
provision of the Confirmation Order, substantively consolidating the
Chapter 11 Cases, as provided in Section 4.1 of the Plan.
1.119 UNIMPAIRED CLAIM means a Claim that is not impaired
within the meaning of Section 1124 of the Bankruptcy Code.
1.120 UNIMPAIRED UNSECURED CLAIM means a Claim that is not an
Administrative Claim, Priority Tax Claim, Non-Tax Priority Claim, Other
Secured Claim, Secured Lender Claim, Impaired Unsecured Claim, Junior
Subordinated Note Claim or Intercompany Claim.
1.121 VOTING DEADLINE means August 28, 2000.
1.122 VOTING RECORD DATE means August 11, 2000.
Rules of Interpretation and Computation of Time. For purposes
of this Plan, unless otherwise provided herein: (a) whenever from the
context it is appropriate, each term, whether stated in the singular or the
plural, will include both the singular and the plural; (b) unless otherwise
provided in this Plan, any reference in this Plan to a contract,
instrument, release or other agreement or document being in a particular
form or on particular terms and conditions means that such document will be
substantially in such form or substantially on such terms and conditions;
(c) any reference in this Plan to an existing document or schedule Filed or
to be Filed means such document or schedule, as it may have been or may be
amended, modified or supplemented pursuant to this Plan; (d) any reference
to an entity as a holder of a Claim or Interest includes that entity's
successors and assigns; (e) all references in this Plan to Sections,
Articles and Schedules are references to Sections, Articles and Schedules
of or to this Plan; (f) the words "herein," "hereunder" and "hereto" refer
to this Plan in its entirety rather than to a particular portion of this
Plan; (g) captions and headings to Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to
affect the interpretation of this Plan; (h) subject to the provisions of
any contract, certificates of incorporation, by-laws, instrument, release
or other agreement or document entered into in connection with this Plan,
the rights and obligations arising under this Plan shall be governed by,
and construed and enforced in accordance with, federal law, including the
Bankruptcy Code and Bankruptcy Rules; (i) the rules of construction set
forth in section 102 of the Bankruptcy Code will apply; and (j) in
computing any period of time prescribed or allowed by this Plan, the
provisions of Bankruptcy Rule 9006(a) will apply.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
All Claims and Interests, except Administrative Claims and
Priority Tax Claims, are placed in the Classes set forth below. In
accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims and Priority Tax Claims, as described below, have not been
classified.
This Plan constitutes a single plan of reorganization for all
Debtors. A Claim or Interest is placed in a particular Class only to the
extent that the Claim or Interest falls within the description of that
Class and is classified in other Classes to the extent that any portion of
the Claim or Interest falls within the description of such other Classes. A
Claim or Interest is also placed in a particular Class for the purpose of
receiving distributions pursuant to the Plan only to the extent that such
Claim or Interest is an Allowed Claim or Interest in that Class and such
Claim or Interest has not been paid, released or otherwise settled prior to
the Effective Date.
2.1 UNCLASSIFIED CLAIMS (not entitled to vote on the Plan).
(a) Administrative Claims.
(b) Priority Tax Claims.
2.2 UNIMPAIRED CLASSES OF CLAIMS (deemed to have accepted the
Plan and, therefore, not entitled to vote).
(a) Class 1: Non-Tax Priority Claims. Class 1 consists of
all Non-Tax Priority Claims.
(b) Class 2: Other Secured Claims. Class 2 consists of
all Other Secured Claims.
(c) Class 3: Unimpaired Unsecured Claims. Class 3
consists of all Unimpaired Unsecured Claims.
(d) Class 6: KSOP Claims. Class 6 consists of all Claims
arising from, under, or relating in any way to, the KSOP including the Old
Preferred Stock associated therewith.
2.3 IMPAIRED CLASSES OF CLAIMS (entitled to vote on the Plan).
(a) Class 4: Secured Lender Claims. Class 4 consists of
all Secured Lender Claims.
(b) Class 5A: Impaired Unsecured Claims. Class 5A
consists of all Senior Subordinated Note Claims and General Impaired
Unsecured Claims.
(c) Class 5B: Junior Subordinated Note Claims. Class 5B
consists of all Junior Subordinated Note Claims.
2.4 IMPAIRED CLASS OF INTERESTS (if the Bankruptcy Court enters
the Class 7 Solicitation Order, Class 7 will be deemed to have rejected the
Plan and, therefore, not be entitled to vote to accept or reject the Plan;
Classes 8 and 9 are not entitled to vote on the Plan and are deemed to have
rejected the Plan).
(a) Class 7: Old Common Stock Interests. Class 7 consists
of all Interests directly arising from, under, or relating in any way to,
Old Common Stock Interests.
(b) Class 8: Securities Claims. Class 8 consists of all
Securities Claims.
(c) Class 9: Other Old Equity. Class 9 consists of all
Interests directly arising from, under or relating in any way to the Old
Rights and Warrants.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
3.1 UNCLASSIFIED CLAIMS.
(a) Administrative Claims. Subject to the provisions of
sections 330(a), 331 and 503(b) of the Bankruptcy Code, each Administrative
Claim shall be paid by the Debtors, at their election, (a) in full, in
Cash, in such amounts as are incurred in the ordinary course of business by
the Debtors, or in such amounts as such Administrative Claim is Allowed by
the Bankruptcy Court upon the later of the Effective Date or the date upon
which there is a Final Order allowing such Administrative Claim, (b) upon
such other terms as may exist in the ordinary course of such Debtor's
business or (c) upon such other terms as may be agreed upon between the
Holder of such Administrative Claim and the Debtors.
(i) Professional Fees. All final applications for
Professional Fees for services rendered in connection with the
Chapter 11 Cases prior to the Confirmation Date shall be filed no
later than thirty (30) days after the Effective Date; provided,
however, that the Debtors shall pay any unpaid fees and expenses of
Bondholder Committee's counsel and financial advisor on the Effective
Date and such professionals shall not need to file fee applications.
(ii) Claims Under the DIP Credit Agreement. On the
Effective Date, all amounts outstanding under the DIP Credit
Agreement shall be paid in full (A) in Cash or (B) as provided in the
DIP Credit Agreement and the New Credit Agreement.
(b) Priority Tax Claims. The legal and equitable rights
of the Holders of Priority Tax Claims are unaltered by the Plan. On, or as
soon as reasonably practicable after (i) the Distribution Date if such
Priority Tax Claim is an Allowed Priority Tax Claim as of the Effective
Date or (ii) the date on which such Priority Tax Claim becomes an Allowed
Priority Tax Claim, each holder of an Allowed Priority Tax Claim shall
receive in full satisfaction, settlement and release of and in exchange for
such Allowed Priority Tax Claim at the election of the Debtors (A) Cash
equal to the amount of such Allowed Priority Tax Claim; (B) such other
treatment as to which the Debtors or the Reorganized Debtors and the holder
of such Allowed Priority Tax Claims shall have agreed upon in writing; or
(C) such Claim will be otherwise treated in any other manner such that it
will not be impaired pursuant to section 1124 of the Bankruptcy Code;
further provided, any Allowed Priority Tax Claim not due and owing
on the Effective Date will be paid in accordance with this section when
such Claim becomes due and owing.
3.2 UNIMPAIRED CLASSES OF CLAIMS.
(a) Class 1. Non-Tax Priority Claims. The legal and
equitable rights of the Holders of Non-Tax Priority Claims are unaltered by
the Plan. On, or as soon as reasonably practicable after (i) the
Distribution Date if such Non-Tax Priority Claim is an Allowed Non-Tax
Priority Claim as of the Effective Date or (ii) the date on which such
Non-Tax Priority Claim becomes an Allowed Non-Tax Priority Claim, each
Holder of an Allowed Non-Tax Priority Claim shall receive in full
satisfaction, settlement and release of and in exchange for such Allowed
Non-Tax Priority Claim at the election of the Debtors (A) Cash equal to the
amount of such Allowed Non-Tax Priority Claim; (B) such other treatment as
to which the Debtors or the Reorganized Debtors and the holder of such
Allowed Non-Tax Priority Claim have agreed upon in writing; or (C) such
Claim will be otherwise treated in any other manner such that it will not
be impaired pursuant to section 1124 of the Bankruptcy Code, provided,
however, any Allowed Non-Tax Priority Claim not due and owing on the
Effective Date will be paid in accordance with this section when such Claim
becomes due and owing.
Any default with respect to any Non-Tax Priority Claim that
existed immediately prior to the Petition Date will be deemed cured on the
Effective Date.
(b) Class 2: Other Secured Claims. The legal, equitable
and contractual rights of the Holders of Allowed Other Secured Claims are
unaltered by the Plan. On, or as soon as reasonably practicable after (i)
the Distribution Date if such Other Secured Claim is an Allowed Other
Secured Claim on the Effective Date or (ii) the date on which such Other
Secured Claim becomes an Allowed Other Secured Claim, each Holder of an
Allowed Other Secured Claim shall receive at the election of the Debtors in
full satisfaction, settlement and release of, and in exchange for, such
Allowed Other Secured Claim (A) cash equal to the amount of such Allowed
Other Secured Claim; (B) such other treatment as to which the Debtors or
Reorganized Debtors have agreed upon in writing; or (C) such other
treatment that will not impair the Holder of such claim pursuant to section
1124 of the Bankruptcy Code.
Any default that existed immediately prior to the Petition Date
shall be deemed cured upon the Effective Date.
(c) Class 3: Unimpaired Unsecured Claims. The legal,
equitable and contractual rights of the Holders of Unimpaired Unsecured
Claims are unaltered by the Plan. On (i) the Distribution Date if such
Unimpaired Unsecured Claim is an Allowed Unimpaired Unsecured Claim on the
Effective Date or (ii) the date on which such Unimpaired Unsecured Claim
becomes an Allowed Unimpaired Unsecured Claim, each Holder of an Allowed
Unimpaired Unsecured Claim shall receive in full satisfaction, settlement
of, and in exchange for, such Allowed Unsecured Claim, at the election of
the Debtors: (A) to the extent due and owing on the Effective Date, Cash in
accordance with the terms thereof; (B) to the extent not due and owing on
the Effective Date, Cash when and as such Claim becomes due and owing in
the ordinary course of business in accordance with the terms thereof; (C)
such other treatment as to which the Holder of such Claim and the Debtors
or Reorganized Debtors agree in writing; or (D) such Claim will be
otherwise treated in any other manner such that it will not be impaired
pursuant to section 1124 of the Bankruptcy Code.
Any default with respect to any Unimpaired Unsecured Claim that
existed immediately prior to the Petition Date shall be deemed cured upon
the Effective Date.
(d) Class 6: KSOP Claims. The legal, equitable and
contractual rights of the Holders of KSOP Claims will be unaltered by the
Plan.
3.3 IMPAIRED CLASSES OF CLAIMS.
(a) Class 4: Secured Lender Claims. On, or as soon as
reasonably practicable after, the Distribution Date, each holder of an
Allowed Class 4 Claim shall receive (A) to the extent designated by the
Prepetition Agent prior to the Effective Date, its share of the New Tranche
A Term Notes; (B) its pro rata share of the Tranche B Term Notes up to such
Prepetition Lenders' pro rata share of the New Term Notes minus the amount
of Tranche A Term Notes received by such Prepetition Lender; (C) its pro
rata share of the New Special Notes; (D) its pro rata share of the Bank
Warrants; and (E) its pro rata share of the New Preferred Stock. All
distributions on account of Secured Lender Claims shall be made to the
Prepetition Agent for distribution to the Holders of Allowed Secured Lender
Claims.
The rights and interests of Prepetition Lenders under and with
respect to the New Term Notes, the New Special Notes, the Bank Warrants and
the New Preferred Stock shall be provided in and governed by the New Credit
Agreement, the New Term Notes, the New Special Notes and the Bank Warrant
Agreement.
(b) Class 5A: Impaired Unsecured Claims. On or as soon as
practicable after (i) the Distribution Date if such Impaired Unsecured
Claim is an Allowed Impaired Unsecured Claim on the Effective Date or (ii)
the date on which such Impaired Unsecured Claim becomes an Allowed Impaired
Unsecured Claim, each Holder of an Allowed Impaired Unsecured Claim shall
receive its pro rata share of 4,410,000 shares of New Common Stock.
(c) Class 5B: Junior Subordinated Note Claims. On or as
soon as practicable after (i) the Distribution Date if such Junior
Subordinated Note Claim is an Allowed Junior Subordinated Note Claim on the
Effective Date or (ii) the date on which such Junior Subordinated Note
Claim becomes an Allowed Junior Subordinated Note, each Holder of an
Allowed Junior Subordinated Note Claim shall receive (a) its pro rata share
of 90,000 shares of New Common Stock and (b) its pro rata share of the New
Junior Warrants.
3.4 IMPAIRED CLASS OF INTERESTS.
(a) Class 7: Old Common Stock Interests. On the Effective
Date, the Old Common Stock shall be cancelled. On or as soon as practicable
after (i) the Distribution Date if such Old Common Stock Interest is an
Allowed Old Common Stock Interest as of the Effective Date or (ii) the date
such Old Common Stock Interest becomes an Allowed Old Common Stock
Interest, each Holder of an Allowed Old Common Stock Interest shall receive
its pro rata share of the New Warrants together with the Holders of any
Allowed Securities Claims.
(b) Class 8: Securities Claims. On or as soon as
practicable after (i) the Distribution Date if such Securities Claim is an
Allowed Securities Claim or (ii) the date on which such Securities Claim
becomes an Allowed Securities Claim, each Holder of an Allowed Securities
Claim shall receive its pro rata share of the New Warrants together with
the Holder of Allowed Old Common Stock Interests. The Debtors do not
believe there are any Securities Claims and, therefore, any Securities
Claims Filed will be objected to by the Debtors.
(c) Class 9: Other Old Equity. On the Effective Date, the
Other Old Equity will be cancelled and the Holders of Other Old Equity
shall not receive or retain any distribution on account of such Other Old
Equity Interests under the Plan.
3.5 SPECIAL PROVISION REGARDING UNIMPAIRED CLAIMS. Except as
otherwise provided in the Plan, nothing shall affect the Debtors' or the
Reorganized Debtors' rights and defenses, both legal and equitable, with
respect to any Unimpaired Claims, including, but not limited to, all rights
with respect to legal and equitable defenses to setoffs or recoupments
against Unimpaired Claims.
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN
4.1 SUBSTANTIVE CONSOLIDATION FOR PURPOSES OF TREATING IMPAIRED
CLAIMS.
(a) Substantive Consolidation. The Plan contemplates and
is predicated upon entry of an order substantively consolidating the
Debtors solely for the purposes of treating Class 4, 5A and 5B Claims under
the Plan, including for voting, confirmation and distribution purposes. The
Plan does not contemplate the substantive consolidation of the Debtors with
respect to the other Classes of Claims or Interests set forth in the Plan,
or for any other purpose, on the Effective Date, (i) all guaranties of any
Debtor of the payment, performance or collection of another Debtor with
respect to Class 4, 5A or 5B Claims shall be deemed eliminated and
cancelled, (ii) any obligation of any Debtor and all guarantees with
respect to Class 4, 5A or 5B Claims thereof executed by one (1) or more of
the other Debtors shall be treated as a single obligation and any
obligation of two or more Debtors, and all multiple Impaired Claims against
such entities on account of such joint obligations shall be treated and
Allowed only as a single Impaired Claim against the consolidated Debtors,
and (iii) each Class 4, 5A or 5B Claim filed or to be filed against any
Debtor shall be deemed filed against the consolidated Debtors and shall be
deemed a single Class 4, 5A or 5B Claim against and a single obligation of
the consolidated Debtors. On the Confirmation Date, and in accordance with
the terms of the Plan and the consolidation of the assets and liabilities
of the Debtors, all Class 4, 5A or 5B Claims based upon guarantees of
collection, payment or performance made by the Debtors as to the
obligations of another Debtor shall be released and of no further force and
effect. Except as set forth in this Section 4.1, such substantive
consolidation shall not (other than for purposes related to the Plan) (i)
affect the legal and corporate structures of the Reorganized Debtors, (ii)
cause any Debtor to be liable for any Impaired Claim or Unimpaired Claim
under the Plan for which it otherwise is not liable, and the liability for
any such Claim shall not be affected by such substantive consolidation,
(iii) affect Intercompany Claims of Debtors against Debtors, and (iv)
affect Interests in Subsidiary Debtors. On the Effective Date, the
Intercompany Claims of Debtors against Debtors shall be reinstated or
discharged and satisfied, at the option of the Reorganized Debtors by
contributions, distributions or otherwise. On the Effective Date, except as
otherwise expressly provided for in the Plan, the Interests in the
Subsidiary Debtors shall remain outstanding.
(b) Substantive Consolidation Order. Unless the
Bankruptcy Court has approved the substantive consolidation of the Chapter
11 Cases by a prior order, this Plan shall serve as, and shall be deemed to
be, a motion for entry of an order substantively consolidating the Debtors
as provided in Section 4.1(a) hereof. If no objection to substantive
consolidation is timely filed and served by any holder of an Impaired Claim
affected by the Plan as provided herein on or before the deadline for
objection to confirmation of the Plan, the Substantive Consolidation Order
(which may be the Confirmation Order) may be entered by the Bankruptcy
Court. If any such objections are timely filed and served, a hearing with
respect to the substantive consolidation of the Chapter 11 Cases and the
objections thereto shall be scheduled by the Bankruptcy Court, which
hearing may, but is not required to, coincide with the Confirmation
Hearing.
4.2 CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE
REORGANIZED DEBTORS. After the Effective Date the Reorganized Debtors shall
continue to exist as separate corporate entities in accordance with the
applicable law in the respective jurisdiction in which they are
incorporated and pursuant to their respective certificates or articles of
incorporation and by-laws in effect prior to the Effective Date, except to
the extent such certificates or articles of incorporation and by-laws are
amended under this Plan. Notwithstanding anything to the contrary in this
Plan, including Section 4.1 hereof as to substantive consolidation, the
Unimpaired Claims of a particular Debtor or Reorganized Debtor shall remain
the obligations solely of such Debtor or Reorganized Debtor and shall not
become obligations of any other Debtor or Reorganized Debtor by virtue of
the Plan, the Chapter 11 Cases or otherwise. Except as otherwise provided
in the Plan, on and after the Effective Date, all property of the Estate of
the Debtors, including all claims, rights and causes of action and any
property acquired by the Debtors or the Reorganized Debtors under or in
connection with the Plan, shall vest in the Reorganized Debtors free and
clear of all Claims, liens, charges, other encumbrances and Interests. On
and after the Effective Date, the Reorganized Debtors may operate their
businesses and may use, acquire and dispose of property and compromise or
settle any Claims without supervision of or approval by the Bankruptcy
Court and free and clear of any restrictions of the Bankruptcy Code or the
Bankruptcy Rules, other than restrictions expressly imposed by the Plan or
the Confirmation Order. Without limiting the foregoing, the Reorganized
Debtors may pay the charges that they incur on or after the Effective Date
for Professionals' fees, disbursements, expenses or related support
services without application to the Bankruptcy Court.
4.3 CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS AND
CORPORATE ACTION.
(a) Certificates of Incorporation and By-laws. The
certificates or articles of incorporation and by-laws of each of the
Debtors shall be amended as necessary to satisfy the provisions of the Plan
and the Bankruptcy Code, and shall include, among other things, (i)
pursuant to section 1123(a)(6) of the Bankruptcy Code, a provision
prohibiting the issuance of non-voting equity securities, but only to the
extent required by section 1123(a)(6) of the Bankruptcy Code; and (ii)
authorize the issuance of New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants and Bank Warrants in amounts not less than the
amounts necessary to permit the distributions thereof required or
contemplated by the Plan. After the Effective Date, the Reorganized Debtors
may amend and restate the Amended Certificates of Incorporation and Bylaws
as permitted by applicable law.
(b) Directors and Officers of the Reorganized Debtors.
Subject to any requirement of Bankruptcy Court approval pursuant to section
1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the initial
officers of Reorganized Tokheim shall be the officers of the Debtors
immediately prior to the Effective Date. On the Effective Date, the board
of directors of Reorganized Tokheim shall have nine (9) members including
Douglas K. Pinner, six (6) directors designated by the Bondholder Committee
and two (2) directors designated by the Prepetition Lenders. The board of
directors of the Reorganized Subsidiary Debtors shall remain the same as
prior to the Effective Date. Pursuant to section 1129(a)(5), the Debtors
will disclose, on or prior to the Confirmation Date, the identity and
affiliations of any person proposed to serve on the initial board of
directors of Reorganized Tokheim (including those persons designated by the
Bondholder Committee and the Prepetition Lenders), and, to the extent such
person is an insider other than by virtue of being a director, the nature
of any compensation for such person. In addition, the Bondholder Committee,
on or prior to the Confirmation Date, shall designate the length of term of
each director, which length of term shall be either 1, 2, or 3 years. The
term of Douglas K. Pinner shall be three (3) years (but in no event longer
than his term of employment). The classification and composition of the
board of directors of each of the Reorganized Debtors shall be consistent
with the Amended Certificates of Incorporation. Each such director and
officer shall serve from and after the Effective Date pursuant to the terms
of the Amended Certificates of Incorporation, the other constituent
documents of the Reorganized Debtors, and applicable law. The board of
directors of Tokheim will be deemed to have resigned on the Effective Date.
(c) Corporate Action. On the Effective Date, the adoption
of the Amended Certificates of Incorporation or similar constituent
documents, the adoption of the Amended By-Laws, the selection of directors
and officers for the Reorganized Debtors, and all other actions
contemplated by the Plan shall be authorized and approved in all respects
(subject to the provisions of the Plan). All matters provided for in the
Plan involving the corporate structure of the Debtors or the Reorganized
Debtors, and any corporate action required by the Debtors or the
Reorganized Debtors in connection with the Plan, shall be deemed to have
occurred and shall be in effect, without any requirement of further action
by the security holders or directors of the Debtors or the Reorganized
Debtors. On the Effective Date, the appropriate officers of the Reorganized
Debtors and members of the boards of directors of the Reorganized Debtors
are authorized and directed to issue, execute and deliver the agreements,
documents, securities and instruments contemplated by the Plan in the name
of and on behalf of the Reorganized Debtors.
4.4 CANCELLATION OF NOTES, INSTRUMENTS, DEBENTURES AND COMMON
STOCK. On the Effective Date, except as otherwise provided for herein, (i)
the Senior Subordinated Notes, Junior Subordinated Notes, Old Common Stock,
Other Old Equity, any other notes, bonds (with the exception of surety
bonds outstanding), indentures or other instruments or documents evidencing
or creating any indebtedness or obligations of a Debtor, except such notes
or other instruments evidencing indebtedness or obligations of a Debtor
that are reinstated or amended and restated under the Plan, shall be
cancelled, and (ii) the obligations of the Debtors under any agreements,
indentures or certificates of designation governing the Senior Subordinated
Notes, Junior Subordinated Notes, Old Common Stock, Other Old Equity and
any other notes, bonds, indentures or other instruments or documents
evidencing or creating any indebtedness or obligations of a Debtor, except
such notes or other instruments evidencing indebtedness or obligations of a
Debtor that are reinstated or amended and restated under the Plan, as the
case may be, shall be discharged. As of the Effective Date, all Old Common
Stock and Other Old Equity that has been authorized to be issued but that
has not been issued shall be deemed cancelled and extinguished without any
further action of any party.
4.5 ISSUANCE OF NEW SECURITIES AND RELATED DOCUMENTATION. On
the Effective Date, the Reorganized Debtors shall issue New Common Stock,
New Preferred Stock, New Junior Warrants, New Warrants and Bank Warrants to
be distributed pursuant to the Plan without further act or action under
applicable law, regulation, order or rule. All documents, agreements and
instruments entered into on or as of the Effective Date contemplated by or
in furtherance of the Plan, including without limitation, the New Credit
Agreement, the New Junior Warrant Agreement, the New Warrant Agreement, the
Bank Warrant Agreement, the Management Option Agreement and any other
agreement entered into in connection with the foregoing, shall become
effective and binding in accordance with their respective terms and
conditions upon the parties thereto.
4.6 ISSUANCE OF NEW COMMON STOCK, NEW PREFERRED STOCK AND
WARRANTS. On or as soon as reasonably practicable after the Effective Date,
Reorganized Tokheim shall issue, in accordance with the terms of the Plan,
4,500,000 shares of the New Common Stock to be distributed to Holders of
Impaired Unsecured Claims. In addition, Reorganized Tokheim shall issue the
New Preferred Stock to be distributed to Holders of Secured Lender Claims.
The New Junior Warrant Agreement, New Warrant Agreement and the Bank
Warrant Agreement shall be executed and delivered by Reorganized Tokheim.
The issuance of the New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants and Bank Warrants is hereby authorized without the
need for any further corporate action.
4.7 NEW CREDIT AGREEMENT. On the Effective Date, the
Reorganized Debtors are authorized and directed to execute and deliver the
New Credit Agreement to govern the Exit Facility, the New Term Notes and
the New Special Notes.
4.8 EXIT FINANCING. On the Effective Date, the Reorganized
Debtors shall be authorized and directed to enter into the Exit Facility
and to enter into and execute any notes, documents or agreements in
furtherance thereof.
4.9 REGISTRATION RIGHTS AGREEMENT. On the Effective Date,
Reorganized Tokheim shall be authorized and directed to enter into the
Registration Rights Agreement.
4.10 MANAGEMENT OPTION PLAN. On the Effective Date, the
Reorganized Debtors shall be authorized and directed to enter into and
execute the Management Option Agreement. The Management Option Plan and
Management Option Agreement may be amended or modified by the board of
directors of Reorganized Tokheim in accordance with their terms and any
such amendment or modified shall not require an amendment of this Plan.
4.11 SOURCES OF CASH FOR PLAN DISTRIBUTIONS. Except as
otherwise provided in the Plan or the Confirmation Order, all Cash
necessary for Reorganized Debtors to make payments pursuant to the Plan
shall be obtained from existing Cash balances, the operations of the
Debtors and the Reorganized Debtors or the New Credit Agreement. The
Reorganized Debtors may also make such payments using Cash received from
their subsidiaries through the Reorganized Debtors' consolidated cash
management systems.
4.12 EXEMPTION FROM CERTAIN TRANSFER TAXES. Pursuant to section
1146(c) of the Bankruptcy Code, any transfers from the Debtors to
Reorganized Debtors or otherwise pursuant to the Plan shall not be subject
to any document recording tax, stamp tax, conveyance fee, intangibles or
similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage
recording tax or other similar tax or governmental assessment, and the
Confirmation Order shall direct the appropriate state or local governmental
officials or agents to forgo the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing
instruments or other documents without the payment of any such tax or
governmental assessment.
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN
5.1 CLASSES ENTITLED TO VOTE. Classes 4, 5A and 5B are entitled
to vote to accept or reject the Plan. Ballots shall be cast and tabulated
on a consolidated basis, in accordance with the expected limited
substantive consolidation of the Debtors' Estates and Chapter 11 Cases. If
the Class 7 Solicitation Order is entered, Class 7 will be deemed to have
rejected the Plan and therefore will not be entitled to vote to accept or
reject the Plan. By operation of law, Classes 8 and 9 are deemed to reject
the Plan and, therefore, are not entitled to vote to accept or reject the
Plan. By operation of law, each Unimpaired Class of Claims is deemed to
have accepted the Plan and, therefore, is not entitled to vote to accept or
reject the Plan. Therefore Classes 1, 2, 3, and 6 are deemed to have
accepted the Plan.
5.2 ACCEPTANCE BY IMPAIRED CLASSES. An Impaired Class of Claims
shall have accepted the Plan if (a) the Holders (other than any holder
designated under section 1126(e) of the Bankruptcy Code) of at least
two-thirds (2/3) in amount of the Allowed Claims actually voting in such
Class have voted to accept the Plan and (b) the Holders (other than any
holder designated under section 1126(e) of the Bankruptcy Code) of more
than one-half (1/2) in number of the Allowed Claims actually voting in such
Class have voted to accept the Plan.
5.3 CRAMDOWN. The Debtors will request Confirmation of the
Plan, as it may be modified from time to time, under section 1129(b) of the
Bankruptcy Code with respect to Classes 7, 8 and 9 which are deemed to have
rejected the Plan.
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS
6.1 DISTRIBUTIONS FOR CLAIMS OR INTERESTS ALLOWED AS OF THE
EFFECTIVE DATE. Except as otherwise provided herein or as ordered by the
Bankruptcy Court, distributions to be made on account of Claims or
Interests that are Allowed Claims as of the Effective Date shall be made on
the Distribution Date or as soon thereafter as is practicable. Any
distribution to be made on the Effective Date pursuant to this Plan shall
be deemed as having been made on the Effective Date if such distribution is
made on the Effective Date or as soon thereafter as is practicable. Any
payment or distribution required to be made under the Plan on a day other
than a Business Day shall be made on the next succeeding Business Day.
Distributions on account of Claims or Interests that first become Allowed
Claims or Interests after the Effective Date shall be made pursuant to
Articles III, VI and VIII of this Plan. Notwithstanding the date on which
any distribution of securities is made to a Holder of a Claim or Interest
that is an Allowed Claim or Allowed Interest on the Effective Date, as of
the date of the distribution such Holder shall be deemed to have the rights
of a Holder of such securities distributed as of the Effective Date.
6.2 INTEREST ON CLAIMS. Unless otherwise specifically provided
for in the Plan or Confirmation Order, or required by applicable bankruptcy
law, postpetition interest shall not accrue or be paid on any Claims, other
than Secured Lender Claims as provided in the Prepetition Credit Agreement,
and no Holder of a Claim shall be entitled to interest accruing on or after
the Petition Date on any Claim.
6.3 DISTRIBUTIONS BY REORGANIZED DEBTORS. Reorganized Debtors
or the Disbursing Agent shall make all distributions required to be
distributed under the Plan. Distribution on account of Secured Lender
Claims shall be made to the Prepetition Agent. Distribution on account of
Senior Subordinated Note Claims and Junior Subordinated Note Claims shall
be made to the Senior Subordinated Note Trustee and the Junior Subordinated
Note Trustee, respectively. The Reorganized Debtors may employ or contract
with other entities to assist in or make the distributions required by the
Plan.
6.4 DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
DISTRIBUTIONS.
(a) Delivery of Distributions in General. Distributions
to holders of Allowed Claims and Allowed Interests shall be made at the
addresses set forth in the Debtors' records unless such addresses are
superseded by proofs of claim or transfers of claim filed pursuant to
Bankruptcy Rule 3001.
(b) Undeliverable and Unclaimed Distributions.
(i) Holding and Investment of Undeliverable and
Unclaimed Distributions. If the distribution to any Holder of an
Allowed Claim or Interest is returned to the Disbursing Agent as
undeliverable or is otherwise unclaimed, no further distributions
shall be made to such Holder unless and until the Disbursing Agent is
notified in writing of such Holder's then current address.
(ii) After Distributions Become Deliverable. The
Reorganized Debtors shall make all distributions that have become
deliverable or have been claimed since the Distribution Date as soon
as practicable after such distribution has become deliverable.
(iii) Failure to Claim Undeliverable Distributions.
Any holder of an Allowed Claim or Interest that does not assert a claim
pursuant to the Plan for an undeliverable or unclaimed distribution
within one (1) year after the Effective Date shall be deemed to have
forfeited its claim for such undeliverable or unclaimed distribution
and shall be forever barred and enjoined from asserting any such
claim for an undeliverable or unclaimed distribution against the
Debtors or their Estates, Reorganized Debtor or their property. In
such cases, any Cash for distribution on account of such claims for
undeliverable or unclaimed distributions shall become the property of
the Estates free of any restrictions thereon and notwithstanding any
federal or state escheat laws to the contrary subject to the liens of
the Prepetition Lenders. Any New Common Stock held for distribution
on account of such Claim shall be canceled and of no further force or
effect. Any New Warrant or New Junior Warrant held for distribution
on account of such Interest shall be cancelled and of no full force
or effect. Nothing contained in the Plan shall require any Disbursing
Agent, including, but not limited to, the Reorganized Debtors, to
attempt to locate any holder of an Allowed Claim or Interest.
6.5 RECORD DATE FOR DISTRIBUTIONS. As of the close of business
on the Distribution Record Date, the transfer register for the Senior
Subordinated Notes, the Junior Subordinated Notes and the Old Common Stock,
as maintained by the Debtors, the Senior Subordinated Trustee, the Junior
Subordinated Trustee, any other applicable trustee or their respective
agents shall be closed and the transfer of such securities or any interest
thereon prohibited. The Disbursing Agent will have no obligation to
recognize the transfer of, or the sale of any participation in, any Allowed
Claim or Interest that occurs after the close of business on the
Distribution Record Date, and will be entitled for all purposes herein to
recognize and distribute only to those Holders of Allowed Claims and
Interests who are Holders of such Claims or Interest, or participants
therein, as of the close of business on the Distribution Record Date. The
Disbursing Agent and the Reorganized Debtors shall instead be entitled to
recognize and deal for all purposes under the Plan with only those record
holders stated on the official claims register as of the close of business
on the Distribution Record Date.
6.6 COMPLIANCE WITH TAX REQUIREMENTS. Any federal, state or
local withholding taxes or amounts required to be withheld under applicable
law shall be deducted from distributions hereunder. All entities holding
Claims or Interests shall be required to provide any information necessary
to effect the withholding of such taxes.
6.7 ALLOCATION OF PLAN DISTRIBUTIONS BETWEEN PRINCIPAL AND
INTEREST. To the extent that any Allowed Claim entitled to a distribution
under the Plan is comprised of indebtedness and accrued but unpaid interest
thereon, such distribution shall, for federal income tax purposes, be
allocated to the principal amount of the Claim first and then, to the
extent the consideration exceeds the principal amount of the claim, to the
portion of such Claim representing accrued but unpaid interest.
6.8 MEANS OF CASH PAYMENT. Payments of Cash made pursuant to
the Plan shall be in U.S. dollars and shall be made, at the option and in
the sole discretion of the Reorganized Debtors, by (a) checks drawn on or
(b) wire transfer from a domestic bank selected by the Reorganized Debtors.
Cash payments to foreign creditors may be made, at the option of the
Reorganized Debtors, in such funds and by such means as are necessary or
customary in a particular foreign jurisdiction.
6.9 WITHHOLDING AND REPORTING REQUIREMENTS. In connection with
the Plan and all distributions thereunder, the Reorganized Debtors shall
comply with all withholding and reporting requirements imposed by any
federal, state, local or foreign taxing authority, and all distributions
hereunder shall be subject to any such withholding and reporting
requirements. The Reorganized Debtors shall be authorized to take any and
all actions that may be necessary or appropriate to comply with such
withholding and reporting requirements. Notwithstanding any other provision
of the Plan (i) each Holder of an Allowed Claim or Interest that is to
receive a distribution of New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants or Bank Warrants pursuant to the Plan shall have
sole and exclusive responsibility for the satisfaction and payment of any
tax obligations imposed by any governmental unit, including income,
withholding and other tax obligations, on account of such distribution, and
(ii) no distribution shall be made to or on behalf of such Holder pursuant
to the Plan unless and until such holder has made arrangements satisfactory
to the Reorganized Debtors for the payment and satisfaction of such tax
obligations. Any New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants or Bank Warrants to be distributed pursuant to the
Plan shall, pending the implementation of such arrangements, be treated as
an undeliverable distribution pursuant to Section 6.4 hereof.
6.10 SETOFFS. The Reorganized Debtors may, pursuant to section
553 of the Bankruptcy Code or applicable nonbankruptcy laws, but shall not
be required to, set off against any Claim and the payments or other
distributions to be made pursuant to the Plan in respect of such Claim,
claims of any nature whatsoever that the Debtors or the Reorganized Debtors
may have against the holder of such Claim; provided, however, that neither
the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Reorganized Debtors of any such claim
that the Debtors or the Reorganized Debtors may have against such holder.
6.11 FRACTIONAL SHARES. No fractional shares of New Common
Stock, New Preferred Stock, New Junior Warrants, New Warrants or Bank
Warrants shall be distributed. New Junior Warrants, New Warrants or Bank
Warrants would otherwise be called for, the actual issuance shall reflect a
rounding up (in the case of .50 or more than .50) of such fraction to the
nearest whole New Common Stock share, New Preferred Stock share, New Junior
Warrants, New Warrant or Bank Warrant or a rounding down of such fraction
(in the case of less than .50).
6.12 SURRENDER OF CANCELLED INSTRUMENTS OF SECURITIES. As a
condition precedent to receiving any distribution pursuant to the Plan on
account of an Allowed Claim or Interest evidenced by the instruments,
securities or other documentation canceled pursuant to Section 6.4 hereof,
the Holder of such Claim or Interest shall tender the applicable
instruments, securities or other documentation evidencing such Claim to the
Reorganized Debtors unless waived in writing by the Debtors or the
Reorganized Debtors. Any New Common Stock and any New Junior Warrants or
New Warrants to be distributed pursuant to the Plan on account of any such
Claim or Interest shall, pending such surrender, be treated as an
undeliverable distribution pursuant to Section 6.4(b) hereof.
(a) Notes and Common Stock. Each Holder of a Senior
Subordinated Note Claim, a Junior Subordinated Note Claim or Old Common
Stock shall tender its Senior Subordinated Notes, Junior Subordinated Notes
or Old Common Stock relating to such Claim or Interest to the Reorganized
Debtors in accordance with written instructions to be provided to such
Holders by the Reorganized Debtors or the applicable trustee as promptly as
practicable following the Effective Date. Such instructions shall specify
that delivery of such Senior Subordinated Notes, Junior Subordinated Notes
or Old Common Stock will be effected, and risk of loss and title thereto
will pass, only upon the proper delivery of such Senior Subordinated Notes,
Junior Subordinated Notes or Old Common Stock with a letter of transmittal
in accordance with such instructions. All surrendered Senior Subordinated
Notes, Junior Subordinated Notes or Old Common Stock shall be marked as
cancelled.
(b) Failure to Surrender Cancelled Instruments. Any
Holder of Senior Subordinated Notes, Junior Subordinated Notes or Old
Common Stock that fails to surrender or is deemed to have failed to
surrender the applicable Senior Subordinated Notes, Junior Subordinated
Notes or Old Common Stock required to be tendered hereunder within one year
after the Effective Date shall have its Claim or Interest and its
distribution pursuant to the Plan on account of such Senior Subordinated
Notes, Junior Subordinated Notes or Old Common Stock discharged and shall
be forever barred from asserting any such Claim or Interest against the
Reorganized Debtors or their respective property. In such cases, any New
Common Stock, New Junior Warrants or New Warrants held for distribution on
account of such Claim shall be disposed of pursuant to Section 6.4 hereof.
6.13 LOST, STOLEN, MUTILATED OR DESTROYED DEBT SECURITIES. In
addition to any requirements under the Senior Subordinated Note Indentures,
Junior Subordinated Note Indenture or any other applicable agreement, any
Holder of a Claim or Interest evidenced by a Senior Subordinated Note,
Junior Subordinated Note or Old Common Stock that has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such Senior
Subordinated Note, Junior Subordinated Note or Old Common Stock deliver to
the Reorganized Debtors: (i) evidence reasonably satisfactory to the
Reorganized Debtors of the loss, theft, mutilation or destruction; and (ii)
such security or indemnity as may be required by Reorganized Debtors to
hold the Reorganized Debtors harmless from any damages, liabilities or
costs incurred in treating such individual as a Holder of an Allowed Claim
or Interest. Upon compliance with this Article VI by a Holder of a Claim or
Interest evidenced by a Senior Subordinated Note, Junior Subordinated Note
or Old Common Stock, such Holder shall, for all purposes under the Plan, be
deemed to have surrendered such note, debenture or equity.
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
7.1 ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Immediately prior to the Effective Date, all executory contracts or
unexpired leases of the Reorganized Debtors will be deemed assumed in
accordance with the provisions and requirements of sections 365 and 1123 of
the Bankruptcy Code except those executory contracts and unexpired leases
that (1) have been rejected by order of the Bankruptcy Court, (2) are the
subject of a motion to reject pending on the Effective Date, (3) are
identified on a list to be filed with the Bankruptcy Court on or before the
Confirmation Date as to be rejected, or (4) are rejected pursuant to the
terms of the Plan. Entry of the Confirmation Order by the Bankruptcy Court
shall constitute approval of such assumptions and rejections pursuant to
sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract
and unexpired lease assumed pursuant to this Article VII shall revest in
and be fully enforceable by the respective Reorganized Debtor in accordance
with its terms, except as modified by the provisions of the Plan, or any
order of the Bankruptcy Court authorizing and providing for its assumption
or applicable federal law.
7.2 CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR
UNEXPIRED LEASES. All proofs of claim with respect to Claims arising from
the rejection of executory contracts or unexpired leases, if any, must be
filed with the Bankruptcy Court within thirty (30) days after the date of
entry of an order of the Bankruptcy Court approving such rejection. Any
claims arising from the rejection of an executory contract or unexpired
lease not filed within such times will be forever barred from assertion
against the Debtors or Reorganized Debtors, their Estates and property
unless otherwise ordered by the Bankruptcy court or provided for in this
Plan. All such Allowed Claims for which proofs of claim are required to be
filed will be, and will be treated as, Allowed General Impaired Unsecured
Claims subject to the provisions of Article III hereof, subject to any
limitation on allowance of such Claims under section 502(b) of the
Bankruptcy Code or otherwise.
7.3 CURE OF DEFAULTS OF ASSUMED EXECUTORY CONTRACTS AND
UNEXPIRED LEASES. Any monetary amounts by which each executory contract and
unexpired lease to be assumed pursuant to the Plan is in default shall be
satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment
of the default amount in Cash on the Effective Date or on such other terms
as the parties to such executory contracts or unexpired leases may
otherwise agree. In the event of a dispute regarding: (1) the amount of any
cure payments, (2) the ability of the Reorganized Debtors or any assignee
to provide "adequate assurance of future performance" (within the meaning
of section 365 of the Bankruptcy Code) under the contract or lease to be
assumed, or (3) any other matter pertaining to assumption, the cure
payments required by section 365(b)(1) of the Bankruptcy Code shall be made
following the entry of a Final Order resolving the dispute and approving
the assumption.
7.4 INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The
obligations of the Debtors to indemnify any Person or Entity serving at any
time on or prior to the Effective Date as one of their directors, officers
or employees by reason of such Person's or Entity's service in such
capacity, or as a director, officer or employee of any other corporation or
legal entity, to the extent provided in the Debtors' constituent documents
or by a written agreement with the Debtors or the applicable states'
general corporation law, each as applicable, shall be deemed and treated as
executory contracts that are assumed by the Debtors pursuant to the Plan
and section 365 of the Bankruptcy Code as of the Effective Date.
Accordingly, such indemnification obligations shall be treated as
Unimpaired Unsecured Claims, and shall survive unimpaired and unaffected by
entry of the Confirmation Order, irrespective of whether such
indemnification is owed for an act or event occurring before or after the
Petition Date.
7.5 COMPENSATION AND BENEFIT PROGRAMS. Except as otherwise
expressly provided hereunder, all employment and severance policies, and
all compensation and benefit plans, policies, and programs of the Debtors
applicable to their employees, retirees and non-employee directors and the
employees and retirees of its subsidiaries, including, without limitation,
all savings plans, retirement plans, healthcare plans, disability plans,
severance benefit plans, incentive plans, life, accidental death and
dismemberment insurance plans and the SERP are treated as executory
contracts under the Plan and on the Effective Date will be assumed pursuant
to the provisions of sections 365 and 1123 of the Bankruptcy Code. All
employment contracts assumed pursuant to this Section 7.5 shall be deemed
modified such that the transactions contemplated by the Plan shall not be a
"change of control" as defined in the relevant employment contracts.
ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
8.1 OBJECTION DEADLINE; PROSECUTION OF OBJECTIONS. No later
than the Claims Objection Deadline (unless extended by an order of the
Bankruptcy Court), the Debtors or the Reorganized Debtors, as the case may
be, shall file objections to Claims and Interests with the Bankruptcy Court
and serve such objections upon the holders of each of the Claims and
Interests to which objections are made, provided, however, the Debtors and
Reorganized Debtors shall not object to Claims Allowed pursuant to the
Plan. Nothing contained herein, however, shall limit the Reorganized
Debtors' right to object to Claims or Interests, if any, filed or amended
after the Claims Objection Deadline. The Debtors and the Reorganized
Debtors shall be authorized to, and shall, resolve all Disputed Claims or
Interests by withdrawing or settling such objections thereto, or by
litigating to judgment in the Bankruptcy Court or such other court having
jurisdiction the validity, nature and/or amount thereof.
8.2 NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any
other provision of the Plan, no payments or distributions shall be made
with respect to all or any portion of a Disputed Claim or Interest unless
and until all objections to such Disputed Claim or Interest have been
settled or withdrawn or have been determined by Final Order, and the
Disputed Claim or Interest, or some portion thereof, has become an Allowed
Claim or Interest.
8.3 DISPUTED CLAIMS RESERVE; DISPUTED INTEREST RESEROn. the
Effective Date (or as soon thereafter as is practicable), the Reorganized
Debtors shall establish the Disputed Claims Reserve and the Disputed
Interest Reserve by withholding from the initial distribution (i) with
respect to the Disputed Claims Reserve, an amount of New Common Stock and
New Junior Warrants calculated as if all Class 5A and 5B Claims were
Allowed Class 5A and 5B Claims, in an amount equal to one hundred percent
(100%) of the distributions to which Holders of Disputed Class 5A and 5B
Claims would be entitled if their Claim was allowed in the Disputed Claim
Amount; and (ii) with respect to the Disputed Interest Reserve, an amount
of New Warrants calculated as if all Class 7 Interests were Allowed Class 7
Interests and all Class 8 Claims were Allowed Class 8 Claims; in an amount
equal to one hundred percent (100%) of the distributions to which Holders
of Disputed Class 7 Interests or Disputed Class 8 Claims would be entitled
if their Interest or Claim was allowed in the Disputed Interest or Disputed
Claim Amount; provided, however, that the Debtors and the Reorganized
Debtors shall have the right to file a motion seeking to modify any
Disputed Claim Amounts or Disputed Interest Amounts.
8.4 DISTRIBUTIONS AFTER ALLOWANCE. The Reorganized Debtors
shall make payments and distributions from the Disputed Claims Reserve or
Disputed Interest Reserve, as appropriate to the holder of any Disputed
Claim or Disputed Interest that has become an Allowed Claim or Interest, as
soon as practicable after the date such Disputed Claim or Interest becomes
an Allowed Claim or Interest. Such distributions shall be based upon the
cumulative distributions that would have been made to the Holder of such
Claim or Interest under the Plan if the Disputed Claim or Interest had been
Allowed on the Effective Date and shall not be limited by the Disputed
Claim Amounts or Disputed Interest Amounts previously reserved with respect
to such Disputed Unsecured Claim to the extent that additional amounts are
available therefor from the Disputed Claims Reserve or the Disputed
Interest Reserve, as appropriate, but only to the extent that such
additional amounts have not yet been distributed to holders of Allowed
Claims or Interest. After a Final Order has been entered, or other Final
resolution has been reached, with respect to each Disputed Claim or
Disputed Interest, any New Common Stock, New Junior Warrants or New
Warrants that remain in the Disputed Claims Reserve or Disputed Interest
Reserve, as applicable, shall be distributed as applicable, pro rata, to
(i) with respect to the Disputed Claims Reserve, Holders of Allowed Class
5A and 5B Claims; and (ii) with respect to the Disputed Interest Reserve,
Holders of Allowed Class 7 Interests and Allowed Class 8 Claims. All
distribution made under this Section 8.4 shall be made together with any
payments or distributions made on account of the distributed property, as
if such Allowed Class 5A or 5B Claim or Allowed Class 7 Interest and
Allowed Class 8 Claims had been Allowed on the Effective Date.
ARTICLE IX
CONFIRMATION AND CONSUMMATION OF THE PLAN
9.1 CONDITIONS TO CONFIRMATION. The Bankruptcy Court shall not
enter the Confirmation Order unless and until the Confirmation Order shall
be reasonably acceptable in form and substance to the Debtors and the
Bondholder Committee and the Prepetition Agent.
9.2 CONDITIONS TO EFFECTIVE DATE. The following are conditions
precedent to the occurrence of the Effective Date:
(a) The Effective Date shall occur on or before December
31, 2000.
(b) The Confirmation Order confirming the Plan, as such
Plan may have been modified, shall have been entered and become a Final
Order in form and substance reasonably satisfactory to the Debtors and
shall provide that:
(i) the Debtors and Reorganized Debtors are
authorized and directed to take all actions necessary or appropriate
to enter into, implement and consummate the contracts, instruments,
releases, leases, indentures and other agreements or documents
created in connection with the Plan;
(ii) the provisions of the Confirmation Order are
nonseverable and mutually dependent;
(iii) the Reorganized Debtors are authorized to
issue the New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants, New Bank Warrants and Management Options
and enter into the New Credit Agreement; and
(iv) the New Tranche A Notes, New Tranche B Notes,
New Special Notes, New Common Stock, New Preferred Stock, New Junior
Warrants, New Warrants and Bank Warrants issued under the Plan in
exchange for Claims against and Interests in the Debtors are exempt
from registration under the Securities Act of 1933 pursuant to
section 1145 of the Bankruptcy Code, except to the extent that
Holders of the New Tranche A Notes, New Tranche B Notes, New Special
Notes, New Common Stock, New Preferred Stock, New Junior Warrants,
New Warrants or Bank Warrants are "underwriters," as that term is
defined in section 1145 of the Bankruptcy Code.
(c) The Reorganized Debtors shall have credit
availability under the Exit Facility, in an amount, form and substance
acceptable to the Reorganized Debtors, the Bondholder Committee and the
Prepetition Agent.
(d) The following agreements, in form and substance
satisfactory to the Reorganized Debtors, the Bondholder Committee and the
Prepetition Agent and shall have been executed and delivered, and all
conditions precedent thereto shall have been satisfied:
(i) Amended Certificates of Incorporation and
By-laws of the Reorganized Debtors;
(ii) New Credit Agreement and all similar
documents provided for therein or contemplated thereby;
(iii) New Warrant Agreement, and all similar
documents provided for therein or contemplated thereby;
(iv) New Bank Warrant Agreement;
(v) New Junior Warrant Agreement;
(vi) Management Option Agreement; and
(vii) Registration Rights Agreement.
(e) The Amended Certificates of Incorporation and By-laws
of the Reorganized Debtors, as necessary, shall have been filed with the
applicable authority of each entity's jurisdiction of incorporation in
accordance with such jurisdiction's corporation laws.
(f) All actions, documents and agreements necessary to
implement the Plan shall have been effected or executed.
(g) The new board of directors of Reorganized Tokheim shall
have been appointed.
9.3 WAIVER OF CONDITIONS. Each of the conditions set forth in
section 9.2 above may be waived in whole or in part by the Debtors, with
consent of the Bondholder Committee and the Prepetition Agent, without any
other notice to parties in interest or the Bankruptcy Court and without a
hearing. The failure to satisfy or waive a condition to the Effective Date
may be asserted by the Debtors or the Reorganized Debtors regardless of the
circumstances giving rise to the failure of such condition to be satisfied
(including any action or inaction by a Debtor or Reorganized Debtor). The
failure of a Debtor or Reorganized Debtor to exercise any of the foregoing
rights shall not be deemed a waiver of any other rights, and each right
shall be deemed an ongoing right that may be asserted at any time.
9.4 CONSEQUENCES OF NON-OCCURRENCE OF EFFECTIVE DATE. If the
Effective Date does not occur within ninety (90) days of the Confirmation
Date, or by such later date, after notice and hearing, as is proposed by
the Debtors, then upon motion by the Debtors and upon notice to such
parties in interest as the Bankruptcy Court may direct, the Confirmation
Order will be vacated by the Bankruptcy Court; provided, however, that,
notwithstanding the filing of such motion, the Confirmation Order may not
be vacated if the Effective Date occurs before the Bankruptcy Court enters
an order granting such motion. If the Confirmation Order is vacated
pursuant to this Section 9.4, (a) the Plan shall be null and void in all
respects; (b) any settlement of Claims and Interests provided for hereby
shall be null and void without further order of the Bankruptcy Court; and
(c) the time within which the Debtors may assume and assign or reject all
executory contracts and unexpired leases shall be extended for a period of
thirty (30) days after the date the Confirmation Order is vacated.
ARTICLE X
EFFECT OF PLAN CONFIRMATION
10.1 BINDING EFFECT. The Plan shall be binding upon and inure
to the benefit of the Debtors, all present and former holders of Claims and
Interests, and their respective successors and assigns, including, but not
limited to, the Reorganized Debtors.
10.2 RELEASES.
(a) Releases by the Debtors. As of the Effective Date,
for good and valuable consideration, the adequacy of which is hereby
confirmed, the Debtors and Reorganized Debtors in their individual
capacities and as debtors in possession will be deemed to release forever,
waive and discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities (other than the
rights of the Debtors or Reorganized Debtors to enforce the Plan and the
contracts, instruments, releases, indentures and other agreements or
documents delivered thereunder) whether liquidated or unliquidated, fixed
or contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, in law, equity or
otherwise that are based in whole or part on any act, omission,
transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtors, the Reorganized Debtors,
the parties released pursuant to this Section 10.2, the Chapter 11 Cases,
or the Plan or the Disclosure Statement, and that could have been asserted
by or on behalf of the Debtors or their Estates or the Reorganized Debtors
against (i) the current and former directors, officers and employees of the
Debtors (other than for money borrowed from or owed to the Debtors or their
subsidiaries by any such directors, officers or employees as set forth in
the Debtors' books and records) and the Debtors' agents and professionals,
(ii) the Prepetition Lenders and the Prepetition Agent, (iii) the
Bondholder Committee, (iv) the DIP Lenders and agents, (v) any individual,
corporation or other entity that was at any time formerly one of the
foregoing released parties identified in subclauses (ii) - (iv) of this
Section 10.2(a), and (vi) the respective affiliates, current and former
officers, directors, employees, agents, members, shareholders and
professionals (including the current and former officers, directors,
employees, agents, members, shareholders and professionals of the released
professionals) of the entities released in subclauses (ii) - (iv) of this
Section 10.2(a) acting in such capacity; provided that notwithstanding the
foregoing, neither the Debtors nor the Reorganized Debtors shall be deemed
to release any person or entity that holds a Claim that is listed on the
General Impaired Unsecured Claims List.
(b) Releases by Holders of Claims and Interests. On the
Effective Date, (i) each Holder of a Claim or Interest that voted to accept
the Plan and (ii) to the fullest extent permissible under applicable law,
as such law may be extended or interpreted subsequent to the Effective
Date, all other Holders of Claims and Interests, in consideration for the
obligations of the Debtors and the Reorganized Debtors under the Plan and
the Cash and other contracts, instruments, releases, agreements or
documents to be delivered in connection with the Plan, each entity (other
than a Debtor) that has held, holds or may hold a Claim or Interest, as
applicable, will be deemed to forever release, waive and discharge all
claims, demands, debts, rights, causes of action or liabilities (other than
the right to enforce the Debtors' or the Reorganized Debtors' obligations
under the Plan, and the contracts, instruments, releases, agreements and
documents delivered under the Plan), whether liquidated or unliquidated,
fixed or contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, in law, equity or
otherwise that are based in whole or in part on any act or omission,
transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtors, the Chapter 11 Cases,
the Plan or the Disclosure Statement and that could have been asserted by
or on behalf of the Debtors or their Estates or the Reorganized Debtors
against (i) the current and former directors, officers and employees of the
Debtors (other than for money borrowed from or owed to the Debtors or their
subsidiaries by any such directors, officers or employees as set forth in
the Debtors' books and records) and the Debtors' agent and professionals,
(ii) the Prepetition Lenders, (iii) the Bondholder Committee, (iv) the DIP
Lenders, (v) any individual, corporation or other entity that was at any
time formerly one of the foregoing released parties identified in
subclauses (ii) - (iv) of this Section 10.2(b), and (vi) the respective
affiliates, current and former officers, directors, employees, agents,
members, shareholders and professionals (including the current and former
officers, directors, employees, agents, members, shareholders and
professionals of the released professionals) of the entities released in
subclauses (ii) - (iv) of this Section 10.2(b) acting in such capacity;
provided that notwithstanding the foregoing, no Holder of a Claim or
Interest shall be deemed to have released any person or entity who holds a
Claim that is listed on the General Impaired Unsecured Claims List.
(c) Injunction Related to Releases. The Confirmation
Order will permanently enjoin the commencement or prosecution by any
entity, whether directly, derivatively or otherwise, of any claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action or liabilities released pursuant to the Plan, including but not
limited to the claims, obligations, suits, judgments, damages, demands,
debts, rights, causes of action or liabilities released in this Section
10.2 of the Plan.
10.3 DISCHARGE OF CLAIMS AND TERMINATION OF INTERESTS. Except
as otherwise provided herein or in the Confirmation Order, all
consideration distributed under the Plan shall be in exchange for, and in
complete satisfaction, settlement, discharge and release of, all Claims
(other than those Claims that are Unimpaired under the Plan) of any nature
whatsoever against the Debtors or any of their assets or properties, and
regardless of whether any property shall have been distributed or retained
pursuant to the Plan on account of such Claims. Upon the Effective Date,
the Debtors, and each of them, shall be deemed discharged and released
under section 1141(d)(1)(A) of the Bankruptcy Code from any and all Claims
(other than Claims that are not Impaired), including, but not limited to,
demands and liabilities that arose before the Confirmation Date, and all
debts of the kind specified in section 502(g), 502(h) or 502(i) of the
Bankruptcy Code, and the Old Common Stock and Other Old Equity Interests
shall be terminated.
10.4 PRESERVATION OF RIGHTS OF ACTION; SETTLEMENT OF LITIGATION
CLAIMS.
(a) Preservation of Rights of Action. Except as otherwise
provided in the Plan, the Confirmation Order or in any document,
instrument, release or other agreement entered into in connection with the
Plan, in accordance with section 1123(b) of the Bankruptcy Code, the
Debtors and their Estates shall retain the Litigation Claims. The
Reorganized Debtors, as the successors in interest to the Debtors and the
Estates, may enforce, sue on, settle or compromise (or decline to do any of
the foregoing) any or all of the Litigation Claims. Notwithstanding the
foregoing, the Debtors and the Reorganized Debtors shall not file, commence
or pursue any claim, right or cause of action under sections 544 through
550 of the Bankruptcy Code; provided, however, that notwithstanding any
statute of limitations (including, without limitation, section 544 of the
Bankruptcy Code), the Debtors and Reorganized Debtors shall have the right
to assert or raise such causes of action (a) as defenses or counterclaims
(up to the amount asserted in the Claims against the Debtors); and (b) in
connection with the Claims objection process, in which case such causes of
action can be raised as an objection to a Claim and not as defenses or
counterclaims.
(b) Settlement of Litigation Claims. At any time after
the Confirmation Date and before the Effective Date, notwithstanding
anything in this Plan to the contrary, the Reorganized Debtors may settle
any or all of the Litigation Claims with the approval of the Bankruptcy
Court pursuant to Fed. R. Bankr. P. 9019.
10.5 EXCULPATION AND LIMITATION OF LIABILITY. Neither the
Debtors, the Bondholder Committee, the Prepetition Lenders, nor any of
their respective present or former members, officers, directors,
shareholders, employees, advisors, attorneys or agents acting in such
capacity, shall have or incur any liability to, or be subject to any right
of action by, any holder of a Claim or an Interest, or any other party in
interest, or any of their respective agents, shareholders, employees,
representatives, financial advisors, attorneys or affiliates, or any of
their successors or assigns, for any act or omission in connection with,
relating to, or arising out of, the Debtors' Chapter 11 Cases, the pursuit
of confirmation of the Plan, the consummation of the Plan or the
administration of the Plan or the property to be distributed under the
Plan, except for their willful misconduct or gross negligence, and in all
respects shall be entitled to rely reasonably upon the advice of counsel
with respect to their duties and responsibilities under the Plan.
10.6 INJUNCTION. (a) Except as otherwise provided in the Plan,
the Confirmation Order shall provide, among other things, that from and
after the Confirmation Date all Persons who have held, hold or may hold
Claims against or Interests in the Debtors are (i) permanently enjoined
from taking any of the following actions against the Estate(s), or any of
their property, on account of any such Claims or Interests and (ii)
permanently enjoined from taking any of the following actions against any
of the Debtors, the Reorganized Debtors or their property on account of
such Claims or Interests: (A) commencing or continuing, in any manner or in
any place, any action or other proceeding; (B) enforcing, attaching,
collecting or recovering in any manner any judgment, award, decree or
order; (C) creating, perfecting or enforcing any lien or encumbrance; (D)
asserting a setoff, right of subrogation or recoupment of any kind against
any debt, liability or obligation due to the Debtors; and (E) commencing or
continuing, in any manner or in any place, any action that does not comply
with or is inconsistent with the provisions of the Plan; provided, however,
that nothing contained herein shall preclude such persons from exercising
their rights pursuant to and consistent with the terms of this Plan.
(b) By accepting distributions pursuant to the Plan, each
holder of an Allowed Claim or Interest will be deemed to have specifically
consented to the injunctions set forth in this Section 10.6.
10.7 TERM OF BANKRUPTCY INJUNCTION OR STAYS. All injunctions or
stays provided for in the Chapter 11 Cases under section 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date,
shall remain in full force and effect until the Effective Date.
10.8 TERMINATION OF SUBORDINATION RIGHTS AND SETTLEMENT OF
RELATED CLAIMS. (a) The classification and manner of satisfying all Claims
and Interests under the Plan take into consideration all subordination
rights, whether arising by contract or under general principles of
equitable subordination, section 510(b) or 510(c) of the Bankruptcy Code,
or otherwise. All subordination rights that a Holder of a Claim or Interest
may have with respect to any distribution to be made pursuant to the Plan
will be discharged and terminated, and all actions related to the
enforcement of such subordination rights will be permanently enjoined.
Accordingly, distributions pursuant to the Plan to Holders of Allowed
Claims or Allowed Interests will not be subject to payment to a beneficiary
of such terminated subordination rights, or to levy, garnishment,
attachment or other legal process by a beneficiary of such terminated
subordination rights.
(b) All Claims of holders of Senior Debt, as defined in
the Senior Subordinated Note Indentures and the Junior Subordinated Note
Indenture (collectively, the "Senior Debt Holders") against the Debtors,
and all rights and claims between or among the Senior Debt Holders and the
Senior Subordinated Note Holders or the Junior Subordinated Note Holders
relating in any manner whatsoever to claimed subordination rights,
"make-whole" rights, rights to postpetition or default interest or similar
rights, if any (collectively "Subordination-Related Rights"), shall be
deemed satisfied by the distributions under, described in, contemplated by,
and/or implemented by this Plan to holders of such Claims (i.e., Holders of
Secured Lender Claims, Senior Subordinated Note Claims and Junior
Subordinated Note Claims), and such rights shall be deemed waived,
released, discharged and terminated as of the Effective Date, and all
actions related to the enforcement of such Subordination-Related Rights
shall be permanently enjoined. Distributions under, described in,
contemplated by and/or implemented by this Plan shall not be subject to
levy, garnishment, attachment or like legal process by any holder of a
Claim, including, but not limited to, Holders of Secured Lender Claims,
Senior Subordinated Note Claims and Junior Subordinated Note Claims, by
reason of any claimed Subordination-Related Rights or otherwise, so that
each Holder of a Claim shall have and receive the benefit of the
distributions in the manner set forth and described in this Plan.
(c) Pursuant to Bankruptcy Rule 9019 and in consideration
of the distributions and other benefits provided under the Plan, the
provisions of the Plan will constitute a good faith compromise and
settlement of all claims or controversies relating to the subordination
rights that a Holder of a Claim including, but not limited to, a Holder of
a Secured Lender Claim, Senior Subordinated Note Claim or a Junior
Subordinated Note Claim, may have or any distribution to be made pursuant
to the Plan on account of such Claim. Entry of the Confirmation Order will
constitute the Bankruptcy Court's approval, as of the Effective Date, of
the compromise or settlement of all such claims or controversies and the
Bankruptcy Court's finding that such compromise or settlement is in the
best interests of the Debtors, the Reorganized Debtors, and their
respective properties and holders of Claims and Interests, and is fair,
equitable and reasonable.
ARTICLE XI
RETENTION OF JURISDICTION
Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and
notwithstanding entry of the Confirmation Order and the occurrence of the
Effective Date, the Bankruptcy Court will retain exclusive jurisdiction
over all matters arising out of, and related to, the Chapter 11 Cases and
the Plan to the fullest extent permitted by law, including, among other
things, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify,
estimate or establish the priority or secured or unsecured status of any
Claim or Interest, including the resolution of any request for payment of
any Administrative Claim and the resolution of any objections to the
allowance or priority of Claims or Interests;
(b) Grant or deny any applications for allowance of
compensation or reimbursement of expenses authorized pursuant to the
Bankruptcy Code or the Plan for periods ending on or before the Effective
Date;
(c) Resolve any matters related to the assumption,
assumption and assignment, or rejection of any executory contract or
unexpired lease to which any Debtor is a party or with respect to which any
Debtor or the Reorganized Debtor may be liable and to hear, determine and,
if necessary, liquidate any Claims arising therefrom;
(d) Ensure that distributions to holders of Allowed
Claims and Allowed Interests are accomplished pursuant to the provisions of
the Plan;
(e) Decide or resolve any motions, adversary proceedings,
contested or litigated matters and any other matters and grant or deny any
applications involving the Debtors that may be pending on the Effective
Date;
(f) Enter such orders as may be necessary or appropriate
to implement or consummate the provisions of the Plan and all contracts,
instruments, releases and other agreements or documents created in
connection with the Plan, the Disclosure Statement or the Confirmation
Order;
(g) Resolve any cases, controversies, suits or disputes
that may arise in connection with the consummation, interpretation or
enforcement of the Plan or any contract, instrument, release or other
agreement or document that is executed or created pursuant to the Plan, or
any entity's rights arising from or obligations incurred in connection with
the Plan or such documents;
(h) Modify the Plan before or after the Effective Date
pursuant to section 1127 of the Bankruptcy Code or modify the Disclosure
Statement, the Confirmation Order or any contract, instrument, release or
other agreement or document created in connection with the Plan, the
Disclosure Statement or the Confirmation Order, or remedy any defect or
omission or reconcile any inconsistency in any Bankruptcy Court order, the
Plan, the Disclosure Statement, the Confirmation Order or any contract,
instrument, release or other agreement or document created in connection
with the Plan, the Disclosure Statement or the Confirmation Order, in such
manner as may be necessary or appropriate to consummate the Plan;
(i) Hear and determine all applications for compensation
and reimbursement of expenses of Professionals under the Plan or under
sections 330, 331 503(b), 1103 and 1129(c)(9) of the Bankruptcy Code,
provided, however, that from and after the Effective Date the payment of
fees and expenses of the Reorganized Debtors, including counsel fees, shall
be made in the ordinary course of business and shall not be subject to the
approval of the Bankruptcy Court.
(j) Issue injunctions, enter and implement other orders
or take such other actions as may be necessary or appropriate to restrain
interference by any entity with consummation, implementation or enforcement
of the Plan or the Confirmation Order;
(k) Hear and determine causes of action by or on behalf
of the Debtors or the Reorganized Debtors;
(l) Hear and determine matters concerning state, local
and federal taxes in accordance with sections 346, 505 and 1146 of the
Bankruptcy Code;
(m) Enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any reason or in any respect
modified, stayed, reversed, revoked or vacated or distributions pursuant to
the Plan are enjoined or stayed;
(n) Determine any other matters that may arise in
connection with or relate to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release or other agreement
or document created in connection with the Plan, the Disclosure Statement
or the Confirmation Order;
(o) Enforce all orders, judgments, injunctions, releases,
exculpations, indemnifications and rulings entered in connection with the
Chapter 11 Cases;
(p) Hear and determine all matters related to (i) the
property of the Estates from and after the Confirmation Date and (ii) the
activities of the Reorganized Debtors;
(q) Hear and determine disputes with respect to
compensation of the Reorganized Debtors' professional advisors;
(r) Hear and determine such other matters as may be
provided in the Confirmation Order or as may be authorized under the
Bankruptcy Code; and
(s) Enter an order closing the Chapter 11 Cases.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS. Each of
the Debtors or the Reorganized Debtors is authorized to execute, deliver,
file or record such contracts, instruments, releases and other agreements
or documents and take such actions as may be necessary or appropriate to
effectuate, implement and further evidence the terms and conditions of the
Plan and any notes or securities issued pursuant to the Plan.
12.2 CORPORATE ACTION. Prior to, on or after the Effective Date
(as appropriate), all matters provided for under the Plan that would
otherwise require approval of the stockholders or directors of one (1) or
more of the Debtors or the Reorganized Debtors shall be deemed to have
occurred and shall be in effect prior to, on or after the Effective Date
(as appropriate) pursuant to the applicable general corporation law of the
states in which the Debtors or the Reorganized Debtors are incorporated
without any requirement of further action by the stockholders or directors
of the Debtors or the Reorganized Debtors.
12.3 EXEMPTION FROM TRANSFER TAXES. Pursuant to section 1146(c)
of the Bankruptcy Code, (a) the issuance, transfer or exchange of notes or
equity securities under the Plan; (b) the creation of any mortgage, deed of
trust, lien, pledge or other security interest; (c) the making or
assignment of any lease or sublease; or (d) the making or delivery of any
deed or other instrument of transfer under, in furtherance of, or in
connection with, the Plan, including, without limitation, any merger
agreements; agreements of consolidation, restructuring, disposition,
liquidation or dissolution; deeds; bills of sale; and transfers of tangible
property, will not be subject to any stamp tax, recording tax, personal
property tax, real estate transfer tax, sales or use tax or other similar
tax. Unless the Bankruptcy Court orders otherwise, all sales, transfers and
assignments of owned and leased property approved by the Bankruptcy Court
on or prior to the Effective Date, shall be deemed to have been in
furtherance of, or in connection with, the Plan.
12.4 BAR DATES FOR ADMINISTRATIVE CLAIMS. The Confirmation
Order will establish an Administrative Claims Bar Date for filing
Administrative Claims, except for Claims under the DIP Credit Agreement as
provided in Section 3.1(a)(ii) hereof, which date will be thirty (30) days
after the Confirmation Date. Holders of asserted Administrative Claims not
paid prior to the Confirmation Date shall submit proofs of Claim on or
before such Administrative Claims Bar Date or forever be barred from doing
so. The notice of Confirmation to be delivered pursuant to Fed. R. Bankr.
P. 3020(c) and 2002(f) will set forth such date and constitute notice of
this Administrative Claims Bar Date. The Debtors and the Reorganized
Debtors shall have thirty (30) days (or such longer period as may be
allowed by order of the Bankruptcy Court) following the Administrative
Claims Bar Date to review and object to such Administrative Claims before a
hearing for determination of allowance of such Administrative Claims.
12.5 PAYMENT OF STATUTORY FEES. All fees payable pursuant to
section 1930 of title 28, United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on the
Effective Date.
12.6 AMENDMENT OR MODIFICATION OF THE PLAN. Subject to section
1127 of the Bankruptcy Code and, to the extent applicable, sections 1122,
1123 and 1125 of the Bankruptcy Code, the Debtors reserve the right, to
alter, amend or modify the Plan with consent of the Bondholder Committee
and the Prepetition Agent at any time prior to or after the Confirmation
Date but prior to the substantial consummation of the Plan. A Holder of a
Claim or Interest that has accepted the Plan shall be deemed to have
accepted the Plan, as altered, amended or modified, if the proposed
alteration, amendment or modification does not materially and adversely
change the treatment of the Claim or Interest of such Holder.
12.7 SEVERABILITY OF PLAN PROVISIONS. If, prior to the
Confirmation Date, any term or provision of the Plan is determined by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court
will have the power to alter and interpret such term or provision to make
it valid or enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision held to be invalid, void or
unenforceable, and such term or provision will then be applicable as
altered or interpreted. Notwithstanding any such holding, alteration or
interpretation, the remainder of the terms and provisions of the Plan will
remain in full force and effect and will in no way be affected, impaired or
invalidated by such holding, alteration or interpretation. The Confirmation
Order will constitute a judicial determination and will provide that each
term and provision of the Plan, as it may have been altered or interpreted
in accordance with the foregoing, is valid and enforceable pursuant to its
terms.
12.8 SUCCESSORS AND ASSIGNS. The Plan shall be binding upon and
inure to the benefit of the Debtors, and their respective successors and
assigns, including, without limitation, the Reorganized Debtors. The
rights, benefits and obligations of any entity named or referred to in the
Plan shall be binding on, and shall inure to the benefit of any heir,
executor, administrator, successor or assign of such entity.
12.9 PLAN SUPPLEMENT. The Plan Supplement shall be filed with
the Bankruptcy Court not later than five (5) days prior to the Confirmation
Hearing. Upon its filing, the Plan Supplement may be inspected in the
office of the clerk of the Bankruptcy Court or its designee during normal
business hours. Holders of Claims and Interests may obtain a copy of the
Plan Supplement upon written request to the Debtor. The documents contained
in the Plan Supplement shall be approved by the Bankruptcy Court pursuant
to the Confirmation Order.
12.10 REVOCATION, WITHDRAWAL OR NON-CONSUMMATION. The Debtors
reserve the right to revoke or withdraw the Plan as to any or all of the
Debtors prior to the Confirmation Date and to file subsequent plans of
reorganization. If the Debtors revoke or withdraw the Plan as to any or all
of the Debtors, or if Confirmation or Consummation as to any or all of the
Debtors does not occur, then, with respect to such Debtors, (a) the Plan
shall be null and void in all respects, (b) any settlement or compromise
embodied in the Plan (including the fixing or limiting to an amount certain
any Claim or Interest or Class of Claims or Interests), assumption or
rejection of executory contracts or leases affected by the Plan, and any
document or agreement executed pursuant to the Plan, shall be deemed null
and void, and (c) nothing contained in the Plan shall (i) constitute a
waiver or release of any Claims by or against, or any Interests in, such
Debtors or any other Person, (ii) prejudice in any manner the rights of
such Debtors or any other Person, or (iii) constitute an admission of any
sort by the Debtors or any other Person.
12.11 NOTICE. All notices, requests and demands to or upon the
Debtors or the Reorganized Debtors to be effective shall be in writing and,
unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when actually delivered or, in the case of notice by
facsimile transmission, when received and telephonically confirmed,
addressed as follows:
TOKHEIM CORPORATION
P.O. Box 360
10501 Corporate Drive
Fort Wayne, IN 46801
Telephone: (219) 470-4600
Facsimile: (219) 470-4887
Attn: Douglas K. Pinner
with copies to:
SKADDEN ARPS SLATE
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
Attn: David S. Kurtz, Esq.
12.12 GOVERNING LAW. Except to the extent the Bankruptcy Code,
the Bankruptcy Rules or other federal law is applicable, or to the extent
an exhibit or schedule to the Plan provides otherwise, the rights and
obligations arising under this Plan shall be governed by, and construed and
enforced in accordance with, the laws of Delaware, without giving effect to
the principles of conflicts of law of such jurisdiction.
12.13 TAX REPORTING AND COMPLIANCE. In connection with the Plan
and all instruments issued in connection therewith and distributions
thereof, the Debtors, and the Reorganized Debtors, as the case may be,
shall comply with all withholding and reporting requirements imposed by any
federal, state, local or foreign taxing authority and all distributions
hereunder shall be subject to any such withholding and reporting
requirements. The Reorganized Debtors are hereby authorized, on behalf of
each of the Debtors, to request an expedited determination under section
505(b) of the Bankruptcy Code of the tax liability of the Debtors for all
taxable periods ending after the Petition Date through, and including, the
Effective Date.
12.14 SCHEDULES. All exhibits and schedules to the Plan and the
Plan Supplement are incorporated and are a part of the Plan as if set forth
in full herein.
12.15 SECTION 1145 EXEMPTION. Pursuant to section 1145(a) of
the Bankruptcy Code, the offer, issuance, transfer or exchange of any
security under the Plan, or the making or delivery of an offering
memorandum or other instrument of offer or transfer under this Plan, shall
be exempt from section 5 of the Securities Act or any similar state or
local law requiring the registration for offer or sale of a security or
registration or licensing of an issuer or a security.
12.16 JURISDICTION OVER THE REORGANIZED DEBTORS.
Notwithstanding the jurisdiction retained in Article XI hereof, from and
after the Effective Date, the Bankruptcy Court shall not have the power to
issue any order which modifies the New Common Stock, New Preferred Stock,
New Junior Warrants, New Warrants or Bank Warrants or the rights of the
Holders thereof with respect to such New Common Stock, New Warrants, New
Preferred Stock, New Junior Warrants or Bank Warrants.
12.17 FILING OF ADDITIONAL DOCUMENTS. On or before substantial
consummation of the Plan, the Debtors shall File such agreements and other
documents, as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan.
Dated: August 16, 2000
Respectfully submitted,
TOKHEIM CORPORATION
(for itself and on behalf of the Subsidiary
Debtors)
By:/s/ Douglas K. Pinner
-------------------------------
Name: Douglas K. Pinner
Title: President, Chairman and
Chief Executive Officer
Counsel:
/s/ David S. Kurtz
----------------------------------
David S. Kurtz (IL 03126561)
Felicia Gerber Perlman (IL 06210753)
SKADDEN ARPS SLATE MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR DEBTORS
EXHIBIT A
GENERAL IMPAIRED UNSECURED CLAIM LIST
TABLE OF CONTENTS
PAGE
INTRODUCTION.........................................................2
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION.........................2
1.1 Administrative Claim...................................2
1.2 Allowed................................................3
1.3 Allowed Claim..........................................3
1.4 Allowed Interest ......................................3
1.5 Amended Certificates of Incorporation and By-Laws......3
1.6 Ballot.................................................3
1.7 Bank Warrants .........................................3
1.8 Bank Warrant Agreement ................................3
1.9 Bankruptcy Code........................................4
1.10 Bankruptcy Court.......................................4
1.11 Bankruptcy Rules.......................................4
1.12 Bar Date...............................................4
1.13 Bondholder Committee...................................4
1.14 Business Day...........................................4
1.15 Cash...................................................4
1.16 Chapter 11 Cases.......................................4
1.17 Claim .................................................4
1.18 Claims Objection Deadline..............................4
1.19 Class..................................................5
1.20 Class 7 Solicitation Order ............................5
1.21 Collateral.............................................5
1.22 Confirmation Date......................................5
1.23 Confirmation Hearing...................................5
1.24 Confirmation Order.....................................5
1.25 Debtor(s)..............................................5
1.26 Delaware General Corporate Law.........................5
1.27 DIP Credit Agreement...................................5
1.28 DIP Lenders............................................6
1.29 Disbursing Agent.......................................6
1.30 Disclosure Statement...................................6
1.31 Disputed Claim.........................................6
1.32 Disputed Claim Amount..................................6
1.33 Disputed Claims Reserve................................6
1.34 Disputed Interest .....................................6
1.35 Disputed Interest Amount...............................6
1.36 Disputed Interest Reserve .............................7
1.37 Distribution Date......................................7
1.38 Distribution Record Date...............................7
1.39 Effective Date.........................................7
1.40 Estate(s)..............................................7
1.41 Exchange Act...........................................7
1.42 Exit Facility .........................................7
1.43 Exit Lenders ..........................................7
1.44 Fee Claim..............................................7
1.45 File, Filed or Filing..................................7
1.46 Final Order............................................8
1.47 General Impaired Unsecured Claim.......................8
1.48 General Impaired Unsecured Claims List ................8
1.49 Holder ................................................8
1.50 Impaired...............................................8
1.51 Impaired Unsecured Claim...............................8
1.52 Intercompany Claim.....................................8
1.53 Interest...............................................9
1.54 IRC....................................................9
1.55 IRS....................................................9
1.56 Junior Subordinated Note ..............................9
1.57 Junior Subordinated Note Claim ........................9
1.58 Junior Subordinated Noteholders........................9
1.59 Junior Subordinated Note Indenture.....................9
1.60 Junior Subordinated Note Trustee.......................9
1.61 KSOP...................................................9
1.62 KSOP Claim.............................................9
1.63 Litigation Claims.....................................10
1.64 Management Option Agreement...........................10
1.65 Management Option Plan................................10
1.66 Management Options....................................10
1.67 Management Option Plan Participants ..................10
1.68 Master Ballot.........................................10
1.69 New Common Stock .....................................10
1.70 New Credit Agreement..................................10
1.71 New Junior Warrant Agreement..........................10
1.72 New Junior Warrants...................................11
1.73 New Preferred Stock...................................11
1.74 New Special Notes ....................................11
1.75 New Term Notes........................................11
1.76 New Tranche A Term Notes .............................11
1.77 New Tranche B Term Notes .............................11
1.78 New Tranche B Term Notes Amount.......................12
1.79 New Warrant Agreement ................................12
1.80 New Warrants..........................................12
1.81 Non-Tax Priority Claim................................12
1.82 Old Bank Warrants.....................................12
1.83 Old Common Stock......................................12
1.84 Old Equity............................................12
1.85 Old Junior Preferred Stock............................12
1.86 Old Preferred Stock...................................13
1.87 Old Rights Agreement .................................13
1.88 Old Rights and Warrants...............................13
1.89 Other Old Equity......................................13
1.90 Other Secured Claim...................................13
1.91 Petition Date.........................................13
1.92 Plan..................................................13
1.93 Plan Supplement.......................................13
1.94 Prepetition Agent.....................................13
1.95 Prepetition Credit Agreement .........................14
1.96 Prepetition Lenders ..................................14
1.97 Prepetition Noteholders ..............................14
1.98 Prepetition Notes ....................................14
1.99 Priority Tax Claim....................................14
1.100 Professional.........................................14
1.101 Registration Rights Agreement........................14
1.102 Reorganized Debtors .................................14
1.103 Reorganized Tokheim..................................14
1.104 Schedules............................................14
1.105 Schlumberger Limited Warrants........................15
1.106 Secured Lender Claim ................................15
1.107 Securities Act.......................................15
1.108 Securities Claims....................................15
1.109 Senior Subordinate Note Claims.......................15
1.110 Senior Subordinated Noteholders......................15
1.111 Senior Subordinated Note Indentures .................15
1.112 Senior Subordinated Notes............................15
1.113 Senior Subordinated Note Trustee.....................16
1.114 SERP.................................................16
1.115 Solicitation Order...................................16
1.116 Subsidiary Debtors...................................16
1.117 Subsidiary Interests.................................16
1.118 Substantive Consolidation Order......................16
1.119 Unimpaired Claim ....................................16
1.120 Unimpaired Unsecured Claim ..........................16
1.121 Voting Deadline......................................16
1.122 Voting Record Date ..................................16
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS...........................17
2.1 Unclassified Claims...................................18
2.2 Unimpaired Classes of Claims..........................18
2.3 Impaired Classes of Claims............................18
2.4 Impaired Class of Interests...........................19
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS................................19
3.1 Unclassified Claims...................................19
3.2 Unimpaired Classes of Claims..........................20
3.3 Impaired Classes of Claims............................22
3.4 Impaired Class of Interests...........................23
3.5 Special Provision Regarding Unimpaired Claims.........23
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN.............................24
4.1 Substantive Consolidation for Purposes of
Treating Impaired Claims..............................24
4.2 Continued Corporate Existence and Vesting of
Assets in the Reorganized Debtors.....................25
4.3 Corporate Governance, Directors and Officers
and Corporate Action..................................26
4.4 Cancellation of Notes, Instruments, Debentures and
Common Stock..........................................27
4.5 Issuance of New Securities and Related Documentation..27
4.6 Issuance of New Common Stock, New Preferred Stock
and Warrants. .......................................28
4.7 New Credit Agreement. ...............................28
4.8 Exit Financing. .....................................28
4.9 Registration Rights Agreement.........................28
4.10 Management Option Plan................................28
4.11 Sources of Cash for Plan Distributions................29
4.12 Exemption from Certain Transfer Taxes.................29
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN..............................29
5.1 Classes Entitled to Vote..............................29
5.2 Acceptance by Impaired Classes........................29
5.3 Cramdown..............................................30
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS...............................30
6.1 Distributions for Claims or Interests Allowed as
of the Effective Date.................................30
6.2 Interest on Claims....................................30
6.3 Distributions by Reorganized Debtors..................30
6.4 Delivery of Distributions and Undeliverable
or Unclaimed Distributions............................31
6.5 Record Date for Distributions.........................32
6.6 Compliance with Tax Requirements......................32
6.7 Allocation of Plan Distributions Between
Principal and Interest................................32
6.8 Means of Cash Payment.................................33
6.9 Withholding and Reporting Requirements................33
6.10 Setoffs...............................................33
6.11 Fractional Shares. ..................................34
6.12 Surrender of Cancelled Instruments of Securities......34
6.13 Lost, Stolen, Mutilated or Destroyed Debt Securities..35
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES.............................................35
7.1 Assumption of Executory Contracts and Unexpired
Leases................................................35
7.2 Claims Based on Rejection of Executory
Contracts or Unexpired Leases.........................36
7.3 Cure of Defaults of Assumed Executory
Contracts and Unexpired Leases........................36
7.4 Indemnification of Directors, Officers and Employees..36
7.5 Compensation and Benefit Programs.....................37
ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS...............................37
8.1 Objection Deadline; Prosecution of Objections.........37
8.2 No Distributions Pending Allowance....................38
8.3 Disputed Claims Reserve; Disputed Interest Reserve....38
8.4 Distributions After Allowance.........................38
ARTICLE IX
CONFIRMATION AND CONSUMMATION OF THE PLAN........................39
9.1 Conditions to Confirmation............................39
9.2 Conditions to Effective Date..........................39
9.3 Waiver of Conditions..................................41
9.4 Consequences of Non-Occurrence of Effective Date......41
ARTICLE X
EFFECT OF PLAN CONFIRMATION......................................42
10.1 Binding Effect........................................42
10.2 Releases..............................................42
10.3 Discharge of Claims and Termination of Interests......44
10.4Preservation of Rights of Action; Settlement of
Litigation Claims.................................44
10.5 Exculpation and Limitation of Liability...............45
10.6 Injunction............................................45
10.7 Term of Bankruptcy Injunction or Stays................46
10.8 Termination of Subordination Rights and Settlement
of Related Claims....................................46
ARTICLE XI
RETENTION OF JURISDICTION........................................47
ARTICLE XII
MISCELLANEOUS PROVISIONS.........................................50
12.1 Effectuating Documents and Further Transactions.......50
12.2 Corporate Action......................................50
12.3 Exemption from Transfer Taxes.........................50
12.4 Bar Dates for Administrative Claims...................51
12.5 Payment of Statutory Fees.............................51
12.6 Amendment or Modification of the Plan.................51
12.7 Severability of Plan Provisions.......................51
12.8 Successors and Assigns................................52
12.9 Plan Supplement.......................................52
12.10Revocation, Withdrawal or Non-Consummation............52
12.11Notice................................................52
12.12Governing Law.........................................53
12.13Tax Reporting and Compliance..........................53
12.14Schedules.............................................54
12.15Section 1145 Exemption................................54
12.16Jurisdiction over the Reorganized Debtors.............54
12.17Filing of Additional Documents........................54
EXHIBIT B
ANNUAL REPORT ON FORM 10-K
EXHIBIT C
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT D
REORGANIZATION VALUATION ANALYSIS
Tokheim has been advised by Lazard Freres ("Lazard"), its
financial advisor, with respect to the reorganization value of Reorganized
Tokheim on a going concern basis. Solely for purposes of the Plan, the
estimated range of reorganization value of Reorganized Tokheim was assumed
to be approximately $300 million to $350 million (with a midpoint value of
$325 million) as of an assumed Effective Date of September 30, 2000.
THE ASSUMED RANGE OF THE REORGANIZATION VALUE, AS OF AN ASSUMED
EFFECTIVE DATE OF SEPTEMBER 30, 2000, REFLECTS WORK PERFORMED BY LAZARD
FRERES ON THE BASIS OF INFORMATION IN RESPECT OF THE BUSINESS AND ASSETS OF
TOKHEIM AVAILABLE TO LAZARD FRERES AS OF AUGUST 8, 2000.
Based upon the assumed range of the reorganization value of
Reorganized Tokheim of between $300 million and $350 million and an assumed
total debt (including capital, capitalized operating lease obligations and
preferred stock) of approximately $275 million, Tokheim has employed an
imputed estimate of the range of equity value for Reorganized Tokheim
between $25 million and $75 million, with a mid-point value of $50 million.
Assuming a distribution of 5,000,000 shares of New Common Stock pursuant to
the Plan, the imputed estimate of the range of equity value on a per share
basis for Reorganized Tokheim is between $5.00 and $15.00 per share, with a
midpoint value of $10.00 per share.
For purposes of determining reorganization value, Lazard Freres
assumed that the impact on the equity value of Reorganized Tokheim from the
issuance of warrants and the Management Options would be minimal.
The foregoing estimate of the reorganization value of
Reorganized Tokheim is based on a number of assumptions, including a
successful reorganization of Tokheim's business and finances in a timely
manner, the implementation of Reorganized Tokheim's business plan, the
achievement of the forecasts reflected in the Projections, market
conditions as of August 8, 2000 continuing through the assumed Effective
Date of September 30, 2000, and the Plan becoming effective in accordance
with the estimates and other assumptions discussed herein.
IN ESTIMATING THE RANGE OF THE REORGANIZATION VALUE OF
REORGANIZED TOKHEIM, LAZARD FRERES: (I) REVIEWED CERTAIN HISTORICAL
FINANCIAL INFORMATION OF TOKHEIM FOR RECENT YEARS AND INTERIM PERIODS; (II)
REVIEWED CERTAIN INTERNAL FINANCIAL AND OPERATING DATA OF TOKHEIM INCLUDING
FINANCIAL PROJECTIONS, PREPARED AND PROVIDED BY MANAGEMENT RELATING TO ITS
BUSINESS AND ITS PROSPECTS; (III) MET WITH CERTAIN MEMBERS OF SENIOR
MANAGEMENT OF TOKHEIM TO DISCUSS TOKHEIM'S OPERATIONS AND FUTURE PROSPECTS;
(IV) REVIEWED PUBLICLY AVAILABLE FINANCIAL DATA AND CONSIDERED THE MARKET
VALUE OF PUBLIC COMPANIES WHICH LAZARD FRERES DEEMED GENERALLY COMPARABLE
TO THE OPERATING BUSINESS OF TOKHEIM; (V) CONSIDERED CERTAIN ECONOMIC AND
INDUSTRY INFORMATION RELEVANT TO THE OPERATING BUSINESS; AND (VI) CONDUCTED
SUCH OTHER STUDIES, ANALYSIS INQUIRIES, AND INVESTIGATIONS AS IT DEEMED
APPROPRIATE. ALTHOUGH LAZARD FRERES CONDUCTED A REVIEW AND ANALYSIS OF
TOKHEIM'S BUSINESS, OPERATING ASSETS AND LIABILITIES AND REORGANIZED
TOKHEIM'S BUSINESS PLANS, IT ASSUMED AND RELIED ON THE ACCURACY AND
COMPLETENESS OF ALL (I) FINANCIAL AND OTHER INFORMATION FURNISHED TO IT BY
TOKHEIM, AND (II) PUBLICLY AVAILABLE INFORMATION, INCLUDING TO THE EXTENT
RELEVANT PRECEDENT TRANSACTIONS. IN ADDITION, LAZARD FRERES DID NOT
INDEPENDENTLY VERIFY MANAGEMENT'S PROJECTIONS IN CONNECTION WITH SUCH
ESTIMATES OF THE REORGANIZATION VALUE, AND NO INDEPENDENT VALUATIONS OR
APPRAISALS OF TOKHEIM WERE SOUGHT OR OBTAINED IN CONNECTION HEREWITH.
ESTIMATES OF THE REORGANIZATION VALUE DO NOT PURPORT TO BE
APPRAISALS OR NECESSARILY REFLECT THE VALUES WHICH MAY BE REALIZED IF
ASSETS ARE SOLD AS A GOING CONCERN, IN LIQUIDATION, OR OTHERWISE.
IN THE CASE OF REORGANIZED TOKHEIM, THE ESTIMATES OF THE
REORGANIZATION VALUE PREPARED BY LAZARD FRERES REPRESENT THE HYPOTHETICAL
REORGANIZATION ENTERPRISE VALUE OF REORGANIZED TOKHEIM. SUCH ESTIMATES WERE
DEVELOPED SOLELY FOR PURPOSES OF THE FORMULATION AND NEGOTIATION OF A PLAN
OF REORGANIZATION AND THE ANALYSIS OF IMPLIED RELATIVE RECOVERIES TO
CREDITORS THEREUNDER. SUCH ESTIMATES REFLECT COMPUTATIONS OF THE RANGE OF
THE ESTIMATED REORGANIZATION ENTERPRISE VALUE OF REORGANIZED TOKHEIM
THROUGH THE APPLICATION OF VARIOUS VALUATION TECHNIQUES AND DO NOT PURPORT
TO REFLECT OR CONSTITUTE APPRAISALS, LIQUIDATION VALUES OR ESTIMATES OF THE
ACTUAL MARKET VALUE THAT MAY BE REALIZED THROUGH THE SALE OF ANY SECURITIES
TO BE ISSUED PURSUANT TO THE PLAN, WHICH MAY BE SIGNIFICANTLY DIFFERENT
THAN THE AMOUNTS SET FORTH HEREIN.
THE VALUE OF AN OPERATING BUSINESS IS SUBJECT TO NUMEROUS
UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT TO PREDICT, AND WILL
FLUCTUATE WITH CHANGES IN FACTORS AFFECTING THE FINANCIAL CONDITION AND
PROSPECTS OF SUCH A BUSINESS. AS A RESULT, THE ESTIMATE OF THE RANGE OF THE
REORGANIZATION ENTERPRISE VALUE OF REORGANIZED TOKHEIM SET FORTH HEREIN IS
NOT NECESSARILY INDICATIVE OF ACTUAL OUTCOMES, WHICH MAY BE SIGNIFICANTLY
MORE OR LESS FAVORABLE THAN THOSE SET FORTH HEREIN. BECAUSE SUCH ESTIMATES
ARE INHERENTLY SUBJECT TO UNCERTAINTIES, NEITHER TOKHEIM, LAZARD FRERES,
NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THEIR ACCURACY. IN
ADDITION, THE VALUATION OF NEWLY-ISSUED SECURITIES IS SUBJECT TO ADDITIONAL
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT.
ACTUAL MARKET PRICES OF SUCH SECURITIES AT ISSUANCE WILL DEPEND UPON, AMONG
OTHER THINGS, PREVAILING INTEREST RATES, CONDITIONS IN THE FINANCIAL
MARKETS, THE ANTICIPATED INITIAL SECURITIES HOLDINGS OF PREPETITION
CREDITORS, SOME OF WHICH MAY PREFER TO LIQUIDATE THEIR INVESTMENT RATHER
THAN HOLD IT ON A LONG-TERM BASIS, AND OTHER FACTORS WHICH GENERALLY
INFLUENCE THE PRICES OF SECURITIES.
Reorganized Tokheim may, in its discretion, seek to list the
New Common Stock for trading. There can be no assurance, however, that the
stock will be so listed and, if so listed, that an active trading market
would develop.
VALUATION METHODOLOGY
Lazard performed a variety of analyses and considered a variety
of factors in preparing the valuation of Tokheim. While several generally
accepted valuation techniques for estimating Tokheim's enterprise value
were used, Lazard primarily relied on three methodologies: comparable
public company analysis, discounted cash flow analysis, and precedent
transactions analysis. Lazard placed different weights on each of these
analyses and made judgements as to the relative significance of each
analysis in determining Tokheim's indicated enterprise value range.
Lazard's valuation must be considered as a whole and selecting just one
methodology or portions of the analyses, without considering the analyses
as a whole, could create a misleading or incomplete conclusion as to
Tokheim's enterprise value.
COMPARABLE PUBLIC COMPANY ANALYSIS
A comparable public company analysis estimates value based on a
comparison of the target company's financial statistics with the financial
statistics of public companies that are similar to the target company. It
establishes a benchmark for asset valuation by deriving the value of
"comparable" assets, standardized using a common variable such as revenues,
earnings, and cash flows. The analysis includes a detailed multi-year
financial comparison of each company's income statement, balance sheet, and
cash flow. In addition, each company's performance, profitability, margins,
leverage and business trends are also examined. Based on these analyses, a
number of financial multiples and ratios are calculated to gauge each
company's relative performance and valuation. Comparable public company
analysis is generally a historic or "backward looking" technique. It relies
on the price that an investor is willing to pay in the public markets for
securities of similar publicly traded companies and is indicative of
Tokheim's current and future prospects as well as the rate of return
required on the investment.
A key factor to this approach is the selection of companies
with relatively similar business and operational characteristics to the
target company. Criteria for selecting comparable companies include, among
other relevant characteristics, similar lines of businesses, business
risks, growth prospects, maturity of businesses, market presence, size and
scale of operations and technology employed in production. The selection of
truly comparable companies is often difficult and subject to
interpretation. However, the underlying concept is to develop a premise for
relative value, which when coupled with other approaches, presents a
foundation for determining firm value.
As the largest "pure play" manufacturer of retail gasoline
dispensers in the world, it was challenging to identify comparable
companies. Its major competitors are either subsidiaries of large
conglomerates, smaller --recently acquired companies, or foreign and/or
privately held corporations. In order to identify comparable companies to
Tokheim, it was necessary to focus on the technology that Tokheim brings to
market. The production of gasoline dispensers involves three components:
dispensing and measuring pump technology, point of sales technology or
electronics and equipment service. Lazard selected six comparable companies
as a result of examining over 150 different potential candidates.
DISCOUNTED CASH FLOW APPROACH ("DCF")
The discounted cash flow ("DCF") valuation methodology relates
the value of an asset or business to the present value of expected future
cash flows to be generated by that asset or business. The DCF methodology
is a "forward looking" approach that discounts the expected future cash
flows by a theoretical or observed discount rate determined by calculating
the average cost of debt and equity for publicly traded companies that are
similar to Tokheim.
This approach relies on the company's ability to project future
cash flows with some degree of accuracy. Since Tokheim's projections
reflect significant assumptions made by Tokheim's management concerning
anticipated results, the assumptions and judgments used in the projections
may or may not prove correct and therefore, no assurance can be provided
that projected results are attainable or will be realized. Lazard cannot
and does not make any representations or warranties as to the accuracy or
completeness of Tokheim's projections.
PRECEDENT TRANSACTIONS ANALYSIS
Precedent transaction analysis estimates value by examining
public merger and acquisition transactions. An analysis of the disclosed
purchase price as a multiple of various operating statistics reveals
industry sales multiples for companies in similar lines of businesses to
Tokheim. These transaction multiples are calculated based on the purchase
price (including any debt assumed) paid to acquire companies that are
comparable to Tokheim. These multiples are then applied to Tokheim's key
operating statistics to determine the total enterprise value or value to a
potential strategic buyer.
Precedent transaction analysis explains other aspects of value.
Unlike the comparable public company analysis, the valuation in this
methodology includes a "control" premium, representing the purchase of a
majority or controlling position in a company's assets. Thus, this
methodology generally produces higher valuations than the comparable public
company analysis. Other aspects of value that manifest itself in a
precedent transaction analyses include:
o Circumstances surrounding a merger transaction may introduce
"noise" into the analysis (e.g. an additional premium may be
extracted from a buyer in the case of a competitive bidding
contest)
o The market environment is not identical for transactions
occurring at different periods of time
o Circumstances pertaining to the financial position of a company
may have an impact on the resulting purchase price (e.g. a
company in financial distress may receive a lower price due to
perceived weakness in its bargaining leverage)
Since precedent transaction analysis explains other aspects of value
besides the inherent value of a company, there are limitations as to its
usage in Tokheim's valuation.
THE ESTIMATES OF THE REORGANIZATION VALUE DETERMINED BY LAZARD
FRERES REPRESENT ESTIMATED REORGANIZATION VALUES AND DO NOT REFLECT VALUES
THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE MARKETS. THE IMPUTED ESTIMATE
OF THE RANGE OF THE REORGANIZATION EQUITY VALUE OF REORGANIZED TOKHEIM
ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO BE AN ESTIMATE OF THE
POST-REORGANIZATION MARKET TRADING VALUE. ANY SUCH TRADING VALUE MAY BE
MATERIALLY DIFFERENT FROM THE IMPUTED ESTIMATE OF THE REORGANIZATION EQUITY
VALUE RANGE FOR REORGANIZED TOKHEIM ASSOCIATED WITH LAZARD FRERES'
VALUATION ANALYSIS.
EXHIBIT E
LIQUIDATION ANALYSIS
<TABLE>
<CAPTION>
TOKHEIM CORPORATION
Liquidation Analysis
($ in thousands) Unaudited Book Hypothetical
Value as of Percentage Estimated Note
May 2000 Recovery Value Reference
(Note A) Percentage (See Below)
-----------------------------------------------------------------
[1] [2] [1] * [2] = [3]
<S> <C> <C> <C> <C>
Cash and Cash Equivalents $13,255 100% $13,255 B
Accounts Receivable, Net 53,317 77% 41,054 C
Inventory 31,867 59% 18,802 D
Fixed Assets, Net 36,596 78% 28,545 E
Intercompany Long Term Assets 313,051 51% 160,000 F
Other Assets 143,295 3% 5,000 G
---------- ---------
Total Assets $591,381 $266,656
========== =========
Assets and Other Items Available for Distribution $266,656
=========
Costs Associated with Liquidation: H
Costs Associated with Wind Down (7,800)
Chapter 7 Trustee Fees (5,333)
Chapter 7 Professional Fees (1,500)
---------
Costs Associated with Liquidation (14,633)
---------
NET ESTIMATED LIQUIDATION PROCEEDS AVAILABLE FOR 252,022
DISTRIBUTION
I
Less: Total Secured Claims 226,841 226,841
---------
Net Estimated Liquidation Proceeds Available
After Secured Claims 25,181
Less: Pre-Petition Priority Claims 1,500 1,500 J
---------
Net Estimated Liquidation Proceeds Available
for Unsecured Creditors 23,681
Less: Pre-Petition Unsecured Claims 307,519 307,519 K
---------
NET ESTIMATED DEFICIENCY TO UNSECURED ($283,838)
CLAIMS
==========
Hypothetical Recovery in a 7.7%
liquidation(%)
</TABLE>
The Liquidation Analysis was prepared by Lazard Freres and
relies on certain projected future events and necessarily relies on certain
estimates and assumptions in order to arrive at a hypothetical liquidation
value for the Debtors and their affiliates. Although developed and
considered reasonable by management and Lazard Freres, the estimates and
assumptions are inherently subject to significant business, economic and
competitive uncertainties and contingencies beyond the control of Tokheim
and its management, and upon assumptions with respect to the liquidation
decisions which could be subject to change. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE
REALIZED IF TOKHEIM WERE, IN FACT, TO UNDERGO SUCH A LIQUIDATION, AND
ACTUAL RESULTS COULD VARY MATERIALLY FROM THOSE SHOWN HERE. Furthermore,
the Debtor does not have available any current appraisals of its assets to
incorporate herein, nor can it judge with any degree of certainty the
impact of forced liquidation asset sales on the in-use market value of the
related assets.
The Liquidation Analysis assumes a liquidation period of six
months during which a two-phase approach to the liquidation would occur.
Phase I would entail a three month period in which contracts,
leases, inventory, property and equipment, and employees at all operating
units would be transferred through sale or otherwise to other contract food
service providers or liquidated and/or terminated as appropriate. Unit
level operations would be expected to substantially cease in any event
within the three month period. This time period would allow for an orderly
transfer of work load to competitors and could be expected to minimize
litigation from customers for breach of contract.
Phase II would entail a three month wrap-up period following
cessation of operations. Tokheim's remaining assets including receivables,
property and equipment, and miscellaneous assets would be collected and/or
liquidated. Certain corporate personnel, such as those in financial,
treasury and management information system areas would be retained as
necessary to support the completion of the liquidation process. It is also
assumed that the foreign operations would be sold as a going concern during
this time period.
The following notes describe the significant assumptions
reflected in the Liquidation Analysis.
Note A - Book Values as of May 2000
The book values used in this Liquidation Analysis are the
unaudited book values as of May 2000, and are assumed to be representative
of Tokheim's assets and liabilities as of the Effective Date.
Note B - Cash and Cash Equivalents
The Liquidation Analysis assumes that operations during the
liquidation period would not generate additional cash available for
distribution except for net proceeds from the disposition of non-cash
assets. It is assumed that cash and cash equivalents held at each of the
divisions would be 100% collectable, and would be offset by the Company's
current float.
Note C - Accounts Receivable
The accounts receivable balance is comprised of trade and
inter-company receivables. The recovery represents a blended rate of
collections based upon aging of the receivables and type of receivable.
Note D - Inventory
The inventory balance includes raw materials, work-in-progress,
finished goods and spare parts. The assumed recovery is based on
management's knowledge of the detailed asset composition and general market
conditions and represents a blended valuation based upon the inventory
type.
Note E - Fixed Assets, Net
Fixed Assets consist primarily of plant equipment, furniture &
fixtures, office equipment and leasehold improvements. The Debtor does not
have current appraisals for its property, plant and equipment. For purposes
of the Liquidation Analysis, the Debtor has assumed recovery rates based on
its knowledge of property, plant and equipment assets and general market
conditions. It is important to note that much of the property, plant and
equipment owned by the Debtor are considered unique and solely suited for
the production of fuel dispensers. It is believed that there are limited
other uses for these assets. Due to the limited number of competitors,
reduced profitability and general immobility of the fixed assets, the
Debtor believes that there would not be widespread demand for its plant,
property and equipment.
Note F - Intercompany Long-Term Assets
Intercompany Long Term Assets include investments in
subsidiaries that are comprised of notes receivables from and equity
investments in foreign subsidiaries. It is assumed that any value in a
liquidation scenario would be received through the sale of these foreign
subsidiaries on a going concern basis. Based on this assumption the
valuation ascribed to this asset for liquidation purposes is derived based
upon the low end of the valuation range included in the Reorganized
Valuation Analysis attached to the Disclosure Statement as Exhibit D.
Note G - Other Assets
Other Assets includes certain investments, prepaid expenses and
goodwill. Investments includes Key-man insurance, CVS split life insurance
and deferred compensation, which are listed on the Debtors books at net
book value. Due to the liquid nature of these assets the liquidation value
is assumed to be 100% of the realizable value.
Prepaid expense consists of group insurance, interest,
advertising and maintenance inventory. Due to the liquid nature of these
assets it has been assumed that 70% of these expense balances, as of the
petition date, will be reimbursed to the Debtor and available for
distribution to creditors. The cost of new insurance policies has been
included in the estimated wind-down costs.
Goodwill is adjusted to zero and has no value in a liquidation
scenario.
Note H - Costs Associated with Liquidation
During Phase I, contracts, leases, inventory, property and
equipment, and employees would be transferred or liquidated through sale or
during the initial three-month period. During this period, it is assumed
that the uncertainty caused by the liquidation process would result in
diminished profitability. Management estimates that unit operations would
be expected to generate a loss of approximately $2.8 million during this
three-month period. It is also assumed that the severance costs would total
approximately $5.0 million throughout the liquidation period.
Chapter 7 Trustee Fees include those fees associated with the
appointment of a Chapter 7 trustee in accordance with Section 326 of the
Bankruptcy Code. Trustee fees are estimated based on historical experience
in other similar cases and are calculated at 2% of the total cash generated
during the liquidation.
Chapter 7 Professional Fees include legal and accounting fees
incurred during the liquidation period.
Note I - Secured Creditor Claims
It is assumed that approximately $226,840 of secured Claims
exist as of May 31, 2000.
Note J - Administrative and Priority Claims
For purposes of the Liquidation Analysis, management has
assumed $1.5 million in administrative and priority claims as we have
assumed a Chapter 7 liquidation plan without a Chapter 11 reorganization
process.
Note K - Pre-Petition Unsecured Claims
Unsecured Creditors are estimated based on the Debtor's books
and records as of May 31, 2000 and include the following:
DESCRIPTION
Senior Subordinated Notes $ 193,337
Junior Subordinated PIK Notes 47,762
Trade Payables 21,575
Accrued Expenses 26,566
Intercompany Claims 2,286
Postretirement Benefits 15,993
--------------
TOTAL $ 307,519
The Debtor has not calculated lease rejection claims and other
potential claims as a result of the liquidation. However, at this time it
does not appear that any such claim would materially effect the recovery to
the pre-petition unsecured claims.
EXHIBIT F
PROJECTIONS
REORGANIZED TOKHEIM CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Reorganization
Adjustments
Estimated --------------- Pro Forma
($ in thousands) Pre-confirmation Debt Reorganized
Balance Sheet Discharge Fresh-Start Balance Sheet
-----------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $10,000 - - $ 10,000
Accounts receivable, net 116,726 - - 116,726
Inventory, net 84,740 - - 84,740
Other current assets 11,253 - - 11,253
------------------------------------------------------
Total current assets 222,719 - - 222,719
Investments 6,704 - - 6,704
Property, plant and equipment, net 70,068 - - 70,068
Intangibles, net 254,113 - (44,859) 209,254
Other non-current assets 46,367 - (45,858) 510
------------------------------------------------------
Total non-current assets 377,252 - (90,717) 286,536
Total assets $599,972 - ($90,717) $509,255
======================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities Not Subject to Compromise
Accounts payable $64,548 - - $64,548
Other current liabilities 84,197 (416) - 83,781
Postretirement benefits 16,866 - - 16,866
DIP/revolver financing 2,873 - - 2,873
Bank credit agreement 229,247 (229,247) - 0
Term debt (new) - 140,000 - 140,000
Senior trust note (new) - 100,000 - 100,000
Guaranteed ESOP obligation 2,238 - (2,238) 0
Cap leases/overdrafts/other 18,644 2,134 - 20,778
-----------------------------------------------------
Total current liabilities 418,613 12,470 (2,238) 428,846
Liabilities Subject to Compromise
Senior subordinated notes 193,337 (193,337) - -
Junior subordinated PIK notes 50,671 (50,671) - -
-----------------------------------------------------
Total liabilities subject
to compromise 244,007 (244,007) - -
Total liabilities 662,620 (231,537) (2,238) 428,846
Preferred equity 17,448 2,238 - 19,686
Common stockholders equity (80,097) 235,492 (94,672) 60,724
Total stockholders equity (62,649) 237,730 (94,672) 80,410
Total liabilities and stockholders'
equity 599,972 6,193 (96,909) 509,255
======================================================
</TABLE>
<TABLE>
<CAPTION>
REORGANIZED TOKHEIM CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
---------- ----------------------------------------------------------
($ in thousands) PRO FORMA REORGANIZED TOKHEIM CORPORATION
---------- ----------------------------------------------------------
September 30, November 30 November 30, November 30 November 30,
2000 2001 2002 2003 2004
------------------------------------------------- ---------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $10,000 $18,692 $18,692 $18,692 $18,692
Accounts receivable, net 116,726 132,705 141,280 148,344 155,761
Inventory, net 84,740 94,492 86,342 91,349 96,607
Other current assets 11,253 10,113 10,113 10,113 10,113
---------- -------------- ----------- ---------- --------
Total current assets 222,719 256,002 256,427 268,498 281,173
Investments 6,704 6,878 6,878 6,878 6,878
Property, plant and
equipment,net 70,068 68,667 61,472 49,474 36,423
Intangibles, net 209,254 209,254 209,254 209,254 209,254
Other non-current assets 510 510 510 510 510
---------- -------------- ----------- ---------- --------
Total non-current assets 286,536 285,308 278,113 266,115 253,064
Total assets $509,255 $541,310 $534,540 $534,613 $534,237
========== ============== =========== ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities Not Subject to
Compromise
Accounts payable $64,548 $72,824 $78,613 $82,535 $86,653
Other current liabilities 83,781 103,646 112,146 112,214 103,783
Postretirement benefits 16,866 16,900 16,900 17,407 17,929
DIP/revolver financing 2,873 8,237 7,848 17,920 30,331
Bank credit agreement - - - - -
Term debt (new) 140,000 140,000 140,000 140,000 140,000
Senior trust note (new) 100,000 100,000 75,000 50,000 25,000
Guaranteed ESOP obligation - - 0 0 0
Cap leases/overdrafts/other 20,778 19,562 18,918 18,727 18,855
Total liabilities subject
to comprise 428,846 461,169 449,425 438,803 422,551
Liabilities Subject to
Compromise
Senior subordinated notes - - - - -
Junior subordinated PIK notes - - - - -
--------------------------------------------------------------------
Total liabilities subject to
compromise - - - - -
Total liabilities 428,846 461,169 449,425 438,803 422,551
Preferred equity 19,686 19,686 19,686 19,686 19,686
Common stock equity 60,724 60,724 60,724 60,724 60,724
Retained earnings - (268) 4,705 15,401 31,276
Treasury stock at cost - - - - -
----------------------------------------------------------------------
Total common
stockholders equity 60,724 60,456 65,429 76,125 92,000
Total stockholders equity 80,410 80,142 85,115 95,811 111,686
Total liabilities and
stockholders' equity 509,255 $541,310 $534,540 $534,614 $534,238
======================================================================
</TABLE>
<TABLE>
<CAPTION>
REORGANIZED TOKHEIM CORPORATION
PROJECTED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
------------ --------------------------------------------
($ in thousands) PRO FORMA REORGANIZED TOKHEIM CORPORATION
----------- --------------------------------------------
November November November November November
30, 2000 30, 2001 30, 2002 30, 2003 30, 2004
------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $525,159 $566,121 $594,427 $624,148 $655,356
Cost of goods sold 339,467 360,959 378,648 397,580 417,459
----------- --------------------------------------------
Contribution margin 185,692 205,162 215,779 226,568 237,896
Selling, general and
administrative 156,823 147,875 146,188 150,770 155,996
Depreciation and amortization 23,731 19,497 20,945 21,998 23,051
Other operating expenses 3,542 2,916 0 0 0
----------- --------------------------------------------
Total period expenses 184,095 170,288 167,133 172,768 179,047
Operating income (loss) 1,597 34,874 48,646 53,800 58,850
Restructuring/professional
fees 17,000 0 0 0 0
Other (income)/expense, net (1,270) 0 0 0 0
Interest expense 47,064 37,947 37,691 33,974 31,057
Currency exchange (gain)/loss (470) 0 0 0 0
----------- --------------------------------------------
Earnings before taxes (60,727) (3,073) 10,955 19,826 27,793
Provision for income taxes (1,550) 500 5,982 9,131 11,917
----------- --------------------------------------------
Earnings from continuing
operations (59,177) (3,573) 4,973 10,696 15,876
Change in method of
accounting 0 0 0 0 0
Extraordinary (gains)
/losses extinguishment
of debt (297,814) 0 0 0 0
----------- --------------------------------------------
Net earnings $238,637 ($3,573) $4,973 $10,696 $15,876
=========== ============================================
Depreciation and
amortization 23,731 19,497 20,945 21,998 23,051
EBITDA 31,074 57,287 69,591 75,798 81,901
</TABLE>
<TABLE>
<CAPTION>
REORGANIZED TOKHEIM CORPORATION
PROJECTED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
($ in thousands) REORGANIZED TOKHEIM CORPORATION
----------------------------------------------------------------------------------------
November November November November
30, 2001 30, 2002 30, 2003 30, 2004
---------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net Income (loss) ($3,573) $4,973 $10,696 $15,876
Depreciation & Amortization 19,497 20,945 21,998 23,051
Working Capital and Other 6,578 13,864 (7,451) (16,337)
---------------------------------------------
22,502 39,782 25,243 22,589
CASH FLOWS FROM INVESTING:
Purchase of Capital Equipment (16,778) (13,750) (10,000) (10,000)
--------------------------------------------
(16,778) (13,750) (10,000) (10,000)
CASH FLOWS FROM FINANCING:
Debt Repaid (969) (25,644) (25,315) (25,000)
Revolver Borrowings (Repayments) (4,755) (388) 10,072 12,411
--------------------------------------------
(5,724) (26,032) (15,243) (12,589)
--------------------------------------------
Increase (Decrease) in Cash - - - -
Cash & Cash Equivalents Beginning of Period 18,692 18,692 18,692 18,692
Cash & Cash Equivalents at End of Period $18,692 $18,692 $18,692 $18,692
============================================
</TABLE>
TOKHEIM CORPORATION
FINANCIAL PROJECTIONS
OVERVIEW
REORGANIZED TOKHEIM'S BUSINESS
Reorganized Tokheim will continue to be the world's largest producer
of petroleum dispensing devices throughout the world. Reorganized Tokheim
will continue to manufacture and service electronic and mechanical
petroleum dispensing systems including: petroleum dispensers and pumps;
retail automation systems (such as point-of-sale systems), dispenser
payment or "pay-at-the-pump"" terminals, replacement parts, and upgrade
kits. The financial projections assume no acquisitions or divestitures
during the projection period. The projections assume an Effective Date of
September 30, 2000.
ACCOUNTING ASSUMPTIONS
The projections were not prepared with a view towards complying
with the guidelines for prospective financial statements published by the
American Institute of Certified Public Accountants. The Debtors'
independent accountant, PricewaterhouseCoopers LLP, has neither compiled
nor examined the accompanying financial projections. However, the Company
and Lazard have attempted to prepare the financial projections throughout
the projection period in a manner consistent with GAAP.
ECONOMIC ASSUMPTIONS
The overall economic assumptions assume a 3% annual inflation rate.
INCOME STATEMENT
REVENUE
The revenue projections are based on the following key
assumptions:
(i) FY 2000 - Current trends experienced
throughout FY 2000 continue through the end of the year. An
additional volume reduction has been included in the third quarter of
2000 due to the negative impact on the business as a result of the
restructuring.
(ii) FY 2001 - A 7.8% increase in revenues
has been projected based upon 3% inflation, 2% real growth and an
additional increase during the third quarter to offset the negative
impact on the business as a result of the restructuring.
(iii) FY 2002 - 2004 - A 5.0% increase has
been projected based upon 3% inflation and 2% real growth.
CONTRIBUTION MARGIN
Contribution Margin is projected to improve from approximately
35.4% in FY 2000 to 36.6% in FY 2002 and thereafter. This improvement is
due in large part cost cutting initiatives placed into effect in FY 2000.
OPERATING EXPENSES
A significant portion of the Company's operating expenses are
"fixed" in nature and relate to the operations. As a result, total
operating expenses (excluding depreciation and amortization) are projected
to increase primarily due to inflationary pressures and are offset by the
cost savings initiatives placed into effect in FY 2000. Management believes
that its infrastructure is fully adequate to service the projected revenue
levels.
INTEREST EXPENSE
Interest expense is calculated based on the following interest
rates: (i) revolving credit facility at a rate of Prime + 250 basis points,
(ii) term loan facility at a rate of Prime + 350 basis points, and (iii)
Special Loan at 16% compounding quarterly, payable-in-kind (non-cash)
throughout the projection period. For the purpose of these projections,
Prime was assumed to be 9.5%.
OTHER ITEMS
Restructuring expenses include: (i) fees related to
professionals retained by the Company, its secured lenders and its
subordinated bondholders and (ii) financing transaction fees related to
implementing the Plan.
BALANCE SHEET
SIGNIFICANT BALANCE SHEET ADJUSTMENT ITEMS
The confirmation and consummation will be accomplished
according to the terms of the Plan as described in the Disclosure Statement
to which this exhibit is attached. The effect of the Plan will be the
conversion of the Senior Subodinated Note Claims totaling approximately
$211 million (together with interest accrued but unpaid as of the petition
date), the Junior Subordinated Note Claims totaling approximately $50.7
million and the General Impaired Unsecured Claims into substantially all of
the primary equity of Reorganized Tokheim.
"Fresh start" accounting adjustments have been made to reflect
the estimated adjustments necessary to adopt "fresh start" reporting in
accordance with SOP 90-7. "Fresh start" reporting requires that the
reorganization value of Reorganized Prime be allocated to its assets in
conformity with Accounting Principles Bulletin ("APB") Opinion No. 16,
"Business Combinations," for transactions reported on the basis of the
purchase method. Any reorganization value less than the fair value of
specific tangible or identified intangible assets is to be allocated back
to its non-current tangible assets after offsetting the intangible assets.
The reorganization value used in preparing the Pro Forma Consolidated
Balance Sheet of Reorganized Tokheim as of the Effective Date was assumed
to be in a range of $315.0 million to $335.0 million, with a midpoint value
of $325.0 million. Based upon the assumed total debt (including capital
lease obligations) of approximately $250.0 million, the estimated implied
range of equity value of Reorganized Tokheim is between $65.0 million and
$85.0 million, with a midpoint value of approximately $75.0 million for
purposes of "fresh start" reporting. The reorganization value is subject to
adjustment to reflect any fluctuation in these projections on which the
valuation is based. The allocation of the reorganization value to
individual assets and liabilities is subject to change after the Effective
Date and could result in material differences to the allocated values
estimated in these projections.
ACCOUNTS RECEIVABLE
Accounts receivable are projected based upon days outstanding
and are projected to remain consistent with FY 2000 year-to-date and prior
year actual financial results.
INVENTORY
Inventory is projected based upon inventory turns per year and
is projected to remain consistent with FY 2000 year-to-date and prior year
actual financial results.
PROPERTY, PLANT & EQUIPMENT, NET
Property, plant & equipment, net is projected to decrease
slightly as capital expenditures are projected to be below annual
depreciation. Capital expenditures are projected to be $17.5 million in FY
2000 decreasing to $16.8 million in FY 2001 and $13.8 in 2002 before
reaching $10.0 million thereafter. The majority of these expenditures
represent capital improvements to facilities and replacement parts in the
operating facilities.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Upon exit from Chapter 11, it is assumed the Company will be
receiving normal and customary trade credit terms. Accrued liabilities are
projected to remain at historical levels and include such items as accrued
wages and benefits and accrued interest on the Special Loan.
LONG TERM DEBT
Upon exit from Chapter 11 on the Effective Date (which is
defined as September 30, 2000), the Company will have drawn approximately
$2.9 million of the $50.0 million available under the revolving credit
facility. The revolving credit facility has two step-down provisions of $10
million each on December 15, 2001 and December 15, 2002, respectively.
The Company will have approximately $140.0 million in a secured
term loan outstanding on the Effective Date.
The Company will also have approximately $100 in a Special Loan
outstanding as of the Effective Date. Annual installments of $25.0 million
plus accrued interest are due beginning December 31, 2002.
The Company also contemplates having approximately $15.0
million of Other Debt consisting primarily of foreign overdraft facilities
to fund the working capital needs of the Company' s European operations.
