DRESSER INC
LETTER AGREEMENT DATED MARCH 7, 2003
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>dex104.txt
<DESCRIPTION>LETTER AGREEMENT DATED MARCH 7, 2003
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.4

                                                                   March 7, 2003

First Reserve Corporation
411 West Putnam, Suite 109
Greenwich, Connecticut  06830
Attention: Thomas J. Sikorski

First Reserve Corporation
1801 California Street, Suite 4110
Denver, Colorado  80202
Attention: Thomas R. Denison

Dear: Messrs. Sikorski and Denison

     Reference is hereby made to that certain Purchase Agreement, dated as of
November 29, 2002, as modified by that certain letter agreement, dated as of
January 24, 2003, and as subsequently amended or modified (the "Purchase
Agreement"), by and among First Reserve Fund IX, L.P., a Delaware limited
partnership (and, except as otherwise provided therein, any permitted assignee
to whom Buyer's rights and obligations are transferred pursuant to Section 8.12
of the Purchase Agreement, "Buyer"), Tokheim Corporation, an Indiana corporation
("Parent"), Sunbelt Hose & Petroleum Equipment, Inc., a Georgia corporation
("Sunbelt"), Tokheim RPS, LLC, a Delaware limited liability company ("RPS"),
Tokheim Investment Corp., a Texas corporation ("TIC"), Gasboy International,
Inc., a Pennsylvania corporation ("Gasboy"), Tokheim Services, LLC, an Indiana
limited liability company ("Services") and Tokheim and Gasboy of Canada Ltd., a
corporation organized under the laws of Ontario ("TG Canada") (Parent, Sunbelt,
RPS, TIC, Gasboy, Services and TG Canada being collectively referred to as
"Sellers"). Capitalized terms not otherwise defined herein shall have the
meanings given them in the Purchase Agreement.

     This letter confirms the agreement of Buyer and Sellers that the Purchase
Agreement is hereby terminated with respect to Gasboy and the Gasboy Assets, and
the Purchase Agreement is hereby modified as appropriate to reflect the
agreement of Buyer to purchase, and Sellers to sell, only the Tokheim Assets,
and not the Gasboy Assets, on the following general terms, and notwithstanding
anything to the contrary contained in the Purchase Agreement:

     (i)       the aggregate Cash Consideration for the Tokheim Assets shall be
$15,000,000, and there shall be no adjustment to such Cash Consideration
pursuant to Section 2.6 or Section 2.7 of the Purchase Agreement, and

     (ii)      in no event shall Sellers' Wabash Facility, Sellers' Washington
Facility, the fixtures and Personal Property (but such excluded Personal
Property shall not include the tools, dies, fixturing and manufacturing
equipment in such facilities; provided, that Sellers shall retain at least
$330,000 worth of fixtures and Personal Property, assigned value as provided in
Sellers liquidation analysis which was provided to Buyer prior


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to the auction) located at the Wabash Facility or the Washington Facility, or
the approximately 40 acres of land located at Tokheim Professional Park on
Dupont Road be included in the Tokheim Assets (including, without limitation, as
Real Property). Furthermore, Buyer and Sellers agree to use their reasonable
best efforts to consummate such sale and purchase of the Tokheim Assets in
accordance with the terms of the Purchase Agreement with such changes as are
necessary to exclude the Gasboy Assets and reflect the general terms described
above.

     Without in any way limiting the generality of the foregoing, Buyer and
Sellers hereby agree that:

     (i)       the term "Business" is deemed modified such that it only includes
the business of manufacturing and servicing electronic and mechanical petroleum
dispensing systems in the United States, Canada and Mexico which is engaged in
by Sellers, other than Gasboy and, to the extent primarily related to the Gasboy
line of business, TG Canada;

     (ii)      the term "Sellers" is deemed modified such that it only includes
Parent, Sunbelt, RPS, TIC, Services and TG Canada;

     (iii)     the Acquired Assets are deemed to include only the Tokheim
Assets, and not the Gasboy Assets; provided that in no event shall Sellers'
Wabash Facility, Sellers' Washington Facility, the fixtures and Personal
Property (but such excluded Personal Property shall not include the tools, dies,
fixturing and manufacturing equipment in such facilities, which shall be Tokheim
Assets; provided, that Sellers shall retain at least $330,000 worth of fixtures
and Personal Property, assigned value as provided in Sellers liquidation
analysis which was provided to Buyer prior to the auction) located at the Wabash
Facility or the Washington Facility, or the approximately 40 acres of land
located at Tokheim Professional Park on Dupont Road be included in the Tokheim
Assets (including, without limitation, as Real Property);

     (iv)      Section 1.1 of the Purchase Agreement, including the Schedules
and the defined terms contained in Section 1.1, is deemed modified to the extent
necessary to exclude from the Acquired Assets all assets, properties, rights and
claims owned or held by Gasboy or, to the extent primarily related to the Gasboy
line of business, TG Canada, and such assets, properties, rights and claims are
deemed to be Excluded Assets;

     (v)       Section 1.3 of the Purchase Agreement, including the Schedules
and the defined terms contained in Section 1.3, is deemed modified to the extent
necessary to exclude from the Assumed Liabilities all Liabilities of TG Canada
to the extent primarily related to the Gasboy line of business;

     (vi)      the first three sentences of Section 1.6 of the Purchase
Agreement are amended and restated in their entirety as follows:

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               The consideration for the Acquired Assets shall be (a) fifteen
     million dollars ($15,000,000) (the "Cash Consideration") and (b) the
     assumption of the Assumed Liabilities. The payment of the Cash
     Consideration and the assumption of the Assumed Liabilities are referred to
     herein as the "Consideration".

     (vii)     Section 2.6 and Section 2.7 of the Purchase Agreement are deemed
deleted in their entirety, including, without limitation, any defined terms that
are used only in such Sections;

     (viii)    the representations and warranties contained in Article III of
the Purchase Agreement, including the information on the Schedules contained in
Article III, are deemed modified such that the representations and warranties
are not given by Gasboy or, to the extent such representations and warranties
primarily relate to the Gasboy line of business, TG Canada, and the
representations and warranties shall only apply to the Tokheim Assets, and not
the Gasboy Assets;

     (ix)      the covenants and agreements contained in Article V of the
Purchase Agreement are deemed modified such that the covenants and agreements
only apply to Parent, Sunbelt, RPS, TIC, Services and, to the extent such
covenants and agreements do not related primarily to the Gasboy line of business
TG Canada, and only with respect to the Tokheim Assets, and not the Gasboy
Assets;

     (x)       notwithstanding anything in this letter to the contrary, Section
5.8(d) of the Purchase Agreement is deemed to remain in effect without reference
to any modification set forth in this letter (e.g., the aggregate amount of the
Break-Up Fee and Expense Reimbursement, if payable with respect to the Gasboy
Assets under Section 5.8(d)(i), would be $1,050,021);

     (x)       Section 7.1(i) and Section 7.1(j) of the Purchase Agreement are
deemed deleted in their entirety; and

     (xiv)     each of the definitions contained in Article IX of the Purchase
Agreement are deemed modified to the extent necessary to effect the changes to
the Purchase Agreement contemplated above.

     Buyer and Sellers hereby agree that the Transition Supply Agreement
attached as Exhibit 2.2(g) to the Purchase Agreement shall be substantially in
the form attached hereto as Exhibit A.

     Buyer and Sellers hereby agree that the Schedules to the Purchase Agreement
shall be in the form attached hereto as Exhibit B.

     Buyer and Sellers hereby agree that Buyer shall have the right to remove
any Acquired Assets from Sellers' facility in Highlands Ranch, CO until Sellers'
lease with respect to such facility is terminated on March 31, 2003. Rent
relating to or attributable

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to Sellers' lease with respect to such facility for the month of March 2003
shall be prorated between Sellers and Buyer as of the Closing Date.

     Buyer and Sellers hereby agree that the words "Prior to the Closing" in the
first sentence of Section 2.5 of the Purchase Agreement are hereby deleted and
shall be replaced with the words "After the Closing" and Buyer and Sellers
further agree to cooperate in good faith to fulfill their obligations under
Section 2.5 of the Purchase Agreement, as so amended, in a timely manner.

     Buyer and Sellers hereby agree that, in accordance with the requirements of
the Income Tax Act (Canada), the regulations thereunder, the administrative
practice and policy of the Canada Customs and Revenue Agency and any applicable
equivalent or corresponding provincial or territorial legislative, regulatory
and administrative requirements, Buyer and TG Canada shall jointly execute,
deliver and file in a timely manner such elections or other filings that do not
have a material adverse Tax implication to TG Canada, any other Seller or Buyer.

     Buyer and Sellers hereby agree and acknowledge that any transfer Taxes
imposed on the Contemplated Transaction that are paid by Buyer to be held by the
Escrow Holder shall be used by Sellers to pay such transfer Taxes, if any;
provided, that any amounts held by the Escrow Holder after the final
determination and payment of such transfer Taxes, if any, shall be returned to
Buyer. Buyer and Sellers shall, upon such determination, promptly provide joint
written instructions to the Escrow Holder instructing the Escrow Holder to
release such amounts to Buyer.

     Buyer and Sellers hereby agree to work in good faith to reach mutually
satisfactory agreements on the following items following the Closing:

               i. inclusion of U.S. Patent 6418981 (relating to vapor recovery
          alarms and shut-off systems) in the definition of Vapor Recovery IP
          under the Intangible Property License Agreement between Sellers (other
          than Gasboy) and Buyer, and extension of Buyer's license to use the
          Vapor Recovery IP outside of North America through a license on
          commercially reasonable terms;

               ii. assumption and assignment to Buyer of the December 1, 1997
          Technology License Agreement between Parent and Gilbarco, Inc.;

               iii. finalizing the ECVR License between Buyer and Tokheim
          Services France relating to the Vapor Recovery IP (as defined in (i)
          above) (potentially including U.S. Patent 6418981); and

               iv. Sellers entering into the license with Gasboy International
          LLC (or any of its permitted assignees) in the form attached hereto as
          Exhibit C.

     Buyer and Sellers hereby agree that notwithstanding anything in this letter
to the contrary, nothing in this letter shall be deemed to release Buyer from
its obligation to

                                        4

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keep its final Bid submitted at the February 7, 2003 Auction for the purchase of
both the Gasboy Assets and the Tokheim Assets open upon the terms described at
such Auction, in accordance with the Bidding Procedures.

                                        5

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Please indicate your agreement with the foregoing by countersigning in the space
provided below.

                                        TOKHEIM CORPORATION

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


                                        SUNBELT HOSE & PETROLEUM EQUIPMENT, INC.

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


                                        TOKHEIM RPS, LLC

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


                                        TOKHEIM INVESTMENT CORP.

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:

                                        6

<PAGE>

                                        GASBOY INTERNATIONAL, INC.

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


                                        TOKHEIM SERVICES, LLC

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


                                        TOKHEIM AND GASBOY OF CANADA LTD.

                                        By:
                                           -------------------------------
                                        Name:
                                        Title:


AGREED AND ACCEPTED this ___/th/ day of March, 2003

FIRST RESERVE FUND IX, L.P.

      By:      First Reserve GP IX, L.P.,
               its General Partner

      By:      First Reserve GP IX, Inc.,
               its General Partner

By:
   -------------------------------
Name:  Thomas R. Denison
Title: Managing Director

Cc:    Dennis J. Friedman, Barbara L. Becker
       Gibson, Dunn & Crutcher LLP
       200 Park Avenue
       New York, New York  10166-0193

                                        7

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                                    EXHIBIT A

                                        8

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                                    EXHIBIT B

                                        9

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                                    EXHIBIT C

                                       10

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