UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report - May 29, 1998
TRANSFINANCIAL HOLDINGS, INC.
State of Incorporation - Delaware
Commission File No. - 0-12321
IRS Employer Identification No. - 46-0278762
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
(Address of Principal Executive Offices)
Telephone Number - (913) 859-0055
ITEM 2. ACQUISITION OR DISPOSITON OF ASSETS
On May 29, 1998, TransFinancial Holdings, Inc. ("TransFinancial" or "the
Company") announced that Universal Premium Acceptance Corporation ("UPAC"), its
insurance premium finance subsidiary, had completed the acquisition of all of
the issued and outstanding stock of Oxford Premium Finance, Inc. ("Oxford").
Oxford offers short-term collateralized financing of commercial insurance
premiums through approved insurance agencies in 17 states throughout the United
States. At March 31, 1998, Oxford had outstanding net finance receivables of
approximately $21.7 million. This transaction will be accounted for as a
purchase. UPAC sold an additional $4.2 million of its receivables under its
receivable securitization agreement to obtain funds to consummate the purchase.
Concurrently with the closing of the acquisition, UPAC amended its receivables
securitization agreement to increase the maximum allowable amount of receivables
to be sold under the agreement from $50 million to $65 million and to permit the
sale of Oxford's receivables under the agreement. Effective on May 29, 1998,
Oxford sold approximately $19 million of its receivables under the
securitization agreement using the proceeds to repay the balance outstanding
under its prior financing arrangement. The terms of the acquisition and the
purchase price resulted from negotiations between UPAC and Oxford Bank & Trust
Company, the former sole shareholder of Oxford.
In addition to the stock purchase agreement, UPAC entered into employment
agreements with certain marketing and operating personnel of Oxford to ensure
continuity of service and relationships with Oxford's key insurance agencies.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
INDEX TO FINANCIAL STATEMENTS
Page
(a) Historical Financial Statements of Oxford Premium
Finance, Inc. (business acquired)
Condensed Interim Financial Statements (Unaudited)
Condensed Balance Sheet as of March 31, 1998 4
Condensed Statement of Income for the three months
ended March 31, 1998 5
Condensed Statement of Cash Flows for the three months
ended March 31, 1998 6
Notes to Condensed Interim Financial Statements 7
Annual Financial Statements
Independent Auditor's Report 8
Balance Sheet as of December 31, 1997 9
Statement of Income for the year ended
December 31, 1997 10
Statement of Changes in Stockholder's Equity for the
year ended December 31, 1997 11
Statement of Cash Flows for the year ended
December 31, 1997 12
Notes to Financial Statements 13
(b) Condensed Pro Forma Financial Statements (Unaudited)
Description of Pro Forma Financial Statements 16
Condensed Pro Forma Balance Sheet as of March 31, 1998 17
Condensed Pro Forma Statement of Income for the year ended
December 31, 1997 18
Condensed Pro Forma Statement of Income for the three months
ended March 31, 1998 19
(c) Exhibits
2(a) Stock Purchase Agreement by and between Universal
Premium Acceptance Corporation and Oxford Bank and
Trust Company, dated April 29, 1998.
10(a)Amendment No. 4 to Receivables Purchase Agreement by
and among APR Funding Corporation, Universal Premium
Acceptance Corporation, TransFinancial Holdings, Inc.,
EagleFunding Capital Corporation and BankBoston, N.A.,
dated May 29, 1998.
<TABLE>
OXFORD PREMIUM FINANCE, INC.
CONDENSED BALANCE SHEET
AS OF MARCH 31, 1998
(Unaudited)
(in thousands)
<S> <C>
ASSETS
Current Assets
Finance accounts receivables $21,708
Other 60
Total current assets 21,768
Net Operating Property 79
Total Assets $21,847
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities -
Accounts payable $ 640
Line of credit, related party 18,463
Other current liabilities 13
Total current liabilities 19,116
Shareholder's Equity 2,731
Total Liabilities and Shareholder's Equity $21,847
<FN>
The accompanying notes to condensed financial statements are an integral part of this statement.
</TABLE>
<TABLE>
OXFORD PREMIUM FINANCE, INC.
CONDENSED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
(in thousands)
<S> <C>
Interest and Other Fees $ 634
Interest Expense 342
Net interest income before provision for loan loses 292
Provision for Loan Losses 24
Net interest income 268
Operating and Administrative Expenses:
Salaries, wages & employee benefits 124
Operating supplies & expenses 95
Depreciation & amortization 11
Total operating and administrative expenses 230
Income Before Income Taxes 38
Income Tax Provision 12
Net Income $ 26
<FN>
The accompanying notes to condensed financial statements are an integral part of this statement.
</TABLE>
<TABLE>
OXFORD PREMIUM FINANCE, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
(in thousands)
<S> <C>
Cash Flows From Operating Activities
Net income $ 26
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 11
Provision for loan losses 24
Other 66
NET CASH PROVIDED BY OPERATING ACTIVITIES 127
Cash Flows From Investing Activities
Purchase of furniture and equipment (6)
Insurance premium finance loans made to customers
net of principal collections and amounts due to
insurance companies and insured (314)
NET CASH USED IN INVESTING ACTIVITIES (320)
Cash Flows From Financing Activities
Net advances on line of credit 193
NET CASH PROVIDED BY FINANCING ACTIVITIES 193
Net increase in cash -
Cash:
Beginning -
Ending $ -
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 342
<FN>
The accompanying notes to condensed financial statements are an integral part of this statement.
</TABLE>
OXFORD PREMIUM FINANCE INC.
Notes to Condensed Financial Statements
(Unaudited)
(1) Condensed Financial Statements:
The condensed financial statements of Oxford Premium Finance Inc. ("Oxford")
included herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") and have not been examined or
reviewed by independent public accountants. In the opinion of management, all
adjustments necessary to present fairly the results of operations have been
made.
Pursuant to SEC rules and regulations certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
from these statements. In the opinion of management the disclosures contained
herein, when read in conjunction with financial statements and notes included in
Oxford's 1997 audited financial statements filed herewith are adequate to make
the information presented not misleading. It is suggested therefore, that these
statements be read in conjunction with the statements and notes included with
those financial statements.
(2) Acquisition:
Oxford, a premium finance company was a wholly-owned subsidiary of Oxford Bank &
Trust Company ("Oxford Bank"). On April 29, 1998 Oxford Bank entered into an
agreement for the sale of 100% of the issued and outstanding shares of common
stock of Oxford to Universal Premium Acceptance Corporation, a wholly-owned
subsidiary of TransFinancial Holdings Inc.
The accompanying financial statements do not reflect the costs associated with
the sale.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Oxford Premium Finance, Inc.
Addison, Illinois
We have audited the accompanying balance sheet of Oxford Premium Finance, Inc.
as of December 31, 1997, and the related statements of income, changes in
stockholder's equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oxford Premium Finance, Inc. as
of December 31, 1997, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ McGLADREY & PULLEN LLP
Schaumburg, Illinois
January 9, 1998
<TABLE>
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
BALANCE SHEET
DECEMBER 31, 1997
<S> <C>
ASSETS
Insurance premium finance receivables, net $ 21,387,468
Deferred tax assets 12,000
Prepaid expenses and other assets 117,294
Furniture and equipment 287,097
Less accumulated depreciation 203,467
83,630
TOTAL ASSETS $ 21,600,392
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Line of credit, related party $ 18,269,759
Amounts due to insurance companies and insured 609,466
Accrued expenses 16,193
Income taxes payable 102
18,895,520
Stockholder's Equity
Common stock, no par value, 10,000 shares authorized;
100 shares issued and outstanding 100
Additional paid-in capital 2,165,000
Retained earnings 539,772
2,704,872
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 21,600,392
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
<S> <C>
Interest and other fees $ 2,555,475
Interest expense 1,407,095
NET INTEREST INCOME BEFORE PROVISION FOR
LOAN LOSSES 1,148,380
Provision for loan losses 92,300
NET INTEREST INCOME 1,056,080
Other expenses:
Salaries and employee benefits 544,451
Depreciation 44,848
Other 389,764
979,063
INCOME BEFORE INCOME TAXES 77,017
Income tax expense 19,180
NET INCOME $ 57,837
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earning
<S> <C> <C> <C> <C>
Balance, December 31, 1996 100 $ 100 $ 2,165,000 $ 481,935
Net income - - - 57,837
Balance, December 31, 1997 100 $ 100 $ 2,165,000 $ 539,772
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<S> <C>
Cash Flows From Operating Activities
Net income $ 57,837
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 44,848
Provision for loan losses 92,300
(Increase) in prepaid expenses and deposits (8,631)
(Decrease) in income taxes payable (49,768)
Increase (decrease) in accrued expenses 12,650
NET CASH PROVIDED BY OPERATING ACTIVITIES 149,236
Cash Flows From Investing Activities
Purchases of furniture and equipment (11,435)
Insurance premium finance loans made to customers,
net of principal collections and amounts due to
insurance companies and insured (653,137)
NET CASH (USED IN) INVESTING ACTIVITIES (664,572)
Cash Flows From Financing Activities
Net (repayments) advances on line of credit
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 515,336
NET INCREASE IN CASH -
Cash:
Beginning -
Ending $ -
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 1,407,095
<FN>
See Notes to Financial Statements.
</TABLE>
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Oxford Premium Finance, Inc. finances insurance premiums for businesses located
primarily in the midwest or southeastern United States. The Company maintains
its corporate and main sales office in Addison, Illinois, and has a sales office
in Atlanta, Georgia.
Oxford Bank & Trust (the Bank), which is a wholly owned subsidiary of Oxford
Financial Corporation, is the sole stockholder of Oxford Premium Finance, Inc.
Significant accounting policies are as follows:
Accounting estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the year. Actual results could differ from those estimates.
Insurance premium finance receivables: The receivables are reported at the
amount of unpaid principal. Unearned finance charges are reported separately as
a reduction of the receivable balance. Finance charges are recognized as income
over the term of the receivable using the sum-of-the-months digits method, which
approximates the interest method. Late fees are reported as income when
collected.
The allowance for finance receivable losses is maintained at a level considered
adequate to provide for potential finance receivable losses. The Company
estimates its allowance for finance receivable losses based upon industry and
its own historical charge-off trends as well as a case-by-case analysis of
specific receivables. While management uses the best information available to
make its evaluation, future adjustments to the allowance may be necessary if
there are significant changes in economic conditions.
Furniture and equipment: Furniture and equipment are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets of five to seven years.
Income taxes: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. INSURANCE PREMIUM FINANCE RECEIVABLES
The insurance premium finance receivables are generally for terms of nine
months, with a down payment of at least twenty percent of the total premium paid
to the insurance carrier at the time the policy is written. If the customer
becomes delinquent on the contract, the Company notifies the insurance company,
the insurance is canceled and the unearned premium is refunded to the Company.
Generally the unearned premium refunded is equal to or greater than the balance
due on the contract. The Company, however, could incur a loss if the insurance
company is not timely notified on policy cancellations. Also, a loss can occur
if the unearned premium refund is less than the balance due on the contract and
the shortfall is not recovered from the customer.
The Company has a significant amount of credit exposure to the insurance
industry. Diversification of the premium finance receivables by insurance
carrier tends to reduce the overall risk by minimizing the adverse impact of any
single event or set of occurrences.
The composition of receivables is as follows as of December 31, 1997:
Insurance premium finance receivables $21,860,320
Less:
Unearned finance charges (392,707)
Allowance for loan losses (80,145)
Insurance premium finance receivables, net $21,387,468
Changes in the allowance for loan losses for the year ended December 31, 1997,
are summarized as follows:
Balance, beginning $ 80,000
Provision charged to operations 92,300
Loans charged off (98,246)
Recoveries 6,091
Balance, ending $ 80,145
OXFORD PREMIUM FINANCE, INC.
(A WHOLLY OWNED SUBSIDIARY OF OXFORD BANK & TRUST)
NOTES TO FINANCIAL STATEMENTS
NOTE 3. LINE OF CREDIT
The line of credit is unsecured and is due on demand to Oxford Bank & Trust.
Interest is at the Bank's prime lending rate less .75%. The prime lending rate
at December 31, 1997, was 8.5%.
The loan arrangement with Oxford Bank & Trust provides that, as checks issued by
the Company are presented for payment, the bank automatically honors the checks
with advances under the line of credit. At December 31, 1997, outstanding
checks of $389,548 are included in the amount due under the line of credit.
NOTE 4. RELATED PARTY TRANSACTIONS
Oxford Financial Corporation's majority stockholder also owns 100% of a company
placing business with the Company. The total finance charges from business
placed by this related party were $200,117 in 1997.
The Company is provided office space and certain administrative support by
Oxford Bank & Trust at no charge.
NOTE 5. INCOME TAX MATTERS
The deferred tax asset results primarily from differences in the basis of
equipment and the allowance for loan losses.
No valuation allowance was considered necessary.
For the year ended December 31, 1997, $19,180 in income tax expense is currently
paid or payable.
NOTE 6. PROFIT- SHARING PLAN
The Company has a defined contribution 401(k) plan which covers substantially
all employees. Participants make tax deferred contributions. The Company matches
contributions equal to 50% of each participant's contribution up to 6% of wages.
Contributions to the plan were $10,795 for the year ended December 31, 1997.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
DESCRIPTION OF CONDENSED PRO FORMA FINANCIAL STATEMENTS
On May 29, 1998 TransFinancial Holdings, Inc. ("TransFinancial") through its
wholly-owned subsidiary, Universal Premium Acceptance Corporation ("UPAC")
completed the acquisition of all of the issued and outstanding stock of Oxford
Premium Finance, Inc. ("Oxford"). The purchase price was approximately $4.2
million. This transaction will be accounted for as a purchase.
The entities involved in the pro forma financial statements are TransFinancial
and Oxford. TransFinancial's and Oxford's normal fiscal year is a calendar year
ending December 31.
The pro forma balance sheet was prepared using the historical balance sheets of
TransFinancial and Oxford as of March 31, 1998 assuming the acquisition occurred
on that date. TransFinancial previously reported its information on Form 10-Q.
The fiscal year ending December 31, 1997 and three months ending March 31, 1998
pro forma income statements were prepared using the historical income statements
of TransFinancial and Oxford for the year ended December 31, 1997 and three
months ended March 31, 1998, assuming the acquisition occurred on January 1,
1997, and January 1, 1998, respectively. TransFinancial's historical
information was previously reported on Form 10-K and Form 10-Q, respectively.
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1998
(Unaudited)
(in thousands)
<CAPTION>
Historical Pro Forma Pro Forma
TransFinancial Oxford Combined Adjustments Combined
<S> <C> <C> <C> <C> <C>
Current Assets
Cash & short term investments $ 3,816 $ - $ 3,816 $ - $ 3,816
Finance accounts receivable 15,576 21,708 37,284 (262) (1) 14,380
(18,463) (2)
(4,179) (3)
Freight accounts receivable 15,793 - 15,793 15,793
Current deferred tax asset 1,349 - 1,349 285 (1) 1,634
Other current assets 2,724 60 2,784 (23) (1) 2,761
AFS net assets 6,704 - 6,704 - 6,704
Total current assets 45,962 21,768 67,730 (22,642) 45,088
Net Operating Property 35,807 79 35,886 (65) (1) 35,821
Intangibles and Other Assets 9,854 - 9,854 428 (1) 11,730
1,448 (3)
$ 91,623 $ 21,847 $ 113,470 $ (20,831) $ 92,639
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Cash overdrafts $ 2,436 $ - $ 3,055 $ - $ 2,436
Accounts payable 4,350 640 4,990 4,990
Secured notes payable 1,851 18,463 19,695 (18,463) (2) 1,851
Other accrued expenses 8,176 13 8,189 363 (1) 8,552
Total current liabilities 16,813 19,116 35,929 (18,100) 17,829
Deferred Income Taxes 2,145 - 2,145 2,145
Shareholders' Equity 72,665 2,731 75,396 (2,731) (3) 72,665
$ 91,623 $ 21,847 $ 113,470 $ (20,831) $ 92,639
<FN>
This proforma balance sheet should be read in conjunction with the related Description and Notes to Condensed Pro Forma Financial
Statements and the Registrant's financial statements contained in its Form 10-Q and Form 10-K filings.
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
Historical Pro Forma Pro Forma
TransFinancial Oxford Combined Adjustments Combined
<S> <C> <C> <C> <C> <C>
Operating Revenue $ 133,687 $ 1,148 $ 134,835 $ 24 (3) $ 134,859
Operating Expenses:
Salaries, wages & employee
benefits 74,622 544 75,166 (202) (2) 74,964
Operating supplies & expenses 19,605 390 19,995 19,995
Provision for credit losses 950 92 1,042 1,042
Operating taxes & licenses 3,324 3,324 3,324
Insurance & claims 3,051 3,051 3,051
Depreciation & amortization 4,758 45 4,803 125 (1) 4,888
(40) (2)
Purchased transportation 25,441 25,441 25,441
Total operating expenses 131,751 1,071 132,822 (117) 132,705
Operating Income 1,936 77 2,013 141 2,154
Nonoperating Income (Expense) 689 - 689 - 689
Income Before Income Taxes 2,625 77 2,702 141 2,843
Income Tax Provision 1,525 19 1,544 107 (4) 1,651
Net Income $ 1,100 $ 58 $ 1,158 $ 34 $ 1,192
Basic Average
Shares Outstanding 6,214 6,214
Basic Earnings Per Share $ 0.18 $ 0.19
Diluted Average
Shares Outstanding 6,266 6,266
Diluted Earnings Per Share $ 0.18 $ 0.19
<FN>
This pro forma statement of income should be read in conjunction with the related Description and Notes to Condensed Pro Forma
Financial Statements and the Registrant's financial statements contained in its Form 10-Q and Form 10-K filings with the Commission.
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
Historical Pro Forma Pro Forma
TransFinancial Oxford Combined Adjustments Combined
<S> <C> <C> <C> <C> <C>
Operating Revenue $ 37,003 $ 292 $ 37,295 $ 4 (3) $ 37,299
Operating Expenses:
Salaries, wages & employee
benefits 21,647 124 21,771 (50) (2) 21,721
Operating supplies & expenses 5,002 95 5,097 5,097
Provision for credit losses 93 24 117 117
Operating taxes & licenses 845 - 845 845
Insurance & claims 746 746 746
Depreciation & amortization 1,292 11 1,303 31 (1) 1,324
(10) (2)
Purchased transportation 7,078 - 7,078 7,078
Total operating expenses 36,703 254 36,957 (29) 36,928
Operating Income 300 38 338 33 371
Nonoperating Income (Expense) 51 - 51 - 51
Income Before Income Taxes 351 38 389 33 422
Income Tax Provision 190 12 202 26 (4) 228
Net Income $ 161 $ 26 $ 187 $ 7 $ 194
Basic Average
Shares Outstanding 6,053 6,053
Basic Earnings Per Share $ 0.03 $ 0.03
Diluted Average
Shares Outstanding 6,124 6,124
Diluted Earnings Per Share $ 0.03 $ 0.03
<FN>
This pro forma statement of income should be read in conjunction with the related Description and Notes to Condensed Pro Forma
Financial Statements and the Registrant's financial statements contained in its Form 10-Q and Form 10-K filings with the Commission.
</TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED PRO FORMA FINANCIAL STATEMENTS
1. These Notes to Condensed Pro Forma Financial Statements are not intended to
disclose all data of significance related to the historical financial statements
of the entities. The Notes and the related Condensed Pro Forma Financial
Statements should be read in conjunction with the historical interim and annual
financial statements of TransFinancial Holdings, Inc. ("TransFinancial") filed
with the Commission on Forms 10-Q and 10-K. TransFinancial knows of no material
non-recurring credits or charges from the acquisition of Oxford Premium Finance,
Inc. ("Oxford") from Oxford Bank & Trust Company that will be included in
TransFinancial's statement of income subsequent to May 29, 1998 (the date of
acquisition).
2. Pro Forma balance sheet adjustments
See Description of Condensed Pro Forma Financial Statements for a
description of the historical balance sheets used to prepare the Condensed Pro
Forma Balance Sheet. The following descriptions correspond to the numbering of
the adjustments set forth on the Condensed Pro Forma Balance Sheet.
(1) The historical carrying values of certain assets and liabilities have
been adjusted to the estimated fair value of such assets and liabilities as
follows; the finance accounts receivables of Oxford were adjusted to their
estimated fair market value; a reserve had been provided for the fair value of
furniture and other equipment; deferred tax assets relating to reserves
provided; and, liabilities have been established at fair value for certain
compensation and benefits payable to employees of Oxford and other commitments
resulting from the acquisition.
(2) Concurrent with the closing of the acquisition, UPAC amended its
receivable securitization agreement to permit the sale of Oxford's finance
receivables under the arrangement. Effective at closing Oxford sold a portion
of its receivables with the proceeds utilized to repay the balance outstanding
under its former line of credit.
(3) To record the acquisition as follows:
(in thousands)
Purchase price paid to Oxford shareholder $ 4,178
Fair value of assets acquired and liabilities assumed 2,302
Intangibles acquired, including goodwill $ 1,876
UPAC sold additional eligible receivables under its securitization agreement
with the proceeds utilized to pay the purchase price to Oxford's sole
shareholder.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED PRO FORMA FINANCIAL STATEMENTS
3. Pro Forma income statement adjustments.
See Description of Condensed Pro Forma Financial Statements for a description of
the historical income statements used to prepare the Condensed Pro Forma
Income Statements. For consistency of presentation, the historical operating
revenues of Oxford are shown net of interest expense on borrowings secured by
finance receivables. The following descriptions correspond to the numbering of
the adjustments and eliminations set forth on the Condensed Pro Forma Income
Statements.
(1) Amortization of intangibles, including goodwill, arising in the
acquisition using the straight-line method of amortization over an estimated
useful life of 15 years.
(2) Adjustment to reflect the elimination of the salary benefits of the
former president of Oxford, who retired effective on the acquisition date and
the adjustment of depreciation on fixed assets recorded at fair market value.
Not reflected in the above adjustments are the elimination of salaries,
wages and employee benefits and certain operating expenses which the Company
expects to realize as Oxford's operations are integrated into UPAC's.
(3) Adjustment to reflect the elimination of interest expense on Oxford's
former line of credit, which was terminated and repaid under the terms of the
Stock Purchase Agreement, and the costs of selling an additional $4.2 million of
UPAC's receivables and approximately $18 million of Oxford's receivables under
UPAC's securitization agreement.
(4) Adjustment to record an income tax provision for the net pro forma
adjustments to income before income taxes at TransFinancial's combined federal
and state tax rate, adjusted for the non-deductibility of goodwill and
intangibles amortization.
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
TRANSFINANCIAL HOLDINGS, INC.
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil, President and
Chief Executive Officer
Date: June 12, 1998
EXHIBIT INDEX
Exhibit
No. Description
2(a) Stock Purchase Agreement by and between Universal Premium
Acceptance Corporation and Oxford Bank & Trust Company dated
April 29, 1998.
10(a) Amendment No. 4 to Receivables Purchase Agreement by
and among APR Funding Corporation, Universal Premium
Acceptance Corporation, TransFinancial Holdings, Inc.,
EagleFunding Capital Corporation and BankBoston, N.A.,
dated May 29, 1998.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated April 29, 1998, by and
between UNIVERSAL PREMIUM ACCEPTANCE CORPORATION, a Missouri corporation
("UPAC"), and OXFORD BANK & TRUST, an Illinois banking corporation ("Bank").
W I T N E S S E T H:
WHEREAS, Bank owns all of the issued and outstanding shares of capital
stock of Oxford Premium Finance, Inc., an Illinois corporation ("Oxford");
WHEREAS, UPAC wishes to acquire all of the issued and outstanding shares of
Oxford (the "Shares") and Bank is willing to sell the same to UPAC, on the terms
and provisions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound, agree as follows:
1. Sale and Purchase.
Bank agrees to sell and cause to be transferred to UPAC at the Closing, as
hereinafter described in Section 2.1, and UPAC agrees to purchase at the
Closing, the Shares, being 100 shares of no par value common capital stock of
Oxford.
1.1 Purchase Price. UPAC shall pay Bank at the Closing, and upon delivery
of certificates representing the Shares duly endorsed and in proper form for
transfer, a purchase price equal to the sum of (a) the "adjusted net book value"
of Oxford as of the end of the month immediately preceding the month in which
the Closing shall occur, plus (b) $1,500,000. For the purposes of this Section
1.1 only, "adjusted net book value" shall mean the stockholder's equity
(including retained earnings) of Oxford determined in accordance with generally
accepted accounting principles on an unconsolidated basis, (y) excluding from
such determination items related to income taxes or accrual for income taxes and
(z) less the aggregate amount as of the Closing of the "Deductions from Adjusted
Net Book Value" listed in Schedule 1.1. The parties to this Agreement
acknowledge that, based on the financial statements of Oxford, as of March 31,
1998, the "adjusted net book value" of Oxford is calculated as set forth in
Schedule 1.1 and equals $2,669,874.24.
2. Closing and Deliveries.
2.1 Closing. The Closing shall be at the offices of Hillix, Brewer,
Hoffhaus, Whittaker & Wright, L.L.C., 2420 Pershing Road, Suite 400, Kansas
City, Missouri 64108, at 10:00 a.m., C.S.T., on May 15, 1998, or on such other
date or at such other place or time as is agreed upon in writing by the parties.
2.2 Deliveries. At the Closing, (a) Bank shall deliver to UPAC
certificates representing record ownership of the Shares, duly endorsed and in
proper form for transfer, free and clear of all encumbrances; (b) UPAC shall
deliver to Bank the purchase price by wire transfer; and (c) the parties shall
deliver such other documents as are required pursuant to this Agreement to be
then executed and delivered.
3. Representation and Warranties of Bank. Bank represents and warrants to
UPAC as follows:
3.1 Organization, Powers and Qualifications. Oxford is duly organized,
validly existing and in good standing under the laws of the State of Illinois,
has all requisite corporate power and authority to own its properties and assets
and carry on its business as now conducted, and is qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which such qualification is necessary because of the nature or extent of its
operations or property owned, leased or operated, unless the failure to so
qualify would not have a material adverse impact on its ability to own its
assets and conduct its operations, all of which jurisdictions are listed on
Schedule 3.1. Oxford does not own any interest, directly or indirectly, in any
corporation, partnership, joint venture, limited liability company,
proprietorship, association, trust, or other business or entity.
3.2 Capital Stock. Oxford has authorized capital stock consisting of
10,000 shares of common stock, no par value, of which 100 shares are issued and
outstanding, nonassessable, and were not issued in violation of pre-emptive or
other statutory or contractual rights.
3.3 Stock Options, Warrants, Etc. Oxford does not have outstanding any
options, warrants, calls, convertible securities, rights, agreements, or
obligations to purchase, redeem, issue, sell, distribute, dividend, or otherwise
acquire or dispose of any shares of its stock, and Bank has no contractual right
or obligation to sell, acquire or otherwise trade in any of the Shares.
3.4 Articles of Incorporation, By-Laws, Minute Book and Stock Book. The
Articles of Incorporation and all amendments thereto and the by-laws, as
amended, of Oxford have been made available to UPAC for its inspection and are
true, correct and complete, and such Articles and by-laws shall be the Articles
and by-laws in effect at the Closing. The minute books of Oxford have been made
available to UPAC for its inspection and contain accurate minutes of all
meetings and accurate consents in lieu of meetings of the Board of Directors
(and any committee thereof) and of the stockholders of Oxford since its
incorporation, and accurately reflect all transactions referred to in such
minutes and consents in lieu of meetings during the periods reflected therein.
Except as reflected in such minute books, there are no minutes of meetings or
consents in lieu of meetings of the Board of Directors (or any committee
thereof) or of the stockholders of Oxford, except for minutes or consents which
may be missing but which would evidence actions that have been consented to by
the stockholders and directors and which reflect transactions that are not
material to Oxford. The stock ledgers of Oxford have been made available to UPAC
for its inspection and contain accurate records of all issuances and transfers
of record of the capital stock of Oxford since its date of incorporation.
3.5 Authority, No Violation, Etc. Except as reflected in Schedule 3.5,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on the part of Bank, and this Agreement is the valid and
binding obligation of Bank, enforceable in accordance with its terms (except as
may be limited by genera1 principles of equity as to the enforcement of remedies
or applicable bankruptcy, reorganization, insolvency, moratorium and similar
laws affecting creditors' rights generally, now or hereafter in effect). Except
as provided in Schedule 3.5, neither the execution and delivery by Bank of this
Agreement nor the consummation by it of the transactions contemplated hereby
will cause a default (or give rise to any right of termination, cancellation or
acceleration) under (a) any of the terms, conditions or provisions of any
agreement, instrument or obligation to which either it or Oxford is a party, or
by which either of them or any of their respective properties or assets may be
bound, except for such conflict, breach or default as to which requisite waivers
or consents shall have been obtained prior to the Closing (all of which are
identified in Schedule 3.5);or (b) any statute, rule or regulation or any
judgment, order, writ, injunction or decree of any court, arbitrator, mediator,
administrative agency or governmental body, in each case applicable to either
Bank or Oxford or any of their properties or assets.
3.6 Books and Records. The books and records of Oxford have been kept
and maintained accurately and in sufficient detail to permit the preparation of
periodic financial statements in accordance with generally accepted accounting
principles consistently applied.
3.7 Compliance with Law. Oxford and its use and occupancy of its assets
and properties wherever located are in substantial compliance with all federal,
state and local laws and ordinances and any order, rule or regulation of any
federal, state, local or other governmental agency or body, including but not
limited to, any of the foregoing that concerns the environment, except where the
failure to comply, individually or in the aggregate, would not have a materially
adverse effect on its business or operations.
3.8 Financial Statements. Bank has delivered to UPAC true and complete
copies of the unconsolidated audited financial statements of Oxford as of and
for the fiscal years ended December 31, 1995, 1996 and 1997, certified by
McGladrey & Pullen, L.L.P., and true and complete copies of the unconsolidated
unaudited financial statements of Oxford as of and for the three months ended
March 31, 1998. With respect to the audited annual financial statements of
Oxford, all such financial statements, including the related notes, have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the unconsolidated financial condition,
results of operations, and cash flows of Oxford at the dates and for the years
indicated. With respect to the unaudited interim financial statements for the
three-months ended March 31, 1998, such financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
and fairly present the unconsolidated financial condition and results of
operations at the date and for the period indicated in such financial
statements.
3.9 Liabilities and Obligations. Except as described in Schedule 3.9,
Oxford does not have any material liability or obligation (direct or indirect,
contingent or fixed, matured or unmatured) of any nature, whether arising out of
contract, tort, statute or otherwise, except liabilities and obligations in the
amounts and categories reflected, reserved against or given effect to in the
March 31, 1998 unaudited interim financial statements referred to in Section
3.8, and liabilities subsequently incurred in the ordinary course of business
consistent with past practice.
3.10 Absence of Adverse Changes or Events.
(a) Except as disclosed in Schedule 3.10, since December 31, 1997,
Oxford has been operated in all material respects in the ordinary course of its
business consistent with past practice in prior periods and has not changed or
altered its past practices with respect to recording income and expenses and
establishing reserves for loan losses.
(b) Since December 31, 1997, the allowance for loan losses has been
maintained at a level adequate to provide for potential losses, without
necessity for future increase, arising from premium finance contracts that are
the subject of insurance premium finance receivables as of the date hereof
("Current Premium Finance Contracts").
3.11 Tax Reports.
(a) Except as disclosed in Schedule 3.11, (a) all federal, state
and local tax returns and reports (or timely extensions thereof) (including but
not limited to all income tax, unemployment compensation, social security,
payroll, sales and use, excise, property, ad valorem, franchise, license, school
and any other tax under the laws of the United States or any state or municipal
or political subdivision thereof) required to be filed by or for Oxford (the
"Tax Returns") have been filed with, and the taxes thereon shown to be owing
paid to, the appropriate governmental agencies in all jurisdictions in which
such Tax Returns and reports are required to be filed and taxes paid, and all
such Tax Returns and reports correctly reflect the taxes of Oxford for the
periods covered thereby; (b) Oxford has not received any notice of assessment or
proposed assessment by the Internal Revenue Service or any other taxing
authority in connection with any Tax Returns; and (c) there are no pending tax
examinations of or tax claims asserted against Oxford or its properties or
operations.
3.12 Dividends and Stock Purchases. Since December 31, 1997, Oxford has
not declared, set aside or made payment of any dividend or other distribution in
respect of any shares of its capital stock, or repurchased, redeemed or
otherwise acquired any shares of its capital stock.
3.13 Title to Assets; Operating Authorities. Except as disclosed in
Schedule 3.13, Oxford has good and marketable title to all of its properties and
assets material to the operation of its business and reflected in the March 31,
1998 unaudited interim financial statements and those acquired by it thereafter,
except properties and assets sold or otherwise disposed of in the ordinary
course of business consistent with past practice in prior periods, free and
clear of all mortgages, liens, pledges, charges or encumbrances or other third
party interests of any nature whatsoever, except (a) as reflected or reserved
for in the March 31, 1998 unaudited interim financial statements, or (b) the
lien of current taxes not yet due and payable (collectively "Permitted Liens").
3.14 Licenses, Permits, Etc. Oxford has maintained all licenses and
permits (all of which are listed on Schedule 3.14 and each of which is currently
valid and in full force and effect), necessary for the operation of its business
as now conducted and as of the date of the execution of each of the Current
Premium Finance Contracts, except where the failure to maintain such a license
or permit would not have an adverse effect on the validity or enforceability of
a Current Premium Finance Contract or a premium finance agreement involved in
any pending claim, action, suit, arbitration or other proceeding, whether civil
or criminal in nature.
3.15 Contracts.
(a) All written contracts, agreements, leases, mortgages
or commitments, excluding (i) premium finance agreements and (ii) such as
involve payments of less than $5,000 on an annualized basis or such as are
terminable by Oxford without penalty on 30 days or less written notice, to
which Oxford is a party or may be bound or to which its assets are subject
are listed on Schedule 3.15 ("Contracts"). All Contracts are valid, binding
on and enforceable against the parties to them (except as may be limited
under bankruptcy, insolvency or similar laws affecting creditors rights or
general principles of equity), and in full force and effect on the date
hereof, and Oxford has not violated any provision of, or committed or
failed to perform any act which with notice, lapse of time or both would
constitute a material default under the provisions of any Contract. Copies
of all Contracts disclosed on Schedule 3.15 have been made available to
UPAC for inspection. Schedule 3.15 also separately identifies all
Contracts otherwise required to be listed thereon which require the consent
or approval of third parties to the execution and delivery of this
Agreement or to the consummation and performance of the transactions
contemplated hereby.
(b) Except as set forth in Schedule 3.15, a11 Current
Premium Finance Contracts to which Oxford is a party are valid and binding
upon and enforceable against the parties to them (except as may be limited
under bankruptcy, insolvency or similar laws affecting creditors rights or
general principles of equity), in full force and effect, in compliance with
all applicable laws and regulations, and Oxford has not violated any
provision of, or committed or failed to perform any act which with notice,
lapse of time, or both would constitute a material default under the
provisions of any such Current Premium Finance Contract.
3.16 Collateral. With respect to each Current Premium Finance Contract to
which Oxford is a party, Oxford has been validly authorized to cancel and
recover the unearned premium on one or more insurance policies, the premiums for
which have been advanced by Oxford, and Oxford has not cancelled any such policy
without prior delivery to all persons entitled to notice pursuant to the policy,
statute or regulation of all required written notice of intention to do so.
3.17 Litigation. Except as disclosed in Schedule 3.17, (a)
no claim, action, suit, arbitration, investigation or other proceeding, whether
civil or criminal in nature, is pending, or to Bank's knowledge, threatened
against Oxford or any of its properties or with respect to the transaction,
pursuant to this Agreement before any court, governmental agency, authority or
commission, arbitrator or mediator; and (b) there are no judgments, consent
decrees, injunctions, or any other judicial or administrative or other mandates
outstanding against and which might be expected to adversely affect Oxford or
its assets, liabilities, income, financial condition, results of operations or
business prospects or its right to conduct its business as presently conducted.
3.18 Insurance. Schedule 3.18 lists all policies of insurance held by or
maintained on behalf of Oxford. Copies of all such insurance policies disclosed
on Section 3.18 have been made available to UPAC for inspection. All such
policies of insurance are in full force and effect. No notices of cancellation
or nonrenewal have been received and all premiums to date have been paid in
full. Bank has furnished to UPAC a list of all claim notices which have been
given by Oxford or Bank to any of such insurers regarding Oxford and (a) related
to litigation still pending or overtly threatened or (b) within the two-year
period prior to the date hereof.
3.19 Overtime, Back Wages, Vacation, Discrimination, and Occupational
Safety Claims. Except as disclosed in Schedule 3.19 or as fully reserved in the
March 31, 1998 unaudited interim financial statements, there are no outstanding
or, to the best of Bank's knowledge, threatened claims against Oxford (whether
under federal or state law, under any employment agreement or otherwise)
asserted by any applicant for employment, or present or former employee, on
account of or for (a) overtime pay, other than overtime pay for work done on the
current payroll period; (b) wages or salary for any persons other than the
current payroll period; (c) any amount of vacation pay or pay in lieu of
vacation time off; or (d) any material violation of any other term or condition
of employment or of any statute, ordinance or regulation relating to
discrimination, occupational safety, leave, condition of premises, disability or
employment practices.
3.20 Contracts for Personal Service. Except as set forth in Schedule
3.20, Oxford is not a party to or bound by any contract, agreement or
undertaking with any person for or related to personal services rendered or to
be rendered by any person, Oxford has no policy that requires payment of
severance pay, and the consummation of the transactions contemplated by the
parties will not give rise to or create a right to the payment of severance pay
by Oxford to any person.
3.21 Employee Welfare and Pension Benefit Plans.
(a) Plans. Attached hereto as Schedule 3.21 is a true and
complete list of all plans, funds and programs that are or within the three year
period preceding the date hereof have been maintained by Oxford, or for which it
contributes or is required to contribute, which constitute "employee welfare
benefit plans" or "employee pension benefit plans" within the meaning of Section
3(1) and (2) of the Employee Retirement Income Security Act ("ERISA"). Such
plans, funds and programs are hereinafter collectively referred to as the
"Plans".
(b) Compliance with Internal Revenue Code and ERISA. With
respect to all such Plans, and all related trust agreements, annuity contracts
or other funding instruments, Oxford is now in material compliance with, and has
materially complied in the past, both as to form and operation, with all
applicable provisions of ERISA and of the Internal Revenue Code, as amended (the
"Code"), including sections of the Code relating to coverage, where required in
order to be tax qualified. All necessary governmental approvals for such Plans
have been obtained, or applied for, and a favorable determination as to the
qualification under the Code of each employee pension benefit plan and each
material amendment thereto has been made by the Internal Revenue Service or a
request for such a determination has been filed with the Internal Revenue
Service within the remedial amendment period provided by Code S 401(b) and
regulatory guidance thereunder.
(c) Administration. Each such Plan has been administered to date
in material compliance with the requirements of the Code and of ERISA, and all
reports required by any governmental agency with respect thereto have been
timely filed.
(d) Claims. There is no litigation and there are no proceedings
before the U.S. Department of Labor, the Internal Revenue Service or any other
commission or administrative or regulatory authority pending against Oxford or
any fiduciary of any such Plan relating to claims for benefits thereunder or
relating in any way to the maintenance or operation of such Plans; and, to the
knowledge of Bank, no such litigation or proceeding has been threatened. There
are no audits now being conducted of any such Plan by the Department of Labor or
Internal Revenue Service, and, to the knowledge of Bank, none has been noticed.
(e) Prohibited Transactions. Neither Oxford nor any fiduciary
under such Plan has engaged in (A) any transactions in violation of Section 406
of ERISA for which no exemption exists under Section 408 of ERISA, or (B) any
prohibited transactions, as that term is defined in Section 4975(c) of the Code,
for which no exemption exists under Section 4975(d) of the Code.
(f) Plan Documents. Bank has delivered to UPAC, with respect
to each of the Plans, correct and complete copies of (A) all current Plan
documents and amendments, trust agreements and insurance contracts, (B) the most
recent IRS determination letter, (C) the Annual Report (Form 5500 Series) and
accompanying schedules, for each of the last three years as filed, (D) the
current summary plan description and summaries of material modifications
relating to each Plan, and (E) the most recent financial statements.
(g) No Multi-Employer Plans and No Plans For Retirees. Oxford is
not now and in the preceding six (6) years has not been obligated to contribute
to a multi-employer pension plan as defined in Section 37(A) of ERISA, and has
not incurred any liability on account of a "partial withdrawal" or a "complete
withdrawal" (within the meaning of Sections 4203 and 4205, respectively, of
ERISA) with respect to any multi-employer plan, and no Plan provides medical or
death benefits (whether or not insured) with respect to current or former
employees of Oxford or UPAC beyond their retirement or other termination of
Service (other than (A) coverage mandated by law, or (B) death benefits under
any Plan intended to qualify under Section 401(a) of the Code).
(h) Contribution Paid. All accrued obligations of Oxford
whether arising by operation of law, by contract or by past custom, for payments
to trusts or other funds or to any governmental body, with respect to
unemployment compensation, social security, any Plan or any other benefits for
employees of Oxford as of the date hereof, have been paid when due, or adequate
assurance therefor have been provided on the March 31, 1998 unaudited interim
financial statements. Except as disclosed on Schedule 3.19, all reasonably
anticipated obligations of Oxford (whether arising by operation of law, by
contract, by past custom or otherwise) for salaries, vacation, sick pay,
personal day and holiday pay, bonuses and other forms of compensation which were
payable to the employees of Oxford as of date hereof have been paid or adequate
accruals therefore have been made in the March 31, 1998 unaudited interim
financial statements.
3.22 Commission Fees. In connection with the transactions contemplated
by this Agreement, no broker, finder or similar agent has been employed by or on
behalf of Bank or Oxford, and no person with which either of them has had
dealings or communications of any kind is entitled to a commission or other
compensation for which UPAC or Oxford may be liable.
3.23 Disclosure. No representation or warranty herein, including the
Schedules hereto, nor any information contained in the financial statements
referenced in Section 3.8 hereof, or any certificate, statement, or other
document delivered by Bank or Oxford hereunder, contains any untrue statement of
material fact or omits to state a material fact necessary in order to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading.
3.24 Trademarks and Similar Rights. Oxford owns or is licensed or
otherwise has the right to use all patents, trademarks, service marks, common
trade names, copyrights, inventions, trade secrets, proprietary processes and
other intellectual property rights used in the ordinary course of its business,
including but not limited to, those listed on Schedule 3.24. No person or party
has asserted or threatened to assert, any claim that the rights used by Oxford
in the operation of its business infringes any rights owned or held by any other
person, and there is no pending, or to Bank's knowledge, threatened claim or
litigation against Oxford contesting its right to use such.
3.25 Related Party Transactions.
(a) Except as disclosed on Schedule 3.25, Oxford is not a party to
or bound by any oral or written agreement with Bank or any Affiliate of Bank (as
hereinafter defined) (i) related to the provision, sharing or use of employees,
services, facilities, credit arrangements or other assets; (ii) related to
expense (including tax) sharing or the provision of management services; (iii)
whereby it guarantees or otherwise assumes a contingent obligation in respect of
the obligation of another; or (iv) whereby it is a co-debtor, co-insured or
shares joint or common ownership or use of property with another.
(b) Except as disclosed in Schedule 3.25, neither Bank nor any
Affiliate of Bank has any direct or indirect financial interest in, or serves as
an officer, director, employee, manager, partner or consultant of, any
competitor, client or supplier of Oxford. Relationships described in this
Section 3.25 (a) or (b) are herein collectively referred to as "Related Party
Transactions."
(c) For purposes of this Section 3.25, an Affiliate is a person or
entity who controls, is controlled by, or is under common control with Bank, and
includes any officer, director, employee, manager, partner, spouse or child of
such person or entity.
3.26 Environmental. Oxford has never (a) owned any interest in real
property, or been the operator of any site containing, or transported any
hazardous materials in violation of any environmental law or regulation, or (b)
as an occupant or tenant of real property, handled or used any hazardous
material and no leak, spill, release, deposit, leach, migration, discharge,
emission or disposal of any hazardous materials has occurred on any real
property occupied or leased by Oxford in violation of any environmental law or
regulation.
4. Representations and Warranties of UPAC. UPAC represents and warrants to
Bank as follows:
4.1 Organization, Powers and Qualifications. UPAC is duly organized,
validly existing and in good standing under the laws of the State of Missouri
has all requisite corporate power and authority to own its properties and assets
and carry on its business as now conducted.
4.2 Authority, No Violation, Etc. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by a majority of the directors of UPAC. This
Agreement constitutes the valid and binding obligation of UPAC, enforceable in
accordance with its terms (except as may be limited by general principles of
equity to the enforcement of remedies or applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights generally
now or hereafter in effect). Neither the execution and delivery by UPAC of this
Agreement nor the consummation by it of the transactions contemplated hereby
will violate, cause a default (or give rise to any right of termination,
cancellation or acceleration) under or require any consent, approval, notice or
filing pursuant to (a) any of the terms, conditions or provisions of any
agreement, instrument or obligation to which UPAC is a party, or by which it or
any of its properties or assets may be bound, (b) the Certificate of
Incorporation or Bylaws of UPAC, or (c) any statute, rule or regulation or any
judgment, order, writ, injunction or decree of any court, arbitrator, mediator,
administrative agency or governmental body, in each case applicable to either
UPAC or any of its properties or assets.
4.3 Commission Fees. In connection with this Agreement and the
transactions contemplated hereby, no broker, finder or similar agent has been
employed by or on behalf of UPAC, and no person with which UPAC has had any
dealings or communications of any kind is entitled to any brokerage commission,
finder's fee or any similar compensation for which Bank would be liable.
4.4 Disclosure. No representation or warranty herein, including the
schedules hereto prepared by UPAC, nor any information contained in any
certificate, statement, or other document delivered by UPAC hereunder, contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein or herein, in light
of the circumstances under which they were made, not misleading.
4.5 Accreditation, Due Diligence and Sophistication Matters. (a) UPAC
has been provided an opportunity to ask questions of, and UPAC has received
answers thereto satisfactory to it from Bank and its representatives regarding
the terms and conditions of this Agreement and other matters pertaining to this
transaction. UPAC has investigated and is familiar with the affairs and
financial condition of Oxford and has been given sufficient access to and has
acquired sufficient information including the Schedules to this Agreement and
all other information and documents as requested by UPAC including but not
limited to financial information, corporate records, tax returns, contracts,
forms, leases and premium finance contracts and related documents about Oxford
to reach an informed and knowledgeable decision to acquire the Shares.
(b) UPAC has such knowledge and experience in financial affairs that
it is capable of evaluating the merits and risks of this transaction. UPAC's
financial situation is such that it can afford to bear the economic risk of
holding the Shares for an indefinite period of time.
(c) UPAC is acquiring the Shares pursuant to this Agreement for its
own account and not with a view to or for sale in connection with any
distribution of all or any part of the Shares. UPAC acknowledges Bank's
understanding that the sale of the Shares hereunder is intended to be exempt
from registration under the Securities Act of 1933, as amended (the "Securities
Act").
(d) UPAC is an "Accredited Investor" within the definitions set
forth in Securities Act Rule 501(a).
(e) Nothing contained in this Section 4.5 is intended to limit in
any way (i) any representation, warranty or covenant of Bank, contained herein
or in any document delivered pursuant hereto, or (ii) UPAC's right to rely
thereon.
5. Conduct of Business of Oxford. Bank covenants that, from and after the
date hereof through the Closing, it will cause Oxford to conduct its business
as follows:
5.1 Business. Oxford will conduct and operate its business substantially
in the ordinary course consistent with past practice so as to protect and
maintain such business and the goodwill it now enjoys. Oxford will preserve
intact its present business organization, keep available the services of its
present officers and employees, and make good faith efforts to preserve its
relationships with customers and others having business dealings with them.
Except with the written approval of UPAC, neither Bank nor Oxford will execute,
agree to, or allow to continue any Related Party Transaction except those
disclosed in Schedule 3.25.
5.2 Adverse Changes. Oxford will not take or omit to take any action
which would cause any adverse change to occur in any material respect in its
business, assets, liabilities, income, financial conditions, results of
operations or reasonably likely prospects or waive any statute of limitations so
as to expand any tax or other liability.
5.3 Maintenance of Properties, Permits, Licenses, Etc. Oxford will
maintain all of its properties, assets, licenses and permits, used or useful in
its business in present or better repair, order, and condition, except for
reasonable wear and use and damage by fire and unavoidable casualty (subject,
however, to the provisions of Section 5.12).
5.4 Maintain Corporate Existence. Oxford will maintain its corporate
existence in good standing in its state of incorporation and its due
qualifications in good standing in all jurisdictions in which it is qualified to
do business.
5.5 Capital Stock. Oxford will not make any change in its authorized,
issued or outstanding capital stock or other securities or grant any options or
other right to acquire, whether directly or contingently, any of its capital
stock or other securities.
5.6 Dividends. Oxford will not declare, set aside, or pay any dividend or
make any redemption, repurchase or other distribution in respect of its capital
stock and other securities.
5.7 Employment; Compensation; Benefits. Except as disclosed in Schedule
5.7 or as consented to in writing by UPAC, Oxford will not enter into any
employment contract, increase the rate of compensation payable or to become
payable by it to any officer or any other employee, or accrue or pay to any of
its officers or employees any bonus, profit-sharing, retirement pay, insurance,
death benefit, fringe benefit or other compensation, except that which shall
have accrued in the ordinary course in connection with increases in compensation
of non-officer employees or the operation of the existing employee benefit plans
disclosed in Schedule 3.21, none of which shall be terminated or cancelled
except as contemplated by this Agreement or as approved by UPAC in writing.
5.8 Liabilities and Obligations. Oxford will not incur or otherwise
become liable for any liabilities or obligations (direct or indirect, contingent
or fixed, matured or unmatured) whether arising out of contract, tort, statute
or otherwise, including federal or state income tax liabilities, except (a)
liabilities and obligations which are in the ordinary course of business
consistent with past practice in prior periods and (b) liabilities and
obligations fully covered by insurance other than any retained amounts.5.9
Capital Expenditures. Oxford will not, without the prior written approval of
UPAC, enter into or make commitments of a capital expenditure nature in excess
of $5,000 in the aggregate.
5.10 Sale of Assets. Oxford will not sell or dispose of any of its assets
other than in the ordinary course consistent with past practice in prior
periods.
5.11 Leases; Contracts. Oxford will not enter into any lease or do or
permit any act or omission to act by Oxford which act or omission will cause a
breach of or a default by Oxford in any Contract.
5.12 Insurance. Oxford or Bank will maintain in full force and effect all
policies of insurance listed in Schedule 3.18. If any of the assets or
properties owned or used by Oxford are damaged or destroyed by fire or other
casualty, whether insured or uninsured, then, subject to the rights, if any, of
the lessors or mortgagees thereof, Oxford will promptly proceed with the repair,
restoration or replacement thereof in such manner and at such location as UPAC
shall determine.
5.13 Books and Records. Oxford will maintain its books and records in the
manner in which they are presently maintained.
5.14 Compliance with the Laws and Regulations. Oxford will operate its
business in compliance in all material respects with all laws, rules and
regulations applicable to it and to the conduct of its business.
5.15 Encumbrances. Oxford will not mortgage, pledge or otherwise subject
to any lien, security interest, encumbrance or charge of any nature any of its
property or assets, or become committed so to do, or permit or suffer any of
such property or assets to become subject to any mortgage, pledge, lien,
security interest, encumbrance or charge of any nature, except for liens for
current taxes not yet due and payable.
5.16 Amendment to Articles of Incorporation and By-Laws. Oxford will not
amend its Articles of Incorporation or By-Laws.
6. Covenants of Bank and UPAC. Bank and UPAC covenant and agree to and with
each other as follows:
6.1 Update of Information. Between the date hereof and the Closing, Bank
will promptly disclose to UPAC in writing, and UPAC will promptly disclose to
Bank in writing, information of which they have knowledge (i) concerning any
event that would render any of their respective representations or warranties
untrue if made as of the date of such event, (ii) which renders any information
set forth in the Schedules to be no longer correct in all material respects or
(iii) which is known to arise after the date hereof and which would have been
required to be included in the Schedules if such information had existed on the
date hereof.
6.2 Access to Business and Records. Between the date hereof and the
Closing, UPAC and its officers, employees, attorneys and accountants and
employees of the senior lender to UPAC shall during normal business hours have
full reasonable access to and the right to inspect and copy the books, records,
contracts, properties, and assets of Oxford and to consult with officers, full-
time employees, attorneys, accountants and agents of and lenders to Oxford;
provided, however, that such review of documents shall not disrupt the normal
business operations of Oxford.
6.3 Efforts to Consummate. Subject to the terms and provisions of this
Agreement, each of the parties shall use its best efforts to take or cause to be
taken all action and to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated hereby, including, without limitation, the
obtaining of all consents, authorizations, orders and approvals of any third
party, whether private or governmental, required or appropriate in connection
with such party's, performance of such transactions, and each of the parties
hereto shall cooperate with the other in all of the foregoing. Notwithstanding
this Section 6.3, neither the Bank nor Oxford shall be required to obtain the
consents or approvals of the transactions contemplated by this Agreement by the
authorities listed in Schedule 3.14; provided, however, that the Bank shall have
caused Oxford to fully cooperate with UPAC in its efforts to file, at the
expense of UPAC, all notices or requests for approvals as required by such
authorities.
6.4 Confidentiality. Except as otherwise provided in that certain
Confidentiality Letter, dated January 16, 1998, between the Bank and
TransFinancial Holdings Inc. (the "Confidentiality Agreement"), from and after
the Closing, Bank will keep secret and confidential all trade secrets and
confidential information heretofore or hereafter possessed by it concerning
Oxford or UPAC and any affiliates of any thereof and further agrees that it will
at no time use for any purpose whatsoever or disclose to any person, firm or
corporation (other than Oxford or UPAC) any such information. Unless this
Agreement is fully consummated, and except as otherwise provided in the
Confidentiality Agreement, UPAC will (i) keep secret and confidential all trade
secrets and confidential information heretofore or hereafter acquired by it
concerning Bank or Oxford, and (ii) will at no time use or disclose any such
information to any person, firm or corporation, except to the extent that such
information is no longer a trade secret or confidential.
6.5 Public Announcement. Prior to Closing, unless required by law, no
party hereto shall make any public announcement regarding the transaction
contemplated hereby without prior consent of the other party hereto.
6.6 Income Tax Matters.
(a) Federal and State Income Tax Returns. Bank will, at its
expense or at the expense of its parent company, prepare and file all federal
and state income tax returns required to be filed by or on behalf of Oxford,
including any stub returns due to this transaction, for all tax periods (or
portions thereof) ending on or prior to the Closing. Any taxes (including
interest and penalties) owing under, or adjustments to or refunds of the taxes
paid or determined under, such income tax returns for tax periods ending on or
prior to the Closing shall be the sole responsibility of Bank and its parent
company, and shall be payable to Bank or its parent company in the case of
refunds. Any taxes on the income of Oxford (including interest and penalties)
owing for periods commencing after the Closing shall be the sole responsibility
of Oxford and UPAC, as applicable, in the case of amounts owing to taxing
authorities, and shall be payable to Oxford or UPAC, as applicable, in the case
of refunds of taxes paid for such periods.
(b) Audits. The Bank and its parent company shall have sole
responsibility for and control over the conduct and/or resolution of any tax
audit or examination, or any other tax-related proceeding, pertaining to Oxford
for any tax period (or portion thereof) ending on or prior to the Closing,
including the preparation and filing or execution of any tax agreement or
amended tax return for such tax period (or portion thereof). In the event of
any amended tax return, tax audit, examination or proceeding with respect to a
tax period (or portion thereof) ending on or prior to the Closing, UPAC shall
cause Oxford to cooperate with Bank and shall provide Bank with any documents or
other information reasonably requested by it in connection therewith. If, after
the Closing, the Bank or its parent company intends to cause Oxford to file any
amended income tax return, or to execute any income tax agreement with any
taxing authority, with respect to any tax period (or portion thereof) ending on
or prior to the Closing, then the Bank or its parent company shall notify UPAC
of the details of such amended income tax return or income tax agreement at
least 30 days prior to final filing or execution, and within 21 days of having
been so notified UPAC shall provide the Bank or its parent company with UPAC's
good faith written estimate of the specific dollar amount (if any) by which
Oxford's income tax liability for tax periods ending after the Closing shall be
increased as a direct result of such amended income tax return or income tax
agreement (other than as a result of any carry back of any available operating
loss, capital loss or tax credit accrued or incurred on or prior to the
Closing). If UPAC provides such good faith written estimate to the Bank and its
parent company within the 21-day period specified in the preceding sentence, and
if notwithstanding having received such estimate the Bank or its parent company
files such amended income tax return or executes such income tax agreement, then
the Bank and its parent company shall reimburse Oxford for the lesser of (i) the
amount (if any) by which Oxford's income tax liability for tax periods ending
after the Closing is increased as a direct result of such amended income tax
return or income tax agreement (other than as a result of any carry back of any
available operating loss, capital loss or tax credit accrued or incurred on or
prior to the Closing) or (ii) the amount estimated by UPAC in a writing provided
to the Bank or its parent company within the 21-day period specified in the
preceding sentence.
6.7 Additional Bank Covenants. Bank agrees to allow Oxford or UPAC, as
the case may be, the use and occupancy without additional cost but otherwise
pursuant to a written lease in form and substance satisfactory to the parties,
until December 31, 1998, of the offices and office furniture now used and
occupied by Oxford. Bank also agrees to allow Oxford or UPAC, as the case may
be, to maintain without charge but otherwise pursuant to the published rules,
regulations and policies of Bank applicable to deposit accounts, until December
31, 1998, all existing depositary accounts with Bank. If Oxford maintains a
deposit account with Bank after December 31, 1998, then UPAC shall cause Oxford
to comply with all of Bank's rules, regulations and policies on deposit
accounts, and pay all published fees on accounts maintained by Oxford with Bank
as might be imposed on commercial deposit accounts from time to time maintained
with Bank. Immediately following the Closing, UPAC shall cause Oxford to
execute all standard resolutions, signature cards and other documents required
by Bank regarding commercial deposit accounts.
6.8 Additional Covenants of UPAC. UPAC agrees that not later than two (2)
years after the Closing it will cause Oxford to change its corporate name to a
name not using the word "Oxford," and that by such date it will have caused
Oxford to otherwise cease doing business using the name "Oxford."
6.9 Access to Company Records Post Closing. UPAC shall cause Oxford to
provide all reasonably necessary access and provide copies of business records
or documents of Oxford or UPAC to Bank, at its cost and expense, for any
reasonably necessary business or regulatory need post closing. UPAC will provide
to Bank copies of the financial statements of Oxford for the period ending on
the Closing promptly after the same are available in final form.
7. Conditions to Obligations of UPAC to Consummate Acquisition. The
obligations of UPAC to consummate the transactions provided for in Agreement
shall be subject to satisfaction, on or before the Closing, of the following
conditions:
7.1 Representations and Warranties True at Closing. All representations
and warranties of Bank shall be true on and as of the Closing as though such
representations and warranties were made at and as of such date, except as
otherwise expressly stated herein.
7.2 Opinion of Counsel for Bank. UPAC shall have received an opinion of
counsel for Bank, reasonably satisfactory to UPAC and its counsel.
7.3 Resignations. UPAC shall have received signed resignations of the
officers and directors of Oxford in their capacities as officers and directors.
7.4 Glavan Agreements. Oxford shall have entered into a two-year
written non-competition (excluding nonmarketing strategic consulting and expert
testimony) and non-solicitation agreement with John Glavan, having UPAC as an
intended third party beneficiary thereof, and otherwise in form and substance
satisfactory to UPAC. In addition, all of John Glavan's rights under the Stock
Appreciation Rights Agreement among Oxford Financial Corporation, Oxford Premium
Finance, Inc., and John Glavanovits, dated November 30, 1995, the letter
agreement between Oxford Premium Finance, Inc. and John Glavan, dated August 21,
1989, and the letter agreement between Security Funding Corp. and John Glavan,
dated May 16, 1988 shall have been satisfied by Bank or its parent company, and
all such agreements shall have been terminated in writing to the satisfaction of
UPAC.
7.5 Employment Agreements. Nancy Piper and Sheila Minitti shall have
entered into employment agreements with either Oxford or UPAC, as determined by
UPAC, having terms of at least one year and otherwise in form and substance
satisfactory to UPAC, provided that the aggregate compensation to be paid to
each of them is not less than the amount each is receiving as of the date
hereof.
7.6 Intentionally omitted.
7.7 Third Party Approvals. UPAC shall have received evidence
satisfactory to it that approvals have been received from all third parties
whose approval or consent is required to consummate the transactions
contemplated by this Agreement; provided, however, it shall not be a condition
to Closing for either Bank or Oxford to have obtained the consents or approvals
of the transactions contemplated by this Agreement by the authorities listed in
Schedule 3.14.
7.8 Performance of Covenants. Bank shall have materially performed each
and every obligation to be performed by it hereunder at or before the Closing.
7.9 Deliveries. All deliveries required to be made under this Agreement
to UPAC on or before the Closing shall have been received.
7.10 No Action. No action, suit or proceeding shall have been commenced,
and no investigation by any governmental or regulatory authority shall have been
commenced, seeking to restrain, prevent or change the transactions contemplated
hereby or seeking judgments against Bank, Oxford or UPAC in respect to the
transactions contemplated hereby.
7.11 Hart-Scott-Rodino. Any necessary Hart-Scott-Rodino notice filing
shall have been filed and prior notice periods elapsed.
7.12 Euclid Agreement. Oxford and Euclid Insurance Services, Inc.
("Euclid") shall have entered into an agreement in form and substance
satisfactory to UPAC, pursuant to which Euclid shall, for three (3) years from
and after the Closing, arrange for premium financing for its customers
exclusively with Oxford; provided, that, premium financing generated by Euclid
as a result of agencies or books of business purchased after the Closing are
excluded from the foregoing exclusivity commitment; and provided further, that
Euclid shall be entitled (a) to obtain premium financing from another source, on
a case-by-case contract basis, if Oxford is unable to match or beat the bona
fide rate or material terms for such contract offered by such other source and
(b) terminate the agreement, if after notice and opportunity to cure within 30
days, Oxford is unable to provide the level of service provided now to Euclid by
Oxford as determined by Euclid in its sole discretion.
8. Conditions to Obligation of Bank to Consummate the Acquisition. The
obligation of Bank to consummate this transaction shall be subject to
satisfaction, on or prior to the Closing, of the following conditions:
8.1 Representations and Warranties True at Closing. The representations
and warranties of UPAC shall be true on and as of the Closing, as though such
representations and warranties were made at and as of such date, except as is
otherwise expressly contemplated herein.
8.2 Opinion of Counsel for UPAC. Bank shall have received an opinion of
counsel for UPAC, reasonably satisfactory to Bank and its counsel.
8.3 Performance of Covenants. UPAC shall have materially performed each
and every obligation to be performed by it hereunder at or before the Closing.
8.4 Hart-Scott-Rodino. Any necessary Hart-Scott-Rodino notice filing
shall have been filed and prior notice periods elapsed.
8.5 Replacement of Letter of Credit. UPAC shall have executed and
delivered documents necessary in connection with a replacement letter of credit
for the current letter of credit of American National Bank and Trust Company of
Chicago that shows Oxford as the applicant. This replacement letter of credit
shall satisfy the requirements of any insurance or other bonding company that
provides performance bonds or other similar arrangements for Oxford in
connection with its various state licenses or compliance with various state
laws.
8.6 Glavan Agreements. Oxford shall have entered into a two-year written
non-competition (excluding nonmarketing strategic consulting and expert
testimony) and non-solicitation agreement with John Glavan, having UPAC as an
intended third party beneficiary thereof, and otherwise in form and substance
satisfactory to Glavan. In addition, all of John Glavan's rights under the
Stock Appreciation Rights Agreement among Oxford Financial Corporation, Oxford
Premium Finance, Inc., and John Glavanovits, dated November 30, 1995, the letter
agreement between Oxford Premium Finance, Inc. and John Glavan, dated August 21,
1989, and the letter agreement between Security Funding Corp. and John Glavan,
dated May 16, 1988 shall have been satisfied by Bank or its parent company, and
all such agreements shall have been terminated in writing to the satisfaction of
UPAC.
8.7 Employment Agreements. Nancy Piper and Sheila Minitti shall have
entered into employment agreements with either Oxford or UPAC, as determined by
UPAC, having terms of at least one year and otherwise in form and substance
satisfactory to Piper and Minitti.
8.8 Third Party Approvals. Bank shall have received evidence satisfactory
to it that approvals have been received from all third parties whose approval or
consent is required to consummate the transactions contemplated by this
Agreement; provided, however, it shall not be a condition to Closing for either
Bank or Oxford to have obtained the consents or approvals of the transactions
contemplated by this Agreement by the authorities listed in Schedule 3.14.
8.9 Deliveries. All deliveries required to be made under this Agreement
to Bank on or before the Closing shall have been received.
8.10 No Action. No action, suit or proceeding shall have been
commenced, and no investigation by any governmental or regulatory authority
shall have been commenced, seeking to restrain, prevent or change the
transactions contemplated hereby or seeking judgments against Bank, Oxford or
UPAC in respect to the transactions contemplated hereby.
8.11 Line of Credit. The line of credit extended by Bank to Oxford
shall be paid in full, including all related interest and fees. As of the
Closing, the Bank shall have no obligation to provide credit or otherwise lend
any funds to Oxford. As of March 31, 1998, the total amount advanced under the
line of credit, including interest and fees was $17,844,126.
9. Termination. On or prior to Closing:
(a) Bank, by written notice to UPAC, may terminate this Agreement
in the event that any of the conditions precedent contained in Section 8 hereof
to the performance of its obligations which are to be performed or fulfilled at
or prior to such date shall not have been fulfilled prior to and cannot be
fulfilled concurrent with the Closing and shall not have been waived by Bank,
which termination shall not prejudice any claim for damages or other relief
which Bank may have at law or in equity against UPAC; and
(b) UPAC, by written notice to Bank, may terminate this Agreement
in the event that any of the conditions precedent contained in Section 7 hereof
to the performance of UPAC's obligations which are to be performed or fulfilled
at or prior to such date shall not have been fulfilled prior to and cannot be
fulfilled concurrent with the Closing and shall not have been waived by UPAC,
which termination shall not prejudice any claim for damages or other relief
which UPAC may have at law or in equity against Bank.
(c) Each of the parties to this Agreement shall pay all of its
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, whether or not such transactions are consummated, including
without limitation the expenses of lawyers, accountants, investment bankers,
appraisers, and other advisors.
(d) Either party may terminate this Agreement if without fault of
such party the transaction contemplated herein does not close on or before
May 31, 1998.
(e) UPAC, by written notice to Bank, may terminate this Agreement
on or before the fourteenth day following the date of this Agreement, if
(i) UPAC shall not have completed its investigation of Oxford and its financial
condition and prospects to the satisfaction of UPAC and its financial, tax,
accounting and legal advisors, or (ii) Bank of Boston shall not have agreed in
writing to amend its credit facility with UPAC to increase the credit facility
to include financing of Oxford's operations, on terms not less advantageous than
existing at the date hereof and otherwise satisfactory to UPAC. After the
fourteenth day following the date of this Agreement, UPAC shall not have any
rights to terminate this Agreement pursuant to this Section 9(e).
10. Counterparts. This Agreement may be executed in two or more counterparts
each of which shall be deemed an original, but a11 of such counterparts together
shall be deemed to be one and the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
11. Contents of Agreement, Parties in Interest, Assignment, Etc. This
Agreement and the Schedules which are attached hereto and are incorporated
herein set forth the entire understanding of the parties with respect to the
subject matter hereof. Any previous agreements or understandings between the
parties regarding the subject matter hereof are merged into and superceded by
this Agreement; provided however that if this transaction is not closed, the
parties will continue to be bound by their Confidentiality Agreement. This
Agreement may not be assigned without the written consent of the parties. All
representations, warranties, covenants, terms and conditions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto. Nothing
herein express or implied is intended or shall be construed to confer upon or to
give any person, other than the parties and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
12. Indemnification.
12.1 General Indemnification. Subject to the terms and conditions
hereinafter set forth, Oxford and UPAC and their respective officers and
directors, and the successors and assigns of each thereof, shall be indemnified
by Bank from and against any and all damages, losses, liabilities and expenses
resulting from (a) any inaccuracy in or breach or nonfulfillment of any
representation, warranty, obligation, covenant, or agreement made or undertaken
in or under this Agreement by Bank; (b) any third party claims arising from or
as the result of any inaccuracy in or breach or nonfulfillment of any of the
foregoing; and (c) all actions, suits, judgments, costs and expenses (including,
without limitation, attorneys' fees) incident to items (a) or (b) of this
sentence. Subject to the terms and conditions hereinafter set forth, Bank, and
its successors, representatives and permitted assigns, shall be indemnified by
UPAC from and against any and all damages, losses, liabilities and expenses
resulting from (a) any inaccuracy in or breach or nonfulfillment of any
representation, warranty, obligation, covenant or agreement made or undertaken
in or under this Agreement by UPAC; (b) any third party claims arising from or
as the result of any inaccuracy in or breach or nonfulfillment of any of the
foregoing; (c) all actions, suits, judgments, costs and expenses (including,
without limitation, attorneys' fees) incident to items (a), or (b) of this
sentence.
12.2 Claims Procedure. Claims for indemnification hereunder shall be made
as follows:
(a) Third Party Claims. In the event that any claim or demand for
which any party hereto would be entitled to indemnification under Section 12 is
asserted or sought to be collected by a third party, the party(ies) seeking
indemnity shall give a Claim Notice (as described in Section 12.3 hereof) to
the party or parties from whom indemnity is sought. The party(ies) from whom
indemnity is sought shall have thirty (30) days from the date of delivery of the
Claim Notice (the "Notice Period") to notify the party(ies) seeking indemnity
whether or not the right to indemnity for such claim is disputed and, if
disputed, the reasons therefor.
(1) If the right to indemnity is not disputed by
the party(ies) from whom indemnity is sought, such party(ies) shall assume the
control and defense and/or settlement of such claim or demand, and the amount of
any settlement or judgment and the costs and expenses of such defense shall be
paid by such party(ies). If the party(ies) seeking indemnity shall desire to
participate in any such defense, such party(ies) may do so at its or their sole
cost and expense, in which event no settlement of any claim or demand which
would adversely affect the rights of the party(ies) seeking indemnity may be
made without the written consent(s) of such party(ies), which consent(s) may not
be unreasonably withheld. If, however, the party(ies) seeking indemnification
refuses to consent to a firm, bona fide settlement offer not involving
injunctive relief against it (them) that the party from whom indemnification is
sought wishes to accept, the party(ies) to be indemnified may continue to pursue
such matter, free of any participation by the party making the indemnification,
at the sole expense of the party(ies) seeking indemnification. In such event,
the obligations of the party from whom indemnification is sought to the
party(ies) seeking indemnification shall be equal to the amount of such offer of
settlement that was refused, plus the costs and expenses of the party(ies)
seeking indemnification prior to the date consent to such settlement offer was
refused, which shall not be more than twenty days after such offer of settlement
was delivered to the party(ies) seeking indemnification. Without limiting the
generality of the foregoing, it shall not be deemed unreasonable to withhold
consent to a settlement involving injunctive or other relief against the
party(ies) seeking indemnity or their respective assets, employees or
businesses. The party(ies) seeking indemnity shall be kept fully informed of the
status of any such claim or demand at a11 stages thereof, regardless of whether
or not they participate in any such defense.
(2) If the right to indemnity is disputed by the
party(ies) from whom indemnity is sought or if such party(ies) shall fai1 to
respond within the Notice Period, the party(ies) seeking indemnity shall have
the right to control the defense and/or settlement of such claim or demand, and
the amount of any settlement or judgment and the cost, and expenses of such
defense (including, without limitation, attorneys' fees incurred in connection
therewith) may be the subject of a claim for indemnification under Section
12.2(b) hereof. Nothing herein contained shall prohibit or limit the right of
the party(ies) seeking indemnity hereunder to pursue such legal remedies as may
be available to it or them to enforce such right of indemnity prior to or after
the resolution of the third party's claim or demand.
(3) The party(ies) seeking indemnity shall make
available to the party(ies) from whom indemnity is sought and their attorneys
and accountants all books and records of the party(ies) seeking indemnity
relating to any such claim or demand and the parties agree to render each other
such assistance as they may reasonably require in order to ensure the proper and
adequate defense of any such claim or demand.
(b) Non-Third Party and Other Claims. In the event of a claim or
demand for which any party hereto would be entitled to indemnification under
this Section 12 which does not involve a claim or demand being asserted or
sought to be collected by a third party, the party(ies) seeking indemnity shall
give a Claim Notice, or in the case of claims or demands which have proceeded in
the manner described in Section 12.2(a)(2), a second Claim Notice, with respect
to such claim or demand to the party(ies) from whom indemnity is sought. Unless
disputed by the party(ies) from whom indemnity is sought by written notice
within thirty (30) days of receipt of the Claim Notice to the party(ies) seeking
indemnity stating the reasons therefor, each claim under this Section shall be
paid within forty-five (45) days after the date of receipt of the Claim Notice
therefor. If any claim under this Section shall not be paid within such
forty-five (45) day period, or if the party(ies) from whom indemnity is sought
dispute such claim by written notices within such thirty (30) day period to the
party(ies) seeking indemnity stating the reasons therefor, the party(ies)
seeking indemnity shall have the right to commence legal proceedings for the
enforcement of their rights hereunder, and shall be entitled to recover interest
thereon at the rate of ten percent (10%) per year. Interest shall be calculated
from 30 days after the party providing indemnification received the Claim
Notice.
12.3 Timing and Content of Claim Notice. Each Claim Notice shall
be given by the party(ies) seeking indemnity as promptly as practicable after
such party(ies) becomes or become aware of the claim or demand and the facts
indicating that a claim for indemnification in respect of the same may be
warranted; provided, however, that subject to the one year or other applicable
time limitations on making claims set forth in Section 12.6, no delay in giving
a Claim Notice shall affect the obligation of the party(ies) from whom
indemnification is sought, except to the extent that such failure or delay shall
adversely affect the ability of such party(ies) to defend, settle or satisfy the
claim or demand. Each Claim Notice shall specify the nature of the claim or
demand, the applicable provision(s) of this Agreement or other instrument under
which the claim for indemnity arises and the amount or the estimated amount
thereof.
12.4 Consent to Jurisdiction and Venue. Bank consents, for the
purposes of any suit, action or proceeding which may be instituted with respect
to this Agreement, the breach on non-performance hereof, or the transaction
contemplated hereby, to the non-exclusive jurisdiction of the state or federal
courts sitting in the State of Missouri, agrees that venue is properly in such
courts, and agrees that service of process may properly be had on it, by mailing
to it at the address provided in Section 13 hereof, the papers or other
documents sought to be so served.
12.5 Limits on Indemnity. (a) The maximum aggregate liability of
Bank with respect to all indemnity claims made pursuant to Section 12 of this
Agreement, including related legal expenses ("Indemnity Claims"), shall be
$300,000 (the "Maximum Claim Amount"). UPAC may not make any Indemnity Claims
against Bank until UPAC has incurred damage, loss, liability or expense with
respect to Indemnity Claims other than those described in Section 12.5(b) that
collectively equal $50,000 (the "Threshold"); provided, however, that if such
Indemnity Claims exceed the Threshold, then the entire amount of such Indemnity
Claims (up to the Maximum Amount) can be made and recovered, regardless of the
Threshold; and provided further, that any Indemnity Claim made because of a
breach by Bank of any covenant contained in Sections 1, 2.2(a), 2.2(b), 5.3-5.7,
5.9-5.12, 5.15, 5.16, 6.2 or 6.4-6.7 shall not be subject to the Threshold.
(b) Notwithstanding Section 12.5(a), Bank shall be liable for
indemnification under this Agreement for claims of misrepresentation or breach
of warranty under Section 3.10(b) hereof relating to the adequacy of the
allowance for loan losses that, in the aggregate, exceed the loss reserve
indicated on the March 31, 1998 financial statement of Oxford, plus $50,000
(such excess being the "Loan Loss Indemnity Amount"). The Loan Loss Indemnity
Amount shall be added to all indemnification claims under Section 12.1 in
applying the Maximum Claim Amount. The Loan Loss Indemnity Amount shall be
excluded from indemnification claims under Section 12.1 to determine the
Threshold Amount.
12.6 Expiration of Indemnity Claims; Exclusivity of Remedy. All claims
described in Section 12.1 made against either party under this Article 12 must
be asserted in writing by the other party on or before the first anniversary of
the Closing, except (a) as otherwise agreed to in writing by the parties, (b)
claims for breach of any warranty contained in Sections 3.11 or 3.21 with
respect to compliance by Oxford with the Code, ERISA or state taxes may be
brought within the time provided in the statutes of limitation applicable
thereto and (c) claims for breach of any covenant contained in Section 6.4 with
respect to confidentiality may be brought within 120 days after the non-
breaching party obtained knowledge of the breach giving rise to the claim. This
Section 12 is intended by the parties to provide the exclusive remedy for any
misrepresentation, breach of warranty, covenant, or agreement made or undertaken
in or under this Agreement regardless of whether such claim is stated in
contract, tort, as a violation of or pursuant to any federal or state statute,
rule or regulation or in equity; provided that the parties shall be entitled to
seek equitable relief as allowed herein and provided, further, that this
limitation shall not apply to claims based on fraud.
12.7 Insurance. In computing the amount of losses and expenses for which
an action or claim may be made for indemnification under Section 12.1, the
obligation of the party from whom indemnification is sought shall be reduced to
the extent of the amount of any insurance payments received by the party(ies)
seeking indemnification in connection with such losses and expenses.
13. Notices. Any notices or other communications required or permitted
hereunder shall be deemed to have been given three business days after sent by
certified or registered mail, postage prepaid, addressed (or one business day
after being sent by one-day express mail) as follows:
if to Bank, to: Oxford Bank and Trust
1100 Lake Street
Addison, IL 60101
Facsimile: (630) 628-0181
Attention: George P. Colis
With a copy to: Freeborn & Peters
311 South Wacker Drive
Chicago, IL 60606
Facsimile: (312) 360-6571
Attention: Craig McCrohon
And if to UPAC: Universal Premium Acceptance
Corporation
Attn: President
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
With a copy to: Kent E. Whittaker, Esq.
Hillix, Brewer, Hoffhaus,
Whittaker & Wright, L.L.C.
2420 Pershing Road, Suite 400
Kansas City, MO 64108
or to such other persons and addresses as have been furnished by either party
to the other in writing. No notice, waiver, consent or approval required or
permitted hereunder shall be deemed effective unless given in writing.
14. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Missouri without reference or regard to
the conflicts of laws and rules of said state.
IN WITNESS WHEREOF, this Agreement has been executed on the day and year
first above written.
UNIVERSAL PREMIUM ACCEPTANCE
CORPORATION
ATTEST:
By:
Secretary Title:
OXFORD BANK & TRUST
ATTEST:
By:
Secretary Title:
AMENDMENT NO. 4
TO
RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 4 TO RECEIVABLES PURCHASE AGREEMENT (the
"Amendment") dated as of May 29, 1998 is entered into by and among APR FUNDING
CORPORATION, a Delaware corporation ("Seller"), UNIVERSAL PREMIUM ACCEPTANCE
CORPORATION, a Missouri corporation, individually ("UPAC") and as Servicer (in
such capacity, the "Servicer"), TRANSFINANCIAL HOLDINGS, INC. (formerly known as
Anuhco, Inc.), a Delaware corporation (the "Parent"), EAGLEFUNDING CAPITAL
CORPORATION, a Delaware corporation ("Purchaser"), and BANKBOSTON, N.A.
(formerly known as THE FIRST NATIONAL BANK OF BOSTON) (as "Agent", as
"Custodian" and in its individual capacity). Capitalized terms used herein and
not otherwise defined herein shall have the meanings ascribed to such terms in
Appendix A to the "Agreement" (as defined below).
W I T N E S S E T H:
WHEREAS, the Seller, UPAC, the Servicer, the Parent, the Purchaser and
the Agent have entered into that certain Receivables Purchase Agreement dated as
of December 31, 1996 (as the same shall have been amended through the date
hereof, the "Agreement"; the terms defined therein being used herein as therein
defined unless otherwise defined herein), pursuant to which, among other things,
the Seller has agreed to sell to the Purchaser, and the Purchaser has agreed to
purchase from the Seller, undivided percentage interests in the Seller's
Receivables; and
WHEREAS, the parties hereto have agreed to modify certain terms and
provisions of the Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS TO THE AGREEMENT. Effective as of the first
date on which each of the conditions set forth in Section 2 hereof shall have
been satisfied, the Agreement is amended as follows:
(a) Section 1.01 of the Agreement is hereby amended to delete the
amount "$50,000,000" and to substitute therefor "$65,000,000".
(b) The definition of "Change in Control" is hereby amended to delete
the references to "APR" in clause (b) thereof and to substitute therefor
"UPAC".
(c) The definition of "Excess Concentration Deduction" in Appendix A
of the Agreement is hereby amended to delete the tables in Section (A)2 of
such definition and to substitute the following tables therefor:
Best's Rating Generation Limit
B to A++ 2.0%
B- (or lower) 0.5%
(d) The definition of "Excess Concentration Deduction" in Appendix A
of the Agreement is hereby further amended to add the following Sections
A(4) and (I) thereto:
4. If the Insurance Obligor is not described in any of clauses 1 through
3 above: 0.5%.
(I) Certain Insurance Obligors in the Aggregate. The amount by which
(x) the aggregate unpaid principal balance of all Eligible Receivables
having Insurance Obligors which either (1) have a Best's Rating of
lower than B-, or (2) are not otherwise described in any of clauses 1
through 3 of Section (A) of this definition, exceeds (y) an amount
equal to 2.5% of the unpaid principal balance of all Eligible
Receivables.
(e) The definition of "Eligible Insurance Carrier" in Appendix A of
the Agreement is hereby amended to delete clause (b) thereof.
(f) Schedule 6.01(o) is amended to add the following to the list of
banks:
Oxford Bank & Trust (as Depository Bank)
1100 Lake Street
Addison, Illinois 60101
(g) Exhibit 3.03(b) "Form of Weekly Report" is replaced in its
entirety by Exhibit 3.03(b) attached hereto.
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become
effective upon the satisfaction of the following conditions precedent:
(a) The Agent shall have received the following (including all
attachments thereto), each (unless otherwise indicated) dated the date of
the initial Originator Purchase from Oxford under the Purchase and Sale
Agreement and in form and substance satisfactory to the Agent:
(i) Eight fully executed copies of (A) this Amendment, (B)
Amendment No. 1 to the Purchase and Sale Agreement, (C) the letter
agreement amending the Fee Agreement, in the form of Exhibit A
attached hereto, and (D) the letter agreement amending the fee letter
referred to in Section 2.10 of the Liquidity Agreement, in the form of
Exhibit B attached hereto;
(ii) A copy of the resolutions of the Board of Directors of
Oxford approving the Purchase and Sale Agreement and Amendment No. 1
to the Purchase and Sale Agreement and the transactions contemplated
thereby certified by its Secretary or Assistant Secretary;
(iii) Good standing certificate for Oxford issued by the
Secretary of State of Illinois;
(iv) A certificate of the Secretary or Assistant Secretary
of Oxford certifying the names and true signatures of the officers
authorized on its behalf to sign Amendment No.1 to the Purchase and
Sale Agreement;
(v) The Articles of Incorporation of Oxford, duly certified
by the Secretary of State of Illinois, as of a recent date acceptable
to the Agent, together with a copy of the By-laws of Oxford, duly
certified by the Secretary or an Assistant Secretary of Oxford;
(vi) Copies of acknowledgment copies of (A) proper Financing
Statements (Form UCC-1), naming Oxford, as Originator, as the assignor
of Receivables, Funding, as secured party/purchaser, and Seller as
assignee of such Financing Statements, and (B) proper terminations of
Financing Statements (Form UCC-3), terminating any and all Financing
Statements which cover any Receivable or Contract other than pursuant
to the Purchase and Sale Agreement or the Agreement;
(vii) Copies of search reports (including tax, UCC, ERISA and
judgment liens) provided in writing to the Agent, listing all
effective financing statements that name Oxford as debtor and that are
filed in or relate to the jurisdictions in which filings were made
pursuant to subsection (vi) above, together with copies of such
financing statements (none of which shall cover any Receivables or
Contracts other than pursuant to the Agreement or the Purchase and
Sale Agreement );
(viii) Duly executed Deposit Account Agreement with Oxford
Bank and Trust;
(ix) Such powers of attorney as Agent or the Purchaser shall
reasonably request to enable them to collect all amounts due under any
and all Contracts and related Receivables originated by Oxford;
(x) Evidence that Oxford has marked its master data
processing records to reflect Funding's (or Funding's assignee's)
interest in each Pool Receivable;
(xi) An executed copy of an amendment to the Tax Sharing
Agreement among Parent and its "affiliated group of companies"
(including APR, UPAC, UPAC of California and Oxford), adding Oxford as
a party thereto;
(xii) Opinions of Polsinelli, White, Vardeman & Shalton,
counsel to Oxford as to perfection, authority and other matters in
form and substance satisfactory to the Agent;
(xiii) Opinions of Polsinelli, White, Vardeman & Shalton,
counsel to Seller and Oxford as to "true sale" and "nonsubstantive
consolidation" in form and substance satisfactory to the Agent;
(xiv) An executed copy of the Subordinated Intercompany
Revolving Note payable by the Seller to Oxford; and
(xv) Such other further documents and information as Funding
shall reasonably request.
(b) No event or condition has occurred and is continuing, or would
result from the execution, delivery or performance of this Amendment, which
would constitute a Liquidation Event or Unmatured Liquidation Event;
(c) The Purchaser shall have obtained confirmation from each of the
three rating agencies rating the Commercial Paper Notes that the amendment
herein to the definition of "Excess Concentration Deduction" will not
result in a withdrawal or reduction of the ratings of the Commercial Paper
Notes;
(d) All of the fees and expenses referred to in Section 9 below and
any other fees and expenses owing under Section 14.05 of the Agreement
shall have been paid in full; and
(e) The conditions precedent to the effectiveness of Amendment No. 2
to the Liquidity Agreement shall have been fully satisfied.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Upon the effectiveness of this Amendment, each of the Seller,
UPAC, the Servicer and the Parent, hereby remakes and reaffirms all
covenants, representations and warranties made by it (or deemed made by it)
in the Agreement, the Backup Servicing Agreement, the Custody Agreement and
the Parent Support Agreement (except, in each case, to the extent that such
covenants, representations or warranties expressly speak as to another
date).
(b) Each of the Seller, UPAC and the Parent covenants and agrees that
none of the proceeds of any Purchase shall be used directly or indirectly
to purchase the capital stock of Oxford from Oxford Bank & Trust.
SECTION 4. CONSENT AND REAFFIRMATION. The Parent, by its execution
hereof, hereby (i) consents to the execution, delivery and performance of the
Amendment by all of the parties hereto and (ii) reaffirms all of its obligations
and liabilities under that certain Parent Support Agreement dated as of December
31, 1996 executed by the Parent in favor of the Seller and its successors and
assigns, which obligations and liabilities shall remain in full force and
effect.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS DISTINGUISHED FROM THE
CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW YORK.
SECTION 6. SEVERABILITY. Each provision of this Amendment shall be
severable from every other provision of this Amendment for the purpose of
determining the legal enforceability of any provision hereof, and the
unenforceability of any provision hereof in one jurisdiction shall not have the
effect of rendering such provision or provisions unenforceable in any other
jurisdiction.
SECTION 7. REFERENCE TO AND EFFECT ON THE AGREEMENT. Upon the
effectiveness of this Amendment, each reference in the Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import shall mean
and be, and references to the Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Agreement shall mean
and be, a reference to the Agreement as previously amended and as amended
hereby. Except as otherwise amended by this Amendment, the Agreement as
previously amended shall continue in full force and effect and is hereby
ratified and confirmed.
SECTION 8. COUNTERPARTS. This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
SECTION 9. FEES AND EXPENSES. The Seller hereby confirms its
agreement to pay on demand all reasonable costs and expenses in connection with
the preparation, execution and delivery of this Amendment and any of the other
instruments, documents and agreements to be executed and/or delivered in
connection herewith, including, without limitation, the reasonable fees and out-
of-pocket expenses of counsel to the Agent with respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
APR FUNDING CORPORATION,
as Seller
By
Title
UNIVERSAL PREMIUM ACCEPTANCE CORPORATION,
individually and
as initial Servicer
By
Title
TRANSFINANCIAL HOLDINGS, INC.
(formerly known as Anuhco, Inc.)
as Parent
By
Title:
EAGLEFUNDING CAPITAL CORPORATION,
as Purchaser
By: BANKBOSTON, N.A.(formerly known as The First
National Bank of Boston) as its attorney-in-
fact
By
Title
BANKBOSTON, N.A.(formerly known as THE FIRST
NATIONAL BANK OF BOSTON), as Agent
By
Title
Acknowledged and agreed to
as of this 29th day of May, 1998 in
accordance with Section 5.03 of that
certain Liquidity Agreement dated as of
December 31, 1996, as amended, among the
Purchaser, the financial institutions from
time to time parties thereto (the "Liquidity
Providers"), BankBoston, N.A.(formerly
known as The First National Bank of Boston),
as liquidity agent (the "Liquidity
Agent") and Bankers Trust Company, as
collateral agent (the "Collateral Agent")
BANKBOSTON, N.A. (formerly known as THE
FIRST NATIONAL BANK OF BOSTON), as a
Liquidity Provider
By
Title
HARRIS TRUST AND SAVINGS BANK,
as a Liquidity Provider
By
Title
