UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-12070
TRANSFINANCIAL HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 46-0278762
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 859-0055
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at October 22, 1999
Common stock, $0.01 par value 3,252,370 Shares
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Operating Revenues.......................................................... $ 39,294 $ 39,614
Operating Expenses.......................................................... 40,653 43,645
Operating Income (Loss)..................................................... (1,359) (4,031)
Nonoperating Income (Expense)
Interest income.......................................................... 23 111
Interest expense......................................................... (331) (5)
Other.................................................................... 22 68
Total nonoperating income (expense).................................. (286) 174
Income (Loss) Before Income Taxes........................................... (1,645) (3,857)
Income Tax Provision (Benefit).............................................. (610) (1,383)
Net Income (Loss)........................................................... $ (1,035) $ (2,474)
Basic and Diluted Earnings (Loss) Per Share................................. $ (0.32) $ (0.50)
Basic Average Shares Outstanding............................................ 3,276 4,964
Diluted Average Shares Outstanding.......................................... 3,294 4,980
<FN>
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Operating Revenues.......................................................... $ 119,412 $113,652
Operating Expenses.......................................................... 120,944 117,117
Operating Income (Loss)..................................................... (1,532) (3,465)
Nonoperating Income (Expense)
Interest income.......................................................... 70 265
Interest expense......................................................... (876) (73)
Other.................................................................... 31 163
Total nonoperating income (expense).................................. (775) 355
Income (Loss) Before Income Taxes........................................... (2,307) (3,110)
Income Tax Provision (Benefit).............................................. (779) (973)
Net Income (Loss)........................................................... $ (1,528) $ (2,137)
Basic and Diluted Earnings (Loss) Per Share................................. $ (0.44) $ (0.38)
Basic Average Shares Outstanding............................................ 3,461 5,684
Diluted Average Shares Outstanding.......................................... 3,469 5,715
<FN>
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................................ $ 1,530 $ 3,256
Freight accounts receivable, less allowance
for credit losses of $200 and $387................................... 15,050 13,351
Finance accounts receivable, less allowance
for credit losses of $767 and $566................................... 15,628 12,584
Current deferred income taxes............................................ 2,640 2,548
Other current assets..................................................... 3,509 2,401
Total current assets................................................. 38,357 34,140
Operating Property, at Cost:
Revenue equipment........................................................ 30,835 31,969
Land..................................................................... 3,794 3,681
Structures and improvements.............................................. 11,880 11,130
Other operating property................................................. 11,249 10,500
57,758 57,280
Less accumulated depreciation........................................ (25,141) (24,122)
Net operating property........................................... 32,617 33,158
Intangibles, net of accumulated amortization................................ 9,253 9,777
Other Assets................................................................ 966 688
$ 81,193 $ 77,763
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Cash overdrafts.......................................................... $ 317 $ 1,976
Line of credit borrowings................................................ 2,272 --
Accounts payable......................................................... 4,899 3,093
Current maturities of long-term debt (Note 5)............................ 15,000 300
Accrued payroll and fringes.............................................. 6,279 6,068
Other accrued expenses................................................... 4,079 3,685
Total current liabilities............................................ 32,846 15,122
Deferred Income Taxes....................................................... 1,396 1,867
Long-Term Debt (Note 5)..................................................... -- 9,700
Shareholders' Equity (Note 6)
Preferred stock with $0.01 par value, authorized 1,000,000 shares,
none outstanding..................................................... -- --
Common stock with $0.01 par value, authorized 13,000,000 shares,
issued 7,597,676 and 7,593,592 shares................................ 76 76
Paid-in capital.......................................................... 6,103 6,090
Retained earnings........................................................ 75,839 77,367
Treasury stock 4,345,561 and 3,661,220 shares, at cost................... (35,067) (32,459)
Total shareholders' equity........................................... 46,951 51,074
$ 81,193 $ 77,763
The accompanying notes to condensed consolidated balance sheets are an integral part of these statements.
<FN>
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(In thousands) (Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss)................................................... $ (1,528) $ (2,137)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities
Depreciation and amortization..................................... 3,812 5,053
Provision for credit losses....................................... 675 1,033
Deferred income tax benefit....................................... (563) (3,047)
Other............................................................. 27 --
Net increase (decrease) from change in other
working capital items affecting operating activities........... (222) 3,459
2,201 4,361
Cash Flows From Investing Activities
Proceeds from discontinued operations............................... -- 6,345
Purchase of finance subsidiary...................................... -- (4,178)
Purchase of operating property, net................................. (2,819) (2,415)
Origination of finance accounts receivable.......................... (148,652) (117,599)
Sale of finance accounts receivable................................. 111,765 92,078
Collection of owned finance accounts receivable..................... 33,005 28,749
Purchases of short-term investments................................. -- (2,998)
Maturities of short-term investments................................ -- 6,024
Other............................................................... (233) (329)
(6,934) 5,677
Cash Flows From Financing Activities
Cash overdrafts..................................................... (1,659) --
Borrowings on long-term debt........................................ 5,000 10,000
Payments to acquire treasury stock.................................. (2,603) (18,847)
Borrowing (repayments) on line of credit agreements, net............ 2,272 (2,500)
Other............................................................... (3) (79)
3,007 (11,426)
Net Decrease in Cash and Cash Equivalents............................. (1,726) (1,388)
Cash and Cash Equivalents at beginning of period...................... 3,256 4,778
Cash and Cash Equivalents at end of period............................ $ 1,530 $ 3,390
Cash Paid During the Period for
Interest............................................................ $ 876 $ 62
Income Taxes........................................................ $ 80 $ 363
<FN>
On May 29, 1998, the Company acquired all of the capital stock of Oxford Premium Finance, Inc. ("Oxford") for approximately
$4,178,000. In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired 22,338
Cash paid for capital stock and acquisition expenses (4,178)
Intangibles 1,876
Liabilities assumed $ 20,036
In connection with the acquisition of Oxford, $19.0 million of its finance accounts receivables were sold under the securitization
agreement. The proceeds of the sale were paid directly to Oxford's former line of credit bank to repay the balance outstanding
under the line at the date of acquisition.
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)(Unaudited)
<CAPTION>
Total
Share
Common Paid-In Retained Treasury holders'
Stock Capital Earnings Stock Equity
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997.................. $ 75 $ 5,581 $ 79,394 $(12,565) $ 72,485
Net loss...................................... -- -- (2,027) -- (2,027)
Issuance of shares under incentive plans...... 1 509 -- (591) (81)
Purchase of 2,115,422 shares of common stock.. -- -- -- (19,303) (19,303)
Balance at December 31, 1998.................. 76 6,090 77,367 (32,459) 51,074
Net loss...................................... -- -- (l,528) -- (1,528)
Issuance of shares under incentive plans...... -- 13 -- (5) 8
Purchase of 683,241 shares of common stock.... -- -- -- (2,603) (2,603)
Balance at September 30, 1999................. $ 76 $ 6,103 $ 75,839 $(35,067) $ 46,951
<FN>
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
</TABLE>
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated financial statements include
TransFinancial Holdings, Inc. ("TransFinancial") and all of its subsidiary
companies (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation. The unaudited condensed
financial statements 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. The year end
condensed balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles. In the opinion of management, all adjustments necessary to fairly
present 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 unless significant changes have taken place since the end
of the most recent fiscal year. TransFinancial believes that the disclosures
contained herein, when read in conjunction with the financial statements and
notes included in TransFinancial's Annual Report on Form 10-K, filed with the
SEC on March 15, 1999, 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 in the aforementioned report
on Form 10-K.
As of July 1, 1998, the Company prospectively decreased the estimated
remaining useful life of certain purchased software to reflect the Company's
plan to substantially revise and replace the software. This change decreased
amortization expense in the third quarter and nine months of 1999 by $50,000 and
$150,000 and decreased the net loss by approximately $30,000, or $0.01 per
share, and $90,000, or $0.03 per share, for the periods. This change will
decrease amortization expense and increase operating income by approximately
$50,000 for the remainder of 1999 from amounts which would have been recorded
had the change not been made.
2. SEGMENT REPORTING
The Company operates in three business segments: transportation, financial
services, and industrial technology. Other items are shown in the table below
for purposes of reconciling to consolidated amounts.
<TABLE>
<CAPTION>
Third Quarter Nine Months
Operating Operating Operating Operating Total
($ in thousands) Revenues Income (Loss) Revenues Income (Loss) Assets
<S> <C> <C> <C> <C> <C> <C>
Transportation 1999 $ 37,089 $ (1,502) $ 112,959 $(1,861) $47,863
1998 37,666 (812) 108,440 675 46,564
Financial Services 1999 2,163 333 6,352 1,113 26,685
1998 1,914 (886) 5,107 (826) 25,312
Industrial Technology 1999 -- (33) -- (127) 110
1998 -- (926) -- (1,388) 195
Total Segments 1999 39,252 (1,202) 119,311 (875) 74,658
1998 39,580 (2,624) 113,547 (1,539) 72,071
General Corporate and Other 1999 42 (157) 101 (657) 6,535
1998 34 (1,407) 105 (1,926) 7,237
Consolidated 1999 39,294 (1,359) 119,412 (1,532) 81,193
1998 39,614 (4,031) 113,652 (3,465) 79,308
<FN>
</TABLE>
3. SUBSEQUENT EVENTS
On October 19, 1999, the Company executed a definitive agreement pursuant to
which COLA Acquisitions, Inc. ("COLA"), a company newly formed by three
TransFinancial directors, will acquire all of the Company stock not owned by
such directors for $6.03 in cash. The acquisition will be effected by a merger
of COLA into TransFinancial, and the conversion of TransFinancial shares into
cash.
Consummation of the Merger is subject to several conditions, including
completion of COLA's financing and approval of the transaction by the holders of
a majority of the outstanding Company shares.
4. ACQUISITION OF PREMIUM FINANCE SUBSIDIARY
On May 29, 1998, TransFinancial Holdings, Inc. ("TransFinancial" or "the
Company") through Universal Premium Acceptance Corporation ("UPAC"), its
insurance premium finance subsidiary, completed the acquisition of all of the
issued and outstanding stock of Oxford Premium Finance, Inc. ("Oxford") for
approximately $4.2 million. Oxford offered short-term collateralized financing
of commercial insurance premiums through approved insurance agencies in 17
states throughout the United States. At May 29, 1998, Oxford had outstanding
net finance receivables of approximately $22.5 million. This transaction was
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 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 connection with the purchase
of Oxford, TransFinancial recorded goodwill of $1.9 million which will be
amortized on the straight-line basis over 15 years.
The operating results of Oxford are included in the consolidated operating
results of TransFinancial after May 29, 1998. The pro forma consolidated
results of operations of TransFinancial for the nine months ended September 30,
1998, assuming the acquisition occurred as of the beginning of the period, were
operating revenues of $114.1 million, net loss of $2.1 million and basic and
diluted loss per share of $(0.37). The pro forma results of operations are not
necessarily indicative of the actual results that would have been obtained had
the acquisition been made at the beginning of the period, or of results which
may occur in the future.
5. FINANCING AGREEMENTS
SECURITIZATION OF RECEIVABLES
TransFinancial, UPAC and APR Funding Corporation (a wholly-owned subsidiary)
have entered into a securitization agreement with a financial institution
whereby undivided interests in a designated pool of accounts receivable can be
sold on an ongoing basis. Effective October 8, 1999, the securitization
agreement was amended to decrease the maximum allowable amount of receivables to
be sold under the agreement to $70.0 million and to change the expiration date
of the agreement from December 30, 2001 to January 15, 2000. The purchaser
permits principal collections to be reinvested in new financing agreements. The
Company had securitized receivables of $63.1 million and $64.8 million at
September 30, 1999 and 1998. The cash flows from the sale of receivables are
reported as investing activities in the accompanying consolidated statement of
cash flows. The securitized receivables are reflected as sold in the
accompanying balance sheet.
The terms of the agreement require UPAC to maintain a minimum book net worth
of $20.0 million and contain restrictions on the payment of dividends by UPAC to
TransFinancial without prior consent of the financial institution. The terms of
the agreement also require the Company to maintain a minimum consolidated
tangible net worth of $35 million and a minimum ratio of consolidated EBITDA to
interest and securitization fees of 1.5 to 1.0. The Company was in compliance
with all such provisions at September 30, 1999. The terms of the securitization
agreement also require that UPAC maintain a default reserve at specified levels
that serves as additional collateral. At September 30, 1999, approximately $7.3
million of owned finance receivables served as collateral under the default
reserve provision.
SECURED LOAN AGREEMENTS
In January 1998, Crouse Cartage Company entered into a three-year secured loan
agreement with a commercial bank which provides for a $4.5 million working
capital line of credit loan ("Working Capital Line"). The following table
summarizes activity under the Working Capital Line in the third quarter and nine
months ended September 30, 1999 and 1998 (in thousands, except percentages):
Third Quarter Nine Months
1999 1998 1999 1998
Balance outstanding at end of period $2,272 $ -- $2,272 $ --
Average amount outstanding.......... $1,703 $ -- $ 915 $ 773
Maximum month end balance outstanding $2,272 $ -- $2,414 $2,752
Interest rate at end of period...... 8.00% 8.25% 8.00% 8.25%
Weighted average interest rate...... 7.82% 8.50% 7.78% 8.50%
In September 1998, the Company entered into a two-year secured loan agreement
with the same commercial bank which enabled the Company to borrow $10.0 million
(the "Loan"), secured by freight accounts receivable and a second lien on
revenue equipment. In March 1999, the Loan was amended and restated to increase
the borrowing to $15.0 million. The Loan bears interest at 25 basis points
below the bank's prime rate. The interest rate was 8.00% at September 30, 1999.
The terms of the Loan provide for monthly payments of interest only through
September 30, 1999, with monthly principal payments thereafter of $100,000 plus
interest through maturity on September 30, 2000, when the balance outstanding
becomes due.
The terms of the Loan require the Company to maintain a minimum tangible net
worth of $35 million, a ratio of current assets to current liabilities of 1.25
to 1.00, a ratio of total liabilities to tangible net worth of 1.0 to 1.0, and
contain restrictions on the payment of dividends without prior consent of the
Lender. The Company was in compliance with all such provisions at September 30,
1999, except for the current ratio covenant and certain other covenants. The
Company received a waiver from the bank of these covenant violations. The
proceeds of the Loan were used to repurchase shares of the Company's common
stock.
6. STOCK REPURCHASE
In the first quarter of 1999, the Board of Directors authorized the repurchase
of 1,030,000 shares of the Company's common stock. Through September 30, 1999,
a total of 683,241 shares had been repurchased at a cost of approximately $2.6
million.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Third quarter ended September 30, 1999 compared to the third quarter ended
September 30, 1998 and nine months ended September 30, 1999 compared to the
nine months ended September 30, 1998.
TransFinancial operates primarily in three segments; transportation, through
its subsidiary, Crouse Cartage Company and its affiliates ("Crouse"); financial
services, through its subsidiary, UPAC; and industrial technology, through its
subsidiary, Presis.
TRANSPORTATION
Operating Revenue - The changes in transportation operating revenue are
summarized in the following table (in thousands):
Qtr. 3 1999 Nine Months 1999
vs. vs.
Qtr. 3 1998 Nine Months 1998
Increase (decrease) from:
Increase (decrease) in LTL tonnage............. (1,333) 2,443
Increase in LTL revenue per hundredweight..... 1,031 2,401
Increase (decrease) in truckload revenues...... (275) (326)
Net increase (decrease).................... (577) 4,518
Less-than-truckload ("LTL") revenues declined 0.9% from $33.3 million for the
third quarter of 1998 to $33.0 million for the third quarter of 1999. The
principal cause of the decline was a 4.0% decrease in LTL tons hauled, which
management believes is largely due to a perception of uncertainty about Crouse's
future resulting from the one day work stoppage in May 1999 by union personnel
at a key terminal and the announcements relating to the proposed management
buyout of the Company. The Company's management believes the completion of the
proposed management buyout will provide the continuity and stability necessary
to regain the lost business. The decline in revenue from reduced tons was
offset in part by a 3.1% improvement in LTL revenue yield resulting from the
Crouse's focus on yield improvement, general rate increases in November 1998 and
September 1999 and fuel surcharges imposed in August 1999 to recover the cost of
increased diesel fuel prices.
LTL revenues rose 5.1% from $95.7 million for the first nine months of 1998
to $100.6 million for the same period of 1999. A 2.6% overall increase in tons
hauled and a 2.5% improvement in revenue yield combined to provide the revenue
growth, particularly in the first six months of 1999.
Truckload operating revenues fell 6.3% from $4.3 million for the third
quarter of 1998 to $4.1 million for the third quarter of 1999 and 2.6% from
$12.7 million for the first nine months of 1998 to $12.4 million for the same
period in 1999. The decline in truckload revenues for both periods was the
result of the factors discussed above as well as the temporary closing of a meat
processing plant operated by one of Crouse's customers.
Operating Expenses - A comparative summary of transportation operating expenses
as a percent of transportation operating revenue follows:
<TABLE>
<CAPTION>
Percent of Operating Revenue
Third Quarter Nine Months
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Salaries, wages and employee benefits.................... 61.0% 58.5% 60.0% 58.3%
Operating supplies and expenses.......................... 14.3% 13.3% 13.1% 12.6%
Operating taxes and licenses............................. 3.3% 2.6% 2.8% 2.6%
Insurance and claims..................................... 4.3% 3.3% 2.9% 2.4%
Depreciation............................................. 2.9% 2.8% 2.8% 2.8%
Purchased transportation and rents....................... 18.3% 21.6% 20.9% 20.7%
Total operating expenses............................. 104.1% 102.1% 101.6% 99.4%
</TABLE>
Crouse's operating expenses as a percentage of operating revenue, or
operating ratio, increased in each of the third quarter and the first nine
months of 1999, in relation to the comparable periods of 1998. The
deterioration in operating ratio occurred principally in three cost categories:
salaries, wages and employee benefits; operating supplies and expenses; and
insurance and claims. The above increases were in part offset by decreases in
purchased transportation and rents.
Salaries, wages and employee benefits increased 2.6% from $22.1 million for
the third quarter of 1998 to $22.6 million for the third quarter of 1999, and
7.2% from $63.2 million for the nine months of 1998 to $67.7 million for the
same period of 1999. The increase in the third quarter of 1999 was principally
the result of a scheduled increase in union wages and benefits effective April
1, 1999, pursuant to the Crouse's collective bargaining agreement.
Additionally, in the third quarter of 1999 Crouse increased its utilization of
Company drivers and tractors to provide transportation of freight between
terminals ("linehaul transportation") and decreased its utilization of owner-
operator leased equipment. The increase in salaries, wages and employee
benefits for the first nine months of 1999 was the result of the increase in
business volumes discussed above, the scheduled increase in union wages and
benefits and certain retroactive wage increases paid in connection with the
resolution of certain local union contracts.
Operating supplies and expenses increased 5.8% from $5.0 million for the
third quarter of 1998 to $5.3 million for the third quarter of 1999, and 8.5%
from $13.7 million for the first nine months of 1998 to $14.8 million for the
comparable period of 1999. The increase in the third quarter was primarily the
result of increases in diesel fuel prices, as well as the cost of relocating
certain personnel affected by changes in the Crouse's operations. The increase
for the first nine months of 1999 was result the increased business volumes
discussed previously in addition to the factors discussed above for the third
quarter.
Insurance and claims expenses rose from 3.3% to 4.3% of operating revenue for
the third quarter of 1998 and 1999, respectively, and from 2.4% to 2.9% of
operating revenue for the respective nine month periods of 1998 and 1999. The
increases in insurance and claims expenses were primarily the result of adverse
developments in the 1999 periods with respect to prior period claims.
Purchased transportation and rent, decreased 15.6% from $8.1 million for the
third quarter of 1998 to $6.9 million for the third quarter of 1999 as Crouse
decreased its utilization of owner-operator leased equipment for linehaul
transportation as discussed above.
The Company's transportation net loss for the third quarter of 1999 was
$886,000 as compared to a net loss of $484,000 for the third quarter of 1998, as
a result of the decrease in operating revenues and increases in operating
expenses discussed above. The net loss for the first nine months of 1999 was
$1,131,000 as compared to net income of $336,000 for the same period of 1998, as
a result of increases in operating expenses discussed above.
FINANCIAL SERVICES
For the third quarter of 1999, UPAC reported operating income of $333,000 on
net financial services revenue of $2.2 million, as compared to an operating loss
of $886,000 on net revenue of $1.9 million for the comparable period of 1998.
For the first nine months of 1999, UPAC reported operating income of $1,113,000
on net revenue of $6.4 million, as compared to an operating loss of $826,000 on
net revenue of $5.1 million. The increases in net financial services revenue
and operating income in the periods of 1999 were the result of increased average
total receivables outstanding, offset in part by lower average yields on finance
contracts. The growth in average total receivables was due to the acquisition
of Oxford Premium Finance, Inc. on May 29, 1998 and the addition of marketing
representatives in other key markets since the beginning of 1998. A decrease in
consulting fees in the third quarter and nine months of 1999 resulting from the
expiration, effective December 31, 1998, of a consulting agreement with the
former owner of UPAC, also contributed to the increases in operating income.
Increased provisions for credit losses in the first nine months of 1999
partially offset the improvement in revenue in the period. Operating expenses
for the third quarter and nine months of 1998 include $333,000 of additional
depreciation related to the change in estimated useful life for certain
purchased software.
UPAC reported net income of $181,000 for the third quarter of 1999, as
compared to a net loss of $535,000 for the third quarter of 1998, as a result of
increased revenues and decreased operating expenses as discussed above. UPAC's
net income for the first nine months of 1999 was $606,000 as compared to a net
loss of $491,000 for the comparable period of 1998, as a result of the factors
discussed above.
INDUSTRIAL TECHNOLOGY
In the third quarter and nine months of 1999, Presis incurred operating
expenses of $33,000 and $127,000, primarily in salaries, wages and employee
benefits, as compared to operating expenses of $926,000 and $1,388,000 for the
third quarter and nine months of 1998. Since the fourth quarter of 1998, Presis
has limited expenditures to essential activities related to continued research
and testing of its technology. The operating expenses in the periods of 1998
include charges of $244,000 relating to certain management and consulting
contracts and $525,000 resulting from the adjustment of certain equipment and
intangibles to estimated fair value.
Presis' losses, net of tax effects, were $20,000 and $78,000 for the third
quarter and nine months of 1999, as compared to $557,000 and $837,000 for the
comparable periods of 1998.
OTHER
Included in general corporate expenses of the third quarter and nine months
of 1999 are approximately $191,000 of legal, accounting and financial advisor
fees incurred in the evaluation of the proposal by certain members of management
to acquire all of the outstanding shares of the Company.
In connection with a failed takeover attempt in the third quarter of 1998,
the Company incurred $500,000 in transaction costs and expenses that are
included in general corporate expenses. Additionally, general corporate charges
of $700,000 were recorded in the third quarter of 1998, principally to reflect
certain excess costs incurred to remove contaminated soil from a site formerly
owned by the Company. A lawsuit has been filed against the environmental
engineering firm that performed the initial cleanup to recover such excess
costs. The Company has not recorded the benefit of potential recovery pursuant
to this lawsuit and none can be assured.
As a result of the Company's use of funds for the stock repurchases, interest
earnings on invested funds were substantially lower in the third quarter and
nine months of 1999 than in the same periods of 1998. Interest expense increased
in the periods of 1999 due to borrowings on long-term debt incurred to
repurchase stock and increases in interest rates on borrowings in the third
quarter of 1999.
TransFinancial's effective income tax provision (benefit) rates for the third
quarter and nine months of 1999 were (37)% and (34)%, as compared to (36)% and
(31)% for the comparable periods of 1998. The effective income tax rates for
each period were a lower percentage than the statutory rate due to the impact of
non-deductible amortization of intangibles and meals and entertainment expenses.
OUTLOOK
The Company believes the following statements may be forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and, as such, involve risks and uncertainties which are
detailed below under the caption "Forward-Looking Statements".
The Company utilizes a three-year strategic planning process with the goal of
maximizing shareholder value through profitable growth of its business segments.
In the transportation segment the plan calls for the Company to continue to
provide and improve upon its already superior service to its customers in its
primary operating territory, while increasing the density of its operations in
the eastern portion of its service area. The Company also intends to continue
to focus on improving the efficiency and effectiveness of its operations.
The Financial services segment will focus on targeting its marketing efforts
to improve its contribution to the Company's return on equity. Additionally,
the Company intends to focus on utilizing technology to improve its operating
efficiency.
The industrial technology operation will focus on continued research, testing
and commercialization of its technology. The Company expects this operation to
incur operating losses in the remainder of 1999 at or below expenditure levels
of $100,000 per quarter.
FORWARD-LOOKING STATEMENTS
The Company believes certain statements contained in this Quarterly Report on
Form 10-Q which are not statements of historical fact may constitute forward-
looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, including, without limitation, the statements
specifically identified as forward-looking statements in this Form 10-Q. These
statements can often be identified by the use in such statements of forward-
looking terminology, such as "believes," "expects," "may," "will," "should,"
"could," "intends," "plans," "estimates," or "anticipates," or the negative
thereof, or comparable terminology. Certain of such statements contained herein
are marked by an asterisk ("*") or otherwise specifically identified herein. In
addition, the Company believes certain statements in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases, and in oral statements made by or with the approval of an authorized
executive officer of the Company which are not statements of historical fact may
constitute forward-looking statements within the meaning of the Act. Examples
of forward-looking statements include, but are not limited to (i) projections of
revenues, income or loss, earnings or loss per share, capital expenditures, the
payment or non-payment of dividends, capital structure and other financial
items, (ii) statements of plans and objectives of the Company or its management
or Board of Directors, including plans or objectives relating to the products or
services of the Company, (iii) statements of future economic performance, and
(iv) statements of assumptions underlying the statements described in (i), (ii)
and (iii). These forward-looking statements involve risks and uncertainties
which may cause actual results to differ materially from those anticipated in
such statements. The following discussion identifies certain important factors
that could affect the Company's actual results and actions and could cause such
results or actions to differ materially from any forward-looking statements made
by or on behalf of the Company that relate to such results or actions. Other
factors, which are not identified herein, could also have such an effect.
TRANSPORTATION
Certain specific factors which may affect the Company's transportation
operation include: competition from other regional and national carriers for
freight in the Company's primary operating territory; price pressure; changes in
fuel prices; labor matters, including changes in labor costs, and other labor
contract issues; and environmental matters.
FINANCIAL SERVICES
Certain specific factors which may affect the Company's financial services
operation include: the performance of financial markets and interest rates; the
performance of the insurance industry; competition from other premium finance
companies and insurance carriers for finance business in the Company's key
operating states; adverse changes in statutory interest rates or other
regulations in states in which the Company operates; greater than expected
credit losses; the acquisition and integration of additional premium finance
operations or receivables portfolios; and the inability to obtain continued
financing at a competitive cost of funds.
INDUSTRIAL TECHNOLOGY
Presis is a start-up business formed to develop an industrial technology for
dry particle processing. This technology is subject to risks and uncertainties
in addition to those generally applicable to the Company's operations described
herein. These additional risks and uncertainties include the efficacy and
commercial viability of the technology, the ability of the venture to market the
technology, the acceptance of such technology in the marketplace, the general
tendency of large corporations to be slow to change from known technology, the
ability to protect its proprietary information in the technology and potential
future competition from third parties developing equivalent or superior
technology. As a result of these and other risks and uncertainties, the future
results of operations of the venture are difficult to predict, and such results
may be materially better or worse than expected or projected.
OTHER MATTERS
With respect to statements in this Report which relate to the current
intentions of the Company and its subsidiaries or of management of the Company
and its subsidiaries, such statements are subject to change by management at any
time without notice.
With respect to statements in "Financial Condition" regarding the adequacy of
the Company's capital resources, such statements are subject to a number of
risks and uncertainties including, without limitation: the future economic
performance of the Company (which is dependent in part upon the factors
described above); the ability of the Company and its subsidiaries to comply with
the covenants contained in the financing agreements; future acquisitions of
other businesses not currently anticipated by management of the Company; and
other material expenditures not currently anticipated by management.
The proposed management buyout of the Company is subject to a number of
conditions, including the completion of financing by COLA and approval of the
transaction by the holders of a majority of outstanding shares of Common Stock
of the Company. There can be no assurance that all of the conditions to the
consummation of the transaction will be satisfied.
With respect to statements in "Financial Condition" regarding the Company's
intention to refinance, extend or replace certain financing arrangements, the
Company's ability to do so is subject to a number of risks and uncertainties,
including, without limitation, the future economic performance of the Company,
the ability of the Company to comply with the terms of such financing
arrangements, general conditions in the credit markets and the availability of
credit to the Company on acceptable terms.
GENERAL FACTORS
Certain general factors that could impact any or all of the Company's
operations include: changes in general business and economic conditions; changes
in governmental regulation; and tax changes. Expansion of these businesses into
new states or markets is substantially dependent on obtaining sufficient
business volumes from existing and new customers in these new markets at
compensatory rates.
The cautionary statements made pursuant to Section 21E of the Securities
Exchange Act of 1934, as amended, are made as of the date of this Report and are
subject to change. The cautionary statements set forth in this Report are not
intended to cover all of the factors that may affect the Company's businesses in
the future. Forward-looking information disseminated publicly by the Company
following the date of this Report may be subject to additional factors hereafter
published by the Company.
FINANCIAL CONDITION
As of September 30, 1999, the Company's net working capital was $5.5 million
as compared to $19.0 million as of December 31, 1998. The Company's current
ratio was 1.2 and its ratio of total liabilities to tangible net worth was 0.9
as of September 30, 1999, as compared to a current ratio of 2.3 and a ratio of
total liabilities to tangible net worth of 0.7 as of December 31, 1998. The
decrease in working capital and current ratio was the result of the
reclassification of the Company's $15.0 million term loan as current maturities
of long-term debt as discussed below. A substantial amount of the Company's
cash is generated from operating activities. Cash generated from operating
activities decreased in the nine months ended September 30, 1999 as compared to
the nine months ended September 30, 1998, due primarily to an increase in
freight accounts receivable resulting from decreased productivity as Crouse's
relocated its administrative office. The Company expects this administrative
issue to be corrected by December 31, 1999.* The Company believes that cash
generated from operating activities, together with funds available under
financing agreements discussed below, will be sufficient to meet the Company's
short-term and long-term cash requirements.*
A substantial portion of the capital required for UPAC's insurance premium
finance operations has been provided through the sale of undivided interests in
a designated pool of receivables on an ongoing basis under a receivables
securitization agreement. The current securitization agreement provides for the
sale of a maximum of $70.0 million of eligible receivables. As of September 30,
1999, $63.1 million of such receivables had been securitized. The
securitization agreement expires January 15, 2000. The Company intends to
negotiate an extension or replacement of this agreement prior to its expiration,
although there can be no assurance that the Company will be successful. Failure
to extend or replace the current securitization agreement would likely have a
material adverse effect on the Company's business, financial condition and
results of operations.*
Crouse has a three-year secured loan agreement with a commercial bank that
provides for a $4.5 million working capital line of credit loan, ("Working
Capital Line"). Borrowings on the Working Capital Line bear interest at 25
basis points below the bank's prime rate. The interest rate was 8.00% at
September 30, 1999. As of September 30, 1999, borrowings of $2,272,000 were
outstanding under the Working Capital Line. Crouse's banking arrangements with
its primary bank provide for automatic borrowing under the Working Capital Line
to cover checks presented in excess of collected funds. On certain occasions
the timing of cash disbursements and cash collections results in a net cash
overdraft. The outstanding checks representing such overdrafts are generally
funded from the next days cash collections, or if not sufficient, from
borrowings on the Working Capital Line.
In September 1998, the Company entered into a two-year secured loan agreement
with the same commercial bank to borrow $10.0 million (the "Loan"). Freight
accounts receivable and a second lien on revenue equipment are pledged as
collateral for the Loan. In March 1998, the Company amended and restated this
agreement increasing the borrowings to $15 million. The Loan bears interest at
25 basis points below the bank's prime rate. The interest rate was 8.00% at
September 30, 1999. The terms of the Loan provide for monthly payments of
interest only through September 30, 1999, with monthly principal payments
thereafter on $100,000 plus interest through maturity on September 30, 2000. At
September 30, 1999 the entire $15 million term loan was classified as current
maturities of long-term debt. In the event the management buyout transaction is
approved by shareholders and becomes effective, this term loan would be replaced
with a new debt agreement including a new principal maturity schedule. If the
management buyout transaction is not completed, the Company intends to negotiate
a new principal maturity schedule prior to September 30, 2000, although there
can be no assurance that Company would be successful. Failure to replace the
term loan or negotiate a new principal maturity schedule would likely have a
material adverse effect on the Company's business, financial condition and
results of operations.*
In the first quarter of 1999, the Board of Directors authorized the repurchase
of 1,030,000 shares of the Company's common stock. Through September 30, 1999,
a total of 683,241 shares had been repurchased at a cost of $2.6 million.
YEAR 2000 ISSUES
The Year 2000 Issue is the result of computer programs being written using two
digits to represent years rather than four digits, which include the century
designation. Without corrective action, it is possible that the Company's
computer programs, or its major service providers, vendors, suppliers, partners
or customers that have date-sensitive software could recognize a date using "00"
as the year 1900 rather than the year 2000. Additionally, certain other assets
may contain embedded chips that include date functions that could be affected by
the transition to the year 2000. In some systems this could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Company has developed and is executing a Year 2000 Compliance Strategic
Plan ("Year 2000 Plan") to enable management of TransFinancial Holdings, Inc.
and each of its business operations to ensure that each of its critical business
systems are "Year 2000 Compliant". The Company considers a business system to
be Year 2000 Compliant if it is able to transition into the year 2000 without
significant disruption to the Company's internal operations or those of its key
business partners. The Year 2000 Plan encompasses the Company's information
technology assets, including computer hardware and software ("IT assets") and
non-information technology assets, goods and services, including assets
utilizing embedded chip technology and significant customer and vendor
relationships ("non-IT assets").
The Company's Year 2000 Plan includes three principal sections: (1) mainframe
computer and personal computer hardware and software utilized by the Company's
transportation operations ("Transportation IT assets"); (2) desktop computer
applications, embedded chips, significant business partners of the
transportation operations ("Transportation non-IT assets"); and (3) personal
computer hardware and software, desktop computer applications, embedded chips,
significant business partners of the financial services operations ("Financial
Services IT and non-IT assets"). The general phases common to all sections are:
(1) inventorying, assessing and assigning priorities to Year 2000 items
("Inventory Phase"); (2) taking corrective actions to modify, repair or replace
items that are determined not to be Year 2000 Compliant ("Corrective Action
Phase"); (3) testing material items ("Testing Phase"); and (4) developing and
implementing contingency plans for each organization and location ("Contingency
Planning Phase"). The Company intends to utilize primarily internal personnel
and resources to execute its Year 2000 Plan but may utilize external consultants
as needed in certain phases.
TRANSPORTATION IT ASSETS
With regard to the Transportation IT assets section, the Inventory Phase is
completed. The Company has identified its computer applications, programs and
hardware and is in the processing of assessing the Year 2000 risk associated
with each item. The Company executed the Corrective Action Phase by modifying
or upgrading items that were not Year 2000 compliant. This phase was completed
in the third quarter of 1999. The Testing Phase was ongoing as corrective
actions were completed. The Testing Phase was substantially completed in the
third quarter of 1999, although further testing and verification will continue
throughout 1999.*
TRANSPORTATION NON-IT ASSETS
With regard to the Transportation non-IT assets section, the Inventory Phase
is completed. The Company identified assets that may contain embedded chip
technologies and contacted the related vendors to gain assurance of Year 2000
status on each item. The Company also identified its significant business
relationships and contacted key vendors, suppliers and customers to attempt to
reasonably determine their Year 2000 status. The Corrective Action Phase was
substantially completed the third quarter of 1999.* The Testing Phase was
ongoing as corrective actions were completed. This phase was substantially
completed by the end of third quarter of 1999, although further testing and
verification will continue throughout 1999.*
FINANCIAL SERVICES IT AND NON-IT ASSETS
With regard to the Financial Services IT and non-IT assets section, the
Inventory Phase is completed. The Company identified its computer applications,
programs and hardware and non-IT assets and assessed the Year 2000 risk
associated with each item. The Company also identified its significant business
relationships and contacted key vendors, suppliers and customers to attempt to
reasonably determine their Year 2000 status. The Company has completed the
Corrective Action Phase. The Company's financial services database, operating
systems and computer applications have been upgraded or modified to address the
Year 2000. The Testing Phase was ongoing as corrections were made and was
substantially complete in the fourth quarter of 1998. Certain testing of bank
and other interfaces was completed in the first quarter of 1999.
The Company has been contacting business partners whose Year 2000 non-
compliance could adversely affect the Company's operations, employees, or
customers. The Company's transportation and financial services businesses are
dependent on telecommunication, financial and utility services provided by a
number of entities. The Company has received written assurances from
substantially all of its material business partners that they will be compliant.
The Company has developed contingency plans to address potential Year 2000
scenarios that may arise with significant business partners. The Company
believes the most likely worst case scenario would be the failure of a material
business partner to be Year 2000 compliant.* Therefore, the Company will
continue to work with and monitor the progress of its partners and formulate
additional contingency plans when the Company does not believe any business
partner will be compliant.*
COSTS
It is currently estimated that the aggregate cost of the Company's Year 2000
efforts will be approximately $150,000 to $200,000, of which approximately
$145,000 has been spent.* These costs are being expensed as they are incurred
and are being funded out of operating cash flow. These amounts do not include
approximately $25,000 of costs capitalized as the Company replaced certain non-
IT assets, in part to address the Year 2000 issue, as part of the Company's
normal capital replacement and upgrades. These amounts also do not include any
internal costs associated with the development and implementation of contingency
plans, which are not expected to be material.*
RISKS
The failure to correct a material Year 2000 issue could result in an
interruption in, or failure of, certain normal business operations. Such
failures could materially and adversely affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 issue, resulting in part from the uncertainty of the
Year 2000 readiness of third-party vendors, suppliers and customers, the Company
is unable to determine at this time whether the consequences of Year 2000
failures will have a material impact on the Company's results of operations,
liquidity and financial condition. The Company's Year 2000 Plan is designed to
gather information concerning Year 2000 issues facing the Company and to address
and resolve such issues to the extent reasonably possible. Even if the Company
successfully implements its Year 2000 Plan, there can be no assurance that the
Company's operations will not be affected by Year 2000 failures or that such
failures will not have a material adverse effect on the Company's results of
operations, liquidity and financial condition.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -- The Company and Crouse have been named as
defendants in two lawsuits arising out of a motor vehicle accident. The first
suit was instituted on June 16, 1999 in the United States District Court in the
Eastern District of Michigan (Northern Division) by Kimberly Idalski, Personal
Representative of the Estate of Lori Cothran, Deceased against the Company and
Crouse. The second suit was instituted on August 17, 1999 in the United States
District Court in the Eastern District of Michigan (Northern Division) by Jeanne
Cothran, as Legal Guardian, on behalf of Kaleb Cothran, an infant child against
the Company and Crouse. The suits allege that the Company and Crouse
negligently caused the death of Lori Cothran in a motor vehicle accident
involving a Crouse driver. The first suit seeks damages in excess of
$50,000,000, plus costs, interest and attorney fees. The second suit seeks
damages in excess of $100,000,000, plus costs, interest and attorney fees. The
Company believes that it has meritorious defenses to the claims against the
Company and is currently investigating the claims against Crouse.
Item 2. Changes in Securities -- None
Item 3. Defaults Upon Senior Securities -- None
Item 4. Submission of Matters to Vote of Security Holders -- None
Item 5. Other Information -- None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2* Agreement and Plan of Merger Between TransFinancial Holdings, Inc.
and COLA Acquisitions, Inc.,dated as of October 19, 1999.
10.1* Amendment No. 8 to Receivables Purchase Agreement by and among
APR Funding Corporation, Universal Premium Acceptance Corporation,
TransFinancial Holdings, Inc., EagleFunding Corporation and BankBoston, N.A.,
dated October 8, 1999.
10.2* Supplemental Benefit and Collateral Assignment Split-Dollar
Agreement dated January 18, 1997 by and between the Company and Timothy P.
O'Neil.
10.3* Employment Agreement dated July 2, 1998 by and between the
Company and Timothy P. O'Neil.
10.4* Supplemental Benefit Agreement dated September 30, 1995 by and
between the Company and David D. Taggart.
10.5* Employment Agreement dated April 27, 1998 by and among the
Company, Crouse Cartage Company and David D. Taggart.
10.6* Agreement dated September 30, 1995 by and between the Company and
David D. Taggart.
10.7* Amended and Restated Employment Agreement dated October 16, 1998
by and among the Company, Universal Premium Acceptance Corporation, Presis,
L.L.C. and Kurt W. Huffman.
10.8* Agreement dated April 30, 1998 by and between the Company and
Mark A. Foltz.
10.9* Form of Indemnification Agreement between Company and officers.
10.10* Form of Indemnification Agreement between Company and directors.
27* Financial Data Schedule.
99.1 Press Release of TransFinancial Holdings, Inc. dated October 19,
1999.
* Filed herewith.
(b) Reports on Form 8-K - None
(SIGNATURE)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TransFinancial Holdings, Inc.
Registrant
By: /s/ Timothy P. O'Neil
Timothy P. O'Neil, President &
Chief Executive Officer
(Principal executive officer)
By: /s/ Mark A. Foltz
Mark A. Foltz
Vice President, Finance and
Secretary
(Principal financial officer)
Date: October 27, 1999
EXHIBIT INDEX
Assigned
Exhibit
Number Description of Exhibit
2 Agreement and Plan of Merger Between TransFinancial Holdings, Inc.
and COLA Acquisitions, Inc., dated as of October 19, 1999.
10.1 Amendment No. 8 to Receivables Purchase Agreement by and among APR
Funding Corporation, Universal Premium Acceptance Corporation, TransFinancial
Holdings, Inc., EagleFunding Corporation and BankBoston, N.A., dated October 8,
1999.
10.2 Supplemental Benefit and Collateral Assignment Split-Dollar Agreement
dated January 18, 1997 by and between the Company and Timothy P. O'Neil.
10.3 Employment Agreement dated July 2, 1998 by and between the Company
and Timothy P. O'Neil.
10.4 Supplemental Benefit Agreement dated September 30, 1995 by and
between the Company and David D. Taggart.
10.5 Employment Agreement dated April 27, 1998 by and among the Company,
Crouse Cartage Company and David D. Taggart.
10.6 Agreement dated September 30, 1995 by and between the Company and
David D. Taggart.
10.7 Amended and Restated Employment Agreement dated October 16, 1998 by
and among the Company, Universal Premium Acceptance Corporation, Presis, L.L.C.
and Kurt W. Huffman.
10.8 Agreement dated April 30, 1998 by and between the Company and Mark A.
Foltz.
10.9 Form of Indemnification Agreement between Company and officers.
10.10 Form of Indemnification Agreement between Company and directors.
27 Financial Data Schedule.
99.1 Press Release of TransFinancial Holdings, Inc. dated October 19,
1999.
Exhibit 2
AGREEMENT AND PLAN OF MERGER
BETWEEN
TRANSFINANCIAL HOLDINGS, INC.
AND
COLA ACQUISITIONS, INC.
DATED AS OF
OCTOBER 19, 1999
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of this 19th
day of October, 1999 by and between TransFinancial Holdings, Inc., a Delaware
corporation (the "Company"), and COLA Acquisitions, Inc., a Kansas corporation
("COLA").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
formed a special committee comprised exclusively of independent directors of the
Company (the "Special Committee") to consider and act upon a proposal received
from three members of the Board of Directors, who include the Chairman of the
Board, Vice Chairman of the Board and Chief Executive Officer of the Company, to
acquire all of the issued and outstanding shares of the Company not currently
owned by them;
WHEREAS, having received the advice of its financial and legal advisors,
and following detailed negotiation of the terms of a transaction with COLA, the
entity formed by the three members of the Board of Directors to conduct the
acquisition, and following consideration and negotiation of proposals received
from third parties to acquire some or all of the assets or outstanding shares of
stock of the Company, the Special Committee has unanimously determined that the
terms of the proposed acquisition of the Company by COLA, upon the terms and
subject to the conditions hereinafter provided, are fair to and in the best
interests of the Company and its stockholders (other than COLA and certain
related parties);
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and the Kansas General Corporation Code (the"KGCC"), COLA will merge
with and into the Company (the "Merger") pursuant to which certain outstanding
shares of common stock of the Company, par value $0.01 per share (the "Common
Stock"), shall be converted into the right to receive $6.03 in cash per share of
Common Stock, as more fully set forth herein;
WHEREAS, the Board of Directors, based on the unanimous recommendation of
the Special Committee, has determined that the Merger is fair to and in the best
interests of the Company and its stockholders (other than COLA and certain
related parties) and has approved this Agreement, the Merger and the other
transactions contemplated hereby and has recommended approval and adoption of
this Agreement by the stockholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL and the KGCC, at the Effective
Time (as defined in Article 1.2), COLA shall be merged with and into the
Company. Following the Merger, the separate existence of COLA shall cease and
the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
1.2. Effective Time. As soon as practicable after the satisfaction or, if
permissible, the waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware and by making any related filings required under the DGCL and the KGCC
in connection with the Merger. The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware or at such later time as is agreed to by the parties hereto
and as is specified in the Certificate of Merger (the "Effective Time" or the
"Closing").
1.3. Effects of the Merger. From and after the Effective Time, the Merger
shall have the effects set forth in the DGCL (including, without limitation,
Sections 259, 260 and 261 thereof) and the KGCC. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and COLA
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and COLA shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4. Certificate of Incorporation and By-laws. Unless otherwise agreed by
the Company and COLA prior to Closing, (a) the certificate of incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be
amended and restated by the Certificate of Merger in the manner set forth on
Exhibit A and such amended and restated certificate of incorporation shall be
the certificate of incorporation of the Surviving Corporation (the "Surviving
Certificate") until thereafter amended in accordance with the DGCL, and (b) the
bylaws of COLA immediately prior to the Effective Time shall be the bylaws of
the Surviving Corporation until thereafter amended in accordance with the
Surviving Certificate and the DGCL.
1.5. Directors and Officers. From and after the Effective Time, until
their respective successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of COLA at the Effective Time
shall be the directors of the Surviving Corporation and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1. Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of COLA, the Company or the holders of
any of the Company's securities, the Company's securities shall be converted in
accordance with the following provisions.
2.1.1. Public Shares. Each share of the Common Stock, other than
any shares of Common Stock to be converted or canceled pursuant to Article 2.1.2
or 2.1.3 and other than any Dissenting Shares (as defined in Article 2.5),
issued and outstanding immediately prior to the Effective Time (the "Public
Shares") shall be converted into the right to receive $6.03 in cash, without
interest (the "Merger Consideration"). At the Effective Time, each Public Share
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate evidencing any Public Share shall
thereafter represent only the right to receive, upon the surrender of such
certificate in accordance with the provisions of Article 2.2, an amount in cash
per share equal to the Merger Consideration. The holders of certificates
previously evidencing the Public Shares shall cease to have any rights with
respect to such shares of Common Stock except as otherwise provided herein or by
law.
2.1.2. TREASURY SHARES; COLA SHARES. EACH SHARE OF CAPITAL STOCK OF THE
COMPANY (A) HELD IN THE TREASURY OF THE COMPANY OR BY ANY WHOLLY OWNED
SUBSIDIARY OF THE COMPANY OR (B) OWNED BY COLA SHALL AUTOMATICALLY BE CANCELED,
RETIRED AND CEASE TO EXIST WITHOUT ANY CONVERSION THEREOF AND NO PAYMENT SHALL
BE MADE WITH RESPECT THERETO.
2.1.3. CONVERSION OF EXCLUDED SHARES. THE SHARES OF COMMON STOCK LISTED ON
EXHIBIT B HERETO SHALL BE CONVERTED INTO AND BECOME SHARES OF STOCK OF THE
SURVIVING CORPORATION IN THE MANNER DESCRIBED IN EXHIBIT B AND THE CONVERTED
SHARES SHALL HAVE THE RIGHTS SET FORTH IN THE SURVIVING CERTIFICATE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, COLA SHALL HAVE THE
RIGHT, IN ITS SOLE DISCRETION, TO ALTER AND AMEND EXHIBIT B AT ANY TIME PRIOR TO
THE FILING OF A PRELIMINARY PROXY STATEMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION BY GIVING WRITTEN NOTICE OF SUCH AMENDMENT TO THE COMPANY BUT SHALL
NOT INCREASE THE NUMBER OF SHARES LISTED ON EXHIBIT B BY MORE THAN 1,000 SHARES.
2.1.4. CONVERSION OF SHARES OF COLA. EACH SHARE OF CLASS A, CLASS B AND
CLASS C STOCK OF COLA OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE TIME SHALL
BE CONVERTED INTO AND BECOME ONE SHARE OF THE SAME CLASS OF STOCK OF THE
SURVIVING CORPORATION WITH THE RIGHTS SET FORTH IN THE SURVIVING CERTIFICATE.
2.1.5 CAPITAL STOCK OF SURVIVING CORPORATION. THE SHARES OF STOCK RESULTING
FROM CONVERSION UNDER ARTICLES 2.1.3 AND 2.1.4 SHALL CONSTITUTE THE ONLY
OUTSTANDING SHARES OF CAPITAL STOCK OF THE SURVIVING CORPORATION.
2.2. Exchange of Certificates and Cash.
2.2.1. Exchange Agent. On or before the Effective Time, COLA shall
enter into an agreement providing for the matters set forth in this Article 2.2
(the "Exchange Agent Agreement") with a bank or trust company selected by COLA
and reasonably acceptable to the Company (the "Exchange Agent"), authorizing
such Exchange Agent to act as Exchange Agent in connection with the Merger.
Immediately prior to the Effective Time, COLA shall deposit or shall cause to be
deposited with or for the account of the Exchange Agent, for the benefit of the
holders of Public Shares, an amount in cash equal to the Merger Consideration
payable pursuant to Article 2.1.1 (such cash funds are hereafter referred to as
the "Exchange Fund"). The Exchange Agent shall invest the Exchange Fund as COLA
directs, provided that investments shall be made only in obligations of or
guaranteed by the United States of America or in certificates of deposit or
banker's acceptances of commercial banks with capital in excess of $100 million.
2.2.2. Exchange Procedures. As soon as reasonably practicable
after the Effective Time, but in any event within five (5) Business Days
thereafter, COLA will instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time evidenced outstanding Public Shares (the "Certificates"), (a) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as COLA may reasonably specify) and (b) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by COLA, together
with a letter of transmittal, duly executed, and such other customary documents
as may be required pursuant to such instructions (collectively, the "Transmittal
Documents"), the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Common Stock
formerly represented by such Certificate, without any interest thereon, less any
required withholding of taxes, and the Certificate so surrendered shall
thereupon be canceled. In the event of a transfer of ownership of Public Shares
which is not registered in the transfer records of the Company, the Merger
Consideration may be issued and paid in accordance with this Article II to the
transferee of such shares if the Certificate evidencing such shares of Common
Stock is presented to the Exchange Agent and is properly endorsed or otherwise
in proper form for transfer. The signature on the Certificate or any related
stock power must be properly guaranteed and the person requesting payment of the
Merger Consideration must either pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate so surrendered or establish to the Surviving Corporation's
satisfaction that such tax has been paid or is not applicable. The Merger
Consideration will be delivered by the Exchange Agent as promptly as practicable
following surrender of a Certificate and the related Transmittal Documents.
Cash payments may be made by check unless otherwise required by a depositary
institution in connection with the book-entry delivery of securities. No
interest will be payable on such Merger Consideration. Until surrendered in
accordance with this Article 2.2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive, upon such
surrender, the Merger Consideration for each Public Share formerly represented
by such Certificate. The Exchange Fund shall not be used for any purpose other
than as set forth in this Article II. Any interest, dividends or other income
earned on the investment of cash held in the Exchange Fund shall be for the
account of the Surviving Corporation.
2.2.3. Termination of Exchange Fund. Any portion of the Exchange
Fund (including the proceeds of any investments thereof) which remains
undistributed to the holders of Common Stock for one year following the
Effective Time shall be delivered to the Surviving Corporation upon demand. Any
holders of Public Shares who have not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration.
2.2.4. No Liability. None of COLA, the Surviving Corporation or
the Company shall be liable to any holder of Public Shares for any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.2.5. Withholding Rights. COLA, the Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Public Shares such
amounts as the Surviving Corporation or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the United States
Internal Revenue Code of 1986, as amended, or any provision of state, local or
foreign tax law; provided, however, that COLA or the Surviving Corporation, as
the case may be, shall promptly pay any amounts deducted or withheld hereunder
to the applicable governmental authority, shall promptly file all tax returns
and reports required to be filed in respect of such deductions and withholding,
and shall provide to any holder of Public Shares affected by such withholding
promptly upon written request proof of such payment and a copy of all tax
returns and reports relevant thereto. To the extent that amounts are so
withheld by the Surviving Corporation or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or the Exchange Agent.
2.2.6. Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing Public Shares shall have been lost, stolen or destroyed,
the holder of such lost, stolen or destroyed Certificate(s) shall execute an
affidavit of that fact upon request. The holder of any such lost, stolen or
destroyed Certificate(s) shall also deliver a reasonable indemnity against any
claim that may be made against COLA or the Exchange Agent with respect to the
Certificate(s) alleged to have been lost, stolen or destroyed. The affidavit
and any indemnity which may be required hereunder shall be delivered to the
Exchange Agent, who shall be responsible for making payment for such lost,
stolen or destroyed Certificates(s) pursuant to the terms hereof.
2.3. Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed, and there shall be no further registration of
transfers of shares of Common Stock thereafter on the records of the Company.
Any Certificates evidencing the Public Shares presented to the Exchange Agent or
the Surviving Corporation for any reason at or after the Effective Time shall be
exchanged for the Merger Consideration pursuant to the terms hereof.
2.4. Stock Options.
2.4.1. CANCELLATION. SUBJECT TO ARTICLES 2.4.3, 2.4.4 AND 2.4.5 AND THE
TERMS OF SUCH OPTION, EACH OPTION (AS DEFINED IN ARTICLE 3.3) WHICH IS
OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE TIME, WHETHER OR NOT THEN
EXERCISABLE, SHALL BE CANCELED AS OF THE EFFECTIVE TIME. EACH HOLDER OF SUCH
CANCELED OPTIONS SHALL BE PAID BY THE SURVIVING CORPORATION AS SOON AS
PRACTICABLE, BUT IN ANY EVENT WITHIN THIRTY DAYS AFTER THE EFFECTIVE TIME, FOR
EACH SUCH OPTION, AN AMOUNT DETERMINED AS FOLLOWS: (A) FOR EACH OPTION WITH AN
EXERCISE PRICE BELOW $6.03 PER SHARE, AN AMOUNT EQUAL TO (I) THE EXCESS, IF ANY,
OF THE MERGER CONSIDERATION OVER THE APPLICABLE EXERCISE PRICE PER SHARE OF SUCH
OPTION MULTIPLIED BY (II) THE NUMBER OF SHARES ISSUABLE UPON EXERCISE OF SUCH
OPTION, AND (B) FOR EACH OPTION WITH AN EXERCISE PRICE AT OR ABOVE $6.03, TWENTY
CENTS ($0.20) MULTIPLIED BY THE NUMBER OF SHARES ISSUABLE UPON EXERCISE OF SUCH
OPTION, IN EACH CASE SUBJECT TO ANY REQUIRED WITHHOLDING OF TAXES.
2.4.2 TERMINATION. ALL COMPANY OPTION PLANS (AS DEFINED IN ARTICLE 3.3)
SHALL TERMINATE AS OF THE EFFECTIVE TIME AND THE COMPANY SHALL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO ENSURE THAT FOLLOWING THE EFFECTIVE TIME NO
HOLDER OF AN OPTION OR ANY PARTICIPANT IN A COMPANY OPTION PLAN SHALL HAVE ANY
RIGHT THEREUNDER TO ACQUIRE ANY CAPITAL STOCK OF THE COMPANY OR THE SURVIVING
CORPORATION.
2.4.3. CONSENTS. PRIOR TO THE EFFECTIVE TIME, THE COMPANY SHALL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO (A) OBTAIN ALL CONSENTS FROM HOLDERS OF
OPTIONS AND (B) MAKE ANY AMENDMENTS TO THE TERMS OF THE COMPANY OPTION PLANS AND
ANY OPTIONS GRANTED THEREUNDER THAT ARE NECESSARY OR APPROPRIATE TO GIVE EFFECT
TO THE TRANSACTIONS CONTEMPLATED BY THIS ARTICLE 2.4.
2.4.4. OTHER ARRANGEMENTS. IN LIEU OF THE CANCELLATION OF OPTIONS REFERRED
TO IN THIS ARTICLE 2.4, PRIOR TO THE EFFECTIVE TIME, THE COMPANY MAY ENTER INTO
MUTUALLY ACCEPTABLE ARRANGEMENTS WITH ANY HOLDER OF OPTIONS PROVIDING THAT SUCH
HOLDER'S OPTIONS WILL BE TREATED IN A MANNER OTHER THAN AS PROVIDED IN ARTICLE
2.4.1.
2.4.5 PAYMENTS. ALL PAYMENTS TO HOLDERS OF OPTIONS MADE PURSUANT TO THIS
ARTICLE 2.4 SHALL BE CONTINGENT UPON CONSUMMATION OF THE MERGER AND WILL BE
SUBJECT TO THE WITHHOLDING OF SUCH AMOUNTS AS THE SURVIVING CORPORATION IS
REQUIRED TO DEDUCT AND WITHHOLD WITH RESPECT TO THE MAKING OF SUCH PAYMENT UNDER
THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR ANY PROVISION OF
STATE, LOCAL OR FOREIGN TAX LAW.
2.5. Dissenting Shares.
2.5.1. GENERALLY. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO
THE CONTRARY, SHARES THAT ARE OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE
TIME AND WHICH ARE HELD BY STOCKHOLDERS (A) WHO SHALL NOT HAVE VOTED IN FAVOR OF
ADOPTION OF THIS AGREEMENT AND (B) WHO SHALL BE ENTITLED TO AND SHALL HAVE
PROPERLY DEMANDED IN WRITING AN APPRAISAL OF SUCH SHARES IN ACCORDANCE WITH
SECTION 262 OF THE DGCL ("DISSENTING SHARES"), SHALL NOT BE CONVERTED INTO OR
REPRESENT THE RIGHT TO RECEIVE THE MERGER CONSIDERATION UNLESS SUCH STOCKHOLDERS
FAIL TO PERFECT, WITHDRAW OR OTHERWISE LOSE THEIR RIGHT TO APPRAISAL. SUCH
STOCKHOLDERS SHALL BE ENTITLED TO RECEIVE PAYMENT OF THE APPRAISED VALUE OF SUCH
DISSENTING SHARES IN ACCORDANCE WITH THE PROVISIONS OF THE DGCL. IF, AFTER THE
EFFECTIVE TIME, ANY SUCH STOCKHOLDER FAILS TO PERFECT, WITHDRAWS OR LOSES ITS
RIGHT TO APPRAISAL, SUCH SHARES SHALL BE TREATED AS IF THEY HAD BEEN CONVERTED
AS OF THE EFFECTIVE TIME INTO A RIGHT TO RECEIVE THE MERGER CONSIDERATION,
WITHOUT INTEREST THEREON, UPON SURRENDER OF THE CERTIFICATE OR CERTIFICATES THAT
FORMERLY EVIDENCED SUCH SHARES IN THE MANNER SET FORTH IN ARTICLE 2.2.
2.5.2. NOTICE OF DEMANDS. THE COMPANY SHALL GIVE COLA PROMPT NOTICE OF ANY
DEMANDS FOR APPRAISAL RECEIVED BY IT, WITHDRAWALS OF SUCH DEMANDS, AND ANY OTHER
INSTRUMENTS SERVED PURSUANT TO THE DGCL AND RECEIVED BY THE COMPANY. COLA SHALL
DIRECT ALL NEGOTIATIONS AND PROCEEDINGS WITH RESPECT TO DEMANDS FOR APPRAISAL
UNDER THE DGCL. THE COMPANY SHALL NOT, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF
COLA, WHICH SHALL NOT BE UNREASONABLY WITHHELD, MAKE ANY PAYMENT WITH RESPECT TO
ANY DEMANDS FOR APPRAISAL, OR OFFER TO SETTLE, OR SETTLE, ANY SUCH DEMANDS.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to COLA as follows:
3.1. Organization and Qualifications. The Company and each subsidiary of
the Company (a "Company Subsidiary") is a corporation, partnership or other
legal entity duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has the requisite power and authority and all necessary governmental
approvals, to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing and in good standing would not have a Company Material Adverse Effect
(as defined below). The Company and each Company Subsidiary is duly qualified
or licensed and in good standing to do business in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations or financial condition of the Company
and the Company Subsidiaries, taken as a whole (a "Company Material Adverse
Effect").
3.2. Certificate of Incorporation and Bylaws. COLA has been given access
by the Company to a complete and correct copy of the certificate of
incorporation and the bylaws or equivalent organizational documents, each as
amended to the date hereof, of the Company and each Company Subsidiary. Such
certificates of incorporation, bylaws and equivalent organizational documents
are in full force and effect. Neither the Company nor any Company Subsidiary is
in violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents.
3.3. Capitalization. The authorized capital stock of the Company consists
of 13,000,000 shares of Common Stock and 1,000,000 shares of preferred stock,
par value $0.01 per share (the "Preferred Stock"). As of September 30, 1999:
(a) 3,252,115 shares of Common Stock were outstanding, all of which were validly
issued, fully paid and nonassessable; (b) no shares of Preferred Stock were
issued and outstanding; (c) 421,450 shares of Common Stock were reserved for
issuance upon the exercise of outstanding stock options (the "Options") granted
pursuant to the Company's 1992 Incentive Stock Plan and 1998 Long-Term Incentive
Plan (collectively, the "Company Option Plans"); (d) 4,345,561 shares of Common
Stock and no shares of Preferred Stock were held in the treasury of the Company;
(e) 23,860 shares of Common Stock are subject to issuance as deferred
compensation to Timothy P. O'Neil (f) no Company Subsidiary owns any shares of
the Company's capital stock; and (g) there are no securities of any Company
Subsidiary outstanding which are convertible into or exercisable or exchangeable
for capital stock of the Company. Except as set forth above, and except
pursuant to the First Amended and Restated Rights Agreement dated March 4, 1999
by and between the Company and U.M.B. Bank n.a., no shares of capital stock or
other securities of the Company have been issued, are reserved for issuance or
are outstanding. All shares of Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable.
3.4. Subsidiaries. The Company owns, directly or indirectly, all of the
outstanding shares of capital stock of, or other equity interest in, each
Company Subsidiary. Except as set forth in Exhibit C, all outstanding shares of
capital stock of each Company Subsidiary are duly authorized, validly issued,
fully paid and nonassessable, and are owned, directly or indirectly, by the
Company free and clear of all liens, pledges, security interests, claims or
other encumbrances ("Encumbrances"). Exhibit C sets forth for each Company
Subsidiary: (a) its authorized capital stock or share capital, (b) the number
of issued and outstanding shares of stock or share capital, and (c) the holder
or holders of such shares. Except for the Company's interest in each Company
Subsidiary or as set forth in Exhibit C, neither the Company nor any Company
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or entity.
3.5. Authority Relative to This Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action. No other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than,
with respect to the Merger, the adoption of this Agreement by the holders of a
majority of the aggregate voting power of the issued and outstanding shares of
Common Stock (the "Company Stockholder Approval"), and the filing and
recordation of appropriate merger documents as required by, and in accordance
with, the KGCC and the DGCL. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by COLA, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity.
3.6. No Conflict; Required Filings and Consents.
3.6.1. CONFLICTS. EXCEPT AS SET FORTH IN EXHIBIT D, THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY THE COMPANY DO NOT, AND THE PERFORMANCE OF THIS
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT,
(A) CONFLICT WITH OR VIOLATE THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION, OR ITS BY-LAWS, OR THE CERTIFICATE OF INCORPORATION, BY-LAWS OR
OTHER EQUIVALENT ORGANIZATIONAL DOCUMENTS OF ANY COMPANY SUBSIDIARY, (B)
CONFLICT WITH OR VIOLATE ANY LAW, RULE, REGULATION, ORDER, JUDGMENT OR DECREE
APPLICABLE TO THE COMPANY OR ANY COMPANY SUBSIDIARY OR BY WHICH ANY PROPERTY OR
ASSET OF THE COMPANY OR ANY COMPANY SUBSIDIARY IS BOUND OR AFFECTED, OR (C)
RESULT IN ANY BREACH OF OR CONSTITUTE A DEFAULT (OR AN EVENT WHICH, WITH NOTICE,
LAPSE OF TIME OR BOTH, WOULD BECOME A DEFAULT) UNDER, RESULT IN THE LOSS OF A
MATERIAL BENEFIT UNDER OR GIVE TO OTHERS ANY RIGHT OF TERMINATION, AMENDMENT,
ACCELERATION, INCREASED PAYMENTS OR CANCELLATION OF, OR RESULT IN THE CREATION
OF A LIEN OR OTHER ENCUMBRANCE ON ANY PROPERTIES OR ASSETS OF THE COMPANY
PURSUANT TO, ANY NOTE, BOND, MORTGAGE, INDENTURE, CONTRACT, AGREEMENT, LEASE,
LICENSE, PERMIT, FRANCHISE OR ANY OTHER INSTRUMENT OR OBLIGATION TO WHICH
COMPANY IS A PARTY OR BY WHICH COMPANY OR ANY OF ITS PROPERTIES OR ASSETS IS
BOUND OR AFFECTED, EXCEPT, IN THE CASE OF CLAUSES (B) AND (C), FOR ANY SUCH
CONFLICTS, VIOLATIONS, BREACHES, DEFAULTS OR OTHER OCCURRENCES WHICH (X) WOULD
NOT PREVENT OR DELAY CONSUMMATION OF THE MERGER IN ANY MATERIAL RESPECT OR
OTHERWISE PREVENT THE COMPANY FROM PERFORMING ITS OBLIGATIONS UNDER THIS
AGREEMENT IN ANY MATERIAL RESPECT, AND (Y) WOULD NOT, INDIVIDUALLY OR IN THE
AGGREGATE, HAVE A COMPANY MATERIAL ADVERSE EFFECT.
3.6.2. Required Filings, Consents, etc. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign (each a "Governmental Entity"),
except (a) for (i) any applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the Securities Act of 1933, as amended
(the "Securities Act"), (ii) the filing and recordation of appropriate merger
and similar documents as required by the DGCL and the KGCC, and (iii) filings
under the rules and regulations of the American Stock Exchange, Inc., and (b)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, (i) would not prevent or delay
consummation of the Merger in any material respect or otherwise prevent the
Company from performing its obligations under this Agreement in any material
respect, and (ii) would not, individually or in the aggregate, have a Company
Material Adverse Effect.
3.7. Opinion of Financial Advisor. The Company represents that William
Blair & Company, L.L.C. (the "Financial Advisor") has delivered to the Special
Committee and to the Board of Directors its written opinion, as of the date
hereof, subject to the qualifications and limitations stated therein, to the
effect that the consideration to be received by the holders of the Shares (other
than Shares held by COLA and the Excluded Shares) pursuant to the Merger is fair
to such holders of Shares from a financial point of view. The Company has been
authorized by the Financial Advisor to permit, subject to prior review and
consent by the Financial Advisor, the inclusion of the fairness opinion (or a
reference thereto) in the Proxy Statement (as defined in Article 6.2.1) and the
Schedule 13E-3 (as defined in Article 6.2.3) on the terms of the engagement
letter between the Company and the Financial Advisor dated July 15, 1999.
3.8. Board Approval. The Board of Directors of the Company, based on the
unanimous recommendation of the Special Committee, at a meeting duly called and
held and at which a quorum was present and voting, unanimously (a) determined
that this Agreement and the Merger are fair to and in the best interests of the
Company's stockholders (other than COLA and the holders of the Excluded Shares),
(b) approved this Agreement, the Merger and the other transactions contemplated
hereby, and (c) resolved to recommend approval and adoption of this Agreement by
the Company's stockholders.
3.9. Brokers. No broker, finder or investment banker (other than the
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Merger and the other
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COLA
COLA hereby represents and warrants to the Company as follows:
4.1. Organization and Qualification. COLA is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Kansas and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. COLA is duly qualified or licensed
and in good standing to do business in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a material adverse effect on the business, results of
operations or financial condition of COLA and its subsidiaries, taken as a whole
("COLA Material Adverse Effect") and would not prevent COLA from consummating
the transactions contemplated hereby.
4.2. Authority Relative to This Agreement. COLA has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by COLA and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of COLA and no other corporate
proceedings on the part of COLA are necessary to authorize this Agreement or to
consummate such transactions (other than the filing and recordation of
appropriate merger documents as required by the KGCC and the DGCL). This
Agreement has been duly and validly executed and delivered by COLA and, assuming
the due authorization, execution and delivery by the Company, constitutes the
legal, valid and binding obligation of COLA, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and by general principles of
equity.
4.3. No Conflict; Required Filings and Consents.
4.3.1. CONFLICTS. THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY COLA DO
NOT, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT, (A)
CONFLICT WITH OR VIOLATE THE CERTIFICATE OF INCORPORATION OR BY-LAWS OF COLA, OR
(B) CONFLICT WITH OR VIOLATE ANY LAW, RULE, REGULATION, ORDER, JUDGMENT OR
DECREE APPLICABLE TO COLA OR BY WHICH ANY OF ITS PROPERTIES OR ASSETS ARE BOUND
OR AFFECTED, EXCEPT IN THE CASE OF CLAUSES (B), FOR ANY SUCH CONFLICTS,
VIOLATIONS, BREACHES, DEFAULTS OR OTHER OCCURRENCES WHICH (X) WOULD NOT PREVENT
OR DELAY CONSUMMATION OF THE MERGER IN ANY MATERIAL RESPECT OR OTHERWISE PREVENT
COLA FROM PERFORMING ITS OBLIGATIONS UNDER THIS AGREEMENT IN ANY MATERIAL
RESPECT, OR (Y) WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE A COLA
MATERIAL ADVERSE EFFECT.
4.3.2. Required Filings, Consents, etc. The execution and
delivery of this Agreement by COLA do not, and the performance of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby by COLA will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (a) for
(i) any applicable requirements, if any, of the Exchange Act, the Securities
Act, and (ii) filing and recordation of appropriate merger and similar documents
as required by the KGCC and the DGCL and (b) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (x) prevent or delay consummation of the Merger in any
material respect or otherwise prevent COLA from performing its obligations under
this Agreement in any material respect, or (y) would not, individually or in the
aggregate, have a COLA Material Adverse Effect.
4.4. Financing. COLA has received and accepted a written commitment from
LaSalle Bank, n.a. (the "Bank") for the provision of a senior credit facility or
facilities for the transactions contemplated hereby in an amount of up to $38
million (with $10 million of such commitment to be provided by Bankers Trust).
The aggregate amount of the financing (the "Financing") contemplated by the
commitment (the "Commitment") will be sufficient to consummate the Merger. COLA
has provided true and correct copies of the Commitment to the Company prior to
the date hereof, and will provide copies of any material amendments or
modifications thereto. To the knowledge of COLA, there exists no condition with
respect to COLA or the Company as of the date of this Agreement that would
materially adversely affect the ability of COLA to satisfy in all respects the
conditions set forth in the Commitment.
4.5. Solvency. COLA has no reason to believe that the Financing to be
provided to COLA to effect the Merger will cause (a) the fair salable value of
the Surviving Corporation's assets to be less than the total amount of its
existing liabilities and identified contingent liabilities, (b) the fair salable
value of the Surviving Corporation's assets to be less than the amount that will
be required to pay its probable liabilities and its existing debts as they
mature, (c) the Surviving Corporation not to be able to pay its existing debts
as they mature or (d) the Surviving Corporation to have an unreasonably small
amount of capital with which to engage in its business.
4.6. No Knowledge of Breach. As of the date hereof, COLA is not aware of
any fact that causes any representation or warranty of the Company made in this
Agreement to be false or misleading.
4.7. Hart-Scott-Rodino. Capitalized terms used in this Article 4.7 but not
otherwise defined herein are used as defined in the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"). Financial information described in this Article 4.7
is to be determined in accordance with the HSR Act. As of the date hereof and
the date of Closing, (a) the annual net sales of the Person within which COLA is
included under the HSR Act, determined in accordance with the HSR Act, for the
most recent fiscal year were less than $10,000,000 and (b) the total assets of
such Person were less than $10,000,000.
4.8. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this
Agreement, the Merger and the other transactions contemplated hereby based upon
arrangements made by or on behalf of COLA.
4.9. Ownership of Company Stock. As of the date of this Agreement, 122,200
Shares have been contributed as capital to COLA. Prior to the date of this
Agreement, COLA has provided the Company with true and accurate copies of
documents showing the contribution of such shares to COLA. Prior to the
execution of this Agreement, COLA has provided the Company with a true and
accurate copy of the letter agreement among Timothy P. O'Neil, Roy R. Laborde,
William D. Cox, and COLA, a copy of which is attached as Exhibit E, in which (a)
Mr. Laborde has agreed to contribute 154,650 Shares to COLA at such time as
those shares are no longer pledged as collateral for personal indebtedness,
which will be no later than November 30, 1999, and (b) COLA and Messrs. O'Neil,
Laborde and Cox have agreed to vote all Shares held by them (other than Excluded
Shares) in favor of the Merger.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, unless COLA shall have consented (such consent to be given or withheld
within its sole discretion), neither the Company nor any Company Subsidiary
shall:
(a) conduct its business in any manner other than in the ordinary course
of business consistent with past practice;
(b) amend or propose to amend its certificate of incorporation or by-laws;
(c) authorize for issuance, issue, grant, sell, pledge, redeem or acquire
for value any of its or their securities, including options, warrants,
commitments, stock appreciation rights, subscriptions, or other rights to
purchase securities; provided, however, that shares of Common Stock earned as
Performance Shares by employees of the Company and Company Subsidiaries pursuant
to the Company's 1998 Long-Term Incentive Plan may be issued upon such
employees' satisfaction of performance criteria that (i) have been adopted by
the Board of Directors prior to the date of this Agreement or (ii) are
subsequently approved by COLA; and provided, further, that the Company may issue
securities pursuant to the exercise of options, warrants, commitments,
subscriptions, or other rights to purchase securities outstanding on the date
hereof;
(d) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property, or otherwise, with respect to any of its
capital stock or other equity interests, or subdivide, reclassify, recapitalize,
split, combine or exchange any of its shares of capital stock;
(e) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures (including tax accounting policies and
procedures);
(f) take any action that would, or could reasonably be expected to result
in, any of its representations and warranties set forth in this Agreement being
untrue or in any of the conditions to the Merger set forth in Article VII not
being satisfied, except as provided in Articles 6.4 and 8.1 hereof; or
(g) authorize any of, or commit or agree to take any of, the foregoing
actions.
ARTICLE VI
ADDITIONAL COVENANTS
6.1. Access to Information; Confidentiality. From the date hereof to the
Effective Time, the Company shall (and shall cause the Company Subsidiaries and
the officers, directors, employees, auditors and agents of the Company and each
of the Company Subsidiaries to) afford the officers, employees and agents of
COLA (the "COLA Representatives") reasonable access at all reasonable times to
its officers, employees, agents, properties, offices, plants and other
facilities, books and records, and shall furnish such COLA Representatives with
all financial, operating and other data and information as may from time to time
be reasonably requested.
6.2. Proxy Statement; Schedule 13E-3.
6.2.1. Proxy Statement. As soon as practicable after the date of
this Agreement, the Company shall prepare and file with the SEC a proxy
statement, in form and substance approved by COLA (such approval not to be
unreasonably withheld), relating to the meeting of the Company's stockholders to
be held in connection with the Merger (together with any amendments thereof or
supplements thereto, the "Proxy Statement"). COLA shall furnish to the Company
such information concerning itself as the Company may reasonably request in
connection with the preparation of the Proxy Statement. The Proxy Statement
will comply in all material respects with applicable federal securities laws,
except that no representation is made by the Company with respect to information
supplied by COLA for inclusion in the Proxy Statement. The Proxy Statement
shall include the opinion of the Financial Advisor referred to in Article 3.7
hereof. The Company will use its commercially reasonable best efforts to
respond to the comments of the SEC concerning the Proxy Statement and to cause
the Proxy Statement to be mailed to the Company's stockholders, in each case as
soon as reasonably practicable. Each party to this Agreement will notify the
other parties promptly of the receipt of the comments of the SEC, if any, and of
any request by the SEC for amendments or supplements to the Proxy Statement or
for additional information, and will supply the other parties with copies of all
correspondence between such party or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the Proxy
Statement or the Merger.
6.2.2. INFORMATION. THE INFORMATION PROVIDED BY EACH OF THE COMPANY AND COLA
FOR USE IN THE PROXY STATEMENT SHALL NOT, AT (A) THE TIME THE PROXY STATEMENT
(OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO) IS FIRST MAILED TO THE
STOCKHOLDERS OF THE COMPANY OR (B) THE TIME OF THE COMPANY STOCKHOLDERS' MEETING
CONTEMPLATED BY SUCH PROXY STATEMENT, CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL
FACT OR OMIT TO STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN NOT MISLEADING. IF AT ANY
TIME PRIOR TO THE EFFECTIVE TIME ANY EVENT OR CIRCUMSTANCE RELATING TO ANY PARTY
HERETO, OR THEIR RESPECTIVE OFFICERS OR DIRECTORS, SHOULD BE DISCOVERED BY SUCH
PARTY WHICH SHOULD BE SET FORTH IN AN AMENDMENT OR A SUPPLEMENT TO THE PROXY
STATEMENT, SUCH PARTY SHALL PROMPTLY INFORM THE COMPANY AND COLA THEREOF AND
TAKE APPROPRIATE ACTION IN RESPECT THEREOF.
6.2.3. SCHEDULE 13E-3. AS SOON AS PRACTICABLE AFTER THE DATE OF THIS
AGREEMENT, COLA AND THE COMPANY SHALL FILE WITH THE SEC A RULE 13E-3 TRANSACTION
STATEMENT ON SCHEDULE 13E-3 (THE "SCHEDULE 13E-3"), WITH RESPECT TO THE MERGER.
EACH OF THE PARTIES HERETO AGREES TO USE ITS REASONABLE BEST EFFORTS TO
COOPERATE AND TO PROVIDE EACH OTHER WITH SUCH INFORMATION AS ANY OF SUCH PARTIES
MAY REASONABLY REQUEST IN CONNECTION WITH THE PREPARATION OF THE SCHEDULE 13E-3.
THE INFORMATION PROVIDED BY EACH OF THE COMPANY AND COLA FOR USE IN THE SCHEDULE
13E-3 SHALL NOT, AT THE TIME THE SCHEDULE 13E-3 IS FILED WITH THE SEC, CONTAIN
ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING. EACH PARTY HERETO AGREES PROMPTLY TO SUPPLEMENT, UPDATE
AND CORRECT ANY INFORMATION PROVIDED BY IT FOR USE IN THE SCHEDULE 13E-3 IF AND
TO THE EXTENT THAT IT IS OR SHALL HAVE BECOME INCOMPLETE, FALSE OR MISLEADING.
EACH PARTY AGREES TO PROVIDE THE OTHER PARTY AND THE OTHER PARTY'S COUNSEL WITH
ANY COMMENTS SUCH PARTY OR ITS COUNSEL MAY RECEIVE FROM THE SEC OR ITS STAFF
WITH RESPECT TO THE SCHEDULE 13E-3 PROMPTLY AFTER THE RECEIPT OF SUCH COMMENTS
AND OF ANY REQUEST BY THE SEC FOR AMENDMENTS OR SUPPLEMENTS TO THE SCHEDULE 13E-
3 OR FOR ADDITIONAL INFORMATION, AND WILL SUPPLY THE OTHER PARTIES WITH COPIES
OF ALL CORRESPONDENCE BETWEEN SUCH PARTY OR ITS REPRESENTATIVES, ON THE ONE
HAND, AND THE SEC OR MEMBERS OF ITS STAFF, ON THE OTHER HAND, WITH RESPECT TO
THE SCHEDULE 13E-3.
6.3. Action by Stockholders. The Company, acting through its Board of
Directors, shall, in accordance with applicable law, the Company Charter and the
Company's bylaws, duly call, give notice of, convene and hold a special meeting
of stockholders (the "Company Stockholders' Meeting") as soon as practicable
after the date of this Agreement for the purpose of adopting this Agreement.
The Company will, through the Board of Directors based on the recommendation of
the Special Committee, (a) recommend to its stockholders the adoption of this
Agreement, and (b) use its best efforts to obtain the Company Stockholder
Approval. COLA shall vote all shares of Common Stock owned by it in favor of
the adoption of this Agreement.
6.4. Acquisition Proposals. From and after the date hereof, the Company
will not, and will not authorize or permit any of its officers, directors,
employees or agents (its "Representatives"), directly or indirectly, to solicit,
initiate or knowingly encourage (including by way of furnishing information) or
take any other action to facilitate knowingly any inquiries or the making of any
proposal which constitutes or may reasonably be expected to lead to an
Acquisition Proposal (as defined below) from any person, or engage in any
discussion or negotiations relating thereto or accept any Acquisition Proposal;
provided, however that notwithstanding any other provision hereof: (a) the
Special Committee may at any time prior to the receipt of Company Stockholder
Approval, engage in discussions or negotiations with a third party who (without
any solicitation, initiation, encouragement, discussion or negotiation, directly
or indirectly, by or with the Company or its Representatives after the date
hereof) seeks to initiate such discussions or negotiations and may furnish such
third party information concerning the Company and its business, properties and
assets if, and only to the extent that, (i) (A) the third party has first made
an Acquisition Proposal that is more favorable to the Company and its
stockholders (other than COLA and holders of the Excluded Shares) than the
transactions contemplated by this Agreement and has demonstrated that financing
for the Acquisition Proposal is reasonably likely to be obtained (as determined
in good faith in each case by the Special Committee after consultation with its
financial advisors) and (B) the Special Committee shall conclude in good faith,
after considering applicable provisions of state law, on the basis of oral or
written advice of outside counsel (who may be the Company's regularly engaged
independent counsel) that such action is necessary for the Special Committee to
act in a manner consistent with its fiduciary duties under applicable law and
(ii) prior to furnishing such information to or entering into discussions or
negotiations with such person or entity, the Company (A) provides three Business
Days' prior written notice to COLA to the effect that it is furnishing
information to or entering into discussions or negotiations with such person or
entity and (B) receives from such person or entity an executed confidentiality
agreement in reasonably customary form; (b) the Special Committee may withdraw
or modify its recommendation referred to in Article 6.3 following receipt of a
bona fide unsolicited Acquisition Proposal from a third party if (i) the Special
Committee, after consultation with and receipt of advice from the Financial
Advisor or another nationally recognized investment banking firm, determines in
good faith in the exercise of its fiduciary obligations under applicable law
that the Acquisition Proposal is more favorable to the Company and its
stockholders (other than COLA and holders of the Excluded Shares) than the
transactions contemplated by this Agreement and (ii) the Special Committee,
after consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is necessary for the Special Committee to comply with its fiduciary
obligations under applicable law and/or (c) the Board of Directors, upon the
recommendation of the Special Committee, may comply with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer or take any
other required action (including, without limitation, the making of such public
disclosures as may be necessary or advisable under applicable securities laws)
and provided further, that, in the event of an exercise of the Company's or its
Board of Director's or the Special Committee's rights under clause (a), (b) or
(c) above, notwithstanding anything contained in this Agreement to the contrary,
such action shall not constitute a breach of this Agreement by the Company but
shall only give rise to the rights specified in Article 8.3 to the extent
provided therein. As of the date of this Agreement, the Company shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any parties conducted
heretofore by the Company with respect to the foregoing. The Company shall
notify COLA orally and in writing of any such inquiries, offers or proposals
(including, without limitation, the terms and conditions of any such proposal
and the identify of the person making it), within 24 hours of the receipt
thereof, shall keep COLA informed of the status and details of any such inquiry,
offer or proposal, and shall give COLA three Business Days' advance notice of
any agreement to be entered into with or any information to be supplied to any
person making such inquiry, offer or proposal. As used herein, "Acquisition
Proposal" means any proposal or offer to acquire, directly or indirectly, in one
transaction or a series of related transactions, twenty percent (20%) or more of
the outstanding shares of the Company's Common Stock (whether by purchase,
merger, consolidation, share exchange, business combination or other similar
transaction) or twenty percent (20%) or more of the dollar value of the assets
of the Company.
6.5. Directors' and Officers' Insurance and Indemnification.
6.5.1. GENERALLY. IT IS UNDERSTOOD AND AGREED THAT THE COMPANY SHALL, TO THE
FULLEST EXTENT PERMITTED UNDER DELAWARE LAW AND REGARDLESS OF WHETHER THE MERGER
BECOMES EFFECTIVE, AND THE SURVIVING CORPORATION SHALL, FROM AND AFTER THE
EFFECTIVE TIME, TO THE FULLEST EXTENT PERMITTED UNDER DELAWARE LAW, INDEMNIFY,
DEFEND AND HOLD HARMLESS ANY PERSON WHO IS NOW, OR HAS BEEN AT ANY TIME PRIOR TO
THE DATE HEREOF, OR WHO BECOMES PRIOR TO THE EFFECTIVE TIME, AN OFFICER OR
DIRECTOR (THE "INDEMNIFIED PARTY") OF THE COMPANY OR ANY OF ITS SUBSIDIARIES
AGAINST ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS' FEES AND EXPENSES), JUDGMENTS, FINES, LOSSES, AND AMOUNTS PAID IN
SETTLEMENT, WITH THE WRITTEN APPROVAL OF THE SURVIVING CORPORATION (WHICH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD), IN CONNECTION WITH ANY THREATENED,
PENDING OR COMPLETED ACTION, SUIT, CLAIM, PROCEEDING OR INVESTIGATION (EACH A
"CLAIM") TO THE EXTENT THAT ANY SUCH CLAIM IS BASED ON, OR ARISES OUT OF, (A)
THE FACT THAT SUCH PERSON IS OR WAS A DIRECTOR, OFFICER, EMPLOYEE, FIDUCIARY OR
AGENT OF THE COMPANY OR ANY SUBSIDIARIES OR IS OR WAS SERVING AT THE REQUEST OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES AS A DIRECTOR, OFFICER, EMPLOYEE,
FIDUCIARY OR AGENT OF ANOTHER CORPORATION, PARTNERSHIP, JOINT VENTURE, TRUST OR
OTHER ENTERPRISE, OR (B) THIS AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE TO THE EXTENT THAT ANY SUCH CLAIM PERTAINS TO ANY MATTER OR
FACT ARISING, EXISTING, OR OCCURRING PRIOR TO OR AT THE EFFECTIVE TIME,
REGARDLESS OF WHETHER SUCH CLAIM IS ASSERTED OR CLAIMED PRIOR TO, AT OR AFTER
THE EFFECTIVE TIME, AND IN THE EVENT ANY INDEMNIFIED PARTY BECOMES INVOLVED IN
ANY CAPACITY IN ANY CLAIM, THE COMPANY OR THE SURVIVING CORPORATION, AS
APPLICABLE, SHALL ADVANCE EXPENSES TO SUCH INDEMNIFIED PARTY IN ADVANCE OF THE
FINAL DISPOSITION THEREOF UPON RECEIPT OF THE UNDERTAKING SPECIFIED IN SECTION
145 OF THE DGCL, INCLUDING PAYMENT OF THE REASONABLE FEES AND EXPENSES OF
COUNSEL SELECTED BY THE INDEMNIFIED PARTY, PROMPTLY AS STATEMENTS THEREFOR ARE
RECEIVED. ANY DETERMINATION REQUIRED TO BE MADE WITH RESPECT TO WHETHER AN
INDEMNIFIED PARTY'S CONDUCT COMPLIES WITH THE STANDARDS SET FORTH UNDER DELAWARE
LAW, THE CERTIFICATE OF INCORPORATION, THE BY-LAWS, THIS AGREEMENT OR ANY
INDEMNIFICATION AGREEMENT, AS THE CASE MAY BE, SHALL BE MADE BY INDEPENDENT
COUNSEL MUTUALLY ACCEPTABLE TO THE SURVIVING CORPORATION AND THE INDEMNIFIED
PARTY.
6.5.2. CONTINUATION OF RIGHTS. THE CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE COMPANY OR THE SURVIVING CORPORATION, AS THE CASE MAY BE, SHALL NOT BE
AMENDED, REPEALED OR OTHERWISE MODIFIED FOR A PERIOD FROM THE DATE HEREOF UNTIL
SIX YEARS AFTER THE EFFECTIVE TIME IN ANY MANNER THAT WOULD ADVERSELY AFFECT THE
RIGHTS THEREUNDER OF INDIVIDUALS WHO AS OF THE DATE HEREOF ARE OR WERE
DIRECTORS, OFFICERS, EMPLOYEES, FIDUCIARIES OR AGENTS OF THE COMPANY AND ITS
SUBSIDIARIES OR OTHERWISE ENTITLED TO INDEMNIFICATION, ADVANCEMENT OF EXPENSES
OR EXCULPATION FROM LIABILITY UNDER THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION, BY-LAWS OR INDEMNIFICATION AGREEMENTS; PROVIDED THAT IN THE EVENT
ANY CLAIM IS ASSERTED OR MADE WITHIN SUCH SIX YEAR PERIOD, SUCH PROVISIONS SHALL
NOT BE SO AMENDED, REPEALED OR OTHERWISE MODIFIED UNTIL THE LATER OF THE END OF
SUCH SIX-YEAR PERIOD OR THE DISPOSITION OF THE CLAIM.
6.5.3. INSURANCE. AT OR PRIOR TO THE EFFECTIVE TIME, COLA, THE COMPANY OR
THE SURVIVING CORPORATION SHALL OBTAIN A FULLY-PAID OFFICERS' AND DIRECTORS'
LIABILITY INSURANCE POLICY COVERING THE INDEMNIFIED PARTIES WHO ARE CURRENTLY
COVERED BY THE COMPANY'S OFFICERS' AND DIRECTORS' LIABILITY INSURANCE POLICY FOR
A TERM OF SIX YEARS AFTER THE EFFECTIVE TIME IN THE AMOUNT OF $10 MILLION AND ON
SUCH OTHER TERMS AS ARE NOT MATERIALLY LESS FAVORABLE TO THE OFFICERS AND
DIRECTORS THAN THOSE IN EFFECT ON THE DATE HEREOF.
6.5.4. AGREEMENT BINDING. THIS ARTICLE 6.5 IS INTENDED TO BE FOR THE BENEFIT
OF, AND SHALL BE ENFORCEABLE BY, THE INDEMNIFIED PARTIES, THEIR HEIRS AND
PERSONAL REPRESENTATIVES, AND SHALL BE BINDING ON THE SURVIVING CORPORATION AND
ITS RESPECTIVE SUCCESSORS AND ASSIGNS. IF THE SURVIVING CORPORATION OR ANY OF
ITS SUCCESSORS OR ASSIGNS (I) CONSOLIDATES WITH OR MERGES INTO ANY OTHER PERSON
AND SHALL NOT BE THE CONTINUING OR SURVIVING CORPORATION OR ENTITY OF SUCH
CONSOLIDATION OR MERGER OR (II) TRANSFERS ALL OR SUBSTANTIALLY ALL OF ITS
PROPERTIES AND ASSETS TO ANY PERSON, THEN AND IN EACH SUCH CASE, PROPER
PROVISION SHALL BE MADE SO THAT THE SUCCESSORS AND ASSIGNS OF THE SURVIVING
CORPORATION ASSUME THE OBLIGATIONS SET FORTH IN THIS ARTICLE 6.5.
6.6. Best Efforts; Further Action.
6.6.1. BEST EFFORTS. UPON THE TERMS AND SUBJECT TO THE CONDITIONS HEREOF,
INCLUDING WITHOUT LIMITATION ARTICLE 6.4, EACH OF THE PARTIES HERETO SHALL USE
ITS REASONABLE BEST EFFORTS TO TAKE, OR CAUSE TO BE TAKEN, ALL APPROPRIATE
ACTION, AND TO DO, OR CAUSE TO BE DONE, ALL THINGS NECESSARY, PROPER OR
ADVISABLE UNDER APPLICABLE LAWS AND REGULATIONS OR OTHERWISE TO CONSUMMATE AND
MAKE EFFECTIVE THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED HEREBY,
INCLUDING, WITHOUT LIMITATION, USING ITS REASONABLE BEST EFFORTS TO OBTAIN ALL
LICENSES, PERMITS, WAIVERS, ORDERS, CONSENTS, APPROVALS, AUTHORIZATIONS,
QUALIFICATIONS AND ORDERS OF GOVERNMENTAL ENTITIES AND PARTIES TO CONTRACTS WITH
THE COMPANY AND THE COMPANY SUBSIDIARIES AS ARE NECESSARY FOR THE CONSUMMATION
OF THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED HEREBY.
6.6.2. FURTHER ACTION. IN CASE AT ANY TIME AFTER THE EFFECTIVE TIME ANY
FURTHER ACTION IS NECESSARY OR DESIRABLE TO CARRY OUT THE PURPOSES OF THIS
AGREEMENT, THE PROPER OFFICERS AND DIRECTORS OF EACH PARTY TO THIS AGREEMENT
SHALL USE THEIR REASONABLE BEST EFFORTS TO TAKE ALL SUCH ACTION.
6.7. Public Announcements. COLA and the Company shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the transactions contemplated hereby and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may be
required by law, regulation or any listing agreement or arrangement to which the
Company or COLA is a party with a national securities exchange if it has used
all reasonable efforts to consult with the other party and to obtain such
party's consent but has been unable to do so in a timely manner.
6.8. Conveyance Taxes. COLA and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
6.9 Financing. COLA shall use reasonable efforts to accept and close the
Financing on terms consistent with the Commitment or such other terms as shall
be satisfactory to COLA or as are not more onerous to COLA than as set forth in
the Commitment, and to execute and deliver definitive agreements with respect to
the Financing (the "Definitive Financing Agreements"). COLA shall use
reasonable efforts to satisfy all requirements of the Definitive Financing
Agreements which are conditions to closing the transactions constituting the
Financing. The obligations contained herein are not intended, nor shall they be
construed, to benefit or confer any rights upon any person, firm or entity other
than the Company.
6.10. Special Committee. Until the earlier of the Effective Time or
the termination of this Agreement, (a) any amendment of this Agreement, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of COLA,
any consent or approval of the Company contemplated hereby, any extension of the
Effective Time as contemplated by the last sentence of Article 2.2, any waiver
of any of the Company's rights hereunder, any amendment to the Company's
Restated Certificate of Incorporation or By-laws or any action taken by the
Company that adversely affects the interest of the stockholders of the Company
(other than the COLA Stockholders) with respect to the transactions contemplated
hereby, will require the concurrence of the Special Committee, and (b) the
Special Committee shall be authorized to take all actions on behalf of the
Company hereunder, except to the extent prohibited by the DGCL. COLA agrees on
behalf of itself and its Affiliates and Associates that, until the earlier of
the Effective Time or the termination of this Agreement, it will not take any
action to change the composition or authority of the Special Committee without
the prior approval of a majority of the persons then serving as members of the
Special Committee.
6.11 Action by COLA. Prior to the earlier of the Effective Time or the
termination of this Agreement, COLA shall retain ownership of all Shares of
Common Stock owned by it as of the date of this Agreement and all Shares
contributed to it in accordance with the letter agreement attached as Exhibit E
hereto and shall not distribute, sell, pledge or otherwise transfer such Shares
to any person.
ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable law:
7.1.1. Company Stockholder Approval. The Company Stockholder
Approval shall have been obtained.
7.1.2. COLA Stockholder Approval. Approval of this Agreement by
the stockholders of COLA shall have been obtained.
7.1.3. No Order. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
which materially restricts, prevents or prohibits consummation of the Merger or
the other transactions contemplated by this Agreement; provided, however, that
the parties shall use their reasonable best efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted.
7.2. Additional Conditions to Obligations of COLA. The obligation of COLA
to effect the Merger is also subject to satisfaction or waiver of the following
conditions:
7.2.1. Representations and Warranties. Each of the representations
and warranties of the Company contained in this Agreement that are qualified by
materiality shall be true and correct and each of the representations and
warranties of the Company contained in this Agreement that are not qualified by
materiality shall be true and correct in all material respects, in each case as
of the Effective Time as though made on and as of the Effective Time, except (a)
for changes specifically permitted by this Agreement and (b) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date.
7.2.2. Agreement and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Effective Time.
7.2.3. Performance Shares. The Company shall have issued all
shares of Common Stock earned by employees of the Company and Company
Subsidiaries pursuant to the terms of the Company's 1998 Long-Term Incentive
Plan.
7.2.4. Financing. COLA shall have obtained the Financing, and the
proceeds of such Financing shall have been received by or made immediately
available to COLA at or immediately prior to the Closing.
7.2.5. Dissenting Shares. As of the Effective Time, Dissenting
Shares shall aggregate no more than five percent (5 %) of the then outstanding
Shares.
7.2.6. Officer's Certificate. COLA shall have received a
certificate of an appropriate officer of the Company to the effect that the
conditions set forth in this Article 7.2 have been satisfied at the Effective
Time.
7.3. Additional Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver of the following conditions:
7.3.1. Representations and Warranties. Each of the representations
and warranties of COLA contained in this Agreement that are qualified by
materiality shall be true and correct and each of the representations and
warranties of COLA contained in this Agreement that are not qualified by
materiality shall be true and correct in all material respects, in each case as
of the Effective Time as though made on and as of the Effective Time, except (a)
for changes specifically permitted by this Agreement and (b) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date.
7.3.2. Agreement and Covenants. COLA shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time.
7.3.3. Officer's Certificate. The Company shall have received a
certificate of an appropriate officer of COLA to the effect that the conditions
set forth in this Article 7.3 have been satisfied at the Effective Time.
7.4 Frustration of Conditions. No party hereto may rely on the failure of
any condition set forth in this Article to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination. This Agreement, notwithstanding approval thereof by the
stockholders of the Company, may be terminated as follows (each a
"Termination"):
(a) by mutual written consent of the Company and COLA;
(b) by COLA or the Company at any time prior to the Effective Time:
(i) if there shall be any statute, law, rule or regulation that makes
consummation of the Merger illegal or prohibited, or if any court of
competent jurisdiction in the United States or other Governmental Entity
shall have issued an order, judgment, decree or ruling, or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and such
order, judgment, decree, ruling or other action shall have become final and
non-appealable (provided, that the party seeking to terminate this
Agreement pursuant to this clause (i) shall have used all reasonable best
efforts to remove such judgment, injunction, order, decree or ruling); or
(ii) upon a vote at a duly held meeting, or upon any adjournment
thereof, the stockholders of the Company shall have failed to give any
approval required by applicable law.
(c) by the Company at any time prior to the receipt of Company Stockholder
Approval, if the Company shall have received after the date of this Agreement
but prior to the date of Company Stockholder Approval an Acquisition Proposal
from a third party that was not initiated, solicited or knowingly encouraged by
the Company or any Company Subsidiary in violation of this Agreement if:
(i) the Special Committee, after consultation with and receipt of
written advice from the Financial Advisor or another nationally recognized
investment banking firm, determines in good faith in the exercise of its
fiduciary obligations under applicable law that the Acquisition Proposal is
more favorable to the Company and its stockholders (other than COLA and
holders of the Excluded Shares) than the transactions contemplated by this
Agreement (including any adjustment to the terms and conditions of this
Agreement proposed in writing by COLA in response to such Acquisition
Proposal); provided, that in making such determination, the Special
Committee shall consider, among other factors and without limitation,
whether or not the Acquisition Proposal is subject to any material
contingency to which the other party thereto has not reasonably
demonstrated in its written offer its ability to overcome or address,
including the receipt of government consents or approvals, and whether
the Acquisition Proposal is reasonably likely to be consummated and is in
the best interests of the stockholders of the Company; and
(ii) the Special Committee, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Special
Committee to comply with its fiduciary obligations under applicable law.
(d) by COLA at any time prior to the Effective Time if the Board of
Directors, based upon the recommendation of the Special Committee, (i) withdraws
or modifies in a manner adverse to COLA the Board of Director's favorable
recommendation of the transactions contemplated hereby or (ii) shall have
recommended any Acquisition Proposal;
(e) by COLA at any time prior to the Effective Time, if the Company shall
be in material breach of its obligations hereunder (except for a breach of its
representations or warranties or a breach that was not the result of the action
or inaction of the Special Committee) and such breach is not cured within five
Business Days after notice thereof is received by the Company; provided that
COLA is not in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement; or
(f) by the Company at any time prior to the Effective Time, if COLA shall
be in material breach of its obligations hereunder (including a material breach
of its representations or warranties) and such breach is not cured within five
Business Days after notice thereof is received by COLA; provided that the
Company is not in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement.
8.2. Effect of Termination and Abandonment. Except as provided in Article
8.3, in the event of the termination of this Agreement pursuant to Article 8.1,
this Agreement shall forthwith become void, there shall be no liability on the
part of any party hereto, or any of their respective officers or directors, to
the other and all rights and obligations of any party hereto shall cease;
provided, however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
8.3. FEES AND EXPENSES. IN THE EVENT THAT THIS AGREEMENT SHALL HAVE BEEN
TERMINATED BY THE COMPANY PURSUANT TO ARTICLE 8.1(C) OR BY COLA PURSUANT TO
ARTICLE 8.1(D) OR 8.1(E) THE COMPANY SHALL PAY COLA'S TRANSACTION EXPENSES (AS
DEFINED BELOW) PLUS A TERMINATION FEE OF $500,000 WITHIN SIXTY DAYS AFTER
TERMINATION OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT NO FEES OR EXPENSES SHALL
BE PAID TO COLA UPON ANY TERMINATION PURSUANT TO ARTICLE 8.1(E) IF THE BREACH
GIVING RISE TO THE RIGHT OF TERMINATION WAS NOT THE RESULT OF THE ACTION OR
INACTION OF THE SPECIAL COMMITTEE. "TRANSACTION EXPENSES" SHALL MEAN AN AMOUNT,
NOT TO EXCEED $200,000, EQUAL TO COLA'S ACTUAL OUT-OF-POCKET EXPENSES DIRECTLY
ATTRIBUTABLE TO THE PROPOSED ACQUISITION OF THE COMPANY (INCLUDING NEGOTIATION
AND EXECUTION OF THIS AGREEMENT AND REASONABLE ATTORNEYS' FEES AND EXPENSES) AND
THE ATTEMPTED FINANCING AND COMPLETION OF THE MERGER.
8.4. AMENDMENT. BEFORE OR AFTER ADOPTION OF THIS AGREEMENT BY THE
STOCKHOLDERS OF THE COMPANY, THIS AGREEMENT MAY BE AMENDED BY THE PARTIES HERETO
AT ANY TIME PRIOR TO THE EFFECTIVE TIME; PROVIDED, HOWEVER, THAT (A) ANY SUCH
AMENDMENT SHALL, ON BEHALF OF THE COMPANY, HAVE BEEN APPROVED BY THE SPECIAL
COMMITTEE AND (B) AFTER ADOPTION OF THIS AGREEMENT BY THE STOCKHOLDERS OF THE
COMPANY, NO AMENDMENT WHICH UNDER APPLICABLE LAW MAY NOT BE MADE WITHOUT THE
APPROVAL OF THE STOCKHOLDERS OF THE COMPANY MAY BE MADE WITHOUT SUCH APPROVAL.
ANY AMENDMENT PURSUANT TO THIS ARTICLE SHALL BE MADE BY AN INSTRUMENT IN WRITING
SIGNED BY THE PARTIES HERETO.
8.5. Extension; Waiver. Subject to Article 6.10 hereof, at any time prior
to the Effective Time, any party hereto may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Closing.
This Article 9.1 shall not limit any covenant or agreement of the parties which
by its terms contemplated performance after such time and date, including
without limitation Article 6.5.
9.2. Definitions. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
9.3. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of receipt
of a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand or (c) the expiration of five business days
after the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to the Company:
TransFinancial Holdings, Inc.
8245 Nieman Road, Suite 100
Lenexa, KS 66214
Attn: Mr. Harold Hill
Fax: (913) 859-0011
With copies to:
Mr. Harold Hill
Route 3, Box 268
Gravois Mills, MO 65037
Fax: (573) 372-5071
Mr. Kent E. Whittaker, Esq.
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, MO 64108
Fax: (816) 474-4208
If to COLA:
COLA Acquisitions, Inc.
8245 Nieman Road, Suite 100
Lenexa, KS 66214
Attn: Mr. Timothy P. O'Neil
Fax: (913) 859-0011
With a copy to:
Mr. Jeffrey T. Haughey, Esq.
Blackwell Sanders Peper Martin LLP
2300 Main Street, Suite 1000
Kansas City, MO 64108
Fax: (816) 983-9146
9.4. Assignment; Binding Effect. This Agreement shall not be assigned, by
operation of law or otherwise, and any purported assignment shall be null and
void. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Articles 6.5, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.5. Entire Agreement. This Agreement and any other documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
9.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the conflict
of laws rules thereof.
9.7. Fee and Expenses. Except as provided in Article 8.3, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby (including without
limitation, fees and disbursements of counsel, financial advisors and
accountants) shall be paid by the party incurring such costs and expenses. The
expenses of filing, printing and mailing the Proxy Statement shall be borne by
the Company. The expenses of filing the Schedule 13E-3 shall be borne by COLA.
9.8. Headings. Headings of the Articles and Articles of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
9.9. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10. Specific Performance. The parties hereto each acknowledge that,
in view of the uniqueness of the subject matter hereof, the parties hereto
would not have an adequate remedy at law for money damages in the event that
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
9.11. Interpretation. Words of the masculine gender shall be deemed to
include the feminine and neuter genders, and vice versa, where applicable.
Words of the singular number shall be deemed to include the plural number, and
vice versa, where applicable.
9.12. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be an original. All such counterparts shall together constitute one and
the same instrument. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
TRANSFINANCIAL HOLDINGS, INC.
By: /s/ Harold C. Hall, Jr.
Name: Harold C. Hall, Jr.
Title: Chairman - Special Committee of
Independent Directors
COLA:
COLA ACQUISITIONS, INC.
By: /s/ Timothy P. O'Neil
Name: Timothy P. O'Neil
Title: President
EXHIBIT E
October 19, 1999
TransFinancial Holdings, Inc.
8245 Nieman Road, Suite 100
Lenexa, KS 66214
Attn: Harold Hill
RE: Agreement and Plan of Merger dated October 19, 1999
Dear Mr. Hill:
In connection with the Agreement and Plan of Merger dated October 19, 1999
(the "Agreement") by and between COLA Acquisitions, Inc. ("COLA") and
TransFinancial Holdings, Inc. ("TransFinancial"), the undersigned parties agree
as follows:
1. Roy R. Laborde agrees to contribute a total of 154,650 shares of common
stock of TransFinancial to COLA on or before November 30, 1999.
2. Timothy P. O'Neil, Roy R. Laborde, William D. Cox and COLA each agree
to cause all shares of common stock of TransFinancial held by them or by COLA,
other than Excluded Shares (as defined in the Agreement), to be voted in favor
of the Agreement and the Merger at the special meeting of stockholders that is
to be called to consider and approve the same.
The Special Committee of the Board of Directors of TransFinancial is
entitled to rely on the agreements contained herein.
COLA Acquisitions, Inc.
By: /s/ Timothy P. O'Neil
Name: Timothy P. O'Neil
Title: President
/s/ Timothy P. O'Neil
Timothy P. O'Neil
/s/ Roy R. Laborde
Roy R. Laborde
/s/ William D. Cox`
William D. Cox
Exhibit 10.1
[Execution Version]
AMENDMENT NO. 8
TO
RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 8 TO RECEIVABLES PURCHASE AGREEMENT (the "Amendment") dated
October 8, 1999 is entered into by and among APR FUNDING CORPORATION, a
are corporation ("Seller"), UNIVERSAL PREMIUM ACCEPTANCE CORPORATION, a Missouri
ration, individually ("UPAC") and as Servicer (in such capacity, the
icer"), TRANSFINANCIAL HOLDINGS, INC., a Delaware corporation (the "Parent"),
FUNDING CAPITAL CORPORATION, a Delaware corporation ("Purchaser"), and
OSTON, N.A., (as "Agent" or "Custodian", and in its individual capacity).
alized terms used herein and not otherwise defined herein shall have the
ngs ascribed to such terms in Appendix A to the "Agreement" (as defined below).
W I T NE S S E T H:
WHEREAS, the Seller, UPAC, the Servicer, the Parent, the Purchaser and the Agent
entered into that certain Receivables Purchase Agreement dated as of December
996 (as the same has been amended, restated, supplemented or otherwise modified
time to time through the date hereof, the "Agreement"; the terms defined therein
used herein as therein defined unless otherwise defined herein), pursuant to
, among other things, the Seller has agreed to sell to the Purchaser, and the
aser has agreed to purchase from the Seller, undivided percentage interests in
eller's Receivables; and
WHEREAS, the parties hereto have agreed to modify certain terms and provisions
e Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
ich are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE AGREEMENT. Effective as of the first date on which
of the conditions set forth in Section 2 hereof shall have been satisfied, the
ment is amended as follows:
(a) Section 1.01 of the Agreement is hereby amended to delete the amount
000,000" and to substitute therefor "$70,000,000".
(b) The definition of "Scheduled Termination Date" in Appendix A of the
ment is hereby amended to delete the date "December 30, 2001" and to substitute
for "January 15, 2000".
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become effective upon the
faction of the following conditions precedent:
(a) The Agent shall have received:
(i) eight fully executed copies of (A) this Amendment, (B) Amendment No. 6
quidity Agreement of even
herewith among EagleFunding Capital Corporation as "Borrower", BKB and
le Bank National Association. as "Liquidity Providers", BKB as "Liquidity Agent"
Bankers Trust Company as "Collateral Agent" ("Amendment No. 6 to Liquidity
ment"), (C) the fee letter
regard to the amendment fee to be paid to the Deal Agent on the date hereof, in
the form of Exhibit A attached hereto (the "Amendment Fee Letter"), and (D) the
nment and Acceptance of
date herewith between Harris Trust and Savings Bank and LaSalle Bank National
iation (the "Assignment");and
(ii) such other further documents and information as the Agent shall
nably request.
(b) No event or condition has occurred and is continuing, or would result from
xecution, delivery or performance of this Amendment, which would constitute a
dation Event or Unmatured Liquidation Event;
(c) The Purchaser shall have obtained confirmation from each of the three
g agencies rating the Commercial Paper Notes that the amendments herein and the
ments to the Liquidity Agreement of even date herewith will not result in a
rawal or reduction of the ratings of the Commercial Paper Notes;
(d) All of the fees and expenses referred to in Section 9 below, the Amendment
escribed in the Amendment Fee Letter, and any other fees and expenses owing
Section 14.05 of the Agreement or any other agreement between the parties
to shall have been paid in full;
(e) The conditions precedent to the effectiveness of Amendment No. 6 to
dity Agreement shall have been fully satisfied; and
(f) The conditions precedent to the effectiveness of the Assignment and
tance shall have been fully satisfied.
SECTION 3. REPRESENTATIONS. WARRANTIES AND COVENANTS,
Upon the effectiveness of this Amendment, each of the Seller, UPAC, the Servicer
he Parent, hereby remakes and reaffirms all covenants, representations and
nties made by it (or deemed made by it) in the Agreement, the Backup Servicing
ment, the Custody Agreement and the Parent Support Agreement (except, in each
to the extent that such covenants, representations or warranties expressly
as to another date).
SECTION 4. CONSENT AND REAFFIRMATION. The Parent, by its execution hereof hereby
onsents to the execution, delivery and performance of the Amendment by all of
arties hereto and (ii) reaffirms all of its obligations and liabilities under
certain Parent Support Agreement dated as of December 31, 1996 executed by the
t in favor of the Seller and its successors and assigns, which obligations and
lities shall remain in full force and effect.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
DANCE WITH THE INTERNAL LAWS (AS DISTINGUISHED FROM THE CONFLICT OF LAW
SIONS) OF THE STATE OF NEW YORK.
ON 6. SEVERABILITY. Each provision of this Amendment shall be severable from
other provision of this Amendment for the purpose of determining the legal
ceability of any provision hereof, and the unenforceability of any provision
f in one jurisdiction shall not have the effect of rendering such provision or
sions unenforceable in any other jurisdiction.
SECTION 7. REFERENCE TO AND EFFECT ON THE AGREEMENT. Upon the effectiveness of
Amendment, each reference in the Agreement to "this Agreement", "hereunder",
of', "herein" or words of like import shall mean and be, and references to the
ment in any other document, instrument or agreement executed and/or delivered in
ction with the Agreement shall mean and be, a reference to the Agreement as
ously amended and as amended hereby. Except as otherwise amended by this
ment, the Agreement as previously amended shall continue in full force and
t and is hereby ratified and confirmed.
SECTION 8. COUNTERPARTS. This Amendment maybe executed in one or more
erparts, each of which shall be deemed to be an original, but all of which
her shall constitute one and the same instrument.
SECTION 9. FEES AND EXPENSES. The Seller hereby confirms its agreement to pay on
d all reasonable costs and expenses in connection with the preparation,
tion and delivery of this Amendment and any of the other instruments, documents
greements to be executed and/or delivered in connection herewith, including,
ut limitation, the reasonable fees and out-of-pocket expenses of counsel to the
with respect thereto.
TNESS WHEREOF, the parties hereto have caused this Amendment to be executed as
e date first above written.
APR FUNDING CORPORATION,
as Seller
By /s/ Kurt W. Huffman
Title President
UNIVERSAL PREMIUM ACCEPTANCE
CORPORATION, individually and
as initial Servicer
By /s/ Kurt W. Huffman
Title President
TRANSFINANCIAL HOLDINGS, INC., as
Parent
By /s/ Kurt W. Huffman
Title Exec Vice President
EAGLEFUNDING CAPITAL CORPORATION,
As Purchaser
By: BANKBOSTON, N.A., as its attorney-in-
fact
By /s/ Mark E. Gallivan
Title Director
BANKBOSTON, N.A., as Agent
By /s/ Mark E. Gallivan
Title Director
wledged and agreed to
this 8th day of October, 1999 in
dance with Section 5.03 of that
in Liquidity Agreement dated as of
ber 31, 1996, as amended, among the
aser, the financial institutions from
to time parties thereto as liquidity providers,
oston, N.A., as liquidity agent, and
rs Trust Company, as collateral agent
OSTON, N.A., as a Liquidity Provider
/s/ Mark E. Gallivan
Director
LE BANK NATIONAL ASSOCIATION, as a Liquidity Provider
/s/ Julia S. Harris
Vice President
EXHIBIT 10.2
SUPPLEMENTAL BENEFIT AND COLLATERAL ASSIGNMENT
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into and shall be
effective as of the 18th day of January, 1997 by and between TRANSFINANCIAL
HOLDINGS, INC. (The "Employer") and TIMOTHY P. O'NEIL (the "Employee).
RECITALS
WHEREAS, Employee is now, and has agreed to continue as, an executive
officer of Employer, and
WHEREAS, Employer has agreed to provide a supplemental benefit to Employee
upon his death, disability or retirement, and as otherwise provided herein, and
WHEREAS, the parties hereto desire to set forth all of the terms of their
agreement with respect to such supplemental benefit.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereto do hereby agree as
follows:
AGREEMENTS
1. For as long as Employee is insurable under the life insurance policy
hereinafter referred to, and is an executive officer of Employer, and
until the earlier of Employee's retirement, permanent disability or
death, Employer agrees to timely and promptly pay (or provide to
Employee the funds with which to pay) the installment premiums on a
life insurance policy (the "Policy") selected by, insuring the life
of, and owned by, Employee, with an initial death benefit in the
amount of $532,968. Subject to the provisions of this Agreement,
Employee shall, at all times, have the right to designate the
beneficiary or beneficiaries to whom the death benefits of the Policy
shall be payable.
2. Employee shall be eligible to retire from employment with Employer
upon having completed 10 years employment with Employer and having
attained at least age 50, or at such other time as Employee shall
become permanently disabled. For purposes of this agreement, Employee
shall be deemed permanently disabled if, by a mental or physical
incapacity, it is impossible for Employee to perform, for 180
consecutive days or more, the duties and services being provided to
Employer by Employee immediately prior to such disability. Such
determination shall be made by a licensed medical doctor designated by
the Employer and reasonably acceptable to Employee, or on evidence
that the Employee is eligible for Social Security disability payments.
Permanent disability shall exclude disability arising from chronic or
excessive use of intoxicants, drugs or narcotics, or intentionally
self-inflicted injury or self-induced sickness.
3. a. If the Employee's employment with the Employer terminates for any
reason other than retirement, death, permanent disability or discharge
by Employer without cause, except as provided in sub paragraph b.
hereof Employee shall, without further consideration, assign to
Employer all of his rights in, and full ownership of, the Policy, and
all of Employee's rights under this Agreement shall terminate and be
of no further force or effect. For purposes hereof, the term "cause"
shall mean a material breach of the provisions of this Agreement;
breach of Employee's duty of loyalty or other fiduciary duty to
Employer; fraud against Employer or misappropriation of Employer's
assets; theft; or conviction of a crime involving drug abuse,
violence, dishonesty or theft.
b. Notwithstanding the provisions of sub paragraph a. hereof, if
Employee's employment shall terminate other than by retirement,
permanent disability, death or discharge with or without cause,
Employee shall be entitled, for each period of twelve months from the
date of hire, to 10% of the excess, if any, of the cash surrender
value of the Policy, at the date of such termination over the
aggregate cost of the Policy therefore incurred by Employer in the
payment of premiums therefore, which latter amount shall be
immediately due and payable to Employer.
4. Upon the death of the Employee, or the earlier surrender and
cancellation of the Policy by him subsequent to his retirement,
permanent disability or termination without cause, Employer shall be
promptly paid, from the death benefits or cash surrender value of the
Policy, the lessor of the cash surrender value of the policy or the
aggregate cost theretofore incurred by it in the payment of the
premiums therefor. In such event, all portions of the death benefits
or cash surrender value of the Policy, in excess of the amount due to
the Employer, shall be the property of and shall be distributed to
Employee or such beneficiary or beneficiaries as he shall have
designated. Employee may not, without Employer's prior written
consent, cancel or surrender the policy prior to his retirement,
permanent disability or discharge without cause.
5. Employee hereby agrees, upon issuance of the Policy, to deliver the
same to Employer, to grant to Employer a security interest in the
Policy, and the cash surrender value and death benefits payable
thereunder, to secure the obligation to repay to Employer the amount
provided in Paragraphs 3.b and 4 hereof. The Employee further agrees,
upon the issuance of such policy, to make, execute and deliver to
Employer and to the issuer of the Policy such documents as Employer or
such issuer may reasonably request to evidence and perfect such
collateral assignment. Prior to assignment of the Policy to Employer
pursuant to Paragraph 3, hereof, the Employer's only rights in the
Policy shall be those of a secured creditor.
6. Employee shall not take any action which would have the effect of
lessening or prejudicing Employer's rights pursuant to Paragraphs 3.b,
4 and 5 hereof, and, specifically, Employee shall not borrow against
the Policy unless he shall contemporaneously pay, from such
borrowings, to Employer the amount then due it hereunder for premiums
theretofore paid.
7. Prior to the assignment of the Policy pursuant to Paragraph 3 hereof,
the Employee shall have the sole right to surrender or cancel the
policy, but no such surrender or cancellation may be made, without the
prior written consent of the Employer, prior to retirement, death,
permanent disability or discharge without cause.
8. This Agreement contains the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof, and may not
be amended, altered or modified except by a subsequent written
instrument signed by the parties hereto.
9. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors, heirs, personal
representatives and beneficiaries. This Agreement, and the rights and
benefits hereof, shall not be assigned, transferred, pledged, conveyed
or encumbered in any way by Employee, and shall not be subject to
execution, attachment or similar process.
10. This Agreement shall be subject to and construed in accordance with
the laws of the state of Kansas.
11. The issuer of the Policy is not a party to this Agreement, and none of
the terms and provisions hereof shall be in any way binding upon it.
Such issuer's obligations shall be only as stated in the Policy. A
copy of any communication between either of the parties hereto and the
issuer of such Policy shall be promptly delivered to the other party
hereto. Such delivery, and any other notice or communication to either
of the parties hereto, may be personally made to such party, or
forwarded by United States mail, postage pre-paid, addressed to the
Employer at its principal executive office, and to Employee at the
last known address shown on the records of the employer.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.
TRANSFINANCIAL HOLDINGS, INC.
By: /s/Roy R. Laborde
Roy R. Laborde
By: /s/Timothy P. O'Neil
Timothy P. O'Neil
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of the 2nd day of July, 1998
("Effective Date"), by and between Timothy P. O'Neil ("Employee") and
TransFinancial Holdings, Inc., a Delaware corporation ("TFH").
RECITALS
1. Employee for a number of years has been an executive officer of TFH,
has expertise in its business, and desires to continue such employment on the
terms and conditions hereinafter set forth.
2. To induce Employee to continue his employment notwithstanding actions
by others to take control of TFH, and to give to him the independence necessary
to negotiate with such others for the benefit of TFH and all its stockholders,
TFH has agreed to pay and provide to Employee the compensation and other
benefits hereinafter set forth.
3. The parties desire to here set forth all of the terms and provisions
of their agreements relating to the employment of Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:
AGREEMENTS
1. Employment. TFH hereby employs Employee as its President and Chief
Executive, and Employee accepts such employment and position. Employee is an
employee at will, and his employment may be terminated at any time, and for any
reason, or no reason; provided, however, that until such termination and, in
some instances, thereafter, as provided in paragraph 8.c. hereof, Employee shall
be entitled to the compensation and other benefits herein provided unless and
until the parties hereto shall otherwise agree in writing.
2. Employee's Duties and Responsibilities. Employee shall be the
President and Chief Executive of TFH, and shall report directly to its board of
directors. Employee's duties on behalf of TFH shall be the usual and customary
duties and responsibilities of a chief executive officer, and he shall to the
best of his ability perform the same and such other lawful duties as shall be
from time to time assigned to him by the board of directors so long as the same
are not inconsistent with his position. During the term of this Employment
Agreement, Employee agrees to devote his entire skill, attention, loyalty and
diligence to serving and promoting the business of TFH, and agrees that he shall
not, directly or indirectly, during the term of this Agreement, engage or
participate in any other activities for profit or in conflict with the interest
of TFH; provided, however, that Employee shall be entitled to devote reasonable
time to his personal investments and affairs.
3. Base Compensation. During the term of this Employment Agreement,
Employee shall be paid base compensation at the rate of $160,680 per year, in
semi-monthly installments, or in installments otherwise applicable to
compensation paid to the executive officers of TFH, subject to withholding for
applicable federal, state, local, social security and unemployment taxes, and
any other withholding required by law. Base Compensation and Incentive
Compensation shall be reviewed annually and may be increased by agreement of the
parties.
4. Incentive Compensation. For each year or portion thereof during the
term hereof, from and after the Effective Date, Employee shall be entitled to
receive incentive compensation equal to such percentage (which may exceed 100%)
of $69,000 as shall be determined in accordance with Exhibit A hereto. Such
incentive compensation shall be computed within 30 days after receipt of the
report of TFH's independent auditors on the consolidated net income of TFH. The
amount so computed shall be paid to Employee within 30 days of such
determination.
5. Benefits. In addition to base compensation and incentive
compensation, Employee shall be entitled to the following:
a. The exclusive use of an automobile owned by TFH which is to be
replaced every four years or earlier at such time as such automobile has
been driven 80,000 miles. Employee shall have the option, but not the
obligation, to purchase any of such automobiles, at the time of replacement
thereof, at the depreciated net book value thereof on the books of TFH.
b. Medical insurance to the extent provided by TFH to its other
executive officers.
c. Long-term disability to the extent provided by TFH to its other
executive officers.
d. Life insurance to the extent provided by TFH to its other
executive officers.
e. Four weeks paid vacation per year.
f. Participation in all welfare and benefit plans maintained by TFH
and its affiliates for the officers or TFH, as amended from time to time,
and as restricted by their terms and rules prohibiting discrimination in
favor of highly compensated employees.
g. Such stock options as TFH shall from time to time grant
to Employee pursuant to Stock Option Plans from time to time in effect.
h. Nothing contained herein is intended to, or shall,
replace or in any way alter Employee's rights or the obligations of TFH
under existing Deferred Compensation and Supplemental Benefit and
Collateral Assignment Split-Dollar Agreement.
6. Confidentiality. Employee agrees that he shall not, at any time
during or following the term of his employment hereunder, directly or indirectly
use, disseminate, divulge or disclose, for any purpose whatsoever, any
Confidential Information (as hereinafter defined) which has been given to or
obtained by him as a result of his employment. For purposes of this paragraph,
Confidential Information shall include the identity and location of customers,
financing, accounts, systems, procedures, policies, manuals, trade secrets and
other information peculiar to the operations of TFH and its affiliates and not
known to the public in general. In the event of a breach or threatened breach
of any of the provisions of this paragraph, or the following paragraph, TFH, in
addition to and not in limitation of any other rights, remedies or damages
available at law or in equity, shall be entitled to a restraining order and
injunction in order to prevent or restrain any such breach.
7. Non-Competition. Employee agrees that, during the term of this
Agreement and for a period of two years from and after the termination of his
employment, for whatever reason (except in the event such termination is
pursuant to paragraph 9 hereof), he shall not, directly or indirectly:
a. Solicit of divert business from any customer of TFH or any other
business owned directly or indirectly by TFH; or
b. Solicit for employment or employ any person who in the prior six
months has been an employee of TFH or any other such business; or
c. Individually or through any corporation, partnership, joint
venture, trust, limited liability company or person, engage in any business
competitive with the business then being conducted by TFH, or any other
business owned directly or indirectly by TFH, at any place and in any state
in which TFH or such other business is then conducting its business.
8. Termination of Employment.
a. The employment of Employee under this Employment Agreement will
be terminated:
(i) Upon the death of Employee;
(ii) In the event Employee becomes permanently disabled. For
the purpose of this Employment Agreement, Employee will be considered
to be permanently disabled if, by a mental or physical incapacity, it
is impossible for Employee to render, for 180 consecutive days or more
to TFH the Employee's Duties and Responsibilities provided in
paragraph 2 hereof. Such determination shall be made by a licensed
medical doctor designated by TFH and reasonably acceptable to Employee
or on evidence that the Employee is eligible for Social Security
disability payments. Total and permanent Disability shall exclude
disability arising from:
(a) Chronic or excessive use of intoxicants, drugs or
narcotics; or
(b) Intentionally self-inflicted injury or intentionally
self-induced sickness.
(iii) By the mutual written agreement of Employee and TFH; or
(iv) Within a reasonable period of time following a
determination by TFH that "good cause" exists for such termination and
the delivery by TFH to Employee of a written notice specifying with
factual specificity the actions of Employee which justify TFH's
determination that cause exists to terminate Employee's employment
pursuant to Paragraph 8(b) herein. Delivery of such notice shall not
be determinative of whether cause does or does not in fact exist for
purposes of termination of Employee's employment.
b. For purposes hereof, the term "good cause" shall have the meaning
set forth in Section 9(b) hereof.
c. If employment is terminated by TFH without good cause, TFH shall
pay within fourteen (14) days following the date of such termination an
amount equal to then existing Base Compensation and all related benefits
for two (2) years.
9. Change of Control.
a. In the event that (1) a Change of Control of TFH shall occur and
(2) within two years after such Change of Control, Employee's employment
with TFH is terminated other than by Employee, for any reason other than
Employee's permanent disability, death, normal retirement or Good Cause (as
hereinafter defined), or is terminated by Employee for Stated Cause (as
hereinafter defined), TFH shall promptly pay to Employee as termination
compensation the amount provided in subparagraph e. hereof.
b. For purposes of this Agreement, "Good Cause" is defined as (1) a
material breach by Employee of his obligations under this Employment
Agreement which is demonstrably willful and deliberate on Employee's part,
committed in bad faith, or without reasonable belief that such breach is in
the best interest of TFH and is not remedied within a reasonable period of
time after receipt of written notice specifying the breach; (2) conviction
of Employee of a felony; (3) fraud committed by Employee against TFH or
misappropriation by Employee of the assets of either thereof; or (4) breach
of Employee's duty of loyalty or other fiduciary duty or obligation to TFH
which is not remedied within a reasonable period of time after receipt of
written notice specifying the same.
c. For purposes of this Agreement, "Stated Cause" is defined as (1)
any substantive changes in Employee's duties and responsibilities for TFH
which are not approved by him; (2) involuntary relocation or proposed
relocation of Employee from Greater Kansas City; (3) any material reduction
in the salary or benefits to which Employee is entitled pursuant hereto; or
(4) any change in the position to which Employee shall report as provided
in paragraph 2 hereof.
d. For purposes of this Agreement, a Change of Control of TFH shall
have occurred if, as the result of the acquisition of the assets or
securities of TFH by a single person or group, as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, or a merger,
consolidation, contested election of directors or any combination of the
foregoing transactions, (a "Transaction"), either of the following shall
occur:
(i) The persons who were directors of TFH immediately before
the Transaction shall cease to constitute a majority of the board of
directors of TFH or of any parent of or successor to TFH, or
(ii) Such person or group becomes the beneficial owner, directly
or indirectly of substantially all of the assets of TFH or securities
of TFH representing 35% or more of the combined voting power of TFH's
then outstanding securities.
e. The compensation to which Employee shall be entitled pursuant to
Paragraph 9.a. hereof shall be equal to 2.99 times the average annual
compensation from TFH and its affiliates includable in Employee's gross
income, for federal income tax purposes, for the three most recent years
ending before the Transaction, or such lesser period as Employee shall have
been an employee. In no event shall any amount be required to be paid
hereunder that would constitute an "excess parachute payment" within the
meaning of S 280G(b) of the Internal Revenue Code.
f. In the event that Employee's employment terminates after a change
in control so as to entitle him to the compensation provided in
subparagraph e. hereof, Employee shall be additionally entitled to:
(i) Immediate 100% vesting of all Incentive Compensation and
Stock Options provided or to be provided pursuant hereto or pursuant
to Stock Option Agreements with TFH, and
(ii) All benefits to which he would have been entitled had he
retired at normal retirement age from TFH, and
(iii) Three years of continued participation in medical and life
insurance plans, Supplemental Benefit and Collateral Assignment Split-
Dollar Agreement and benefit plans of TFH then in effect and in which
Employee was participating immediately prior to the Transaction,
provided, however, that if there are any limitations on such
participation provided in such plans, TFH shall provide Employee
during such three-year period equivalent benefits not less favorable
to Employee than those to which he would have been entitled as a
participant in such plans at the time of the Transaction, except that
Employee's entitlement to such participation shall not extend beyond
his normal retirement date.
(iv) The right to purchase the automobile then being provided to
Employee under paragraph 5(a) hereof at the price therein specified.
10. Burden and Benefit. This Agreement shall be binding upon, and
shall inure to the benefit of, TFH and Employee, and their respective heirs,
personal and legal representatives, successors and assigns, provided that no
party hereto may assign its rights or obligations hereunder.
11. Governing Law. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of Kansas.
12. Severability. The provisions of this Agreement (including
particularly, but not limited to, the provisions of Paragraphs 6 and 7 hereof)
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the validity and enforceability
of the other provisions hereof, and if any court shall determine any provision
of Paragraphs 6 or 7 hereof to be unreasonably broad, the parties hereto agree
that such provision(s) shall be deemed amended to the greatest breadth which
such court shall find to be reasonable and enforceable.
13. Notices. Any notice permitted or required to be given hereunder shall
be sufficient and deemed given when in writing, and delivered or sent by
certified or registered mail, return receipt requested, first-class postage
prepaid, to his last known residence in the case of Employee, and to its
principal office in the case of TFH.
14. Attorney Fees. If any party to this Agreement files suit or takes
legal action to enforce or avoid its provisions, the losing party shall pay the
prevailing parties' reasonable attorney fees.
15. Entire Agreement. This Agreement and the Exhibit hereto contain the
entire agreement and understanding between TFH and Employee with respect to the
employment herein referred to, and no representations, promises, agreements or
understandings, written or oral, not herein contained, shall be of any force or
effect. No change or modification hereof shall be valid or binding unless the
same is in writing and signed by the party intended to be bound. No waiver of
any provision of this Agreement shall be valid unless the same is in writing and
signed by the party against whom such waiver is sought to be enforced; moreover,
no valid waiver of any provision of this Agreement at any time shall be deemed a
waiver of any other provision of this Agreement at such time or be deemed a
valid waiver of such provision at any other time.
IN WITNESS WHEREOF, TFH and Employee have duly executed this Agreement as
of the day and year first above written.
Witness:
By: /s/Larry Pendleton /s/Timothy P. O'Neil
Timothy P. O'Neil
TRANSFINANCIAL HOLDINGS, INC.
Attest:
By: /s/Larry Pendleton By: /s/William D. Cox
EXHIBIT A
(a) Except as set forth in subparagraph (b) hereof, no Incentive
Compensation shall be earned unless the net income of TFH
(consolidated) or Universal Premium Acceptance Corporation (UPAC), for
each full or partial year during the term of the Employment Agreement,
shall equal at least 80% of budget (the "Threshold"). If the
Threshold with respect to UPAC is met, 16.67% of Incentive
Compensation shall be deemed earned, and such amount shall be
increased by 1.25% for each whole percentage point by which the net
income of UPAC exceeds 80% of budget. If the Threshold with respect
to TFH is met, 16.67% of Incentive Compensation shall be deemed
earned, and such amount shall be increased by 1.25% for each whole
percentage point by which the consolidated net income of TFH exceeds
80% of budget.
(b) An amount not to exceed 16.67% of Incentive Compensation may be
awarded, if, in the sole judgment of the Board of Directors of TFH,
such adjustment is necessary to properly reflect Employee's
contribution.
Exhibit 10.4
SUPPLEMENTAL BENEFIT AGREEMENT
THIS AGREEMENT, made of the 30th day of September, 1995, by and between
ANUHCO, INC., a Delaware corporation (the "Company") and DAVID D. TAGGART
("Employee").
W I T N E S S E T H:
WHEREAS, Employee has agreed to become an executive officer of Crouse
Cartage Company ("Crouse"); and,
WHEREAS, Crouse is a subsidiary of Company; and,
WHEREAS, Employee's services are of value to the Company.
NOW, THEREFORE, in consideration of the premises the parties hereby
covenant and agree as follows:
1. Benefits. The purpose of this Agreement is to provide Employee
and his beneficiary(ies) with the benefits of salary continuation, supplemental
retirement, and a post-retirement death payment.
2. Employee Relinquishment of Group Life Benefits. Employee hereby
relinquishes all life insurance benefits he presently possesses or to which he
may become entitled in the future under any group life insurance plan sponsored
by the Company, but does not relinquish any such rights under group life
insurance plans sponsored by Crouse.
3. Retirement. Normal Retirement shall occur when Employee's
employment with Crouse terminates after attaining age sixty-five (65). Early
Retirement shall occur when Employee has terminated his employment with Crouse,
has ten (10) years of employment with Crouse, and has attained at least age
fifty-five (55).
4. Salary Continuation Benefit. If the Employee's position with
Crouse is terminated before his sixty-fifth (65th) birthday by reason of death,
the Company shall pay, or cause to be paid, to his beneficiary the sum of
$35,000 per year for twenty (20) years. Payment shall be made in twelve (12)
equal monthly installments beginning with the first day of the month after his
death and on the first day of each month thereafter.
5. Supplemental Retirement Benefit. If the Employee continues to
devote his full time as an officer of Crouse until Normal Retirement, the
Company shall pay to him following his retirement the sum of $21,000 per year.
Such amount shall be paid to the Employee in equal monthly installments over a
period of fifteen (15) years beginning with the first day of the month after
such retirement. If the Employee dies after his sixty-fifth (65) birthday while
employed by the Company or if Employee dies before the payment of all
installments referred to in the preceding sentence, all such installments
remaining unpaid shall be paid to such beneficiary is designated, to his estate.
Employee's entitlement to the supplemental retirement benefit shall be fully
vested in him (that is, not subject to the forfeiture) upon the first to occur
of the following dates provided Employee is employed by the Company on such
date:
a. his Normal Retirement date provided he began his
employment prior to age sixty (whether or not he actually retires);
b. date on which he has both attained at least his fifty-
fifth birthday and has ten or more years of service with the Company;
c. date on which he first qualifies for disability under
the provisions of this paragraph 5;
d. date of completion of fifteen (15) or more years of
service with the Company.
e. the date upon which a Transaction shall occur, as
defined in an Agreement of even date herewith, between Employee and Company.
The extent to which Employee is vested in the supplemental retirement
benefit other than as provided above shall be determined in accordance with the
following vesting schedule:
VESTING SCHEDULE
No. of Percentage
Years of Service Of Vesting
One 10%
Two 20%
Three 30%
Four 40%
Five 50%
Six 60%
Seven 70%
Eight 80%
Nine 90%
Ten 100%
"Disability" as used herein means the Employee's inability to discharge the
duties and responsibilities assigned to him by an Employment Agreement of even
date herewith, by reason of a medically determinable physical or mental
impairment which can be expected to continue until Employee reaches age sixty-
five (65). No payments shall be made to Employee for disability until Employee
shall have qualified for early retirement, i.e. attainment of age fifty-five
(55) and ten years of service with Crouse. The determination of the Employee's
disability shall be made by the Company. The Employee agrees to submit to such
medical examinations and to furnish such proof as may be required by the Company
in connection with the determination of the existence and continuation of
disability.
6. Post Retirement Benefit. Upon the death of Employee before
retirement, the Company shall pay or cause to be paid to Employee's beneficiary
or beneficiaries designated by him (or if no such beneficiary is designated, to
his estate) the sum of $175,000.
7. Early Retirement and Partial Benefits. In the event the employment
of Employee terminates after Employee has a vested supplemental retirement
benefit and the Employee elects to commence receiving payment after either
having attained age fifty-five (55) with ten years of service or having attained
age sixty-five (65), the amount of payment of such vested supplemental
retirement benefit shall be $21,000 per year for a period of fifteen (15) years
beginning with the first day of the month following receipt of written notice
from Employee to the Company of his election, which amount shall be adjusted as
follows:
Amount of Stated Benefits
Multiplied By
the applicable percentage of vested benefits
determined in accordance with paragraph 5.
Multiplied By
a fraction, the number of which is Employee's years
of service with Crouse (including fractions of
years) and the denominator of which is number of
years of service (including fractions of years) the
Employee would have had if he had remained in the
Employment of the Company until age sixty-five (65).
Reduced By
Two and one-half percent (2 /%) for each year
(including fractions of years) by which the date
that such benefit payments are to commence precedes
age sixty-five (65).
8. Alternative Payment Methods. Upon the written application by
Employee or his beneficiary, the Company may permit the payment of benefits as
provided herein to Employee or his beneficiary in such other manner as it may,
in its sole discretion, determine to be appropriate.
9. Termination of Employment.
(h) If Employee's position as an officer of Crouse
terminates for any reason other than the retirement, death or disability of the
Employee, benefits are payable to Employee or to his designee only to the extent
that the Employee had vested benefits as set forth in paragraph 5 as provided
herein, or as provided in paragraph 6(b) of the Agreement of even date herewith
between Employee and Company.
(i) Nothing in this Agreement shall be construed to
obligate the Company or Crouse to continue to employ Employee; provided,
however, that in the event such employment relationship is terminated by
Employee, Company, Crouse or any successor corporation at any time after a
Transaction (as defined in the Agreement referred to in subparagraph (a) of this
paragraph 9), and such termination entitles Employee to compensation under such
Agreement, the Company or its successor corporation, as the case may be, shall
pay to Employee the benefits provided in paragraph 4 herein commencing on the
first day of the month immediately following the date of such circumstances
shall relieve the Company of all other obligations for payment under this
Agreement.
1. Payments as Supplemental Compensation. The future benefits
provided hereunder shall not affect Employee's annual salary while an officer of
Crouse, nor shall such benefits affect Employee's right to participate in any
current or future retirement plan or any supplemental compensation arrangement
which constitutes a part of Crouse's employee benefit plans including, but not
limited to, pension plans and group life, health and accident plans except as
provided in this Agreement.
2. Designation of Beneficiaries. Any amounts payable under this
Agreement after the death of Employee shall be paid to the beneficiary or
beneficiaries designated by Employee. Such designation of beneficiary or
beneficiaries shall be made in writing on a form prescribed by the Company and,
when filed with the Secretary or the Company, shall become effective and remain
in effect until changed with the Secretary of the Company. If Employee fails to
so designate a beneficiary, or in the event all of the designated beneficiaries
are individuals who either predecease Employee or survive Employee but die prior
to receiving all installments payable under this Agreement, the remaining
installments shall be paid when due to Employee's estate.
3. Rights Not Assignable. This Agreement and the rights, interests
and benefits hereunder shall not be assigned, transferred, pledged, sold,
conveyed or encumbered in any way by Employee and shall not be subject to
execution, attachment or similar process. Any attempted sale, conveyance,
transfer, assignment, pledge or encumbrance of the rights, interests or benefits
provided pursuant to the terms of this Agreement contrary to the foregoing
provision or the levy of any attachment or similar process thereupon shall be
null and void and without effect.
4. Life Insurance Policy. The Company may, at its option, purchase a
life insurance policy on the life of Employee, and such policy, if purchased,
shall name the company as beneficiary. Such policy, if purchased, shall remain
a general, unsecured, unrestricted asset of the Company and neither Employee nor
any Employee beneficiary shall have any rights with respect to, or claim against
such policy, and such policy shall not be deemed to be held under any trust for
the benefit of Employee or Employee's beneficiary, nor shall such policy be held
in any way as collateral security for fulfilling the obligations of the Company
under the terms of this Agreement. It is expressly understood that the benefits
provided to Employee under the terms of this Agreement will not be funded by
such policy, and that such benefits are promised on the general credit of the
Company and are unsecured. At the request of the Company, Employee agrees to
cooperate with the Company by providing information for and by submitting to any
physical examination necessary to obtain one or more life insurance policies.
5. Successors, Mergers or Consolidation. This Agreement shall inure
to the benefit of and be binding upon the Company, its successors and assigns,
including, without limitation, any person, organization or corporation which may
acquire substantially all of the assets and business of the Company or any
corporation into which company may be merged or consolidated, and Employee,
Employee's heirs, executors, administrators and legal representatives.
6. Amendment. This Agreement cannot be modified or amended except in
writing signed by both parties.
7. Construction. This Agreement shall be subject to and construed
under the laws of the State of Kansas.
8. Entire Agreement. This Agreement contains the entire agreement
between the Company and Employee pertaining to the subject matter hereof, though
Employee is contemporaneously executing an Employment Agreement and an Agreement
with respect to other facts of his employment by Crouse and relationship with
the Company. No agreements, representations, or understandings not specifically
contained herein or therein shall be binding upon either party unless reduced to
writing and signed by the parties to be bound thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
ANUHCO, INC.
By: /s/Timothy P. O'Neil
President
Attest:
/s/Barbara Wackly
Secretary
/s/David D. Taggart
David D. Taggart
Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of the 27th day of April, 1998
("Effective Date"), by, between and among Crouse Cartage Company, an Iowa
corporation ("Crouse"), David D. Taggart ("Employee") and TransFinancial
Holdings, Inc., a Delaware corporation ("TFH").
RECITALS
1. Crouse is engaged in the business of transporting freight by motor
vehicle, and desires to continue the employment of Employee as an executive
officer on the terms and conditions hereinafter set forth.
2. Employee for a number of years has been an executive officer of Crouse
and TFH and other freight transportation companies, has expertise in that
business, and desires to continue employment with Crouse and TFH on the terms
and conditions hereinafter set forth.
3. TFH is the sole shareholder of Crouse and, to induce employee to enter
into the Agreement with Crouse and TFH, has agreed to pay and provide to
Employee the compensation and other benefits hereinafter set forth.
4. The parties desire to here set forth all of the terms and provisions
of their agreements relating to the employment of Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:
AGREEMENTS
1. Employment. Crouse and TFH hereby employs Employee as its Chairman
and Chief Executive of Crouse and Executive Vice President of TFH, and Employee
accepts such employment and position. Employee is an employee at will, and his
employment by Crouse and TFH may be terminated at any time, and for any reason,
or no reason; provided, however, that until such termination and, in some
instances, thereafter, as provided in paragraph 8.c. hereof, Employee shall be
entitled to the compensation and other benefits herein provided unless and until
the parties hereto shall otherwise agree in writing.
2. Employee's Duties and Responsibilities. Employee shall be the
President and Chief Executive of Crouse and Executive Vice President of TFH, and
shall report directly to its board of directors and the Chief Executive Officer
of TFH. Employee's duties on behalf of Crouse shall be the usual and customary
duties and responsibilities of a chief executive officer, and he shall to the
best of his ability perform the same and such other lawful duties as shall be
from time to time assigned to him by the board of directors and the Chief
Executive Officer of TFH so long as the same are not inconsistent with his
position. During the term of this Employment Agreement, Employee agrees to
devote his entire skill, attention, loyalty and diligence to serving and
promoting the business of Crouse and TFH, and agrees that he shall not, directly
or indirectly, during the term of this Agreement, engage or participate in any
other activities for profit or in conflict with the interest of Crouse;
provided, however, that Employee shall be entitled to devote reasonable time to
his personal investments and affairs.
3. Base Compensation. During the term of this Employment Agreement,
Employee shall be paid base compensation at the rate of $143,000 per year, in
semi-monthly installments, or in installments otherwise applicable to
compensation paid to the executive officers of Crouse, subject to withholding
for applicable federal, state, local, social security and unemployment taxes,
and any other withholding required by law or contract. Such base compensation
shall be paid by TFH, but Crouse agrees to reimburse TFH for such amount, and
the amount of Incentive Compensation hereinafter provided. Base Compensation
and Incentive Compensation shall be reviewed annually and may be increased by
agreement of the parties.
4. Incentive Compensation. For each year or portion thereof during the
term hereof, from and after the Effective Date, Employee shall be entitled to
receive incentive compensation equal to such percentage (which may exceed 100%)
of $62,000 as shall be determined in accordance with Exhibit A hereto. Such
incentive compensation shall be computed within 30 days after receipt of the
report of TFH's independent auditors on the consolidated net income of TFH. The
amount so computed shall be paid to Employee within 30 days of such
determination. Such Incentive Compensation shall not be less, for 1998 and
1999, than is provided in existing compensation arrangements with Employee.
5. Benefits. In addition to base compensation and incentive
compensation, Employee shall be entitled to the following:
a. The exclusive use of an automobile owned by Crouse which is to be
replaced every four years or earlier at such time as such automobile has
been driven 80,000 miles. Employee shall have the option, but not the
obligation, to purchase any of such automobiles, at the time of replacement
thereof, at the depreciated net book value thereof on the books of Crouse.
b. Medical insurance to the extent provided by TFH or Crouse to its
other executive officers.
c. Long-term disability to the extent provided by TFH to its
officers, currently two-thirds of base compensation from the 181st day of
disability through age 65, fully integrated with social security and with a
maximum of $10,000 per month.
d. Life insurance to the extent provided by TFH or Crouse to its
other executive officers.
e. Supplemental benefits in accordance with the Supplemental Benefit
Agreement dated September 30, 1995.
f. Three weeks paid vacation per year through 2000, and four weeks
per year thereafter.
g. Participation in the defined contribution pension plan maintained
by Crouse, as amended from time to time, all of which is vested by virtue
of Employee's prior service with another affiliate of TFH.
h. Participation in whatever 401(k) Plan is from time to time
sponsored by Crouse, if any.
i. In the event of a change of control of TFH or Crouse as defined
in the Agreement dated September 30, 1995 Employee shall be entitled to the
rights and benefits provided therein, and shall be additionally entitled to
(a) purchase the automobile then being provided to him, at the depreciated
net book value thereof on the books of Crouse, and (b) sell to Crouse, and
require Crouse to purchase, Employee's residence in Carroll, Iowa, for an
amount, payable in cash, equal to the greater of Employee's cost therein or
the fair market value thereof.
j. Such stock options as TFH shall from time to time grant
to Employee pursuant to Stock Option Plans from time to time in effect.
k. The right to sell to Crouse, and require Crouse to
purchase, Employee's residence in Carroll, Iowa, for an amount, payable in
cash, equal to the greater of Employee's cost therein, or the fair market
value thereof, if Crouse or TFH shall direct Employee to relocate from
Carroll, Iowa.
l. In general, Employee shall be entitled to participate in all
welfare and benefit plans from time to time maintained by TFH or Crouse
generally for its executive officers, subject to amendment or termination
thereof and subject to all legal constraints, including discrimination in
favor of highly compensated employees.
6. Confidentiality. Employee agrees that he shall not, at any time
during or following the term of his employment hereunder, directly or indirectly
use, disseminate, divulge or disclose, for any purpose whatsoever, any
Confidential Information (as hereinafter defined) which has been given to or
obtained by him as a result of his employment. For purposes of this paragraph,
Confidential Information shall include the identity and location of customers,
financing, accounts, systems, procedures, policies, manuals, trade secrets and
other information peculiar to the operations of Crouse and not known to the
public in general. In the event of a breach or threatened breach of any of the
provisions of this paragraph, or the following paragraph, either Crouse, or TFH,
in addition to and not in limitation of any other rights, remedies or damages
available at law or in equity, shall be entitled to a restraining order and
injunction in order to prevent or restrain any such breach.
7. Non-Competition. Employee agrees that, during the term of this
Agreement and for a period of two years from and after the termination of his
employment with Crouse, for whatever reason, he shall not, directly or
indirectly:
a. Solicit of divert business from any customer or Crouse or any
other business owned directly or indirectly by Crouse or TFH and with
respect to which Employee has responsibility; or
b. Solicit for employment or employ any person who in the prior six
months has been an employee of Crouse or TFH or any other such business; or
c. Individually or through any corporation, partnership, joint
venture, trust, limited liability company or person, engage in any business
competitive with the business then being conducted by Crouse, or any other
business owned directly or indirectly by Crouse or TFH and with respect to
which Employee has responsibility, at any place and in any state in which
Crouse or such other business is then conducting its business, except by
mutual written consent of TFH and the Employee.
8. Termination of Employment.
a. The employment of Employee under this Employment Agreement will
be terminated:
(i) Upon the death of Employee;
(ii) In the event Employee becomes permanently disabled. For
the purpose of this Employment Agreement, Employee will be considered
to be permanently disabled if, by a mental or physical incapacity, it
is impossible for Employee to render, for 130 consecutive days or more
to Crouse the Employee's Duties and Responsibilities provided in
paragraph 2 hereof. Such determination shall be made by a licensed
medical doctor designated by TFH or Crouse and reasonably acceptable
to Employee or on evidence that the Employee is eligible for Social
Security disability payments. Total and permanent Disability shall
exclude disability arising from:
(a) Chronic or excessive use of intoxicants, drugs or
narcotics; or
(b) Intentionally self-inflicted injury or intentionally
self-induced sickness.
(iii) By the mutual written agreement of Employee and TFH or
Crouse; or
(iv) Within a reasonable period of time following a
determination by TFH that "cause" exists for such termination and the
delivery by TFH to Employee of a written notice specifying with
factual specificity the actions of Employee which justify TFH's
determination that cause exists to terminate Employee's employment
pursuant to Paragraph 8(b) herein. Delivery of such notice shall not
be determinative of whether cause does or does not in fact exist for
purposes of termination of Employee's employment.
b. For purposes hereof, the term "cause" is defined as (1) a
material breach by Employee of his obligations under this Employment
Agreement (other than as a result of death, disability or normal
retirement) which is demonstrably willful and deliberate on Employee's
part, committed in bad faith, or without reasonable belief that such breach
is in the best interest of TFH or Crouse and is not remedied within a
reasonable period of time after receipt of written notice specifying the
breach; (2) conviction of Employee of a felony; (3) fraud committed by
Employee against TFH or Crouse or misappropriation by Employee of the
assets of either thereof, or (4) breach of Employee's duty of loyalty to
other fiduciary duty or obligation to TFH or Crouse which is not remedied
within a reasonable period of time after receipt of written notice
specifying the same.
c. If employment is terminated by TFH or Crouse without cause, TFH
shall pay within fourteen (14) days following the date of such termination
an amount equal to then existing Base Compensation for two (2) years.
9. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of, Crouse, TFH and Employee, and their respective heirs,
personal and legal representatives, successors and assigns, provided that no
party hereto may assign its rights or obligations hereunder.
10. Governing Law. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of Kansas.
11. Severability. The provisions of this Agreement (including
particularly, but not limited to, the provisions of Paragraphs 6 and 7 hereof)
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the validity and enforceability
of the other provisions hereof, and if any court shall determine any provision
of Paragraphs 6 or 7 hereof to be unreasonably broad, the parties hereto agree
that such provision(s) shall be deemed amended to the greatest breadth which
such court shall find to be reasonable and enforceable.
12. Notices. Any notice permitted or required to be given hereunder shall
be sufficient and deemed given when in writing, and delivered or sent by
certified or registered mail, return receipt requested, first-class postage
prepaid, to his last known residence in the case of Employee, and to its
principal office in the case of Crouse and TFH.
13. Attorney Fees. If any party to this Agreement files suit or takes
legal action to enforce or avoid its provisions, the losing party shall pay the
prevailing parties' reasonable attorney fees.
14. Entire Agreement. This Agreement and the Exhibit hereto contain the
entire agreement and understanding among Crouse, TFH, and Employee with respect
to the employment herein referred to, and no representations, promises,
agreements or understandings, written or oral, not herein contained, shall be of
any force or effect. No change or modification hereof shall be valid or binding
unless the same is in writing and signed by the party intended to be bound. No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced; moreover, no valid waiver of any provision of this Agreement at any
time shall be deemed a waiver of any other provision of this Agreement at such
time or be deemed a valid waiver of such provision at any other time. This
Agreement replaces and supercedes an earlier Employment Agreement among the
parties dated September 30, 1995, but does not in any way, except as set forth
in subparagraph 5(i) and 5(k) hereof, alter, amend or modify the agreements
referred to therein as Exhibit A and B thereto.
IN WITNESS WHEREOF, Crouse, TFH and Employee have duly executed this
Agreement as of the day and year first above written.
CROUSE CARTAGE COMPANY
Attest:
By: /s/Larry Pendleton By: /s/Mark A. Foltz
Witness:
By: /s/Larry Pendleton By: /s/David D. Taggart
David D. Taggart
TRANSFINANCIAL HOLDINGS, INC.
Attest:
By: /s/Larry Pendleton By: /s/Timothy P. O'Neil
President
EXHIBIT A
(a) Except as set forth in subparagraph (b) hereof, no Incentive
Compensation shall be earned unless the net income of TFH
(consolidated) or Crouse, for each full or partial year during the
term of the Employment Agreement, shall equal at least 80% of budget
(the "Threshold"). If the Threshold with respect to Crouse is met,
26.67% of Incentive Compensation shall be deemed earned, and such
amount shall be increased by 2% for each whole percentage point by
which the net income of Crouse exceeds 80% of budget. If the
Threshold with respect to TFH is met, 6.67% of Incentive Compensation
shall be deemed earned, and such amount shall be increased by 0.5% for
each whole percentage point by which the consolidated net income of
TFH exceeds 80% of budget.
(b) An amount not to exceed 16.67% of Incentive Compensation may be
awarded if, in the sole judgment of the Chief Executive Officer of
TFH, such adjustment is necessary to properly reflect Employee's
contribution.
Exhibit 10.6
AGREEMENT
This Agreement is effective as of the 30th day of September, 1995, by and
between Anuhco, Inc., a Delaware corporation ("Anuhco") and David D. Taggart
("Employee").
RECITALS:
1. Anuhco has recruited Employee to serve as an executive officer of
Crouse Cartage Company, an Iowa corporation ("Crouse"), a wholly owned
subsidiary of Anuhco.
2. Based upon prior experiences, Employee has insisted upon
financial assurance in the event that, during the term of his employment, a
Change of Control (as hereinafter defined) shall occur with respect to Anuhco or
Crouse.
3. Anuhco has concluded that it is in its best interest to assure
Employee's continuing dedication notwithstanding the occurrence, which might
otherwise be unsettling, of a change in control, and so that Employee may be
able, without being influenced by the uncertainties of his own situation, to
participate and aid in the analysis of any proposal which might result in a
change of control
NOW, THEREFORE, in consideration of the premises and the terms and
provisions hereinafter set forth, the parties hereby agree as follows:
AGREEMENTS:
1. In the event that (1) a Change of Control of Anuhco or Crouse
shall occur at a time when Anuhco, directly or through its affiliates, owns all
of the issued and outstanding common stock of Crouse and (2) within two years
after such Change of Control, Employee's employment with Crouse or Anuhco is
terminated other than by Employee, for any reason other than Employee's
permanent disability, death, normal retirement or Good Cause (as hereinafter
defined), or is terminated by Employee for Stated Cause (as hereinafter
defined), Anuhco shall promptly pay to Employee as termination compensation the
amount provided in paragraph 5 hereof.
2. For purposes of this Agreement, "Good Cause" is defined as (1) a
material breach by Employee of his obligations under an Employment Agreement of
even date herewith (other than as a result of death, disability or normal
retirement) which is demonstrably willful and deliberate on Employee's part,
committed in bad faith, or without reasonable belief that such breach is in the
best interest of Anuhco or Crouse and is not remedied within a reasonable period
of time after receipt of written notice specifying the breach; (2) conviction of
Employee of a felony; (3) fraud committed by Employee against Anuhco or Crouse,
or misappropriation by Employee of the assets of either thereof; or (4) breach
of Employee's duty of loyalty or other fiduciary duty or obligation to Anuhco or
Crouse which is not remedied within a reasonable period of time after receipt of
written notice specifying the same.
3. For purposes of this Agreement, "Stated Cause" is defined as
(1) any changes in Employee's duties and responsibilities for Crouse and Anuhco
which are not approved by him; (2) involuntary relocation or proposed relocation
of Employee from Carroll, Iowa; or (3) any reduction in the salary or benefits
to which Employee is entitled pursuant to an Employment Agreement of even date
herewith.
4. For purposes of this Agreement, a Change of Control of Crouse
shall have occurred if Anuhco and its affiliates cease to own at least 51% of
the issued and outstanding voting stock thereof, and a Change of Control of
Anuhco shall have occurred if, as the result of the acquisition of the assets or
securities of Anuhco by a single person or group, as defined in Section 13 (d)
(3) of the Securities Exchange Act of 1934, or a merger, consolidation,
contested election of directors or any combination of the foregoing
transactions, (a "Transaction"), either of the following shall occur:
a. The persons who were directors of Anuhco
immediately before the Transaction shall cease to
constitute a majority of the board of directors of
Anuhco or of any parent of or successor to Anuhco,
or
b. Such person or group becomes the
beneficial owner, directly or indirectly of
substantially all of the assets of Anuhco or
securities of Anuhco representing 30% or more of
the combined voting power of Anuhco's then
outstanding securities.
5. The compensation to which Employee shall be entitled pursuant to
Paragraph 1 hereof shall be equal to 2.99 times the average annual compensation
from Anuhco and Crouse includable in Employee's gross income, for federal income
tax purposes, for the three most recent years ending before the Transaction, or
such lesser period as Employee shall have been an employee of Crouse. In no
event shall any amount be required to be paid hereunder that would constitute an
"excess parachute payment" within the meaning of S 280G(b) of the Internal
Revenue Code.
6. In the event that Employee's employment terminates after a change
in control so as to entitle him to the compensation provided in paragraph 5
hereof, Employee shall be additionally entitled to:
a. Immediate 100% vesting of all Incentive
Compensation provided or to be provided pursuant
to the Employment Agreement of even date herewith,
and
b. All benefits to which he would have been
entitled had he retired at normal retirement age
from Crouse pursuant to Supplemental Benefit
Agreement of even date herewith.
c. Three years of continued participation
in medical and life insurance plans of Anuhco and
Crouse then in effect and in which Employee was
participating immediately prior to the
Transaction, provided, however, that if there are
any limitations on such participation provided in
such plans, Anuhco shall provide Employee during
such three year period equivalent benefits not
less favorable to Employee than those to which he
would have been entitled as a participant in such
plans at the same time of the Transaction, except
that Employee's entitlement to such participation
shall not extend beyond his normal retirement
date.
5. Anuhco shall pay all reasonable legal fees and expenses incurred by
Employee as a result of any contest by Anuhco of the validity or enforceability
of this Agreement.
6. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective legal representatives, successors and
assigns, and shall be construed in accordance with and governed by the laws of
the State of Kansas.
7. Notwithstanding that Employee's position with Crouse is at-will,
Employee's rights hereunder may not be modified or amended, without his written
consent, after a Transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
caused the same to be executed, by their duly authorized officers, as of the
date and year first above written.
ANUHCO, INC.
By: /s/Timothy P. O'Neil
/s/David D. Taggart
David D. Taggart
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AS AMENDED AND RESTATED OCTOBER 16, 1998
This Employment Agreement is effective as of the 16th day of October, 1998
("Effective Date"), by, between and among Universal Premium Acceptance
Corporation, a Missouri corporation ("UPAC"), Presis, L.L.C., a Kansas limited
liability company ("Presis"), Kurt W. Huffman ("Employee") and TransFinancial
Holdings, Inc., a Delaware corporation ("TFH").
RECITALS
1. UPAC is primarily engaged in the business of insurance premium finance,
and desires to continue the employment of Employee as an executive officer on
the terms and conditions hereinafter set forth.
2. Presis is engaged in the business of particle reduction, and desires
to continue the employment of Employee as an executive officer on the terms and
conditions hereinafter set forth.
3. Employee is and has been an executive officer of UPAC, Presis and TFH,
has developed expertise in their business and desires to continue said
employment on the terms and conditions hereinafter set forth.
4. TFH is the owner of UPAC and Presis and, to induce employee to enter
into the Agreement, has agreed to pay and provide to Employee the compensation
and other benefits hereinafter set forth.
5. The parties desire to here set forth all of the terms and provisions
of their agreements relating to the employment of Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:
AGREEMENTS
1. Employment. UPAC, Presis and TFH hereby employ Employee as
President and Chief Executive of UPAC and Presis, and Executive Vice-President
of TFH, and Employee accepts such employment and positions. Employee is an
employee at will, and his employment may be terminated at any time, and for any
reason, or no reason; provided, however, that until such termination and, in
some instances, thereafter, as provided in paragraph 8.c. hereof, Employee shall
be entitled to the compensation and other benefits herein provided unless and
until the parties hereto shall otherwise agree in writing.
2. Employee's Duties and Responsibilities. Employee shall be the
President and Chief Executive of UPAC and Presis and Executive Vice-President of
TFH, and shall report directly to the board of managers of Presis and the Chief
Executive Officer of TFH. Employee's duties on behalf of UPAC and Presis shall
be the usual and customary duties and responsibilities of a chief executive
officer, and he shall to the best of his ability perform the same and such other
lawful duties as shall be from time to time assigned to him by the board of
managers and the Chief Executive Officer of TFH so long as the same are not
inconsistent with his position. During the term of this Employment Agreement,
Employee agrees to devote his entire skill, attention, loyalty and diligence to
serving and promoting the business of UPAC and Presis, and agrees that he shall
not, directly or indirectly, during the term of this Agreement, engage or
participate in any other activities for profit or in conflict with the business
of UPAC or Presis; provided, however, that Employee shall be entitled to devote
reasonable time to his personal investments and affairs.
3. Base Compensation. During the term of this Employment Agreement,
Employee shall be paid base compensation at the rate of $125,000 per year, in
semi-monthly installments, or in installments otherwise applicable to
compensation paid to the executive officers of UPAC and Presis, subject to
withholding for applicable federal, state, local, social security and
unemployment taxes, and any other withholding required by law. Such base
compensation shall be paid by TFH, but UPAC and Presis agrees to reimburse TFH
for such amount, and the amount of Incentive Compensation hereinafter provided.
Base Compensation and Incentive Compensation shall be reviewed annually and may
be increased by agreement of the parties.
4. Incentive Compensation. For each year or portion thereof during the
term hereof, from and after the Effective Date, Employee shall be entitled to
receive incentive compensation equal to such percentage (which may exceed 100%)
of $54,000 as shall be determined in accordance with Exhibit A hereto. Such
incentive compensation shall be computed within 30 days after receipt of the
report of TFH's independent auditors on the consolidated net income of TFH. The
amount so computed shall be paid to Employee within 30 days of such
determination.
5. Benefits. In addition to base compensation and incentive
compensation, Employee shall be entitled to the following:
a. Automobile allowance of $600.00 per month.
b. Medical insurance to the extent provided by TFH, UPAC or Presis
to its other executive officers.
c. Long-term disability to the extent provided by TFH, UPAC or
Presis to its other executive officers.
d. Life insurance to the extent provided by TFH, UPAC or Presis to
its other executive officers.
e. Three weeks paid vacation per year.
f Participation in pension and profit sharing plans maintained by
TFH or UPAC, as amended from time to time.
g. Participation in whatever 401(k) Plan is from time to time
sponsored by TFH, UPAC or Presis, if any.
h. Such stock options as TFH shall from time to time grant to
Employee pursuant to Stock Option Plans from time to time in effect.
i. In general, Employee shall be entitled to participate in all
welfare and benefit plans from time to time maintained by TFH, UPAC or
Presis generally for its executive officers, subject to amendment or
termination thereof and subject to all legal constraints, including
discrimination in favor of highly compensated employees.
6. Confidentiality. Employee agrees that he shall not, at any time
during or following the term of his employment hereunder, directly or indirectly
use, disseminate, divulge or disclose, for any purpose whatsoever, any
Confidential Information (as hereinafter defined) which has been given to or
obtained by him as a result of his employment. For purposes of this paragraph,
Confidential Information shall include the identity and location of customers,
financing, accounts, systems, procedures, policies, manuals, trade secrets and
other information peculiar to the operations of UPAC or Presis and not known to
the public in general. In the event of a breach or threatened breach of any of
the provisions of this paragraph, or the following paragraph, either Presis,
UPAC or TFH, in addition to and not in limitation of any other rights, remedies
or damages available at law or in equity, shall be entitled to a restraining
order and injunction in order to prevent or restrain any such breach.
7. Non-Competition. Employee agrees that, during the term of this
Agreement and for a period of one year from and after the termination of his
employment with UPAC or Presis, for whatever reason, he shall not, directly or
indirectly:
a. Solicit or divert business from any customer of UPAC or Presis or
any other business owned directly or indirectly by Presis, UPAC or TFH and
with respect to which Employee has responsibility; or
b. Solicit for employment or employ any person who in the prior six
months has been an employee of Presis, UPAC or TFH or any other such
business; or
c. Individually or through any corporation, partnership, joint
venture, trust, limited liability company or person, engage in any business
competitive with the business then being conducted by Presis or UPAC, or
any other business owned directly or indirectly by Presis, UPAC or TFH and
with respect to which Employee has responsibility, at any place and in any
state in which Presis, UPAC or such other business is then conducting its
business.
8. Termination of Employment.
a. The employment of Employee under this Employment Agreement with
TFH, UPAC and Presis will be terminated:
(i) Upon the death of Employee;
(ii) In the event Employee becomes permanently disabled. For
the purpose of this Employment Agreement, Employee will be considered
to be permanently disabled if, by a mental or physical incapacity, it
is impossible with reasonable accommodation for Employee to render,
for 180 consecutive days or more to UPAC or Presis the Employee's
Duties and Responsibilities provided in paragraph 2 hereof. Such
determination shall be made by a licensed medical doctor designated by
TFH, UPAC or Presis and reasonably acceptable to Employee or on
evidence that the Employee is eligible for Social Security disability
payments. Total and permanent Disability shall exclude disability
arising from:
(a) Chronic or excessive use of intoxicants, drugs or
narcotics; or
(b) Intentionally self-inflicted injury or intentionally
self-induced sickness.
(iii) By the mutual written agreement of Employee and TFH, UPAC
or Presis; or
(iv) Within a reasonable period of time following a
determination by TFH that "good cause" exists for such termination and
the delivery by TFH to Employee of a written notice specifying with
factual specificity the actions of Employee which justify TFH's
determination that cause exists to terminate Employee's employment
pursuant to Paragraph 8(b) herein. Delivery of such notice shall not
be determinative of whether cause does or does not in fact exist for
purposes of termination of Employee's employment.
b. For purposes hereof, the term "good cause" shall have the meaning
set forth in Section 9(b) hereof.
c. If employment is terminated by TFH, UPAC or Presis for other than
good cause, TFH shall pay within fourteen (14) days following the date of
such termination an amount equal to then existing Base Compensation and
related benefits for one (1) year.
9. Change of Control.
a. In the event that (1) a Change of Control of TFH, UPAC or Presis
shall occur and (2) within two years after such Change of Control,
Employee's employment with UPAC Presis or TFH is terminated other than by
Employee, for any reason other than Employee's permanent disability, death,
normal retirement or Good Cause (as hereinafter defined), or is terminated
by Employee for Stated Cause (as hereinafter defined), TFH shall promptly
pay to Employee as termination compensation the amount provided in
subparagraph e. hereof.
b. For purposes of this Agreement, "Good Cause" is defined as (1) a
material breach by Employee of his obligations under this Employment
Agreement which is demonstrably willful and deliberate on Employee's part,
committed in bad faith, or without reasonable belief that such breach is in
the best interest of TFH, UPAC or Presis and is not remedied within a
reasonable period of time after receipt of written notice specifying the
breach; (2) conviction of Employee of a felony; (3) fraud committed by
Employee against TFH, UPAC or Presis or misappropriation by Employee of the
assets of either thereof; or (4) breach of Employee's duty of loyalty or
other fiduciary duty or obligation to TFH, UPAC or Presis which is not
remedied within a reasonable period of time after receipt of written notice
specifying the same.
c. For purposes of this Agreement, "Stated Cause" is defined as (1)
any substantive changes in Employee's duties and responsibilities for
Presis, UPAC or TFH which are not approved by him; (2) involuntary
relocation or proposed relocation of Employee from Greater Kansas City; (3)
any material reduction in the salary or benefits to which Employee is
entitled pursuant to an Employment Agreement of even date herewith; or (4)
change in the position to which Employee reports, as set forth in paragraph
2 hereof.
d. For purposes of this Agreement, a Change of Control of UPAC or
Presis shall have occurred if TFH and its affiliates cease to own at least
51% interest therein, and a Change of Control of TFH shall have occurred
if, as the result of the acquisition of the assets or securities of TFH by
a single person or group, as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, or a merger, consolidation, contested election of
directors or any combination of the foregoing transactions, (a
"Transaction"), either of the following shall occur:
(i) The persons who were directors of TFH immediately before
the Transaction shall cease to constitute a majority of the board of
directors of TFH or of any parent of or successor to TFH, or
(ii) Such person or group becomes the beneficial owner, directly
or indirectly of substantially all of the assets of TFH or securities
of TFH representing 35% or more of the combined voting power of TFH's
then outstanding securities.
e. The compensation to which Employee shall be entitled pursuant to
Paragraph 9.a. hereof shall be equal to 2.99 times the average annual
compensation from TFH, UPAC and Presis includable in Employee's gross
income, for federal income tax purposes, for the three most recent years
ending before the Transaction, or such lesser period as Employee shall have
been an employee. In no event shall any amount be required to be paid
hereunder that would constitute an "excess parachute payment" within the
meaning of S 280G(b) of the Internal Revenue Code.
f. In the event that Employee's employment terminates after a change
in control so as to entitle him to the compensation provided in
subparagraph e. hereof, Employee shall be additionally entitled to:
(i) Immediate 100% vesting of all Incentive Compensation and
Stock Options provided or to be provided pursuant hereto, or pursuant
to Stock Option Agreements with TFH, and
(ii) All benefits to which he would have been entitled had he
retired at normal retirement age from Presis, UPAC or TFH, and
(iii) Three years of continued participation in medical and life
insurance plans of UPAC, Presis and TFH then in effect and in which
Employee was participating immediately prior to the Transaction,
provided, however, that if there are any limitations on such
participation provided in such plans, TFH shall provide Employee
during such three-year period equivalent benefits not less favorable
to Employee than those to which he would have been entitled as a
participant in such plans at the time of the Transaction, except that
Employee's entitlement to such participation shall not extend beyond
his normal retirement date.
10. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of, UPAC, Presis, TFH and Employee, and their respective
heirs, personal and legal representatives, successors and assigns, provided that
no party hereto may assign its rights or obligations hereunder.
11. Governing Law. It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of Kansas.
12. Severability. The provisions of this Agreement (including
particularly, but not limited to, the provisions of Paragraphs 6 and 7 hereof)
shall be deemed severable, and the invalidity or unenforceability of any one or
more of the provisions hereof shall not affect the validity and enforceability
of the other provisions hereof, and if any court shall determine any provision
of Paragraphs 6 or 7 hereof to be unreasonably broad, the parties hereto agree
that such provision(s) shall be deemed amended to the greatest breadth which
such court shall find to be reasonable and enforceable.
13. Notices. Any notice permitted or required to be given hereunder shall
be sufficient and deemed given when in writing, and delivered or sent by
certified or registered mail, return receipt requested, first-class postage
prepaid, to his last known residence in the case of Employee, and to its
principal office in the case of UPAC, Presis and TFH.
14. Attorney Fees. If any party to this Agreement files suit or takes
legal action to enforce or avoid its provisions, the losing party shall pay the
prevailing parties' reasonable attorney fees.
15. Entire Agreement. This Agreement and the Exhibit hereto contain the
entire agreement and understanding among UPAC, Presis, TFH, and Employee with
respect to the employment herein referred to, and no representations, promises,
agreements or understandings, written or oral, not herein contained, shall be of
any force or effect. No change or modification hereof shall be valid or binding
unless the same is in writing and signed by the party intended to be bound. No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced; moreover, no valid waiver of any provision of this Agreement at any
time shall be deemed a waiver of any other provision of this Agreement at such
time or be deemed a valid waiver of such provision at any other time.
IN WITNESS WHEREOF, UPAC, Presis, TFH and Employee have duly executed this
Agreement as of the day and year first above written.
Universal Premium Acceptance
Corporation
Attest:
By: By:
PRESIS, L.L.C.
Attest:
By: /s/Timothy P. O'Neil By: /s/Timothy P. O'Neil
Witness:
By: /s/Mark A. Foltz By: /s/Kurt W. Huffman
Kurt W. Huffman
TRANSFINANCIAL HOLDINGS, INC.
Attest:
By: /s/Mark A. Foltz By: /s/Timothy P. O'Neil
President
EXHIBIT A
(a) Except as set forth in subparagraph (b) hereof, no Incentive
Compensation shall be earned unless the net income of TFH
(consolidated), UPAC or Presis, for each full or partial year during
the term of the Employment Agreement, shall equal at least 80% of
budget (the "Threshold"). If the Threshold with respect to Presis is
met, 13.33% of Incentive Compensation shall be deemed earned, and such
amount shall be increased by 1.0% for each whole percentage point by
which the net income of Presis exceeds 80% of budget. If the
Threshold with respect to UPAC is met, 13.33% of Incentive
Compensation shall be deemed earned, and such amount shall be
increased by 1.0% for each whole percentage point by which the net
income of UPAC exceeds 80% of budget. If the Threshold with respect
to TFH is met, 6.67% of Incentive Compensation shall be deemed earned,
and such amount shall be increased by 0.5% for each whole percentage
point by which the net consolidated income of TFH exceeds 80% of
budget.
(b) An amount not to exceed 16.67% of Incentive Compensation may be
awarded if, in the sole judgment of the Chief Executive Officer of
TFH, such adjustment is necessary to properly reflect Employee's
contribution.
Exhibit 10.8
AGREEMENT
This Agreement is effective as of the 30th day of April, 1998, by and
between TransFinancial Holdings, Inc., a Delaware corporation ("TFH") and Mark
A. Foltz ("Employee").
RECITALS:
1. TFH has employed, and desires to continue to employ, Employee to
serve as an executive officer.
2. Based upon prior experiences and current circumstances, Employee
has insisted upon financial assurance in the event that, during the term of his
employment, a Change of Control (as hereinafter defined) shall occur with
respect to TFH.
3. TFH has concluded that it is in the best interest to assure
Employee's continuing dedication notwithstanding the occurrence, which might
otherwise be unsettling, of a change in control, and so that Employee may be
able, without being influenced by the uncertainties of his own situation, to
participate and aid in the analysis of any proposal which might result in a
change of control
NOW, THEREFORE, in consideration of the premises and the terms and
provisions hereinafter set forth, the parties hereby agree as follows:
AGREEMENTS:
1. In the event that (1) a Change of Control of TFH and (2) within
two years after such Change of Control, Employee's employment with TFH is
terminated other than by Employee, for any reason other than Employee's
permanent disability, death, normal retirement or Good Cause (as hereinafter
defined), or is terminated by Employee, for Stated Cause (as hereinafter
defined), TFH shall promptly pay to Employee as termination compensation the
amount provided in paragraph 5 hereof.
2. For the purposes of this Agreement, "Good Cause" is defined as
(1) conviction of Employee of a felony; (2) fraud committed by Employee against
TFH or misappropriation by Employee of the assets of either thereof; of
(3) breach of Employee's duty of loyalty or other fiduciary duty or obligation
to TFH, which is not remedied within a reasonable period of time after receipt
of written notice specifying the same.
3. For purposes of this Agreement, "Stated Cause" is defined as
(1) any changes in Employee's duties and responsibilities or reporting structure
(including personnel) for TFH which are not approved by him; (2) involuntary
relocation or proposed relocation of Employee from the greater Kansas City area
or (3) any reduction in the salary or benefits to which Employee is entitled as
of the date of such Change of Control.
4. For purposes of this Agreement, a Change of Control of TFH shall
have occurred if, as the result of the acquisition of the assets or securities
of TFH by a single person or group, as defined in Section 13(d) (3) of the
Securities Exchange Act of 1934, or a merger, consolidation, contested election
of directors or any combination of the foregoing transactions, (a
"Transaction"), either of the following shall occur:
a. The persons who were directors of TFH immediately
before the Transaction shall cease to constitute a majority of
the board of directors of TFH or of any parent of or successor to
TFH, or
b. Such Person or group becomes the beneficial owner,
directly or indirectly of substantially all of the assets of TFH
or securities of TFH, representing 30% or more of the combined
voting power of TransFinancial then outstanding securities.
1. The compensation to which Employee shall be entitled pursuant to
Paragraph 1 hereof shall be equal to the greater 1.0 times the annual
compensation from TFH includible in Employee's gross income, for federal income
tax purposes, at the date of the change of control or the date of a later
triggering event. In no event shall any amount be required to be paid
hereunder that would constitute an "excess parachute payment" within the meaning
of S 280G(b) of the Internal Revenue Code.
2. In the event that Employee's employment terminates after a change
in control so as to entitle him to the compensation provided in paragraph 5
hereof, Employee shall be additionally entitled to:
a. Immediate 100% vesting of all Incentive Compensation
provided pursuant under any then existing incentive programs, and
b. One year of continued participation in medical and life
insurance plans of TFH then in effect and in which Employee was
participating immediately prior to the Transaction, provided,
however, that if there are any limitations on such participation
provided in such plans, TFH shall provide Employee during such
one-year period equivalent benefits not less favorable to
Employee than those to which he would have been entitled as a
participant on such plans at the time of the Transaction, except
that Employee's entitlement to such participation shall not
extend beyond his normal retirement date.
1. TFH shall pay all reasonable legal fees and expenses incurred by
Employee as a result of any contest by TFH of the validity or enforceability of
this Agreement.
2. This Agreement shall inure to the benefit of and be finding upon
the parties hereto and their respective legal representatives, successors and
assigns, and shall be construed in accordance with and governed by the laws of
the State of Kansas.
3. Notwithstanding that Employee's position with TFH is at-will,
Employee's rights hereunder may not be modified or amended, without his written
consent, after a Transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
cause the same to be executed, by their duly authorized officers, as of the date
and year first above written.
TRANSFINANCIAL HOLDINGS, INC.
BY: /s/Timothy P. O'Neil
Timothy P. O'Neil, President
/s/Mark A. Foltz
Mark A. Foltz
Exhibit 10.9
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this day of , between TRANSFINANCIAL
HOLDINGS, INC., a Delaware Corporation ("Corporation") and
("Officer").
WITNESSETH:
WHEREAS, Officer is an employee of Corporation and in such capacity is
performing a valuable service for the Corporation; and
WHEREAS, the Board of Directors of the Corporation adopted By-Laws (the
"By-Laws") providing for the indemnification of the officers, directors, agents
and employees of Corporation in accordance with Section 145 of The General
Corporation Law of Delaware (the "State Statute"); and
WHEREAS, such By-Laws and the State Statute specifically provide that they
are not exclusive, and thereby contemplate that contracts may be entered into
between Corporation and the members of its Board of Directors with respect to
indemnification of such officers; and
WHEREAS, Corporation has purchased and presently maintains a policy of
Directors and Officers Liability Insurance ("D&O Insurance"), covering certain
liabilities which may be incurred by its directors and officers in the
performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and availability of
D&O Insurance (including the amount thereof, the exclusions from coverage, and
the limitations on the payment of defense costs), and with respect to the
application, amendment and enforcement of statutory and by-law indemnification
provisions generally have raised questions concerning the adequacy and
reliability of the protection afforded to officers thereby; and
WHEREAS, in order to resolve such questions, to offer to its officers the
broadest indemnity allowed by law, and thereby induce Officer to continue to
serve as an employee of Corporation, Corporation enter into this Indemnification
Agreement with Officer; and
WHEREAS, experience has shown that there is good reason to amend the terms
of such Indemnification Agreement, and the parties desire to here restate and
set forth the terms thereof, as amended;
NOW THEREFORE, the parties hereto agree as follows:
1. Continued Service. officer will continue to serve as an officer of
Corporation pursuant to its Certificate of Incorporation and By-Laws,
so long as officer is duly elected and qualified pursuant to such
instruments, or until officer tenders officer's resignation.
2. Indemnity of Officer. Corporation hereby agrees to hold harmless
and indemnify Officer to the full extent authorized or permitted by
law, including any amendment or modification thereof adopted after the
date hereof.
3. Maintenance of Insurance and Self-Insurance.
(a) Corporation represents that it presently has in force
and effect a policy of D&O Insurance providing insurance to
Officer in the amount of $10,000,000, with a deductible of
$250,000 (the "Insurance Policy"). Subject only to the
provisions of Section 3(b) hereof, Corporation hereby agrees
that, so long as officer shall continue to serve as a officer of
Corporation (or shall continue at the request of Corporation to
serve as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise) and thereafter so long as officer, or officer's
estate, shall be subject to any possible claim or threatened,
pending or completed action, suit or proceeding, whether civil,
criminal or investigative by reason of the fact that officer was
a officer of Corporation (or served in any of said other
capacities), Corporation will purchase and maintain in effect for
the benefit of officer one or more valid, binding and enforceable
policy of D&O Insurance providing, in the reasonable business
judgment of the Corporation's officers, coverage in all respects
not less favorable to Officer than that presently provided
pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said
policy of D&O Insurance in effect if said insurance is not
reasonably available or if, in the reasonable business judgment
of the then officers of Corporation, either (i) the premium cost
for such insurance is substantially disproportionate to the
amount of coverage or (ii) the coverage provided by such
insurance is so limited by exclusions that there is insufficient
benefit from such insurance.
(c) A decision of the Corporation not to maintain in effect
said policy of D&O Insurance pursuant to the provisions of
Section 3(b) hereof, shall not terminate, reduce, diminish or
otherwise affect the obligation of the Corporation to indemnify
Officer as herein provided.
4. Additional Indemnity. Subject only to the exclusions set forth
in Section 5
hereof, Corporation hereby further agrees to hold harmless and indemnify
Officer:
(a) Against any and all expenses and costs of defense
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Officer in
connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the
Corporation) to which officer is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact
that officer is, was or any time becomes a officer, officer,
employee or agent of Corporation, or is or was serving or at any
time serves at the request of Corporation as a officer, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise; and
(b) Otherwise to the fullest extent as may be provided to
Officer by Corporation under the non-exclusivity provisions of
the By-Laws of Corporation and State Statute.
4. Limitations on Additional Indemnity. No indemnity pursuant to
Section 4 hereto shall be paid by Corporation:
(a) if the losses to be indemnified thereunder are
indemnified to Officer either pursuant to Section 3 hereof or
pursuant to any D&O Insurance purchased and maintained by the
Corporation;
(b) in respect to remuneration paid to Officer if it shall
be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(c) on account of any suit in which judgment is rendered
against a Officer for an accounting of profits made from the
purchase or sale by Officer of securities of Corporation pursuant
to the provisions of Section 16(b) of the Securities and Exchange
Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;
(d) on account of Officer's conduct which is finally
adjudged to have been knowingly fraudulent or deliberately
dishonest;
(e) for losses by Officer pursuant to Section 174 of the
State Statute;
(f) in a final decision by a Court having jurisdiction in
the matter shall determine that such indemnification is not
lawful.
4. Continuation of Indemnity.
(a) All agreements and obligations of Corporation contained
herein shall continue during the period Officer is a director,
officer, employee or agent of Corporation (or is or was serving
at the request of Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise) and shall continue thereafter so long as
Officer, or Officer's estate, shall be subject to any possible
claim or threatened, pending or completed action, suit or
proceeding; whether civil, criminal, administrative or
investigative, by reason of the fact that Officer was a officer
of corporation or serving in any other capacity referred to
herein.
(b) In the event that (i) an action, suit or proceeding
with respect to which Officer is, or, except for the existence of
D&O Insurance would be, entitled to indemnification, is
instituted or threatened against officer after the expiration of
Officer's term as an employee of Corporation, or (ii) such an
action, suit or proceeding has been earlier instituted or
threatened and continues after the expiration of Officer's term
as an employee of Corporation, Corporation shall, in addition to
the performance of all other obligations imposed upon it by this
Agreement, within 30 days after being billed therefore, pay to
Officer the sum of the rate per hour then in effect for officers
receiving compensation for special assignments, or sixty dollars
($60.00), whichever is greater, times the number of hours for all
time reasonably spent by Officer, and all out-of-pocket expenses
reasonably incurred by Officer, in connection with the defense of
such action, suit or proceeding.
4. Notification and Defense of Claim. Promptly after receipt by
Officer of notice of the threat or commencement of any action, suit or
proceeding, Officer will, if a claim in respect thereof is to be made
against Corporation under this Agreement, notify Corporation thereof;
but the omission so to notify Corporation will relieve it from any
liability which it may have to Officer under this Agreement only to
the extent the Corporation is prejudiced by such omission. With
respect to any such action, suit or proceeding as to which Officer
notifies corporation:
(a) Corporation will be entitled to participate therein at
its own expense; and
(b) Except as otherwise provided below, to the extent that
it may wish, Corporation jointly with any other indemnifying
party similarly notified will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to Officer. After
notice from Corporation to Officer of its election so to assume
the defense thereof, Corporation will not be liable to officer
under this Agreement for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other
than reasonable costs of investigation or as otherwise provided
below. Officer shall have the right to employ counsel in such
action, suit or proceeding but the fees and expenses of such
counsel incurred after notice from Corporation of its assumption
of the defense thereof shall be at the expense of Officer unless
(i) the employment of counsel by officer has been authorized by
Corporation, (ii) Officer shall have reasonably concluded that
there may be a legal or economic conflict of interest between
Corporation and officer in the conduct of the defense of such
action or (iii) Corporation shall not in fact have employed
counsel to assume the defense of such action, or such counsel is
not reasonably satisfactory to Officer, in each of which cases
the fees and expenses of counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf
of Corporation or as to which Officer shall have made the
conclusion provided for in (ii) above.
Corporation shall not be liable to indemnify Officer under this Agreement
for any amounts paid in settlement of any action or claim effected without
its written consent. Corporation shall not settle any action or claim in
any manner which would impose any penalty or limitation on Officer without
officer's written consent. Neither Corporation nor Officer will
unreasonably withhold their consent to any proposed settlement. The
reasonableness of a settlement shall be determined from the perspective of
the Officer against whom a claim is made.
4. Repayment of Expenses. Expenses incurred in defending an action,
suit or proceeding shall, on demand, be paid in advance of the final
disposition thereof upon the agreement of officer that officer shall
reimburse Corporation for all such expenses paid by Corporation in
defending any action, suit or proceeding against officer in the event
and only to the extent that it shall be ultimately determined that
Officer is not entitled to be indemnified by Corporation for such
expenses under the provisions of the By-Laws, this Agreement or
applicable law.
5. Enforcement.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed
on Corporation hereby in order to induce officer to continue as
an officer of Corporation, and acknowledges that officer is
relying upon this Agreement in continuing in such capacity.
(b) In the event officer is required to bring any action to
enforce rights or to collect monies due under this Agreement and
is successful in such action, Corporation shall reimburse officer
for all of officer's reasonable fees and expenses in bringing and
pursuing such action.
4. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that
if any provision hereof shall be held to be invalid or unenforceable
for any reason, such invalidity or unenforceability shall not affect
the validity or enforceability of the other provisions hereof.
5. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
(b) This Agreement shall be binding upon officer and upon
Corporation, its successors and assigns, and shall inure to the
benefit of Officer, officer's heirs, personal representatives and
assigns and to the benefit of Corporation, its successors and
assigns.
(c) No amendment, modification, termination or cancellation
of this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
Exhibit 10.10
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this , between TRANSFINANCIAL
HOLDINGS, INC., a Delaware Corporation ("Corporation") and
("Director").
WITNESSETH:
WHEREAS, Director is a member of the Board of Directors of Corporation and
in such capacity is performing a valuable service for the Corporation; and
WHEREAS, the Board of Directors of the Corporation adopted By-Laws (the "By-
Laws") providing for the indemnification of the officers, directors, agents and
employees of Corporation in accordance with Section 145 of The General
Corporation Law of Delaware (the "State Statute"); and WHEREAS, such By-Laws and
the State Statute specifically provide that they are not exclusive, and thereby
contemplate that contracts may be entered into between Corporation and the
members of its Board of Directors with respect to indemnification of such
directors; and
WHEREAS, Corporation has purchased and presently maintains a policy of
Directors and Officers Liability Insurance ("D&O Insurance"), covering certain
liabilities which may be incurred by its directors and officers in the
performance of their services for Corporation; and
WHEREAS, recent developments with respect to the terms and availability of
D&O Insurance (including the amount thereof, the exclusions from coverage, and
the limitations on the payment of defense costs), and with respect to the
application, amendment and enforcement of statutory and by-law indemnification
provisions generally have raised questions concerning the adequacy and
reliability of the protection afforded to directors thereby; and
WHEREAS, in order to resolve such questions, to offer to its directors the
broadest indemnity allowed by law, and thereby induce Director to continue to
serve as a member of the Board of Directors of Corporation, Corporation enter
into this Indemnification Agreement with Director; and
WHEREAS, experience has shown that there is good reason to amend the terms
of such Indemnification Agreement, and the parties desire to here restate and
set forth the terms thereof, as amended;
NOW THEREFORE, the parties hereto agree as follows:
1. Continued Service. Director will continue to serve as a director of
Corporation pursuant to its Certificate of Incorporation and By-Laws, so long as
director is duly elected and qualified pursuant to such instruments, or until
Director tenders director's resignation.
2. Indemnity of Director. Corporation hereby agrees to hold harmless and
indemnify Director to the full extent authorized or permitted by law, including
any amendment or modification thereof adopted after the date hereof.
3. Maintenance of Insurance and Self-Insurance.
(a) Corporation represents that it presently has in force and
effect a policy of D&O Insurance providing insurance to Director in the amount
of $10,000,000, with a deductible of $250,000 (the "Insurance Policy"). Subject
only to the provisions of Section 3(b) hereof, Corporation hereby agrees that,
so long as Director shall continue to serve as a director of Corporation (or
shall continue at the request of Corporation to serve as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise) and thereafter so long as Director, or director's estate,
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal or investigative by reason
of the fact that Director was a director of Corporation (or served in any of
said other capacities), Corporation will purchase and maintain in effect for the
benefit of Director one or more valid, binding and enforceable policy of D&O
Insurance providing, in the reasonable business judgment of the Corporation's
directors, coverage in all respects not less favorable to Director than that
presently provided pursuant to the Insurance Policies.
(b) Corporation shall not be required to maintain said policy of
D&O Insurance in effect if said insurance is not reasonably available or if, in
the reasonable business judgment of the then directors of Corporation, either
(i) the premium cost for such insurance is substantially disproportionate to the
amount of coverage or (ii) the coverage provided by such insurance is so limited
by exclusions that there is insufficient benefit from such insurance.
(c) A decision of the Corporation not to maintain in effect said
policy of D&O Insurance pursuant to the provisions of Section 3(b) hereof, shall
not terminate, reduce, diminish or otherwise affect the obligation of the
Corporation to indemnify Director as herein provided.
4. Additional Indemnity. Subject only to the exclusions set forth in
Section 5 hereof, Corporation hereby further agrees to hold harmless and
indemnify Director:
(a) Against any and all expenses and costs of defense (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by Director in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Corporation) to
which Director is, was or at any time becomes a party, or is threatened to be
made a party, by reason of the fact that Director is, was or any time becomes a
director, officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise; and
(b) otherwise to the fullest extent as may be provided to Director by
Corporation under the non-exclusivity provisions of the By-Laws of Corporation
and State Statute.
5. Limitations on Additional Indemnity. No indemnity pursuant to Section
4 hereto shall be paid by Corporation:
(a) if the losses to be indemnified thereunder are indemnified to
Director either pursuant to Section 3 hereof or pursuant to any D&O Insurance
purchased and maintained by the Corporation;
(b) in respect to remuneration paid to Director if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any suit in which judgment is rendered against a
Director for an accounting of profits made from the purchase or sale by Director
of securities of Corporation pursuant to the provisions of Section 16(b) of the
Securities and Exchange Act of 1934 and amendments thereto or similar provisions
of any federal, state or local statutory law;
(d) on account of Director's conduct which is finally adjudged to
have been knowingly fraudulent or deliberately dishonest;
(e) for losses by Director pursuant to Section 174 of the State
Statute;
(f) in a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
6. Continuation of Indemnity.
(a) All agreements and obligations of Corporation contained herein
shall continue during the period Director is a director, officer, employee or
agent of Corporation (or is or was serving at the request of corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter so long as
Director, or Director's estate, shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding; whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of Corporation or serving in any other capacity referred to
herein.
(b) In the event that (i) an action, suit or proceeding with respect
to which Director is, or, except for the existence of D&O Insurance would be,
entitled to indemnification, is instituted or threatened against Director after
the expiration of Director's term as a member of the Board of Directors of
Corporation, or (ii) such an action, suit or proceeding has been earlier
instituted or threatened and continues after the expiration of Director's term
as a member of the Board of Directors of Corporation, Corporation shall, in
addition to the performance of all other obligations imposed upon it by this
Agreement, within 30 days after being billed therefore, pay to Director the sum
of the rate per hour then in effect for Directors receiving compensation for
special assignments, or seventy-five dollars ($75.00), whichever is greater,
times the number of hours for all time reasonably spent by Director, and all
out-of-pocket expenses reasonably incurred by Director, in connection with the
defense of such action, suit or proceeding.
7. Notification and Defense of Claim. Promptly after receipt by Director
of notice of the threat or commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against corporation
under this Agreement, notify Corporation thereof; but the omission so to notify
Corporation will relieve it from any liability which it may have to Director
under this Agreement only to the extent the Corporation is prejudiced by such
omission. With respect to any such action, suit or proceeding as to which
Director notifies Corporation:
(a) Corporation will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
Director. After notice from Corporation to Director of its election so to
assume the defense thereof, Corporation will not be liable to Director under
this Agreement for any legal or other expenses subsequently incurred by Director
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Director shall have the right to
employ counsel in such action, suit or proceeding but the fees and expenses of
such counsel incurred after notice from Corporation of its assumption of the
defense thereof shall be at the expense of Director unless (i) the employment of
counsel by Director has been authorized by Corporation, (ii) Director shall have
reasonably concluded that there may be a legal or economic conflict of interest
between Corporation and Director in the conduct of the defense of such action or
(iii) Corporation shall not in fact have employed counsel to assume the defense
of such action, or such counsel is not reasonably satisfactory to Director, in
each of which cases the fees and expenses of counsel shall be at the expense of
corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
Director shall have made the conclusion provided for in (ii) above.
Corporation shall not be liable to indemnify Director under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent. Corporation shall not settle any action or claim in any manner
which would impose any penalty or limitation on Director without Director's
written consent. Neither Corporation nor Director will unreasonably withhold
their consent to any proposed settlement. The reasonableness of a settlement
shall be determined from the perspective of the Director against whom a claim is
made.
8. Repayment of Expenses. Expenses incurred in defending an action,
suit or proceeding shall, on demand, be paid in advance of the final disposition
thereof upon the agreement of Director that director shall reimburse Corporation
for all such expenses paid by Corporation in defending any action, suit or
proceeding against Director in the event and only to the extent that it shall be
ultimately determined that Director is not entitled to be indemnified by
Corporation for such expenses under the provisions of the By-Laws, this
Agreement or applicable law.
9. Enforcement.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to
enforce rights or to collect monies due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses in bringing and pursuing such action.
10. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
11. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
(b) This Agreement shall be binding upon Director and upon
Corporation, its successors and assigns, and shall inure to the benefit of
Director, Director's heirs, personal representatives and assigns and to the
benefit of Corporation, its successors and assigns.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
TRANSFINANCIAL HOLDINGS, INC.
BY:
President
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from TransFinancial
Holdings, Inc.'s condensed consolidated statement of income for the nine months
ended September 30, 1999 and condensed consolidated balance sheet as of Septmber
30, 1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000719271
<NAME> TRANSFINANCIAL HOLDINGS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1530
<SECURITIES> 0
<RECEIVABLES> 31645
<ALLOWANCES> 967
<INVENTORY> 0
<CURRENT-ASSETS> 38357
<PP&E> 57758
<DEPRECIATION> 25141
<TOTAL-ASSETS> 81193
<CURRENT-LIABILITIES> 32846
<BONDS> 0
0
0
<COMMON> 76
<OTHER-SE> 46875
<TOTAL-LIABILITY-AND-EQUITY> 81193
<SALES> 0
<TOTAL-REVENUES> 119412
<CGS> 0
<TOTAL-COSTS> 120944
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 876
<INCOME-PRETAX> (2307)
<INCOME-TAX> (779)
<INCOME-CONTINUING> (1528)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1528)
<EPS-BASIC> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
TransFinancial Holdings, Inc. / Page 1 of 2
Exhibit 99.1
News Release Release
FOR IMMEDIATE RELEASE
Contact: Mark A. Foltz
(913) 859-0055
TRANSFINANCIAL HOLDINGS, INC. ANNOUNCES MANAGEMENT BUYOUT
LENEXA, KANSAS, OCTOBER 19, 1999 - TransFinancial Holdings, Inc. (Amex: TFH),
announced the execution of a definitive agreement pursuant to which Cola
Acquisitions, Inc., a company newly formed by three TFH directors, will acquire
all of the TFH stock not owned by such directors for $6.03 per share in cash.
The acquisition will be effected by a merger of Cola into TFH, and the
conversion of TFH shares into cash. At September 30, 1999, TFH had 3,252,115
shares outstanding.
Cola was formed by William D. Cox, Roy R. Laborde and Timothy P. O'Neil,
Chairman, Vice Chairman and President, respectively, of TFH. The buyout
proposal was initially made by the three TFH directors on June 7 and announced
on June 21, 1999, at a price of $5.25 per share. Since that time, a Special
Committee of independent directors of TFH, after hiring legal counsel and a
financial advisor, has analyzed the value of the Company and negotiated with the
management group and others who have indicated an interest in acquiring TFH
stock or assets. Harold C. Hill, Chairman of the Special Committee, stated that
the Committee had received an opinion of its financial advisor that the $6.03
TransFinancial Holdings, Inc. / Page 2 of 2
was fair to the TFH shareholders from a financial point of view, and concluded
that the offer from Cola was superior to others the Committee had considered.
Mr. O'Neil said, "I am pleased with the outcome, and its impacts on our
shareholders, customers and employees. This transaction will remove the
burdensome costs and reporting requirements associated with a public entity, and
more importantly will provide stability and continuity of the ownership and
management team. I am especially thankful for our loyal customers and employees
who have exercised tremendous patience during the past several months."
The full Board of Directors of TFH has unanimously approved the merger and
agreed to recommend it to TFH shareholders. The merger is subject to completion
of Cola's financing and approval by a majority of outstanding TFH shares at a
special meeting to be held after preparation and mailing of proxy material.
Separately, TFH reported third quarter operating revenues of $39.3 million, a
decrease of one percent from $39.6 million for the same period a year ago. The
Company recorded a net loss for the quarter of $1,035,000, or $0.32 per share,
compared with a net loss of $2,474,000, or $0.50 per share, in the third quarter
of 1998. For the first nine months of 1999, TFH reported operating revenues of
$119.4 million, an increase of five percent from $113.7 million for the same
period of 1998. The Company's net loss for the nine months was $1,528,000, or $
0.44 per share, compared to a net loss of $2,137,000, or $0.38 per share, for
the first nine months of 1998.
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