-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GLQrJjzQmY1x522acPlXU2UzUHwJP90HzjaklMf7DgCNGW7UL+L0OFdDjga/QJ/q 2JuLZvesVExKabXW6yWKlg== 0000719271-99-000023.txt : 19991029 0000719271-99-000023.hdr.sgml : 19991029 ACCESSION NUMBER: 0000719271-99-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSFINANCIAL HOLDINGS INC CENTRAL INDEX KEY: 0000719271 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 460278762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12070 FILM NUMBER: 99736417 BUSINESS ADDRESS: STREET 1: 8245 NIEMAN ROAD, STE 100 STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 BUSINESS PHONE: 9138590055 MAIL ADDRESS: STREET 1: 8245 NIEMAN ROAD STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: ANUHCO INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CARRIERS INC DATE OF NAME CHANGE: 19910812 10-Q 1 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 TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, (In thousands, except per share amounts) (Unaudited)
1999 1998 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 The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, (In thousands, except per share amounts) (Unaudited)
1999 1998 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 The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
SEPTEMBER 30, DECEMBER 31, 1999 1998 ASSETS (Unaudited) 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.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (In thousands) (Unaudited)
1999 1998 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 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.
TRANSFINANCIAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands)(Unaudited)
Total Share Common Paid-In Retained Treasury holders' Stock Capital Earnings Stock Equity 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 The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
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 $50,000 for the remainder of 1999 from amounts which would have been recorded had the change not been made. 2. SEGMENT REPORTING The Company operates in three business segments: transportation, financial services, and industrial technology. Other items are shown in the table below for purposes of reconciling to consolidated amounts.
Third Quarter Nine Months Operating Operating Operating Operating Total ($ in thousands) Revenues Income (Loss) Revenues Income (Loss) Assets 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
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:
Percent of Operating Revenue Third Quarter Nine Months 1999 1998 1999 1998 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%
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. EX-2 2 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 EX-10 3 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 EX-10 4 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 EX-10 5 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. EX-10 6 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 EX-10 7 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. EX-10 8 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 EX-10 9 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. EX-10 10 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 EX-10 11 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. EX-10 12 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 EX-27 13
5 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. 0000719271 TRANSFINANCIAL HOLDINGS, INC. 1000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 1530 0 31645 967 0 38357 57758 25141 81193 32846 0 0 0 76 46875 81193 0 119412 0 120944 0 0 876 (2307) (779) (1528) 0 0 0 (1528) (0.44) (0.44)
EX-99 14 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. # # # # # -----END PRIVACY-ENHANCED MESSAGE-----