EXHIBIT 10.24
================================================================
STOCK PURCHASE AGREEMENT
AMONG
PACER INTERNATIONAL, INC.,
CROSS CON TERMINALS, INC.,
CROSS CON TRANSPORT, INC.,
AND
XXXXXXX X. XXXXXX
DATED AS OF MAY 29, 1998
================================================================
TABLE OF CONTENTS
-----------------
PAGE
----
Article I PURCHASE AND SALE OF SHARES 1
1.1 Transfer of Shares............................................................... 1
1.2 Purchase Price................................................................... 1
1.3 Payment at Closing............................................................... 2
1.4 Delivery of Shares............................................................... 2
1.5 Further Assurances............................................................... 2
Article II THE CLOSING 3
Article III FINAL DETERMINATION OF ADDITIONAL AMOUNT 3
3.1 Preparation and Delivery of Statements........................................... 3
3.2 Adjustments and Payment.......................................................... 4
Article IV CONTINGENT PAYMENT 5
4.1 Determination of Contingent Payment.............................................. 5
4.2 Option to Receive Contingent in Shares........................................... 7
Article V REPRESENTATIONS AND WARRANTIES OF THE SELLER 7
5.1 Title to the Shares.............................................................. 7
5.2 Authority; Enforceability; Noncontravention; Consents............................ 7
5.3 Investment Representations....................................................... 8
Article VI REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANIES 9
6.1 Organization, Power, Authority and Good Standing................................. 9
6.2 Authority; Authorization, Execution and Delivery; Enforceability................. 9
6.3 Consents. 10
6.4 Capitalization................................................................... 10
6.5 Subsidiaries; Investments........................................................ 11
6.6 Financial Information............................................................ 11
6.7 Absence of Undisclosed Liabilities............................................... 11
6.8 Absence of Changes............................................................... 12
6.9 Tax Matters. 13
6.10 Title to Assets, Properties and Rights and Related Matters....................... 14
6.11 Real Property-Owned or Leased.................................................... 15
6.12 Intellectual Property............................................................ 15
6.13 Agreements, No Defaults, Etc..................................................... 16
6.14 Litigation, Etc.................................................................. 18
6.15 Compliance with Laws............................................................. 18
6.16 Insurance. 19
6.17 Labor Relations; Employees...................................................... 19
6.18 ERISA Compliance................................................................. 20
-i-
PAGE
----
6.19 Environmental Matters............................................................ 22
6.20 Brokers. 23
6.21 Related Party Transactions....................................................... 23
6.22 Accounts and Notes Receivable.................................................... 23
6.23 Bank Accounts; Powers of Attorney................................................ 24
6.24 Suppliers and Vendors............................................................ 24
6.25 Customers. 24
6.26 Conflicts of Interest............................................................ 24
6.27 Disclosure. 24
Article VII REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 25
7.1 Organization; Corporate Authority................................................ 25
7.2 Authority; Authorization; Execution and Delivery; Enforceability; No Conflict.... 25
7.3 Consents. 25
7.4 Capitalization................................................................... 26
Article VIII COVENANTS AND AGREEMENTS 26
8.1 Access to Records and Properties................................................. 26
8.2 Conduct of the Companies......................................................... 27
8.3 Efforts to Consummate............................................................ 28
8.4 Negotiation with Others.......................................................... 28
8.5 Termination or Amendment of Certain Agreements................................... 28
8.6 Proprietary Information.......................................................... 29
8.7 Notice of Prospective Breach..................................................... 29
8.8 Public Announcements............................................................. 29
8.9 Cooperation Regarding Tax Filings, Section 338 Election, Etc..................... 29
8.10 Exchange Proceeds................................................................ 30
8.11 [Intentionally Omitted.]......................................................... 31
8.12 Noncompetition Covenant.......................................................... 31
8.13 Headquarters Lease............................................................... 32
8.14 Ordinary Course.................................................................. 32
8.15 Registration Rights.............................................................. 32
Article IX CLOSING CONDITIONS 32
9.1 Conditions to Each Party's Obligations........................................... 32
9.2 Conditions to Obligations of the Purchaser....................................... 33
9.3 Conditions to Obligations of the Companies and the Seller........................ 35
Article X INDEMNIFICATION 36
10.1 Indemnification Generally; Etc.................................................. 36
10.2 Assertion of Claims............................................................ 37
10.3 Notice and Defense of Third Party Claims......................................... 37
10.4 Survival of Representations and Warranties................................... 38
10.5 Limitations on Indemnification................................................... 39
10.6 Satisfaction of Indemnification Obligations of the Seller Indemnifying Persons... 39
10.7 Cooperation Regarding Tax Proceedings............................................ 40
-ii-
PAGE
----
Article XI................................................................................... 41
11.1 Termination...................................................................... 41
11.2 Effect of Termination............................................................ 42
Article XII MISCELLANEOUS PROVISIONS......................................................... 43
12.1 Amendment........................................................................ 43
12.2 Entire Agreement................................................................ 43
12.3 Severability..................................................................... 43
12.4 Benefits of Agreement............................................................ 43
12.5 Expenses......................................................................... 44
12.6 Remedies......................................................................... 44
12.7 Notices.......................................................................... 44
12.8 Counterparts..................................................................... 45
12.9 Governing Law................................................................... 45
12.10 Independence of Covenants and Representations and Warranties..................... 46
12.11 Interpretation; Construction..................................................... 46
-iii-
ANNEXES, SCHEDULES AND EXHIBITS
ANNEXES
-------
Annex I - Certain Definitions
Annex II - Determination of Additional Amount
Annex III - Determination of Contingent Payment
SCHEDULES
---------
Schedule 5.1 - Title to the Shares
Schedule 6.1 - Organization, Power, Authority and Good Standing
Schedule 6.3 - Consents
Schedule 6.4 - Capitalization
Schedule 6.5 - Subsidiaries; Investments
Schedule 6.6 - Financial Information
Schedule 6.7 - Disclosed Liabilities
Schedule 6.8 - Absence of Changes
Schedule 6.9(a) - Tax Matters
Schedule 6.9(c) - Taxing Authority Notifications
Schedule 6.10 - Encumbrances
Schedule 6.11(a) - Real Property
Schedule 6.11(b) - Real Property Notices
Schedule 6.11(c) - Leased Property Notices
Schedule 6.12(a) - Licensed Requisite Rights
Schedule 6.12(b) - Patents, Trademarks and Service marks
Schedule 6.13 - Contracts
Schedule 6.14(a) - Pending Litigation
Schedule 6.14(b) - Resolved Litigation
Schedule 6.15 - Compliance with Laws
Schedule 6.16(a) - Insurance Policies
Schedule 6.16(b) - Insurance Claims, Etc.
Schedule 6.17 - Employees
Schedule 6.18(a) - Employee Benefit Plans
Schedule 6.18(b) - ERISA Compliance
Schedule 6.19(a) - Environmental Laws - Violations
Schedule 6.19(b) - Previous Facilities - Environmental Compliance
Schedule 6.21 - Related Transactions
Schedule 6.22 - Accounts and Notes Receivable
Schedule 6.23 - Bank Accounts; Powers of Attorney
Schedule 7.1 - Purchaser's Jurisdictions
Schedule 7.4 - Purchaser's Capitalization
Schedule 8.5 - Terminated or Amended Agreements
-iv-
EXHIBITS
--------
Exhibit A - Form of Opinion of Seller Group's Counsel
Exhibit B - Form of General Release
Exhibit C - Form of Employment Agreement of Xxxxxxx X. Xxxxxx
Exhibit D - Form of Stockholders Agreement Amendment
Exhibit E - Form of Opinion of Purchaser's Counsel
-v-
INDEX OF DEFINED TERMS
The following capitalized terms, which may be used in more than one Section or
other location of this Agreement, are defined in the following Sections or other
locations
Section or other
Term Location
---- --------
Acquisition Proposal.......................................Annex I
Additional Amount.........................................Annex II
Affiliate..................................................Annex I
Agreement....................................................12.11
Amended and Restated Stockholder's Agreement............9.2(h)(iv)
Audited Financial Statements.............................6.6(a)(i)
Best Knowledge...............................................12.11
Business Day...............................................Annex I
Business..................................................Preamble
Capital Leases.............................................Annex I
Cash Portion...................................................1.2
Charter Documents..........................................Annex I
Closing Date.....................................................2
Closing Income Statement....................................3.1(a)
Closing Payment.............................................1.3(a)
Closing..........................................................2
Code........................................................6.9(a)
Company Employee Plans.....................................6.18(a)
Company....................................................Caption
Competing Business.........................................8.12(c)
Contingent Payment..........................................4.1(b)
Contract...................................................Annex I
Control....................................................Annex I
Covered Properties.........................................6.19(b)
EBIT.....................................................Annex III
EBIT Certificate............................................4.1(a)
EBIT Determination Date.....................................4.1(a)
Employee Benefit Plan......................................Annex I
Employment Agreement...................................9.2(h)(iii)
Encumbrances...............................................Annex I
Environmental, Health and Safety Laws......................Annex I
ERISA Affiliate............................................Annex I
Estimated Additional Amount.................................1.3(a)
Exchange Proceeds.............................................8.10
Final Determination Date....................................3.1(b)
Financial Statements....................................6.6(a)(ii)
Fiscal Year 1998............................................4.1(b)
-vi-
Section or other
Term Location
---- --------
Funded Indebtedness........................................Annex I
GAAP.......................................................Annex I
General Release.........................................9.2(h)(ii)
Governmental Entity........................................Annex I
Guaranty...................................................Annex I
Headquarters Lease.......................................9.2(h)(i)
Indemnified Persons........................................Annex I
Indemnifying Persons.......................................Annex I
Independent Accounting Firm.................................3.1(b)
Intellectual Property Rights...............................Annex I
Latest Balance Sheet Date...............................6.6(a)(ii)
Latest Balance Sheet....................................6.6(a)(ii)
Law........................................................Annex I
Leased Property............................................6.11(a)
Liability..................................................Annex I
Licensed Requisite Rights...............................6.12(a)(i)
Litigation Expense.........................................Annex I
Losses.....................................................Annex I
Management Consulting Agreement..........................9.2(h)(v)
Material Adverse Change.....................................6.8(i)
Nonrecurring................................................4.1(c)
Notice of Disagreement With Deferred
Purchase Price Certificate.................................4.1(e)
Notice of Disagreement......................................3.1(b)
Orders.....................................................Annex I
Owned Requisite Rights..................................6.12(a)(i)
Pacer......................................................Caption
Pacer Shares................................................1.3(b)
Permits....................................................Annex I
Permitted Encumbrances.....................................Annex I
Person.....................................................Annex I
Proceedings................................................Annex I
Purchase Price.................................................1.2
Purchaser Indemnified Persons..............................Annex I
Purchaser Indemnifying Persons.............................Annex I
Purchaser Losses...........................................Annex I
Purchaser..................................................Caption
Purchaser's Accountants.....................................3.1(a)
Purchaser's Certificate.....................................3.1(a)
Related Documents...........................................9.2(h)
Requisite Rights........................................6.12(a)(i)
Section 338 Election Forms..............................8.9(b)(ii)
Section 338 Elections....................................8.9(b)(i)
Securities Act.............................................Annex I
Securities.................................................Annex I
-vii-
Section or other
Term Location
---- --------
Seller Group............................................Caption
Seller Indemnified Persons..............................Annex I
Seller Indemnifying Persons.............................Annex I
Seller Losses...........................................Annex I
Seller..................................................Caption
Shares.................................................Preamble
Special Tax Losses......................................Annex I
Stock..................................................Preamble
Stockholders Agreement Amendment....................9.2(h)(iii)
Tax Claim..................................................10.7
Tax Return..............................................Annex I
Tax(es).................................................Annex I
Terminals...............................................Caption
Third Party Claim..........................................10.3
Transport...............................................Caption
Unaudited Financial Statements.......................6.6(a)(ii)
-viii-
EXECUTION COPY
STOCK PURCHASE AGREEMENT dated as of May
29, 1998, by and among PACER INTERNATIONAL, INC.,
a Delaware corporation (the "Purchaser" or
---------
"Pacer"), CROSS CON TERMINALS, INC., a Delaware
corporation ("Terminals"), CROSS CON TRANSPORT,
---------
INC., a Illinois corporation ("Transport";
---------
Terminals and Transport collectively, the
"Companies" and each individually, a "Company"),
---------- -------
and XXXXXXX X. XXXXXX (the "Seller;" and together
-------
with the Companies prior to the Closing, the
"Seller Group").
-------------
PREAMBLE
The Companies are engaged in the business (the "BUSINESS") of
--------
providing intermodal marketing company services and drayage services to third
party customers.
The Seller is the sole shareholder of each Company, with the Seller
owning all 250 outstanding shares of the common stock, par value $1.00 per
share, of Terminals and all 1,000 shares of the common stock, no par value, of
Transport (collectively, the "STOCK"). The shares of Stock owned by the Seller
-----
are collectively referred to herein as the "SHARES". The Seller desires to sell
------
to the Purchaser, and the Purchaser desires to purchase from the Seller, all of
the Shares, on the terms and subject to the conditions contained in this
Agreement. Certain capitalized terms used in this Agreement are defined on
ANNEX I attached hereto.
-------
ACCORDINGLY, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows.
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 TRANSFER OF SHARES.
------------------
On the terms and subject to the conditions of this Agreement, at the
Closing, the Seller shall sell, transfer, convey and assign to the Purchaser,
and the Purchaser shall purchase and acquire from the Seller, all of the Shares,
free and clear of all Encumbrances.
1.2 PURCHASE PRICE.
--------------
The aggregate purchase price (the "PURCHASE PRICE") to be paid by the
--------------
Purchaser to the Seller for the Shares shall be an aggregate amount equal to the
sum of the Cash Portion plus the Pacer Shares issued and delivered by Pacer to
----
the Seller at the Closing pursuant to SECTION 1.3(B). As used herein, the term
--------------
"CASH PORTION" means the sum of (i) $9,600,000.00 , plus (ii)
------------ ----
the Additional Amount, if any, as finally determined pursuant to ARTICLE III,
-----------
plus (iii) the Contingent Amount, if any, as finally determined pursuant to
----
ARTICLE IV.
----------
1.3 PAYMENT AT CLOSING.
------------------
(a) On the Closing Date, the Purchaser shall pay to the Seller by wire
transfer of immediately available funds to the account designated by the Seller,
an amount equal to the sum of (i) $9,600,000.00 plus (ii) the Estimated
----
Additional Amount (the "CLOSING PAYMENT"). As used herein, the term "ESTIMATED
--------------- ---------
ADDITIONAL AMOUNT" means an amount equal to the sum of (A) $861,902 (calculated
-----------------
as the difference between (x) $1,125,000 (which is the parties' agreed upon
estimate of the combined net income of the Companies for the period from (and
including) January 1, 1998, through (and including) May 31, 1998) less (y)
----
$263,098 (which is the amount by which the aggregate amount of all dividends and
distributions paid by the Companies to the Seller since December 31, 1997, as
set forth on Schedule 6.8 exceeds $1,391,000)) plus (B) interest on $861,902 at
------------ ----
the rate of 8% per annum, calculated on a per diem basis from and including June
1, 1998, through but excluding the Closing Date (assuming a year of 365 days).
(b) At the Closing, the Purchaser shall issue and deliver to the Seller a
certificate registered in the Seller's name evidencing 57,000 shares of common
stock, $.01 par value (the "Pacer Common Stock"), of Pacer(the "PACER SHARES")
------------------ ------------
issued in the name of the Seller.
1.4 DELIVERY OF SHARES.
------------------
At the Closing, in consideration of the Purchaser's delivery of the
Closing Payment and the Pacer Shares pursuant to SECTION 1.3, (a) the Seller
-----------
shall deliver to each Company the certificate or certificates representing the
Shares of such Company owned by the Seller (or, in lieu thereof, an Affidavit of
Loss and Indemnity reasonably satisfactory in form and substance to the
Purchaser), duly endorsed for transfer to the Purchaser or accompanied by duly
executed stock powers transferring the Shares to the Purchaser, in each case
sufficient in form and substance to convey to the Purchaser good title to all of
the Shares, free and clear of all Encumbrances, and (b) each Company shall
deliver to the Purchaser certificates registered in the name of the Purchaser
representing the Shares.
1.5 FURTHER ASSURANCES.
------------------
The Seller shall, at any time after the Closing, upon the request of
the Purchaser and at the Purchaser's expense, do, execute, acknowledge and
deliver, and cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
other assurances as may be required to transfer, convey, grant and confirm to
and vest in the Purchaser good title to (i) the Shares and (ii) any asset used
in or necessary for the conduct of the Business that is owned by the Seller or
any Affiliate of the Seller (other than fee title to the real estate and
improvements thereon to be subject to the Headquarters Lease), in each case free
and clear of all Encumbrances.
-2-
ARTICLE II
THE CLOSING
The closing (the "CLOSING") of the transactions contemplated by this
-------
Agreement shall take place at the offices of X'Xxxxxxxx, Graev & Karabell, LLP,
counsel for the Purchaser, at the address set forth in SECTION 12.7, on June 3,
------------
1998, or such other place or later date as shall be mutually agreeable to the
parties hereto (the "CLOSING DATE"), provided that all of the conditions set
------------
forth in ARTICLE IX have been satisfied or waived (other than those conditions
----------
which by their terms are intended to be satisfied at the Closing).
ARTICLE III
FINAL DETERMINATION OF ADDITIONAL AMOUNT
3.1 PREPARATION AND DELIVERY OF STATEMENTS.
--------------------------------------
(a) As soon as practicable after the Closing, but in no event later than 60
days after the Closing Date, the Purchaser shall prepare and deliver to the
Seller (i) a combined statement of operations of the Companies for the period
from (and including) January 1, 1998, through (and including) the Closing Date
(the "CLOSING INCOME STATEMENT") and (ii) a certificate from the Chief Financial
------------------------
Officer of the Purchaser setting forth the Purchaser's calculation of the
Additional Amount (the "PURCHASER'S CERTIFICATE" ). As used herein, the term
-----------------------
"ADDITIONAL AMOUNT" has the meaning set forth on ANNEX II. The Closing Income
------------------ --------
Statement shall be prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with the preparation of the
Annual Financial Statements (subject to those exceptions set forth on ANNEX II),
--------
and shall be reviewed by Xxxxxx Xxxxxxxx LLP (the "PURCHASER'S ACCOUNTANTS").
-----------------------
(b) The Seller (together with his accountants (the "Seller's Accountants")
and other advisers, as he may determine) shall be entitled to review the Closing
Income Statement, the Purchaser's Certificate and any working papers, trial
balances and similar materials relating to the Purchaser's preparation of the
Closing Income Statement and/or the Purchaser's Accountants' review thereof for
a period of thirty days following the Seller's receipt of the Closing Income
Statement and the Purchaser's Certificate. The Purchaser shall provide the
Seller (together with the Seller's Accountants and other advisers, as he may
determine) with timely access, during the Companies' normal business hours, to
each Company's personnel, properties, books and records in connection with such
review by the Seller. The Closing Income Statement and the Additional Amount
set forth in the Purchaser's Certificate shall become final and binding upon the
parties on the thirty-first day following delivery thereof unless the Seller
gives written notice to the Purchaser of its disagreement therewith (a "NOTICE
------
OF DISAGREEMENT") prior to such date. Any Notice of Disagreement shall specify
---------------
in reasonable detail the nature of any disagreement so asserted. If a timely
Notice of Disagreement is received by the Purchaser, then the Closing Income
Statement and the Additional Amount set forth therein (as revised in accordance
with clause (x) or (y) below) shall become final and binding upon the parties on
the earlier of (x) the date on which the Purchaser and the Seller resolve in
writing any differences they have with respect to any matter specified in the
Notice of Disagreement or (y) the date on
-3-
which any matters in dispute are finally resolved in writing by the Independent
Accounting Firm (as defined below). The date on which the Closing Income
Statement and the Additional Amount set forth therein so become final and
binding is called "FINAL DETERMINATION DATE." During the 30 days immediately
------------------------
following the delivery of any Notice of Disagreement, the Purchaser and the
Seller shall seek in good faith to resolve in writing any differences which they
may have with respect to any matter specified in such Notice of Disagreement.
During such period, the Purchaser and the Seller shall each have reasonable
access to the other party's and its accountants' working papers, trial balances
and similar materials prepared in connection with the other party's preparation
and/or review of the Closing Income Statement and the Notice of Disagreement, as
the case may be. At the end of such 30-day period, the Seller and the Purchaser
shall submit to an independent "Big 6 public accounting firm (but not Xxxxxx
Xxxxxxxx, LLP) (the "INDEPENDENT ACCOUNTING FIRM") for review and resolution any
---------------------------
and all matters which remain in dispute and which were included in any Notice of
Disagreement, and the Independent Accounting Firm shall reach a final, binding
resolution of all matters which remain in dispute, which final resolution shall
be (i) in writing, (ii) furnished to the Purchaser and the Seller as soon as
practicable after the items in dispute have been referred to the Independent
Accounting Firm, (iii) made in accordance with this Agreement and (iv)
conclusive and binding upon the parties to this Agreement. The Closing Income
Statement and the Additional Amount set forth thereon, with any adjustments
necessary to reflect the Independent Accounting Firm's resolution of the matters
in dispute, shall become final and binding on the Purchaser and the Seller on
the date the Independent Accounting Firm delivers its final resolution to the
parties. The parties shall endeavor in good faith to cause the Independent
Accounting Firm to so deliver its final determination within 120 days after the
Closing Date. The Independent Accounting Firm shall be Deloitte & Touche, or if
such firm is unable or unwilling to act, such other independent "Big 6" public
accounting firm as shall be agreed upon by the Purchaser and the Seller in
writing or, if the Purchaser and the Seller cannot so agree within the 30-
calendar day period referred to above, by lot from among the remaining
independent "Big 6" public accounting firms (other than Xxxxxx Xxxxxxxx) willing
to act. Each party shall pay its own fees, costs and expenses incurred in
connection with the discussion and negotiation of any and all disputes that may
arise as to the Closing Income Statement and the determination of the Additional
Amount and in connection with any such arbitration; provided, however, that the
-------- -------
fees and disbursements of the Independent Accounting Firm shall be allocated
between the Seller on the one hand and the Purchaser on the other hand in the
same proportion that the aggregate amount of the disputed items submitted to the
Independent Accounting Firm that is unsuccessfully disputed by each such party
(as finally determined by the Independent Accounting Firm) bears to the total
amount of such disputed items so submitted.
3.2 ADJUSTMENTS AND PAYMENT.
-----------------------
Upon the final determination of the Additional Amount, pursuant to
SECTION 3.1, the following adjustment shall be made, if any, and the following
-----------
payment shall be made, if any, within five (5) days after the Final
Determination Date:
(i) if the Additional Amount as finally determined is greater than the
Estimated Additional Amount, the Cash Portion shall be increased by an
amount equal to such excess and the Purchaser shall pay such excess to the
Seller, by wire transfer of immediately available funds pursuant to SECTION
-------
1.3(A); or
------
-4-
(ii) if the Additional Amount as finally determined is less than the
Estimated Additional Amount, the Cash Portion shall be decreased by an
amount equal to such deficiency and the Seller shall pay such deficiency to
the Purchaser, by wire transfer of immediately available funds to an
account designated by the Purchaser; or
(iii) if the Additional Amount as finally determined equals the
Estimated Additional Amount, then no adjustment shall be made to the Cash
Portion and no payment shall be required to be made under this ARTICLE III.
-----------
ARTICLE IV
CONTINGENT PAYMENT
4.1 DETERMINATION OF CONTINGENT PAYMENT.
-----------------------------------
(a) As soon as practicable, but in no event later than 30 days following the
Purchaser's receipt from the Purchaser's Accountants of the Purchaser's audited
consolidated financial statements as of and for the fiscal year ended December
31, 1998, the Purchaser shall provide the Seller with a copy of the combined
statement of operations of the Companies for the fiscal year ending December 31,
1998 (the "1998 INCOME STATEMENT"), and a certificate from the Chief Financial
---------------------
Officer of the Purchaser (the "EBIT CERTIFICATE") setting forth in reasonable
----------------
detail the Purchaser's calculation of the combined EBIT (as defined on ANNEX
-----
III) of the Companies for the fiscal year ending December 31, 1998 (the "1998
----
EBIT AMOUNT"). The 1998 Income Statement and the 1998 EBIT Amount shall be
-----------
prepared and calculated as set forth on ANNEX III. The Seller (together with
---------
the Sellers' Accountants and other advisers) shall be entitled to review the
1998 Income Statement and the EBIT Certificate and any working papers, trial
balances and similar materials relating to the 1998 Income Statement and the
EBIT Certificate prepared by the Purchaser and/or the Purchaser's Accountants
for a period of 30 days following the Seller's receipt of the 1998 Income
Statement and the EBIT Certificate, and the Purchaser shall, during such period,
provide the Seller and the Sellers' Accountants with reasonable access during
the Companies' normal business hours to each Company's personnel, properties,
books and records in connection with such review. The 1998 EBIT Amount set
forth in the EBIT Certificate shall become final and binding upon the parties on
the thirty-first day following delivery thereof unless the Seller gives written
notice to the Purchaser of its disagreement with the EBIT Certificate (a "NOTICE
------
OF DISAGREEMENT WITH EBIT CERTIFICATE") prior to such date. Any Notice of
-------------------------------------
Disagreement With EBIT Certificate shall specify in reasonable detail the nature
of any disagreement so asserted. If a timely Notice of Disagreement With EBIT
Certificate is delivered by the Seller to the Purchaser, then the 1998 EBIT
Amount set forth in the EBIT Certificate (as revised (if at all) in accordance
with clause (x) or (y) below), shall become final and binding upon the parties
on the earlier of (x) the date the Purchaser and the Seller resolve in writing
any differences they have with respect to any matter specified in such Notice of
Disagreement With EBIT Certificate or (y) the date any matters in dispute are
finally resolved in writing by the Independent Accounting Firm (the date on
which the 1998 EBIT Amount becomes final and binding being hereinafter referred
to as the "EBIT DETERMINATION DATE"). During the 30 days immediately following
-----------------------
the delivery of any such Notice of Disagreement With EBIT Certificate, the
Purchaser and the Seller shall seek in good faith to resolve in writing any
differences which they may have with respect to any matter
-5-
specified in such Notice of Disagreement With EBIT Certificate. During such
period, the Purchaser and the Seller shall each have reasonable access to the
other party's and its accountants' working papers, trial balances and similar
materials prepared in connection with the other party's preparation and/or
review of the 1998 Income Statement, the EBIT Certificate and the Notice of
Disagreement With EBIT Certificate, as the case may be. At the end of such 30-
day period, the Seller and the Purchaser shall submit to the Independent
Accounting Firm for review and resolution any and all matters which remain in
dispute and which were included in any Notice of Disagreement With EBIT
Certificate, and the Independent Accounting Firm shall reach a final, binding
resolution of all matters which remain in dispute, which final resolution shall
be (i) in writing, (ii) furnished to the Purchaser and the Seller as soon as
practicable after the items in dispute have been referred to the Independent
Accounting Firm, (iii) made in accordance with this Agreement and (iv)
conclusive and binding upon the Purchaser and the Seller. The 1998 EBIT Amount,
as adjusted to reflect the Independent Accounting Firm's resolution of the
matters in dispute, shall become final and binding on the Purchaser and the
Seller on the date the Independent Accounting Firm delivers its final resolution
to the parties. Each party shall pay its own fees, costs and expenses incurred
in connection with the discussion and negotiation of any and all disputes that
may arise as to the 1998 Income Statement and the determination of the 1998 EBIT
Amount and in connection with any such arbitration; provided, however, that the
-------- -------
fees and disbursements of the Independent Accounting Firm shall be allocated
between the Seller on the one hand and the Purchaser on the other hand in the
same proportion that the aggregate amount of the disputed items submitted to the
Independent Accounting Firm that is unsuccessfully disputed by each such party
(as finally determined by the Independent Accounting Firm) bears to the total
amount of such disputed items so submitted.
(b) Upon the final determination of the 1998 EBIT Amount, pursuant to SECTION
-------
4.1(A), the following adjustment shall be made to the Cash Portion, if any,
------
within five (5) days after the EBIT Determination Date:
(i) if the 1998 EBIT Amount as finally determined exceeds
$2,997,000.00, the Cash Portion shall be increased by $1,500,000.00 and the
Purchaser shall pay to the Seller the amount of such increase by wire
transfer of immediately available funds pursuant to SECTION 1.3(A); or
--------------
(ii) if the 1998 EBIT Amount as finally determined is more than
$2,500,000.00 and less than or equal to 2,997,000.00, the Cash Portion
shall be increased by an amount equal to the product of $1,500,000.00
multiplied by a fraction, the numerator of which is the 1998 EBIT Amount
less $2,500,000 and the denominator of which is $497,000.00, and the
Purchaser shall pay to the Seller the amount of such increase by wire
transfer of immediately available funds pursuant to SECTION 1.3(A); or
--------------
(iii) if the 1998 EBIT Amount as finally determined is less than or
equal to $2,500,000.00, then no adjustment shall be made to the Cash
Portion and no payment shall be required under this ARTICLE IV.
----------
Any payment made to the Seller pursuant to ARTICLE IV shall be referred to as
----------
the "CONTINGENT PAYMENT."
------------------
-6-
4.2 OPTION TO RECEIVE CONTINGENT IN SHARES.
--------------------------------------
If the Purchaser shall have completed an initial public offering of
the Pacer Common Stock prior to the EBIT Determination Date, the Seller may, at
his sole option, elect to receive the Contingent Payment, if any, to which he is
entitled pursuant to clause (i) or (ii) of the first sentence of Section 4.1(b)
--------------
in shares of Pacer Common Stock, such number of shares to be determined by
dividing the amount of such Contingent Payment by an amount equal to the per
share Market Price of the Pacer Common Stock determined as of the EBIT
Determination Date. As used herein, "Market Price" means, as to any publicly
------------
traded security, the average of the closing prices of such security's sales on
all United States securities exchanges on which such security may at the time be
listed, or, if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any day such security is not so listed, the average
of the representative bid and asked prices quoted in The NASDAQ Stock Market as
of 4:00 P.M., New York time, on such day, or, if on any day such security is not
quoted in The NASDAQ Stock Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar or successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which "Market Price" is being determined and the 20 consecutive
business days prior to such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants as to himself as of the date hereof
and as of the Closing Date as follows:
5.1 TITLE TO THE SHARES.
-------------------
The Seller is the lawful owner, of record and beneficially, of all of
the Shares and has good and marketable title to such Shares, free and clear of
any Encumbrances whatsoever and with no restriction on the voting rights and
other incidents of record and beneficial ownership pertaining thereto. The
Seller is not the subject of any bankruptcy, reorganization or similar
proceeding. Except for this Agreement and except as set forth on SCHEDULE 5.1,
------------
there are no agreements or understandings between the Seller or any other Person
with respect to the acquisition, disposition, transfer, registration or voting
of, or any other matters in any way pertaining or relating to, any of the
capital stock or other securities of any Company. The Seller does not have any
right whatsoever to receive or acquire any additional capital stock or other
securities of any Company.
5.2 AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION; CONSENTS.
-----------------------------------------------------
(a) The Seller has the full and absolute legal right, capacity, power and
authority to enter into this Agreement and each Related Document to which Seller
is or will be a party, this Agreement and each Related Document to which the
Seller is or will be a party has been, or
-7-
upon the execution thereof will be, duly and validly executed and delivered by
the Seller, and this Agreement and each Related Document is, or upon the
execution thereof will be, the valid and binding obligation of the Seller,
enforceable against the Seller in accordance with their respective terms.
(b) Neither the execution, delivery or performance by the Seller of, nor the
performance by the Seller of his obligations under, this Agreement and each
Related Document to which the Seller is or will be a party, nor the consummation
of the transactions contemplated hereby or thereby, nor compliance by the Seller
with any of the provisions hereof or thereof will (i) conflict with, or result
in any violation of, or cause a default (with or without notice or lapse of time
or both) under, or give rise to any right of termination, amendment,
cancellation or acceleration of any obligations contained in, or the loss of any
benefit under, any term, condition or provision of any Contract to which the
Seller is a party or by which the Seller or his assets may be bound, or (ii)
violate any Law applicable to the Seller, which conflict or violation could
prevent or impair the consummation of the transactions contemplated by this
Agreement or any of the Related Documents to which the Seller is or will be a
party or result in an Encumbrance on or against any assets, rights or properties
of the Seller or the Company, or on or against any capital stock or other
securities of any Company, or give rise to any claim against any Company or the
Purchaser.
(c) Except as set forth on SCHEDULE 5.2, no Permit, authorization,
consent or approval of or by, or any notification of or filing with, any Person
(governmental or private) is required in connection with the execution, delivery
and performance by the Seller of this Agreement or the Related Documents to
which the Seller is or will be a party or the consummation by the Seller of the
transactions contemplated hereby or thereby.
5.3 INVESTMENT REPRESENTATIONS.
--------------------------
(a) The Seller is acquiring the Pacer Shares to be acquired by the Seller
hereunder for his own account, for investment and not with a view to the
distribution thereof in violation of the Securities Act or applicable state
securities laws.
(b) The Seller understands that (i) the Pacer Shares have not been registered
under the Securities Act or applicable state securities laws by reason of their
issuance by the Purchaser in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities laws and (ii)
the Pacer Shares must be held by the Seller indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable state
securities laws or is exempt from registration.
(c) The Seller further understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the Seller)
promulgated under the Securities Act depends on the satisfaction of various
conditions, and that, if applicable, Rule 144 may only afford the basis for
sales of Pacer Shares acquired hereunder only in limited amounts.
(d) The Seller is an "accredited investor" (as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act). The Purchaser has made
available to the Seller or his attorneys and other representatives all
agreements, documents, records and books that the Seller
-8-
has requested relating to his acquisition of the Pacer Shares. The Seller has
had an opportunity to ask questions of, and receive answers from, persons acting
on behalf of the Purchaser concerning the Purchaser and the terms and conditions
of the Seller's acquisition of the Pacer Shares hereunder, and answers have been
provided to all of such questions to the full satisfaction of the Seller. The
Seller has such knowledge and experience in financial and business matters that
he is capable of evaluating the risks and merits of his acquisition of the Pacer
Shares hereunder.
(e) The Seller is not a person who himself is, or would cause the Purchaser
to be, disqualified pursuant to Rule 262 promulgated under the Securities Act of
1933, as amended.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANIES
Each Company and the Seller jointly and severally represent and
warrant as of the date hereof and as of the Closing Date as follows:
6.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
------------------------------------------------
Each Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as presently conducted and as presently
proposed to be conducted. Each Company is duly qualified and in good standing
to transact business as a foreign Person in those jurisdictions set forth on
SCHEDULE 6.1, which constitute all the jurisdictions in which the character of
------------
the property owned, leased or operated by such Company or the nature of the
business or activities conducted by such Company makes such qualification
necessary. The Purchaser has been furnished with true, correct and complete
copies of the Charter Documents of each Company in each case as amended and in
effect on and as of the date this representation is being made and is deemed
made. Except as set forth on SCHEDULE 6.1, no Company has (i) engaged in any
------------
business or activity other than the Business or (ii) used within the last five
years any trade name or assumed names.
6.2 AUTHORITY; AUTHORIZATION, EXECUTION AND DELIVERY; ENFORCEABILITY.
----------------------------------------------------------------
(a) Each Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and each Related Document to
which it is or will be a party and to consummate the transactions contemplated
hereby and thereby. Each Company's execution and delivery of this Agreement and
each Related Document to which it is or will be a party, and the performance by
any Company of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite action on the part of such Company and the
Seller, and this Agreement and each Related Document to which such Company is or
will be a party has been, or upon such Company's execution thereof will be, duly
and validly executed and delivered by such Company and constitutes, or upon such
Company's
-9-
execution and delivery thereof will constitute, a valid and binding obligation
of such Company, enforceable against such Company in accordance with its terms.
(b) Except as set forth on SCHEDULE 6.3, neither the execution and delivery
------------
by any Company of, nor the performance of its obligations under, this Agreement
and each Related Document to which it is or will be a party, nor the
consummation of the transactions contemplated hereby or thereby, nor the
compliance by such Company with any of the provisions hereof and thereof will
(i) conflict with, or result in any violation of, or cause a default (with or
without notice or lapse of time or both) under, or give rise to any right of
termination, amendment, cancellation or acceleration of any obligations
contained in, or the loss of any benefit under, any term, condition or provision
of any provision of such Company's Charter Documents or any Contract to which
any Company is a party, or by which any Company or its assets may be bound, or
(ii) violate any Law applicable to any Company, which conflict or violation
could prevent or impair the consummation of any of the transactions contemplated
by this Agreement or any of the Related Documents to which any Company is or
will be a party or result in an Encumbrance on or against any assets, rights or
properties of any Company, or on or against any capital stock or other
securities of any Company, or give rise to any claim against any Company or the
Purchaser.
6.3 CONSENTS.
--------
Except as set forth on SCHEDULE 6.3, no Permit, authorization, consent
------------
or approval of or by, or notification of or filing with, any Person
(governmental or otherwise) is required in connection with the execution,
delivery and performance by any Company of this Agreement or the Related
Documents to which it is or will be a party or the consummation of the
transactions contemplated hereby or thereby.
6.4 CAPITALIZATION.
--------------
(a) The authorized capital stock of each Company is as set forth on SCHEDULE
--------
6.4, which schedule also sets forth the total number of outstanding shares of
---
each Company. All such outstanding shares disclosed on SCHEDULE 6.4 are duly
------------
and validly issued and outstanding, fully paid and nonassessable, with no
personal Liability attached to the ownership thereof, and are held of record and
beneficially by the Seller, without Encumbrance.
(b) Except as set forth on SCHEDULE 6.4, there are no outstanding securities
------------
which are convertible into, exchangeable for, or carrying the right to acquire,
any equity securities of any Company, or subscriptions, warrants, options,
calls, puts, convertible securities, registration or other rights, arrangements
or commitments obligating any Company to issue, sell, register, purchase or
redeem any of its equity securities or any ownership interest or rights therein.
There are no voting trusts or other agreements or understandings to which any
Company is bound with respect to the voting of such Company's or any other
Person's capital stock or share capital. There are no stock appreciation
rights, phantom stock rights or similar rights or arrangements outstanding with
respect to any Company. Except as set forth on SCHEDULE 6.4, there are no
------------
Contracts, commitments, arrangements, understandings or restrictions to which
any Company, the Seller or any other Person is bound relating in any way to any
shares of capital stock or other securities of any Company.
-10-
(c) All securities issued by each Company have been issued in transactions
exempt from registration under the Securities Act and the rules and regulations
promulgated thereunder and all applicable state securities or "blue sky" laws,
and no Company has violated the Securities Act or any applicable state
securities or "blue sky" laws in connection with the issuance of any such
securities.
6.5 SUBSIDIARIES; INVESTMENTS.
-------------------------
Except as set forth on SCHEDULE 6.5, no Company owns or holds,
------------
directly or indirectly, any equity interest in any other Person.
6.6 FINANCIAL INFORMATION.
---------------------
(a) SCHEDULE 6.6 attached hereto contains true, correct and complete copies
------------
of the following:
(i) (A) the audited combined balance sheets of the Companies as of
December 31, 1997, 1996 and 1995, and the related audited combined
statements of operations, stockholder's equity and cash flows of the
Companies for the fiscal years then ended, including the footnotes and
schedules thereto, as audited by (and together with the report of their
audit) Xxxxxx Xxxxxxxx LLP (all of foregoing being hereinafter collectively
called the "ANNUAL FINANCIAL STATEMENTS") and
---------------------------
(ii) the unaudited combined balance sheet of the Companies as of March
31, 1998 (the "LATEST BALANCE SHEET"; and such date being the "LATEST
-------------------- ------
BALANCE SHEET DATE"), and the unaudited combined statements of operations,
------------------
stockholder's equity and cash flows of the Companies for the three-month
period then ended, including any footnotes and schedules thereto (all of
the foregoing, including the Latest Balance Sheet, being hereinafter
collectively referred to as the "INTERIM FINANCIAL STATEMENTS"; and the
----------------------------
Annual Financial Statements and the Interim Financial Statements
collectively, the "FINANCIAL STATEMENTS").
--------------------
(b) The Financial Statements (i) are true, complete and correct, (ii) fairly
present the combined financial position of the Companies as of the dates
indicated and the combined results of operations of the Companies for the
periods indicated, (iii) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby (subject to the exceptions on
SCHEDULE 6.6) and (iv) are in accordance with the books and records of the
Companies which have been maintained in a manner consistent with historical
practice.
6.7 ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
Except as disclosed on SCHEDULE 6.7, no Company has any Liabilities
------------
except (i) to the extent expressly reflected or reserved against on such
Company's Latest Balance Sheet, (ii) Liabilities under Contracts (except
resulting from any breach thereof) and (iii) Liabilities incurred in the
ordinary course of business consistent with past practice since the Latest
Balance Sheet Date (other than any such Liability arising from breach of
contract, breach of warranty, tort, infringement, or violation or Law of
Proceedings). There are no loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the Financial
-11-
Accounting Standards Board in March 1975) of or affecting any Company which are
not adequately provided for or disclosed on such Company's Latest Balance Sheet
or in the notes thereto. No Company has, either expressly or by operation of
Law, assumed or undertaken any Liability of any other Person, including any
obligation for corrective or remedial action relating to Environmental, Health
and Safety Laws.
6.8 ABSENCE OF CHANGES.
------------------
Since the Latest Balance Sheet Date, except as set forth on SCHEDULE
--------
6.8, each Company has been operated in the ordinary course, consistent with past
---
practice, and there has not been:
(i) any adverse change in the business, operations, assets, condition
(financial or otherwise), operating results, liabilities, relations with
employees, customers or suppliers, or prospects of any Company, or any
casualty loss or damage to the assets of any Company, whether or not
covered by insurance (a "MATERIAL ADVERSE CHANGE");
-----------------------
(ii) any declaration, setting aside or payment of any distribution with
respect to any shares of capital stock of any Company, or any direct or
indirect redemption, purchase or other acquisition of any thereof, or any
other payments of any nature to any Affiliate of any Company whether or not
on or with respect to any shares of capital stock of such Company owned by
such Affiliate (excluding salaries and benefits paid in the ordinary course
of business consistent with past practices, and dividends paid in
accordance with this Agreement);
(iii) any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) of any Company, or any increase in any such
compensation payable to any officer, director or key employee;
(iv) any change in the tax or other accounting methods or practices
followed by any Company, any change in the depreciation or amortization
policies or rates previously adopted or any write-up of inventory or other
assets;
(v) any change in the manner in which products or services of any
Company are marketed (including any change in prices), any change in the
manner in which any Company extends discounts or credit to customers or any
change in the manner or terms by which any Company collects accounts
receivable or otherwise deals with customers;
(vi) any failure by any Company to make scheduled capital expenditures
or investments or any failure to pay trade accounts payable or any other
Liability of such Company when due; or
(vii) any agreement, whether in writing or otherwise, to take any of
the actions specified in the foregoing CLAUSES (I) through (VI).
----------- ----
SCHEDULE 6.8 sets forth the aggregate amount of all dividends and distributions
------------
paid by the Companies since December 31, 1997, including the date and amount of
each such payment.
-12-
6.9 TAX MATTERS.
-----------
(a) Except as set forth on SCHEDULE 6.9(A), each Company and each other
---------------
Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "CODE"), of which any Company is or has been a
----
member:
(i) has timely paid or caused to be paid all Taxes required to be paid
by it through the date hereof and as of the Closing Date (including any
Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and proper manner
(within any applicable extension periods) all Tax Returns required to be
filed by it with the appropriate Governmental Entities in all jurisdictions
in which such Tax Returns are required to be filed; and
(iii) has not requested or caused to be requested any extension of
time within which to file any Tax Return, which Tax Return has not since
been filed.
(b) Each Company has previously delivered to the Purchaser true, correct and
complete copies of all Tax Returns filed by or on behalf of the Companies for
all completed Tax years of each of the Companies that remain open for audit or
review by the relevant Taxing authority. All such Tax Returns were complete and
correct.
(c) Except as set forth in SCHEDULE 6.9(C):
---------------
(i) no Company has been notified by the Internal Revenue Service or any
other taxing authority that any issues have been raised (and no such issues
are currently pending) by the Internal Revenue Service or any other taxing
authority in connection with any Tax Return of any Company, there are no
pending Tax audits and no waivers of statutes of limitations have been
given or requested with respect to any Company;
(ii) full and adequate provision has been made (A) on the Latest
Balance Sheet Date for all Taxes payable by the Companies for all periods
ending on or prior to the Latest Balance Sheet Date, and (B) on the books
and records each Company for all Taxes payable by such Company for all
periods beginning on or after the Latest Balance Sheet Date;
(iii) no Company has incurred any Tax Liability from and after the
Latest Balance Sheet Date other than Taxes incurred in the ordinary course
of business and consistent with previous years and past practices;
(iv) no Company (A) is, or has made an election to be treated as, a
"consenting corporation" under Section 341(f) of the Code or (B) is, or has
been, a "personal holding company" within the meaning of Section 542 of the
Code;
-13-
(v) each Company has complied in all respects with all applicable Laws
relating to the collection or withholding of Taxes (such as sales Taxes or
withholding of Taxes from the wages of employees);
(vi) no Company is or has ever been a party to any Tax sharing
agreement with any Person;
(vii) no Company has incurred any Liability to make or possibly make
any payments either alone or in conjunction with any other payments that:
(A) shall be non-deductible under, or would otherwise constitute
a "parachute payment" within the meaning of, Section 280G of the Code
(or any corresponding provision of state, local or foreign income Tax
Law) or
(B) are or may be subject to the imposition of an excise Tax
under Section 4999 of the Code;
(viii) no Company has agreed to or is required to make any adjustments
or changes either on, before or after the Closing Date, to its accounting
methods pursuant to Section 481 of the Code, and the Internal Revenue
Service has not proposed any such adjustments or changes in the accounting
methods of any Company;
(ix) no claim has ever been made by any Taxing authority in a
jurisdiction in which any Company does not file Tax Returns that such
Company is or may be subject to taxation by that jurisdiction and
(x) neither any Company nor the Seller is a foreign Person within the
meaning of Section 1.1445-2(b) of the rules and regulations promulgated
under Section 1445 of the Code, and the Purchaser has been furnished with
true and accurate certificates of the Companies and the Seller so stating
which complies in all respects with Section 1.1445-2(b)(1) of such rules
and regulations.
(d) Terminals has had in effect at all times since March 1, 1993, through the
date hereof a valid election under Section 1362(a) of the Code to be taxed as an
S corporation.
(e) Transport has had in effect at all times since February 23, 1993, through
the date hereof a valid election under Section 1362(a) of the Code to be taxed
as an S corporation.
6.10 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
----------------------------------------------------------
(a) Each Company has good and marketable title (or a valid leasehold
interest) to all of the assets, properties and interests in properties, real,
personal or mixed, reflected on the Latest Balance Sheet or acquired after the
Latest Balance Sheet Date (except for property sold or otherwise disposed of
since the Latest Balance Sheet Date in the ordinary course of business and
accounts receivable and notes receivable paid in full subsequent to the Latest
Balance Sheet Date), free and clear of all Encumbrances, of any kind or
character, except for those Encumbrances set forth on SCHEDULE 6.10 and
-------------
Permitted Encumbrances. Such assets are in good operating condition and repair
(normal wear and tear excepted), are sufficient to operate the
-14-
Business as presently conducted and as presently proposed to be conducted, are
suitable for the uses for which they are used in the Business, are not subject
to any condition which interferes with the economic value or use thereof. With
respect to any leased assets, such assets are in such condition as to permit the
surrender thereof by the Companies to the lessors thereunder on the date hereof
without any cost or expense for repair or restoration as if the related leases
were terminated on the date hereof in the ordinary course of business. Except
for any inventory, supplies trailers and automobiles in transit in the ordinary
course of business, all tangible personal property is located on the premises of
the Companies listed on SCHEDULE 6.11.
-------------
6.11 REAL PROPERTY-OWNED OR LEASED.
-----------------------------
(a) SCHEDULE 6.11(A) contains a list of all of the real property owned,
----------------
leased, subleased or otherwise occupied by the Companies . The description of
each parcel of real property subject to one or more leases (the "LEASED
------
PROPERTY") includes the names of the lessor and the lessee and the basic terms
thereof. The real property listed on SCHEDULE 6.11(A) constitutes all real
----------------
property used or occupied by the Companies in connection with the Business.
(b) With respect to the real property, except as set forth on SCHEDULE
--------
6.11(B): (i) no portion thereof is subject to any pending condemnation
-------
Proceeding or Proceeding by any public or quasi-public authority and, to the
Best Knowledge of the Seller, there is no threatened condemnation or Proceeding
with respect thereto; (ii) the physical condition of the property is sufficient
to permit the continued conduct of the Business as presently conducted and as
presently proposed to be conducted, subject to the provision of usual and
customary maintenance and repair performed in the ordinary course with respect
to similar properties of like age and construction; (iii) the Company indicated
on SCHEDULE 6.11(B) is the fee owner or owner and holder of all the leasehold
----------------
estates purported to be granted by such leases, as applicable; (iv) there are no
Contracts, written or oral, to which any Company or any Affiliate thereof is a
party, granting to any party or parties the right of use or occupancy of any
portion of real property; (v) there are no parties (other than the Companies) in
possession of the real property; (vi) no notice of any increase in the assessed
valuation of any real property and no notice of any contemplated special
assessment has been received by any Company and to the Best Knowledge of the
Seller, there is no threatened increase in assessed valuation or threatened
special assessment pertaining to any real property; and (vii) to the Best
Knowledge of the Seller, the current lease for the Companies' Headquarters
facility is at a rental rate that does not exceed fair market value..
(c) Notwithstanding anything contained in SECTION 6.11(B) to the contrary,
---------------
with respect to the Leased Property, except as set forth on SCHEDULE 6.11(C),
----------------
the Companies are the owner and holder of all the leasehold estates purported to
be granted by such leases and no notice of any increase in the assessed
valuation of the Leased Property and no notice of any contemplated special
assessment has been received by any Company and to the Best Knowledge of the
Seller, there is no threatened increase in assessed valuation or threatened
special assessment pertaining to any of the Leased Property.
6.12 INTELLECTUAL PROPERTY.
---------------------
(a) Except in each case as set forth on SCHEDULE 6.12(A):
----------------
-15-
(i) each Company owns, has the right to use, sell, license and dispose
of, and has the right to bring actions for the infringement of, all
Intellectual Property Rights necessary or required for the conduct of the
Business (collectively, the "OWNED REQUISITE RIGHTS"), other than those
----------------------
Intellectual Property Rights for which any Company has a valid license,
all of which are listed on SCHEDULE 6.12(A) (collectively, the "LICENSED
---------------- --------
REQUISITE RIGHTS"; and together with the Owned Requisite Rights, the
----------------
"REQUISITE RIGHTS"), and such rights to use, sell, license, dispose of and
-----------------
bring actions are exclusive with respect to the Owned Requisite Rights;
(ii) each Company has taken reasonable and practicable steps designed
to safeguard and maintain (A) the secrecy and confidentiality of
confidential or proprietary information and (B) the proprietary rights of
such Company or subsidiary in all of its Requisite Rights;
(iii) no Company has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Intellectual Property Rights of
any Person or committed any acts of unfair competition or received from any
Person in the past five years any notice, charge, complaint, claim or
assertion thereof, and no such claim is impliedly threatened by an offer to
license from another Person; and
(iv) no Company has sent to any Person in the past five years, or
otherwise communicated to any Person, any notice, charge, complaint, claim
or other assertion of any present, impending or threatened infringement by
or misappropriation of, or other conflict with, any Intellectual Property
Rights of such Company by such other Person or any acts of unfair
competition by such other Person, nor to the Best Knowledge of the Seller,
is any such infringement, misappropriation, conflict or act of unfair
competition occurring or threatened.
(b) SCHEDULE 6.12(B) contains a true and complete list of all applications,
----------------
filings and other formal actions made or taken pursuant to any Laws by any
Company to perfect or protect their respective interests in its Intellectual
Property Rights, including, all patents, patent applications, trademarks,
trademark applications, service marks and service xxxx applications.
6.13 AGREEMENTS, NO DEFAULTS, ETC.
-----------------------------
(a) SCHEDULE 6.13 contains a true and complete list and brief description of
-------------
all written Contracts and, to the Best Knowledge of the Seller all oral
Contracts to which any Company is a party and (x) which were entered into or
made outside the ordinary course of business, or (y) which were entered into or
made in the ordinary course of business and are described in CLAUSES (I) through
-----------
(XV) of the next sentence this SECTION 6.13. Except as set forth on SCHEDULE
---- ------------ --------
6.13, none of the Companies is a party to any of the following, whether written
----
or oral:
(i) distributorship, dealer, sales, advertising, agency, manufacturer's
representative or other Contract relating to the payment of a commission;
-16-
(ii) Contract for the employment of any officer, employee or consultant
or any other type of Contract or understanding with any officer, employee
or consultant, including any agreement or understanding relating to
severance payments;
(iii) indenture, mortgage, promissory note, loan agreement, pledge
agreement, conditional sale, guarantee or other Contract for the borrowing
of money, for a line of credit or for a Capital Lease;
(iv) Contract for charitable contributions in excess of $5,000
individually or $10,000 in the aggregate;
(v) Contract for capital expenditures in excess of $25,000 individually
or $100,000 in the aggregate;
(vi) agreement or arrangement for the sale of any assets, properties or
rights other than the sale of services or products in the ordinary course
of business at normal profit margins;
(vii) lease or other agreement pursuant to which it is a lessee of or
holds or operates any machinery, equipment, motor vehicles, office
furniture, fixtures, products, merchandise or other personal property owned
by any other Person in excess of $5,000 individually or $10,000 in the
aggregate;
(viii) Contract with respect to the lending or investing of funds;
(ix) Contract with respect to any form of intangible property,
including any Intellectual Property Rights;
(x) Contract which restricts any Company subsidiary from engaging in
any aspect of the Business or any other business anywhere in the world;
(xi) Contract or group of related Contracts with the same Person or
group of Affiliated Persons (excluding purchase orders entered into in the
ordinary course of business which are to be completed within three months
of entering into such purchase orders) for the purchase or sale of products
or services under which the undelivered or unperformed balance or portion
thereof (including the aggregate undelivered or unperformed balance or
portion under any such Contracts between the same Person and such Company )
has a selling price in excess of $50,000;
(xii) agreement for the acquisition or disposition of a Person or a
division of a Person made within the preceding five years (whether or not
such acquisition or disposition was consummated); or
(xiii) other Contract material to the Business.
The Contracts disclosed on SCHEDULE 6.4, the leases described on SCHEDULE
------------ --------
6.11(A), the licenses described on SCHEDULE 6.12(A), the insurance policies on
------- ----------------
SCHEDULE 6.16, the Company Employee Plans and the Contracts on SCHEDULE 6.21,
------------- -------------
are incorporated by reference onto SCHEDULE 6.13.
-------------
-17-
(b) All items listed on SCHEDULE 6.13 are in full force and effect,
-------------
constitute legal, valid and binding obligations of the respective parties
thereto, and are enforceable in accordance with their respective terms. Each
Company has performed all of the obligations required to be performed by it to
date, and there exists no default, or any event which upon the giving of notice
or the passage of time, or both, would give rise to a claim of a default in the
performance by any Company or, to the Best Knowledge of the Seller, any other
party to any of the foregoing of their respective obligations thereunder. The
Purchaser has been furnished with true, complete and correct copies of all
written items listed on SCHEDULE 6.13 and SCHEDULE 6.13 (including by
------------- -------------
incorporated reference) contains complete descriptions of all oral items listed
on SCHEDULE 6.13 (including by incorporated reference).
-------------
(c) SCHEDULE 6.13 contains a true and complete list of all Funded
-------------
Indebtedness of each Company, all of which is to be repaid in full on or prior
to the Closing Date, in each case showing the aggregate principal amount thereof
(and the aggregate amount of any undrawn commitments with respect thereto), the
name of the lender and the name of the respective borrower and any other Person
which directly or indirectly guaranteed such debt.
6.14 LITIGATION, ETC.
----------------
(a) Except as disclosed on SCHEDULE 6.14(A) and for workers' compensation
----------------
claims made in the ordinary course of business and consistent (in frequency and
cost) with past practices, there are no (i) Proceedings pending or, to the Best
Knowledge of the Seller, threatened against any Company, whether at law or in
equity, whether civil or criminal in nature or before or by any Governmental
Entity or arbitrator, nor to the Best Knowledge of the Seller does there exist
any basis therefor, or (ii) Orders of any Governmental Entity or arbitrator
with respect to, involving or against any Company. Each Company has delivered
to the Purchaser all material documents and correspondence relating to such
matters referred to on SCHEDULE 6.14(A).
----------------
(b) SCHEDULE 6.14(B) lists each matter described in SECTION 6.14(A) that (i)
---------------- ---------------
was in existence since the inception of each Company and resulted in any
criminal sanctions or (ii) was in existence within the last five years and
resulted in payments in excess of $50,000 by any Company (whether as a result
of a judgment, civil fine, settlement or otherwise).
6.15 COMPLIANCE WITH LAWS.
--------------------
Each Company (a) has complied in all respects with, and is in
compliance in all respects with, all Laws, Orders and Permits applicable to it
and the Business and (b) has all Permits used or necessary in the conduct of the
Business. Such Permits are listed on SCHEDULE 6.15 and are in full force and
-------------
effect, no violations with respect to any thereof have occurred or are or have
been recorded, no Proceeding is pending or, to the Best Knowledge of the Seller,
threatened to revoke or limit any thereof. No investigation or review by any
Governmental Entity with respect to any Company is pending or, to the Best
Knowledge of the Seller, threatened, nor has any Governmental Entity notified
any Company of its intention to conduct the same. To the Best Knowledge of the
Seller, there is no proposed change in any applicable Law which would require
any Company to obtain any Permits not set forth on SCHEDULE 6.15 in order to
-------------
conduct the Business as presently conducted and as presently proposed to be
conducted. No Company
-18-
has received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any Liability or
disadvantage which may be material to its business, financial condition,
operations, property or affairs. No Company is aware of any proposed Law which
would prohibit or restrict any Company from, or otherwise materially adversely
affect any Company in, conducting the Business in any jurisdiction in which it
is now conducting business or which it currently proposes to conduct business.
6.16 INSURANCE.
---------
(a) SCHEDULE 6.16(A) contains a true and complete list of all policies of
----------------
liability, theft, fidelity, life, fire, product liability (including "bobtail"),
cargo, workmen's compensation, health and other forms of insurance held by each
Company, or the Seller for the benefit of any Company (specifying the insurer,
amount of coverage, type of insurance, policy number, Best's rating of the
insurer and any pending claims thereunder). All such coverages have been
maintained at all times during the course of the operation of the Business, and
such insurance coverage has been maintained on an occurrence (as opposed to a
claims made) basis. Each Company is insured against all risks usually insured
against by Persons conducting similar businesses and operating similar
properties in the localities where the Business is conducted and the properties
of each Company are located, under policies of such types and in such amounts as
are customarily carried by such Persons.
(b) Except as set forth on SCHEDULE 6.16(B), with respect to each policy of
----------------
insurance listed on SCHEDULE 6.16(A): (i) all premiums with respect thereto are
----------------
currently paid and are not subject to adjustment, and neither the Seller nor any
Company is in default in any respect with respect to its obligations under such
policy, and no basis exists that would give any insurer under any such policy
the right to cancel or unilaterally reduce or limit the stated coverages
contained in such policy; (ii) there are no outstanding claims currently pending
under such policy that could be expected to cause an increase in the insurance
rates of any Company, and no facts or circumstances exist that might reasonably
be expected to relieve the insurer under such policy of its obligations to
satisfy in full any claim thereunder; and (iii) no Company has received any
notice that such policy has been or shall be canceled or terminated or will not
be renewed on substantially the same terms as are now in effect or that the
premium on such policy shall be increased on the renewal thereof.
6.17 LABOR RELATIONS; EMPLOYEES.
---------------------------
(a) SCHEDULE 6.17 sets forth a list of all directors, officers and key
--------------
employees of each Company as of the date hereof, together with their respective
titles (if any), their current compensation (including salary, wages, bonuses
and commissions) and the respective dates on which they commenced employment.
To the extent any such employee is on a leave of absence, SCHEDULE 6.17
--------------
indicates the nature of such leave of absence and such employee's anticipated
date of return to active employment. No key employee listed on SCHEDULE 6.17 has
-------------
given any Company notice and to the Best Knowledge of the Seller, none of the
key employees listed on SCHEDULE 6.17 has any plans or intends to terminate his
-------------
employment or engagement with such Company. No former key employee has left the
service of any Company within the last 6 months.
-19-
(b) Except as set forth on SCHEDULE 6.17, (i) each Company generally enjoys
-------------
good relations with all of its employees, and there is no labor strike, dispute
or grievance, or work slowdown or stoppage actually pending or, to the Best
Knowledge of the Seller, threatened against or involving any Company, and (ii)
no Company is a party to or bound by any collective bargaining agreement, union
contract or similar agreement, no such agreement is currently being negotiated
by any Company, no labor union has taken any action with respect to organizing
employees of any Company and no representation question exists with respect to
any such employees.
(c) Each of the Companies and its ERISA Affiliates has complied in all
respects with all Laws relating to the hiring and retention of all employees,
leased employees and independent contractors relating to wages, hours, Company
Employee Plans, workers' compensation, unemployment, equal opportunity,
collective bargaining and the payment of social security and other taxes.
6.18 ERISA COMPLIANCE.
----------------
(a) SCHEDULE 6.18(A) contains a true, complete and correct list of all
----------------
Employee Benefit Plans of each Company (collectively, the "COMPANY EMPLOYEE
----------------
PLANS") (i) that cover any employees, contract employees or former employees of
-----
any Company or any spouses, family members or beneficiaries thereof (A) that are
maintained, sponsored or contributed to by any Company or (B) with respect to
which any Company is obligated to contribute or has any Liability, or (ii) with
respect to which any Company has any Liability on account of the maintenance or
sponsorship thereof or contribution thereto by any present or former ERISA
Affiliate of any Company.
(b) ADMINISTRATION AND COMPLIANCE. Except as set forth on SCHEDULE 6.18(B),
----------------------------- ----------------
with respect to each Company Employee Plan:
(i) each Company Employee Plan has been established, maintained,
operated and administered in accordance with its terms and in compliance
with ERISA, the Code, and other applicable Laws (including with respect to
reporting and disclosure);
(ii) all required, declared or discretionary (in accordance with
historical practices) payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the date hereof have been
made or properly accrued on the Latest Balance Sheet, or with respect to
accruals properly made after the Latest Balance Sheet Date, on the books
and records of such Company and all amounts withheld from employees have
been timely deposited into the appropriate trust or account;
(iii) there is no unfunded Liability relating to any Company Employee
Plan which is not reflected on the Latest Balance Sheet, or with respect to
accruals properly made after the Latest Balance Sheet Date, on the books
and records of such Company;
(iv) none of the Companies, or its ERISA Affiliates, nor any other
"disqualified person" or "party in interest" (as such terms are defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively) with
respect to such Company Employee Plan, has breached the fiduciary rules of
ERISA or engaged in a prohibited
-20-
transaction that could subject any of the foregoing Persons to any tax or
penalty imposed under Section 4975 of the Code of Section 502(i), (j) or
(l) of ERISA;
(v) no Proceedings (other than routine claims for benefits) are pending
or, to the Best Knowledge of the Seller, threatened against or relating to
any Company Employee Plan or any fiduciary thereof, and there is, to the
Best Knowledge of the Seller, no basis for any such Proceeding against any
Company Employee Plan;
(vi) each Company Employee Plan, if intended to be "qualified", within
the meaning of Section 401(a) of the Code, has been determined by the
Internal Revenue Service to be so qualified and the related trusts are
exempt from Tax under Section 501(a) of the Code, and nothing has occurred
that has or could reasonably be expected to adversely affect such
qualification or exemption;
(vii) except as may be required under Laws of general application, no
Company Employee Plan obligates any Company to provide any employee or
former employee, or their spouses, family members or beneficiaries, any
post-employment or post-retirement health or life insurance, accident or
other "welfare-type" benefits;
(viii) each Company Employee Plan which is subject to the requirements
of the consolidated Omnibus Budget Reconciliation of 1985 ("COBRA") and the
Health Insurance Portability and Accountability Act ("HIPAA") has been
maintained in compliance with COBRA and HIPAA, including all notice
requirements, and no tax payable on account of Section 4980B or any other
section of the Code has been or is expected to be incurred;
(ix) no Company nor any ERISA Affiliate thereof is or has ever
maintained or been obligated to contribute to a Multiemployer Plan (as
defined in Section 3(37) of ERISA), a Multiple Employer Plan (as defined in
Section 413 of the Code) or a Defined Benefit Pension Plan (as defined in
Section 3(35) of ERISA); and
(x) no benefit payable or which may become payable by any Company or
its ERISA Affiliates pursuant to any Company Employee Plan shall constitute
an "excess parachute payment," within the meaning of Section 280G of the
Code, which is or may be subject to the imposition of an excise tax under
Section 4999 of the Code or which would not be deductible by reason of
Section 280G of the Code.
(c) The Purchaser has been provided with true and complete copies, to the
extent applicable, of all documents pursuant to which each Company Employee Plan
is maintained and administered, the two most recent annual reports (Form 5500
and attachments) and financial statements therefor, all governmental rulings,
determinations, and opinions (and pending requests therefor), and, if any
Company Employee Plan provides post-employment or post-retirement health and
life insurance, accident or other "welfare-type" benefits, the most recent
valuation of the present and future obligations under such Company Employee
Plan; and the foregoing documents accurately reflect all of the terms of such
Company Employee Plan (including any agreement or provision which would limit
the ability of any Company to make any prospective amendments or terminate such
Company Employee Plan).
-21-
6.19 ENVIRONMENTAL MATTERS.
---------------------
(a) Except as set forth on SCHEDULE 6.19(A), none of the Companies or their
----------------
Affiliates, nor any of their respective predecessors, has received any written
or oral notice, report or other information (i) regarding any actual or alleged
violation of any Environmental, Health and Safety Laws, or any Liabilities,
including any investigatory, remedial or corrective obligations, relating to any
Company, the Business or any Company's current or former owned or leased
properties or operations or (ii) that any Company is potentially responsible
under any Environmental, Health and Safety Laws for response costs, corrective
action or natural resource damages, as those terms are defined under the
Environmental, Health and Safety Laws, at any location.
(b) SCHEDULE 6.19(B) sets forth a complete and accurate list of all
----------------
properties and facilities previously owned, leased or operated by each Company
or any of their respective predecessors, (together with the Leased Properties,
the "COVERED PROPERTIES"). There has been no release, discharge, spill, or
------------------
disposal of any substance at any of the Covered Properties so as to give rise to
Liability of any Company under any Environmental, Health and Safety Laws.
Except as set forth on SCHEDULE 6.19(B), neither is there now, nor has there
----------------
ever been, any asbestos-containing material in any form or condition,
underground storage tanks, above-ground storage tanks, landfill, waste pile,
surface impoundment, or article or equipment containing polychemical biphenyls
on or at any of the Covered Properties.
(c) None of the Companies or their Affiliates, nor any of their respective
predecessors, has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled or released any substance, or owned or
operated any property (and no such property is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities pursuant
to any Environmental, Health and Safety Laws, including any Liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damage or attorney fees, or any investigative, corrective or
remedial obligations pursuant to any Environmental, Health and Safety Laws.
(d) No facts, events or conditions relating to the past or present operations
of any Company or its Affiliates, nor any of their respective predecessors or
any of the Covered Properties will prevent continued compliance by any Company
with any Environmental, Health and Safety Laws, or give rise to any
investigatory, remedial or corrective obligations pursuant to any Environmental,
Health and Safety Laws, or give rise to any other Liabilities pursuant to
Environmental Health and Safety Laws, including any relating to on-site or off-
site releases or threatened releases of materials, substances or wastes,
personal injury, property damage or natural resources damage.
(e) Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement or any of the Related Documents will result in
any obligations for site investigation or cleanup, or notification to or consent
of government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Laws.
-22-
(f) Each Company has provided the Purchaser with correct and complete copies
of all reports and studies within the possession or control of such Company with
respect to past or present environmental conditions or events at any of the
Covered Properties and to the Best Knowledge of the Seller there are no other
environmental reports or studies with respect thereto.
6.20 BROKERS.
-------
Other than Blackwater Capital Group, neither the Seller nor any
Company has employed any broker or finder or incurred any Liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby. All fees and related out-of-pocket expenses payable to
Blackwater Capital Group have been (or will be) paid by the Seller.
6.21 RELATED PARTY TRANSACTIONS.
--------------------------
Except as set forth on SCHEDULE 6.21, and except for compensation to
-------------
bona-fide employees of each Company for services rendered in the ordinary course
of business, no current or former Affiliate of any Company or any "Associate"
(as defined in the rules promulgated under the Securities Exchange Act of 1934,
as amended) of any thereof, is now, or has been during the last five fiscal
years, (i) party to any transaction or Contract with any Company (including any
contract, agreement or other arrangement providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
payments to, any such Affiliate or Associate), or (ii) the direct or indirect
owner of an interest in any Person which is a present or potential competitor,
supplier or customer of any Company (other than non-affiliated holdings in
publicly held companies). Except as set forth on SCHEDULE 6.21, no Company is a
-------------
guarantor or otherwise liable for any actual or potential Liability of its
Affiliates and their Associates. Except as set forth on SCHEDULE 6.21, no
-------------
Company (x) owns or operates any vehicles, boats, aircrafts, apartments or other
residential or recreational properties or facilities for executive,
administrative or sales purposes or (y) owns or pays for any social club
memberships, whether or not for the benefit of any Company and/or any of its
executives.
6.22 ACCOUNTS AND NOTES RECEIVABLE.
-----------------------------
Except as set forth on SCHEDULE 6.22 and except for allowances for bad
-------------
debt reflected on the Interim Balance Sheet, all accounts receivable and notes
receivable owing to any Company as of the date hereof constitute, and as of the
Closing shall constitute, valid and enforceable claims arising from bona fide
transactions in the ordinary course of business, and there are no known or
asserted claims, refusals to pay or other rights of set-off against any thereof.
Except as set forth on SCHEDULE 6.22, there is (i) no account debtor or note
-------------
debtor that is delinquent by more than 30 days for payments in excess of $10,000
in the aggregate, (ii) no account debtor or note debtor that has refused or, to
the Best Knowledge of the Seller, threatened to refuse to pay its obligations to
any Company for any reason, or has otherwise made a claim of set-off or similar
claim (other than in amounts not in excess of $5,000 per account debtor or
$10,000 in the aggregate), and (iii) to the Best Knowledge of the Seller, no
account debtor or note debtor that owes any Company amounts in excess of $10,000
in the aggregate that is insolvent or bankrupt.
-23-
6.23 BANK ACCOUNTS; POWERS OF ATTORNEY.
---------------------------------
SCHEDULE 6.23 sets forth a true and complete list of (i) all bank
-------------
accounts and safe deposit boxes of each Company and all persons who are
signatories thereunder or who have access thereto and (ii) the names of all
persons, firms, associations, corporations or business organizations holding
general or special powers of attorney from any Company and a summary of the
terms thereof (excluding ministerial powers of attorney granted to
representatives of any Company which are terminable at will).
6.24 SUPPLIERS AND VENDORS.
---------------------
Except in the ordinary course of business, no material supplier or
vendor to any Company has canceled or otherwise terminated, or, to the Best
Knowledge of the Seller, threatened to cancel or otherwise terminate, its
relationship with any Company or has decreased, limited or otherwise modified,
or to the Best Knowledge of the Seller, threatened to decrease, limit or
otherwise modify, the services, supplies or materials it provides to any
Company.
6.25 CUSTOMERS.
---------
No customer of any Company, to which more than $250,000 of annual
sales are attributable, has notified any Company that it intends, or, to the
Best Knowledge of the Seller, has threatened, to terminate or materially curtail
its relationship and dealings with any Company.
6.26 CONFLICTS OF INTEREST.
---------------------
Neither the Seller, nor any Company nor any officer, employee, agent
or other Person acting on their behalf has directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any Governmental Entity or other Person who was, is, or may be in a position
to help or hinder the business of any Company (or assist in connection with any
actual or proposed transaction) that (i) might subject any Company to any damage
or penalty in any Proceeding, (ii) if not given in the past, would have resulted
in a Material Adverse Change, or (iii) if not continued in the future, could
reasonably be expected to result in a Material Adverse Change. There is not
now, and there has never been, any employment by any Company of, or beneficial
ownership in any Company by, any governmental or political official in any
jurisdiction in which any Company has conducted or proposes to conduct business.
6.27 DISCLOSURE.
----------
This Agreement, including the schedules, attachments or exhibits
hereto does not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein or therein,
taken as a whole, in light of the circumstances in which they were made, not
misleading. There is no fact that has not been disclosed to the Purchaser of
which the Seller is aware and which constitutes or could reasonably be
anticipated to result in a Material Adverse Change.
-24-
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as of the date hereof and as of
the Closing Date as follows:
7.1 ORGANIZATION; CORPORATE AUTHORITY.
---------------------------------
The Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Purchaser is duly
qualified and in good standing to transact business as a foreign Person in those
jurisdictions set forth on SCHEDULE 7.1, which constitute all the jurisdictions
------------
in which the character of the property owned, leased or operated by the
Purchaser or the nature of the business or activities conducted by the Purchaser
makes such qualification necessary. The Seller has been furnished with true,
correct and complete copies of the Purchaser's Charter Documents, in each case
as amended and in effect on the date hereof.
7.2 AUTHORITY; AUTHORIZATION; EXECUTION AND DELIVERY; ENFORCEABILITY; NO
--------------------------------------------------------------------
CONFLICT.
--------
The Purchaser has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and each Related
Document to which it is or will be a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Purchaser of this Agreement and each Related Document to which it is or will be
a party, and performance of its obligations hereunder and thereunder have been
duly and validly authorized by all necessary corporate action on the part of the
Purchaser and its shareholders. This Agreement and each Related Document to
which the Purchaser is or will be a party has been or upon the execution thereof
will be, duly and validly executed and delivered by the Purchaser, and
constitutes, or upon its execution and delivery will constitute, a valid and
binding obligation of the Purchaser, enforceable against it in accordance with
its terms. Neither the Purchaser's execution and delivery of, and performance
of its obligations under, this Agreement and each Related Document to which it
is or will be a party, nor the consummation of the transactions contemplated
hereby and thereby will (i) conflict with or result in any violation or breach
of, any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time, or both) a default under, or give rise to any right of
termination, cancellation or acceleration or result in the creation of any
Encumbrance upon any of the assets or properties of the Purchaser under
provision of the Purchaser's Charter Documents or any Contract to which the
Purchaser is a party or by which it or any of its assets or properties is or may
be bound or (ii) violate, or result in the creation of an Encumbrance upon any
of the Purchaser's assets as a result of, any Law applicable to the Purchaser or
any of its properties or assets.
7.3 CONSENTS.
--------
No Permit, authorization, consent or approval of or by, or
notification of or filing with, any Person (governmental or otherwise) is
required in connection with the execution, delivery
-25-
and performance by the Purchaser of this Agreement or the Related Documents to
which the Purchaser is or will be a party or the consummation of the
transactions contemplated hereby or thereby.
7.4 CAPITALIZATION.
--------------
(a) The authorized capital stock of the Purchaser and its subsidiaries is as
set forth on SCHEDULE 7.4, which schedule also sets forth the total number of
------------
outstanding shares of the Purchaser and its subsidiaries. All such outstanding
shares disclosed on SCHEDULE 7.4 are duly and validly issued and outstanding,
------------
fully paid and nonassessable, with no personal Liability attached to the
ownership thereof, and are held of record by the Persons and in the amounts set
forth on SCHEDULE 7.4.
------------
(b) Except as set forth on SCHEDULE 7.4, there are no securities presently
------------
outstanding, and on the Closing Date there will not be any outstanding
securities, which are convertible into, exchangeable for, or carrying the right
to acquire, equity securities of the Purchaser or any of its subsidiaries, or
subscriptions, warrants, options, calls, puts, convertible securities,
registration or other rights, arrangements or commitments obligating the
Purchaser or any of its subsidiaries to issue, sell, register, purchase or
redeem any of its equity securities or any ownership interest or rights therein.
Except as set forth on SCHEDULE 7.4, there are no voting trusts or other
------------
agreements or understandings to which the Purchaser or any of its subsidiaries
is bound with respect to the voting of such Person's capital stock. There are
no stock appreciation rights, phantom stock rights or similar rights or
arrangements outstanding with respect to the Purchaser or any of its
subsidiaries.
(c) All securities issued by the Purchaser and its subsidiaries have been
issued in transactions exempt from registration under the Securities Act and
the rules and regulations promulgated thereunder and all applicable state
securities or "blue sky" laws, and none of the Purchaser nor any of its
subsidiaries has violated the Securities Act or any applicable state securities
or "blue sky" laws in connection with the issuance of any such securities.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 ACCESS TO RECORDS AND PROPERTIES.
--------------------------------
(a) From and after the date hereof until the Closing, each Company shall
afford, and the Seller shall cause each Company to afford, (i) to the Purchaser,
its lenders and other financing sources and their respective authorized
representatives, including accountants, free and full access at all reasonable
times to the assets, business, facilities, properties, books, records (including
Tax returns filed and in preparation), customers, consultants, and key employees
of, or relating to, each Company in order that the Purchaser has the full
opportunity to make such investigation as it shall reasonably desire to make of
the affairs of each Company, and each Company and the Seller shall cooperate
fully in connection therewith and (ii) the Accountants, free and full access at
all reasonable times to the records of the independent certified public
accountants of each Company relating to such Company. The investigation
contemplated by this
-26-
SECTION 8.1(A) shall not affect or otherwise diminish or obviate in any respect
--------------
any of the representations and warranties or the indemnification obligations of
any Company or the Seller contained in this Agreement. The parties hereto agree
to use their reasonable efforts to minimize any disruption to any other party's
business in connection with the conduct of the due diligence process
contemplated herein.
(b) From and after the date hereof until the Closing, the Purchaser shall
afford, to the Seller and his authorized representatives, including accountants,
free and full access at all reasonable times to the assets, business,
facilities, properties, books, records (including Tax returns filed and in
preparation), and senior officers of, or relating to, the Purchaser in order
that the Seller has the full opportunity to make such investigation as he shall
reasonably desire to make of the affairs of the Purchase, and the Purchasers
shall cooperate fully in connection therewith. The investigation contemplated
by this SECTION 8.1(B) shall not affect or otherwise diminish or obviate in any
--------------
respect any of the representations and warranties or the indemnification
obligations of the Purchaser contained in this Agreement. The parties hereto
agree to use their reasonable efforts to minimize any disruption to any other
party's business in connection with the conduct of the due diligence process
contemplated herein.
8.2 CONDUCT OF THE COMPANIES.
------------------------
From and after the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to ARTICLE XI, each Company shall, and
----------
the Seller shall cause each Company to:
(i) conduct its business substantially as presently operated and only
in the ordinary course consistent with past practice;
(ii) not enter into any transaction other than in the ordinary course
of business, or any transaction which is not at arms-length with
unaffiliated third Persons, or any transaction with any affiliated third
Person;
(iii) not dispose of any material assets;
(iv) use commercially reasonable efforts to (A)maintain its business,
assets, relations with present employees, customers and suppliers, licenses
and operations as an ongoing business and preserve its goodwill, in
accordance with past custom and (B) to satisfy each of the closing
conditions set forth in ARTICLE IX;
----------
(v) not issue or sell any shares of any capital stock or issue or sell
any securities convertible into, exercisable or exchangeable for or options
or warrants to purchase or rights to subscribe for, any shares of any of
its capital stock, or enter into any agreement, contract or other
commitment to do any of the foregoing;
(vi) not declare or pay any dividend or distribution on or with respect
to its capital stock (other than dividends payable prior to Closing
pursuant to SECTION 8.11), not change the number of authorized shares of
------------
its capital stock or reclassify, combine, split, subdivide or redeem or
otherwise repurchase any of its capital stock, or issue, deliver,
-27-
pledge or encumber any additional capital stock or other securities
equivalent to or exchangeable for capital stock or enter into any Contract
to do any of the foregoing;
(vii) not take or omit to take any action which would result in the
representations and warranties contained in this Agreement and the Related
Documents being untrue on the Closing Date, other than such action as shall
have been previously agreed to in writing by the parties hereto or is
otherwise expressly contemplated herein; and
(viii) not delay or postpone the payment of accounts payable and other
obligations and liabilities or accelerate the collection of accounts
receivable, other than in the ordinary course of business consistent with
past custom and practice.
8.3 EFFORTS TO CONSUMMATE.
---------------------
Subject to the terms and conditions of this Agreement, each party
shall use commercially reasonable efforts to take or cause to be taken all
actions and do or cause to be done all things required under all applicable
Laws, in order to consummate the transactions contemplated hereby.
8.4 NEGOTIATION WITH OTHERS.
-----------------------
(a) From and after the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to ARTICLE XI, the Seller Group shall
----------
not, and shall cause its officers, directors, Affiliates, representatives and
agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Acquisition Proposal, (ii) continue, initiate or engage in
negotiations or discussions relating to an Acquisition Proposal with, or
disclose or provide any non-public information (other than in the ordinary
course of business or otherwise required by Law) relating to any Company to any
Person other than the parties hereto and their respective representatives or
(iii) enter into any written or oral agreement or understanding with any Person
(other than the Purchaser) regarding an Acquisition Proposal. If any of the
Seller or the Companies receives any unsolicited offer or proposal to enter into
negotiations relating to any Acquisition Proposal, such party shall promptly
notify the Purchaser of such offer or proposal and the general economic terms of
such offer or proposal and shall furnish a copy of any written offer or proposal
thereto.
(b) The parties recognize and acknowledge that a breach of this SECTION 8.4
-----------
will cause irreparable and material loss and damage to the non-breaching party
as to which it will not have an adequate remedy at law or in equity.
Accordingly, each party acknowledges and agrees that the issuance of an
injunction or other equitable remedy is an appropriate remedy for any such
breach.
8.5 TERMINATION OR AMENDMENT OF CERTAIN AGREEMENTS.
----------------------------------------------
The Seller Group agrees that, effective as of the Closing, those
Agreements listed on SCHEDULE 8.5 shall either (i) be automatically terminated
------------
without any further action by the parties thereto or any further liability of
any Company thereunder or (ii) be amended in form and substance reasonably
acceptable to the Purchaser, in each case as designated on such schedule.
-28-
8.6 PROPRIETARY INFORMATION.
-----------------------
The Seller agrees that all confidential or proprietary information or
work product relating to the Business which is known to the Seller as of the
Closing Date will be the sole property of the Companies. The Seller agrees that
it will not use or disclose such information or work product except for the
benefit of the Companies and their respective successors and assigns and the
Seller will take reasonable steps to protect such information and work product
from misuse, loss, theft or accidental disclosure.
8.7 NOTICE OF PROSPECTIVE BREACH.
----------------------------
Each party shall immediately notify the other parties in writing upon
the occurrence, or the failure to occur, of any event, which occurrence or
failure to occur would be reasonably likely to cause (i) any representation or
warranty of such party that is contained in this Agreement or any Related
Document to be untrue or inaccurate in any respect at any time from the date of
this Agreement to the Closing as if such representation and warranty were made
at such time or (ii) any failure of any party hereto to comply with or satisfy
any covenant or agreement to be complied with or satisfied by it under this
Agreement.
8.8 PUBLIC ANNOUNCEMENTS.
--------------------
The Seller, the Companies and the Purchaser agree that, except (i) as
otherwise required by Law and (ii) for disclosure to its respective directors,
officers, employees, financial advisors, financing sources, legal counsel,
independent certified public accountants or other agents, advisors or
representatives on a need-to-know basis and with whom such party has a
confidential relationship, and, in the case of the Purchaser, in connection with
its efforts regarding an initial public offering of its Common Stock, it will
not issue any reports, statements or releases, in each case pertaining to this
Agreement or any Related Document to which it is a party or the transactions
contemplated hereby or thereby, without the prior written consent of the Seller
and the Purchaser, which consent shall not unreasonably be withheld or delayed.
8.9 COOPERATION REGARDING TAX FILINGS, SECTION 338 ELECTION, ETC.
------------------------------------------------------------
(a) The Purchaser, each Company and the Seller shall act in good faith and
cooperate with one another for the purpose of filing all Tax Returns and reports
required to be filed by any of them and in connection with the Purchaser's
efforts regarding an initial public offering of its Common Stock.
(b) The Seller and the Purchaser agree to jointly make, or cause to be made,
in an appropriate and timely manner the elections provided for by Section
338(h)(10) of the Code (and, to the extent necessary to allow for an election
under Section 338(h)(10) of the Code, the elections provided for by Section
338(g) of the Code) and any corresponding election under state, local, or
foreign law (collectively, "SECTION 338 ELECTIONS") with respect to the purchase
---------------------
of the Shares.
(i) The Seller and the Purchaser shall cooperate with each other to
take all actions necessary or appropriate to effect and preserve timely
Section 338 Elections, including, but not limited to, preparing the IRS
Form 8023-A (Corporate Qualified Stock
-29-
Purchase Agreement) and any related and comparable forms for state, local,
or foreign law (collectively, "SECTION 338 ELECTION FORMS").
---------------------------
(ii) As reasonably requested form time to time by the Purchaser
(whether before, at, or after the Closing), the Seller shall assist the
Purchaser in, and shall provide the necessary information to the Purchaser,
in connection with the preparation of any Section 338 Election Form. The
Seller also agrees on or before the Closing to cause each Section 338
Election Form reasonably requested by the Purchaser to be duly executed by
the Seller or any Affiliate of the Seller, as appropriate, and delivered to
the Purchaser at the Closing. If the Purchaser reasonably determines that
a change is required to any Section 338 Election Form previously executed
by the Seller or an Affiliate of the Seller, the Purchaser may prepare a
new Section 338 Election Form and deliver it to the Seller and the Seller
shall cause such form to be duly executed by the Seller or an Affiliate of
the Seller, as appropriate, and promptly delivered to the Purchaser.
Anything contained in this SECTION 8(B) to the contrary notwithstanding,
------------
the Seller shall have the right to approve all Section 338 Election Forms
prior to filing, such approval not to be unreasonably withheld or delayed.
(iii) The Purchaser shall file, or cause to be filed, all Section 338
Election Forms and shall provide the Seller with notice of such filings.
(iv) The Seller and the Purchaser agree to report, or cause to be
reported, the purchase by the Purchaser of the Companies consistent with
the Section 338 Elections and shall take no position on any Tax Return, or
in any audit, examination, investigation, or other proceeding that is
inconsistent with such elections.
(v) The Seller and the Purchaser shall cooperate and consult with each
other in good faith in order to reach a mutually acceptable agreement with
respect to the allocation of the Modified Aggregate Sales Price (as defined
in Treasury Regulation section 1.338(h)(10)-1(e)(5)) among the assets of
the Companies that complies with the applicable treasury regulations
promulgated under Section 338 of the Code.
8.10 EXCHANGE PROCEEDS.
-----------------
If, between the date hereof and the Closing, any Company receives any
proceeds in consideration for the exchange of any of its assets, whether from
the sale of any such assets, from insurance proceeds payable on account of any
loss or casualty to such assets, any proceeds form the taking of such assets
pursuant to the power of eminent domain, or any other proceeds from whatever
source relating to the disposition of such assets (the "EXCHANGE PROCEEDS"),
-----------------
such Company shall promptly notify the Purchaser of such receipt of such
Exchange Proceeds and shall consult with the Purchaser with respect to the
application of any such Exchange Proceeds, which shall either be used to
purchase replacement assets or real properties or shall be retained by such
Company.
-30-
8.11 [INTENTIONALLY OMITTED.]
---------------------
8.12 NONCOMPETITION COVENANT.
-----------------------
(a) The Seller acknowledges and agree that as a mutual condition to the
respective obligations of the parties at the Closing, as a material inducement
to the Purchaser to enter into and perform its obligations hereunder and in
consideration of the payments to be received by the Seller under this Agreement,
the Seller shall not, without the prior written consent of the Purchaser, at any
time during the period beginning on the Closing Date and ending on the fifth
anniversary thereof, (i) directly or indirectly engage in, represent in any way,
or be connected with, any Competing Business (as defined below), whether such
engagement shall be as an officer, director, owner, employee, partner, affiliate
or other participant in any Competing Business, (ii) assist others in engaging
in any Competing Business in the manner described in clause (i) above, (iii)
induce other employees of any Company or any of its respective subsidiaries or
Affiliates to terminate their employment with any Company or any of its
respective subsidiaries or Affiliates or to engage in any Competing Business or
(iv) induce any customer, vendor or agent or any other Person with which any
Company or its respective subsidiaries or Affiliates has a business
relationship, contractual or otherwise, to terminate or alter such business
relationship. This covenant is considered an integral part of this Agreement.
The foregoing restriction shall not apply to the Seller's ownership of publicly
traded securities which represent less than 5% of the ownership interests of the
issuer.
(b) The Seller understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the business of any
Company or affiliate thereof, but the Seller nevertheless believes that he has
received and will receive sufficient consideration and other benefits under this
Agreement, and under the terms of this Agreement, to justify clearly such
restrictions which, in any event (given the Seller's education, skills and
ability), the Seller does not believe would prevent him from earning a living.
(c) As used herein, the term "Competing Business" shall mean any business
conducted in any city or county in any state of the United States which is
engaged in the business of providing any of the following transportation
services to third party customers:
(i) intermodal marketing services in any city or county in any state or
province located in the continental United States, Canada or Mexico; or
(ii) intermodal drayage services (A) in any city or county in the State
of Illinois or (B) in any other city or county in any state or province
located in the continental United States, Canada or Mexico where any of the
Companies provides drayage services at the time of, or where there are
fixed plans for any of the Companies to provide drayage services at any
time within 12 months after, the termination of your employment under this
Agreement; or
(iii) any other transportation services in any city or county in the
United States, Canada or Mexico provided by Pacer or its subsidiaries at
the time of, or where there are fixed plans for Pacer or its subsidiaries
to provide such other transportation services at any time within 12 months
after, the termination of the Seller's employment
-31-
under the Employment Agreement and with respect to which the Seller has had
direct or indirect supervisory authority as an officer of Pacer or any of
its subsidiaries.
Anything contained in the immediately preceding sentence to the
contrary notwithstanding, any entity which has separate divisions or business
units, one or more of which are engaged in a business described above, will not
be deemed a Competing Business with respect to those portions of such entity
which are not engaged in a business described above so long as the Seller's
association with any such separate division or business unit (fully taking into
account the Seller's functions and the nature of the Seller's work at such
division or business unit) does not involve existing customers of Pacer or any
of its subsidiaries or relate in any material respect to such portion of such
business which would be a Competing Business hereunder.
8.13 HEADQUARTERS LEASE.
------------------
From and after the Closing, the Seller shall continue to lease to the
Companies their current headquarters facility pursuant to an oral, month-to-
month lease at a monthly rental rate no greater than the average monthly rental
paid by the Companies therefor during 1997, provided, however, that each party
-------- -------
shall provide the other party at least 90 days advance written notice of any
intention to discontinue such oral month-to-month lease.
8.14 ORDINARY COURSE.
---------------
From and after the date hereof, until December 31, 1998, each of the
Purchaser and the Seller shall cause the Companies to continue to operate in the
ordinary course of business consistent with past practice, unless otherwise
agreed to in writing by the Seller and the Purchaser in their reasonable
discretion exercised in good faith (which agreement shall include any necessary
or appropriate modifications and adjustments to the amounts set forth in SECTION
-------
4.1(B) and to ANNEX III).
------ ---------
8.15 REGISTRATION RIGHTS.
-------------------
After the Closing, the Purchaser will use its commercially reasonable
efforts to provide the Seller with "piggyback" registration rights following an
initial public offering of the Purchaser's common stock having the same priority
with respect to the inclusion of the Pacer Shares then held by the Seller as the
priority rights of the other senior executive officers of the Purchaser
(including Xxxx Xxxxxxxx and Xxxxx Xxxxxxx).
ARTICLE IX
CLOSING CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.
--------------------------------------
The respective obligations of the parties to consummate the
transactions contemplated hereby are subject to the satisfaction prior to the
Closing Date of the following conditions unless waived (to the extent such
conditions can be waived) by the Seller or the Purchaser, as applicable:
-32-
(a) APPROVALS. All authorizations, consents, Orders or approvals of, or
---------
declarations or filings with, or expiration of waiting periods imposed by, any
Governmental Entity necessary for the consummation of the transactions
contemplated hereby shall have been obtained or made.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other Order issued by any court or
Governmental Entity of competent jurisdiction nor other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.
(c) ACTIONS AND STATUTES. No action, suit or proceeding shall have been
--------------------
taken or threatened, and no statute, rule, regulation or Order shall have been
enacted, promulgated or issued or deemed applicable to the transactions
contemplated by this Agreement or the Related Documents by any Governmental
Entity that would (i) make the consummation of the transactions contemplated
hereby or thereby illegal or substantially delay the consummation of any
material aspect of the transactions contemplated hereby or thereby or (ii)
render any party unable to consummate the transactions contemplated hereby or
thereby.
9.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
------------------------------------------
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, unless waived (to the extent such conditions can be waived) by the
Purchaser:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
--------------------------------------------
warranties made by the Companies and the Seller in this Agreement and the
Related Documents shall be true and correct in all material respects as of the
Closing Date with the same effect as if such representations and warranties had
been made at and as of the Closing Date, and the Purchaser shall have received a
certificate to that effect signed by the Seller.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANIES AND THE SELLER. Each Company
----------------------------------------------------------
and the Seller shall have performed in all material respects all obligations and
covenants required to be performed by them under this Agreement and the Related
Documents as of the Closing Date, and the Purchaser shall have received a
certificate to that effect signed by the Seller.
(c) AUTHORIZATION. All action necessary to authorize the execution, delivery
-------------
and performance of this Agreement and the Related Documents by each Company and
the Seller and the consummation of the transactions contemplated hereby and
thereby, including, the requisite shareholder approvals, shall have been duly
and validly taken by each Company and the Seller, and each Company and the
Seller shall have the full power and right to consummate the transactions
contemplated hereby and thereby on the terms provided herein and therein.
(d) OPINION OF THE SELLER GROUP'S COUNSEL. The Purchaser shall have received
-------------------------------------
an opinion of Pembroke & Xxxxx, PC, counsel for the Seller Group, dated the
Closing Date, substantially in the form of EXHIBIT A attached hereto.
---------
-33-
(e) CONSENTS AND APPROVALS. The Purchaser shall have received duly executed
----------------------
copies of all consents and approvals required for or in connection with the
execution and delivery, by each Company and the Seller, of this Agreement and
each of the Related Documents to which any of them may be parties, the
consummation of the transactions contemplated hereby and thereby, and the
continued conduct of the Business as previously conducted (including any
material consent identified on SCHEDULE 6.3), in form and substance reasonably
-------------
satisfactory to the Purchaser and its counsel.
(f) FINANCING. The Purchaser shall have obtained sufficient financing on
---------
terms and conditions acceptable to the Purchaser, necessary to consummate the
transactions contemplated hereby.
(g) ABSENCE OF MATERIAL ADVERSE CHANGE. Since the Latest Balance Sheet Date,
----------------------------------
there shall have been no Material Adverse Change in the Business of any Company.
(h) RELATED DOCUMENTS. Each of the following documents (each, a "RELATED
----------------- -------
DOCUMENT," and collectively, the "RELATED DOCUMENTS") shall have been executed
-------- -----------------
and delivered by the parties thereto and the transactions contemplated thereby
to be completed at or prior to the Closing substantially consummated or
effected, as the case may be, in accordance with the terms thereof:
(i) GENERAL RELEASES. The Seller has entered into a General Release in
----------------
favor of each Company substantially in the form of EXHIBIT B attached
---------
hereto (the "GENERAL RELEASE");
---------------
(ii) EMPLOYMENT AGREEMENT. The Seller has executed and delivered an
--------------------
employment agreement with the Purchaser substantially in the form of
EXHIBIT C attached hereto (the "EMPLOYMENT AGREEMENT").
---------- --------------------
(iii) AMENDMENT TO STOCKHOLDERS AGREEMENT. The Seller and the other
-----------------------------------
parties thereto other than the Purchaser shall have entered into an
amendment to the Purchaser's Amended and Restated Stockholders Agreement in
substantially in the form of EXHIBIT D attached hereto (the "STOCKHOLDERS
---------- ------------
AGREEMENT AMENDMENT").
-------------------
(i) SELLER CERTIFICATES. Each of the following certificates shall have been
-------------------
executed and/or delivered, as the case may be, by the Person who or which is the
subject thereof:
(i) a certificate of the secretary of each Company, dated as of the
Closing Date, certifying (i) that true and complete copies of such
Company's Charter Documents as in effect on the Closing Date are attached
thereto, (ii) as to the incumbency and genuineness of the signatures of
each officer of such Person executing this Agreement and the Related
Documents on behalf of such Person; and (iii) the genuineness of the
resolutions (attached thereto) of the board of directors or similar
governing body of such Person authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which such
Person is a party and the consummation of the transactions contemplated
hereby and thereby;
-34-
(ii) certificates dated within five days of the Closing Date of the
secretaries of state of the states in which each Company is organized and
qualified to do business dated as of the Closing Date, certifying as to the
good standing and non-delinquent tax status of such Company;
(iii) a certificate signed by the Seller, dated as of the Closing
Date, and certifying as to (A) the accuracy of the representations and
warranties of each Company and the Seller contained herein, as contemplated
by SECTION 9.2(A), and (B) the performance of the covenants of each
---------------
Company and the Seller contained herein, as contemplated in SECTION 9.2(B)
---------------
and
(iv) a certificate of a principal executive officer of each Company,
dated as of the Closing Date, certifying that such Company is not a foreign
person within the meaning of Section 1445 of the Code.
9.3 CONDITIONS TO OBLIGATIONS OF THE COMPANIES AND THE SELLER.
---------------------------------------------------------
The obligations of the Seller Group to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions unless waived (to the extent such conditions can be waived) by the
Seller Group:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
------------------------------------------
warranties made by the Purchaser in this Agreement and the Related Documents
shall be true and correct in all material respects at and as of the Closing Date
with the same effect as if such warranties and representations had been made at
and as of the Closing Date, and the Seller Group shall have received a
certificate to that effect signed by a principal executive officer of the
Purchaser.
(b) PERFORMANCE OF OBLIGATIONS OF THE PURCHASER. The Purchaser shall have
-------------------------------------------
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and the Related Documents prior to or as of
the Closing Date and the Seller Group shall have received a certificate to that
effect signed by a principal executive officer of the Purchaser.
(c) AUTHORIZATION. All action necessary to authorize the execution, delivery
-------------
and performance of this Agreement and the Related Documents by the Purchaser and
the consummation of the transactions contemplated hereby and thereby, including
the requisite shareholder approvals (if any), shall have been duly and validly
taken and the Purchaser shall have full power and right to consummate the
transactions contemplated hereby and thereby on the terms provided herein.
(d) OPINION OF THE PURCHASER'S COUNSEL. The Seller Group shall have received
----------------------------------
an opinion of X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Purchaser, dated
the Closing Date, substantially in the form of EXHIBIT E attached hereto.
---------
(e) CONSENTS AND APPROVALS. The Seller Group shall have received duly
----------------------
executed copies of all consents and approvals required for or in connection with
the execution and delivery by the Purchaser of this Agreement and each of the
Related Documents to which it
-35-
may be a party and the consummation of the transactions contemplated hereby and
thereby, in form and substance reasonably satisfactory to the Seller Group.
(f) RELATED DOCUMENTS. Each of the Related Documents to which the Purchaser
-----------------
is a party shall have been executed and/or delivered by the Purchaser and the
transactions contemplated thereby to be completed at or prior to the Closing
shall have been substantially consummated or effected, as the case may be, in
accordance with the terms thereof.
(g) PURCHASER CERTIFICATES. Each of the following certificates shall have
----------------------
been executed and/or delivered, as the case may be, by the Person who or which
is the subject thereof:
(i) a certificate of the secretary of Purchaser, dated as of the
Closing Date, certifying (A) that true and complete copies of Purchaser's
Charter Documents as in effect on the Closing Date are attached thereto,
(B) as to the incumbency and genuineness of the signatures of each officer
of such Person executing this Agreement and the Related Documents on behalf
of Purchaser; and (C) the genuineness of the resolutions (attached thereto)
of the board of directors or similar governing body of Purchaser
authorizing the execution, delivery and performance of this Agreement and
the Related Documents to which Purchaser is a party and the consummation of
the transactions contemplated hereby and thereby;
(ii) certificates dated within five days of the Closing Date of the
secretaries of state of the states in which Purchaser is organized dated as
of the Closing Date, certifying as to the good standing and non-delinquent
tax status of Purchaser and
(iii) a certificate signed by a principal executive officer of
Purchaser dated as of the Closing Date, and certifying as to (A) the
accuracy of the representations and warranties of the Purchaser contained
herein, as contemplated by SECTION 9.3(A) hereof and (B) the performance
---------------
of the covenants of the Purchaser contained herein, as contemplated in
SECTION 9.3(B) hereof.
---------------
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION GENERALLY; ETC.
-------------------------------
(a) Subject to the further provisions of this ARTICLE X, the Seller shall
---------
indemnify the Purchaser Indemnified Persons for, and hold each of them harmless
from and against, any and all Purchaser Losses arising from or in connection
with any of the following:
(i) the untruth, inaccuracy or breach of any representation or warranty
of any Company or the Seller contained herein or any certificate delivered
by any Company or the Seller in connection herewith at or before the
Closing (or any facts or circumstances constituting any such untruth,
inaccuracy or breach);
(ii) the breach of any agreement or covenant of any Company or the
Seller contained in this Agreement and
-36-
(iii) any and all Special Tax Losses.
(b) Subject to the further terms of this ARTICLE X, the Purchaser agrees to
---------
indemnify the Seller Indemnified Persons for, and hold each of them harmless
from and against, any and all Seller Losses arising from or in connection with
any of the following:
(i) the untruth, inaccuracy or breach of any representation or warranty
of Purchaser contained herein or any certificate delivered by the Purchaser
in connection herewith at or before the Closing (or any facts or
circumstances constituting any such untruth, inaccuracy or breach) and
(ii) the breach of any agreement or covenant of the Purchaser contained
in this Agreement.
10.2 ASSERTION OF CLAIMS.
---------------------
No claim shall be brought for a breach of a representation or warranty
under SECTION 10.1 hereof unless the Indemnified Persons, or any of them, at
-------------
any time prior to the applicable Survival Date, give the Indemnifying Persons
(a) written notice of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent known or (b) written
notice pursuant to SECTION 10.3 of any Third Party Claim, the existence of
-------------
which might give rise to such a claim. Upon the giving of such written notice
as aforesaid, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings subsequent to the Survival Date for the enforcement
of their rights under SECTION 10.1.
-------------
10.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
----------------------------------------
The obligations and liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of liability by third parties (each, a
"THIRD PARTY CLAIM") shall be subject to the following terms and conditions:
------------------
(a) The Indemnified Persons shall promptly give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
-------- -------
delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is prejudiced by the delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including any
summons, complaint or other pleading which may have been served, any written
demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing delivered to
the Indemnified Persons that such Third Party Claim is properly subject to their
indemnification obligations hereunder, then the Indemnifying Persons shall have
the right to assume the defense of any Third Party Claim at their own expense
and by their own counsel, which counsel shall be reasonably satisfactory to the
Indemnified Persons; provided, however, that the Indemnifying Persons shall not
-------- -------
have the right to assume the defense of any Third Party Claim, notwithstanding
-37-
the giving of such written acknowledgment, if (i) the Indemnified Persons shall
have been advised by counsel that there are one or more legal or equitable
defenses available to them which are different from or in addition to those
available to the Indemnifying Persons, and, in the reasonable opinion of the
Indemnified Persons, counsel for the Indemnifying Persons could not adequately
represent the interests of the Indemnified Persons because such interests could
be in conflict with those of the Indemnifying Persons, (ii) such action or
proceeding involves, or could have a material effect on, any material matter
beyond the scope of the indemnification obligation of the Indemnifying Persons
or (iii) the Indemnifying Persons shall not have assumed the defense of the
Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third Party
Claim (under circumstances in which the proviso to the first sentence of SECTION
-------
10.3(B) is not applicable), the Indemnifying Persons shall not be responsible
-------
for any legal or other defense costs subsequently incurred by the Indemnified
Persons in connection with the defense thereof. If the Indemnifying Persons do
not exercise their right to assume the defense of a Third Party Claim by giving
the written acknowledgment referred to in SECTION 10.3(B), or are otherwise
----------------
restricted from so assuming by the proviso to the first sentence of SECTION
--------
10.3(B), the Indemnifying Persons shall nevertheless be entitled to participate
-------
in such defense with their own counsel and at their own expense. If the defense
of a Third Party Claim is assumed by the Indemnified Persons pursuant to clause
(i) or (ii) of the proviso to the first sentence of SECTION 10.3(B), the
----------------
Indemnified Persons shall not be entitled to settle such Third Party Claim
without the prior written consent of the Indemnifying Persons, which consent
shall not be unreasonably withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume the defense of
a Third Party Claim pursuant to clause (i) or (ii) of SECTION 10.3(B), (i) the
---------------
Indemnified Persons shall be entitled to participate in such defense with their
own counsel at their own expense and (ii) the Indemnifying Persons shall not
make any settlement of any claims without the written consent of the Indemnified
Persons, which consent shall not be unreasonably withheld or delayed.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
----------------------------------------------
(a) Subject to the further provisions of this SECTION 10.4, the
-------------
representations and warranties of the Seller contained in this Agreement or in
any certificate or other writing delivered in connection with this Agreement
shall survive the Closing until March 31, 2000; provided, however, that the
-------- -------
representations and warranties contained in ARTICLE V, SECTIONS 6.1 THROUGH 6.5
--------- ------------------------
and SECTION 6.10 shall survive indefinitely and the representations and
------------
warranties contained in SECTIONS 6.9, 6.15, 6.18 and 6.19 shall survive the
-------------- ---- ---- ----
Closing Date until the expiration of the applicable statutes of limitations for
claims applicable to the matters covered thereby. The covenants and other
agreements of the Seller contained in this Agreement shall survive the Closing
Date until they are otherwise terminated by their terms. Subject to the further
provisions of this SECTION 10.4 the representations and warranties of the
------------
Purchaser contained in this Agreement or in any certificate or other writing
delivered in connection with this Agreement shall survive the Closing until
March 31, 2000. The covenants and other agreements of the Purchaser contained
in this Agreement shall survive the Closing Date until they are other wise
terminated by their terms. For convenience of reference, the date upon which
-38-
any representation or warranty contained herein shall terminate, if any, is
referred to herein as the "SURVIVAL DATE".
-------------
(b) From and after the Closing, the Seller shall have no recourse against any
Company for any breach of any representation, warranty, covenant or agreement of
any Company set forth in this Agreement or in any certificate or other writing
delivered in connection with this Agreement.
10.5 LIMITATIONS ON INDEMNIFICATION.
------------------------------
(a) INDEMNITY BASKETS FOR THE SELLERS. From and after the Closing, the
---------------------------------
Purchaser Indemnified Persons shall not have the right to be indemnified for
breaches of representations and warranties of the Seller pursuant to SECTION
-------
10.1(A)(I) unless and until the Purchaser Indemnified Persons (or any member
----------
thereof) shall have incurred on a cumulative basis aggregate Losses in an amount
exceeding (and then only to the extent exceeding) $100,000; provided, however,
-------- -------
that in no event shall the limitations set forth in this SECTION 10.5(A) apply
----------------
with respect to the representations and warranties set forth in ARTICLE V and in
---------
SECTIONS 6.1, 6.2, 6.3, 6.4, 6.5, 6.9 (with respect to Income Taxes only) and
--------------------------------------
6.20 (collectively, the "Excluded Seller Representations") and willful breaches.
---- -------------------------------
(b) INDEMNITY LIMITATIONS FOR THE SELLER. From and after the Closing, the
------------------------------------
sum of all Losses pursuant to which indemnification is payable by the Seller
Indemnified Persons pursuant to SECTION 10.1(A)(I) with respect to the
------------------
representations and warranties of the Seller set forth in ARTICLE VI (other than
----------
the Excluded Sellers Representations) shall not exceed $5,700,000; provided,
--------
however, that in no event shall the limitations set forth in this SECTION
------- --------
10.5(B) apply with respect to any willful breach of any of the foregoing
-------
representations and warranties.
(c) The Indemnified Persons shall use commercially reasonable efforts to
mitigate any Losses for which they are entitled to indemnification pursuant to
this ARTICLE X.
---------
10.6 SATISFACTION OF INDEMNIFICATION OBLIGATIONS OF THE SELLER INDEMNIFYING
----------------------------------------------------------------------
PERSONS.
-------
The obligations of the Seller Indemnifying Persons pursuant to SECTION
-------
10.1 to indemnify the Purchaser Indemnified Persons for Purchaser Losses arising
----
from or in connection with the matters described in SECTION 10.1 shall be
------------
satisfied in the following manner: (i) an amount equal to one-half of each such
Purchaser Loss shall be paid in cash by the Seller Indemnifying Persons to the
Purchaser Indemnified Persons by wire transfer of immediately available funds to
an account specified by the Purchaser and (ii) an amount equal to one-half of
each such Purchaser Loss shall be paid by the surrender to the Purchaser for no
consideration of that number of Pacer Shares having an aggregate value on the
Closing Date equal to such amount (unless all of the Pacer Shares have been
surrendered, at which time all Purchaser Losses shall be satisfied in full by
cash payment in the manner provided in CLAUSE (I) of this sentence), it being
----------
agreed that solely for purposes of this SECTION 10.6 on the Closing Date the
------------
aggregate value of the Pacer Shares is $5,700,000 and the per share value of the
Pacer Shares is $100 per share (subject to proportionate adjustment after the
Closing for stock splits, stock dividends, reverse
-39-
stock splits or combinations and other similar pro rata recapitalization events
affecting the Pacer Common Stock).
10.7 COOPERATION REGARDING TAX PROCEEDINGS.
-------------------------------------
(a) The Purchaser, on the one hand, and the Seller, on the other hand, shall
promptly notify the other party upon becoming aware of the assertion of any
claim (a "Tax Claim") with respect to Taxes paid or payable by any Company for
---------
which the Purchaser Indemnified Persons may seek indemnity hereunder; provided,
--------
however, that no delay on the part of either party in so notifying the other
-------
party shall relieve the other party from any liability or obligation hereunder
unless (and then solely to the extent) that the other party is prejudiced by
such delay. Such notice shall be accompanied by copies of all relevant
documentation with respect to such Tax Claim and, to the extent then known to
the party so obligated to provide such notice, the action that such party in
good faith intends to take with respect to such Tax Claim, but such party shall
not thereby be restricted from taking other or different action.
(b) If the Seller shall acknowledge in a writing delivered to the Purchaser
that such Tax Claim is properly subject to its indemnification obligations
hereunder and the Seller shall have the financial resources to meet such
indemnification obligations, then subject to the further provisions of this
SECTION 10.7, the Seller shall have the right to assume the defense of such Tax
------------
Claim at his own expense and by his own counsel and other advisers, which
counsel and other advisors shall be reasonably satisfactory to the Purchaser
Indemnified Persons; provided, however, that the Seller shall not have the right
-------- -------
to assume the defense of any Tax Claim, notwithstanding the giving of such
written acknowledgment, if such Tax Claim involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligations of the Seller or the Seller shall not have assumed the defense of
such Tax Claim in a timely fashion.
(c) If the Seller shall assume the defense of a Tax Claim pursuant to and in
accordance with SECTION 10.7(B), the Seller shall not be responsible for any
---------------
legal or other defense costs subsequently incurred by the Purchaser Indemnified
Persons in connection with the defense thereof. If the Seller does not exercise
his right to assume the defense of a Tax Claim or is otherwise restricted from
doing so pursuant to SECTION 10.7(B), the Seller shall nevertheless be entitled
---------------
to participate in such defense with his own counsel and other advisors and at
their own expense. If the defense of a Tax Claim is retained by a Purchaser
Indemnified Person, the Purchaser Indemnified Persons shall not be entitled to
settle such Tax Claim without the prior written consent of the Seller, which
consent shall not be unreasonably withheld, delayed or conditioned.
(d) If the Seller exercises his right to assume the defense of a Tax Claim
pursuant to and in accordance with SECTION 10.7(B), (i) the Purchaser
---------------
Indemnified Persons shall be entitled to participate in such defense with their
own counsel and other advisors at their own expense and (ii) the Seller shall
not make any settlement of such Tax Claim without the written consent of the
Purchaser Indemnified Persons, which consent shall not be unreasonably withheld,
delayed or conditioned.
-40-
(e) Anything contained in this SECTION 10.7 to the contrary notwithstanding,
------------
if the Purchaser Indemnified Persons (or any of them) or the Seller elect to pay
any Tax asserted by a Tax Claim, such party nevertheless shall not do so for at
least thirty (30) days after the date of its notice to the other party hereunder
(or such shorter period as may be required by law or by prudent practice) in
order to permit the other party to inform the former of the other party's views
as to the merits of such Tax Claim. The Seller, on the one hand, and the
Purchaser Indemnified Persons, on the other hand, shall use commercially
reasonable efforts to resist an assertion of Taxes with respect to which the
Seller is obligated to indemnify the Purchaser Indemnified Persons but shall not
be required to contest any such assertion if the other party consents. Such
other party shall give its consent if (i) there would not be a reasonable
probability of having such Tax Claim declared to be incorrect by a court if the
matter were fully litigated, or (ii) the Purchaser Indemnified Persons
reasonably would agree to such claim if the Purchaser Indemnified Persons were
not indemnified for such Tax Claim, taking into account the collateral effects
of such Tax Claim. If the Seller, on the one hand, and the Purchaser
Indemnified Persons, on the other hand, are unable to resolve any dispute
regarding the application of the principles of this SECTION 10.7(E), the matter
---------------
shall be referred for determination as promptly as possible to the Independent
Accounting Firm, whose determination shall be binding on the parties in the
absence of fraud.
(f) For purposes of this SECTION 10.7(A) and to the extent permitted by law,
---------------
a Purchaser Indemnified Person may contest a Tax Claim either by contesting the
imposition of such Tax prior to payment or by paying the Tax and pursuing
appropriate procedures for obtaining a refund. If the Purchaser Indemnified
Person elects the latter course, the Seller shall indemnify the Purchaser
Indemnified Persons (but only to the extent they are required to do so under the
applicable provisions of this ARTICLE 10) promptly after the Purchaser
----------
Indemnified Person's payment of the Tax, and if a refund subsequently is
obtained, the Purchaser Indemnified Person shall turn over to the Seller the
amount of Tax (but not interest) refunded, up to the amount of the
indemnification payment actually made by the Seller to the Purchaser Indemnified
Persons, together with interest on such refund of Tax from the date the Seller
made such indemnification payment, at the rates in effect from time to time
under Section 6621(a)(1) of the Code.
(g) During the course of any Proceeding regarding any Tax Claim, the
Purchaser Indemnified Persons and the Seller will cooperate and consult with
each other from time to time in good faith regarding the defense of such Tax
Claim. Each of the Purchaser Indemnified Persons, on the one hand, and the
Seller, on the other hand, will afford the other and its attorneys and other
advisors reasonable access to all documents and other materials pertaining to
such Tax Claim and the defense thereof.
ARTICLE XI
TERMINATION; EFFECT OF TERMINATION
----------------------------------
11.1 TERMINATION.
-----------
This Agreement may be terminated at any time prior to the Closing by:
-41-
(i) the mutual consent of the Purchaser and the Seller; or
(ii) the Purchaser, if there has been a breach by any Company or the
Seller of any representation, warranty, covenant or agreement set forth in
this Agreement which is material and which such Company or the Seller fails
to cure within twenty (20) Business Days after notice thereof is given by
the Purchaser (except no cure period shall be provided for a breach by any
Company or the Seller which by its nature cannot be cured); or
(iii) the Seller, if there has been a breach by the Purchaser of any
representation, warranty, covenant or agreement set forth in this Agreement
which is material and which the Purchaser fails to cure within twenty (20)
Business Days after notice thereof is given by the Seller (except no cure
period shall be provided for a breach by the Purchaser which by its nature
cannot be cured); or
(iv) the Purchaser, if the conditions set forth in SECTIONS 9.1 OR 9.2
-------------------
shall not have been satisfied or waived by the Purchaser by June 15, 1998;
or
(v) the Seller, if the conditions set forth in SECTIONS 9.1 OR 9.3
--------------------
shall not have been satisfied or waived by the Seller by June 15, 1998; or
(vi) the Purchaser or the Seller if any permanent injunction or other
Order of a court or other competent authority preventing the Closing shall
have become final and non-appealable;
provided, however, that neither the Purchaser nor the Seller shall be entitled
-------- -------
to terminate this Agreement pursuant to CLAUSE (IV) or CLAUSE (V) of this
----------- ----------
SECTION 11.1 if such party's intentional breach (or, with respect to such
-------------
termination by the Seller, any Company's intentional breach) of this Agreement
has prevented the satisfaction of any such condition. Any termination pursuant
to CLAUSE (I) of SECTION 11.1 shall be effected by a written instrument signed
---------- -------------
by the Purchaser and the Seller, and any termination pursuant to this SECTION
--------
11.1 (other than a termination pursuant to CLAUSE (I) of SECTION 11.1) shall be
---- ---------- -------------
effected by written notice from the party or parties so terminating to the other
parties hereto, which notice shall specify the Section of this Agreement
pursuant to which this Agreement is being terminated.
11.2 EFFECT OF TERMINATION.
---------------------
In the event of the termination of this Agreement as provided in
SECTION 11.1, this Agreement shall be of no further force or effect, except for
-------------
this SECTION 11.2 and SECTION 12, each of which shall survive the termination
------------- -----------
of this Agreement; provided, however, that the Liability of any party for any
-------- -------
breach by such party of the representations, warranties, covenants or agreements
of such party set forth in this Agreement occurring prior to the termination of
this Agreement shall survive the termination of this Agreement and, in addition,
in the event of any action for breach of contract in the event of a termination
of this Agreement, the prevailing party shall be reimbursed by the other party
to the action for reasonable attorneys' fees and expenses relating to such
action.
-42-
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 AMENDMENT.
---------
This Agreement may not be altered or otherwise amended except pursuant
to an instrument in writing signed by each party, except that any party may
waive any obligation owed to it by another party under this Agreement. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
12.2 ENTIRE AGREEMENT.
-----------------
This Agreement and the other agreements and documents referenced
herein (including, but not limited to, the schedules and the exhibits (in their
executed form) attached hereto) and any other document or agreement
contemporaneously entered into this Agreement contain all of the agreements
among the parties hereto with respect to the transactions contemplated hereby
and supersede all prior agreements or understandings among the parties with
respect thereto (including the Letter of Intent dated as of April 3, 1998, among
Seller Group and the Purchaser).
12.3 SEVERABILITY.
---- ------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
12.4 BENEFITS OF AGREEMENT.
---------------------
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing.
Notwithstanding anything contained herein to the contrary, this Agreement shall
not be assignable by the Seller, or any Company prior to the Closing, without
the express, written consent of the Purchaser. The Purchaser may, without the
consent of any other party hereto, (i) assign any or all of its rights and
interests hereunder to one or more of its wholly-owned Affiliates and designate
one or more of its wholly-owned Affiliates to perform its obligations hereunder
and (ii) assign any or all of its rights and interests hereunder as security for
any obligations arising in connection with the financing of the transactions
contemplated hereby,
-43-
in any or all of which cases the Purchaser nonetheless shall remain responsible
for the performance.
12.5 EXPENSES.
--------
Except as otherwise provided in this Agreement, the Purchaser on the
one hand and the Seller on the other hand shall each bear their own expenses
(with the Seller bearing the expenses of each Company) incurred in connection
with this Agreement and the Related Documents (including the legal and due
diligence fees, costs and expenses incurred by such party). If the Closing
occurs, the Purchaser shall pay to EOS Management, Inc., a transaction fee of
not more than $40,000. The Purchaser shall pay the fees and expenses of Xxxxxx
Xxxxxxxx LLP in connection with their audit of the Annual Financial Statements.
12.6 REMEDIES.
--------
The parties shall each have and retain all rights and remedies
existing in their favor under this Agreement, at law or in equity, including
rights to bring actions for specific performance and injunctive and other
equitable relief (including the remedy of rescission) to enforce or prevent a
breach or violation of any provision of this Agreement. All such rights and
remedies shall, to the extent permitted by applicable Law, be cumulative and a
party's pursuit of any such right or remedy shall not preclude such party from
exercising or pursuing any other available right or remedy.
12.7 NOTICES.
-------
All notices or other communications pursuant to this Agreement shall
be in writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Seller, or any Company prior to the Closing, to:
Xxxxxxx X. Xxxxxx
President
Cross Con Terminals, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-44-
with a copy to:
Pembroke and Xxxxx, P.C.
Xxxxx 000
000 X. Xxxxxxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Pembroke, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
(b) if to the Purchaser or, after the Closing, any Company, to:
Pacer International, Inc.
0000 Xx. Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii)
in the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
12.8 COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
12.9 GOVERNING LAW.
--------------
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER
-45-
JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK TO BE APPLIED.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED DOCUMENT.
12.10 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
------------------------------------------------------------
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
12.11 INTERPRETATION; CONSTRUCTION.
----------------------------
The term "AGREEMENT" means this agreement together with all schedules
---------
and exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "BEST KNOWLEDGE" of any Person means (i) the actual
--------------
knowledge of such Person and (ii) that knowledge which should have been
acquired by such Person after making such due inquiry and exercising such due
diligence as a prudent businessperson would have made or exercised in the
management of his or her business affairs, including due inquiry of those
officers, directors, key employees and professional advisers (including
attorneys, accountants and consultants) of the Person who could reasonably be
expected to have actual knowledge of the matters in question. The use in this
Agreement of the term "including" means "including, without limitation." The
words "herein", "hereof", "hereunder", "hereby", "hereto", "hereinafter", and
other words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in this Agreement. All
references to articles, sections, subsections, clauses, paragraphs, schedules
and exhibits mean such provisions of this Agreement and the schedules and
exhibits attached to this Agreement, except where otherwise stated. The title
of and the article, section and paragraph headings in this Agreement are for
convenience of reference only and shall not govern or affect the interpretation
of any of the terms or provisions of this Agreement. The use herein of the
masculine, feminine or neuter forms shall also denote the other forms, as in
each case the context may require. Where specific language is used to clarify
by example a general statement contained herein, such specific language shall
not be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement has
been chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Accounting terms used but not
otherwise defined herein shall have the meanings given to them under GAAP.
Unless expressly provided otherwise, the measure of a
-46-
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if
no corresponding date exists, the measure shall be that date of the following
month or year corresponding to the next day following the starting date. For
example, one month following February 18 is March 18, and one month following
March 31 is May 1.
* * * * *
-47-
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
THE PURCHASER:
-------------
PACER INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxx
By: _________________________________
Name: Xxxxxx X. Xxxxx
Title: President and CEO
THE COMPANIES:
-------------
CROSS CON TERMINALS, INC.
/s/ Xxxxxxx X. Xxxxxx
By: _________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
CROSS CON TRANSPORT, INC.
/s/ Xxxxxxx X. Xxxxxx
By: _________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
THE SELLER:
----------
/s/ Xxxxxxx X. Xxxxxx
______________________________________
Xxxxxxx X. Xxxxxx
ANNEX I
CERTAIN DEFINITIONS
-------------------
"ACQUISITION PROPOSAL" means any offer, proposal or indication of
--------------------
interest in (i) the direct or indirect acquisition of all or any material part
of any of the Companies or their subsidiaries, (ii) a merger, consolidation or
other business combination directly or indirectly involving any of the Companies
or their subsidiaries or (iii) the direct or indirect acquisition of any capital
stock of any of the Companies or their subsidiaries.
"AFFILIATE" means, with respect to any Person, (i) a director,
---------
officer or shareholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day
------------
on which banking institutions in New York, New York are not required to be open.
"CAPITAL LEASE" means any obligation to pay rent or other amounts
-------------
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person as of such date computed in accordance with GAAP.
"CHARTER DOCUMENTS" means, as to any corporation, the articles,
-----------------
certificate or memorandum of incorporation or association of such corporation,
the by-laws of such corporation, and each other instrument or other document
governing such corporation's existence and internal affairs, in each case as
amended and restated and in effect at the time in question.
"CONTRACT" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, permit, concession, franchise or license.
"CONTROL" means, with respect to any Person, the possession, directly
-------
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"EBIT" shall have the meaning provided for on ANNEX III of this
---- ---------
Agreement.
"EMPLOYEE BENEFIT PLAN" means (i) any qualified or non-qualified
---------------------
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA), including
any Multiemployer Plan or Multiple Employer Plan, (ii) any Employee Welfare
Benefit Plan (as defined in Section 3(1) of ERISA), or (iii) any employee
benefit, fringe benefit,
-49-
compensation, severance, incentive, bonus, profit-sharing, stock option, stock
purchase or other plan, program or arrangement, whether or not subject to ERISA
and whether or not funded.
"ENCUMBRANCES" shall mean and include security interests, mortgages,
------------
liens, pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits,
-------------------------------------
Orders and Contracts and all common law relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including, but not limited to, all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA AFFILIATE" means, with respect to any Person, any other Person
---------------
that is a member of a "controlled group of corporations" with, or is under
--------------------------------
"common control" with, or is a member of the same "affiliated service group"
--------------- ------------------------
with such Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of
the Code.
"FUNDED INDEBTEDNESS" means, without duplication, the aggregate amount
-------------------
(including the current portions thereof) of all (i) indebtedness for money
borrowed from others (including any prepayment and similar penalties) and
purchase money indebtedness (other than accounts payable in the ordinary
course); (ii) indebtedness of the type described in clause (i) above
guaranteed, directly or indirectly, in any manner by any Company or in effect
guaranteed, directly or indirectly, in any manner by any Company through an
agreement, contingent or otherwise, to supply funds to, or in any other manner
invest in, the debtor, or to purchase indebtedness, or to purchase and pay for
property if not delivered or pay for services if not performed, primarily for
the purpose of enabling the debtor to make payment of the indebtedness or to
assure the owners of the indebtedness against loss (any such arrangement being
hereinafter referred to as a "GUARANTY") (but the term "Guaranty" shall exclude
--------
endorsements of checks and other instruments in the ordinary course); (iii) all
indebtedness of the type described in clause (i) above secured by any
Encumbrance upon property owned by any Company even though such Company has not
in any manner become liable for the payment of such indebtedness; (iv) Capital
Leases and (v) all interest expense and other charges accrued but unpaid, and
all prepayment premiums, on or relating to any of such indebtedness. Funded
Indebtedness of each Company as of the date hereof is set forth on SCHEDULE
---------
6.13 hereof.
----
-50-
"GAAP" means generally accepted accounting principles in the United
States as promulgated by the AICPA applied on a basis consistent with the
preparation of the Audited Financial Statements.
"GOVERNMENTAL ENTITY" means any governmental authority or
-------------------
instrumentality, whether Federal, state, local or foreign and whether
legislative, executive, judicial or otherwise.
"INCOME TAXES" means all income taxes (including any tax on or based
------------
upon net income, gross income, income as specially defined, earnings, profits or
selected items of income, earnings or profits (including state taxes imposed on
subchapter S corporations)).
"INDEMNIFIED PERSONS" means and includes the Seller Indemnified
-------------------
Persons and/or the Purchaser Indemnified Persons, as the case may be.
"INDEMNIFYING PERSONS" means and includes the Seller Indemnifying
--------------------
Persons and/or the Purchaser Indemnifying Persons, as the case may be.
"INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights,
----------------------------
including, patents, patent applications, trademarks, trademark applications,
trade names, service marks, service xxxx applications, trade dress, logos and
designs and the goodwill connected with the foregoing, copyrights and copyright
applications, know-how, trade secrets, proprietary processes and formulae,
confidential information, franchises, licenses, inventions, instructions,
marketing materials and all documentation and media constituting, describing or
relating to the foregoing, including, manuals, memoranda and records.
"LAW" means any applicable foreign, federal, state or local law,
---
statute, treaty, rule, directive, regulation, ordinances and similar provisions
having the force or effect of law or an Order of any Governmental Entity
(including all Environmental, Health and Safety Laws).
"LIABILITY" means any actual or potential liability or obligation,
---------
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted.
"LITIGATION EXPENSE" means any out-of-pocket expenses incurred in
------------------
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, court filing fees, court costs, arbitration fees or
costs, witness fees and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals.
"LOSSES" means any and all losses (including a diminution in the value
------
of any Company's capital stock), claims, shortages, damages, expenses (including
reasonable attorneys' and accountants' and other professionals' fees and
Litigation
-51-
Expenses), assessments, Taxes (including interest or penalties thereon) and
insurance premium increases arising from or in connection with any such matter
that is the subject of indemnification under ARTICLE X.
---------
"ORDERS" means judgments, writs, decrees, compliance agreements,
------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"PERMITS" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not yet due
----------------------
and payable or being contested in good faith by appropriate proceedings and for
which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business; and (iii)
mechanic's, materialman's, supplier's, vendor's or similar liens arising in the
ordinary course of business securing amounts that are not delinquent.
"PERSON" shall be construed broadly and shall include an individual,
------
a partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization or
a governmental entity (or any department, agency or political subdivision
thereof).
"PROCEEDINGS" means any action, suit, investigation or proceedings
-----------
before any Governmental Entity or arbitrator.
"PURCHASER INDEMNIFIED PERSONS" means and includes the Purchaser and
-----------------------------
its subsidiaries (including, following the Closing, each Company), their
respective successors and assigns, and the respective officers, directors and
controlling parties of each of the foregoing; provided, however, that any such
-------- -------
Person who was, prior to the Closing Date, an officer, director, employee,
Affiliate, successor or assign of any Company or the Seller shall not in such
capacity, be a Purchaser Indemnified Person with respect to a breach of this
Agreement or any Related Document based on facts or circumstances occurring, or
actions taken by such Person, at or prior to the Closing.
"PURCHASER INDEMNIFYING PERSONS" means the Purchaser and its
------------------------------
successors.
"PURCHASER LOSSES" means any and all Losses sustained, suffered or
----------------
incurred by any Purchaser Indemnified Person arising from or in connection with
any such matter which is the subject of indemnification under ARTICLE X.
---------
"SECURITIES" means "SECURITIES" as defined in SECTION 2(1) of the
---------- ---------- -------------
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
--------------
-52-
"SELLER INDEMNIFIED PERSONS" means and includes the Seller and his
--------------------------
respective personal representatives, estates and heirs.
"SELLER INDEMNIFYING PERSONS" means and includes the Seller and his
---------------------------
respective personal representatives, estates and heirs.
"SELLER LOSSES" shall mean any and all Losses sustained, suffered or
-------------
incurred by any Seller Indemnified Person arising from or in connection with any
matter which is the subject of indemnification under ARTICLE X.
---------
"SPECIAL TAX LOSSES" means any and all Losses sustained, suffered or
------------------
incurred by any Purchaser Indemnified Person arising from or in connection with
Taxes payable by any Company or Affiliate thereof with respect to period ending
or prior to the Closing Date or the untruth, inaccuracy or breach of the
representations and warranties of any Company or the Seller contained in SECTION
-------
6.9 that relate to or arise out of any compensation, dividends, distributions or
---
other payments made by any Company or Affiliate thereof to the Seller any former
shareholder of any Company or Affiliate thereof or any officer of any Company or
Affiliate thereof.
"TAX RETURN" means any return, declaration, report, claim for refund,
----------
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXES" means, with respect to any Person, (i) all Income Taxes and
-----
all gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person (if
any) and (ii) any liability for the payment of any amount of the type described
in CLAUSE (I) above as a result of (A) being a "transferee" (within the
----------- ----------
meaning of Section 6901 of the Code or any other applicable Law) of another
Person, (B) being a member of an affiliated, combined or consolidated group or
(C) a contractual arrangement or otherwise.
-53-
ANNEX II
ADDITIONAL AMOUNT
"Additional Amount" shall mean the amount equal to the sum of (i) the
difference between (x) the combined net income of the Companies for the period
from (and including) January 1, 1998, through (and including) May 31, 1998, as
set forth on, and calculated in accordance with, the Closing Income Statement,
less (y) $263,098 plus (ii) interest on such amount in clause (i) at the rate of
---- ----
8 percent per annum, calculated on a per diem basis from (and including) June 1,
1998, through (but excluding) the Closing Date (assuming a year of 365 days).
For the purpose of the above calculation, net income will not take into account
adjustments made to prior periods, including write-downs of accounts payable.
-54-
ANNEX III
CONTINGENT PAYMENT
As used in this Agreement, the term "EBIT" shall mean, with respect to
----
the fiscal year of the Companies commencing January 1, 1998, and ending December
31, 1998, the "Income from Operations" as set forth on, and calculated in
accordance with, the audited combined statement of operations of the Companies
for the fiscal year of the Companies ending December 31, 1998, which shall be
prepared in accordance with GAAP applied on a basis consistent with the
preparation of the Annual Financial Statements, subject to the following
exceptions: (i) EBIT shall not include any reduction for interest expense
incurred by or allocated to the Companies for such fiscal year; (ii) insurance
expense shall remain at historical levels, even if insurance is changed to Pacer
International, Inc. policies; and (iii) EBIT will not be reduced or increased by
any (A) extraordinary gains or losses determined in accordance with GAAP or
adjustments made to periods including prior to January 1, 1998, including write-
downs of accounts payable or (B) without limiting any other provision of this
Agreement, amortization of goodwill resulting from the transactions contemplated
hereby.
III-1
