Exhibit 4.13
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SHAREHOLDERS' AGREEMENT
among
PACER INTERNATIONAL, INC.,
COYOTE ACQUISITION LLC,
COYOTE ACQUISITION II LLC
and
Certain Individual Shareholders
named herein.
Dated as of May 28, 1999
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TABLE OF CONTENTS
Paragraph Page No.
1. Restrictions on Transfer; Permitted Transferees; Pledges........................................... 2
2. Notice by Shareholder of Proposed Transfers........................................................ 4
3. Offer to Sell Shares............................................................................... 4
4. Elections to Purchase Shares....................................................................... 5
5. Procedures Upon Elections for Less than All of Shares Offered...................................... 5
6. Closing of Purchase of Shares...................................................................... 6
7. Disposition by Management Shareholder of Shares not Purchased by the Company and/or the Offerees... 6
8. Participation Rights............................................................................... 7
9. Bring Along Rights................................................................................. 8
10. Representations and Warranties..................................................................... 9
11. Incidental Registration............................................................................ 10
12. Expenses........................................................................................... 11
13. Holdback Agreements................................................................................ 11
14. Indemnification and Contribution................................................................... 11
15. Rule 144 Reporting................................................................................. 14
16. Preemptive Rights.................................................................................. 14
17. Certain Agreements................................................................................. 16
18. Confidentiality; Noncompetition.................................................................... 17
19. Voting Proxy....................................................................................... 18
20. Financial Statements............................................................................... 19
21. General Restriction................................................................................ 19
22. Legends............................................................................................ 19
23. Further Assurances................................................................................. 20
24. Notices............................................................................................ 20
25. Amendment; Termination............................................................................. 20
26. General............................................................................................ 21
27. Corporate Agreement................................................................................ 22
THIS SHAREHOLDERS' AGREEMENT, dated as of May 28, 1999, is among
COYOTE ACQUISITION LLC, a Delaware limited liability company (together with its
transferees and assignees, "Coyote I"), COYOTE ACQUISITION II LLC, a Delaware
limited liability company, (together with its transferees and assignees, "Coyote
II" and Coyote I and Coyote II, jointly "Coyote"), DONALD C. ORRIS, an
individual, GERRY ANGELI, an individual, ROBERT L. CROSS, an individual, JOHN W.
HEIN, an individual, RICHARD HYLAND, an individual, GARY L. GOLDFEIN, an
individual, ALLEN E. STEINER, an individual (the foregoing individuals, herein
sometimes individually referred to as a "Management Shareholder" and,
collectively, as the "Management "Shareholders"), all of the foregoing,
shareholders (the "Shareholders") of PACER INTERNATIONAL, INC., a Tennessee
corporation (the "Company"), and the Company.
WHEREAS, Coyote and APL Limited, a Delaware Corporation ("APL") have
entered into a Stock Purchase Agreement of even date herewith (as the same may
be amended or supplemented, the "Purchase Agreement") whereby Coyote will
purchase (the "Recapitalization") approximately ninety percent (90%) of the
outstanding shares of common stock, no par value, of the Company (the "Common
Shares");
WHEREAS, upon consummation of the Recapitalization (the "Closing"),
Coyote will be the record and beneficial owner of the number of Common Shares
(the "Coyote Shares") (to the extent the right to purchase such shares has not
been assigned to a third party by Coyote) and APL will be the record and
beneficial owner of the number of Common Shares (the "APL Shares") each as set
forth in the Purchase Agreement;
WHEREAS, APL, Coyote and the Company have entered into a Shareholders
Agreement, dated as of the date hereof (the "APL Shareholders' Agreement"), to
impose certain restrictions on the disposition and transfer of the APL Shares,
to create certain purchase and sale rights and to create certain registration
rights;
WHEREAS, Coyote, the Company, BT Capital Investors, L.P. and Pacer
International Equity Investors, LLC. have entered into a Shareholders Agreement,
dated as of the date hereof (the "Investors Shareholders' Agreement"), to impose
certain restrictions on the disposition and transfer of the APL Shares, to
create certain purchase and sale rights and to create certain registration
rights;
WHEREAS, Mile High Acquisition Corp., a Delaware corporation ("Sub"),
Pacer International, Inc., a Delaware corporation ("Pacer"), and the
shareholders of Pacer have entered into an Agreement and Plan of Merger, dated
as of February 22, 1999 (as the same may be amended or supplemented, the "Merger
Agreement"), providing for the merger of Sub with and into Pacer (the "Merger");
WHEREAS, Sub has assigned (the "Assignment") its rights and
obligations under the Merger Agreement to a newly formed subsidiary of the
Company ("Newco");
WHEREAS, pursuant to the Alternative Consideration Letter, dated March
15, 1999 (the "Alternative Consideration Letter"), as a result of the
Assignment, in lieu of receiving shares of common stock, par value $.01 per
share, of Pacer and New Options (as defined in the
Merger Agreement) upon the consummation of the Merger (the "Effective Time"),
the Management Shareholders will be issued Series B Perpetual Participating
Exchangeable Preferred Stock (the "Exchangeable Preferred Stock") which may be
exchanged for Common Shares and options which are exercisable for Common Shares
(the "Management Options"), each in amounts as set forth in the Alternative
Consideration Letter (the Common Shares into which the Exchangeable Preferred
Stock may be exchanged and the Management Options, collectively, the "Management
Shares"). The terms "Management Shares" and "Coyote Shares" shall include any
Common Shares and Management Options now owned or hereinafter acquired by any
Management Shareholder or Coyote, respectively, any securities that may be
issued by the Company to any Management Shareholder or Coyote, respectively, as
a result of any stock dividend, stock split or other distribution,
recapitalization, reclassification, reorganization or the like, and any warrants
or options to acquire Common Shares or securities convertible into Common Shares
now owned or hereafter acquired by any Management Shareholder or Coyote,
respectively; and the term "Shares" shall include the Coyote Shares, the
Management Shares and any and all other capital stock or equity securities
(including derivative securities convertible thereinto or exchangeable or
exercisable therefor) issued by the Company;
WHEREAS, it is desired that the Management Shareholders have an
opportunity to participate in the success of the Company, but it is recognized
that the success of the Company might be diminished if the Management Shares
were transferred to persons who might impair the continuation of harmonious
relations among the shareholders of the Company; and
WHEREAS, the Management Shareholders and Coyote desire to impose
certain restrictions on the disposition and transfer of the Management Shares,
to create certain purchase and sale rights, to create certain registration
rights and to agree with respect to certain matters relating to the voting of
the Management Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Restrictions on Transfer; Permitted Transferees; Pledges.
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(a) No Management Shareholder shall make, or suffer to be made, any
transfer, sale, assignment, gift, pledge, mortgage, or other disposition or
encumbrance (all of which are comprised within the word "transfer" as used
hereinafter) of all or any portion of the Management Shares now owned or
hereafter acquired by such Management Shareholder, except that, subject to the
further provisions of Paragraph 1(c) below, each of the following transfers are
expressly permitted:
(i) by any Management Shareholder pursuant to a bona fide written
purchase offer from another person (as used herein, the term "person" shall
include a natural person, corporation, partnership, association, company,
trust, joint venture, unincorporated organization or other entity of any
nature whatsoever), after the Management Shareholder shall have first
offered the Management Shares to Coyote and each other Management
Shareholder in accordance with the procedures hereinafter set forth in
Paragraphs 2 through 7 below; provided, that no such transfer shall be
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permitted prior to the date which is thirty (30) months after the Effective
Time ( it being understood
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that such thirty (30) month prohibition does not apply to public sales of
Management Shares, after the initial public offering, pursuant to Rule 144
(subject to the last proviso of this paragraph 1(a)(i)) or pursuant to the
incidental registration rights specified in paragraph 11); and, provided,
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further, that in no event may such transfer to a bona fide purchaser be
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effected if the board of directors of the Company (the "Board of
Directors") determines, that (A) the proposed transferee is a person who or
which, directly or indirectly, (including as an employee, director,
officer, consultant, partner, owner, adviser or other participant in an
entity), engages in the business of the corporation, in any related
business or in any other business competitive with the Company or any
subsidiary thereof at the time of sale or (B) such transfer would be
detrimental to the interests of the Company or any subsidiary thereof; and
provided, further, that this paragraph (i) shall not apply to, and shall
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not be interpreted to permit, any sales by the Management Shareholders of
Management Shares pursuant to Rule 144 under the Securities Act of 1933, as
amended (the "Act"), including without limitation, clause (k) of Rule 144,
unless (x) the sale is conducted through the managing underwriter for the
Company's initial public offering of securities, (y) the underwriter has
not advised the Company or such Management Shareholder that the sale of all
or any portion of such Shares would have a material adverse effect on the
market for the Shares and (z) either (1) Coyote has sold 33-1/3% of the
Shares owned by them immediately following the Effective Time or (2) six
(6) years have elapsed since the Effective Time;
(ii) by any Management Shareholder to a Permitted Transferee (as
hereinafter defined); provided, however, that any such Permitted Transferee
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may thereafter transfer such Management Shares pursuant to this Paragraph
1(a)(ii) only to any other Permitted Transferee of the Management
Shareholder who originally owned such Management Shares or to such original
Management Shareholder; and provided, further, that if the Permitted
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Transferee is an entity described in clause (iv) of the definition of
"Permitted Transferee", then prior to any disposition of any equity
interest in such entity to a person that is not the original Management
Shareholder or a Permitted Transferee of such original Management
Shareholder (in which event, such entity would cease to be a Permitted
Transferee) such entity shall either (A) transfer all Management Shares
then held by it to the original Management Shareholder or a Permitted
Transferee thereof, or (B) offer such Management Shares to the Company,
Coyote and the other Management Shareholders pursuant to the provisions of
Paragraphs 2 through 7 below on the terms upon which such Management Shares
were originally transferred to such entity;
(iii) as expressly approved by Coyote (but subject to any terms or
conditions provided by Coyote in granting any such approval); or
(iv) as otherwise expressly provided herein, including pursuant to the
participation rights specified in Paragraph 8 or the incidental
registration rights specified in Paragraph 11.
(b) For the purposes of the foregoing, a "Permitted Transferee" of
any Management Shareholder shall mean:
(i) the heirs, executor, administrator or personal representative of
such
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Management Shareholder, upon the death of any such Management Shareholder;
(ii) the spouse, sibling, parent, child or grandchild of such
Management Shareholder who is a natural person;
(iii) a trust for the exclusive benefit of such Management Shareholder
and any of the family members listed in clause (ii) above;
(iv) any entity in which such Management Shareholder holds a 100% equity
interest; and
(v) Coyote or the Company;
provided, however, that Gary I. Goldfein ("Goldfein") and his Permitted
Transferees shall be deemed to be "Permitted Transferees" of Allen E. Steiner
("Steiner").
(c) Prior to any transfer of any Management Shares to a bona fide
purchaser pursuant to Paragraph 1(a)(i) or to a Permitted Transferee pursuant to
Paragraph 1(a)(ii), (i) the transferee of Management Shares shall agree to be
bound by and benefit from, and that such Management Shares shall continue to be
subject to, the terms and provisions of this Agreement as if he, she or it were
a Management Shareholder hereunder and shall enter into a joinder to this
Agreement (in the form attached hereto as Exhibit A) to such extent and (ii)
Coyote shall receive such assurances as they may reasonably require to the
effect that such transfer does not violate the Act or applicable state
securities laws (including, without limitation, representations and warranties
as to investment intention and an opinion of counsel).
2. Notice by Shareholder of Proposed Transfers. If at any time a
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Management Shareholder proposes to transfer any Management Shares, such
Management Shareholder shall, prior to making any transfer of Management Shares,
give written notice (the "Notice") to the Company, Coyote and each other
Management Shareholder, specifying (i) the Management Shares to be so
transferred, (ii) the method of transfer, (iii) the identity of the prospective
transferee and (iv) in the case of a proposed bona fide sale pursuant to
Paragraph 1(a)(i) above, the terms of the written offer made by the prospective
purchaser, and containing a true and correct copy of such bona fide offer.
3. Offer to Sell Shares. In the case of a proposed bona fide sale
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pursuant to Paragraph 1(a)(i) above, the Notice provided in Paragraph 2 shall
constitute an irrevocable offer by the Management Shareholder who delivers the
Notice to sell such Management Shares to the Company, Coyote and the other
Management Shareholders on the terms and at the price specified in this
Paragraph 3 (such offer is hereinafter referred to as the "Offer to Sell," a
Management Shareholder making an Offer to Sell is hereinafter referred to as the
"Offeror-Shareholder", Coyote and the other Management Shareholders to whom the
Offer to Sell is being made are hereinafter referred to as the "Offerees", and
the Management Shares offered in the Offer to Sell are hereinafter referred to
as the "Offered Shares"). The Offer to Sell shall be at a price and on other
terms (including any deferral of payment in whole or in part) no less favorable
to the Company and the Offerees than the price and other terms offered by the
prospective purchaser specified in the Offeror-Shareholder's Notice, except that
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if the proposed sale is to be
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wholly or partly for consideration other than money (the term "money" being used
in this Paragraph 3 to include deferred obligations to pay money), the Offer to
Sell shall be at a price equal to the amount of the net monetary consideration
plus the fair market value (as determined in good faith by the Board of
Directors within ten (10) days after receipt of the Notice by the Company), at
the date of the Offeror-Shareholder's Notice, of any consideration other than
money offered by the prospective purchaser.
4. Elections to Purchase Shares.
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(a) The Company shall have the first right and option, for a period of
thirty (30) days after delivery of the Offer to Sell by the Offeror-Shareholder,
to accept all or any portion of the Offered Shares at the purchase price and on
the terms stated in the Offer to Sell by delivery to the Offeror-Shareholder,
with a copy to each Offeree, of written notice of its irrevocable election to
purchase (the "Company Election Notice"), specifying the number of Shares the
Company elects to purchase. If the Company does not elect to purchase all of
the Offered Shares, then each Offeree shall have the right and option, for a
period of thirty (30) days after the earlier of the expiration of the 30-day
period provided above and receipt of the Company Election Notice (the "Exercise
Period"), within which to elect to purchase all or any portion of the Offered
Shares which were not elected to be purchased by the Company.
(b) If the Offerees elect to accept the Offer to Sell with respect to
the Offered Shares which were not elected to be purchased by the Company, the
Offerees shall provide the Offeror-Shareholder with written notice (the "Offeree
Election Notice"), no later than the last day of the Exercise Period, specifying
the maximum number of such Offered Shares that each of the Offerees elects to
purchase. Each such election to purchase Offered Shares shall be irrevocable,
regardless of whether the number of Offered Shares deliverable upon the exercise
of such election shall be reduced in accordance with the provisions of Paragraph
4(c) below (in which case such election shall be deemed to constitute an
election to purchase such lesser number of Offered Shares as shall be determined
in accordance with such Paragraph 4(c)). Except as provided in Paragraph 5
below, all elections to purchase Offered Shares in accordance with Paragraph
4(a) and this Paragraph 4(b) shall be binding on the Offeror-Shareholder.
(c) If the aggregate number of Offered Shares accepted by the Offerees
exceeds the number of Offered Shares available to the Offerees, then the right
to purchase such Offered Shares shall be allocated to the electing Offerees as
follows: (i) first by allocating to each Offeree the lesser of (A) its pro rata
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portion of such Offered Shares on the basis of the respective amounts of Shares
owned by each electing Offeree on the date of the initial Offer to Sell, and (B)
the maximum number of Offered Shares elected to be purchased by such Offeree, as
indicated in the Offeree Election Notice, and (ii) thereafter, by repeatedly
allocating any remaining Offered Shares among those Offerees that have not yet
been allocated the maximum number of Offered Shares indicated in the Offeree
Election Notice, pro rata on the basis of the respective amounts of Shares owned
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by such Offerees on the date of the initial Offer to Sell, until all Offered
Shares have been allocated.
5. Procedures Upon Elections for Less than All of Shares Offered.
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Notwithstanding the provisions of Paragraph 4, in the case of a proposed bona
fide sale by the Offeror-Shareholder pursuant to Paragraph 1(a)(i), elections to
purchase made by the Company
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and/or the Offerees shall not be binding on the Offeror-Shareholder if the
Company and the Offerees do not in the aggregate elect to purchase all of the
Offered Shares. In such event, no sales pursuant to such elections need be made
by the Offeror-Shareholder and the Offeror-Shareholder may then sell the Offered
Shares to the proposed bona fide purchaser, subject to the provisions of
Paragraph 7. Notwithstanding the foregoing, the Offeror-Shareholder may, by
written notice of acceptance to the Company and the electing Offerees within ten
(10) days after the earlier of his receipt of an Offeree Election Notice or
expiration of the Exercise Period, waive the requirement that all Offered Shares
be accepted by the Company and the Offerees and elect to sell to the Company
and/or the electing Offerees that part of the Offered Shares for which elections
have been made.
6. Closing of Purchase of Shares. If elections have been made by the
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Company and/or the electing Offerees in the aggregate for all of the Offered
Shares (or if the Company and/or the electing Offerees shall have received from
the Offeror-Shareholder a notice of waiver and acceptance pursuant to Paragraph
5), the Company, the electing Offerees and the Offeror-Shareholder shall
mutually agree on a place, time and date (not more than thirty (30) days nor
less than twenty (20) days after the expiration of the Exercise Period) for a
closing of such purchase and sale. At the closing, the Offeror-Shareholder
shall (i) deliver against receipt of the purchase price therefor by cash or
certified or bank cashier's check or wire transfer of funds, the certificate or
certificates representing the Management Shares each of the Company and the
electing Offerees has elected to purchase, properly endorsed for transfer, with
all necessary transfer and documentary stamps affixed, and in a form such that
upon presentation to the Company the Management Shares represented thereby may
be registered in the names of the respective purchasers and (ii) be deemed to
have represented and warranted to such purchaser that (a) the Management Shares
to be sold are beneficially and of record owned by such Offeror-Shareholder free
and clear of all liens, claims, privileges, options, security interests, rights
of first refusal, agreements, limitations or voting rights, preemptive rights,
charges or other encumbrances of any nature (except as expressly provided by
this Agreement) (an "Encumbrance") and (b) the sale and delivery of the
Management Shares by such Offeror-Shareholder as contemplated hereby shall vest
in the purchaser on such date good, valid and marketable title to such
Management Shares free and clear of all Encumbrances (clauses (a) and (b), the
"Sale Representations").
7. Disposition by Management Shareholder of Shares not Purchased by the
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Company and/or the Offerees. Any Management Shares not purchased by the Company
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and the Offerees pursuant to Paragraphs 4 through 6 may be disposed of by the
Offeror-Shareholder to the prospective transferee named in his Notice under
Paragraph 2, at a price and on terms not more favorable to the transferee than
those specified in such Notice, but only within forty-five (45) days after the
expiration of the Exercise Period; provided, that a transferee shall, prior to
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the transfer, execute and deliver to the Company and each Shareholder a written
joinder to this Agreement and such other assurances as provided in Paragraph
1(c) hereof. Notwithstanding the foregoing, no such transferee shall be
entitled to be an "Offeree" for purposes of Paragraphs 2 through 6 or be
entitled to the rights set forth in Paragraphs 11 and 15 under this Agreement,
unless such transferee was a Management Shareholder prior to such transfer.
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8. Participation Rights.
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(a) No Shareholder or group of Shareholders (a "Transferring
Holder") shall transfer, directly or indirectly, other than in a public offering
under Paragraph 11 below, Shares which result in a 25% Transfer (as defined
below), unless the terms and conditions of such sale shall include an offer to
the other Shareholders (the "Other Shareholders") to include in the transfer, at
the option of each Other Shareholder, a portion (as determined in accordance
with Paragraph 8(c) below) of the Common Shares of each Other Shareholder at the
same price and on the same terms and conditions applicable to the Shares being
transferred by the Transferring Holder. For purposes of this Paragraph 8, the
term "25% Transfer" shall mean (i) with respect to any Management Shareholder or
group of Management Shareholders any transfer of Shares which, when added to all
previous transfers of Shares by Management Shareholders, would result in
Management Shareholders having transferred an amount of Shares which exceeds 25%
of the Shares owned collectively by the Management Shareholders immediately
after the Effective Time, and (ii) with respect to Coyote, any transfer of
Shares which, when added to all previous transfers of Shares by Coyote, would
result in Coyote having transferred an amount of Shares which exceeds 25% of the
Shares owned by Coyote immediately after the Effective Time.
(b) In the event that the Transferring Holder receives a bona fide
offer or offers from a third party to purchase, or otherwise determine to
transfer, Shares which purchase or transfer would trigger a 25% Transfer (the
"Participation Offer"), the Transferring Holder shall then cause the
Participation Offer to be reduced to writing and shall give each Other
Shareholder written notice thereof (a "Participation Notice"). Each
Participation Notice shall contain a true and correct copy of the Participation
Offer and shall identify the number of Shares with respect to which the
Transferring Holder has a bona fide offer or other agreement to sell (the
"Designated Shares"), the total number of Shares which the Transferring Holder
owns beneficially, the price per Share at which the sale is proposed to be made
and any other material term or condition of the Participation Offer. The Other
Shareholders shall have the right and option, within fifteen (15) days after the
Participation Notice is given to the Other Shareholders (the "Participation
Period") to accept the Participation Offer for the number of Common Shares as
determined pursuant to Paragraph 8(c) below. Each Other Shareholder who desires
to exercise such option shall provide the Transferring Holder with written
notice, specifying the maximum amount of Common Shares he or it wishes to
include in the Participation Offer (a "Participation Acceptance Notice"), which
shall constitute an irrevocable acceptance of the Participation Offer by such
Other Shareholder (each such Other Shareholder, a "Participating Shareholder").
(c) Unless the proposed transferee agrees to accept and purchase the
additional number of Common Shares specified in all Participation Acceptance
Notices, at the same price and on the same terms and conditions as set forth in
the Participation Notice, each Participating Shareholder shall have the right to
sell pursuant to the Participation Offer the number of Common Shares (the
"Participating Shares") allocated as follows: (i) first, by allocating to each
Participating Shareholder the lesser of (A) the maximum number of Common Shares
specified in such Participating Shareholder's Participation Acceptance Notice
and (B) a pro rata portion of the number of Designated Shares on the basis of
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the respective amounts of Shares then owned by the Transferring Holder and each
Participating Shareholder and (ii) thereafter, by repeatedly allocating any
remaining Participating Shares among those Participating
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Shareholders that have not yet been allocated the maximum number of
Participating Shares indicated in the Participation Acceptance Notice, pro rata
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on the basis of the respective amounts of Shares owned by such Participating
Shareholder on the date of the initial Participation Notice, until all
Participating Shares have been allocated.
(d) The Transferring Holder shall notify the Participating
Shareholders who have elected to sell their Common Shares at least five (5)
business days prior to the date upon which the transfer of Shares pursuant to
this Paragraph 8 shall be consummated, which notice shall contain the date, time
and location of the closing, and the final number of Participating Shares to be
sold by each such Participating Shareholder. The Participating Shareholders
shall deliver at the closing to the Transferring Holder the certificate or
certificates representing the number of Participating Shares calculated pursuant
to Paragraph 8(c) above, together with a power-of-attorney authorizing the
Transferring Holder to sell such Participating Shares pursuant to the terms of
the Participation Offer. At the closing of the transfer of the Designated Shares
to the third party pursuant to the Participation Offer, the Transferring Holder
shall remit to each of the Participating Shareholders the total sales price of
the Participating Shares of such Participating Shareholder sold or otherwise
disposed of pursuant thereto.
(e) If at the termination of the Participation Period any Other
Shareholder shall not have accepted the offer contained in the Participation
Notice, such Other Shareholder will be deemed to have waived any and all of his
rights under this Paragraph 8 with respect to the transfer of his Common Shares
to such third party. The Transferring Holder shall have 180 days in which to
sell Designated Shares, including the Participating Shares, to the third party,
at a price not less than that contained in the Participation Notice and on other
terms and conditions not less favorable than those set forth in the
Participation Notice.
(f) Notwithstanding any other provision contained in this Paragraph 8,
there shall not be any liability on the part of the Transferring Holder in the
event that the transfer of Designated Shares, including the Participating
Shares, pursuant to this Paragraph 8 is not consummated for any reason
whatsoever. The decision whether to effect a transfer of Designated Shares,
including the Participating Shares, pursuant to this Paragraph 8 shall be in the
sole and absolute discretion of the Transferring Holder.
9. Bring Along Rights. In the event that Coyote shall transfer or
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propose to transfer, directly or indirectly, Shares which, when added to all
previous transfers of Shares by Coyote, would result in a transfer to any person
other than Coyote, the Company or their respective affiliates of greater than
twenty-five percent (25%) of the number of Shares outstanding on the date of
transfer (a "Transfer of Control"), then Coyote may require, by written notice
to each Management Shareholder (the "Bring-Along Notice") that each Management
Shareholder transfer an equivalent portion (on the basis of the amount of Shares
to be transferred by the Requisite Holders pursuant to the Transfer of Control
and the total number of Coyote Shares owned by Coyote at such time) of his
Management Shares in the Transfer of Control on the same terms and conditions
contained in the Bring-Along Notice. The Bring-Along Notice shall contain a
true and correct copy of the terms of the Transfer of Control and shall identify
the third party, the number of Coyote Shares with respect to which Coyote have a
bona fide offer, the price per Coyote Share at which the sale is proposed to be
made and all other material terms and conditions of the Transfer of Control,
including the date, time and location of the closing.
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The Bring-Along Notice shall be delivered not less than five (5) business days
prior to the closing of the purchase and sale contemplated by this Paragraph 9.
In such event, each of the Management Shareholders shall deliver at the closing
to Coyote the certificate or certificates representing his Management Shares
together with a power-of-attorney authorizing Coyote to sell such Management
Shareholder's equivalent portion of the Management Shares pursuant to the terms
of the Bring-Along Notice. No Management Shareholder shall be obligated to pay
more than his pro rata share (based upon the amount of consideration received
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for or with respect to their Shares) of reasonable fees and expenses incurred in
connection with such Transfer of Control (as evidenced by reasonable supporting
documentation) to the extent such costs are incurred for the benefit of the
selling Shareholders generally, including, without limitation, fees and expenses
of one law firm, one accounting firm and one financial advisor acting on behalf
of the Company and/or the Shareholders generally, and are not otherwise paid by
the Company or the acquiring party. Costs incurred by or on behalf of a
Shareholder for his or its sole benefit will not be considered costs of the
transaction hereunder. At the closing of the Transfer of Control, Coyote shall
remit to each of the Management Shareholders the total sales price (net of such
Management Shareholder's pro rata portion of reasonable related expenses as
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specified above) of the Management Shares of such Management Shareholder sold or
otherwise disposed of pursuant thereto. The Management Shareholders hereby
agree to take all reasonable actions necessary to consummate the Transfer of
Control, including, but not limited to, the execution of necessary or
appropriate agreements, the taking of any necessary corporate action and the
waiving of any dissenters, appraisal or similar rights.
10. Representations and Warranties.
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(a) Each Management Shareholder hereby, severally, and not jointly
represents and warrants to the Company and Coyote that, as of the time such
Management Shareholder becomes a party to this Agreement, (i) such Management
Shareholder has the power, capacity and authority to enter into this Agreement
and to perform fully such Management Shareholder's obligations hereunder and
(ii) this Agreement has been duly executed and delivered by such Management
Shareholder and constitutes a legal, valid and binding obligation of such
Management Shareholder, enforceable against such Management Shareholder in
accordance with its terms.
(b) The Company represents and warrants to each Management Shareholder
that (i) the Company is duly organized, validly existing and in good standing
under the laws of Delaware, and has all requisite corporate power to carry on
its business as it is now being conducted, (ii) the execution, delivery and
performance of this Agreement by the Company have been duly authorized by the
Board of Directors, and (iii) this Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
(c) Coyote hereby represents and warrants to the Company and each
Management Shareholder that (i) each of Coyote I and Coyote II is duly
organized, validly existing and in good standing under the laws of Delaware, and
has all requisite limited liability company power to carry on its business as it
is now being conducted, (ii) each of Coyote I and Coyote II has the authority to
enter into this Agreement and to fully perform its obligations hereunder, and
(iii) this Agreement has been duly executed and delivered by each of Coyote I
9
and Coyote II and constitutes the legal, valid and binding obligation of each of
Coyote I and Coyote II, enforceable against each of Coyote I and Coyote II in
accordance with its terms.
11. Incidental Registration.
-----------------------
(a) If the Company at any time (other than pursuant to an initial
public offering of the Company's securities) proposes to register any Common
Shares under the Act for sale to the public, (i) for its own account (except
with respect to registration statements on Forms S-4, S-8 or such other form
which is not available for registering Common Shares for sale to the public) or
(ii) for the account of Coyote, each such time it will give prior written notice
to all Management Shareholders of its intention so to do. Upon the written
request of any such Management Shareholder, received by the Company within
twenty (20) days after the giving of any such notice by the Company, to register
any of his Common Shares (which request shall state the intended method of
disposition thereof), the Company will use all commercially reasonable efforts
to cause the Common Shares as to which registration shall have been so requested
to be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit the
sale by the Management Shareholder (in accordance with its written request) of
such Common Shares so registered. Alternatively, the Company may in its sole
discretion include such Common Shares in a separate registration statement to be
filed concurrently with the registration statement for the securities to be
filed by the Company for its own account or for the account of Coyote. In the
event that any registration of Common Shares for the account of the Company
pursuant to this Paragraph 11 shall be, in whole or in part, an underwritten
public offering of Common Shares, the number of Common Shares owned by
Management Shareholders and Coyote to be included in such an underwriting may be
reduced (pro rata among APL, the requesting Management Shareholders, Coyote and
other persons with pari passu incidential registration rights, as may be
applicable, based upon the number of Shares owned by APL, such Management
Shareholders, Coyote and such other persons) due to underwriter market
limitations if, and to the extent, that the managing underwriter advises the
Company that in its opinion such inclusion would adversely affect the marketing
of the securities to be sold by the Company therein. In addition, if the
managing underwriter so advises, for any reason, against the inclusion of all or
any portion of Common Shares owned by Management Shareholders in the public
offering, then the Management Shareholders shall only have the right to register
Common Shares therein as so advised by the managing underwriter. It is
acknowledged by the parties hereto that the rights of any selling Management
Shareholder to include Common Shares in a registration shall be subordinate to
those of the Company and, except as expressly provided herein, on a parity with
Coyote or other person selling Common Shares for its own account so that, except
as expressly provided herein, cut backs shall be made on a pro rata basis based
on the number of Common Shares held by each such person. Except as set forth
above, there shall be no limit to the number of registrations that may be
requested pursuant to this Paragraph 11.
(b) In connection with each registration pursuant to Paragraph 11(a)
covering an underwritten public offering, each Management Shareholder selling
Common Shares pursuant thereto agrees to (i) enter into a written agreement with
the managing underwriter under the same terms and conditions as apply to the
Company or the selling shareholders, as applicable, and (ii) furnish to the
Company in writing such information with respect to themselves and the proposed
10
distribution by them as reasonably shall be necessary and shall be requested by
the Company in order to comply with federal and applicable state securities
laws.
(c) If, at any time after giving notice of its intention to register any
stock pursuant to this Paragraph 11 and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register such stock, the Company shall
give written notice to all Management Shareholders and, thereupon, shall be
relieved of its obligation to register any Management Shares in connection with
such registration.
(d) The Management Shares shall cease to be registrable pursuant to this
Paragraph 11 on the date upon which they are effectively registered under the
Act and disposed of in accordance with any registration statement covering it.
12. Expenses. All expenses incurred by the Company in complying with
--------
Paragraph 11, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, costs of insurance and reasonable fees and
disbursements of one counsel for the sellers of Management Shares, but excluding
any Selling Expenses, are herein referred to as "Registration Expenses."
"Selling Expenses" as used herein mean all underwriting discounts and selling
commissions applicable to the sale of Management Shares.
The Company will pay all Registration Expenses in connection with each
registration statement under Paragraph 11. All Selling Expenses in connection
with each registration statement under Paragraph 11 shall be borne by the
participating sellers of Management Shares in proportion to the number of
shares sold by each, or by such participating sellers of Management Shares other
than the Company (except to the extent the Company shall be a seller of
Management Shares) as they may agree.
13. Holdback Agreements. Notwithstanding any other provision hereof,
-------------------
except as otherwise may be agreed in writing by the parties hereto concurrently
or subsequent to this Agreement, with respect to each and every public offering,
each Shareholder agrees not to offer, sell or otherwise transfer any Shares
(except for Shares sold (a) in such public offering or (b) to a Permitted
Transferee) during the black-out period prior to the effective date of the
applicable registration statement or other offering document as advised by
counsel for the Company and during the period after such effective date not to
exceed six (6) months.
14. Indemnification and Contribution.
--------------------------------
(a) In the event of a registration of any Management Shareholder's
Common Shares under the Act pursuant to Paragraph 11, the Company will indemnify
and hold harmless, to the full extent permitted by law, each Management
Shareholder selling Common Shares thereunder, each underwriter of such Common
Shares thereunder and each other person, if any, who controls such selling
Management Shareholder or underwriter within the meaning of the Act
11
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
any losses, claims, damages, liabilities and expenses, joint or several, to
which such selling Management Shareholder, underwriter or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Management
Shareholder's Common Shares were registered under the Act pursuant to Paragraph
11, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will pay
or reimburse each such selling Management Shareholder, each such underwriter and
each such controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company (i) will not be
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liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information pertaining to such selling Management Shareholder and furnished by
any such selling Management Shareholder, any such underwriter or any such
controlling person, as the case may be, in writing specifically for use in such
registration statement, prospectus, amendment or supplement and (ii) will not be
liable for amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company,
such consent not to be unreasonably withheld or delayed.
(b) In the event of a registration of any Common Shares under the Act
pursuant to Paragraph 11, each Management Shareholder selling Common Shares
thereunder, severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Act, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such officer,
director, underwriter or controlling person may become subject under the Act or
otherwise, but only insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, made in reliance upon and in conformity with information
pertaining to such selling Management Shareholder, as such, furnished in writing
to the Company by such selling Management Shareholder specifically for use in
such registration statement under which such Management Shareholder's Common
Shares were registered under the Act pursuant to Paragraph 11, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, and will pay or reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that (i) the liability of
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each selling Management Shareholder hereunder shall be limited to the proportion
of any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the Common Shares sold by such
selling Management Shareholder under such registration statement bears to the
total public offering price of all securities sold thereunder, but not in any
event to exceed the
12
net proceeds received by such selling Management Shareholder from the sale of
Common Shares covered by such registration statements and (ii) no selling
Management Shareholder shall be liable for amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of such selling Management Shareholder, such consent not to
be unreasonably withheld or delayed.
(c) Promptly after receipt by an indemnified party hereunder of written
notice of any claim or the commencement of any action or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Paragraph 14 and shall only relieve it from any liability which it may have to
such indemnified party under this Paragraph 14 if and to the extent the
indemnifying party is materially prejudiced by such omission. In case any such
action shall be brought against any indemnified party and the indemnified party
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Paragraph 14 for any legal or other professional expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided, however, that if the defendants in any such action
-------- -------
include both the indemnified party and the indemnifying party, and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified party shall have the right to select a separate counsel
and to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable fees and expenses of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party, in the defense of any
such claim or litigation against an indemnified party, shall consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation, unless such indemnified party shall otherwise consent in writing.
An indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim shall not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim.
(d) In order to provide for just and equitable contribution in any case
in which either (i) any Management Shareholder exercising registration rights
under Paragraph 10 of this Agreement, or any controlling person of any such
Management Shareholder, makes a claim for indemnification pursuant to this
Paragraph 14 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and following the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
this Paragraph 14 provides for indemnification in such case, or (ii)
contribution under the Act may be required on the part of any such Management
Shareholder or any such controlling person in circumstances for which
13
indemnification is provided this Paragraph 14; then, and in each such case, the
Company and such Management Shareholder shall contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion as is appropriate to reflect both
the relative benefit received by such Management Shareholder and the relative
fault of the Company and such Management Shareholder; provided, however, that,
-------- -------
in any such case, (A) no such Management Shareholder will be required to
contribute any amount in excess of the public offering price of all such
Management Shareholder's Common Shares offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation. For purposes of the preceding sentence, the
relative benefit received by such Management Shareholder shall be deemed to be
in the same proportion as the public offering price of his Common Shares offered
by the registration statement bears to the public offering price of all
securities offered by such registration statement; and the relative fault of the
Company and such Shareholder shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission of a material fact relates to information supplied by the Company or by
such Management Shareholder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
15. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Securities and Exchange Commission (the
"Commission") which may at any time permit the sale of the Common Shares to the
public without registration, at all times after any registration statement
covering a public offering of securities of the Company under the Act shall have
become effective, the Company agrees to use all reasonable efforts to: (a) make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Act; (b) use all reasonable efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Act and the Exchange Act; and (c) furnish to each Management
Shareholder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of such Rule 144 and of the Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
Shareholder may reasonably request in availing itself of any rule or regulation
of the Commission allowing such Management Shareholder to sell any Common Shares
without registration.
16. Preemptive Rights.
-----------------
(a) In the event that the Company proposes to issue (a "Proposed
Issuance") any Common Shares or any securities containing options or rights to
acquire any Common Shares or any securities convertible into or exchangeable for
Common Shares ("New Securities") prior to an initial public offering of the
Company's securities and other than pursuant to the exceptions specified below,
the Company shall deliver a notice, with respect to such Proposed Issuance (the
"Preemptive Notice"), to each Management Shareholder and Coyote setting forth
the identity of the proposed purchaser (the "Proposed Purchaser"), the period of
time within which the Preemptive Right must be exercised (the "Acceptance
Period") and the price, terms and conditions of the Proposed Issuance. Subject
to subsection (c) below, each Management Shareholder and Coyote shall have the
right (the "Preemptive Right"), exercisable as hereinafter
14
provided, to participate in such issuance of New Securities ("Offered
Securities") by purchasing up to an amount of such New Securities proposed to be
issued to the Proposed Purchaser equal to (i) the lesser of (A) the maximum
number of New Securities specified in such Shareholder's Purchase Notice (as
defined below) and (B) the aggregate amount of such New Securities multiplied by
a fraction, the numerator of which shall be the aggregate number of Common
Shares owned by such Management Shareholder or Coyote on the date of such notice
and the denominator of which shall be the total number of Common Shares
outstanding on such date (the "Proportionate Share") and (ii) thereafter, by
repeatedly allocating any remaining Offered Securities among those Shareholders
that have not yet been allocated the maximum number of Offered Securities
indicated in the Purchase Notice, pro rata on the basis of the respective
--- ----
amounts of Shares owned by such Shareholder on the date of the initial Purchase
Notice, until all Offered Securities have been allocated, such purchase to be at
the same price and on the same terms and conditions as the Proposed Issuance.
Notwithstanding the foregoing, a Management Shareholder shall only be entitled
to exercise the Preemptive Right if at the time of exercise of the Preemptive
Right such Management Shareholder is an employee of the Company pursuant to a
binding written employment agreement unless such Management Shareholder was
terminated by the Company from such position without Cause (as defined in such
employment agreement).
(b) Anything to the contrary notwithstanding, the Preemptive Rights
provided for herein shall not be applicable to:
(i) options granted to and New Securities issued upon exercise of
options granted to, officers, employees or directors of, or consultants to,
the Company and/or any of its subsidiaries;
(ii) warrants issued to lenders providing debt financing to the Company
and/or any of its subsidiaries and New Securities issued upon the exercise,
conversion or exchange of such warrants in accordance with their stated
terms;
(iii) any New Securities issued by the Company in connection with an
acquisition by the Company and/or any of its subsidiaries;
(iv) any New Securities issued by the Company in an underwritten public
offering;
(v) New Securities issued upon the exercise or conversion of any Shares
of the Company that are convertible, exchangeable or exercisable for Shares
and all stock appreciation rights, phantom stock rights and other rights to
acquire, or to receive or be paid an amount based on the market price (less
any exercise, conversion or purchase price) of, the Shares, issued in
compliance with (or not otherwise in violation of) this Section 16;
(vi) New Securities issued in a stock recapitalization pro rata to all
holders of Shares;
(vii) New Securities issued upon conversion of other Shares of the
Company pursuant to the Certificate of Incorporation of the Company as in
effect on the date hereof, as the same may be amended, modified,
supplemented or restated; and
15
(viii) New Securities issued to Persons (who are not Affiliates (as
defined below) of the Company) entering into "corporate partnering,"
"strategic investment" or other similar types of transactions or
relationships with the Company (the characterization of such transactions
or relationships to be in the sole discretion of the Board of Directors),
in which the granting of equity or equity rights constitutes an aspect of
such transaction or relationship.
(c) The Preemptive Rights shall be exercisable by delivery of
notice (the "Purchaser Notice") to the Company given within the Acceptance
Period set forth in the Preemptive Notice. If a Shareholder shall fail to
respond to the Company within the Acceptance Period, such failure shall be
regarded as a rejection of such Shareholder's right to exercise his Preemptive
Right. The closing of any purchase by the Shareholders under this Paragraph 16
shall be held at such time and place upon which the parties to the transaction
may agree. At such closing, the Shareholders participating in the purchase shall
deliver by certified bank check or wire transfer, payment in full for such New
Securities and all parties to the transaction shall execute such additional
documents as are otherwise deemed necessary or appropriate by the Company. At
such closing, the Company may issue and sell to the Proposed Purchaser such
portion of the Offered Securities as have not been purchased by the Shareholders
pursuant to the exercise of their Preemptive Rights only at the same price and
on the same terms and conditions as the Offered Securities sold to Shareholders.
(d) In the event of a Proposed Issuance of New Securities, which
Proposed Issuance is subject to the Preemptive Rights under this Paragraph 16
and which is offered only in combination with the purchase of debt or debt
securities, then the Preemptive Rights shall apply to the combination and a
Shareholder exercising his Preemptive Right shall be entitled and required to
purchase his pro rata share of both the debt and equity components of such
--- ----
combination on the basis set forth in Paragraph 16(a).
(e) For purposes of this Agreement the following terms shall be
defined as follows:
"Affiliate" means, as to any person, any other person that directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with, such person.
"Person" shall be construed as broadly as possible and shall include
an individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental authority.
(f) Preemptive Rights pursuant to this Paragraph 16 shall terminate
upon an initial public offering of the Company's securities.
17. Certain Agreements.
------------------
(a) Each party agrees that Donald C. Orris will be appointed the
chief executive officer of the Company shall hold such office for as long as he
is employed by the Company.
16
(b) The Company agrees that, unless on an arms-length basis, no
affiliated transaction between the Company and Apollo Management, L.P.
("Apollo") or any affiliate of Apollo which is material to the Company or which,
combined with all other affiliated transactions between the Company and Apollo
or any affiliate of Apollo would be material to the Company, will be undertaken
without the consent of the chief executive officer of the Company.
Notwithstanding the foregoing, the parties agree that following shall be
specifically excluded from the foregoing limitation on Affiliate transactions:
(i) all amounts payable to Apollo pursuant to the terms and provisions of that
certain Management Agreement of even date herewith between the Company and
Apollo (the "Management Agreement") (as it may be extended); provided, that (x)
--------
the fees set forth in such Management Agreement may not be increased unless
approved in accordance with the first sentence of this Paragraph 15(b) and (y)
the $500,000 management fee shall not be deducted for purposes of calculating
net income of the Company for purposes of computing awards under any bonus or
stock option plans of the Company, (ii) customary board fees payable to members
of the Board of Directors designated by Coyote; (iii) any expense
reimbursements; (iv) the Registration Rights Agreement between the Company and
Coyote, dated as of even date herewith; (v) indemnification rights in favor of
Coyote or its Affiliates; and (vi) securities issued to Coyote as to which
preemptive rights pursuant to Section 16 hereof are available.
(c) The parties agree that with respect to the right of each of the
Management Shareholders to be an "Offeree" for purposes of Paragraphs 2 through
6, as well as the rights set forth in Paragraphs 11 and 16, any notice required
to be provided pursuant to such Paragraphs by any party hereto to any
Management Shareholder who is no longer an employee of Pacer, will be sufficient
as to any such Management Shareholder if such notice is delivered to Pacer
International, Inc., 3746 Mt. Diablo Blvd., Suite 110, Lafayette, CA 94549,
Attention: Donald C. Orris.
(d) Each Management Shareholder acknowledges the APL Shareholders'
Agreement and the Investors Shareholders' Agreement and agrees with the terms
thereof, the rights given to, and obligations imposed upon, the parties thereto.
(e) The Corporation hereby covenants and agrees with Gerry Angeli
("Angeli") and Gary I. Goldfein ("Goldfein") that, until the consummation of the
Company's initial public offering of Common Shares for as long as such persons
continue to be Shareholders of the Company, Angeli and Goldfein (each, an
"Observer") shall have the right to be present at all meetings of the Board of
Directors and all committees thereof. The Corporation will give each Observer
reasonable prior notice (it being agreed that the same prior notice given to the
Board of Directors shall be deemed to be reasonable) in any manner permitted in
the Company's bylaws for notices to directors of the time and place of any
proposed meeting of the Board of Directors, such notice in all cases to include
true and complete copies of all documents furnished to any director in
connection with such meeting or, if a meeting is held by telephone conference,
to participate therein for the purpose of listening thereto.
18. Confidentiality; Noncompetition.
-------------------------------
(a) During the term of this Agreement and at all times thereafter, each
Management Shareholder agrees that, except to the extent required in the course
of his
17
employment, he will not divulge to anyone (other than the Company, its
subsidiary or any persons employed or designated by the Company or its
subsidiary) any confidential knowledge or information relating to the business
of the Company or any of its subsidiaries or affiliates, including, without
limitation, all types of trade secrets (unless readily ascertainable from public
or published information or trade sources), product design and customer and
supplier information. Each Management Shareholder further agrees not to
disclose, publish or make use of any such knowledge or information for personal
purposes or for the benefit of any person, firm, corporation or other entity
(other than the Company, its subsidiary or any persons employed or designated by
the Company or its subsidiary) without the prior written consent of the
Company or its subsidiary.
(b) No Management Shareholder, nor any Affiliate thereof, will for the
period set forth opposite such Management Shareholders name on Annex I hereto
-------
following the Effective Time (the "Noncompetition Period"), (i) in any
---------------------
geographic area where the Company or its subsidiary conducts business during the
Noncompetition Period, engage or participate in directly or indirectly (whether
as an officer, director, employee, partner, consultant, holder of an equity or
debt investment, lender or in any other manner or capacity, including, without
limitation, by the rendering of services or advice to any person), or lend his
name (or any part or variant thereof) to, any Competing Business (as defined
below); (ii) deal, directly or indirectly, in a competitive manner with any
customers doing business with the Company or its subsidiary during the
Noncompetition Period; (iii) solicit or employ any officer, director or agent of
the Company or its subsidiary to become an officer, director, or agent of any
Management Shareholder, their respective Affiliates or anyone else; or (iv)
engage in or participate in, directly or indirectly, any business conducted
under any name that shall be the same as or similar to the name of the Company
or its subsidiary or any trade name used by the Company or its subsidiary.
Ownership by a Management Shareholder for investment of less than 2% of the
outstanding shares of capital stock or class of debt securities of any
corporation with one or more classes of its capital stock listed on a national
securities exchange or actively traded in the over-the-counter market shall not
constitute a breach of the foregoing covenant. The term "Competing Business"
shall mean any transportation or other business that the Company or its
subsidiary or any of their respective Affiliates have engaged in at any time
during the period of employment of the applicable Management Shareholder in any
city or county in any state of the United States, Canada or Mexico including,
without limitation, any business engaged in (i) intermodal marketing, (ii)
flatbed specialized hauling services, (iii) less-then-truckload common carrier
services, (iv) drayage, consolidation, deconsolidation or distribution services,
(v) contract warehousing, freight handling or logistic services, (vi)
comprehensive transportation management programs or services to third party
customers, (vii) freight consolidation and deconsolidation, (viii) traffic
management, and (ix) railroad signal project management.
19. Voting Proxy. Each Management Shareholder (other than Goldfein and
------------
Steiner, (each an "Interstate Holder")) hereby grants to the other Management
Shareholders (other than the Interstate Holders), acting jointly, effective only
upon, but at all times after (except as provided herein), any transfer of Shares
owned by such Management Shareholder upon on in connection with the death or
marital divorce, annulment or separation of such Management Shareholder (each
such event a "Proxy Event"), an irrevocable proxy to vote such Shares at any and
all meetings of the stockholders of the Company and to execute and deliver
18
any and all written consents in lieu thereof and otherwise exercise any and all
consensual rights with respect to such Shares to the same extent and with the
same effect as such Management Shareholder could do under this Agreement, under
any applicable law or otherwise. Each Interstate Holder hereby grants to the
other (or in the case such interstate Holder is the only Interstate Holder
hereunder, to the other Management Shareholders), effective only upon but at all
times after (except as provided herein), any transfer of Shares owned by such
Interstate Holder upon or in connection with a Proxy Event of such Interstate
Holder, an irrevocable proxy to vote such Shares at any and all meetings of the
stockholders of the Company and to execute and deliver any and all written
consents in lieu thereof and otherwise exercise any and all consensual rights
with respect to such Shares to the same extent and with the same effect as such
Interstate Holder could do under this Agreement, under any applicable law or
otherwise. Each Management Shareholder (including the Interstate Holders)
acknowledges and agrees that the proxy granted by him under this Paragraph 19 is
coupled with an interest and may not be revoked. All Shares subject to a proxy
granted hereunder that becomes effective pursuant to the terms hereof and that
is to be voted by a proxy holder or holders pursuant to this Paragraph 19 shall
be voted by such proxy holder or holders in the manner provided in the bylaws of
the Company as in effect at the time in question.
20. Financial Statements. The Company will provide each Management
--------------------
Shareholder with copies of its quarterly (unaudited) and annual audited
financial statements promptly upon completion of such financial statements
during any period in which a Management Shareholder remains a holder of Shares,
but is not an officer or director of or consultant to the Company.
21. General Restriction. Each Management Shareholder and Coyote
-------------------
understands and agrees that (a) the Common Shares and Management Options
received pursuant to the Alternative Consideration Letter have not been
registered under the Securities Act and are restricted securities; (b) he or it
will not, directly or indirectly, sell, assign, transfer, grant a participation
in, pledge or otherwise dispose of any Common Shares or Management Options (or
solicit any offers to buy or otherwise acquire, or take a pledge of any Common
Shares or New Options) except in compliance with the Securities Act and the
terms and conditions of this Agreement; and (c) any attempt to transfer any
Common Shares or Management Options not in compliance with this Agreement shall
be null and void and the Company shall not, and shall cause any transfer agent
not to, give any effect in the Company's records to such attempted transfer.
22. Legends.
-------
(a) In addition to any other legend that may be required, each
certificate for Common Shares including Common Shares issued upon exercises of
New Options that is issued to any Management Shareholder shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
19
AS SET FORTH IN THE SHAREHOLDER'S AGREEMENT DATED AS OF May 28,
1999, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM PACER
INTERNATIONAL, INC. OR ANY SUCCESSOR THERETO."
(b) If any Common Shares shall become registered under the Securities
Act, the Company shall, upon the written request of the holder thereof, issue to
such holder a new certificate evidencing such shares without the first sentence
of the legend required by Paragraph 22(a) endorsed thereon. If any Common Shares
cease to be subject to any and all restrictions on transfer set forth in this
Agreement, the Company shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such Common Security without
the second sentence of the legend required by Paragraph 22(a) endorsed thereon.
23. Further Assurances. The parties hereto agree to execute and deliver
------------------
all such further instruments as may be necessary from time to time to carry out
the provisions of this Agreement.
24. Notices. All offers, acceptance, notices, certificates and other
-------
communications provided for in this Agreement shall be in writing and (except as
otherwise provided in this Agreement) shall be deemed to have been given when
(a) sent by facsimile transmission, (b) sent by a nationally known overnight
delivery service, (c) delivered by hand or (d) mailed by first-class registered
or certified mail in a post-paid envelope, in each case addressed to the
respective persons to be notified as follows: in the case of Coyote, c/o Apollo
Management, L.P., 1301 Avenue of the Americas, 38th Floor, New York, NY 10019;
Attention: Joshua J. Harris, with a copy to, Michael Weiner, Esq., Apollo
Management, L.P., 1999 Avenue of the Stars, Suite 1900, Los Angeles, CA 90067,
and with a copy to, Morton A. Pierce, Esq./Douglas L. Getter, Esq., Dewey
Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019; in the
case of the Management Shareholders, at their respective addresses appearing on
the signature pages of this Agreement or at such other address as the party to
be notified shall from time to time have furnished to the other parties in
writing.
25. Amendment; Termination. No provision of this Agreement may be
----------------------
waived except by an instrument in writing executed by the party against whom the
waiver is to be effective. This Agreement may be amended only by an instrument
executed by the parties hereto holding a majority of all of the Common Shares
held by the parties hereto on a fully diluted basis or by their successors and
assigns; provided, however, that in the event any amendment materially and
-------- -------
adversely affects the rights or obligations of any party to this Agreement
without similarly affecting the rights or obligations of any other party hereto,
this Agreement may not be amended without such party's approval. Except with
respect to Paragraphs 14, 18, 21, 22 and Paragraphs 24 through 27 this Agreement
shall terminate automatically upon the earlier of (i) the tenth anniversary of
the date hereof and (ii) at such time as the Company shall be a Public Company
(as defined below) and Coyote shall have sold in the aggregate pursuant to one
or more public offerings, fifty percent (50%) of the total number of Coyote
Shares owned by them at the Effective Time. For the purposes of the foregoing
provision, the term "Public Company" means a corporation with one or more
classes of equity securities listed on a national securities exchange or
publicly traded in the over-the-counter market.
20
26. General.
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(a) This Agreement (i) shall be construed and enforced in accordance
with the laws of the State of New York, (ii) except as set forth in Paragraph
26(c) below, constitutes the entire agreement, and supersedes any and all prior
agreements and understandings between the parties in respect to the subject
matter hereof, (iii) shall bind and inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, personal representatives,
successors and assigns and (iv) may be executed in two or more counterparts each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. The parties hereto hereby consent and agree that
they shall commence any action with respect to any claims or disputes between
the parties hereto pertaining to this Agreement or to any matter arising out of
or related to this Agreement in the United States District Court for the
Southern District of New York, so long as the action falls within the subject
matter jurisdiction of such court; in the event any such action shall be
determined by the court to be outside its subject matter jurisdiction, then the
parties agree to commence any such action in the Supreme Court of New York
County, New York and to take such action as may be necessary to effect
assignment of such action to the Commercial Part of that court. The parties
hereto expressly submit and consent in advance to such jurisdiction in any
action or suit commenced in any such court, and hereby waive any objection which
it may have based upon lack of personal jurisdiction, improper venue or forum
non conveniens and hereby consent to the granting for such legal or equitable
relief as is deemed appropriate by such court. Each party hereto irrevocably
consents to the service of process by registered or certified mail, postage
prepaid, to it at its address given in accordance herewith.
(b) The parties hereto acknowledge that irreparable damage would result if
this Agreement is not specifically enforced and that, therefore, the rights and
obligations of the parties under this Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith without the necessity of posting any bond. Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(c) The restrictions with respect to Management Shares set forth herein
shall be in addition to and shall in no way limit any other restrictions on the
Management Shares set forth in any other agreement.
(d) The section and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) To the extent that any provision of this Agreement shall be invalid
or unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Agreement shall be unaffected and shall continue in
full force and effect. In furtherance and not in limitation of the foregoing, if
any provision, term, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void,
21
unenforceable or against its regulatory policy, then such provision, term,
covenant or restriction shall be construed to cover only that duration, extent
or activities which may be validly and enforceably covered and the remainder of
the provisions, terms covenants and restrictions contained herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
27. Complete Agreement. This Agreement and the Exhibit attached hereto
------------------
and which are hereby incorporated by reference herein, contains the entire
agreement among the parties, superseding all prior agreements whether oral or
written between parties with respect to the subject matter hereof. Without
limiting the foregoing, the parties acknowledge that the Amended and Restated
Stockholders Agreement, dated December 16, 1997 among PMT Holdings, Inc. and the
stockholders party thereto is no longer in effect with respect to any of the
parties hereto. No Management Shareholder shall enter into any Shareholder
agreements or arrangements of any kind with any person with respect to any
Shares on terms inconsistent with the provisions of this Agreement (whether or
not such agreements or arrangements are with other Management Shareholders or
with persons that are not parties to this Agreement), including agreements or
arrangements with respect to the acquisition or disposition of Shares in a
manner which is inconsistent with this Agreement.
22
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and the year first above written.
PACER INTERNATIONAL, INC.
By: /s/ Donald C. Orris
________________________________
Donald C. Orris
President and Chief Executive Officer
COYOTE ACQUISITION LLC
By: /s/ Marc Becker
________________________________
Marc Becker
Vice President
COYOTE ACQUISITION II LLC
By: /s/ Marc Becker
________________________________
Marc Becker
Vice President
MANAGEMENT SHAREHOLDERS:
/s/ Donald C. Orris
___________________________________
Donald C. Orris
/s/ Gerry Angeli
___________________________________
Gerry Angeli
/s/ Robert L. Cross
___________________________________
Robert L. Cross
23
/s/ Gary I. Goldfein
___________________________________
Gary I. Goldfein
/s/ Allen E. Steiner
___________________________________
Allen E. Steiner
/s/ John W. Hein
___________________________________
John W. Hein
/s/ Richard Hyland
___________________________________
Richard Hyland
24
Exhibit A
---------
JOINDER IN
----------
SHAREHOLDERS' AGREEMENT
-----------------------
In consideration of the transfer to (him) (her) (it) of _____ shares
of common stock, no par value, of Pacer International, Inc. (the "Company") and
the registration of such transfers on the books of the Company, ____________ , a
__________ ("Additional Shareholder"), and the Company agree that, as of the
date written below, Additional Shareholder shall become a party as a Management
Shareholder to that certain Shareholders' Agreement, dated as of May 28, 1999,
among the Company, Coyote Acquisition LLC, Coyote Acquisition II LLC, and
certain individual shareholders named therein (the "Shareholders' Agreement"),
and shall be bound by all of the terms and provisions of the Shareholders'
Agreement, as though he was an original party thereto and was included in the
definition of "Management Shareholder" as used therein; provided, that an
Additional Shareholder shall not be entitled to be an "Offeree" for purposes of
Paragraphs 2 through 6 or be entitled to the rights set forth in Paragraphs 11
and 16 of the Shareholders Agreement.
Executed as of the _____ day of ________________, ____.
[ ]
By:_______________________________
Title:
_______________________________
Shareholder
25