EXHIBIT 10.5
PMT HOLDINGS, INC.
3746 MT. DIABLO BOULEVARD, SUITE 110
LAFAYETTE, CALIFORNIA 94549
December __16, 1997
Mr. Allen E. Steiner
1537 Amalfi Drive
Pacific Palisades, CA 90272-2754
Employment Agreement
--------------------
Dear Allen:
This letter sets forth the terms of your employment with PMT Holdings,
Inc. ("Holdings"), Interstate Consolidation, Inc. ("ICI"), and Interstate
-------- ---
Consolidation Service, Inc. ("ICSI"). ICI and ICSI (together, "Interstate") are
----
wholly owned subsidiaries of Holdings. Holdings, ICI and ICSI are each herein
referred to as a "Company" and collectively as the "Companies".
------- ---------
Section 1. Duties. On the terms and subject to the conditions
------
contained in this Agreement, you will be employed as an Executive Vice President
of each of Holdings, ICI and ICSI (and one or more of Holdings' other
subsidiaries as the Board of Directors of Holdings may reasonably determine),
and will have such duties and responsibilities consistent with such positions as
may reasonably be assigned to you from time to time by the President, the
Chairman of the Board or the Board of Directors of each Company, as applicable,
regarding the following areas: general corporate administration, including some
or all of the following: human resources, employment benefits, finance,
management information systems, contracts and insurance (provided, however, that
-------- -------
you will not be required to relocate your principal office to any location
outside a 50 mile radius from your current principal office located at 5800 East
Sheila Street, Los Angeles, California).
Section 2. Term. Unless sooner terminated in accordance with the
----
applicable provisions of this Agreement, your employment hereunder shall be for
the period (the "Employment Period") commencing on the date hereof (the
-----------------
"Commencement Date") and ending on December 31, 2000.
-----------------
Section 3. Time to be Devoted to Employment. During the Employment
--------------------------------
Period, you will devote substantially all of your working energies, efforts,
interest, abilities and time during normal business hours exclusively to the
business and affairs of the Companies (except for reasonable time devoted to the
procedures contemplated by Article III of the Purchase Agreement (as defined in
Section 9(a) below) on your own behalf). You will not engage in any other
business or activity which, in the
reasonable judgment of the Board, the Chairman or the President of each Company,
as applicable, would conflict or interfere, in any material respect, with the
performance of your duties as set forth herein, whether or not such activity is
pursued for gain, profit or other pecuniary advantage.
Section 4. Base Salary; Bonus; Benefits.
----------------------------
(a) During the Employment Period, you will be entitled to a
minimum annual base salary (the "Base Salary") of $220,000 payable by Interstate
in such installments (but not less often than bi-weekly) as is generally the
policy of the Companies with respect to the payment of regular compensation to
its executive officers. The Base Salary may be increased from time to time in
the sole discretion of Holdings' Board. During the Employment Period, you will
also be entitled to the benefits set forth in Part I on Schedule 4(a) attached
hereto, which include four weeks vacation per year and such other benefits as
may from time to time be made available to other executive officers of the
Companies generally, including, without limitation, (i) participation in such
health, life and disability insurance programs and retirement or savings plans
as the Companies may from time to time maintain in effect (provided, however,
-------- -------
that, during the period ending on the first anniversary of the date hereof (or
April 1, 1999, in the case of group health plans), the Companies will not amend
or modify, in any manner that would have a materially adverse effect on the
benefits made available thereunder, any of the employee benefit plans and
programs required to be maintained by Section 7.6 of the Purchase Agreement set
forth in Part II on Schedule 4(a) attached hereto that are maintained by ICI and
------- -------------
ICSI; provided further however, that you may elect to not be covered by the
-------- ------- -------
Companies' benefit plans by so notifying the Companies, and the Companies shall
pay you an amount equal to the benefits cost savings realized by the Company, as
reasonably determined by the Companies and you in consultation with the
Companies' benefits consultants), (ii) participation in such stock option plans
of Holdings as may be adopted from time to time for the executive officers of
the Companies on terms determined by the Board of Holdings and (iii) during the
Employment Period and for a period of six years thereafter, with respect to your
position as a director or officer (as the case may be), directors' and officers'
liability insurance. Part III of Schedule 4(a) attached hereto sets forth the
benefits made available on the date hereof to the other executive officers of
Holdings and its subsidiaries generally.
(b) In addition to the Base Salary and benefits set forth in
paragraph (a) above, during the Employment Period you will be entitled to
receive a bonus, if any, with respect to each full calendar year occurring
during the Employment Period, commencing with the calendar year ending December
31, 1998, such bonus to be paid in a lump sum following the end of the calendar
year with respect to which such bonus is payable (such payment to be made at the
same time performance bonuses are paid to the other senior managers of Holdings
and its subsidiaries). If your employment with the Companies is terminated for
any reason other than without "cause" pursuant to Section 8(b), the Companies
will not pay you a bonus with respect to the calendar year in which your
employment is terminated or thereafter. If your employment with the Companies is
terminated without "cause" pursuant to Section 6(b) below, you will be entitled
to receive that portion of the bonus payable for the calendar year during which
such termination occurs pro rated through the date of such termination based on
the
number of days elapsed through the termination date over 365 days, payable in
accordance with the first sentence of this Section 4(b). The bonus payable for
each such calendar year shall be subject to and determined based on the
achievement by Holdings and its subsidiaries of specified performance targets
applicable to the other senior managers of Holdings and its subsidiaries, such
bonus to range from $35,000 upon the achievement of the minimum specified
targets to $90,000 upon the achievement of the maximum specified targets. The
minimum specified target for the year ending December 31, 1998, is $9.0 million
in Operating Income (as defined in Schedule 4(b)) and the maximum specified
target for the year ending December 31, 1998, is $9.9 million in Operating
Income (as defined in Schedule 4(b)), subject in each case to the adjustment of
such targets pursuant to Schedule 4(b).
-------------
Section 5. Reimbursement of Expenses. During the Employment Period,
-------------------------
the Companies shall reimburse you in accordance with their policies for all
reasonable and necessary traveling expenses and other disbursements incurred by
you for or on behalf of the Companies in connection with the performance of your
duties hereunder upon presentation of appropriate receipts or other
documentation therefor, in accordance with all applicable policies of the
Companies.
Section 6. Termination.
-----------
(a) Holdings may terminate your employment hereunder at any
time for "cause" by giving you written notice of such termination, with
reasonable specificity of the grounds therefor. For purposes of this Section 6,
"cause" shall mean any of the following (whether occurring before or after the
date hereof): (i) willful misconduct with respect to the business and affairs of
the Companies or any of their respective subsidiaries, (ii) willful neglect of
your duties or the failure to follow the lawful and reasonable directions of the
Board, the Chairman or the President of each Company, including, without
limitation, the violation of any material written policy (or oral policy of
which you are aware) of the Companies or any of their respective subsidiaries
applicable to you, and, if such neglect or failure is capable of being cured,
your failure to cure the same as soon as practicable, but in any event within 30
days of receipt of written notice thereof from Holdings, (iii) the material
breach of any of the provisions of this Agreement), and, if such breach is
capable of being cured, your failure to cure such breach as soon as practicable,
but in any event within 30 days of receipt of written notice thereof from
Holdings, (iv) the commission of a felony, (v) the commission of an act of fraud
or financial dishonesty with respect to any of the Companies or their respective
subsidiaries or affiliates or (vi) any conviction for a crime involving moral
turpitude or fraud. A termination pursuant to this Section 6(a) shall take
effect immediately upon the giving of notice contemplated hereby (subject to any
applicable cure period).
(b) Holdings may terminate your employment hereunder at any
time without "cause" by giving you written notice of such termination, which
termination shall be effective as of the date set forth in such notice, provided
that such date shall not be earlier than the date of such notice (provided that
you shall be afforded a reasonable period of time after such termination to
remove your personal effects from the
Companies' premises). Any material breach of Section 1 of this Agreement by any
of the Companies that remains uncured for more than 30 days after your delivery
to the Companies of written notice of such breach shall be deemed to be a
termination without "cause" for purposes of this Agreement. For purposes of the
immediately preceding sentence, a substantial reduction of your duties,
responsibilities and status set forth in Section 1 of this Agreement shall be
deemed to be a "material breach" of such Section 1. In connection with the
foregoing, however, you acknowledge that the Companies intend to and may hire a
Chief Financial Officer.
(c) If, during the Employment Period, you are incapacitated or
disabled by accident, sickness or otherwise so as to render you mentally or
physically incapable of performing substantially all of the services required to
be performed by you under this Agreement for an aggregate of 210 days in any
period of 360 consecutive days (hereinafter, a "Disability"), the Companies may,
at any time thereafter, at their option, terminate your employment under this
Agreement immediately upon giving you written notice to that effect. In the
event of your death, your employment will be deemed terminated as of the date of
your death.
Section 7. Effect of Termination.
---------------------
(a) Upon the effective date of a termination of your
employment under this Agreement for any reason other than a termination without
cause pursuant to Section 6(b), neither you nor your beneficiaries or estate
shall have any further rights under this Agreement or any claims against the
Companies or any of their respective subsidiaries or affiliates arising out of
this Agreement, except the right to receive the following as soon as reasonably
practicable following the effective date of such termination (but in any event
within the applicable time period (if any) mandated by applicable law):
(i) the unpaid portion of the Base Salary payable
pursuant to Section 4, computed on a pro rata basis to the effective date of
--- ----
such termination;
(ii) reimbursement for any expenses for which you shall
not have theretofore been reimbursed, as provided in Section 5; and
(iii) the unpaid portion of any amounts earned by you
prior to the effective date of such termination pursuant to any benefit program
in which you participated during the Employment Period; provided, however, that
-------- -------
you shall not be entitled to receive any benefits under any benefit program that
have accrued during any period if the terms of such program require that the
beneficiary be employed by a Company as of the end of such period.
(b) Upon termination of your employment under this Agreement
pursuant to Section 6(b), neither you nor your beneficiaries or estate shall
have any further rights under this Agreement or any claims against the Companies
or any of their respective subsidiaries or affiliates arising out of this
Agreement, except the right
to receive the following as soon as reasonably practicable following the
effective date of such termination (but in any event within the applicable time
period (if any) mandated by applicable law in the case of amounts due pursuant
to clause (i) below, and at such other times as provided in clauses (ii) and
(iii) below in the case of amounts due thereunder):
(i) the payments, if any, referred to in Section 7(a)
above, to the extent not covered by clause (ii) of this Section 7(b);
(ii) the right to continue to receive the Base Salary
from the effective date of such termination until December 31, 2000, payable
during such period in such manner as the Base Salary is payable pursuant to
Section 4(a), reduced by 50% of any amounts you (or your beneficiaries or
estate) receive or are entitled to receive as salary or other cash compensation
from your subsequent employment or for services rendered by you for one or more
other parties (other than such services that are rendered by you in the
aggregate for less than 20 hours per calendar week and less than 260 hours per
calendar quarter) during such period (other than such compensation earned by you
from a business controlled by you), up to a maximum of 50% of all amounts due to
you under this Section 7(b)(ii) (in order to carry out the intent of the
immediately preceding sentence, you agree, for yourself and your beneficiaries
or estate, to provide the Companies with such information as the Companies may
reasonably request regarding your receipt of salary and other cash compensation
from subsequent employment or for services rendered or to be rendered during or
with respect to such period); and
(iii) the right to receive any bonus payable in
accordance with Section 4(b) with respect to the fiscal year in which such
termination occurs.
Notwithstanding anything contained in this Agreement to the contrary, your
beneficiaries or estate will be entitled to continue to receive all payments
specified in this Section 7(b) if you die after the date of a termination
without "cause."
Section 8. Disclosure of Information.
-------------------------
(a) From and after the date hereof, you shall not at any time
use or disclose to any person or entity (other than any officer, director,
employee, affiliate or representative of the Companies), except as required in
connection with the performance of your duties under and in compliance with this
Agreement and as required by law and judicial process, any Confidential
Information (as hereinafter defined) heretofore acquired or acquired during the
Employment Period for any reason or purpose whatsoever, nor shall you make use
of any of the Confidential Information for your own purposes or for the benefit
of any person or entity except the Companies or their respective subsidiaries.
(b) For purposes of this Agreement, "Confidential Information"
shall mean (i) the Intellectual Property Rights (as hereinafter defined) of the
Companies and their respective subsidiaries and affiliates and (ii) all other
information of a proprietary or confidential nature relating to the Companies or
their respective
subsidiaries and affiliates, or the business or assets of the Companies or their
respective subsidiaries and affiliates, including, without limitation, books,
records, agent and independent contractor lists and related information,
customer lists and related information, vendor lists and related information,
supplier lists and related information, distribution channels, pricing
information, cost information, marketing plans, strategies, forecasts, financial
statements, budgets and projections, other than, with respect to both clauses
(i) and (ii), (x) information which is generally available to the public on the
date hereof, or which becomes generally available to the public after the date
hereof without action by you, or (y) information which you receive from a third
party who does not have any independent obligation to any of the Companies or
their respective subsidiaries or affiliates to keep such information
confidential.
(c) As used herein, the term "Intellectual Property Rights"
means all industrial and intellectual property rights, including, without
limitation, patents, patent applications, patent rights, trademarks, trademark
applications, trade names, service marks, service mark applications, copyrights,
copyright applications, know-how, certificates of public convenience and
necessity, franchises, licenses, trade secrets, proprietary processes and
formulae, inventions, development tools, marketing materials, instructions,
confidential information, trade dress, logos and designs and all documentation
and media constituting, describing or relating to the foregoing, including,
without limitation, manuals, memoranda and records.
Section 9. Noncompetition Covenant.
-----------------------
(a) You acknowledge and recognize that during the Employment
Period you will be privy to Confidential Information. You further acknowledge
and recognize that the relationships with vendors, agents and customers of the
Companies and their respective subsidiaries that you have developed prior to the
date hereof and those that you will maintain or develop during the Employment
Period with the use and assistance of the Companies and their respective
subsidiaries, and their respective properties and assets, are of special and
unique value to the Companies and their affiliates and that the Companies would
find it extremely difficult to replace you. In addition, you acknowledge and
agree that this Agreement is being executed and delivered in connection with,
and as a mutual condition to the respective obligations of the parties at the
closing on the date hereof under, the Stock Purchase Agreement dated as of the
date hereof (the "Purchase Agreement") between each of the Companies, you and
the other seller thereunder; provided, however, that the Companies agree that a
-------- -------
breach by you of this Section 9 shall in no event constitute a breach under the
Purchase Agreement (it being acknowledged by you, however, that this proviso
shall in no way limit or affect the separate and independent provisions of
Section 7.4 of the Purchase Agreement). As a material inducement to Holdings to
enter into and perform its obligations under the Purchase Agreement, and in
consideration of the payments and other benefits (including the further
experience and expertise to be gained during your employment hereunder) to be
received by you under the Purchase Agreement and this Agreement (including,
without limitation, the severance compensation described in Section 7(b)(ii), if
applicable), you shall not, without the prior written consent of the Companies,
at any time during the Employment Period and the period beginning on the
effective date of any termination of your employment with the Companies and
their respective subsidiaries or
affiliates and ending on the later of (i) the second anniversary thereof and
(ii) the fifth anniversary of the Commencement Date, (a) 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, (b) assist others in engaging in any Competing Business in any manner
described in clause (a) above, (c) induce other employees of the Companies or
any of their respective subsidiaries or affiliates to terminate their employment
with any of the Companies or any of their respective subsidiaries or affiliates
or to engage in any Competing Business or in any manner described in clause (a)
above or (d) induce any customer, vendor or agent or any other person or entity
with which any of the Companies or their respective subsidiaries or affiliates
has a business relationship to terminate or alter such business relationship.
This covenant is considered an integral part of this Agreement. The foregoing
restriction shall not apply to your ownership of publicly traded securities
which represent not more than 5% of the ownership interests of the issuer.
(b) You understand that the foregoing restrictions may limit
your ability to earn a livelihood in a business similar to the business of any
of the Companies or any subsidiary or affiliate thereof, but you nevertheless
believe that you have received and will receive sufficient consideration and
other benefits under the Purchase Agreement and as an employee of the Companies
and under the terms of this Agreement to justify clearly such restrictions
which, in any event (given your education, skills and ability), you do not
believe would prevent you from earning a living.
(c) As used herein, the term "Competing Business" shall mean
------------------
any business engaged in providing any of the following transportation services
to third party customers:
(i) intermodal marketing or transportation services in
any city or county in any state or province located in the continental United
States, Canada or Mexico;
(ii) less-then-truckload common carrier services in any
city or county in any state or province located in the continental United
States, Canada or Mexico;
(iii) intra-state trucking of truckload or less-than-
truckload freight in any city or county located in the state of California;
(iv) drayage, consolidation, deconsolidation or
distribution services in any city or county in any state or province located in
the continental United States, Canada or Mexico where any of the Companies
conducts business or provides any drayage, consolidation, deconsolidation or
distribution services at the time of, or where there are fixed plans any of the
Companies to conduct business or provide any drayage, consolidation,
deconsolidation or distribution services at any time within 12 months after, the
termination of your employment with the Companies; or
(v) contract warehousing, freight handling or logistics
services in any city or county in any state or province located in the
continental United States, Canada or Mexico where any of the Companies conducts
business or provides such services at the time of, or where there are fixed
plans for any of the Companies to conduct business or provide such services at
any time within 12 months after, the termination of your employment with the
Companies.
Anything contained in the immediately preceding sentence to the contrary
notwithstanding,
A. any entity which has separate divisions or
business units, one or more of which are engaged in a business
described in the immediately preceding sentence, will not be deemed to
be a Competing Business with respect to those separate divisions or
business units of such entity that are not engaged in a business
described in the immediately preceding sentence so long as your
association with any such separate division or business unit (fully
taking into account your functions and the nature of your work at such
division or business unit) does not (1) involve existing customers of
any of the Companies at the time of the termination of your employment
with the Companies or former customers of any of the Companies at any
time during the 12 months preceding such termination or (2) relate in
any material respect to such portion of such business which would be a
Competing Business hereunder;
B. the provision of consulting services to a
direct shipper who is not a customer of any of the Companies at the
time of the termination of your employment with the Companies, or a
former customer of any of the Companies at any time during the 12
months preceding such termination, shall not be deemed to be "engaging
in a Competing Business" for purposes of this SECTION 9; and
---------
C. the provision of any drayage, consolidation,
deconsolidation, distribution, contract warehousing, freight handling
or logistics services in any location described in clause (iv) or (v)
of the immediately preceding sentence shall only be deemed to be a
"Competing Business" if (1) you had direct managerial authority at any
Company (or any of its separate divisions or business units), or
otherwise had ongoing contact with the customers of such Company (or
division or business unit), that was engaged in providing any
drayage, consolidation, deconsolidation, distribution, contract
warehousing, freight handling or logistics services at the time of (or
at any time within the 12 months prior to) the termination of your
employment with the Companies or where such Company (or such division
or business unit) had fixed plans at the time of such termination to
provide any drayage, consolidation, deconsolidation, distribution,
contract warehousing, freight handling or logistics services at any
time within 12 months after such termination, or (2) any drayage,
consolidation, deconsolidation, distribution, contract warehousing,
freight
handling or logistics services are being provided to any Person who
was a customer of the Company at the time of the termination of your
employment with the Companies or at any time during the 12 months
prior to such termination.
Section 10. As used herein, the term "Competing Business" shall mean
------------------
any business engaged in providing any of the following transportation services
to third party customers: (i) intermodal marketing or transportation services
in any city or county in any state or province located in the continental United
States, Canada or Mexico; (ii) less-than-truckload common carrier services in
any city or county in any state or province located in the continental United
States, Canada or Mexico; (iii) intra-state trucking of truckload or less-than-
truckload freight in any city or county located in the state of California; (iv)
drayage, consolidation, deconsolidation or distribution services in any city or
county in any state or province located in the continental United States, Canada
or Mexico where the Business is conducted or provides such services, or where
there are fixed plans for the Business to be conducted or to provide such
services within 12 months of the time in question; or (v) contract warehousing,
freight handling or logistics services in any city or county in any state or
province located in the continental United States, Canada or Mexico where the
Business is conducted or provides such services, or where there are fixed plans
for the Business to be conducted or to provide such services within 12 months of
the time in question; provided, however, that (A) any entity which has separate
-------- -------
divisions or business units, one or more of which are engaged in a business
described above in this sentence, will not be deemed a Competing Business with
respect to those portions of such entity which are not engaged in a business
described above in this sentence so long as a Seller's association with any such
separate division or business unit (fully taking into account his functions and
the nature of his work at such division or business unit) does not hereunder;
and (B) providing consulting services to direct shippers who are not customers
of the Companies at the time in question shall not be deemed to be "engaging in
a Competing Business" for purposes of this Section. For purposes of the
foregoing clauses (iv) and(v), the services described therein shall only be
deemed to be a "Competing Business" if you had direct managerial authority at
the Company or its division that was providing such services to customers at the
time in question or which provided such services to persons who were customers
of the Company or such division at any time in the preceding twelve months, or
if you otherwise had ongoing contact with such customers or other persons.
Inventions Assignment. During the Employment Period, you shall promptly
- ---------------------
disclose, grant and assign to the Companies for their sole use and benefit any
and all inventions, improvements, technical information and suggestions
reasonably relating to the business of the Companies or any of their respective
subsidiaries or affiliates (collectively, the "Inventions") which you may
develop or acquire during the Employment Period (whether or not during usual
working hours), together with all patent applications, letters patent,
copyrights and reissues thereof that may at any time be granted for or with
respect to the Inventions. In connection therewith (a) you shall, at the
expense of the Companies (including a reasonable payment (based on your last per
diem earnings) for the time involved if you are not then in the employ of any of
the Companies or receiving severance payments from the Companies pursuant to
Section 7(b)(ii)), promptly execute and deliver such applications, assignments,
descriptions and other instruments as may be
necessary or proper in the opinion of the Companies to vest title to the
Inventions and any patent applications, patents, copyrights, reissues or other
proprietary rights related thereto in the Companies and to enable them to obtain
and maintain the entire right and title thereto throughout the world; and (b)
you shall render to the Companies, at their expense (including a reasonable
payment (based on your last per diem earnings) for the time involved if you are
not then in the employ of any of the Companies or receiving severance payments
from the Companies pursuant to Section 7(b)(ii)), such reasonable assistance as
they may require in the prosecution of applications for said patents,
copyrights, reissues or other proprietary rights, in the prosecution or defense
of interferences which may be declared involving any said applications, patents,
copyrights or other proprietary rights and in any litigation in which any of the
Companies may be involved relating to the Inventions.
Section 11. Assistance in Litigation.
------------------------
(a) At all times during the Employment Period, and thereafter
upon reasonable notice from the Board or the Chairman of Holdings you shall
furnish such information and assistance to the Companies as any of them may
reasonably require in connection with the actions entitled Irwin Albillo et. al.
--------------------
v. Intermodal Container Service, Inc. et. al. (Case No. B0174508), and Paul
- -------------------------------------------- ----
Cardoza, et al., vs. Air Rail Truck Service-Air Cargo, et al. (Case No. BC 153
- ------------------------------------------------------------------------------
522), any other related case contemplated by the Cardoza Court's Ruling on
- --------------------------------------------------------------------------
Submitted Matter entered on October 31, 1997, or any other action, federal or
- --------------------------------------------
state, arising from the facts alleged in the Albillo case referred to above, as
any such action may beamended, modified, restated or refiled, whether by the
plaintiffs Albillo, Cardoza or one or more other independent contractor drivers
against one or more of the Companies and the Subsidiary asserting claims based
on the facts alleged in the Albillo action or the Cardoza action cited above.
------- -------
Such information and assistance shall include, but not be limited to, appearing
from time to time at the offices of the Companies or Companies' counsel for
conferences and interviews and in general providing the officers of the
Companies, the Companies and Companies' counsel with the full benefit of your
knowledge with respect to such actions. The Companies shall pay or reimburse
you for all reasonable out-of-pocket expense incurred by you in connection with
your furnishing such information and assistance upon presentation of appropriate
receipts or other documentation therefor.
(b) At all times during the Employment Period, and thereafter
upon reasonable notice from the Board or the Chairman and at the expense of the
Companies (including a reasonable payment (based on your last per diem earnings)
for the time involved if you are not then in the employ of any of the Companies
or collecting payments pursuant to Section 7(b)), you shall furnish such
information and assistance to the Companies as any of them may reasonably
require in connection with any issue, claim or litigation in which any of the
Companies may be involved (excluding the matters covered by Section 11(a)
above). Such information and assistance shall include, but not be limited to,
appearing from time to time at the offices of the Companies or Companies'
counsel for conferences and interviews and in general providing the officers of
the Companies, the Companies and Companies' counsel with the full benefit of
your knowledge with respect to such issue, claim or litigation.
Section 12. Entire Agreement; Amendment and Waiver. This Agreement
--------------------------------------
embodies the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any and all
prior and contemporaneous understandings, agreements, arrangements or
representations by or among the parties, written or oral, which may relate to
the subject matter hereof in any way. Other than this Agreement, there are no
other agreements continuing in effect relating to the subject matter hereof
(except that the parties acknowledge the existence of the separate and
independent provisions contained in Section 7.4 of the Purchase Agreement). No
waiver, amendment or modification of any provision of this Agreement shall be
effective unless in writing and signed by each party hereto. The waiver by
either party of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by such
other party.
Section 13. 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 any Company, to:
PMT Holdings, Inc.
3746 Mt. Diablo Boulevard, Suite 100
Lafayette, CA 94549
Attention: Chairman of the Board
Telecopier: (510) 299-
Telephone: (510) 283-1938
with a copy to:
Eos Partners, L.P.
320 Park Avenue
22nd Floor
New York, NY 10022
Attention: Douglas R. Korn
Telecopier: (212) 832-5815
Telephone: (212) 832-5803
(b) if to you, to:
Mr. Allen E. Steiner
1537 Amalfi Drive
Pacific Palisades, CA 90272-2754
Telephone: (310) 459-3926
Telecopier: (310) 459-8124
with copies to:
Manatt, Phelps & Phillips, LLP
11355 W. Olympic Blvd.
Los Angeles, CA 90064
Attention: Ronald S. Barak
Telecopier: (310) 312-4224
Telephone: (310) 312-4000
Mr. Gary I. Goldfein
229 N. Clifford Avenue
Los Angeles, CA 90049
Telephone: (310) 471-2974
Telecopier: (310) 471-7438
Section 14. Headings. The section headings in this Agreement are for
--------
convenience only and shall not control or affect the meaning of any provision of
this Agreement.
Section 15. Severability. In the event that any provision of this
------------
Agreement is determined to be partially or wholly invalid, illegal or
unenforceable in any jurisdiction, then such provision shall, as to such
jurisdiction, be modified or restricted to the extent necessary to make such
provision valid, binding and enforceable, or if such provision cannot be
modified or restricted, then such provision shall, as to such jurisdiction, be
deemed to be excised from this Agreement; provided, however, that the binding
-------- ------
effect and enforceability of the remaining provisions of this Agreement, to the
extent the economic benefits conferred upon the parties by virtue of this
Agreement remain substantially unimpaired, shall not be affected or impaired in
any manner, and any such invalidity, illegality or unenforceability with respect
to such provisions shall not invalidate or render unenforceable such provision
in any other jurisdiction.
Section 16. Remedies. You acknowledge and understand that the
--------
provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
thus, the breach or threatened breach of the provisions of this Agreement would
cause the Companies irreparable harm. You further acknowledge that in the
event of a breach of any of the covenants contained in paragraphs 8, 9, or 10,
the Companies shall be entitled to immediate relief enjoining such violations in
any court or before any judicial body having jurisdiction over such a claim.
All remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy.
Section 17. Representation.
--------------
(a) You hereby represent and warrant to Holdings that (i) the
execution, delivery and performance of this Agreement by you and ICI and ICSI
does not breach, violate or cause a default under any agreement, contract or
instrument to which any of you, ICI or ICSI is a party or any judgment, order or
decree to which any of you, ICI OR ICSI is subject, and (ii) none of you, ICI or
ICSI is a party to or bound by any employment agreement, consulting agreement,
noncompete agreement, confidentiality agreement or similar agreement regarding
your employment or retention with or by any other person or entity.
(b) Holdings hereby represents and warrants to you that the
execution, delivery and performance of this Agreement by Holdings does not
breach, violate or cause a default under any agreement, contract or instrument
to which Holdings is a party or any judgment, order or decree to which Holdings
is subject.
Section 18. Benefits of Agreement; Assignment. The terms and
---------------------------------
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, assigns, representatives,
heirs and estate, as applicable. Anything contained herein to the contrary
notwithstanding, this Agreement shall not be assignable by any party hereto
without the consent of the other parties hereto.
Section 19. 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 but one
agreement.
Section 20. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
Section 21. Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
---------------------------
CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO
APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
If the above terms are satisfactory to you, please acknowledge our
agreement by signing the enclosed copy of this letter in the space provided
below and returning it to the undersigned.
Very truly yours,
PMT HOLDINGS, INC.
By:_____________________
Name:
Title:
INTERSTATE CONSOLIDATION, INC.
By:_____________________
Name:
Title:
INTERSTATE CONSOLIDATION
SERVICE, INC.
By:_____________________
Name:
Title:
Accepted and agreed to:
________________________
Allen E. Steiner
SCHEDULE 4(A)
PART I
------
. One German Luxury Company Car each including gasoline, repairs, maintenance,
insurance, taxes, etc. (to be replaced not less often than once every three
years after the date of acquisition of such vehicle)
. Country Club Dues (approx. $475/mo.)
. WPO\YPO Dues (approx. $5,000/yr.)
. YPO Seminars
. Membership in Trade and Business Organizations and airline and automobile
club memberships
. Misc. Business Tools including computer links, cell phones, car phones, etc.
. Health Insurance
. Disability Pay as per standard for employees with 25 years service
. Sick Leave as per standard for employees with 25 years service
. Vacation time as per standard for employees with 25 years Service
PART II
-------
The following are the employee benefits for senior executive officers of
Holdings as of the date hereof:
Group Health Insurance
Connecticut General Life Insurance Company - Policy 2233560-01
Coverage: standard group plan
Group Term Life Insurance
Fortis Benefits Insurance Company - Policy 4009662
Coverage: $350,000
Additional Term Life Insurance
CNA/Valley Forge Life Insurance
Coverage: $700,000
Accidental Death and Dismemberment
Fortis Benefits Insurance Company - Policy 4009662
Coverage: standard group plan
Short Term Disability
Fortis Benefits Insurance Company - Policy 4009662
Coverage: standard group plan
Long Term Disability
Fortis Benefits Insurance Company - Policy 4009662
Coverage: standard group plan
Massachusetts Casualty Insurance Company
Gerry Angeli - $6,200 per month
Robert Cross - $4,750 per month
Group Dental Insurance
Fortis Benefits Insurance Company - Policy 4009662
Coverage: standard group plan
Pacific Motor Transport 401(k) Plan
Merrill Lynch
Company matching contribution: 3% of first 100% if participant's contribution
Company Automobiles
Gerry Angeli - Buick Park Avenue
Bob Cross - Buick Park Avenue
Don Orris - Car Allowance of $1,076 per month
SCHEDULE 4(B)
OPERATING INCOME
----------------
For purposes of Section 4(b) of this Agreement, "Operating Income"
----------------
means, for any calendar year, the earnings before interest expense and interest
income, income taxes and amortization of goodwill and acquisition and financing
fees of Holdings and its subsidiaries, determined on a consolidated basis and in
accordance with generally accepted accounting principles consistently applied
for the calendar year in question, as set forth on the audited consolidated
statement of income of Holdings and its subsidiaries for the fiscal year in
question; provided, however, that Operating Income shall (x) exclude management
-------- -------
fees, transaction expenses, non-operating gains and losses as determined by the
Board of Directors of Holdings and such other non-cash items as shall be
determined by the Board of Directors of Holdings (provided that, with regard to
recognition of income due to customer credit balances and the reversal of prior
period accounts payable, such recognition will be made on a basis consistent
with past practice as to amount and timing of such recognition) and (y) be
determined after giving effect to any and all bonuses payable by Holdings and/or
any of its subsidiaries to management or employees of Holdings and/or any of its
subsidiaries hereunder or otherwise. In the event that Holdings and/or any of
its subsidiaries consummate any mergers or acquisitions (whether of assets,
stock or other interests) or other extraordinary transactions, the Board of
Directors of Holdings shall in good faith make such adjustments to the targets
set forth in Section 4(b) for Operating Income (as defined above) to take into
account the effects of any such acquisition or other extraordinary transaction.
PACER INTERNATIONAL, INC.
May 28, 1999
Allen E. Steiner
1537 Amalfi Dr.
Pacific Palisades, CA 90272-2754
Re: Amendment to Employment Agreement
---------------------------------
Dear Allen:
Reference is made to the Employment Agreement, dated December 16, 1997,
(the "Employment Agreement") between Pacific Motor Transport Company and you.
This letter amendment (the "Letter Amendment") sets forth our agreement with
respect to certain amendments to the Employment Agreement in connection with the
merger (the "Merger") contemplated by the Agreement and Plan of Merger amongst
Pacer International, Inc., a Delaware corporation, Mile High Acquisition Corp.,
a Delaware corporation ("Sub") and the shareholders of Pacer International,
Inc., dated February 22, (the "Merger Agreement") for the purposes of assuring
your continued employment with Pacer International, Inc., a Tennessee
corporation, (the "Company") following the Merger and in order to assure Sub of
the transfer of the goodwill of the Company pursuant to the Merger and to
protect the trade secrets and other confidential information of the Company.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company hereby agrees with you as follows:
1. The effectiveness of this Letter Agreement is contingent upon the
closing of the Merger. In the event the Merger is not consummated, this Letter
Agreement will be of no force or effect.
2. Section 2 of the Employment Agreement is hereby deleted in its
entirety and the following provision is hereby substituted therefor:
Term. Unless sooner terminated in accordance with the applicable
----
provisions of this Agreement, your employment hereunder shall be for the
period (including any extensions thereof, the "Employment Period")
commencing on the closing date of the Merger (the "Commencement Date") and
initially ending on the second anniversary of the date hereof. Subject to
the applicable provisions of
Section 6 of this Agreement regarding earlier termination, the Employment
Period shall be extended automatically on each anniversary of the
Commencement Date, beginning with the first anniversary thereof for an
additional period of one year.
3. Section 9 of the Employment Agreement is hereby deleted in its
entirety and the following provision is hereby substituted therefor:
(a) You will not during the Employment Period and for the period of
two years following date of your termination of employment with the Company
or any of its subsidiaries for any reason (the "Noncompetition Period") (i)
-----------------------
in any geographic area where the Company 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 your name (or any part or variant thereof) to, any
Competing Business (as defined in below); (ii) deal, directly or
indirectly, in a competitive manner with any customers doing business with
the Company during the Noncompetition Period; (iii) solicit or employ any
officer, director or agent of the Company to become an officer, director,
or agent of you, your 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
any trade name used by it. Ownership by you 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. You are
entering into the foregoing covenant to assure Sub of the transfer of the
goodwill of the Company, and in order to induce Sub to consummate the
purchase contemplated by the Merger Agreement.
(b) You will not at any time after the date hereof divulge, furnish
to or make accessible to anyone any knowledge or information with respect
to confidential or secret processes, inventions, discoveries, improvements,
formulae, plans, material, devices or ideas or know-how, whether patentable
or not, with respect to any confidential or secret aspects of the business
of the Company (including, without limitation, customer lists, supplier
lists and pricing arrangements with customers or suppliers); provided,
--------
however, that nothing herein shall prohibit you from complying with any
-------
order or decree of any court of competent jurisdiction or governmental
entity or other requirements of law, but you will give the Company
reasonably timely notice of the receipt of any such order or decree or
legal requirement, and the foregoing provision shall not apply to (i) any
information which is or becomes generally available to the public through
no breach of this Agreement or (ii) is or becomes available to you on a
non-confidential basis from a source who is not, to your knowledge,
prohibited from disclosing the same by any legal or contractual obligation.
(c) As used herein, the term "Competing Business" shall mean any
transportation or other business that the Company or any of its affiliates
has engaged in at any time during the Employment Period 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.
4. Notwithstanding anything in this Letter Agreement to the contrary,
nothing herein shall affect the validity of any restrictive covenant you are
bound to pursuant to the Stock Purchase Agreement among you, Gary I. Goldfein,
PMT Holdings, Inc., Interstate Consolidation, Inc., and Interstate Consolidation
Service, Inc., dated as of December 16, 1997.
Please acknowledge your agreement with this Letter Amendment by executing a
counterpart of this Letter Agreement in the appropriate space and returning it
to the Company.
Very truly yours,
PACER INTERNATIONAL, INC.
by _____________________________
Acknowledged and Agreed to
this __ day of ________
________________________________
Allen E. Steiner