Exhibit 4.4
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STOCK PURCHASE AGREEMENT
by and between
APL LIMITED
and
COYOTE ACQUISITION LLC
Dated as of March 15, 1999
TABLE OF CONTENTS
ARTICLE I Purchase and Sale 1
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I.1 Purchase and Sale 1
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I.2 Purchase Price 2
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I.3 The Post-Closing Payment 2
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I.4 Payment of Purchase Price 4
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I.5 Closing 4
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I.6 Financing Fees; Capitalization 4
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ARTICLE II Representations and Warranties of APL 4
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II.1 Organization and Authority 4
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II.2 Noncontravention 5
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II.3 No Governmental Consent or Approval Required 6
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II.4 Organization and Authority of the Company 6
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II.5 Capitalization of the Company 7
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II.6 Financial Statements 7
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II.7 Books and Records 8
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II.8 Undisclosed Liabilities 9
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II.9 Accounts and Notes Receivable 9
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II.10 Absence of Certain Developments 9
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II.11 Customers 10
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II.12 Title to Properties 11
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II.13 Assets 11
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II.14 Contracts 12
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II.15 Litigation 12
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II.16 Compliance with Law; Permits 13
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II.17 Employee Benefit Plans 13
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II.18 Certain Interests 16
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II.19 Insurance 16
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II.20 Consequences of Stock Purchase 17
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II.21 Intercompany Transactions 17
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II.22 No Brokers or Finders 17
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II.23 Environmental Matters 17
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II.24 Intellectual Property 19
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II.25 Year 2000 Compliance. 20
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II.26 Disclosure 21
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II.27 Labor Relations 21
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II.28 Working Capital; Net Fixed Assets 21
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ARTICLE III Representations and Warranties of the Purchaser 21
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III.1 Organization and Authority 22
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III.2 Noncontravention 22
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III.3 No Governmental Consent or Approval Required 22
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III.4 Financial Capability 23
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III.5 Purchase for Investment 23
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III.6 Pacer Acquisition 23
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III.7 Capitalization of the Company 24
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ARTICLE IV Covenants 24
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IV.1 Cooperation and Access 25
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IV.2 No Solicitation 26
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IV.3 Conduct of Business Prior to the Closing 26
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IV.4 Commercially Reasonable Efforts; Government Approvals 30
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IV.5 Use of APL Name and Trademark 31
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IV.6 Confidentiality 32
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IV.7 Employee Benefits; Employees 32
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IV.8 Insurance 33
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IV.9 Warn Act 34
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IV.10 Other Actions 34
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IV.11 Advice of Changes 34
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IV.12 Financial Information 35
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IV.13 Accounts Payable, Accrued Expenses and Accounts Receivable 35
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IV.14 Pacer Indemnification 35
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IV.15 Conduct of Business Following the Closing 36
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ARTICLE V Tax Matters 36
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V.1 Definitions 36
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V.2 Tax-Related Representations and Warranties 37
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V.3 Liability for Taxes and Related Matters 39
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(a) Liability of APL for Taxes. APL shall indemnify,
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defend and hold the Purchaser, the Company and
their respective officers, directors, employees,
Affiliates and agents (each, a 40
(b) Liability of Purchaser for Taxes 40
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(c) Tax Periods 40
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V.4 Adjustment to Purchase Price 40
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V.5 Tax Covenants 40
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V.6 Transfer Taxes 43
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V.7 Information to be Provided by the Purchaser 44
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V.8 Tax Proceedings 44
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(a) Right to Control Proceedings 44
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(b) Notice; Reports 44
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V.9 Assistance and Cooperation 45
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V.10 Survival, Etc. 46
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ARTICLE VI Conditions to Closing 46
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VI.1 Conditions to the Obligations of the Purchaser 46
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(a) Approvals 46
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(b) Orders 47
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(c) Accuracy of Representations 47
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(d) Performance of Covenants 47
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(e) Resignation of Directors 47
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(f) Ancillary Agreements 47
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(g) Intercompany Accounts 47
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VI.2 Conditions to the Obligations of APL 49
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(a) Approvals 49
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(b) Orders 49
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(c) Accuracy of Representations 49
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(d) Performance of Covenants 49
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(e) Ancillary Agreements 49
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(f) Shareholder Vote. The shareholders of NOL shall have
approved the transactions contemplated hereby pursuant
to an extraordinary general meeting. 50
VI.3 Pacer Extension 50
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ARTICLE VII Termination 50
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VII.1 Grounds for Termination 50
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VII.2 Effect of Termination 52
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VII.3 Interest 53
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ARTICLE VIII Indemnification 54
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VIII.1 Survival of Representations, Warranties, Covenants and
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Agreements 54
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VIII.2 Indemnification 54
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VIII.3 Method of Asserting Claims, etc. 55
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VIII.4 Limitation on Damages 56
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VIII.5 Exclusive Remedy 57
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VIII.6 Insurance Proceeds; Interest 57
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VIII.7 Deductible; Maximum Liability 57
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VIII.8 Tax Losses 58
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ARTICLE IX Certain Definitions 58
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IX.1 Certain Definitions 58
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ARTICLE X Miscellaneous 66
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X.1 Amendments 66
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X.2 Assignment 66
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X.3 Notices 66
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X.4 Severability 68
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X.5 Governing Law 68
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X.6 Interpretation 68
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X.7 Entire Agreement 68
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X.8 Publicity 69
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X.9 Expenses 69
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X.10 No Third Party Beneficiaries 69
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X.11 Jurisdiction 69
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X.12 Counterparts 70
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EXHIBITS
A. Non-Competition Agreement
B. Administrative Services Agreement
C. Information Technology Access and License Agreement Terms
D. Stacktrain Services Agreement
E. TPI Chassis Sublet Agreement
F. Equipment Supply Agreement
G. Shareholders Agreement
H-1. Financing Letter of Morgan Stanley & Co., Inc.
H-2. Financing Letter of Bankers Trust Company
I. Union Pacific Terms
J. CSX Memorandum of Understanding
K. Tax Sharing Agreement
L. Working Capital Analysis
SCHEDULES
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2.4 Directors and Executive Officers of the Company
2.6(c) Consolidated Accounts Payable, Accrued Expenses and
Accounts Receivable
2.8 Undisclosed Liabilities
2.9 Accounts and Notes Receivable
2.10 Absence of Certain Developments
2.11 Customers
2.12(b) Real Property
2.14(a) Material Contracts
2.14(b) Noncontravention and Breaches of Material Contracts
2.15 Litigation
2.16 Compliance with the Law/Governmental Permits
2.17(a) Employee Benefit Plans
2.17(g) Employee Benefits Provided After Retirement
2.19 Insurance
2.21 Intercompany Transactions
2.23 Environmental Matters
2.24 Intellectual Property
4.5 APL Corporate Logo
4.7(b) Employees
5.2(b) Tax Returns
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as March 15, 1999, is made by and
between Coyote Acquisition LLC, a Delaware limited liability company (the
"Purchaser"), and APL Limited, a Delaware corporation ("APL").
RECITALS
A. APL owns 1,000 shares of Common Stock, no par value (the "Stock")
of APL Land Transport Services, Inc., a Tennessee corporation (the "Company"),
constituting all of the issued and outstanding capital stock of the Company.
B. The Company is engaged in the Business (this and other
capitalized terms shall have the meanings assigned to such terms in Article IX).
C. The Purchaser desires to purchase the Stock, and APL desires to
sell the Stock to the Purchaser, all on the terms and conditions set forth
herein.
D. The Purchaser and APL desire that this transaction be eligible
for election under Section 338(h)(10) of the Internal Revenue Code with respect
to the acquisition of the Company by the Purchaser.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants and conditions contained herein, the
parties hereto agree as follows:
ARTICLE I
Purchase and Sale
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I.1 Purchase and Sale. Upon the terms and subject to the conditions
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of this Agreement, APL shall sell to the Purchaser, and the Purchaser shall
purchase from APL, shares of Stock (the "Shares") at the Closing and APL shall
deliver at the Closing a certificate evidencing the Shares, properly endorsed,
or accompanied by a duly executed stock power duly endorsed, in blank; provided
that a portion of
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the Shares may be purchased by the Company at the Closing with the proceeds of
the debt financing contemplated by the Financing Letters. The numbers of shares
retained by APL shall be calculated based on (i) the value of the number of
shares of Stock of the Company not sold by APL pursuant to this Agreement
divided by (ii) the value of each share of Stock of the Company based on the
equity investment made by the Purchaser in the Company.
I.2 Purchase Price. In consideration for the Shares and as payment
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in full therefor, the Purchaser shall pay to APL the Purchase Price. The
"Purchase Price" is $300 million, of which (i) at least $292.5 million will be
in cash payable on the Closing Date and (ii) up to $7.5 million will be in value
of shares of Stock of the Company not sold by APL pursuant to this Agreement.
In addition, the Purchaser shall pay to APL up to $15 million in cash (the
"Post-Closing Payment") to be earned to the extent that net income before (plus)
allocated corporate overhead charges, management fees payable to any Affiliate
of the Purchaser, interest, taxes, depreciation, amortization, one-time charges
related to the consummation of the transactions contemplated hereby and
nonrecurring losses and after (less) one-time benefits related to the
consummation of the transactions contemplated hereby and nonrecurring gains
("EBITDA") of the Company for the fiscal year ending December 31, 1999 ("Actual
EBITDA") is equal to or greater than $57 million (the "EBITDA Target").
Nonrecurring gains and losses shall be calculated as reasonably agreed by
Purchaser and APL, subject to the provisions of Section 1.3 relating to an
Objection. The Post-Closing Payment will be reduced by an amount equal to the
product of (x) 5.5 and (y) the amount that Actual EBITDA is below the EBITDA
Target.
I.3 The Post-Closing Payment. Within 90 days of the Company's 1999
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fiscal year end, the Purchaser shall deliver or cause to be delivered to APL an
income statement of the Company for the fiscal year ending December 31, 1999(the
"Final Income Statement"). The Final Income Statement shall be prepared in
accordance with GAAP, consistently applied with the Financial Statements, and
shall not include the consolidated or unconsolidated information of any entity
or business other than the Company or the Business. The Purchaser shall use
commercially reasonable efforts to maintain its books and records such that the
Final Income Statement can be so prepared and
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verified. Not later than 30 days after receipt of the Final Income Statement,
APL may deliver to the Purchaser a written notice ("Objection"), setting forth
any items with which APL disagrees and a description of the bases for such
disagreement.
In the event that APL delivers an Objection to the Final Income
Statement or the Purchaser's calculation of Actual EBITDA, the Purchaser hereby
agrees to negotiate in good faith for a period of 30 days after receipt of such
Objection, to seek to resolve the difference with respect to the Final Income
Statement and calculation of Actual EBITDA. If APL and the Purchaser are unable
to resolve all such disagreements within such 30 day period, then no later than
seven days following such 30 day period they shall refer their remaining
differences to any internationally recognized firm of independent public
accountants as to which APL and the Purchaser agree (the "Independent Firm") who
shall, acting as experts and not as arbitrators, determine, only with respect to
the remaining differences so submitted, whether and to what extent, if any, the
Final Income Statement or the calculation of Actual EBITDA requires adjustment.
APL and the Purchaser shall instruct the Independent Firm to deliver its written
determination to them no later than the twentieth day after the remaining
differences underlying the Objections are referred to the Independent Firm. The
Independent Firm's determination shall be conclusive and binding upon APL and
the Purchaser absent manifest error. The fees and disbursements of the
Independent Firm shall be shared equally by APL and the Purchaser. APL and the
Purchaser shall make readily available to the Independent Firm all relevant
books and records and any work papers (including those of the parties'
respective accountants) relating to the Final Income Statement and all other
items reasonably requested by the Independent Firm.
The Post-Closing Payment shall be (i) $15 million if the Actual EBITDA
is greater than or equal to $57 million; (ii) $0 if the Actual EBITDA is less
than or equal to $54,272,728, and (iii) if the Actual EBITDA is greater than
$54,272,728 and less than $57 million, calculated in accordance with the
following formula:
$15 million - (5.5 * (EBITDA Target - Actual EBITDA))
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The Post-Closing Payment shall be due and payable no later than two
business days after resolving all Objections; provided that any portion of the
Post-Closing Payment as to which there is no disagreement shall be due and
payable no later than two business days after resolving all Objections with
respect to such amount.
I.4 Payment of Purchase Price. If the obligations of the parties to
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proceed with the Closing set forth in Article VI are satisfied or waived, at the
Closing, the Purchaser shall pay APL the cash portion of the Purchase Price
payable on the Closing Date by wire transfer of immediately available funds to a
bank account designated by APL at least two business days prior to Closing.
I.5 Closing. The closing (the "Closing") of the purchase and sale
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of the Stock shall take place at the offices of Dewey Ballantine LLP, 1301
Avenue of the Americas, New York, New York 10019 as soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, or at such
other time and place as the parties shall mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing."
I.6 Financing Fees; Capitalization. The parties hereto agree that
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commitment fees set forth in the Financing Letter attached as Exhibit I-1 shall
be borne equally by APL and the Purchaser; provided, however, that if and to
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the extent any amounts are drawn under the bridge facility contemplated by such
Financing Letter to consummate the transactions contemplated by this Agreement,
APL shall pay all commitment fees and the Purchaser shall pay all funding fees
related thereto.
ARTICLE II
Representations and Warranties of APL
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APL represents and warrants to the Purchaser that:
II.1 Organization and Authority. APL is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware. APL has the requisite corporate power and authority to execute,
deliver and perform this Agreement and such other documents
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as are contemplated hereunder to be executed and delivered at or prior to the
Closing. The execution, delivery and performance by APL of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of APL and the Company. This Agreement constitutes a valid and,
assuming due execution and delivery by the Purchaser, binding obligation of APL,
enforceable against APL in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, and to general equitable principles. Upon execution
and delivery of the Ancillary Agreements by the parties thereto, such Ancillary
Agreements will constitute valid and binding obligations of APL, enforceable
against APL in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, and to general equitable principles.
II.2 Noncontravention. The execution, delivery and performance of
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this Agreement by APL, the performance of this Agreement by APL and the
consummation of the transactions contemplated hereby will not violate or
conflict with, or constitute a breach or default (with or without notice or
lapse of time, or both) under or give rise to any right of termination,
amendment, cancellation or acceleration of any obligations contained in or the
loss of any benefit under, (a) the certificate of incorporation or bylaws of APL
(b) any law, regulation, order, judgment or decree applicable to APL or the
Company or (c) except as disclosed in Schedule 2.14(b), any term, condition or
provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease, sublease, material purchase order or other material agreement (including
any Material Contract), commitment, instrument, permit, concession, franchise or
license to which the Company is a party, or by which the Company or its assets
may be bound, in each case in clauses (b) or (c) above, which conflict or
violation would reasonably be expected to prevent or delay the consummation of
the transactions contemplated by this Agreement or any of the Ancillary
Agreements, result in a Lien on the Stock or give rise to any material claim
against the Company.
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II.3 No Governmental Consent or Approval Required. No authorization,
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consent, Permit, approval or other order of, declaration to, or registration,
qualification, designation or filing with, any Governmental Entity is required
for or in connection with the execution, delivery and performance of this
Agreement by APL, the performance of this Agreement by APL and the consummation
of the transactions contemplated hereby, other than (a) the filing of
notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
("HSR Act") and the expiration or early termination of the waiting period
thereunder, (b) the approval of the transactions contemplated hereby by the
shareholders of Neptune Orient Lines Limited, a Singapore corporation("NOL"),
pursuant to an extraordinary general meeting and (c) any consents, the failure
to obtain would not prohibit the consummation of any of the transactions
contemplated hereby or give rise to any material claim against the Company.
II.4 Organization and Authority of the Company. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee and has the requisite corporate power and authority to
carry on its business as presently conducted and to consummate the transactions
contemplated hereby. The Company is qualified to do business as a foreign
corporation in good standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary. Schedule 2.4 correctly lists the current
directors and executive officers of the Company. True, correct and complete
copies of the respective charter documents of the Company as in effect on the
date hereof have been made available to the Purchaser. The Company has no
subsidiaries. The Company is not in default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of its certificate of
incorporation or by-laws.
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II.5 Capitalization of the Company. The entire authorized capital
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stock of the Company consists of 2,000 shares of Common Stock, no par value, of
which 1,000 shares are issued and outstanding. All of the Stock has been duly
authorized and validly issued and is fully paid and nonassessable. There are no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. There are no outstanding shares of capital stock of the Company or
existing options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments which obligate the Company to issue,
transfer or sell any shares of capital stock of the Company. All securities
issued by the Company have been issued in transactions exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") and the
rules and regulations promulgated thereunder and all applicable state securities
or "blue sky" laws, and the Company has complied in all material respects with
the Securities Act and all applicable state securities or "blue sky" laws in
connection with the issuance of any such securities. APL has good and valid
title to all of the Stock, free and clear of all Liens and, subject to
applicable securities laws and competition laws, free of any restriction on its
right to transfer or exercise any voting or other right with respect thereto.
At the Closing, good and valid title to the Shares, free and clear of all Liens,
encumbrances, equities or claims shall be transferred to the Purchaser. Except
as contemplated by this Agreement, there are no contracts, commitments,
arrangements, understandings or restrictions to which the Company or to the
Knowledge of the Company any other Person is bound relating in any way to any
shares of capital stock or other securities of the Company.
II.6 Financial Statements. (a) APL has delivered to the Purchaser
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the audited consolidated balance sheets of the Company as of December 25, 1998
(the "Balance Sheet") and the audited consolidated statements of operations and
cash flows for fiscal 1996, 1997 and 1998 (together with the Balance Sheet, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP, consistently applied, and fairly and accurately present
the financial position of the Business as of the respective dates thereof and
the results of operations, changes in financial position and cash flow
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of the Business for the respective periods covered thereby. The Financial
Statements were prepared in accordance with the books of account and other
financial records of the Company and include all adjustments that are necessary
for a fair presentation of the consolidated financial condition of the Company
and the results of operations of the Company as of the dates thereof or for the
periods covered thereby. The Company's operating leases in the Financial
Statements have been appropriately classified as such pursuant to GAAP and
Statement of Financial Accounting Standards No. 13.
(b) The Company has no indebtedness for borrowed money
("Indebtedness") owed, as of the date of this Agreement, to any third party
(determined in accordance with GAAP).
(c) Schedule 2.6(c) sets forth a true, correct and complete summary
of all consolidated accounts payable, accrued expenses and accounts receivable
of the Company as of December 25, 1998 and February 5 and March 5, 1999, which
schedule shall set forth the name of the account debtor (in the case of accounts
receivable) or account creditor (in the case of accounts payable) and the amount
owed by or owing to such account debtor or account creditor (identifying the
portion of accounts receivables that are current, 30, 60, 90 and more than 90
days past due).
(d) The consolidated balance sheet of NOL as of June 30, 1998(the
"NOL Balance Sheet") was prepared in accordance with Singapore generally
accepted accounting principles and fairly and accurately presents the financial
position of NOL as of the date thereof. The NOL Balance Sheet was prepared in
accordance with the books of account and other financial records of NOL and
includes all adjustments that are necessary for a fair presentation of the
financial position of NOL as of the date thereof.
II.7 Books and Records. The books of account and other financial and
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corporate records of the Company have been maintained in all material respects
in accordance with good business and accounting practices consistently applied.
The minute books and stock transfer books of the Company are correct, complete
and current in all material respects. At the Closing, any documentary and stock
transfer tax stamps required in connection with the transfer of the Shares
pursuant to this Agreement will be duly affixed for transfer.
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II.8 Undisclosed Liabilities. The Company has no material
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liabilities (whether known or unknown and whether absolute, accrued, fixed,
contingent or otherwise) except for (a) liabilities or obligations reflected or
reserved against on the Balance Sheet in accordance with GAAP, (b) liabilities
incurred in the ordinary course of business since the date of the Balance Sheet,
(c) liabilities set forth in Schedule 2.8 or any other Schedule or Exhibit
hereto and (d) liabilities as to which a separate representation is made in this
Agreement; provided that for purposes of this representation liabilities which
may be immaterial individually, but are material in the aggregate, shall be
deemed to be material. There are no loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975) of or affecting the Company which are
not adequately provided for or disclosed on the Balance Sheet or in the notes
thereto, in each case, to the extent required by GAAP. The Company is not a
guarantor of or obligor on any material Liability of any other Person except as
set forth in any Schedule or Exhibit hereto.
II.9 Accounts and Notes Receivable. Except as set forth in Schedule
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2.9, all the accounts receivable and notes receivable owing to the Company as of
the date hereof constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business. Except to the extent of the
reserves on the consolidated books of the Company or set forth in Schedule 2.9,
there are no known or asserted claims, refusals to pay or other rights of set-
off against any such accounts or notes receivable. Except as set forth in
Schedule 2.9, there is (i) no account debtor or note debtor that to the
Knowledge of the Company, has refused or threatened to refuse to pay its
currently outstanding obligations in excess of $25,000 to the Company for any
reason, or has otherwise made a claim of set-off or similar claim and (ii) to
the Knowledge of the Company (without investigation), no account debtor or note
debtor that owes the Company amounts in excess of $25,000 in the aggregate is a
debtor under applicable bankruptcy laws.
II.10 Absence of Certain Developments. Since the date of the Balance
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Sheet, except as set forth in Schedule 2.10 or as contemplated by this
Agreement, the Company has operated the Business in the ordinary course
consistent with past practice in all material respects and there has not
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been (a) any change or event involving the Company or any of its Affiliates that
has had or would reasonably be expected to have a Material Adverse Effect other
than changes relating to or arising from general economic, market or financial
conditions or generally affecting the industries, including the rail service
industry, or markets in which the Company operates, (b) any delivery of a notice
of non-renewal or any other failure to renew contracts or agreements which are
material to the Company, (c) through the date of this Agreement any loss of any
employee who earned more than $75,000 in the most recent fiscal year (in salary,
bonus and other case compensation), (d) any acquisition or disposition of assets
in a transaction or series of related transactions in excess of $100,000, other
than in the ordinary course of Business, (e) any action taken by the Company of
the type contemplated by Section 4.3(a)-(i), Section 4.3(k) (other than in
connection with the auction of the Company by Morgan Stanley & Co. Incorporated
prior to the date of this Agreement), and Section 4.3(l)-(s) hereof, (f) any
failure to take any action by the Company of the type contemplated by Section
4.2(j) hereof or (g) any loss, destruction or damage to any owned, leased or
licensed property of the Company, whether or not insured, that has had or would
reasonably be expected to have a Material Adverse Effect.
II.11 Customers. The relationships with the material customers of
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the Company are satisfactory working commercial relationships. Schedule 2.11
sets forth a list of the amount of volume and revenue attributable to the twenty
largest customers for fiscal 1997 and 1998.
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II.12 Title to Properties.
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(a) Personal Property. Except as disclosed in the Financial
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Statements, the Company has, or prior to the Closing will have, good and
marketable title to, or a valid leasehold interest in, all material personal
properties and assets (whether tangible or intangible) that it purports to own,
lease or license free and clear of all Liens other than (a) the lien of current
taxes not yet due and payable, (b) Permitted Liens or (c) such other Liens which
do not materially detract from the use of the property. Each lease with respect
to any material personal property leased by the Company is valid and binding on
the Company and in full force and effect, and no termination event or condition
or uncured material default on the part of the Company or, to the Knowledge of
the Company (without investigation), the lessor exists under any such lease.
(b) Real Property. The Company does not own any real property.
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Schedule 2.12(b) lists all real properties currently leased or subleased by the
Company (collectively, the "Real Property"). The Company has a valid leasehold
interest in and quietly enjoys all Real Property shown as leased by it on
Schedule 2.12(b), free and clear of all Liens other than Permitted Liens. Each
lease of real property leased by the Company is valid and binding on the Company
and in full force and effect, and no termination event or condition or uncured
material default on the part of the Company or, to the Knowledge of the Company
(without investigation), the landlord exists under any lease of real property.
II.13 Assets. At the Closing, the assets owned, leased or licensed
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by the Company or provided pursuant to an Exhibit to this Agreement together are
all those assets necessary for the continued conduct of the Business after the
Closing in the same manner as currently conducted. All assets of the Company
are reflected in the Financial Statements in accordance with GAAP. The property
and equipment reflected in the Financial Statements in the aggregate are well
maintained and in good operating condition, and are free from all structural
flaws and design and engineering deficiencies which would materially reduce the
useful life of such assets in the aggregate, except for reasonable wear and tear
and except for items which have been written down in the Financial Statements to
a realizable market value or for which depreciation has been
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taken or adequate reserves have been provided in the Financial Statements.
II.14 Contracts. Attached as Schedule 2.14(a) is a true and complete
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list of all of the following contracts and agreements to which the Company or
any of its respective properties is subject or by which any thereof is bound
(collectively the "Material Contracts")(a) contracts with any current officer,
director or Affiliate of the Company; (b) contracts for the sale of any of the
assets of the Company or for the grant to any person of any preferential rights
to purchase any of its assets other than in the ordinary course of business; (c)
contracts for the purchase of any of the assets or securities of another person
other than in the ordinary course of business; (d) contracts containing
covenants of the Company not to compete in any line of business or with any
person in any geographical area or, covenants of any other person not to compete
with the Company or in any line of business or in any geographical area; (e)
indentures, credit agreements, mortgages, promissory notes, and other contracts
relating to the borrowing of money; (f) contracts or obligations with all
employees, consultants and independent contractors that are material to the
Business; and (g) all other agreements, contracts or instruments which the
aggregate value of conditional or unperformed services as of the date hereof
exceeds $100,000 for any single contract or $1,000,000 in the aggregate for all
such contracts. Except as disclosed in Schedule 2.14(b), each Material Contract
is in full force and effect; and no breach or default or event which would (with
the passage of time, notice or both) constitute a breach or default or result in
the loss of any material benefit thereunder by the Company or, to the Knowledge
of APL or the Company (without investigation), any other party or obligor with
respect thereto, exists and is continuing which in each case would reasonably be
expected to materially impair the benefits expected to be derived therefrom.
II.15 Litigation. Except as disclosed in Schedule 2.15, as of the
----------
date of this Agreement, there is no written claim, filed complaint, arbitration,
action, suit, proceeding or, to the Knowledge of APL or the Company,
investigation pending or threatened, against or affecting (a) the Company or any
of its properties or (b) any officer, director or employee of the Company in
reference to actions taken by them in such capacities. Except for laws of
-12-
general application or as disclosed in Schedule 2.15, the Company is not subject
to any outstanding subpoena that is material to the Business or any order,
injunction, judgment, decree, ruling, writ or arbitration award of any court or
Governmental Entity.
II.16 Compliance with Law; Permits. Except as set forth in Schedule
----------------------------
2.16, the Company is, and during the past two years has been, in material
compliance with all laws, regulations, orders, judgements and decrees of any
Governmental Entity which are applicable to the Company. The Company holds all
Permits that are required by any Governmental Entity to permit it to conduct the
Business as now conducted. Each Permit held by the Company is in full force and
effect, and the transactions contemplated herein (including but not limited to
the change of corporate name) will not affect the continuing validity of any
such Permit. To the Knowledge of APL or the Company (without investigation), no
suspension, cancellation or termination of any of such material Permits is
threatened or imminent. Schedule 2.16 contains a list of all of the Permits
which are material to the Company. Copies of such Permits have been provided to
Purchaser or its counsel or will be so provided upon request.
II.17 Employee Benefit Plans. (a) All benefit and compensation
----------------------
plans and contracts maintained by APL or the Company which cover current
employees of the Company (the "Employees"), including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and deferred
compensation, stock option, stock purchase, stock appreciation rights, stock
based, incentive and bonus plans, workers compensation benefits and employment
agreements (the "Benefit Plans"), are listed in Schedule 2.17(a). True and
complete copies of (i) all Benefit Plans and insurance contracts forming a part
of any Benefit Plans, and all amendments thereto (ii) the three most recent Form
5500 Annual Reports, including related schedules and audited financial
statements and opinions of independent certified public accountants, (iii) the
most recent tax qualification determination letter, if any, received from or
applications pending with the Internal Revenue Service, (iv) the most recent
actuarial report, if any and (v) the most recent nondiscrimination testing
results under Sections 401(a)(4), 401(k), 401(m) and 410(b)
-13-
of the Code have been provided or made available to Purchaser.
(b) All Benefit Plans, to the extent subject to ERISA, have at all
times been operated and administered in compliance in all material respects with
its terms, the applicable requirements of ERISA, the Code and other applicable
law. Each Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code, has received a favorable determination letter
from the Internal Revenue Service with respect to "TRA" (as defined in Section 1
of Rev. Proc. 93-39), and to the Knowledge of APL and the Company there are no
circumstances likely to result in revocation of any such favorable determination
letter. There is no material pending or, to the Knowledge of APL or the Company
threatened, lawsuits, claims (other than routine claims for benefits),
investigations or audits relating to the Plans. The Company has not engaged in
a transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.
(c) No liability, contingent or otherwise, under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(c)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). The Company has not maintained or contributed to at any
time during the five-year period preceding the date of this Agreement any
employee pension benefit plan which is a multi-employer plan, within the meaning
of Section 3(37) of ERISA, which is subject to Title IV of ERISA.
(d) Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver.
-14-
(e) (i) All contributions or payments made or deemed to have been
made with respect to each Benefit Plan that is a deferred compensation plan,
including any pension plan, are presently, and have been during the years to
which they relate, fully deductible pursuant to Section 404 of the Code and are
not presently, and have never been during the years to which they relate,
subject to any material excise tax under Section 4972 of the Code, (ii) as of
the Effective Time, all payments of outstanding contributions, due on or prior
to that date, including minimum contributions, premiums, and funding obligations
imposed by the terms of a Benefit Plan or by any law or government agency,
(including under Part 3 of ERISA) shall have been made in all material respects
with respect to each Benefit Plan, (iii) all contributions to and payments with
respect to or under the Benefit Plans that are required to be made with respect
to periods ending on or before the Effective Time have been made or accrued
before the Effective Time by the Company in all material respects in accordance
with the appropriate plan documents, financial statement, actuarial report,
collective bargaining agreements or insurance contracts or arrangements, and
(iv) with respect to each Benefit Plan that is an "employee welfare benefit
plan" under Section 3(1) of ERISA (a "Welfare Plan") that is partially or fully
funded through a trust, all tax deductions claimed by the Company or any of its
Subsidiaries relating to any such trust are allowable, and all tax returns and
other governmental filings required to be filed with respect to any such trust,
whether by the Company or any of its Subsidiaries or the trust, have, to the
Knowledge of the Company, been made in a timely manner.
(f) Except as provided under Section 4.7 hereof, the consummation of
the transactions contemplated by this Agreement (either alone or together with
the occurrence of any related event such as termination of employment) will not
(i) entitle any employees of the Company to severance pay, (ii) accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the Benefit
Plans or (iii) result in any breach or violation of, or a default under, any of
the Benefit Plans.
(g) Except as set forth in Schedule 2.17(g), no Benefit Plan
providing medical or death benefits (whether or
-15-
not insured) with respect to current or former employees of the Company
continues such coverage or provides such benefits beyond their date of
retirement or other termination of service (other than coverage mandated by
Section 601 of ERISA, the cost of which is fully paid by the former employee or
his or her dependents).
(h) No Parachute Payments. As a direct or indirect result of the
---------------------
Purchaser's purchase of the Stock, neither the Company nor the Purchaser will be
obligated to make a payment, or give a benefit or right, to an individual that
would be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
II.18 Certain Interests. (a) No officer or director of APL or the
-----------------
Company is indebted or otherwise obligated to the Company, and the Company is
not indebted or otherwise obligated to any such officer or director, except for
amounts due under Benefit Plans or normal arrangements applicable to all
employees generally as to salary or reimbursement of ordinary business expenses.
(b) No director, officer or Affiliate of the Company owns any direct
or indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any person or entity (other than the Company or an entity which is a direct
or indirect subsidiary or parent of the Company) which is (i) a competitor,
customer, lessor, tenant, creditor or debtor of the Company, (ii) engaged in a
business directly and materially related to the business of the Company or (iii)
otherwise has a material financial interest in any transaction to which the
Company is a party, except for the ownership of less than 5% of the outstanding
capital stock of any publicly traded corporation.
II.19 Insurance. Schedule 2.19 contains in all material respects a
---------
complete and correct list of all effective insurance policies which cover the
Business, properties and assets of the Company and all premiums due thereon have
been paid. The insurance coverage provided by insurance policies listed in
Schedule 2.19 is adequate and
-16-
suitable for the Business of the Company. No notice of cancellation or non-
renewal has been received by the Company and the Company is not in default under
any such policy. The Financial Statements do not reflect any reserves for any
insurance programs.
II.20 Consequences of Stock Purchase. Neither any Person who now has
------------------------------
material business dealings with the Company nor any officer of the Company has
notified the Company or APL, and neither APL nor the Company has a reasonable
basis to believe, that any such Person would or might cease business dealings or
employment with the Company after the Closing.
II.21 Intercompany Transactions. All material transactions between
-------------------------
the Company and any Affiliate of the Company for fiscal 1996, 1997 and 1998 are
reflected in the Financial Statements. A list and brief description of the
material transactions between the Company and any Affiliate thereof transacted
during fiscal 1998 are set forth on Schedule 2.21 hereto. Except for
liabilities or obligations which are or were set forth in the Financial
Statements or this Agreement, incurred in the ordinary course of business since
the date of the Balance Sheet (and which are not, individually or in the
aggregate, material to the Company) or that are contemplated by, or will be
discharged or terminated pursuant to, this Agreement, there are no outstanding
liabilities or obligations for amounts owing to or from, or leases, contracts or
other commitments or arrangements between the Company and APL or any other
Affiliate of APL (other than the Company).
II.22 No Brokers or Finders. No agent, broker, finder, or investment
---------------------
or commercial banker (other than Morgan Stanley & Co. Incorporated, as to whose
fees and expenses APL has full responsibility and neither the Company nor the
Purchaser shall have any responsibility) or other Person or firm engaged by or
acting on behalf of APL or the Company or any of their respective Affiliates in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement or such transaction.
II.23 Environmental Matters. Except as disclosed on Schedule 2.23 or
---------------------
as to matters as to which none of APL or
-17-
its Affiliates (including the Company) would be liable under applicable
Environmental Law:
(a) the Company complies and at all times has complied in all
material respects with all applicable Environmental Laws;
(b) the properties (including without limitation soils, groundwater,
surface water, buildings and other structures) currently owned, leased,
operated, managed or controlled by the Company are not contaminated with any
Hazardous Substance and do not contain any underground storage tanks;
(c) the properties formerly owned, leased, operated, managed or
controlled by the Company were not contaminated in any material respect with any
Hazardous Substance during such period of ownership, lease, operation,
management or control;
(d) the Company has not received any claim alleging liability and, to
the Knowledge of the Company (without investigation), is not subject to
liability, for any Hazardous Substance contamination at any location (including
without limitation any location to which any Hazardous Substance has been
generated, treated, stored or disposed by or on behalf of the Company);
(e) neither APL nor the Company has received any claim, notice,
demand letter or request for information alleging that the Company may be in
violation of, or liable under, any Environmental Law;
(f) the Company is not subject to any order, decree, injunction or
directive from any Governmental Entity, or to any indemnity or other agreement
with any third party, relating to liability under any Environmental Law or to
Hazardous Substances; and
(g) to the Knowledge of the Company (without investigation), there
are no other circumstances or conditions involving any of the Company or APL
that could reasonably be expected to result in any material claim, liability,
investigation, cost or loss to the Company or any material restriction on the
ownership, use or transfer of any property by the Company pursuant to any
Environmental Law.
-18-
The parties agree that the property in Kearny, New Jersey subject to the
Lease Agreement between Consolidated Rail Corporation, as lessor, and American
President Intermodal Company, Ltd., shall be deemed to be a currently leased and
formerly leased facility only for purposes of Section 2.23(b) and (c) above.
II.24 Intellectual Property. (a) Except as set forth on Schedule
---------------------
2.24, (i) the Company is the sole owner, free of any lien or encumbrance, of, or
has a valid license or otherwise the right to use, and at Closing will have a
valid license or the right to use, without any obligation to make any royalty or
other fixed or contingent payments, or otherwise on commercially reasonable
terms, all U.S. and foreign patents, copyrights, Computer Software and
databases, trademarks, service marks, trade names, logos and trade dress,
whether or not registered, trade secrets, know-how, proprietary and intellectual
property rights and information, including, without limitation, all grants,
registrations and applications relating thereto (collectively, "Intellectual
Property Rights") used in the conduct of the Business as now conducted (such
Intellectual Property Rights owned by or licensed to the Company, or which the
Company has the right to use, collectively, the "Company Rights"), and shall
provide the Purchaser a list of such Company Rights prior to the Closing
Date;(ii) the Company's rights in the Company Rights are valid and enforceable;
(iii) the Company has received no written demand, claim, or notice from any
Person in respect of the Company Rights which challenges or threatens to
challenge the validity of, or the rights of the Company in, any such Company
Rights, and the Company knows of no valid basis for any such challenge; (iv) (A)
the Company is not in violation or infringement of, and (B) to the Knowledge of
the Company (without investigation) has not violated or infringed, any
Intellectual Property Rights of any other Person; (v) to the Knowledge of the
Company (without investigation), no Person is infringing any Company Rights; and
(vi) the Company has not granted any license with respect to any Company Rights
to any Person. The Computer Software owned by the Company or licensed or
otherwise made available to the Company through the Information Technology
Access and License Agreement (the "Included Software") comprises all the
Computer Software necessary for the conduct of the Business after the Closing in
the same manner as currently conducted.
-19-
(b) Schedule 2.24 contains a complete and accurate list of material
Company Rights and all license and other agreements relating thereto (excluding
licenses for off-the-shelf software).
(c) For purposes hereof, "Computer Software" means all programs or
routines used to cause a computer to perform a task or a desired set of tasks,
the documentation required to describe and maintain these programs and all
related codes, including without limitation programs or routines for operating
systems and computer applications.
II.25 Year 2000 Compliance. The Computer Software included in the
--------------------
Included Software that was developed by APL or the Company and related hardware
are capable of providing, or are being adapted to provide pursuant to a Year
2000 ("Y2K") compliance program adopted and in the process of being implemented
by APL (the "Y2K Program"), in all material respects uninterrupted millennium
functionality to record, store, process and present calendar dates falling on or
after January 1, 2000 and date-dependent data in substantially the same manner
and with the same functionality as such software records, stores, processes and
presents such calendar dates and date-dependent data as of the date hereof
without error relating to date data and date-dependent data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than one century ("Y2K Compliant").
To the Knowledge of APL, the software and related hardware that are licensed by
APL or the Company from third parties and are material to the Business are Y2K
Compliant or are being adapted to become Y2K Compliant pursuant to the Y2K
Program. Prior to the date of this Agreement, APL has discussed with the
Purchaser and its advisors the material steps that it has taken to become Year
2000 compliant and the costs expected to incur in connection therewith. The Y2K
Program has been designed to render the Included Software in all material
respects Y2K Compliant. Between the date hereof and the Closing, APL and the
Company will use their commercial reasonable efforts, and following the Closing
APL will use its commercially reasonable efforts to implement the Y2K Program.
If the Y2K Program is implemented in accordance with its terms, Y2K compliance
will be in all material respects achieved prior to the year 2000.
-20-
II.26 Disclosure. (a) The information regarding the Company
----------
contained in the Financial Statements and this Agreement, taken together, does
not contain any untrue statement of a material fact regarding the Company or
omit to state a material fact regarding the Company necessary in order to make
the statements and information contained therein, in light of the circumstances
under which they were made, not misleading.
II.27 Labor Relations. (a) There is no unfair labor practice, charge
---------------
or complaint or other proceeding pending or, to the Knowledge of APL threatened,
against the Company or directly affecting the Business before the National Labor
Relations Board or any other Governmental Entity; (b) there is no labor strike,
slowdown or stoppage pending or, to the Knowledge of APL, threatened, by the
employees of the Company against the Company or directly affecting the Business,
nor has there been any such activity within the past two years against the
Company or directly affecting the Business; (c) there are no pending collective
bargaining negotiations relating to the employees of the Company; and (d) (i)
there are no agreements with, or pending petitions for recognition of, a labor
union or association as the exclusive bargaining agent for any or all of the
employees of the Company, (ii) no such petitions have been pending within the
past five years and (iii) to the Knowledge of APL (without investigation), there
has not been any general solicitation of representation cards by any union
seeking to represent the employees of the Company as their exclusive bargaining
agent at any time within the past five years.
II.28 Working Capital; Net Fixed Assets. As of the date hereof and
---------------------------------
as of the Closing Date, the Company's Working Capital will not be less than
$(16,700,000) and the Company's Net Fixed Assets will not be less than
$95,000,000.
ARTICLE III
Representations and Warranties of the Purchaser
-----------------------------------------------
The Purchaser hereby represents and warrants to APL that:
-21-
III.1 Organization and Authority. The Purchaser is a limited
--------------------------
liability company duly organized, validly existing and in good standing under
the laws of Delaware. The Purchaser has full power and authority to execute,
deliver and perform this Agreement. The execution, delivery and performance by
the Purchaser of this Agreement and any Ancillary Agreement to which the
Purchaser is to be a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the
part of the Purchaser. This Agreement constitutes a valid and, assuming due
execution by APL, binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors'
rights generally and to general equitable principles. Upon execution and
delivery of the Ancillary Agreements to which the Purchaser is to be a party by
the parties thereto, such Ancillary Agreements will constitute valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles.
III.2 Noncontravention. The execution, delivery and performance of
----------------
this Agreement by the Purchaser and the consummation of the transactions
contemplated hereby will not violate or conflict with, or constitute a breach or
default (with or without notice or lapse of time, or both) under (a) the charter
documents of the Purchaser, (b) any law, regulation, order, judgment, or decree
applicable to the Purchaser or (c) any term, condition or provision of any loan
or credit agreement, note, bond, mortgage, indenture, lease, sublease or other
material agreement, commitment, instrument, permit, concession, franchise or
license to which the Purchaser is a party or by which the Purchaser or its
assets may be bound, in each case in clauses (b) or (c) above, which conflict or
violation would reasonably be expected to prevent or delay the consummation of
the transactions contemplated by this Agreement or any of the Ancillary
Agreements.
III.3 No Governmental Consent or Approval Required. No
--------------------------------------------
authorization, consent, Permit, approval or other order of, declaration to, or
registration, qualification, designation or filing with, any Governmental
-22-
Entity or any other Person is required for or in connection with the execution,
delivery and performance of this Agreement by the Purchaser and the consummation
of the transactions contemplated hereby, other than (a) the filing of
notification under the HSR Act and the expiration or early termination of the
waiting period thereunder and (b) any consents, the failure to obtain would not
prohibit the consummation of the transactions contemplated hereby.
III.4 Financial Capability. The Purchaser has delivered to APL
--------------------
complete and correct executed copies of letters with respect to the debt
financing (the "Financing Letters") required for the consummation of the
transactions contemplated hereby, which are attached as Exhibits H-1 and H-2
hereto. The Financing Letters are in full force and effect and constitute the
only understanding of the lenders and the Purchaser with respect to the lenders'
obligations to fund such debt financing. Assuming satisfaction of all
applicable conditions hereunder and as set forth in the term sheets and the
commitment letter which constitutes the Financing Letters and full funding
thereunder, such financing, together with the other funds available to the
Purchaser, will provide sufficient funds to consummate the transactions
contemplated hereby.
III.5 Purchase for Investment. The Purchaser is purchasing the Stock
-----------------------
for investment for its own account and not with a view to, or for sale in
connection with, the distribution thereof. The Purchaser acknowledges that the
Stock is not registered under the United States Securities Act of 1933, as
amended, any applicable state securities laws or any applicable foreign
securities laws, and that the Stock may not be transferred or sold except
pursuant to the registration provisions of the United States Securities Act of
1933, as amended, or applicable foreign securities laws or pursuant to an
applicable exemption therefrom and pursuant to state securities laws as
applicable.
III.6 Pacer Acquisition. The Agreement and Plan of Merger, dated
-----------------
February 22, 1999, by and among Mile High Acquisition Corp. ("Mile High"), Pacer
International, Inc. ("Pacer") and stockholders of Pacer (the "Pacer Merger
Agreement"), has been duly authorized, executed and delivered by Mile High and
is enforceable against Mile High in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights and to general
-23-
equitable principles. No Affiliate of Apollo Management, L.P. other than Mile
High is an obligor under the Pacer Merger Agreement. Mile High is not in breach
of its obligations under the Pacer Merger Agreement and, to the Knowledge of the
Purchaser (without investigation), no other party is in breach of its
obligations under the Pacer Merger Agreement. The Purchaser intends to close the
transactions contemplated by the Pacer Merger Agreement (the "Pacer
Transaction") immediately following the closing of the transaction contemplated
by this Agreement.
III.7 Capitalization of the Company. Immediately following the
-----------------------------
closing of the transaction contemplated by this Agreement (but not the Pacer
Transaction), the ownership of the shares of the Purchaser and APL in the
Company will be based on the amount invested or retained by each such party in
the Company, and the value of each share issued or retained by each shall be the
same for purposes of such calculation. Immediately following the closing of the
Pacer Transaction, the Company will own all the outstanding common stock of
Pacer. Except as set forth in the shareholders agreement referred to in the
Pacer Merger Agreement, financing documents relating to the transactions
contemplated hereby, Company stock option plans and the charter and bylaws of
the Company (a copy of each of which has been delivered to APL on or before the
date of this Agreement), or as otherwise contemplated by this Agreement, as of
the Closing Date there will be no contracts, commitments, arrangements,
understandings or restrictions to which the Company or any other Person will be
bound relating in any way to the shares of capital stock or other securities of
the Company.
ARTICLE IV
Covenants
---------
IV.1 Cooperation and Access. (i) From and after the date hereof,
----------------------
upon reasonable advance notice, APL shall cause the Company to permit the
Purchaser and its attorneys, consultants, lenders, equity investors (other than
an APL Competitor as defined in the Stacktrain Services Agreement), accountants
and other representatives to access, during regular business hours, the assets,
employees, books, contracts, commitments, personnel, lenders and advisors
-24-
(including, without limitation, Tax Returns filed and those in preparation,
workpapers and other items relating to Taxes) of the Company and shall furnish,
or cause to be furnished, to the Purchaser and its representatives such
financial, tax and operating data and other available information with respect
to the Business as the Purchaser shall from time to time reasonably request;
provided, however, that no such access shall be undertaken in such a manner as
- -------- -------
would reasonably be expected to interfere with in any material respect with the
Company and its operation of the Business; provided further that all information
-------- -------
received by the Purchaser and given by or on behalf of the Company in connection
with this Agreement and the transactions contemplated hereby shall be held by
the Purchaser and its Affiliates, agents and representatives confidential
pursuant to the terms of the Confidentiality Agreement. Such investigation as
provided for in this Section 4.1 shall include, among other things, the receipt
of relevant financial information, the review of any relevant contractual
obligations of the Company, the conducting of discussions with the Company's
management and, with the Company's prior consent (such consent not to be
unreasonably withheld or delayed), other employees and customers of the Company,
environmental review (including, if reasonably necessary, environmental
testing), review and valuation of all pension, health, retiree or other ERISA
related liabilities and such other investigations and valuations as may be
deemed reasonably necessary by the Purchaser. The cost of any such
investigation shall be borne by the Purchaser and no such investigation shall be
undertaken in a manner as would reasonably be expected to interfere in any
material respect with the timing of the transactions contemplated by this
Agreement.
IV.2 No Solicitation. From the date hereof and through the Closing
---------------
(the "Nonsolicitation Period"), each of the Company and APL shall, and shall
cause their respective representatives, affiliates, agents, financial advisors
and employees (collectively, "Representatives") to, refrain from soliciting,
discussing, providing information to or negotiating, directly or indirectly,
with any third party (other than Purchaser and its Representatives) any
inquiries, proposals or offers with respect to the sale of the Common Stock or
any portion of the Company's assets or securities (an "Acquisition Proposal")
(other than sales and other dispositions of assets in the ordinary course of
business which are not material to the Business); provided,
--------
-25-
however, that, subject to the provisions of Section 7.2, at any time prior to
- -------
the earlier of (i) April 30, 1999 and (ii) the time the shareholders of NOL
shall have voted to approve this Agreement, if NOL or APL shall receive from any
third party an unsolicited Acquisition Proposal and determines in good faith
upon the advice of its financial advisors that such unsolicited Acquisition
Proposal is superior in its terms to the terms contemplated hereunder, NOL or
APL may, and may authorize and permit its Representatives to, provide third
parties with nonpublic information, otherwise facilitate any effort or attempt
by any third party to implement such Acquisition Proposal, recommend or endorse
such Acquisition Proposal with or by any third party, and participate in
discussions and negotiations with any third party relating to such Acquisition
Proposal. NOL or APL shall promptly advise the Purchaser following the receipt
by NOL or APL of any Acquisition Proposal and the substance thereof (including
the identity of the person making such Acquisition Proposal), and advise the
Purchaser of any developments with respect to such Acquisition Proposal promptly
upon the occurrence thereof.
IV.3 Conduct of Business Prior to the Closing. From the date hereof
----------------------------------------
until the Closing, except as contemplated by this Agreement or the Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, APL agrees that it shall cause the Company, subject to the
provisions of this Section 4.3, to conduct the Business in the ordinary and
usual course consistent with past practice, and use its commercially reasonable
efforts to preserve intact the Business and related relationships with
customers, rail carriers and other third parties and keep available the services
of its officers and employees. From the date hereof until the Closing, except
as contemplated by this Agreement or as the Purchaser shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed, NOL and
APL agree that they:
(a) shall not permit the Company to issue or transfer any capital
stock of the Company or any security convertible into or exchangeable for
any such capital stock or any right to acquire any such capital stock or
pledge or hypothecate shares of capital stock of the Company to secure
existing credit facilities;
-26-
(b) shall not permit the Company to make any change in its
certificate of incorporation or bylaws;
(c) shall not permit the Company to incur or assume any indebtedness
for borrowed money or guarantee any such indebtedness other than in the
ordinary course of business consistent with past practice;
(d) shall not permit the Company to liquidate, dissolve or otherwise
reorganize or seek protection from creditors;
(e) shall not permit the Company to adopt or amend in any material
respect any Benefit Plan including, without limitation, any employment,
severance, retention or similar agreements or arrangements;
(f) shall not permit the Company to grant, confer or award any
options, warrants, conversion rights or other rights, not existing on the
date hereof, to acquire any shares of its capital stock or other securities
of the Company or accelerate, amend or change the period of exercisability
of options or restricted stock granted under any employee stock plan or
authorize cash payments in exchange for any options granted under any of
such plans;
(g) shall not permit the Company to increase or agree to increase the
compensation payable or to become payable, other than increases in
accordance with past practice which are not material, to any of its
officers or employees or enter into any collective bargaining agreement;
(h) shall not permit the Company to (i) enter into any lease for real
property, except renewals of existing leases in the ordinary course of
business or (ii) enter into any operating lease without the prior written
consent of the Purchaser, unless the annual payments under such lease and
all other operating leases entered into by the Company since the date of
the Agreement, in the aggregate, does not result in a net increase in
payments under operating leases which exceeds $1 million per year;
-27-
(i) shall not permit the Company to enter into any contract or
agreement or engage in any other type of transaction with APL or any of its
Affiliates (other than the Company) other than in the ordinary course of
business consistent with past practice or enter into any contract or
agreement that provides for payments that exceed $10 million per year;
(j) shall cause the Company to promptly notify the Purchaser of (i)
any material adverse change in its condition (financial or otherwise),
business, prospects, properties, assets, liabilities or the normal course
of its business or of its properties, (ii) any material litigation or
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or (iii) the
breach of any representation or warranty contained herein;
(k) shall not permit the Company to authorize, propose or announce an
intention to authorize or propose, or enter into an agreement with respect
to, any merger, consolidation or business combination (other than the
transactions contemplated in this Agreement), release or relinquishment of
any material contract rights, or any acquisition or disposition of assets
or securities other than in the ordinary course of business consistent with
past practice;
(l) shall not make with respect to the Company or permit the Company
to (i) make, change or revoke any material Tax election other than the
Section 338 Election, (ii) settle or compromise any dispute involving a
material Tax liability or (iii) change any material practice with respect
to Taxes;
(m) shall not permit the Company to (i) directly or indirectly
redeem, purchase or otherwise acquire any shares of its capital stock, or
make any commitment for any such action or (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
(n) shall not permit the Company to make or agree to make any capital
expenditure or expenditures with respect to property, plant or equipment
which,
-28-
individually or in a series of related transactions, is in excess of
$100,000 or, in the aggregate, are in excess of $500,000 except as
otherwise in the ordinary course of business consistent with past practice
or in order to satisfy contractual commitments to customers;
(o) shall not permit the Company to change any significant accounting
principles or practices;
(p) shall not permit the Company to enter into any agreements
containing restrictive covenants that prohibit or materially limit the
Business (including, but not limited to, any covenant not to compete, which
shall be deemed to materially limit the Business) that would survive the
Closing other than as contemplated by this Agreement;
(q) shall not permit the Company to pay, discharge, settle or satisfy
any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business or in
accordance with their terms, of liabilities reflected or reserved against
in the Financial Statements or incurred thereafter in the ordinary course
of business, or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill, nonsolicitation or
similar agreement to which the Company is a party;
(r) shall not permit the Company to take, or agree (in writing or
otherwise) or resolve to take any action reasonably likely to result in a
Material Adverse Effect; or
(s) agree or commit itself (in writing or otherwise) or resolve to
take any of the foregoing actions.
Notwithstanding the foregoing, prior to Closing, APL shall be entitled, except
as may be required to meet the conditions at Closing set forth in Section 6.1,
to eliminate all intercompany loans, advances and other extensions of credit
between the Company, on the one hand, and APL or an Affiliate of APL (other than
the Company), on the other
-29-
hand, and transfer all cash and cash equivalents of the Company to APL.
IV.4 Commercially Reasonable Efforts; Government Approvals.
-----------------------------------------------------
(a) Upon the terms and subject to the conditions herein provided,
each of the parties hereto agrees to use its commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary for it to do to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which actions shall
include, without limitation, furnishing all information required by applicable
laws and regulations in connection with approvals of or filings with any
Governmental Entity), (ii) to satisfy the conditions precedent to the
obligations of the parties hereto (including using its best reasonable efforts
to satisfy the conditions set forth in Sections 6.1(k) by April 30, 1998 and
6.1(l) by Closing) and (iii) (to use its best efforts, in the case of APL) to
obtain any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party required to be
obtained or made by the Purchaser, APL or the Company in connection with the
acquisition of the Shares or the taking of any action contemplated by this
Agreement. In addition, following the Closing APL will ensure that LTS shall
have access to the 48' expandible APL Chassis provided for in the Equipment
Supply Agreement upon termination of the Stacktrain Services Agreement.
(b) Subject to appropriate confidentiality protections, each of the
parties hereto shall furnish to the other party such necessary information and
reasonable assistance as such other party may reasonably request in connection
with the foregoing and shall provide the other party with copies of all filings
made by such party with any Governmental Entity and, upon request, any other
information supplied by such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
(c) Without limiting the generality of the foregoing, the Purchaser
and APL agree to take or cause to
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be taken the following actions: (i) provide promptly to Governmental Entities
with regulatory jurisdiction over enforcement of any applicable Competition Laws
("Governmental Antitrust Entity") information and documents requested by any
Governmental Antitrust Entity or necessary, proper or advisable to permit
consummation of the acquisition of the Stock and the transactions contemplated
by this Agreement and (ii) without in any way limiting the other provisions of
this Section 4.4, file any notification and report form and related material
required under the HSR Act as soon as practicable and in any event not later
than 10 Business Days after the date hereof, and thereafter use its reasonable
best efforts to certify as soon as practicable its substantial compliance with
any requests for additional information or documentary material that may be made
under the HSR Act. Each party hereto shall provide to the other copies of all
correspondence between it (or its advisor) and any Governmental Antitrust Entity
relating to the acquisition of the Stock or any matters described in this
Section 4.4. Each party hereto agrees that the other party shall have the right
to participate in any meeting between the first party and any Governmental
Antitrust Entity relating to the acquisition of the Stock or any matters
described in this Section 4.4.
IV.5 Use of APL Name and Trademark. The Purchaser acknowledges and
-----------------------------
agrees that APL intends to cause the Company to change the corporate name of the
Company to eliminate the name "APL" prior to the Closing. Purchaser agrees
that, after the Closing, it will cause the Company to cease all use of the name
"APL" and the corporate "eagle" logo, a representation of which is attached
hereto as Schedule 4.5 (the "Logo"); provided, however, following the Closing,
-------- -------
the Company (i) shall have the right to continue to use the name of "APL" and
the Logo as affixed to products, labeling, packaging materials, Company
stationary, business forms or promotional materials as of the Closing Date until
the depletion of existing inventories but in no event after December 31, 1999
and (ii) shall not be obligated to eliminate the name "APL" or the Logo as
affixed to railcars, containers and chassis as of the Closing until such time as
the Purchaser shall decide to undertake the repainting, sale or decommissioning
of such assets. APL hereby grants the Company a non-exclusive license to use
the name "APL" and the Logo solely for the foregoing purposes and limited time
periods.
-31-
IV.6 Confidentiality. Each party hereto, at all times prior to the
---------------
Closing and after any termination of this Agreement, will hold all confidential
information provided to such party by or on behalf of the other party hereto in
confidence pursuant to the terms of the Confidentiality Agreement. Upon any
termination of this Agreement, each party hereto will promptly return to the
other party such information provided to the first party, including any copies
of such information. Each party hereto acknowledges that the other party would
be irreparably harmed by a breach of this Section 4.6 and that there would be no
adequate remedy at law or in damages to compensate the other party for any such
breach and agrees that, in addition to any other remedy, the other party shall
be entitled to one or more injunctions requiring specific performance by the
first party of this Section 4.6, and the first party consents to the entry
thereof.
IV.7 Employee Benefits; Employees. (a) Each employee benefit plan
----------------------------
provided to employees of the Company after the Closing shall give full credit
for each participant's period of service with the Company or its Affiliates
prior to the Closing for purposes of determining eligibility and vesting of
benefits, but not accrual or amount of benefits, to the same extent such service
was credited for comparable purposes under the Company's Benefit Plans prior to
the Closing. Effective as of the Closing, APL shall take all actions necessary
to cause Employees to become fully vested in their accrued benefits under each
Pension Plan. Each employee welfare benefit plan provided to the employees of
the Company from and after the Closing shall (i) give full credit for
copayments, deductibles and out-of-pocket expenses under the Company's Benefit
Plans with respect to the current plan year toward any deductibles for the
remainder of the plan year during which the Closing occurs, and (ii) waive any
pre-existing condition limitation for any employee covered under a Welfare Plan
immediately prior to the Closing, unless such pre-existing condition was not
covered under the applicable Welfare Plan. APL shall cause each Welfare Plan to
remain solely responsible and to satisfy all liabilities for all claims incurred
by Employees under such Welfare Plans prior to the Closing.
(b) As of the Closing, the Employees of the Company shall be those
persons listed on Schedule 4.7(b) hereto (unless an Employee voluntarily
terminates his or her employment), as such Schedule may be amended prior to
-32-
Closing by mutual agreement of the parties hereto. Following the Closing, APL
shall be solely liable for, and shall indemnify Purchaser and the Company
against (i) any obligations to former employees of the Company or current or
former employees of APL (who have performed services for the Company) in respect
of their employment or termination of employment including, without limitation,
obligations for severance or termination pay, COBRA benefits, workers
compensation benefits and other Benefit Plan obligations and (ii) any
obligations to Employees of the Company under any Benefit Plan, none of which
will be assumed or continued by the Company or Purchaser following the Closing.
IV.8 Insurance.
---------
(a) APL shall use commercially reasonable efforts to ensure that any
insurance coverage for any claims that arise out of or are related to
occurrences prior to the Closing relating to the Company or the Business will
continue with respect to such occurrences following the Closing, and APL agrees
to pay promptly to the Company insurance proceeds (net of any expenses of APL
incurred in defense of such claim) resulting from such coverage promptly after
receipt thereof ("Insurance Proceeds"). The amount of Insurance Proceeds
payable to the Company shall also include the amount of any deductible withheld
from any such insurance proceeds. From and after the date hereof, APL shall
diligently pursue for the benefit of the Purchaser, consistent with its past
practice, insurance coverage for any claims filed with third party insurers
prior to the Closing relating to the Company or the Business for periods on or
prior to the Closing. Following the Closing, the Company shall be responsible
for the control of all claims filed with third party insurers, subject to the
control exercised by any insurers in accordance with the applicable insurance
policies. APL shall also pay the Company for any uninsured cargo claims that
arise out of or are related to occurrences prior to the Closing to the extent
such claims are not recovered from a rail carrier.
(b) Except as provided in Section 4.8(a), as of the Closing, the
coverage under all insurance policies related to the Company shall continue in
force only for the benefit of APL and its Affiliates and not for the benefit of
the Purchaser. Purchaser agrees to use commercially reasonable efforts to
arrange for its own insurance policies with respect to the Company. Purchaser
also agrees not to
-33-
seek, through any means, to benefit from APL's or its Affiliates' insurance
policies which may provide coverage for claims relating in any way to the
Company on or prior to the Closing, except as provided in Section 4.8(a).
IV.9 Warn Act. The Purchaser shall comply with The Worker
--------
Adjustment Retraining Notification Act (the "Warn Act") and shall indemnify APL
against liability thereunder with respect to Employees whose employment with the
Company is terminated following the Closing.
IV.10 Other Actions. Prior to the Closing, APL, the Company and the
-------------
Purchaser shall not take or omit to take any action, the taking or omission of
which would reasonably be expected to result in any of the representations and
warranties of such party set forth in this Agreement becoming materially untrue
or inaccurate.
IV.11 Advice of Changes. Prior to the Closing, APL and the Purchaser
-----------------
shall confer on a regular and frequent basis with respect to matters
contemplated hereby as reasonably requested by APL or the Purchaser. In that
regard, APL shall report on operational matters and promptly advise the
Purchaser and, if requested by the Purchaser in writing, of any material change
with respect to the Company, and the Purchaser, if requested by APL in writing,
shall report on the status of the debt financing contemplated by the Financing
Letters and the closing of the Pacer Transaction.
-34-
IV.12 Financial Information. Prior to the Closing, APL shall furnish
---------------------
to the Purchaser (i) as soon as available but in any event within 15 days of
each four week accounting period, the unaudited consolidated balance sheets and
income statements of the Company (prepared in accordance with GAAP consistently
applied), showing the Company's financial condition as of the close of such
period and the results of operations during such period and for the then elapsed
portion of the Company's fiscal year, in each case setting forth the comparative
figures for the fiscal 1999 budget, (ii) as soon as available, but in any event
within 30 days of the end of the first and second fiscal quarters of fiscal
1999, the unaudited consolidated balance sheets and income statements of the
Company (prepared in accordance with GAAP consistently applied), showing the
Company's financial condition as of the end of such fiscal quarter and the
results of such operations during such quarter and for the then elapsed portion
of the Company's fiscal year, setting forth the corresponding figures for the
corresponding quarter in the prior fiscal year and the corresponding elapsed
portion of the prior fiscal year and (iii) such other financial information as
is reasonably requested by the Purchaser that is readily accessible from the
Company's accounting records and does not impose any undue burden or cost to
prepare.
IV.13 Accounts Payable, Accrued Expenses and Accounts Receivable. At
----------------------------------------------------------
least two business days prior to the Closing, APL shall provide a true, correct
and complete listing of all consolidated accounts payable, accrued expenses and
accounts receivable of the Company as of the most reasonably practicable recent
date, which schedule shall set forth the name of the account debtor (in the case
of accounts receivable) or account creditor (in the case of accounts payable)
and the amount owed by or owing to such account debtor or account creditor
(identifying the portion of accounts receivable that is current, 30, 60, 90 and
more than 90 days past due).
IV.14 Pacer Indemnification. The Purchaser shall cause the
---------------------
stockholders of Pacer (rather than the Purchaser itself) to pay promptly to APL
a percentage (equal to the relative equity interests of APL and the Purchaser in
the Company immediately following the closing of the transaction contemplated by
this Agreement) of any amounts (if any) to which the Purchaser or any of its
Affiliates are entitled and are to be paid directly from such stockholders
pursuant
-35-
to the Pacer Merger Agreement, whether pursuant to the indemnification
provisions thereof or otherwise, following the closing of the Pacer Transaction.
IV.15 Conduct of Business Following the Closing. From the date of
-----------------------------------------
the Closing until the end of fiscal 1999, except as APL shall otherwise consent
in writing, which consent shall not be unreasonably withheld or delayed, the
Purchaser agrees that the Company shall conduct the Business in good faith
taking into account the conduct of the Business prior to Closing and the desire
of both parties to achieve the EBITDA Target and shall not permit the Company to
enter into any contract or agreement or engage in any other type of transaction
with Pacer, Apollo Management, L.P. ("Apollo") or any of their Affiliates other
than (i) on an arms' length basis or (ii) management fees and expense
reimbursements payable to Apollo.
ARTICLE V
Tax Matters
-----------
V.1 Definitions. For purposes of this Agreement, "Taxes" shall mean
-----------
all federal, state, local and foreign taxes, including without limitation,
income, property, sales and use, excise, withholding, franchise, environmental,
transfer, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, severance or similar taxes imposed on the
income, properties or operations of the Purchased Entity or the Seller's Group,
together with any penalties, additions or interest relating thereto and any
interest in respect of such additions or penalties. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any person with respect to the liability for, or sharing of,
Taxes (including, without limitation, pursuant to Treas. Reg. (S) 1.1502-6 or
comparable provisions of state, local or foreign Tax law) and including, without
limitation, any liability for Taxes as a transferee or successor, by contract or
otherwise. "Taxable Period" means any taxable year or any other period that is
treated as a taxable year (or other period, or portion thereof, in the case of a
Tax imposed with respect to such period or portion thereof, e.g., a quarter or a
portion of a Taxable Period, in the case of a Taxable Period that begins before
and ends after the Closing) with respect to which any Tax may be
-36-
imposed under any applicable statute, rule or regulation. "Tax Reserve" shall
have the meaning set forth in Section 5.2(d). "Tax Return" shall mean all
reports, returns and other forms and documents (including, without limitation,
all schedules, exhibits and other attachments thereto) filed or required to be
filed with respect to Taxes including, without limitation, combined or
consolidated returns for any group of the Seller's Group.
V.2 Tax-Related Representations and Warranties.
------------------------------------------
(a) Tax Allocation Agreements. APL represents and warrants to the
-------------------------
Purchaser that the Purchased Entity neither is a party to nor has any liability
under any agreement, contract or understanding relating to any sharing by the
Purchased Entity of any Tax liability of any Person.
(b) Tax Returns and Reports. APL represents and warrants to the
-----------------------
Purchaser that except as set forth in Schedule 5.2(b), (i) all material Tax
Returns that are required to be filed by or with respect to the Company or any
member of the Seller's Group have been or will be duly and timely filed, (ii)
all Taxes shown to be due on the Tax Returns referred to in clause (i) have been
or will be timely paid in full, (iii) all deficiencies asserted or assessments
made as a result of any tax examinations have been settled or paid in full, (iv)
no issues that have been raised in writing by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending, (v) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes or Tax Returns of the Company or
any member of the Seller's Group, and (vi) no extension of time with respect to
any date on which a Tax Return was or is to be filed is in force. Schedule
5.2(b) lists the date or dates through which the Internal Revenue Service have
examined the United States federal income tax returns. All material Tax Returns
referred to in clause (i) were prepared in the manner required by applicable
law, are true, correct, and complete in all material respects, and accurately
reflect the liability for Taxes of the Company and each of its Affiliates. True
and complete copies of all federal, state, local and foreign Tax Returns of the
Company or any member of the Seller's Group have been provided to the Purchaser
prior to the date hereof.
-37-
(c) No FIRPTA Withholding. APL represents and warrants to the
---------------------
Purchaser that no tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(d) Payment of Taxes. The Company and each member of the Seller's
----------------
Group have paid, or caused to be paid, all material Taxes due, whether or not
shown (or required to be shown) on a Tax Return, and have provided a sufficient
reserve for the payment of all Taxes not yet due and payable (without regard to
deferred Tax assets and liabilities) (the "Tax Reserve") on the Balance Sheet.
(e) Claims by Certain Jurisdictions and Liens on Assets. No
---------------------------------------------------
material claim has ever been made by any taxing authority with respect to the
Company or any member of the Seller's Group in a jurisdiction where the Company
or such member does not file Tax Returns that the Company or such member is or
may be subject to taxation by that jurisdiction. There are no security interests
on any of the assets of the Company that arose in connection with any failure
(or alleged failure) to pay any Taxes and, except for liens for real and
personal property Taxes that are not yet due and payable, there are no liens for
any Tax upon any asset of the Company.
(f) Affiliated Group. Neither the Company nor any of member of the
----------------
Seller's Group has been a member of an (i) affiliated group (within the meaning
of Section 1504 of the Code) or (ii) affiliated, combined, consolidated,
unitary, or similar group for state, local or foreign Tax purposes, other than
the group of which APL is the common parent, which affiliated group within the
meaning of Section 1504(a) of the Code includes the Company.
(g) Section 338(h)(10) Election. APL represents and warrants that
---------------------------
if the acquisition of the Shares is consummated pursuant to this Agreement, APL
will be eligible to join with the Purchaser in making an election under Section
338(h)(10) of the Code with respect to such acquisition of the Shares.
(h) Withholding and Backup Withholding Taxes. The Company and each
----------------------------------------
member of the Seller's Group have complied in all material respects with the
provisions of the Code relating to the withholding and payment of Taxes,
including, without limitation, the withholding and reporting
-38-
requirements under Sections 1441 through 1464, 3401 through 3406, and 6041
through 6049 of the Code, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required.
(i) Adjustments to Income. Neither the Company nor any member of
---------------------
the Seller's Group has agreed to include, or is required to include, in income
any adjustment under either Section 481(a) or Section 482 of the Code (or an
analogous provision of state, local, or foreign law) by reason of a change in
accounting method or otherwise.
(j) Spin-Offs. Neither the Company nor any member of the Seller's
---------
Group has distributed the stock of any corporation in a transaction satisfying
the requirements of Section 355 of the Code since April 16, 1997.
(k) Options Treated as Stock. There are no outstanding options,
------------------------
warrants, instruments, contracts or other rights that might be treated for U.S.
federal income tax purposes as stock or another equity interest in the Company
or any member of the Seller's Group.
(l0 Partnership Interests. The Company is not a party to any joint
---------------------
venture, partnership or other arrangement or contract that could be treated as a
partnership for U.S. federal income tax purposes.
V.3 Liability for Taxes and Related Matters.
---------------------------------------
(a) Liability of APL for Taxes. APL shall indemnify, defend and
--------------------------
hold harmless the Purchaser, the Company and their respective officers,
directors, employees, Affiliates and agents (each, a "Tax Indemnitee") from and
against, and shall reimburse each Tax Indemnitee for, any and all Taxes
(including, without limitation, the reasonable expenses of investigation and
reasonable attorney's and accountant's fees and expenses in connection with any
action, suit or proceeding) actually incurred or suffered at any time by any Tax
Indemnitee arising out of or attributable to (i) any misrepresentation,
inaccuracy or breach of any representation, warranty, covenant, agreement or
promise related to Taxes by APL and/or the Company contained in this Agreement
(or in any certificate, document, list or schedule delivered to the Purchaser in
-39-
connection with this Agreement by APL or the Company), (ii) any and all Taxes
for any Taxable Period ending on or before the Closing, (iii) any and all Taxes,
whether determined on a separate, consolidated, combined, group or unitary
basis, including any penalties and interest in respect thereof, of the Company
or any member of the Seller's Group (A) pursuant to Treas. Reg. (S) 1.1502-6 or
any comparable provision of state, local, or foreign law with respect to any
Taxable Period beginning on or before the Closing or (B) pursuant to any
guaranty, indemnification, Tax sharing, or similar agreement made on or before
the Closing relating to the sharing of liability for, or payment of, Taxes or
(iv) any and all Taxes resulting from the Section 338 Election.
(b) Liability of Purchaser for Taxes. The Purchaser shall be liable
--------------------------------
for and shall indemnify APL for the Taxes of the Purchased Entity for (i) any
Taxable Period that begins after the Closing and, (ii) with respect to any
Taxable Period beginning before and ending after the Closing, the portion of
such Taxable Period beginning after the Closing (other than Taxes arising under
Treas. Reg (S) 1.1502-6 (or a similar provision of state or local law) with
respect to the Seller's Group). The Purchaser shall be entitled to any refund of
Taxes of the Purchased Entity received for such periods.
(c) Tax Periods. With respect to any Taxes for any Taxable Period
-----------
that includes but does not end as of the Closing, the amount of Taxes subject to
indemnification hereunder shall be calculated as if such Taxable Period ended on
(and included) the Closing, except that property Taxes and exemptions,
allowances or deductions that are calculated on an annual basis shall be
prorated based on the number of days in the annual period elapsed through the
Closing compared to the number of days in the annual period elapsing after the
Closing.
V.4 Adjustment to Purchase Price. Any payment by the Purchaser or
----------------------------
APL under this Article V will be an adjustment to the Purchase Price, except as
prohibited by applicable law.
V.5 Tax Covenants.
-------------
(a) Certain Pre- and Post-Closing Tax Returns. APL shall prepare
-----------------------------------------
and timely file, or shall cause to be
-40-
prepared and timely filed, in a manner consistent with past practice if changing
such practice would adversely affect a Tax Indemnitee, all Tax Returns (whether
separate or consolidated, combined, group or unitary Tax Returns that include or
relate to the Company) that are required to be filed (with extensions) with
respect to the Company on or before the Closing. APL shall timely pay or cause
to be timely paid all Taxes shown as due, or required to be shown as due, on
such Tax Returns. APL shall prepare and timely file, or shall cause to be
prepared and timely filed, in a manner consistent with past practice if changing
such practice would adversely affect a Tax Indemnitee, all Tax Returns (whether
separate or consolidated, combined, group or unitary Tax Returns that include or
relate to the Company) that are required to be filed (with extensions) with
respect to the Company after the Closing for any Taxable Period that ends on or
prior to the Closing. APL shall timely pay or cause to be timely paid all Taxes
shown as due, or required to be shown as due, on such Tax Returns. In addition,
APL shall prepare and timely file, or cause to be prepared and timely filed, in
a manner consistent with past practice as to the Company and timely pay all
Taxes with respect to, all consolidated, combined, group or unitary Tax Returns
that are required to be filed (with extensions) after the Closing with respect
to the Company for all other Taxable Periods that begin on or before and end
after the Closing; provided, however, that APL shall deliver the portion of any
-------- -------
such Tax Return that relates to the Company to the Purchaser at least 15 days
prior to the due date thereof and the Purchaser shall have the right to comment
on that portion of such Tax Return. At least 10 business days prior to the due
date of any payment required to be made with respect to any Tax Return described
in the preceding sentence, the Purchaser shall pay to APL any amount
appropriately reflected on such Tax Return with respect to the Company that is
attributable to any Taxable Period beginning after the Closing.
(b) Other Tax Returns. The Purchaser shall prepare and timely file,
-----------------
or shall cause to be prepared and timely filed, all Tax Returns that include or
relate to the Company other than those described in Section 5.5(a); provided,
--------
however, that with respect to any such Tax Returns, the Purchaser shall deliver
- -------
to APL any Tax Return that relates to any Taxable Period ending on or prior to
the Closing at least 15 days prior to the due date thereof and APL shall have
the right to comment on such Tax Return. At
-41-
least 10 business days prior to the due date of any payment required to be made
with respect to any Tax Return described in the preceding sentence, APL shall
pay to the Purchaser any amount appropriately reflected on such Tax Return with
respect to the Company that is attributable to any Taxable Period ending on or
prior to the Closing.
(c) FIRPTA Certificate. At the Closing, APL shall deliver to the
------------------
Purchaser, pursuant to Section 1445(b)(2) of the Code and Treas. Reg. (S)
1.1445-2(b)(2), a duly executed certification of non-foreign status. Such
certification shall conform to the model certification provided in Treas. Reg.
(S) 1.1445-2(b)(2)(iii)(B).
(d) Section 338 Election. At the request of the Purchaser, APL will
--------------------
join with the Purchaser in making an election under Section 338(h)(10) of the
Code and Treasury Regulation (S) 1.338(h)(10)-1(d) (the "Section 338
Regulations") (and, to the extent requested by the Purchaser, any election
comparable to Section 338(h)(10) of the Code under state, local or foreign Tax
law) (collectively, the "Section 338 Election") with respect to the acquisition
of the Shares by the Purchaser. APL and the Purchaser will cooperate with
regard to the timely preparation and filing of a Section 338 Election and any
and all forms with respect thereto under the laws of each appropriate
jurisdiction for which such election is made. In particular, and without
limiting the generality of the foregoing and subject to Section 5.5(e), APL
shall deliver to the Purchaser a duly executed and completed Internal Revenue
Service Form 8023 (or any successor form) and any similar state or local form to
be filed, as well as any required attachments (collectively, the "Section 338
Forms") no later than ninety (90) calendar days after the Closing. In the event
of any dispute with regard to the content of any Section 338 Form (including,
without limitation, the Section 338 Determinations), APL and the Purchaser shall
diligently attempt to resolve such dispute; but if APL and the Purchaser have
been unable to resolve such dispute by the sixtieth day prior to the date any
such form is to be filed, such dispute shall be resolved in accordance with the
procedures contained in Section 5.5(e) for the resolution of disagreements
regarding Section 338 Determinations. Each party shall promptly cause such
Section 338 Forms to be executed by an authorized person, and (subject to the
receipt of the other party's signature) the party
-42-
responsible for filing such forms with its Tax Returns will duly and timely do
so, providing written evidence to the other party that it has done so. APL shall
pay any Taxes attributable to its sale of the Shares and the making of any
Section 338 Election, including, without limitation, any Tax imposed upon the
Company.
(e) Section 338 Determinations. APL and the Purchaser shall jointly
--------------------------
determine the liabilities of the Company, and allocate the "modified aggregate
deemed sale price" (or the "aggregate deemed sale price," if applicable, or any
deemed sale price comparable to the "modified aggregate deemed sale price" or
the "aggregate deemed sale price" required to be allocated under state, local or
foreign Tax law), such liabilities and other relevant items among the Company's
assets in accordance with Section 338 of the Code, the Treasury Regulations
promulgated thereunder and analogous provisions of state, local and foreign Tax
laws (such determination and allocation, the "Section 338 Determinations"). If
APL and the Purchaser are unable to agree with respect to any Section 338
Determination, APL and the Purchaser shall select an independent third firm of
accountants from among the "big five" accounting firms to which the parties
shall not unreasonably object to submit such disagreement for a final
determination. APL and the Purchaser agree to act in accordance with the
Section 338 Determinations, as finally determined pursuant to this Section
5.5(e), in the preparation and filing of all Tax Returns (including, without
limitation, any amended Tax Return and claim for refund) and in the course of
any tax audit, appeal or litigation relating thereto, unless advised by counsel
that it may not take such position without violating applicable law and without
incurring penalties and except as may be required by a final determination with
respect to any such issue. Upon payment of any indemnification obligations
hereunder resulting in an adjustment of the "modified aggregate deemed sale
price" (or the "aggregate deemed sale price," if applicable, or any deemed sale
price comparable to the "modified aggregate deemed sale price" or the "aggregate
deemed sale price" under state, local or foreign tax law), the Section 338
Determinations shall be appropriately adjusted in accordance with the procedures
described in this Section 5.5(e).
V.6 Transfer Taxes. Notwithstanding anything to the contrary in this
--------------
Article V, the Purchaser and APL shall bear equally the responsibility for all
transfer taxes
-43-
arising in connection with the transactions under this Agreement.
V.7 Information to be Provided by the Purchaser. With respect to the
-------------------------------------------
period in 1999 prior to the Closing, the Purchaser shall promptly cause the
Purchased Entity to prepare and provide to APL, at APL'S expense, a package of
tax information materials relating to any Taxable Period ending on or prior to
the Closing Date computed as if the Closing Date were the last day of any such
Taxable Period (the "Tax Package"), which Tax Package shall include the
information, schedules and work papers and as to the method of computation of
separate taxable income or other relevant measure of taxation of the Purchased
Entity. The Purchaser shall cause the Tax Package for the portion of the
Taxable Period ending on the Closing to be delivered to APL within one hundred
twenty (120) days after the Closing.
V.8 Tax Proceedings.
---------------
(a) Right to Control Proceedings. APL shall have (i) the
----------------------------
responsibility for, and the right to control, at APL's expense, the audit (and
disposition thereof) of any Tax Return relating to any Taxable Period ending on
or prior to the Closing and (ii) the right to participate in the disposition of
the audit of any Tax Return relating to any Taxable Period beginning before and
ending after the Closing if such audit or disposition thereof could give rise to
a claim for indemnification hereunder (any such audit or disposition, a "Tax
Proceeding"); provided, however, that with respect to (i) and (ii) APL shall not
-------- -------
initiate any claim, settle any issue, file any amended Tax Return, take or
advocate any position or otherwise take any action that could adversely affect a
Tax Indemnitee or any of its Affiliates without the written consent of the Tax
Indemnitee, which consent shall not be unreasonably withheld or delayed.
(b) Notice; Reports. APL's right to control a Tax Proceeding shall
---------------
commence upon the receipt by the Purchaser or any of its Affiliates (including,
after the Closing, the Purchased Entity) of a proposed adjustment to Tax for the
period under audit or examination communicated in writing. The Purchaser shall
promptly notify APL in writing upon their learning of the pendency of a Tax
Proceeding and shall reasonably cooperate with APL in the conduct of such Tax
Proceeding. Any notification given by the Purchaser within 15 Business Days of
its learning of the
-44-
pendency of a Tax Proceeding shall constitute "prompt" notification for purposes
of this Section 5.8. The failure on the part of the Purchaser to promptly notify
APL of the pendency of a Tax Proceeding shall not in any way discharge APL's
indemnity obligations hereunder, except that the Purchaser shall be liable for
any increase in penalties, interest, other assessments or fees and expenses
which are due solely to any delay in promptly notifying APL of the pendency of
any Tax Proceeding and shall be responsible for any indemnity obligations to the
extent that APL is prejudiced as a result of such delay. If APL does not assume
the defense of a claim for a Tax made by a taxing authority with respect to
which APL has indemnified a Tax Indemnitee under Section 5.3, the Tax Indemnitee
may defend the same in such manner as it may deem appropriate, including, but
not limited to, settling such audit or proceeding with the consent of APL, which
consent shall not be unreasonably withheld. The Purchaser shall, and shall cause
the Purchased Entity to, reasonably cooperate with APL including providing
reasonable access to records, returns and supporting information, in connection
with any Tax Proceeding or matter as to which the Purchaser may seek indemnity
or other relief from APL under this Article V. The Purchaser promptly shall pay
APL any refunds, rebates or other recoveries received by the Purchased Entity to
which APL is entitled pursuant to Section 5.3(a).
V.9 Assistance and Cooperation. After the Closing, each of APL and
--------------------------
the Purchaser shall (i) assist (and cause their respective affiliates to assist)
the other party in preparing any Tax Returns or reports which such other party
is responsible for preparing and filing in accordance with this Article V, (ii)
reasonably cooperate in preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns of or including the Purchased Entity,
(iii) make available to the other and to any taxing authority as reasonably
requested all information, records, and documents relating to Taxes of the
Purchased Entity for any Taxable Period beginning before the Closing Date, (iv)
provide timely notice to the other in writing of any pending or threatened tax
audits, proposed adjustments or assessments of any Tax of or relating to the
Purchased Entity for Taxable Periods for which the other may have a liability
under this Article V and (v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such Taxable Period.
-45-
V.10 Survival, Etc. Notwithstanding anything to the contrary
-------------
contained in this Agreement, the representations and warranties, the covenants
and agreements and the indemnification obligations set forth in Sections 5.2(a),
5.2(e), 5.2(g), 5.2(k) and 5.2(l) shall survive the Closing and shall remain in
effect until 60 days after the expiration of the applicable statute of
limitations (including any extension thereof) and the remaining representations
and warranties set forth in Section 5.2 shall not survive the Closing. The
indemnification obligations set forth in Section 5.3 and the covenants and
agreements set forth in Section 5.5 shall survive the Closing and shall remain
in effect until 60 days after the expiration of the applicable statute of
limitations (including any extension thereof).
ARTICLE VI
Conditions to Closing
---------------------
VI.1 Conditions to the Obligations of the Purchaser. The obligations
----------------------------------------------
of the Purchaser to consummate the transactions contemplated by this Agreement
are subject to the satisfaction at or prior to the Closing of the conditions set
forth in this Section 6.1, any one or more of which may be waived, in whole or
in part, by the Purchaser:
(a) Approvals. With respect to the HSR Act, the parties shall have
---------
procured such approvals, if applicable, or there shall have occurred the
expiration or early termination of the applicable waiting periods, if any, with
respect thereto without there being any continuing objection thereto. All
notices required to be given prior to Closing to, all filings required to be
made prior to Closing with, and all consents, approvals, authorizations, waivers
and amendments required to be obtained prior to the Closing from, any other
Governmental Entity or any third party in connection with the consummation of
the transactions contemplated herein and the financing thereof, have been made
or obtained, except for the notices, filings, consents, approvals,
authorizations, waivers and amendments, the failure to obtain would not have a
Material Adverse Effect.
-46-
(b) Orders. No party hereto shall be subject to any order, decree or
------
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the sale of the Stock or the transactions
contemplated by the Ancillary Agreements. In addition, no judgment, statute,
rule, regulation, executive order, writ, decree, ruling or injunction shall have
been enacted, entered, promulgated, made or enforced by any Governmental Entity
or court of competent jurisdiction which would have a Material Adverse Effect.
(c) Accuracy of Representations. The representations and warranties
---------------------------
of APL in this Agreement shall be true and correct in all material respects at
and as of the Closing as if made at and as of the Closing, and the Purchaser
shall have received a certificate, dated the Closing, of an executive officer of
APL to that effect. For the purposes of the foregoing condition, failures or
breaches which may be immaterial individually, but are material in the
aggregate, shall be deemed to be material.
(d) Performance of Covenants. APL shall have performed and complied
------------------------
in all material respects (other than Sections 4.2 and 4.3 which it shall perform
in all respects) with all covenants and agreements contained in this Agreement
that are required to be performed or complied with by it at or prior to the
Closing, and the Purchaser shall have received a certificate, dated the Closing,
of an executive officer of APL to that effect.
(e) Resignation of Directors. The directors of the Company shall
------------------------
have submitted their resignations in writing, effective as of the Closing, to
the Company.
(f) Ancillary Agreements. The Ancillary Agreements shall have been
--------------------
executed and delivered by the parties thereto and be in full force and effect.
(g) Intercompany Accounts. (i) All intercompany loans, advances and
---------------------
other extensions of credit made between the Company, on the one hand, and APL or
an Affiliate of APL (other than the Company), on the other hand, shall have been
eliminated and (ii) all cash and cash equivalents of the Company shall have been
transferred to APL.
(h) Financing Letters. The funding contemplated by the Financing
-----------------
Letters shall have been obtained on
-47-
substantially the terms set forth in the term sheets attached to the Financing
Letters.
(i) Material Adverse Effect. Notwithstanding the exception contained
-----------------------
in Section 2.10(a), from the date of this Agreement until the Closing there
shall not have occurred a Material Adverse Effect. Since the date of the NOL
Balance Sheet, there shall not have occurred events, changes, facts or effects
which, individually or in the aggregate, have had or are reasonably likely to
have a material adverse effect on the assets or properties, business, results of
operations or financial condition of NOL.
(j) Working Capital and Net Fixed Assets. Working Capital of the
------------------------------------
Company shall, as of the Closing Date, be not less than $(16,700,000); and Net
Fixed Assets of the Company shall, as of the Closing Date, be not less than
$95,000,000.
(k) Union Pacific Rail Agreement. The execution of a binding
----------------------------
agreement among the Union Pacific Railroad Company, APL and the Company
consistent with the term sheet attached as Exhibit I and otherwise containing
terms that are reasonably acceptable to Purchaser.
(l) CSX Agreement. The execution of a binding document among CSX
-------------
Corporation, APL and the Company consistent with the memorandum of understanding
attached as Exhibit J and otherwise containing terms that are reasonably
acceptable to Purchaser.
(m) List of Company Rights. APL shall have delivered to the
----------------------
Purchaser a list of Company Rights as provided in Section 2.24 which shall not,
individually or in the aggregate, have a Material Adverse Effect.
(n) Assignment of Leases. APL shall have assigned the leases for
--------------------
containers and chassis set forth on Attachment 1 to Schedule 2.14(a) to LTS, and
determined the number of chassis and established the mechanism to be put in
place to accomplish the objective set forth in the last sentence of Section
4.4(a), in each case that is reasonably acceptable to the Purchaser.
(o) NOL Lines of Credit. NOL shall have provided evidence reasonably
-------------------
acceptable to the Purchaser to the
-48-
effect that as of the Closing NOL will have greater than $500 million of
availability under its credit facilities with the Development Bank of Singapore
and that the proceeds of the sale of the Shares hereunder will be available to
NOL for general working capital purposes and will not be required to prepay any
monetary obligations before their stated maturity.
(p) Hub Agreement. APL, the Company and Hub International, Inc.
-------------
shall have entered into an agreement on terms reasonably acceptable to
Purchaser.
The Purchaser agrees to promptly notify APL in writing when it deems
the conditions set forth in Sections 6.1(k), (l), (m), (n), (o) or (p) to be
satisfied or waived.
VI.2 Conditions to the Obligations of APL. The obligations of APL to
------------------------------------
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of the conditions set forth in this
Section 6.2, any one or more of which may be waived, in whole or in part, by
APL.
(a) Approvals. With respect to the HSR Act, the parties shall have
---------
procured such approvals, if applicable, or there shall have occurred the
expiration or early termination of the applicable waiting periods, if any, with
respect thereto without there being any continuing objection thereto.
(b) Orders. No party hereto shall be subject to any order, decree or
------
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the sale of the Stock or the transactions
contemplated by the Ancillary Agreements. In addition, no judgment, statute,
rule, regulation, executive order, writ, decree, ruling or injunction shall have
been enacted, entered, promulgated, made or enforced by any Governmental Entity
or court of competent jurisdiction which would prevent the performance of APL's
obligations hereunder.
(c) Accuracy of Representations. The representations and warranties
---------------------------
of the Purchaser in this Agreement shall be true and correct in all material
respects at and as of the Closing as if made at and as of the Closing, and APL
shall have received a certificate, dated
-49-
the Closing, of an executive officer of the Purchaser to that effect.
(d) Performance of Covenants. The Purchaser shall have performed
------------------------
and complied in all material respects with all covenants and agreements
contained in this Agreement that are required to be performed or complied with
by it at or prior to the Closing, and APL shall have received a certificate,
dated the Closing, of an executive officer of the Purchaser to that effect.
(e) Ancillary Agreements. The Ancillary Agreements shall have been
--------------------
executed and delivered by the parties thereto and be in full force and effect.
(f) Shareholder Vote. The shareholders of NOL shall have approved
----------------
the transactions contemplated hereby pursuant to an extraordinary general
meeting.
VI.3 Pacer Extension. If Mile High exercises its option to extend
---------------
the Original Termination Date (as defined in the Pacer Merger Agreement)
pursuant to the Extension Letter, it shall promptly deliver a copy of the
Extension Notice (as defined in the Extension Letter) to APL.
ARTICLE VII
Termination
-----------
VII.1 Grounds for Termination. This Agreement may be terminated at
-----------------------
any time prior to Closing:
(a) Mutual Agreement. by the mutual written agreement of APL and the
----------------
Purchaser;
(b) Expiration. by APL or by the Purchaser if the Closing shall not
----------
have occurred on or before May 31, 1999; unless the failure to consummate the
Closing by such date (i) shall be due to the failure of the party seeking to
terminate this Agreement to have fulfilled any of its obligations under this
Agreement or (ii) is due to the continuance of a waiting period or lack of an
approval required under or an injunction or equivalent thereof entered based
upon the HSR Act, in which event no party may rely upon this Section 7.1(b) to
terminate this Agreement
-50-
until July 7, 1999; provided that Purchaser shall have 14 days after delivery by
APL of an agreement that APL believes in good faith satisfies Section 6.1(k) to
decide whether such agreement is reasonably acceptable to Purchaser, and if
Purchaser decides that such agreement is reasonably acceptable to Purchaser, and
notifies APL thereof in writing within such 14 day period, the expiration shall
be extended to the 30th day after the date of such acceptance, but in no event
earlier than May 31, 1999 or later than June 14, 1999, and if Purchaser does not
notify APL of its acceptance in writing within such 14 day period, the Agreement
may be terminated by APL or by the Purchaser; provided further that the
expiration date may be extended on at least a day for day basis with the written
consent of APL, which shall not be unreasonably withheld, but in no event later
than June 30, 1999, upon the waiver by the Purchaser and APL of the conditions
to Closing other than Section 6.1(h).
(c) Contravention of Law. By APL or by the Purchaser if consummation
--------------------
of the transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or Governmental Entity having competent
jurisdiction (other than as a result of the failure to obtain approval of the
shareholders of NOL); provided, that, the party seeking to terminate this
--------
Agreement pursuant to this clause (c) shall have used all commercially
reasonable efforts to remove such final order, decree or judgment;
(d) Breach. by APL or by the Purchaser if there has been a breach by
------
the other of any representation, warranty, covenant or agreement contained in
this Agreement which would result in a condition set forth in Section 6.1(c) or
(d) or Section 6.2(c) or (d) of this Agreement, as the case may be, not being
satisfied, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach;
(e) Shareholder Vote. By APL or by the Purchaser if the approval of
----------------
the shareholders of NOL required by Section 6.2(f) shall not have been obtained
for any reason by May 14, 1999; and
(f) Superior Unsolicited Acquisition Proposal. By APL at any time
-----------------------------------------
prior to the earlier of (i) April 30, 1999 and (ii) the time the shareholders of
NOL shall have
-51-
voted to approve this Agreement if NOL or APL receives an unsolicited
Acquisition Proposal and determines in good faith upon the advice of its
financial advisors that such unsolicited Acquisition Proposal is superior in its
terms to the terms contemplated hereunder.
VII.2 Effect of Termination. (a) In the event that (i) this
---------------------
Agreement is terminated by either party pursuant to Section 7.1(b), (ii) the
reason for such termination is that the condition set forth in Section 6.1(h)
was not satisfied and (iii) the Purchaser is entitled to any amounts from the
stockholders of Pacer under the Pacer Merger Agreement, whether pursuant to any
termination provisions or otherwise, the Purchaser shall use commercially
reasonable best efforts to cause such stockholders (and not the Purchaser) to be
responsible for and include in any such amounts and pay to APL the reasonable
out-of-pocket expenses incurred by APL in connection with the transactions
contemplated by this Agreement;
(b) In the event that this Agreement is terminated by either party
hereto pursuant to Section 7.1(e) and Sections 7.2(c) and 7.2(d) do not apply,
then APL shall pay the Purchaser a fee of $2,000,000 plus its reasonable out-of-
pocket expenses. In the event that this Agreement is so terminated and NOL, APL
or an Affiliate thereof consummates, or enters into an agreement which is
subsequently consummated for, a transaction within 12 months of the date of such
termination, then APL, upon consummation, shall pay the Purchaser an additional
fee of $48,000,000;
(c) In the event that this Agreement is terminated by either party
hereto pursuant to Section 7.1(e) and (i) no meeting of shareholders of NOL was
convened by May 14, 1999 or (ii) the board of directors of NOL did not recommend
approval by the shareholders from the date of this Agreement though the date of
the meeting, then APL shall pay the Purchaser a fee of $20,000,000 plus its
reasonable out-of-pocket expenses. In the event that this Agreement is so
terminated and NOL, APL or an Affiliate thereof consummates, or enters into an
agreement which is subsequently consummated within 12 months of the date of such
termination, then APL, upon consummation, shall pay the Purchaser an additional
fee of $30,000,000;
-52-
(d) In the event that this Agreement is terminated by either party
hereto pursuant to Section 7.1(e) and APL held discussions with a Person with
respect to an Acquisition Proposal, then APL shall pay the Purchaser a fee of
$20,000,000 plus its reasonable out-of-pocket expenses. In the event that this
Agreement is so terminated and NOL, APL or an Affiliate thereof consummates, or
enters into an agreement which is subsequently consummated within 12 months of
the date of such termination, then APL, upon consummation, shall pay the
Purchaser an additional fee of $30,000,000;
(e) In the event that this Agreement is terminated by APL pursuant to
Section 7.1(f), then APL shall pay the purchaser a fee of $50,000,000 plus its
reasonable out-of-pocket expenses; and
(f) In the event of any termination of this Agreement, all
obligations of the parties hereto shall terminate, except the obligations of the
parties set forth in Section 4.6 hereto or this Section 7.2; provided, that (i)
--------
nothing in this Section 7.2 shall relieve any party from liability for willful
breach of this Agreement and (ii) if this Agreement is terminated pursuant to
Section 7.1(d) the terminating party shall be reimbursed by the other party for
its reasonable out-of-pocket expenses.
VII.3 Interest. Any monies owed by either party pursuant to Section
--------
1.3, Section 4.14 or Section 7.2 shall be payable by wire transfer of same day
funds within two business days after such amount becomes due. Each party
acknowledges that the agreements contained in Section 1.3, Section 4.14 and
Section 7.2 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the other party would not enter
into this Agreement; accordingly, if a party fails to promptly pay the amount
due pursuant to Section 1.2, Section 4.14 or Section 7.2, and, in order to
obtain such payment, the other party commences a suit which results in a
judgment for the fee, the liable party shall pay the claiming party its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the rate of 8% per annum from the date
such fee was required to be paid.
ARTICLE VIII
-53-
Indemnification
---------------
VIII.1 Survival of Representations, Warranties, Covenants and
------------------------------------------------------
Agreements. Except as provided in Section 8.8, the representations and
- ----------
warranties included or provided for herein shall survive the Closing until March
31, 2001 and the covenants and agreements provided for herein shall terminate on
the Closing; provided, however, that (i) the covenants and agreements of the
-------- -------
parties hereto shall survive the Closing unless or until they are otherwise
terminated by their terms, (ii) the representations and warranties contained in
Section 2.23 (Environmental Matters) shall survive to the Closing and shall
remain in effect until March 31, 2004 and (iii) the representations and
warranties contained in Section 2.17 (Employee Benefit Plans) shall survive the
Closing and shall remain in effect until 60 days after the expiration of the
applicable statute of limitations (including any extensions thereof) with
respect to matters addressed in such Section. All statements contained in any
Schedule hereto or in any certificate delivered by or on behalf of the parties
pursuant to this Agreement shall be deemed representations and warranties by the
parties hereunder.
VIII.2 Indemnification. For a period commencing on the Closing and
---------------
ending, as the case may be, upon the expiration of the applicable period
specified in Section 8.1, APL, on the one hand, or the Purchaser, on the other
hand (the "Indemnifying Party"), shall, subject to the limitations set forth in
this Article VIII hereof, indemnify and hold harmless respectively the Purchaser
and each of its Affiliates, officers, directors, employees and agents, on the
one hand, or APL and each of its Affiliates and their respective officers,
directors, employees and agents, on the other hand, as the case may be (each of
such persons and entities, an "Indemnified Party"), against and in respect of
all Losses resulting from (i) any misrepresentation or breach of warranty or the
nonfulfillment of any agreement, covenant or obligation by the Indemnifying
Party made in this Agreement, and (ii) the failure by the Indemnifying Party to
perform any agreement, consent or obligation of the Indemnifying Party contained
in this Agreement and (iii) any and all actions, suits, proceedings, claims,
demands, assessments, judgments incidental to the foregoing or the enforcement
of such indemnification.
-54-
VIII.3 Method of Asserting Claims, etc. All claims for
-------------------------------
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 8.3. Any Indemnified Party seeking
indemnity pursuant to Section 8.2 or Section 5.3 shall give prompt notice to the
Indemnifying Party of the receipt by the Indemnified Party of a claim or demand
in the case of a third party claim (a "Third Party Claim"), and the amount or
the estimated amount thereof to the extent then feasible, and in the event that
an Indemnified Party shall assert a claim for indemnity under this Article VIII
not including a Third Party Claim, the Indemnified Party shall make such claim
by giving prompt notice thereof to the Indemnifying Party within the period of
time during which such representation or warranty survives the Closing pursuant
to Section 8.1 hereof. Such written notice shall specify with reasonable detail
the basis for such claim and the amount thereof. Following the timely giving of
such notice in accordance with Section 8.1, the Indemnified Party shall be
entitled to pursue its rights to be indemnified under this Article VIII for such
claim notwithstanding the subsequent expiration of the survival period
applicable to the representation or warranty upon which such claim is based;
provided, however, that any failure to provide such notice shall not constitute
- -------- -------
a waiver of the Indemnifying Party's indemnity obligations hereunder except to
the extent the Indemnifying Party is actually materially prejudiced thereby.
The Indemnifying Party shall have 30 days from the personal delivery or mailing
of such notice (the "Notice Period") to notify the Indemnified Party (i) whether
or not the Indemnifying Party disputes the liability of the Indemnifying Party
to the Indemnified Party hereunder with respect to such claim or demand and (ii)
whether or not it desires to defend the Indemnified Party against such claim or
demand. With respect to a Third Party Claim, in the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the Indemnifying
Party shall have the right to defend the Indemnified Party at the Indemnifying
Party's sole cost and expense and with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party's right to assume the defense is
exercised, the Indemnifying Party shall be deemed to have waived all rights to
contest its liability to the Indemnified Party in respect of such Third Party
Claim. The Indemnifying Party shall not settle or compromise any Third Party
Claim that it elects to defend
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without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. If the right to assume and control the defense is
exercised, the Indemnified Party shall have the right to participate in, but not
control, such defense at its own expense and the Indemnifying Party's indemnity
obligations shall be deemed not to include attorneys' fees and litigation
expenses incurred in such participation by the Indemnified Party after the
assumption of the defense by the Indemnifying Party. If the Indemnifying Party
has not elected to assume the defense of a Third Party Claim, the Indemnified
Party may defend and settle the claim for the account and cost of the
Indemnifying Party; provided, that the Indemnified Party will not settle the
--------
Third Party Claim without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. The Indemnifying Party will
promptly pay, or reimburse the Indemnified Party for payment of, costs and
expenses (including reasonable fees and expenses of counsel) incurred in the
defense thereof. The Indemnified Party shall cooperate with the Indemnifying
Party and, subject to obtaining proper assurances of confidentiality and
privilege, shall make available to the Indemnifying Party all pertinent
information under the control of the Indemnified Party. Notwithstanding the
foregoing, the Indemnifying Party shall not have the right to assume the defense
of any Third Party Claim, if (i) the Indemnified Party shall have been advised
in writing by counsel that there are one or more legal or equitable defenses
available to them which are different from or in addition to those available to
the Indemnifying Party, and, in the reasonable opinion of such counsel to the
Indemnified Party, counsel for the Indemnifying Party could not adequately
represent the interests of the Indemnified Party because such interests are in
conflict with those of the Indemnified Party, (ii) such action or proceeding
involves, or could have a material effect on, any material matter beyond the
scope of the indemnification obligation of the Indemnifying Party or involves or
could reasonably be expected to involve injunctive or other non-monetary relief
or (iii) the Indemnifying Party shall not have assumed the defense of the Third
Party Claim in a timely fashion that results in prejudicing the Indemnified
Party.
VIII.4 Limitation on Damages. In no event shall any Indemnifying
---------------------
Party be liable to any Indemnified Party for special, incidental, consequential
or punitive damages
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other than such damages payable by any Indemnified Party as a result of a Third
Party Claim.
VIII.5 Exclusive Remedy. Each of APL and the Purchaser agrees that,
----------------
from and after the Closing, its sole and exclusive remedy with respect to any
and all claims against the other party relating to the subject matter of this
Agreement (other than the Ancillary Agreements) shall be pursuant to this
Article VIII (except for claims relating to Tax matters, which shall be governed
by Article V) and Section 7.2 hereof. In furtherance of the foregoing, each of
APL and the Purchaser hereby waives, from and after the Closing, to the fullest
extent permitted under applicable law, any and all rights, claims and causes of
action it may have against the other party relating to the subject matter of
this Agreement arising under or based upon any federal, state or local statute,
law, ordinance, rule or regulation or otherwise; provided, however, that the
-------- -------
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof
without the necessity of posting a bond or any security, this being in addition
to any other remedy to which they are entitled at law or in equity.
VIII.6 Insurance Proceeds; Interest. In determining the amount of
----------------------------
any Loss for which any party is entitled to indemnification under this Article
VIII, the gross amount thereof (a) will be reduced by any insurance proceeds
realized by such party from third party insurers less the amount that is equal
to the present value of the aggregate future increased insurance policy premium
amounts (if any) attributable to the claims made for such Loss discounted at the
Company's weighted average cost of capital, (b) will be reduced by any Tax
benefits realized by such party in connection with such Loss to the extent such
Tax benefit results directly from the incurrence of such Loss and (c) will be
increased by any Tax detriments suffered by such party in connection with such
Loss to the extent such Tax detriments result directly from such indemnity
payment hereunder.
VIII.7 Deductible; Maximum Liability.
-----------------------------
(a) No claim for indemnification shall be brought under this Article
VIII for breaches of representations and warranties against an Indemnifying
Party unless and until the aggregate amount of all claims for indemnification
under
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this Article VIII for breaches of representations and warranties against such
Indemnifying Party exceeds $6,000,000, and then only for that portion of the
aggregate amount of claims that exceeds such amount.
(b) The indemnification obligations of either party under this Article
VIII shall be limited to a maximum aggregate liability of $150,000,000.
VIII.8 Tax Losses. Losses related to Tax matters are expressly
----------
excluded from this Article VIII and instead shall be governed by the provisions
of Article V.
ARTICLE IX
Certain Definitions
-------------------
IX.1 Certain Definitions. For all purposes of this Agreement, except
-------------------
as otherwise expressly provided or unless the context otherwise requires:
"Acquisition Proposal" has the meaning set forth in Section 4.2.
"Actual EBITDA" has the meaning set forth in Section 1.2.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means (a) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise, or (b) the ownership
of more than 25% of the voting securities of that Person.
"Agreement" means this Agreement by and between APL and the Purchaser,
as amended or supplemented together with all Exhibits and Schedules attached or
incorporated by reference.
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"Administrative Services Agreement" shall mean the Administrative
Services Agreement substantially in the form attached hereto as Exhibit B.
"Ancillary Agreements" shall mean the Non-Competition Agreement, the
Administrative Services Agreement, the Information Technology Access and License
Agreement, the Stacktrain Services Agreement, the TPI Chassis Sublet Agreement,
the Equipment Supply Agreement, the Shareholders Agreement and the Tax Sharing
Agreement.
"APL" has the meaning set forth in Section 2.3.
"Apollo" has the meaning set forth in Section 4.15.
"Balance Sheet" has the meaning set forth in Section 2.6(a).
"Benefit Plans" has the meaning set forth in Section 2.17(a).
"Business" shall mean the businesses engaged in by the Company as of
the date of this Agreement.
"Business Days" shall mean any day other than a Saturday, a Sunday or
a day on which banks in New York are authorized or obligated by law or executive
order to close.
"Closing" has the meaning set forth in Section 1.5.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended. All citations to provisions of the Code, or to the Treasury
Regulations promulgated thereunder, shall include any amendments thereto and any
substitute or successor provisions thereto.
"Company Rights" has the meaning set forth in Section 2.24.
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated September 23, 1998, between NOL and the Purchaser and the Confidentiality
Agreement, dated October 7, 1998, between NOL and Pacer International, Inc.
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"EBITDA" has the meaning set forth in Section 1.2.
"EBITDA Target" has the meaning set forth in Section 1.2.
"Employees" has the meaning set forth in Section 2.17(a).
"Environmental Law" means any international, national, provincial,
regional, federal, state, municipal or local law, rule, regulation, order,
judgment, decree, permit, authorization, license or common law or decisional law
(including without limitation principals of tort negligence, trespass, nuisance,
strict liability, contribution and indemnification) which regulates, establishes
standards or requirements or concerns liability with respect to the environment,
protection of or damage to natural resources or safety or health of human beings
or other living organisms as it relates to Hazardous Substance exposure,
including without limitation the manufacture, distribution in commerce,
transportation and use of Hazardous Substances.
"Equipment Supply Agreement" shall mean the Equipment Supply Agreement
substantially in the form attached hereto as Exhibit F.
"ERISA" has the meaning set forth in Section 2.17(a).
"ERISA Affiliate" has the meaning set forth in Section 2.17(c).
"Extension Letter" has the meaning set forth in Section 4.14.
"Final Income Statement" has the meaning set forth in Section 1.3.
"Financial Statements" has the meaning set forth in Section 2.6(a).
"Financing Letters" has the meaning set forth in Section 3.4.
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"GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time.
"Governmental Antitrust Entity" has the meaning set forth in Section
4.3(c).
"Governmental Entity" shall mean any court, administrative agency or
commission or other national, federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any pollutant, contaminant, hazardous
substance, hazardous waste, toxic substance, oil or petroleum or petroleum-
derived substance, waste, asbestos, PCBs, radioactive material, or other
compound, element, material or substance in any form whatsoever (including
without limitation any product) that is regulated, restricted or designated as
such or under any Environmental Law.
"HSR Act" has the meaning set forth in Section 2.3.
"Indebtedness" has the meaning set forth in Section 2.6(b).
"Indemnified Party" has the meaning set forth in Section 8.2.
"Independent Firm" has the meaning set forth in Section 1.3.
"Information Technology Outsourcing and License Agreement" shall mean
the Information Technology Outsourcing and License Agreement based on the terms
attached hereto as Exhibit C.
"Insurance Proceeds" has the meaning set forth in Section 4.8(a).
"Intellectual Property Rights" has the meaning set forth in Section
2.24.
"Knowledge" shall mean, with respect to any Person, the knowledge of
any individual (except as otherwise indicated, upon reasonable investigation)
who (a) is serving as a director or officer of such Person, (b) is employed in
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the law department of such Person or (c) is currently employed by such Person
with responsibility for the particular subject area or subject matter.
"Law" shall mean applicable statutes, laws, codes, ordinances,
regulations, rules, Permits (as defined below), judgements, decrees and orders
of any Governmental Entity.
"Liability" shall mean any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge, encumbrance, equity, claim, option, tenancy, right, community property
interest, right of first refusal, or restriction of any nature whatsoever
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Logo" has the meaning set forth in Section 4.5.
"Losses" means any and all fines, liabilities, judgments, losses,
costs, deficiencies, penalties, expenses (including, without limitation, the
reasonable fees and expenses of investigation and counsel), or damages,
including in each case, interest and penalties.
"Material Adverse Effect" shall mean events, changes, facts or effects
which, individually or in the aggregate, (i) have had or are reasonably likely
to have a material adverse effect on the assets or properties, business, results
of operations or financial condition of the Company or (ii) which would
materially delay or prevent the performance of the obligations of any party
hereunder.
"Material Contracts" has the meaning set forth in Section 2.14.
"Mile High" has the meaning set forth in Section 3.6.
"Net Fixed Assets" shall mean as at any date of determination and
determined without duplication, consolidated property, plant and equipment of
the Company
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net of accumulated depreciation, computed in accordance with GAAP consistently
applied.
"NOL" has the meaning set forth in Section 2.3.
"Non-Competition Agreement" shall mean the Noncompetition Agreement
substantially in the form attached hereto as Exhibit A.
"Nonsolicitation Period" has the meaning set forth in Section 4.2
"Notice Period" has the meaning set forth in Section 8.3.
"NS" has the meaning set forth in Section 6.1(k).
"Objection" has the meaning set forth in Section 1.3.
"Pacer" has the meanings set froth in Section 3.6.
"Pacer Merger Agreement" has the meaning set forth in Section 3.6.
"Pacer Transaction" has the meaning set forth in Section 3.6.
"Pension Plan" has the meaning set forth in Section 2.17(b).
"Permit" shall mean any license, permit, franchise, certificate of
authority, order or other authorization, or any waiver of the foregoing,
required to be issued by any Governmental Entity.
"Permitted Liens" shall mean the following types of Liens: (a)
statutory Liens of landlords, statutory Liens of banks and rights of set-off,
statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen and
materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business (i) for amounts not yet overdue or (ii) for amounts
that are overdue and that (in the case of such amounts overdue for a period in
excess of 30 days) are being contested in good faith by appropriate proceedings,
so long as such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have
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been made for any such contested amounts; (b) easements, rights-of-way,
restrictions, encroachments, and other minor defects or irregularities in title,
none of which is substantial in amount, materially detracts from the value or
impairs the use of the property subject thereto, or impairs the operations of
the Company and (c) any zoning or similar law or right reserved to or vested in
any Governmental Entity to control or regulate the use of any real property that
do not materially impair the present use of the property subject thereto.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a Governmental Entity or any other entity.
"Purchase Price" has the meaning set forth in Section 1.2.
"Purchased Entity" shall mean the Company.
"Real Property" has the meaning set forth in Section 2.9(b).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement in substantially the form attached hereto as Exhibit G.
"Representative" has the meanings set forth in Section 4.2.
"Schedule" shall mean a disclosure schedule delivered by APL to the
Purchaser on or prior to the date of this Agreement.
"Section 338 Determinations" has the meaning set forth in Section
5.5(e).
"Section 338 Election" has the meaning set forth in Section 5.5(d).
"Section 338 Forms" has the meaning set forth in Section 5.5(d).
"Section 338 Regulations" has the meaning set forth in Section 5.5(d).
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"Seller's Group" shall mean any (i) "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) or (ii) affiliated, combined, consolidated, unitary
or similar group for state, local or foreign Tax purposes that includes or
included APL or the Company or any predecessor of or successor to APL or the
Company (or another such predecessor or successor).
"Securities Act" has the meaning set forth in Section 2.5.
"Shareholders Agreement" shall mean the Shareholders Agreement in
substantially the form attached hereto as Exhibit G.
"Shares" has the meaning set forth in Section 1.1.
"Stacktrain Services Agreement" shall mean the Stacktrain Services
Agreement substantially in the form attached hereto as Exhibit D.
"Stock" has the meaning set forth in Recitals of this Agreement.
"Taxes" has the meaning set forth in Section 5.1.
"Tax Package" has the meaning set forth in Section 5.7.
"Tax Proceeding" has the meaning set forth in Section 5.8(a).
"Tax Reserve" has the meaning set forth in Section 5.2(e).
"Tax Return" has the meaning set forth in Section 5.1.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement in
substantially the form attached hereto as Exhibit K.
"Taxable Period" has the meaning set forth in Section 5.1.
"Third Party Claim" has the meaning set forth in Section 8.3.
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"TPI Chassis Sublet Agreement" shall mean the TPI Chassis Sublet
Agreement substantially in the form attached hereto as Exhibit E.
"Warn Act" has the meaning set forth in
Section 4.9.
"Welfare Plan" has the meaning set forth in Section 2.17(e).
"Working Capital" shall mean, as at any date of determination and
determined without duplication, the excess, if any, of (i) consolidated current
assets, computed in accordance with GAAP consistently applied, over (ii)
consolidated current liabilities, computed in accordance with GAAP consistently
applied, excluding in each case intercompany receivables and payables from and
to APL and its Affiliates (other than the Company) and third party payables
related to such intercompany receivables. Working Capital at Closing will be
prepared using the same types of management judgment, estimates, forecasts,
policies, opinions and allocations that were used for the Working Capital
calculation attached as Exhibit L hereto.
ARTICLE X
Miscellaneous
-------------
X.1 Amendments. This Agreement may not be amended or modified except
----------
by the express written consent of the parties hereto.
X.2 Assignment. Neither party may assign this Agreement or its
----------
rights or obligations hereunder, whether by operation of law or otherwise, to
any third party without the prior written consent of the other party.
X.3 Notices. All notices or communications hereunder shall be in
-------
writing and shall be sent by personal service, by facsimile transmission or by
overnight mail by courier of internationally recognized standing addressed as
follows (or such other address as such party may designate in writing):
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To APL:
1111 Broadway
Oakland, CA 94607-5500
Attention: Timothy J. Windle
Facsimile: (510) 272-8932
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Attention: Steven B. Stokdyk, Esq.
Telephone: (310) 712-6624
Facsimile: (310) 712-8800
To the Purchaser:
Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, New York 10019
Telephone: (212) 261-4032
Facsimile: (212) 261-4102
and
Bruce Spector
c/o Apollo Management, L.P.
1999 Avenue of the Stars
Suite 1910
Los Angeles, CA 90067
Telephone: (310) 201-4124
Facsimile: (310) 201-4199
With copies to:
Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Telephone: (212) 259-6640
Telephone: (212) 259-6685
Facsimile: (212) 259-6333
Any notice hereunder shall be effective upon receipt by the intended recipient.
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X.4 Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
X.5 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
X.6 Interpretation. When a reference is made in this Agreement to an
--------------
Article, Section, Exhibit or Schedule, such reference is to an Article or
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" and
"including" are used in this Agreement, they are deemed to be followed by the
words "without limitation." For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, (a) the
terms defined include the plural as well as the singular, (b) all accounting
terms not otherwise defined herein have the meanings assigned under GAAP, and
(c) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
X.7 Entire Agreement. This Agreement, together with any agreement
----------------
executed and delivered by the parties concurrently herewith and the Schedules
and Exhibits attached hereto and together with the Confidentiality Agreement,
constitutes the entire agreement between the Purchaser and APL with respect to
the subject matter hereof. There are no representations, warranties, covenants
or
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undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements
between the parties with respect to the Stock purchased hereunder and the
subject matter hereof, other than the Confidentiality Agreement.
X.8 Publicity. The parties jointly will prepare a news release or
---------
other announcement regarding this Agreement and, subject to their respective
legal obligations or stock exchange requirements, thereafter will consult with
each other regarding the text of any press release or other public statement
relating to the transaction contemplated by this Agreement prior to any release
or filing thereof.
X.9 Expenses. Subject to Article V and Article VIII, APL and the
--------
Purchaser each shall pay their own expenses incident to the negotiation,
preparation and performance of this Agreement and the transactions contemplated
hereby, including but not limited to the fees, expenses and disbursements of
their respective investment bankers, accountants and counsel.
X.10 No Third Party Beneficiaries. Nothing in this Agreement,
----------------------------
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
X.11 Jurisdiction. Each of the parties hereto hereby irrevocably
------------
submits in any legal action or proceeding relating to or arising out of this
Agreement, any of the Ancillary Agreements or any other document relating hereto
or delivered in connection with the transactions contemplated hereby, or for
recognition and enforcement of any judgment in respect thereof, to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York and appellate courts thereof. Each of the parties hereto further (a)
consents that any such action or proceeding may be brought in such court and
waives any objection that it may now or hereafter have to the venue of any such
action or proceeding in such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the same; (b) agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar
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form of mail), postage prepaid, to such party at its address set forth in
Section 10.3 or at such other address of which such party shall have given
notice pursuant thereto; and (c) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law.
X.12 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first above written, by the duly authorized representatives of the
parties hereto.
COYOTE ACQUISITION LLC
By: /s/ Josh Harris
________________________________
Name: Josh Harris
Title: Vice President
APL LIMITED
By: /s/ Timothy J. Rhein
________________________________
Name: Timothy J. Rhein
Title: President and Chief Executive
Officer
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