Document:

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                                                                   EXHIBIT 10.29

                           PACER INTERNATIONAL, INC.

                            1999 STOCK OPTION PLAN
                            ----------------------

     1. Purpose Of The Plan
        -------------------

          The purpose of the PACER INTERNATIONAL, INC.  1999 STOCK OPTION PLAN
(the "Plan") is (i) to further the growth and success of Pacer International,
      ----
Inc., a Tennessee corporation (the "Company"), by permitting employees and non-
                                    -------
employee directors of the Company to acquire shares of common stock, $.01 par
value, of the Company, thereby increasing such employees' personal interest in
such growth and success and (ii) to provide a means of rewarding outstanding
contribution by such persons to the Company.  Except with respect to certain
Rollover Options described below, Options subject to this Plan (the "Options")
                                                                     -------
are not intended to qualify as "incentive stock options" ("Incentive Stock
                                                           ---------------
Options,") under the provisions of Section 422 of the Internal Revenue Code of
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1986, as amended (the "Code").
                       ----

     2. Definitions
        -----------

          As used in this Plan, the following capitalized terms shall have the
meanings set forth below:

          "Affiliate" means any Person that is controlled by, controlling or
under common control with the Company and shall include Apollo and each of its
partners and each Person in which Apollo or such partners hold or have the right
to acquire, collectively, more than 25% of the voting Equity Interest.

          "Anniversary Date" means each of the successive annual anniversary
dates that follow the last day of the calendar quarter coincident with or
following the Effective Date.

          "Apollo" means Apollo Management, L.P.

          "Board" has the meaning set forth in Section 3(a).

          "Capital Stock" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock, including all common
stock and preferred stock.

          "Code" has the meaning set forth in Section 1.

          "Committee" has the meaning set forth in Section 3(a).

          "Common Stock" means the common stock, $.01 par value, of the Company.

          "Company" has the meaning set forth in Section 1.

          "Disability" shall have the meaning defined in an employment or
similar agreement between the Company and the Optionee, or, if there is no
employment or similar
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agreement between the Company and the Optionee that defines "disability" for
purposes of such agreement, what constitutes a "disability" shall be determined
by the Committee in good faith.

          "EBITA" means, for any period of determination thereof, Net Income of
the Company and its subsidiaries plus, without duplication, (a) Interest
Expense, (b) income tax expense, refunds or credits for such periods included on
the Company's profit and loss statement and (c) amortization expense of the
Company and its subsidiaries, all determined in accordance with GAAP.

          "Effective Date" means the date of consummation of the transactions
contemplated under the Merger Agreement and under the Stock Purchase Agreement.

          "Equity Interest" means (a) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable for,
Capital Stock) and (b) with respect to a partnership, limited liability company
or similar Person, any and all units, interests, rights to purchase, warrants,
options or other equivalents of, or other ownership interests in, any such
Person.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Expiration Date" has the meaning set forth in Section 9.

          "Fair Market Value" means:

     (a) if the Shares of Common Stock are publicly traded and reported on a
closing price basis, the closing price on the principal national securities
exchange, market or system on which the Shares of Common Stock are traded on the
trading day immediately preceding the date of determination or, if no trades
were made on such day, on the next preceding day on which trades were made,
otherwise, the average of the high bid and low asked prices for the Shares of
Common Stock on the trading day immediately preceding the date of determination
in the over-the-counter market as reported by the Nasdaq National Market
("Nasdaq") or, if not reported by Nasdaq, by an established quotation service
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for over-the-counter securities; or

     (b) if there is no public trading market for the Shares, the fair value of
such Shares on the date of any determination as reasonably determined in good
faith by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation recent sale and offer prices of
Shares in private transactions negotiated at arms' length.

          Notwithstanding anything contained in this Plan to the contrary, all
determinations pursuant to this Section shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.

          "GAAP" means generally accepted accounting principles in the United
States, consistently applied, and statements and interpretations (if applicable)
issued by the Financial Accounting Standards Board, or any successor body, as in
effect from time to time, unless otherwise stated.

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          "Incentive Stock Option" has the meaning set forth in Section 1.

          "Indebtedness" means (a) indebtedness for borrowed money, (b)
reimbursement obligations with respect to letters of credit and similar
instruments, (c) obligations incurred, issued or assumed as the deferred
purchase price of property or services (other than accounts payable incurred in
the ordinary course of business consistent with past practice), (d) obligations
of others secured by (or, for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien on property
or assets of the Company or any subsidiary, (e) capital lease obligations, (f)
obligations in respect of guarantees of any of the foregoing or any "keep well"
or other agreement to maintain any financial statement condition of another
person, in each case, whether or not matured, liquidated, fixed, contingent, or
disputed, and (g) any prepayment penalties or similar charges incurred by the
Company in connection with any of the foregoing indebtedness or obligations.
Each of the foregoing items shall be taken into account in determining
Indebtedness to the extent such items would be reflected on the Company's
balance sheet in accordance with GAAP consistently applied.

          "Initial Awards" has the meaning set forth in Section 4(b).

          "Initial Participants" means the persons listed as Initial
Participants on Exhibit A hereto.

          "Interest Expense" means, for any period, all interest (including
capitalized interest) and all amortization of debt discount and expense on any
particular Indebtedness (including, without limitation payment-in-kind, zero
coupon and other like securities and the interest component of capital lease
obligations applicable to such period) of the Company and its subsidiaries
determined on a consolidated basis in accordance with GAAP.

          "Investment" in any Person, means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including any arrangement pursuant to which an investing Person
incurs Indebtedness of the types referred to in the definition of "Indebtedness"
in respect of such Person.

          "Merger Agreement" means the Agreement and Plan of Merger entered into
by and among Mile High Acquisition Corp., Pacer International, Inc. and
Stockholders of Pacer International, Inc. dated February 22, 1999.

          "Net Debt" means (a) all amounts owing by the Company in respect of
outstanding Indebtedness (including principal, interest, fees, expenses and
prepayment penalties (which are due and payable)), less (b) cash of the Company,
all determined on a consolidated basis in accordance with GAAP.

          "Net Income" means, for any period, the gross revenues of the Company
and its consolidated subsidiaries for such period less all expenses and other
proper charges, in each case determined in accordance with GAAP, but (a)
excluding in any event Apollo's annual management fee charged to the Company,
(b) adjusted to reflect business acquisitions or dispositions occurring during
the period on a pro-forma combined basis as if the transactions had

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occurred at the beginning of such period, taking into account the historical
financial results of the applicable business, and (c) adjusted for the after-tax
effect of extraordinary gains or losses and other non-recurring or non-operating
gains or losses which affect Net Income as and to the extent deemed appropriate
by the Committee in its sole discretion.

          "Option" means an option to purchase Shares subject to the terms and
conditions of this Plan.

          "Option Agreement" has the meaning set forth in Section 4(c).

          "Option Price" has the meaning set forth in Section 5(a).

          "Optioned Shares" has the meaning set forth in Section 10(b).

          "Optionees" has the meaning set forth in Section 4(a).

          "Per Share Equity Value" means, in respect of any Tranche B or Tranche
C Performance Measurement Date or other applicable measurement date under the
Shareholders' Agreement, (a) the product of (i) EBITA for the twelve-month
period ending on such date, multiplied by (ii) 7.0, less, (b) the outstanding
                                                    ----
principal balance of the outstanding consolidated Indebtedness (plus any accrued
interest) and the value of the Company preferred stock (in each case as adjusted
to reflect a Sale of the Company, if applicable) divided by (c) the sum of (i)
the number of Shares of Common Stock outstanding as of the end of such twelve-
month period and (ii) the number of Shares of Common Stock issuable upon the
conversion of securities convertible into Shares of Common Stock or upon the
exercise of vested options or warrants exercisable for Shares of Common Stock,
using the treasury share method in accordance with GAAP, including any Options
scheduled to become vested on such measurement date.  Notwithstanding the
foregoing, in the case of a Qualified Public Offering, Per Share Equity Value
shall have the meaning set forth in Sections 7(b) or 8(b), as applicable.

          "Person" is to be construed in the broadest sense and means and
includes any natural person, company, limited liability company, partnership,
joint venture, corporation, business trust, or unincorporated organization or
any national, federal, state, municipal, local, territorial, foreign or other
government or any department, commission, board, bureau, agency, regulatory
authority or instrumentality thereof, or any court, judicial, administrative or
arbitral body or public or private tribunal.

          "Plan" has the meaning set forth in Section 1.

          "Preferred Stock" means preferred stock of the Company, par value 01.

          "Qualified Public Offering" means a public offering of Shares of
Common Stock of the Company in which the proceeds to the Company, net of all
fees, commissions, discounts and expenses, equals or exceeds $ 50 million.

          "Rollover Option" means a stock option originally granted under the
PMT Holdings, Inc.  1997 Stock Option Plan ("1997 Rollover Options") or the
Pacer International,

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Inc. 1998 Stock Option Plan ("1998 Rollover Options") which remains outstanding
as of the Effective Date.

          "Sale of the Company" means the occurrence of one or more of the
following:

     (a)   a sale or series of sales to any Person or group of Persons in
related transactions, other than an Affiliate of the Company, of all or
substantially all of the assets of the Company;

     (b)   a sale or series of sales by the Company of Shares of Common Stock
(whether by merger or otherwise), if any such sale or series of sales is made to
a Person or group of Persons in related transactions, other than an Affiliate of
the Company, which Person (or group of Persons), after giving effect to such
sale or series of sales, will own more than 50% of the outstanding Capital Stock
of the Company; or

     (c)   a sale or series of sales by the shareholders of the Company of
Shares of Common Stock, if any such sale is made to a Person or group of Persons
in related transactions, other than an Affiliate of the Company, which Person
(or group of Persons), after giving effect to such sale or series of sales, will
own more than 50% of the outstanding Shares of Common Stock.

          "Securities Act" has the meaning set forth in Section 12(b).

          "Shares" means a shares of Common Stock or Preferred Stock except as
specifically set forth as shares of Common Stock or shares of Preferred Stock.

          "Shareholders' Agreement" means that certain Shareholders' Agreement
among Coyote Acquisition LLC, Coyote Acquisition II LLC, APL Land Transport
Services, Inc.  and certain shareholders of the Company, dated as of May --,
1999.

          "Stock Purchase Agreement" means the Stock Purchase Agreement by and
between APL Limited and Coyote Acquisition LLC, dated March 15, 1999.

          "Tranche A Options" has the meaning set forth in Section 4(d).

          "Tranche B Options" has the meaning set forth in Section 4(d).

          "Tranche B Performance Measurement Date" has the meaning set forth in
Section 7(a).

          "Tranche B Per Share Target Value" has the meaning set forth in
Section 7(a).

          "Tranche B Vesting Date" has the meaning set forth in Section 7(a).

          "Tranche C Options" has the meaning set forth in Section 4(d).

          "Tranche C Performance Measurement Date" has the meaning set forth in
Section 8(a).

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          "Tranche C Per Share Target Value" has the meaning set forth in
Section 8(a).

          "Tranche C Vesting Date" has the meaning set forth in 8(a).

          "Transferred" means, with respect to any security (including any
Option), sold, transferred, assigned, encumbered, pledged or otherwise disposed
of, either voluntarily or involuntarily and with or without consideration
(including, without limitation, by way of foreclosure or other acquisition by
any lender with respect to any Shares pledged to such lender by an Optionee).

          "Vested Option" means an option which has vested and become
exercisable in accordance with this Plan, or pursuant to an Option Agreement, as
the case may be.

     3. Administration Of The Plan
        --------------------------

        (a) Stock Option Committee. This Plan shall be administered by a
committee (the "Committee") of the Board of Directors of the Company (the
                ---------
"Board"), appointed from time to time by the Board. The Committee shall include
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the Chairman of the Board of the Company at all times. The Committee shall have
the power and authority to grant Options under this Plan. The Board may exercise
any power to be exercised by the Committee hereunder. Awards of Options to non-
employee directors of the Company under the Plan shall be approved by the Board
and, with respect to awards to such directors, all rights, powers and
authorities vested in the Committee under the Plan shall instead be vested in
the Board and all provisions of the Plan relating to the Committee shall be
interpreted in a manner consistent with the foregoing by treating any such
reference as a reference to the Board for such purpose.

        (b) Procedures. The members of the Committee shall from time to time
select a Chairman from among the members of the Committee. The Committee shall
adopt such rules and regulations as it shall deem appropriate concerning the
holding of meetings and the administration of this Plan. A majority of the
entire Committee shall constitute a quorum and the actions of a majority of the
members of the Committee present at a meeting at which a quorum is present, or
actions approved in writing by all of the members of the Committee, shall be the
actions of the Committee.

        (c) Administration. Except as may otherwise be expressly reserved to the
Board as provided herein, the Committee shall have all powers with respect to
the administration of this Plan, including the interpretation of the provisions
of this Plan and any Option Agreement and the making of all factual
determinations and financial calculations required under the Plan. All decisions
of the Board or the Committee, as the case may be, not inconsistent with the
Plan or Option Agreement terms, shall be conclusive and binding on all
participants in this Plan. No member of the Board or Committee will be liable
for any action or determination made in good faith by the Board or Committee
with respect to the Plan or any Option Agreement under it.

     4. Grant Of Options; Shares Subject To This Plan
        ---------------------------------------------

        (a) Power to Grant Options.  Subject to the provisions of this Plan
including, without limitation, any specific provisions regarding the Initial
Awards, the Committee shall have the power and authority, in its sole
discretion:

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           (i)   to approve of the persons (from among the class of persons
     eligible to receive Options under this Plan) to whom Options shall be
     granted, as recommended by the management of the Company (the "Optionees");
                                                                    ---------

           (ii)  to approve of the time or times at which Options shall be
     granted, as recommended by the management of the Company; and

           (iii) to approve of the number of Shares subject to such Option, as
     recommended by the management of the Company.

     (b)  Eligibility.  Notwithstanding anything to the contrary contained
          -----------
herein, as of the Effective Date, each Initial Participant shall be granted
Options which shall represent the right to acquire the number of Shares of
Common Stock set forth next to the name of each Initial Participant on Exhibit A
hereto (the "Initial Awards").  An aggregate of 832,000 Shares of Common Stock
             --------------
shall be subject to the Initial Awards.  Options, other than the Initial Awards,
may be granted under this Plan at any time and from time to time following the
Effective Date and up to the tenth anniversary of the Effective Date to any
person who is an employee or non-employee director of the Company or any of its
subsidiaries at the time of grant.  Notwithstanding any other provisions of this
Plan to the contrary, the Committee may, in its discretion, provide that, with
respect to any Option, the terms of the Option Agreement evidencing such Option
shall control any conflicts between provisions of this Plan and provisions of
such Option Agreement.

     (c)  Option Agreements.  Each Option shall be evidenced by a written
          -----------------
agreement (an "Option Agreement"), in substantially the forms of Exhibit D, with
               ----------------
such changes thereto as are consistent with this Plan as the Committee shall
deem appropriate.  Each Option Agreement shall be executed by the Company and
the Optionee.

     (d)  Date of Grant.  The date of grant of the Initial Awards shall be the
          -------------
Effective Date.  The date of grant of an Option, other than an Initial Award,
under this Plan shall be the date as of which the Committee approves the grant
of the Option (or such later date as may be specified by the Committee).

     (e)  Vesting of Options.  With respect to Initial Awards, 277,345 Shares of
          ------------------
Common Stock of the aggregate Initial Awards shall become vested and exercisable
in accordance with Section 6 ("Tranche A Options"), 277,336 Shares of Common
                               -----------------
Stock of the aggregate Initial Awards shall become vested and exercisable in
accordance with Section 7 ("Tranche B Options"), and 277,319 Shares of Common
                            -----------------
Stock of the aggregate Initial Awards shall become vested and exercisable in
accordance with Section 8 ("Tranche C Options").  Rollover Options shall become
                            -----------------
vested and exercisable as provided in the Merger Agreement and as set forth in
the Option Agreements relating to each Rollover Option, provided that all 1997
Rollover Options shall become Vested Options upon a Sale of the Company.
Options, other than the Rollover Options and the Initial Awards, granted under
the Plan shall become vested and exercisable as determined by the Committee, in
its sole and absolute discretion, and set forth in the Option Agreement.

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     (f) Number of Shares.  Subject to any adjustments pursuant to Section 11
         ----------------
and subject to the vesting provisions set forth herein, each Option shall be
exercisable for one Share.  Subject to any equitable adjustments pursuant to
Section 11, the number of Shares of Common Stock subject at any one time to
Options granted under this Plan, and the number of Shares of Common Stock
theretofore issued and delivered pursuant to the exercise of Options granted
under this Plan, shall be 1,793,747 Shares of Common Stock, which includes
562,861 Shares of Common Stock subject to the Rollover Options.  In addition,
subject to any equitable adjustments pursuant to Section 11 hereof, 44,997
Shares of Preferred Stock will be subject to 1997 Rollover Options.  If and to
the extent that Options granted under this Plan terminate, expire or are
canceled without having been fully exercised, new Options may be granted under
this Plan with respect to the Shares of Common Stock covered by the unexercised
portion of such terminated, expired or canceled Options.

     (g)  Character of Shares. The Shares of Common Stock issuable upon exercise
          -------------------
of Options granted under this Plan shall be (i) authorized but unissued Shares
of Common Stock, (ii) Shares of Common Stock held in the Company's treasury or
(iii) a combination of the foregoing.

     (h)  Reservation of Shares.  The Company shall ensure that the number of
          ---------------------
Shares reserved for issuance under this Plan shall at all times be equal to the
maximum number of Shares which may be purchased at such time pursuant to
outstanding Options.

     (i)  Rollover Options.  As of the closing of the Effective Date, all
          ----------------
Rollover Options shall become subject to the terms and conditions of this Plan
and the Option Agreements entered into hereunder, which shall substitute for the
Option Agreements previously entered into with respect to the Rollover Options.
Exhibit B sets forth the number of Shares of Common Stock and Shares Preferred
Stock and the exercise price of each next to the name of each holder thereof.
An aggregate of 562,861 Shares of Common Stock and 44,997 Shares of Preferred
Stock are subject to the Rollover Options.  All Rollover Options originally
qualified as Incentive Stock Options under the PMT Holdings, Inc. 1997 Stock
Option Plan and the applicable provisions of the Code shall, to the extent
permitted under the Code, continue to be treated as Incentive Stock Options.

     5. Option Price
        ------------

          The exercise price (the "Option Price") for each Share subject to an
Option shall be determined by the Committee and set forth in the Option
Agreement, except that (i) the exercise price for the Initial Awards shall be
$10.00 per share (subject to equitable adjustment pursuant to Section 11
hereof), and (ii) the exercise price of each Rollover Option shall be determined
in the manner determined in Section 4.4(b) of the Merger Agreement and as set
forth in the Option Agreements relating to each Rollover Option.

     6. Exercisability And Vesting Of Tranche A Options
        -------------------------------------------------

          (a)  Vesting Schedule.  Tranche A Options shall become Vested
               ----------------
Options in five equal installments on each of the first five Anniversary Dates,
provided the Optionee is employed by the Company on each such anniversary date.

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       (b) Termination of Employment.  Each Tranche A Option shall cease vesting
           -------------------------
as of the time that an Optionee's employment with the Company is terminated for
any reason, and any Tranche A Option that is not a Vested Option as of such time
shall become null and void and be of no further force or effect.

     7. Exercisability And Vesting Of Tranche B Options
        -----------------------------------------------

       (a) Vesting Schedule.  All of the Tranche B Options shall become
           ----------------
Vested Options on the date that is seven years immediately following the date of
grant ("Tranche B Vesting Date") if the Optionee is employed by the Company on
        ----------------------
the Tranche B Vesting Date.  However, if the Per Share Equity Value as of a
Tranche B Performance Measurement Date indicated below (each a "Tranche B
                                                                ---------
Performance Measurement Date") equals or exceeds the corresponding Tranche B Per
----------------------------
Share Target Value indicated below (the "Tranche B Per Share Target Value") and
                                         --------------------------------
the Optionee is employed by the Company on such Tranche B Performance
Measurement Date, then 20% of the Tranche B Options shall vest on such Tranche B
Performance Measurement Date.

                      ------------------------------------------------------
                        Tranche B Performance          Tranche B Per Share
                        Measurement Date                  Target Value
                      ------------------------------------------------------
                        first Anniversary Date              $13.00
                      ------------------------------------------------------
                        second Anniversary Date             $16.90
                      ------------------------------------------------------
                        third Anniversary Date              $21.97
                      ------------------------------------------------------
                        fourth Anniversary Date             $28.58
                      ------------------------------------------------------
                        fifth Anniversary Date              $37.13
                      ------------------------------------------------------

     (b)  IPO Prior to Final Performance Measurement Date.  Notwithstanding the
          -----------------------------------------------
provisions of Section 7(a), if the Company sells Shares of Common Stock in a
Qualified Public Offering prior to the date of final Tranche B Performance
Measurement Date, the Per Share Equity Value as of each Tranche B Performance
Measurement Date following the Qualified Public Offering shall be the average
closing stock price for the 90 trading days immediately preceding such Tranche B
Performance Measurement Date (with the five highest and five lowest closing
prices disregarded), subject to adjustment pursuant to Section 11 hereof.

     (c)  Sale of the Company.  Notwithstanding the provisions of Section 7(a),
          -------------------
if a Sale of the Company shall occur prior to the date of final Tranche B
Performance Measurement Date, all of the Tranche B Options that are scheduled
for possible vesting on a Tranche B Performance Measurement Date that is on or
after the date of such Sale of the Company shall become Vested Options as of the
effective date of the Sale of the Company, subject to the condition that the
Fair Market Value of the per share consideration received by the holders of
Shares (after giving effect to the vesting described herein), net of all after-
tax fees and expenses incurred in such Sale of the Company, equals or exceeds
(i) the Tranche B Per Share Target Value for the Tranche B Performance
Measurement Date immediately preceding such Sale of the Company, plus (ii) the
product of (x) (A) the Tranche B Per Share Target Value for the Tranche B
Performance Measurement Date immediately following such Sale of the Company,
less (B) the Tranche B Per Share Target Value for the Tranche B Performance
Measurement Date immediately preceding such Sale of the Company, multiplied by
(y) a fraction, the numerator of which is the number of

                                       9
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days lapsed as of the consummation of such Sale of the Company since the
immediately preceding Tranche B Performance Measurement Date and the denominator
of which is 365.

          (d)  Calculations. Notwithstanding anything to the contrary contained
               ------------
in this Plan, the determination as to whether the Per Share Equity Value (prior
to a Qualified Public Offering) equals or exceeds the Tranche B Per Share Target
Value shall be made after the Company's audited financials for the applicable
period become available. All decisions by the Committee with respect to any
calculations pursuant to this Section (absent manifest error or bad faith) shall
be final and binding on all Optionees.

          (e)  Termination of Employment.  Notwithstanding anything else to the
               -------------------------
contrary in this Section 7, each Tranche B Option shall cease vesting as of the
time that an Optionee's employment with the Company is terminated for any
reason, and no Tranche B Option which is not a Vested Option as of such time
shall become a Vested Option thereafter.

     8. Exercisability And Vesting Of Tranche C Options
        -------------------------------------------------

          (a)  Vesting Schedule.  All of the Tranche C Options shall become
               ----------------
Vested Options on the date that is seven years immediately following the date of
grant ("Tranche C Vesting Date") if the Optionee is employed by the Company on
        ----------------------
the Tranche C Vesting Date.  However, if the Per Share Equity Value as of a
            -
Tranche C Performance Measurement Date indicated below (each a "Tranche C
        -                                                       ---------
Performance Measurement Date") equals or exceeds the corresponding Tranche C Per
----------------------------                                               -
Share Target Value indicated below (the "Tranche C Per Share Target Value") and
                                         --------------------------------
the Optionee is employed by the Company on such Tranche C Performance
                                                        -
Measurement Date, then 20% of the Tranche C Options shall vest on such Tranche C
                                          -                                    -
Performance Measurement Date.

                         ---------------------------------------------------
                          Tranche C Performance        Tranche C Per Share
                          Measurement Date                Target Value
                         ---------------------------------------------------
                          first Anniversary Date                  $14.00
                         ---------------------------------------------------
                          second Anniversary Date                 $19.60
                         ---------------------------------------------------
                          third Anniversary Date                  $27.44
                         ----------------------------------------------------
                          fourth Anniversary Date                 $38.42
                         ----------------------------------------------------
                          fifth Anniversary Date                  $53.79
                         ----------------------------------------------------

     (b) IPO Prior to Final Performance Measurement Date.  Notwithstanding the
         -----------------------------------------------
provisions of Section 8(a), if the Company sells Shares of Common Stock in a
Qualified Public Offering prior to the date of final Tranche C Performance
Measurement Date, the Per Share Equity Value as of each Tranche C Performance
Measurement Date following the Qualified Public Offering shall be the average
closing stock price for the 90 trading days immediately preceding such Tranche C
Performance Measurement Date (with the five highest and five lowest closing
prices disregarded), subject to adjustment pursuant to Section 11 hereof.

     (c) Sale of the Company.  Notwithstanding the provisions of Section 8(a),
         -------------------
if a Sale of the Company shall occur prior to the date of final Tranche C
Performance Measurement Date, all of the Tranche C Options that are scheduled
for possible vesting on a Tranche C Performance Measurement Date that is on or
after the date of such Sale of the Company shall become Vested

                                       10
<PAGE>

Options as of the effective date of the Sale of the Company, subject to the
condition that the Fair Market Value of the per share consideration received by
the holders of Shares (after giving effect to the vesting described herein), net
of all after-tax fees and expenses incurred in such Sale of the Company, equals
or exceeds (i) the Tranche C Per Share Target Value for the Tranche C
Performance Measurement Date immediately preceding such Sale of the Company,
plus (ii) the product of (x) (A) the Tranche C Per Share Target Value for the
Tranche C Performance Measurement Date immediately following such Sale of the
Company, less (B) the Tranche C Per Share Target Value for the Tranche C
Performance Measurement Date immediately preceding such Sale of the Company,
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed as of the consummation of such Sale of the Company since the immediately
preceding Tranche C Performance Measurement Date and the denominator of which is
365.

          (d)  Calculations.  Notwithstanding anything to the contrary contained
               ------------
in this Plan, the determination as to whether the Per Share Equity Value (prior
to a Qualified Public Offering) equals or exceeds the Tranche C Per Share Target
Value shall be made after the Company's audited financials for the applicable
period become available.  All decisions by the Committee with respect to any
calculations pursuant to this Section (absent manifest error or bad faith) shall
be final and binding on all Optionees.

          (e)  Termination of Employment.  Notwithstanding anything else to the
               -------------------------
contrary in this Section 8, each Tranche C Option shall cease vesting as of the
time that an Optionee's employment with the Company is terminated for any
reason, and no Tranche C Option which is not a Vested Option as of such time
shall become a Vested Option thereafter.

     9.   Automatic Termination Of Option
          -------------------------------

          Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur (the
"Expiration Date"):
 ---------------

          (a)  the tenth anniversary of the date on which such Option is
granted;

          (b)  if an Optionee's employment with the Company or service as a non-
employee director of the Company is terminated for any reason other than the
death or Disability of the Optionee, the ninetieth day following the date of
such termination;

          (c)  if an Optionee's employment with the Company or service as a non-
employee director of the Company is terminated due to the death or Disability of
the Optionee, twelve months after the date of such death or Disability; or

          (d)  notwithstanding the foregoing, the expiration of such other
period of time or the occurrence of such other event as the Committee, in its
discretion, may provide in the Option Agreement governing such Option, provided
that no Option shall be exercisable after the tenth anniversary of the date on
which such Option is granted.

                                       11
<PAGE>

     10.  Procedure For Exercise
          ----------------------

          (a)  Payment.  At the time an Option is granted under this Plan, the
               -------
Committee shall, in its discretion, specify one or more of the following forms
of payment which may be used by an Optionee upon exercise of his Vested Option:

               (i)   cash or personal or certified check payable to the Company
     in an amount equal to the aggregate Option Price of the Shares with respect
     to which the Option is being exercised;

               (ii)  stock certificates (in negotiable form) representing Shares
     having a Fair Market Value on the date of exercise equal to the aggregate
     Option Price of the Shares with respect to which the Option is being
     exercised; or

               (iii) a combination of the methods set forth in clauses (i) and
     (ii) above.

          (b)  Notice.  An Optionee (or other person, as provided in Section
               ------
12(c)) may exercise a Vested Option granted under this Plan in whole or in part
(but for the purchase of whole Shares only), as provided in the Option Agreement
evidencing his Option, by delivering a written notice (the "Notice") to the
                                                            ------
Secretary of the Company.  The Notice shall be delivered at least 30 days prior
to the date the option may be exercised.  This 30-day advance notice requirement
shall not apply following an Initial Public Offering nor within the 30-day
period prior to the termination or expiration of the Option, and such
requirement may be waived in whole or in part by the Company with the written
consent of Apollo.  The Notice shall state:

               (i)   that the Optionee elects to exercise the Vested Option;

               (ii)  the number of Shares with respect to which the Vested
     Option is being exercised (the "Optioned Shares");
                                     ---------------

               (iii) the method of payment for the Optioned Shares (which
     method must be available to the Optionee under the terms of his Option
     Agreement);

               (iv)  the date upon which the Optionee desires to consummate the
     purchase (which date must be prior to the termination of such Option);

               (v)   a copy of any election filed by the Optionee pursuant to
     Section 83(b) of the Code; and

               (vi)  such further provisions consistent with this Plan as the
     Committee may from time to time require.

          (c)  Exercise Date.  The exercise date of a Vested Option shall be the
               -------------
date which is 30 days following the date on which the Company receives the
Notice from the Optionee, or (i) such earlier date as may be permitted in
accordance with paragraph (a) above, or (ii) such later date as may be specified
in the Notice from the Optionee.

                                       12
<PAGE>

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 12(c)) for the Shares
purchased upon exercise of an Option as soon as practicable after receipt of the
Notice and payment of the aggregate Option Price for such Shares. Neither the
Optionee nor any person exercising a Vested Option in accordance with the
provisions of Section 12(c) shall have any privileges as a shareholder of the
Company with respect to any Shares subject to an Option granted under this Plan
until the date of issuance of a stock certificate pursuant to this Section
10(c).

     11.  Adjustments
          -----------

          (a)  If the Company shall at any time change the number of issued
Shares without new consideration to the Company (such as by stock dividend,
stock split, recapitalization, reorganization, exchange of shares, liquidation,
combination or other change in corporate structure affecting the Shares) or make
a distribution of cash or property which has a substantial impact on the value
of issued Shares, the number of Shares covered by the Plan and each outstanding
Option and the purchase price per Share under each outstanding Option shall be
adjusted so that the aggregate consideration payable to the Company and the
value of each such Option shall not be changed.

          (b)  The Committee may, in its sole discretion, authorize the
issuance, continuation or assumption of outstanding Options or provide for other
equitable adjustments after changes in the Shares resulting from any merger,
consolidation, sale of assets, acquisition of property or stock,
recapitalization, reorganization or similar occurrence upon such terms and
conditions as it may deem necessary to preserve Optionees' rights under the
Plan.

          (c)  Notwithstanding any other provision of this Plan to the contrary,
upon any Sale of the Company:

               (i)  as to each Option that is or becomes a Vested Option as of
     a Sale of the Company, (a) each Option, other than a 1997 Rollovers Option,
     shall be exercisable until the closing of the Sale of the Company
     transaction, but shall terminate and be of no further force or effect
     following the closing of the Sale of the Company transaction and (b) each
     1997 Rollover Option, in the event that the Bring Along Rights contained in
     the Shareholders' Agreement are exercised in connection with such
     transaction, shall be exercisable until the closing of the Sale of the
     Company transaction, but shall terminate and be of no further force or
     effect following the closing of the Sale of the Company transaction; and

               (ii) as to each Option that is not a Vested Option as of a Sale
     of the Company, such Option shall become exercisable as follows: (a) each
     1998 Rollover Option and Tranche A Option shall become vested and
     exercisable in accordance with any time vesting requirements applicable to
     such Option, and (b) each Tranche B and Tranche C Option to the extent such
     Option has not become a Vested Option as of the closing of the Sale of the
     Company transaction shall become exercisable in accordance with the seven
     year time vesting requirement applicable to such Options under Section 7(a)
     or 8(a) hereof, but disregarding any performance vesting provisions of such
     Options;

                                       13
<PAGE>

     provided, however, that any portion of an Option that becomes a Vested
     --------  -------
     Option after such Sale of the Company in accordance with this Section 11
     (c)(ii) shall remain exercisable for 10 days before such portion of the
     Option terminates and is of no further force of effect.

          (d)  Any adjustments or other determinations to be made as provided
for in this Section 11 shall be made by the Committee in its discretion acting
in good faith, and shall be conclusive and binding on all persons holding any
Options granted under this Plan. In the case of any Rollover Options that
qualify as incentive stock options under Section 422 of the Code, such
adjustments shall be made in a manner consistent with the requirements of
Section 424(a) of the Code.

     12.  Restrictions On Options And Optioned Shares
          -------------------------------------------

          (a)  No Options shall be granted under this Plan, and no Shares shall
be issued and delivered upon the exercise of Options granted under this Plan,
unless and until the Company and/or the Optionee shall have complied with all
applicable Federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.  The Company shall make all reasonable efforts to comply
with such requirements that relate to the Company.

          (b)  The Committee in its sole and absolute discretion may, as a
condition to the exercise of any Vested Option granted under this Plan, require
an Optionee (i) to represent in writing that the Shares received upon exercise
of a Vested Option are being acquired for investment and not with a view to
distribution (ii) to make such other representations and warranties as are
reasonably deemed appropriate by the Company to satisfy the requirements of
applicable law, including, without limitation, an applicable private placement
exemption of the Securities Act as determined by the Committee.  Stock
certificates representing Shares acquired upon the exercise of Vested Options
that have not been registered under the Securities Act shall, if required by the
Committee, bear the following legend and such additional legends as may be
required by the Option Agreement evidencing a particular Option:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
          "SECURITIES ACT"), THE SHARES HAVE BEEN ACQUIRED FOR
           --------------
          INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD,
          OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
          EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
          SECURITIES ACT OR AN OPINION OF COUNSEL TO THE ISSUER HEREOF
          THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."

          (c)  Solely to the extent permitted by the Committee in an Option
Agreement and subject to such terms and conditions as the Committee shall
specify, an Option (other than an Incentive Stock Option) may be transferred to
members of the Optionee's immediate family (as determined by the Committee) or
to trusts, partnerships or corporations whose beneficiaries,

                                       14
<PAGE>

members or owners are members of the Optionee's immediate family, and/or to such
other persons or entities as may be approved by the Committee in advance and set
forth in an Award Agreement, in each case subject to the condition that the
Committee be satisfied that such transfer is being made for estate or tax
planning purposes or for gratuitous or donate purposes, without consideration
(other than nominal consideration) being received therefor. Except to the extent
permitted by the Committee in accordance with the foregoing, no Option granted
under this Plan may be Transferred by the Optionee, except by will or by the
laws of descent and distribution. A Vested Option may be exercised during the
lifetime of the Optionee only by the Optionee. If an Optionee dies, his Vested
Options shall thereafter be exercisable, during the period specified in Section
9(d) or the applicable Option Agreement (as the case may be), by his executors
or administrators to the full extent (but only to such extent) to which such
Options were exercisable by the Optionee at the time of his death.

          (d)  No Share issued upon exercise of an Option may be Transferred,
except as otherwise provided in this Plan, in the Shareholders' Agreement (if
applicable to the Optionee), by will, by the laws of descent and distribution or
to the Company or any of the Company's Affiliates.

          (e)  The rights of an Optionee with respect to each Share issuable
upon exercise of an Option granted under the Plan shall be subject to and
benefit from the terms of the Shareholders' Agreement, in the case of an
Optionee subject to the Shareholders' Agreement, or to the terms of the
Shareholders' Rights Appendix attached hereto as Exhibit C, in the case of an
Optionee not subject to the Shareholders' Agreement, and an Optionee shall be
required, as a condition of exercising an Option, to execute and deliver all
such agreements and other instruments required by the Company for such purpose.

          (f)  The Committee in its sole and absolute discretion may, as a
condition to receiving an Option granted under the Plan require that the
Optionee enter into a shareholders' or similar agreement in the form approved by
the Committee, or include provisions in the applicable Option Agreement, that
shall provide for one or more of the following: transfer restrictions, right of
first refusal, call option, drag-along rights, option exercise "blackout"
periods and other such rights or restrictions with respect to the Options and
the Optioned Shares as the Committee in its discretion shall deem appropriate.

     13.  Forfeiture Of Options
          ---------------------

          In the event that an Optionee violates any noncompetition covenant,
including, without limitation, any noncompetition covenant contained in an
Option Agreement, to which he is a party in favor of the Company or any
Affiliate, all Options held by the Optionee at such time, including any Vested
Options, will immediately be forfeited.

     14.  Effective Date And Termination Of The Plan
          ------------------------------------------

          (a)  This Plan shall become effective on the Effective Date.

          (b)  No Options may be granted after the tenth anniversary of the
Effective Date.

                                       15
<PAGE>

          (c)  Any Option outstanding as of the tenth anniversary of the
Effective Date shall remain in effect until the earlier of the exercise thereof
or the Expiration Date with respect to such Option.

     15.  Withholding Taxes
          -----------------

          When taxable compensation is realized by an Optionee in respect of an
Option, such Optionee shall satisfy all applicable federal, state or local taxes
required by law to be withheld at such time.  The Option Agreement shall specify
the manner in which the withholding obligation shall be satisfied with respect
to the Option.

     16.  Miscellaneous
          -------------

          Each Option granted under this Plan may contain such other terms and
conditions not inconsistent with this Plan as may be determined by the
Committee, in its sole and absolute discretion.

          (a)  Number and Gender.  With respect to words used in this Plan, the
               -----------------
singular form shall include the plural form, the masculine gender shall include
the feminine gender, and vice-versa, as the context requires.

          (b)  Captions.  The use of captions in this Plan is for convenience.
               --------
The captions are not intended to provide substantive rights.

          (c)  Amendment of Plan.  This Plan may be modified or amended in any
               -----------------
respect by the Board, provided that no amendment or modification of the Plan
shall in any manner affect any Option theretofore granted without the consent of
the Optionee or the permitted transferee of such Option.

          (d)  Governing Law.  All questions concerning the construction,
               -------------
interpretation and validity of this Plan and the instruments evidencing the
Options granted hereunder shall be governed by and construed and enforced in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.  In furtherance of
the foregoing, the internal law of the State of Delaware will control the
interpretation and construction of this Plan, even if under such jurisdiction's
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.

          (e)  No Evidence of Employment or Service.  Nothing contained in this
               ------------------------------------
Plan or in any Option Agreement shall confer upon any Optionee any right with
respect to the continuation of his employment by or service with the Company or
any of its subsidiaries or interfere in any way with the right of the Company or
any such subsidiary (subject to the terms of any separate agreement to the
contrary) at any time to terminate such employment or service or to increase or
decrease the compensation of the Optionee from the rate in existence at the time
of the grant of an Option.

                                       16
<PAGE>

          (f)  Integration. The provisions contained in this Plan and any Option
               -----------
Agreement shall supersede all prior plans, agreements and understandings with
respect to the subject matter hereof.

                                       17
<PAGE>

                                   EXHIBIT C

                         SHAREHOLDERS' RIGHTS APPENDIX

     1.   Restrictions on Transfer; Permitted Transferees; Pledges.
          --------------------------------------------------------

          (a)  The Optionee shall not make, or suffer to be made, any transfer,
sale, assignment, gift, pledge, mortgage, or other disposition or encumbrance
(all of which are comprised within the word "transfer" as used hereinafter) of
all or any portion of or any interest in the Shares of Common Stock now owned or
hereafter acquired by such Optionee, except that, subject to the further
provisions of Paragraph l(c) below, each of the following transfers are
expressly permitted:

               (i)  to any person after the Optionee shall have first offered
     the Shares of Common Stock proposed to be transferred to the Company in
     accordance with the procedures hereinafter set forth in Paragraphs 2
     through 6 below; provided, that no such transfer shall be permitted prior
                      --------
     to the date which is thirty (30) months after the Effective Date (it being
     understood that such thirty (30) month prohibition does not apply to public
     sales of shares, after an initial public offering, or pursuant to Rule 144
     (subject to the last proviso of this paragraph 1 (a)(i))); and; provided,
                                                                     --------
     further, that in no event may such transfer be effected if the board of
     -------
     directors of the Company (the "Board of Directors") determines that (A) the
     proposed transferee is a person who or which, directly or indirectly
     (including as an employee, director, officer, consultant, partner, owner,
     adviser or other participant in an entity), engages in the business of the
     Company, in any related business or in any other business competitive with
     the Company at the time of sale or (B) such transfer would be detrimental
     to the interests of the Company; and provided, further, that this paragraph
                                          --------  -------
     (i) shall not apply to, and shall not be interpreted to permit, any sales
     by the Optionee of Shares of Common Stock pursuant to Rule 144 under the
     Securities Act of 1933, as amended (the "Act"), including without
     limitation, clause (k) of Rule 144, unless (x) the sale is conducted
     through the managing underwriter for the corporation's initial public
     offering of securities (y) the underwriter has not advised the Company or
     the Optionee that the sale of all or any portion of the Shares of Common
     Stock would have a material adverse effect on the market for the Shares of
     Common Stock, and (z) either (i) the Apollo Entities (as defined below)
     have sold 33 1/3% of the Shares of Common Stock owned by them immediately
     following the date hereof or (2) six (6) years have elapsed since the
     Effective Date.

               (ii) to a Permitted Transferee (as hereinafter defined);
     provided, however, that any such Permitted Transferee may thereafter
     --------  -------
     transfer such Shares of Common Stock pursuant to this Paragraph 1(a)(ii)
     only to any other Permitted Transferee of the Optionee who originally owned
     such Shares of Common Stock or to such original Optionee; and provided,
                                                                   --------
     further, that if the Permitted Transferee is an entity described in clause
     -------
     (iv) of the definition of "Permitted Transferee", then prior to any
     disposition of any equity interest in such entity to a person that is not
     the original Optionee or a Permitted Transferee of such original Optionee
     (in which event, such entity would cease to be a Permitted Transferee) such
     entity shall either (A) transfer all Shares of Common Stock then held by it
     to the original Optionee or a Permitted Transferee thereof, or (B) offer

                                       18
<PAGE>

     such Shares of Common Stock to the Company pursuant to the provisions of
     Paragraphs 2 through 6 below on the terms upon which such Shares of Common
     Stock were originally transferred to such entity.

          (b)  For the purposes of the foregoing, a "Permitted Transferee" of an
Optionee shall mean:

               (i)   the heirs, executor, administrator or personal
     representative of the Optionee, upon the death of Optionee;

               (ii)  the spouse, sibling, parent, child or grandchild of the
     Optionee;

               (iii) a trust for the exclusive benefit of the Optionee and any
     of the family members listed in clause (ii) above;

               (iv)  any entity in which the Optionee holds a 100% equity
     interest; and

               (v)   Apollo Investment Fund IV L.P., Apollo Overseas Partners
     IV, L.P., Apollo UK Fund IV, L.P. (each an "Apollo Entity" and
     collectively, the "Apollo Entities") or the Company.

          (c)  Prior to any transfer of any Shares of Common Stock to a
purchaser pursuant to Paragraph l(a)(i) or to a Permitted Transferee pursuant to
Paragraph l(a)(ii), (i) the transferee of Shares of Common Stock shall agree to
be bound by and benefit from, and that such Shares of Common Stock shall
continue to be subject to, the terms and provisions of this Appendix as if he,
she or it were the Optionee hereunder and shall enter into a written agreement
to such effect in a form satisfactory to the Company and (ii) the Company shall
receive such assurances as it may reasonably request to the effect that such
transfer does not violate the Act, or applicable state securities laws
(including, without limitation, representations and warranties as to investment
intention and an opinion of counsel).

     2.   Notice by the Optionee of Proposed Transfers.
          --------------------------------------------

          If at any time the Optionee proposes to transfer any Shares of Common
Stock pursuant to Paragraph 1(a)(i) or 1(a)(ii) above, the Optionee shall, prior
to making any transfer of Shares of Common Stock, give written notice (the
"Notice") to the Company, specifying (i) the Shares of Common Stock to be so
transferred, (ii) the method of transfer, (iii) the identity of the prospective
transferee and (iv) the terms of any written offer made by the prospective
purchaser, and containing a true and correct copy of such offer, if any.

     3.   Offer to Sell Shares of Common Stock.
          ------------------------------------

          In the case of a proposed sale pursuant to Paragraph 1(a)(i) above,
the Notice provided in Paragraph 2 shall constitute an irrevocable offer by the
Optionee who delivers the Notice to sell such Shares of Common Stock to the
Company on the terms and at the price specified in this Paragraph 3 (such offer
is hereinafter referred to as the "Offer to Sell," the Optionee making an Offer
to Sell is hereinafter referred to as the "Offeror", and the Shares of Common
Stock offered in the Offer to Sell are hereinafter referred to as the "Offered
Shares of

                                       19
<PAGE>

Common Stock"). The Offer to Sell shall be at a price and on other terms
(including any deferral of payment in whole or in part) no less favorable to the
Company than the price and other terms offered by the prospective purchaser
specified in the Offeror's Notice, except that if the proposed sale is to be
                                   ------
wholly or partly for consideration other than money (the term "money" being used
in this Paragraph 3 to include deferred obligations to pay money), the Offer to
Sell shall be at a price equal to the amount of the net monetary consideration
plus the fair market value (as determined in good faith by the Board of
Directors within ten (10) days after receipt of the Notice by the Company), at
the date of the Offeror's Notice, of any consideration other than money offered
by the prospective purchaser.

     4.   Elections to Purchase Shares of Common Stock.
          --------------------------------------------

          The Company shall have the right and option, for a period of thirty
(30) days after delivery of the Offer to Sell by the Offeror (the "Exercise
Period"), to accept all of the Offered Shares of Common Stock at the purchase
price and on the terms stated in the Offer to Sell by delivery to the Offeror,
of written notice of its irrevocable election to purchase (the "Election
Notice"), specifying the number of Shares of Common Stock the Company elects to
purchase.  All elections to purchase Offered Shares of Common Stock in
accordance with this Paragraph 4 shall be binding on the Offeror.  The Company,
in its sole discretion may assign its right to acquire all or any portion of the
Offered Shares of Common Stock to all other shareholders of the Company on a pro
rata basis; provided, that, all of the Offered Shares of Common Stock are
            --------
acquired.

     5.   Closing of Purchase of Shares of Common Stock.
          ---------------------------------------------

          If an election has been made by the Company for all of the Offered
Shares of Common Stock, the Company and the Offeror shall mutually agree on a
place, time and date (not more than thirty (30) days nor less than twenty (20)
days after the expiration of the Exercise Period) for a closing of such purchase
and sale.  At the closing, the Offeror shall (i) deliver against receipt of the
purchase price therefor by cash or certified or bank cashier's check or wire
transfer of funds, the certificate or certificates representing the Shares of
Common Stock that the Company has elected to purchase, properly endorsed for
transfer, with all necessary transfer and documentary stamps affixed and (ii) be
deemed to have represented and warranted to such purchaser that (a) the Shares
of Common Stock to be sold are beneficially and of record owned by such Offeror
free and clear of all liens, claims, privileges, options, security interests,
rights of first refusal, agreements, limitations or voting rights, preemptive
rights, charges or other encumbrances of any nature (except as expressly
provided by this Agreement) (an "Encumbrance") and (b) the sale and delivery of
the Shares of Common Stock by such Offeror as contemplated hereby shall vest in
the purchaser on such date good, valid and marketable title to such Shares of
Common Stock free and clear of all Encumbrances.

     6.   Disposition by the Optionee of Shares of Common Stock not Purchased
          -------------------------------------------------------------------
by the Company and/or the Offerees.
----------------------------------

          If the Offered Shares of Common Stock are not purchased by the Company
pursuant to Paragraphs 3 through 5, such Shares of Common Stock may be disposed
of by the Offeror to the prospective transferee named in his Notice under
Paragraph 2, at a price and on

                                       20
<PAGE>

terms not more favorable to the transferee than those specified in such Notice,
but only within forty-five (45) days after the expiration of the Exercise
Period.

     7.   Bring Along Rights.
          ------------------

               In the event that an Apollo Entity or group of Apollo Entities
(the "Requisite Holders") shall transfer or propose to transfer, directly or
indirectly, in a single transaction or series of related transactions, Shares of
Common Stock which result in a transfer to any person other than any Apollo
Entity, the Company or their respective affiliates of greater than twenty-five
percent (25%) of the number of Shares of Common Stock outstanding on the date of
transfer (a "Transfer of Control"), then the Requisite Holders may require, by
written notice to the Optionee (the "Bring-Along Notice") that the Optionee
transfer an equivalent portion (on the basis of the amount of Shares of Common
Stock to be transferred by the Requisite Holders pursuant to the Transfer of
Control and the total number of Apollo Shares of Common Stock owned by the
Apollo Entities at such time) of his Shares of Common Stock in the Transfer of
Control on the same terms and conditions contained in the Bring-Along Notice.
The Bring-Along Notice shall contain a true and correct copy of the terms of the
Transfer of Control and shall identify the third party, the number of Apollo
Shares of Common Stock with respect to which the Apollo Entities have a bona
fide offer, the price per Apollo Share at which the sale is proposed to be made
and all other material terms and conditions of the Transfer of Control,
including the date, time and location of the closing. The Bring-Along Notice
shall be delivered not less than five (5) business days prior to the closing of
the purchase and sale contemplated by this Paragraph 7. In such event, the
Optionee shall deliver at the closing to the Requisite Holders the certificate
or certificates representing his Shares of Common Stock together with a
power-of-attorney authorizing the Requisite Holders to sell the Optionee's
equivalent portion of the Shares of Common Stock pursuant to the terms of the
Bring-Along Notice. At the closing of the Transfer of Control, the Requisite
Holders shall remit to the Optionee the total sales price (net of the Optionee's
pro rata of reasonable related expenses as specified above) of the Shares of
--- ----
Common Stock of the Optionee sold or otherwise disposed of pursuant thereto. The
Optionee hereby agrees to take all reasonable actions necessary to consummate
the Transfer of Control, including, but not limited to, the execution of
necessary or appropriate agreements, the taking of any necessary corporate
action and the waiving of any dissenters, appraisal or similar rights.

     8.   General Restriction.
          -------------------

               The Optionee understands and agrees that (a) the Shares of Common
Stock received pursuant to the Stock Option Agreement have not been registered
under the Act and are restricted securities; (b) he will not, directly or
indirectly, sell, assign, transfer, grant a participation in, pledge or
otherwise dispose of any Shares of Common Stock (or solicit any offers to buy or
otherwise acquire, or take a pledge of any Shares of Common Stock) except in
compliance with the Act and the terms and conditions of this Appendix; and (c)
any attempt to transfer any Shares of Common Stock not in compliance with this
Appendix shall be null and void and the Company shall not, and shall cause any
transfer agent not to, give any effect in the Company's records to such
attempted transfer.

                                       21
<PAGE>

     9.   Legends.
          -------

          (a)   In addition to any other legend that may be required, each
certificate for Shares of Common Stock shall bear a legend in substantially the
following form:

               "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
               SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
               SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
               EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS
               ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
               AS SET FORTH IN THE RELEVANT STOCK OPTION AGREEMENT
               ENTERED INTO PURSUANT TO THE PACER INTERNATIONAL, INC.
               1999 STOCK OPTION PLAN, COPIES OF WHICH MAY BE OBTAINED
               UPON REQUEST FROM PACER INTERNATIONAL, INC. OR ANY
               SUCCESSOR THERETO."

          (b)   If any Shares of Common Stock shall become registered under the
Act, the Company shall, upon the written request of the holder thereof, issue to
such holder a new certificate evidencing such Shares of Common Stock without the
first sentence of the legend required by Paragraph 9(a) endorsed thereon.  If
any Shares of Common Stock cease to be subject to any and all restrictions on
transfer set forth in this Appendix, the Company shall, upon the written request
of the holder thereof, issue to such holder a new certificate evidencing such
Security without the second sentence of the legend required by Paragraph 9(a)
endorsed thereon.

     10.  Holdback Agreement.
          ------------------

               Notwithstanding any other provision hereof, with respect to each
and every public offering, the Optionee agrees not to offer, sell or otherwise
transfer any Shares of Common Stock (except for Shares of Common Stock sold (a)
in such public offering or (b) to a Permitted Transferee) during the black-out
period prior to the effective date of the applicable registration statement or
other offering document as advised by counsel for the Company and during the
period after such effective date not to exceed six (6) months or such longer
period as the managing underwriter shall so advise.

     11.  Termination.
          -----------

               The provisions contained in this Appendix shall terminate
automatically upon the earlier of (i) the tenth anniversary of the date hereof
and (ii) at such time as the Company shall be a Public Company (as defined
below) and the Apollo Entities shall have sold in the aggregate pursuant to one
or more public offerings, fifty percent (50%) of the total number of Shares of
Common Stock owned by them on the Effective Date.  For the purposes of the
foregoing provision, the term "Public Company" means a company with one or more
classes of equity securities listed on a national securities exchange or
publicly traded in the over-the-counter market.

                                       22
<PAGE>

                                   EXHIBIT D

                         [1998 ROLLOVER OPTIONS - ISO]

                                                      STOCK OPTION AGREEMENT
                                        dated as of the date set forth on the
                                        signature page hereto, between Pacer
                                        International, Inc., a Tennessee
                                        corporation (the "Company"), and the
                                                          -------
                                        optionee set forth on the signature page
                                        hereto (the "Optionee").
                                                     --------

               WHEREAS, pursuant to the terms of the Agreement and Plan of
Merger entered into amongst Mile High Acquisition Corporation, a Delaware
corporation, the Company and the shareholders of the Company dated as of
February 22, 1999 (the "Merger Agreement"), it is intended that certain
outstanding options to purchase shares of common stock and shares of granted to
the Optionee under the Pacer International Inc. 1998 Stock Option Plan (the
"Prior Options") be converted at the Effective Time (as defined in the Merger
Agreement) into the right to receive options to purchase under the Company's
1999 Stock Option Plan (the "Plan") shares of the common stock, $.01 par value,
                             ----
of the Company (the "Common Stock") and shares of the preferred stock, par value
 .01, (the "Preferred Stock") of the Company.

               WHEREAS, the Company, whether acting through its Board of
Directors (the "Board") or a committee thereof (the "Committee") has agreed to
                -----                                ---------
assume the Prior Options granted to Optionee, effective as of the date of this
Agreement, as an option under the Company's 1999 Stock Option Plan to purchase
up to the number of shares of the Common Stock and Preferred Stock set forth on
the signature page hereto, on the terms and subject to the conditions set forth
in this Agreement and the Plan.

               NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained in this Agreement, the parties hereto agree as
follows:

     1.   The Plan.
          --------

               The terms and provisions of the Plan are hereby incorporated into
this Agreement as if set forth herein in their entirety. In the event of a
conflict between any provision of this Agreement and the Plan, the provisions of
this Agreement shall control. A copy of the Plan may be obtained from the
Company by the Optionee upon request. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Plan.

     2.  Option; Option Price.
         --------------------

               On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "Option") to purchase shares of
                                            ------
Common Stock and Preferred Stock at the Option Price set forth on the signature
page hereto.  The Option is intended to qualify for federal income tax purposes
as an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
                                       ----

                                       23
<PAGE>

     3.  Term.
         ----

          The term of the Option (the "Option Term") shall commence on the date
                                       -----------
hereof and expire on January 14, 2009/1/ of the date hereof, unless the Option
shall have sooner been terminated in accordance with the terms of the Plan or
this Agreement.

     4.  Vesting.
         -------

          The Option shall become a Vested Option as set forth in Appendix A
hereto; provided, however, that the Option shall become a Vested Option upon the
termination of the Optionee's employment by the Company without "cause" (as
defined in the employment agreement between the Optionee and Company, dated
____________, as amended from time to time). Notwithstanding the foregoing, each
Option shall cease vesting as of the time that the Optionee's employment with
the Company is terminated for any reason other than a termination without
"cause" as provided above, and no Option that is not a Vested Option as of such
time shall become a Vested Option thereafter.

     5.  Exercise.
         --------

          (a) Payment.  The following forms of payment may be used by
              -------
the Optionee (or such other person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan) upon exercise of the Option:

               (i)   cash or personal or certified check payable to the Company
     in an amount equal to the aggregate Option Price of the shares of Common
     Stock or Preferred Stock with respect to which the Option is being
     exercised;

               (ii)  stock certificates (in negotiable form) representing shares
     having a Fair Market Value on the date of exercise equal to the aggregate
     Option Price of the shares with respect to which the Option is being
     exercised; or

               (iii) a combination of the methods set forth in clauses (i) and
     (ii) above;

provided, however, that the Committee may, in its sole discretion, specify the
--------  -------
form of payment to be used by providing notice thereof to the Optionee (or such
other person exercising in accordance with the provisions of Section 12(c) of
the Plan) on or prior to the exercise date.

          (b) Notice.  The Optionee (or such other person exercising the Option
              ------
in accordance with the provisions of Section 12(c) of the Plan) may exercise the
Option in whole or in part (but for the purchase of whole shares only) by
delivering a written notice (the "Notice") to the Secretary of the Company.  The
                                  ------
Notice shall be delivered at least 30 days prior to the date the option may be
exercised.  This 30-day advance notice requirement shall not apply following an
Initial Public Offering nor within the 30-day period prior to the termination or
expiration of the Option, and such requirement may be waived in whole or in part
by the Company with the written consent of Apollo.  The Notice shall state:

______________________________
/1/      Atturio's expiration date is April 1, 2008.

                                       24
<PAGE>

               (i)   that the Optionee elects to exercise the Option;

               (ii)  the number of shares with respect to which the Option is
     being exercised (the "Optioned Shares");
                           ---------------

               (iii) the method of payment for the Optioned Shares;

               (iv)  the date upon which the Optionee desires to consummate the
     purchase (which date must be prior to the termination of the Option); and

               (v)   a copy of any election filed by the Optionee pursuant to
     Section 83(b) of the Code.

          (c)  Exercise Date.  The exercise date shall be the date on which the
               -------------
Company receives the Notice from the Optionee, or such later date as may be
specified in the Notice from the Optionee.

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 12(c) of the Plan) for the
shares purchased upon exercise of an Option as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such shares.
Neither the Optionee nor any person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan shall have any privileges as a
stockholder of the Company with respect to any shares subject to the Option
until the date of issuance of a stock certificate.

          (e)  Restrictions.  No shares shall be issued and delivered upon the
               ------------
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction.  The Company shall make all reasonable
efforts to comply with such requirements that relate to the Company.

     6.   Sale of the Company
          -------------------

               As provided in Section 1 l(c)(i) of the Plan, as to each Option
that is or becomes a Vested Option as of a Sale of the Company, each Option
shall be exercisable until the closing of the Sale of the Company transaction,
but shall terminate and be of no further force or effect following the closing
of the Sale of the Company transaction. As provided in Section 1 l(c)(ii) of the
Plan, as to each Option that is not a Vested Option as of a Sale of the Company,
such Option shall become vested and exercisable in accordance with any time
vesting requirements applicable to such Option; provided, however, that any
                                                --------  -------
portion of an Option that becomes a Vested Option after such Sale of the Company
shall remain exercisable for 10 days before such portion of the Option
terminates and is of no further force of effect.

     7.   Automatic Termination of Option
          -------------------------------

               Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur:

                                       25
<PAGE>

               (i)   January 14, 2009/2/;

               (ii)  if the Optionee's employment with the Company is terminated
   for any reason other than the death or Disability of the Optionee, the
   ninetieth day following the date of such termination;

               (iii) if the Optionee's employment with the Company is terminated
   due to the death or Disability of the Optionee, twelve months after the date
   of such death or Disability; or

               (iv)  following the Sale of the Company, as provided in Section 6
   hereof.

     8.   Restriction on Transfer.
          -----------------------

               The Option may not be transferred, pledged, assigned,
hypothecated or otherwise disposed of in any way by the Optionee and may be
exercised during the lifetime of the Optionee only by the Optionee. The Option
shall not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.

     9.   Optionee's Employment.
          ---------------------

               Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by the Company or any of its Affiliates or interfere in
any way with the right of the Company or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by the Company
or any of its Affiliates or to increase or decrease the Optionee's compensation
at any time.

     10.  Shareholders' Agreement.
          -----------------------

               The rights of an Optionee with respect to each Share issuable
upon exercise of an Option granted under the Plan shall be subject to and
benefit from the terms of the Shareholders' Agreement (in the case of an
Optionee subject to the Shareholders' Agreement) or to the terms of the
Shareholders' Rights Appendix attached as Exhibit C to the Plan (in the case of
an Optionee not subject to the Shareholders' Agreement), and an Optionee shall
be required, as a condition of exercising an Option, to execute and deliver all
such agreements and other instruments required by the Company for such purpose.

     11.  Notices.
          -------

               All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

_________________
/2/      Atturio's expiration date is April, 1, 2008.

                                       26
<PAGE>

          (a)  if to the Company, to it at:

                         Pacer International, Inc.
                         1675 Larimer Street
                         Suite 620
                         Denver, Colorado 80202
                         Attention: Corporate Secretary
                         Telecopier: (303) 623-5310
                         Telephone: (303) 623-5115

                         with a copy to:

                         Apollo Management
                         1301 Avenue of the Americas, 38th Floor
                         New York, NY 10019
                         Attention: Joshua Harris
                         Telecopier: (212) 515-3263
                         Telephone: (212) 515-3221

          (b)  if to the Optionee, to him at his address set forth in the
Company's records or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery (or if such date is
not a business day, on the next business after the date sent), (ii) in the case
of nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (iv)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.

     12.  Waiver of Breach.
          ----------------

               The waiver by either party of a breach of any provision of this
Agreement must be in writing and shall not operate or be construed as a waiver
of any other or subsequent breach.

     13.  Optionee's Undertaking.
          ----------------------

               The Optionee hereby agrees to take whatever additional actions
and execute whatever additional documents the Company may in its reasonable
judgment deem necessary or advisable in order to carry out or effect one or more
of the obligations or restrictions imposed on the Optionee pursuant to the
express provisions of this Agreement and the Plan.

     14.  Modification of Rights.
          ----------------------

               Anything contained in this Agreement or the Plan to the contrary
notwithstanding, no provision of this Agreement may be modified or amended
without the prior written consent of the Company and the Optionee, and no
interpretation, modification, amendment or termination of any provision of the
Plan that would adversely affect the rights of the Optionee under or with

                                       27
<PAGE>

respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

     15.  Governing Law.
          -------------

               All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced in
accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

     16.  Counterparts.
          ------------

               This Agreement may be executed in one or more counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

     17.  Entire Agreement.
          ----------------

               This Agreement and the Plan (and the other writings referred to
herein) constitute the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto
and the Optionee agrees that, as of the Effective Date, the Prior Options shall
be superceded and shall be of no further force or effect, and the Optionee shall
have no further rights in connection therewith.

                                       28
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.

                                   PACER INTERNATIONAL, INC.

                                   By:______________________________
                                      Name:
                                      Title:

                                   __________________________________
                                   Optionee:_________________________

Dated:_________, 1999

                                       29
<PAGE>

                                                  [1997 Rollover Options - ISOs]

                                    STOCK OPTION AGREEMENT dated as of the date
                              set forth on the signature page hereto, between
                              Pacer International, Inc., a Tennessee corporation
                              (the "Company"), and the optionee set forth on the
                                    -------
                              signature page hereto (the "Optionee").
                                                          --------

          WHEREAS, pursuant to the terms of the Agreement and Plan of Merger
entered into amongst Mile High Acquisition Corporation, a Delaware corporation,
the Company and the shareholders of the Company dated as of February 22, 1999
(the "Merger Agreement"), it is intended that certain outstanding options to
purchase 110,833 shares of the Pacer common stock and 11,666 shares of the Pacer
preferred stock granted to the Optionee under the PMT Holdings, Inc. 1997 Stock
Option Plan on March 31, 1997 (the "Prior Options") be converted at the
Effective Time (as defined in the Merger Agreement) into the right to receive
options to purchase under the Company's 1999 Stock Option Plan (the "Plan")
                                                                     ----
shares of the common stock, $.01 par value, of the Company (the "Common Stock")
and shares of the preferred stock, par value .01, (the "Preferred Stock") of the
Company.

          WHEREAS, the Company, whether acting through its Board of Directors
(the "Board") or a committee thereof (the "Committee") has agreed to assume the
      -----                                ---------
Prior Options granted to Optionee, effective as of the date of this Agreement,
as an option under the Company's 1999 Stock Option Plan to purchase up to the
number of shares of the Common Stock and Preferred Stock set forth on the
signature page hereto, on the terms and subject to the conditions set forth in
this Agreement and the Plan.

          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

     1. The Plan.
        --------

          The terms and provisions of the Plan are hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict
between any provision of this Agreement and the Plan, the provisions of this
Agreement shall control. A copy of the Plan may be obtained from the Company by
the Optionee upon request. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Plan.

     2. Option; Option Price.
        --------------------

          On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "Option") to purchase shares of
                                            ------
Common Stock and Preferred Stock at the Option Price set forth on the signature
page hereto.  The Option is intended to qualify for federal income tax purposes
as an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
                                       ----

                                      30

<PAGE>

     3. Term.
        ----

          The term of the Option (the "Option Term") shall commence on the date
                                       -----------
hereof and expire on March 31, 2007 of the date hereof, unless the Option shall
have sooner been terminated in accordance with the terms of the Plan or this
Agreement.

     4. Vesting.
        -------

          The Option shall become a Vested Option as set forth in Appendix A
hereto; provided, however, all Options shall become Vested Options upon a Sale
        --------  -------
of the Company (as provided in Section 4(e) of the Plan) or upon the termination
of the Optionee's employment by the Company without "cause" (as defined in the
employment agreement between the Optionee and Pacific Motor Transport Company,
dated March 31, 1997, as amended from time to time). In addition, any portion of
an Option which becomes vested and exercisable in accordance with this Section 4
shall remain exercisable for 10 days before such portion of the Option
terminates and is of no further force of effect. Notwithstanding the foregoing,
each Option shall cease vesting as of the time that the Optionee's employment
with the Company is terminated for any reason other than by the Company without
"cause" as provided above, and no Option that is not a Vested Option as of such
time shall become a Vested Option thereafter.

     5. Exercise.
        --------

          (a)  Payment.  The following forms of payment may be used by the
               -------
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan) upon exercise of the Option:

               (i)    cash or personal or certified check payable to the Company
     in an amount equal to the aggregate Option Price of the shares of Common
     Stock or Preferred Stock with respect to which the Option is being
     exercised;

               (ii)   stock certificates (in negotiable form) representing
     shares having a Fair Market Value on the date of exercise equal to the
     aggregate Option Price of the shares with respect to which the Option is
     being exercised; or

               (iii)  a combination of the methods set forth in clauses (i) and
     (ii) above;

provided, however, that the Committee may, in its sole discretion, specify the
--------  -------
form of payment to be used by providing notice thereof to the Optionee (or such
other person exercising in accordance with the provisions of Section 12(c) of
the Plan) on or prior to the exercise date.

          (b)  Notice.  The Optionee (or such other person exercising the Option
               ------
in accordance with the provisions of Section 12(c) of the Plan) may exercise the
Option in whole or in part (but for the purchase of whole shares only) by
delivering a written notice (the "Notice") to the Secretary of the Company. The
                                  ------
Notice shall be delivered at least 30 days prior to the date the option may be
exercised. This 30-day advance notice requirement shall not apply following an
Initial Public Offering nor within the 30-day period prior to the termination or
expiration of the Option, and such requirement may be waived in whole or in part
by the Company with the written consent of Apollo. The Notice shall state:

                                       31

<PAGE>

               (i)    that the Optionee elects to exercise the Option;

               (ii)   the number of shares with respect to which the Option is
     being exercised (the "Optioned Shares");
                           ---------------

               (iii)  the method of payment for the Optioned Shares;

               (iv)   the date upon which the Optionee desires to consummate the
     purchase (which date must be prior to the termination of the Option); and

               (v)    a copy of any election filed by the Optionee pursuant to
     Section 83(b) of the Code.

          (c)  Exercise Date.  The exercise date shall be the date on which the
               -------------
Company receives the Notice from the Optionee, or such later date as may be
specified in the Notice from the Optionee.

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 12(c) of the Plan) for the
shares purchased upon exercise of an Option as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such shares.
Neither the Optionee nor any person exercising the Option in accordance with the
provisions of Section 12(c)of the Plan shall have any privileges as a
stockholder of the Company with respect to any shares subject to the Option
until the date of issuance of a stock certificate.

          (e)  Restrictions.  No shares shall be issued and delivered upon the
               ------------
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction. The Company shall make all reasonable
efforts to comply with such requirements that relate to the Company.

     6. Sale of the Company
        -------------------

          In accordance with Section 11(c)(i) of the Plan, in the event that the
Bring Along Rights contained in the Shareholders' Agreement are exercised in
connection with a Sale of the Company transaction, each Option that is or
becomes a Vested Option as of such Sale of the Company transaction shall be
exercisable until the closing of the Sale of the Company transaction, but shall
terminate and be of no further force or effect following the closing of the Sale
of the Company transaction.

     7. Automatic Termination of Option
        -------------------------------

          Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur:

               (i)  March 31, 2007;

                                       32

<PAGE>

               (ii)   if the Optionee's employment with the Company is
     terminated for any reason other than the death or Disability of the
     Optionee, the ninetieth day following the date of such termination;

               (iii)  if the Optionee's employment with the Company is
     terminated due to the death or Disability of the Optionee, twelve months
     after the date of such death or Disability; or

               (iv)   following the Sale of the Company, as provided in Section
     6 hereof.

     8.  Restriction on Transfer.
         -----------------------

          The Option may not be transferred, pledged, assigned, hypothecated or
otherwise disposed of in any way by the Optionee and may be exercised during the
lifetime of the Optionee only by the Optionee. The Option shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.

     9.  Optionee's Employment.
         ---------------------

          Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by the Company or any of its Affiliates or interfere in
any way with the right of the Company or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by the Company
or any of its Affiliates or to increase or decrease the Optionee's compensation
at any time.

     10. Shareholders' Agreement.
         -----------------------

          The rights of the Optionee with respect to each share of Common Stock
and Preferred Stock issuable upon exercise of the Option shall be subject to and
benefit from the terms of the Shareholders' Agreement, and the Optionee shall be
required, as a condition of exercising the Option, to execute and deliver all
such agreements and other instruments required by the Company for such purpose.

     11. Notices.
         -------

          All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

                                       33

<PAGE>

          (a)  if to the Company, to it at:

                         Pacer International, Inc.
                         1675 Larimer Street
                         Suite 620
                         Denver, Colorado 80202
                         Attention: Corporate Secretary
                         Telecopier: (303) 623-5310
                         Telephone: (303) 623-5115

                         with a copy to:

                         Apollo Management
                         1301 Avenue of the Americas, 38th Floor
                         New York, NY 10019
                         Attention: Joshua Harris
                         Telecopier: (212) 515-3263
                         Telephone: (212) 515-3221

          (b)  if to the Optionee, to him at his address set forth in the
Company's records or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery (or if such date is
not a business day, on the next business after the date sent), (ii) in the case
of nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (iv)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.

     12.  Waiver of Breach.
          ----------------

             The waiver by either party of a breach of any provision of this
Agreement must be in writing and shall not operate or be construed as a waiver
of any other or subsequent breach.

     13.  Optionee's Undertaking.
          ----------------------

             The Optionee hereby agrees to take whatever additional actions and
execute whatever additional documents the Company may in its reasonable judgment
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Optionee pursuant to the express
provisions of this Agreement and the Plan.

     14.  Modification of Rights.
          ----------------------

             Anything contained in this Agreement or the Plan to the contrary
notwithstanding, no provision of this Agreement may be modified or amended
without the prior written consent of the Company and the Optionee, and no
interpretation, modification, amendment or termination of any provision of the
Plan that would adversely affect the rights of the Optionee under or with

                                      34

<PAGE>

respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

     15.  Governing Law.
          -------------

             All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced in
accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

     16.  Counterparts.
          ------------

             This Agreement may be executed in one or more counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

     17.  Entire Agreement.
          ----------------

             This Agreement and the Plan (and the other writings referred to
herein) constitute the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto
and the Optionee agrees that, as of the Effective Date, the Prior Options shall
be superceded and shall be of no further force or effect, and the Optionee shall
have no further rights in connection therewith.

                                      35

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                             PACER INTERNATIONAL, INC.

                                             By: _______________________________
                                             Name:
                                             Title:

                                             ___________________________________
                                             Optionee: _________________________

Dated: ______,1999

                                       36

<PAGE>

                                                    [1997 Rollover Options -NQO]

                                    STOCK OPTION AGREEMENT dated as of the date
                            set forth on the signature page hereto, between
                            Pacer International, Inc., a Tennessee corporation
                            (the "Company"), and the optionee set forth on the
                                  -------
                            signature page hereto (the "Optionee").
                                                        --------

          WHEREAS, pursuant to the terms of the Agreement and Plan of Merger
entered into amongst Mile High Acquisition Corporation, a Delaware corporation,
the Company and the shareholders of the Company dated as of February 22, 1999
(the "Merger Agreement"), it is intended that certain outstanding options to
purchase 31,666 shares of the Pacer common stock and 3,333 shares of the Pacer
preferred stock granted to the Optionee under the PMT Holdings, Inc. 1997 Stock
Option Plan on March 31, 1997 (the "Prior Options") be converted at the
Effective Time (as defined in the Merger Agreement) into the right to receive
options to purchase under the Company's 1999 Stock Option Plan (the "Plan")
                                                                     ----
shares of the common stock, $.01 par value, of the Company (the "Common Stock")
and shares of the preferred stock, par value .01, (the "Preferred Stock") of the
Company.

          WHEREAS, the Company, whether acting through its Board of Directors
(the "Board") or a committee thereof (the "Committee") has agreed to assume the
      -----                                ---------
Prior Options granted to the Optionee, effective as of the date of this
Agreement, as an option under the Company's 1999 Stock Option Plan to purchase
up to the number of shares of the Common Stock and Preferred Stock set forth on
the signature page hereto, on the terms and subject to the conditions set forth
in this Agreement and the Plan.

          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

     1. The Plan.
        --------

          The terms and provisions of the Plan arc hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict
between any provision of this Agreement and the Plan, the provisions of this
Agreement shall control. A copy of the Plan may be obtained from the Company by
the Optionee upon request. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Plan.

     2. Option; Option Price.
        --------------------

          On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "Option") to purchase shares of
                                            ------
Common Stock and Preferred Stock at the Option Price set forth on the signature
page hereto. The Option is not intended to qualify for federal income tax
purposes as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
                                                ----

                                       37

<PAGE>

     3. Term.
        ----

          The term of the Option (the "Option Term") shall commence on the date
                                       -----------
hereof and expire on March 31, 2003, unless the Option shall have sooner been
terminated in accordance with the terms of the Plan or this Agreement.

     4. Vesting.
        -------

          The Option is a Vested Option for the entire Option Term.

     5. Exercise.
        --------

          (a)  Payment.  The following forms of payment may be used by the
               -------
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan) upon exercise of the Option:

                 (i)    cash or personal or certified check payable to the
     Company in an amount equal to the aggregate Option Price of the shares of
     Common Stock or Preferred Stock with respect to which the Option is being
     exercised;

                 (ii)   stock certificates (in negotiable form) representing
     shares having a Fair Market Value on the date of exercise equal to the
     aggregate Option Price of the shares with respect to which the Option is
     being exercised; or

                 (iii)  a combination of the methods set forth in clauses (i)
     and (ii) above;

provided, however, that the Committee may, in its sole discretion, specify the
--------  -------
form of payment to be used by providing notice thereof to the Optionee (or such
other person exercising in accordance with the provisions of Section 12(c) of
the Plan) on or prior to the exercise date.

          (b)  Notice.  The Optionee (or such other person exercising the Option
               ------
in accordance with the provisions of Section 12(c) of the Plan) may exercise the
Option in whole or in part (but for the purchase of whole shares only) by
delivering a written notice (the "Notice") to the Secretary of the Company. The
                                  ------
Notice shall be delivered at least 30 days prior to the date the option may be
exercised. This 30-day advance notice requirement shall not apply following an
Initial Public Offering nor within the 30-day period prior to the termination or
expiration of the Option, and such requirement may be waived in whole or in part
by the Company with the written consent of Apollo. The Notice shall state:

                 (i)    that the Optionee elects to exercise the Option;

                 (ii)   the number of shares with respect to which the Option is
     being exercised (the "Optioned Shares");
                           ---------------

                 (iii)  the method of payment for the Optioned Shares;

                 (iv)   the date upon which the Optionee desires to consummate
     the purchase (which date must be prior to the termination of the Option);
     and

                                      38

<PAGE>

               (v)  a copy of any election filed by the Optionee pursuant to
     Section 83(b) of the Code.

          (c)  Exercise Date.  The exercise date shall be the date which is 30
               -------------
days following the date on which the Company receives the Notice from the
Optionee, or (i) such earlier date as may be permitted in accordance with
paragraph (b) above or (ii) such later date as may be specified in the Notice
from the Optionee.

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 12(c) of the Plan) for the
shares purchased upon exercise of an Option as soon as practicable after the
effective date of the Notice and payment of the aggregate Option Price for such
shares. Neither the Optionee nor any person exercising the Option in accordance
with the provisions of Section 12(c) of the Plan shall have any privileges as a
stockholder of the Company with respect to any shares subject to the Option
until the date of issuance of a stock certificate.

          (e)  Restrictions.  No shares shall be issued and delivered upon the
               ------------
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction. The Company shall make all reasonable
efforts to comply with such requirements that relate to the Company.

     6.  Sale of the Company.
         -------------------

             In accordance with Section 11 (c)(i) of the Plan, in the event that
the Bring Along Rights contained in the Shareholders' Agreement are exercised,
each Option shall be exercisable until the closing of the Sale of the Company
transaction, but shall terminate and be of no further force or effect following
the closing of the Sale of the Company transaction.

     7.  Automatic Termination of Option.
         -------------------------------

             Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur:

               (i)   March 31, 2003;

               (ii)  if the Optionee's employment with the Company is terminated
     for any reason other than the death or Disability of the Optionee, the
     ninetieth day following the date of such termination;

               (iii) if the Optionee's employment with the Company is terminated
     due to the death or Disability of the Optionee, twelve months after the
     date of such death or Disability; or

               (iv)  following the Sale of the Company, as provided in Section 6
     hereof.

                                       39

<PAGE>

     8.  Restriction on Transfer.
         -----------------------

             The Option may not be transferred, pledged, assigned, hypothecated
or otherwise disposed of in any way by the Optionee and may be exercised during
the lifetime of the Optionee only by the Optionee. The Option shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment or similar
process upon the Option, shall be null and void and without effect.

     9.  Optionee's Employment.
         ---------------------

             Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by the Company or any of its Affiliates or interfere in
any way with the right of the Company or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by the Company
or any of its Affiliates or to increase or decrease the Optionee's compensation
at any time.

     10. Shareholders' Agreement.
         -----------------------

             The rights of the Optionee with respect to each share of Common
Stock and Preferred Stock issuable upon exercise of the Option shall be subject
to and benefit from the terms of the Shareholders' Agreement, and the Optionee
shall be required, as a condition of exercising the Option, to execute and
deliver all such agreements and other instruments required by the Company for
such purpose.

     11. Notices.
         -------

             All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

             (a)  if to the Company, to it at:

                              Pacer International, Inc.
                              1675 Larimer Street
                              Suite 620
                              Denver, Colorado 80202
                              Attention: Corporate Secretary
                              Telecopier: (303) 623-5310
                              Telephone: (303) 623-5115

                              with a copy to:

                              Apollo Management
                              1301 Avenue of the Americas, 38th Floor
                              New York, NY 10019

                                      40

<PAGE>

                              Attention: Joshua Harris
                              Telecopier: (212) 515-3263
                              Telephone: (212) 515-3221

          (b)   if to the Optionee, to him at his address set forth in the
Company's records or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery (or if such date is
not a business day, on the next business after the date sent), (ii) in the case
of nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (iv)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.

     12.  Waiver of Breach.
          ----------------

             The waiver by either party of a breach of any provision of this
Agreement must be in writing and shall not operate or be construed as a waiver
of any other or subsequent breach.

      13. Optionee's Undertaking.
          ----------------------

             The Optionee hereby agrees to take whatever additional actions and
execute whatever additional documents the Company may in its reasonable judgment
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Optionee pursuant to the express
provisions of this Agreement and the Plan.

     14.  Modification of Rights.
          ----------------------

             Anything contained in this Agreement or the Plan to the contrary
notwithstanding, no provision of this Agreement may be modified or amended
without the prior written consent of the Company and the Optionee, and no
interpretation, modification, amendment or termination of any provision of the
Plan that would adversely affect the rights of the Optionee under or with
respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

     15.  Governing Law.
          -------------

             All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced in
accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

                                      41

<PAGE>

     16.  Counterparts.
          ------------

             This Agreement may be executed in one or more counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

     17.  Entire Agreement.
          ----------------

             This Agreement and the Plan (and the other writings referred to
herein) constitute the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto
and the Optionee agrees that, as of the Effective Date, the Prior Options shall
be superceded and shall be of no further force or effect, and the Optionee shall
have no further rights in connection therewith.

                                       42

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                    PACER INTERNATIONAL, INC.

                                    By:__________________________________
                                       Name:
                                       Title:

                                    _____________________________________
                                    Optionee: Donald C.  Orris

Dated:    ___________,1999

                                       43

<PAGE>

                                                                      Appendix A
                                                                      ----------

Number of Shares:

     Common Stock:   34,833

     Preferred Stock: 3,333

Option Price:

     Common Stock:     $2.96

     Preferred Stock:  $9

                                      44

<PAGE>

                                                             [New Option Grants]

                                                       STOCK OPTION AGREEMENT
                           dated as of the date set forth on the signature page
                           hereto, between Pacer International, Inc., a
                           Tennessee corporation (the "Company"), and the
                                                       -------
                           optionee set forth on the signature page hereto (the
                           "Optionee").
                            --------

          The Company, whether acting through its Board of Directors (the

"Board") or a committee thereof (the "Committee") has granted to the Optionee,
 -----                                ---------
effective as of the date of this Agreement, an option under the Company's 1999
Stock Option Plan (the "Plan") to purchase up to the number of shares of the
                        ----
common stock, $.01 par value, of the Company (the "Shares") set forth on the
                                                   ------
signature page hereto, on the terms and subject to the conditions set forth in
this Agreement and the Plan.

          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

     1. The Plan.
        --------

          The terms and provisions of the Plan are hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict
between any provision of this Agreement and the Plan, the provisions of this
Agreement shall control. A copy of the Plan may be obtained from the Company by
the Optionee upon request. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Plan.

     2. Option; Option Price.
        --------------------

          On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "Option") to purchase Shares at the
                                            ------
Option Price set forth on the signature page hereto.  The Option shall consist
of the Tranche A Option, Tranche B Option and Tranche C Option, as set forth in
the Plan.  The Option is not intended to qualify for federal income tax purposes
as an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
                                       ----

     3. Term.
        ----

          The term of the Option (the "Option Term") shall commence on the date
                                       -----------
hereof and expire on the tenth anniversary of the date hereof, unless the Option
shall have sooner been terminated in accordance with the terms of the Plan or
this Agreement.

     4. Vesting.
        -------

          20% of each Tranche A Options shall become a Vested Option on each of
the first five Anniversary Dates.  Each Tranche B Option and Tranche C Option
shall become a Vested Option on either (i) the date that is [seven] years
following the date of grant or (ii) if the Per Share Equity Value on a Tranche B
or Tranche Measurement Date equals or exceeds the

                                      45

<PAGE>

applicable Tranche B or Tranche C Per Share Target Value, as set forth in
Appendix A attached hereto, then 20% of such Tranche B or Tranche C Option, as
the case may be, will become a Vested Option on such date. Notwithstanding the
foregoing, each Option shall cease vesting as of the time that the Optionee's
employment with the Company is terminated for any reason, and no Option that is
not a Vested Option as of such time shall become a Vested Option thereafter.

     5. Exercise.
        --------

          (a)   Payment. The following forms of payment may be used by the
                -------
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan) upon exercise of the Option:

                (i)    cash or personal or certified check payable to the
     Company in an amount equal to the aggregate Option Price of the Shares with
     respect to which the Option is being exercised;

                (ii)   stock certificates (in negotiable form) representing
     Shares having a Fair Market Value on the date of exercise equal to the
     aggregate Option Price of the Shares with respect to which the Option is
     being exercised; or

                (iii)  a combination of the methods set forth in clauses (i) and
     (ii) above;

provided, however, that the Committee may, in its sole discretion, specify the
--------  -------
form of payment to be used by providing notice thereof to the Optionee (or such
other person exercising in accordance with the provisions of Section 12(c) of
the Plan) on or prior to the exercise date.

          (b)   Notice. The Optionee (or such other person exercising the Option
                ------
in accordance with the provisions of Section 12(c) of the Plan) may exercise the
Option in whole or in part (but for the purchase of whole Shares only) by
delivering a written notice (the "Notice") to the Secretary of the Company.  The
                                  ------
Notice shall be delivered at least 30 days prior to the date the option may be
exercised.  This 30-day advance notice requirement shall not apply following an
Initial Public Offering nor within the 30-day period prior to the termination or
expiration of the Option, and such requirement may be waived in whole or in part
by the Company with the written consent of Apollo.  The Notice shall state:

                (i)   that the Optionee elects to exercise the Option;

                (ii)  the number of Shares with respect to which the Option is
     being exercised (the "Optioned Shares");
                           ---------------

                (iii) the method of payment for the Optioned Shares;

                (iv)  the date upon which the Optionee desires to consummate
     the purchase (which date must be prior to the termination of the Option);
     and

                (v)   a copy of any election filed by the Optionee pursuant to
     Section 83(b) of the Code.

                                       46

<PAGE>

          (c)  Exercise Date.  The exercise date shall be the date on which the
               -------------
Company receives the Notice from the Optionee, or such later date as may be
specified in the Notice from the Optionee.

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 12(c) of the Plan) for the
Shares purchased upon exercise of an Option as soon as practicable after receipt
of the Notice and payment of the aggregate Option Price for such Shares.
Neither the Optionee nor any person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan shall have any privileges as a
stockholder of the Company with respect to any Shares subject to the Option
until the date of issuance of a stock certificate.

          (e)  Restrictions.  No Shares shall be issued and delivered upon the
               ------------
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction.  The Company shall make all reasonable
efforts to comply with such requirements that relate to the Company.

     6.   Sale of the Company.
          -------------------

             In accordance with Section 1l(c)(i) of the Plan, as to each Option
that is or becomes a Vested Option as of a Sale of the Company, each Option
shall be exercisable until the closing of the Sale of the Company transaction,
but shall terminate and be of no further force or effect following the closing
of the Sale of the Company transaction. In accordance with Section 11(c)(ii) of
the Plan, as to each Option that is not a Vested Option as of a Sale of the
Company, such Option shall become vested and exercisable in accordance with any
time vesting requirements applicable to such Option, but disregarding any
performance vesting requirements of such Option; provided, however, that any
                                                 --------  -------
portion of an Option that becomes a Vested Option after such Sale of the Company
shall remain exercisable for 10 days before such portion of the Option
terminates and is of no further force of effect.

     7.  Automatic Termination of Option
         -------------------------------

             Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur:

               (i)    the tenth anniversary of the date on which such Option is
     granted;

               (ii)   if the Optionee's employment with the Company is
     terminated for any reason other than the death or Disability of the
     Optionee the ninetieth day following the date of such termination; or

               (iii)  if the Optionee's employment with the Company is
     terminated due to the death or Disability of the Optionee, twelve months
     after the date of such death or Disability.

                                       47

<PAGE>

     8.  Restriction on Transfer.
         -----------------------

             The Option may not be transferred, pledged, assigned, hypothecated
or otherwise disposed of in any way by the Optionee and may be exercised during
the lifetime of the Optionee only by the Optionee. The Option shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment or similar
process upon the Option, shall be null and void and without effect.

     9.  Optionee's Employment.
         ---------------------

             Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by the Company or any of its Affiliates or interfere in
any way with the right of the Company or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by the Company
or any of its Affiliates or to increase or decrease the Optionee's compensation
at any time.

     10. Shareholders' Agreement.
         -----------------------

             The rights of an Optionee with respect to each Share issuable upon
exercise of an Option granted under the Plan shall be subject to and benefit
from the terms of the Shareholders' Agreement (in the case of an Optionee
subject to the Shareholders' Agreement) or to the terms of the Shareholders'
Rights Appendix attached as Exhibit C to the Plan (in the case of an Optionee
not subject to the Shareholders' Agreement), and an Optionee shall be required,
as a condition of exercising an Option, to execute and deliver all such
agreements and other instruments required by the Company for such purpose.

     11. Notices.
         -------

             All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

          (a)  if to the Company, to it at:

                           Pacer International, Inc.
                           1675 Larimer Street
                           Suite 620
                           Denver, Colorado 80202
                           Attention: Corporate Secretary
                           Telecopier: (303) 623-5310
                           Telephone: (303) 623-5115

                                      48

<PAGE>

                         with a copy to:

                         Apollo Management
                         1301 Avenue of the Americas, 38th Floor
                         New York, NY 10019
                         Attention: Joshua Harris
                         Telecopier: (212) 515-3263
                         Telephone: (212) 515-3221

          (b)  if to the Optionee, to him at his address set forth in the
Company's records or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (I) in
the case of personal delivery, on the date of such delivery (or if such date is
not a business day, on the next business after the date sent), (ii) in the case
of nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of telecopy transmission, when received (or if not
sent on a business day, on the next business day after the date sent), and (iv)
in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.

          12.  Waiver of Breach.
               ----------------

                    The waiver by either party of a breach of any provision of
this Agreement must be in writing and shall not operate or be construed as a
waiver of any other or subsequent breach.

          13.  Optionee's Undertaking.
               ----------------------

                    The Optionee hereby agrees to take whatever additional
actions and execute whatever additional documents the Company may in its
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on the Optionee pursuant
to the express provisions of this Agreement and the Plan.

          14.  Modification of Rights.
               ----------------------

                    Anything contained in this Agreement or the Plan to the
contrary notwithstanding, no provision of this Agreement may be modified or
amended without the prior written consent of the Company and the Optionee, and
no interpretation, modification, amendment or termination of any provision of
the Plan that would adversely affect the rights of the Optionee under or with
respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

          15.  Governing Law.
               -------------

                    All questions concerning the construction, interpretation
and validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this

                                       49

<PAGE>

Agreement, even if under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily apply.

          16.  Counterparts.
               ------------

                    This Agreement may be executed in one or more counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

          17.  Entire Agreement.
               ----------------

                    This Agreement and the Plan (and the other writings referred
to herein) constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto.

                                       50

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                               PACER INTERNATIONAL, INC.

                                               By:_____________________________
                                                   Name:
                                                   Title:

                                               ________________________________
                                               Optionee:_______________________

Dated:______ ,1999

                                      51

<PAGE>

                                                  [Non-Employee Director Grants]

                            NON EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT (this
                    "Agreement") dated as of the date set forth on the signature
                    page hereto, between Pacer International, Inc., a Tennessee
                    corporation (the "Company"), and the optionee set forth on
                                      -------
                    the signature page hereto (the "Optionee").
                                                    --------

          The Company, acting through its Board of Directors (the "Board") has
                                                                   -----
granted to the Optionee, effective as of the date of this Agreement, an option
under the Company's 1999 Stock Option Plan (the "Plan") to purchase up to the
                                                 ----
number of shares of the common stock, $.01 par value, of the Company (the

"Shares") set forth on the signature page hereto, on the terms and subject to
-------
the conditions set forth in this Agreement and the Plan.

          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

          1.  The Plan.
              --------

                    The terms and provisions of the Plan are hereby incorporated
into this Agreement as if set forth herein in their entirety. In the event of a
conflict between any provision of this Agreement and the Plan, the provisions of
this Agreement shall control. A copy of the Plan may be obtained front the
Company by the Optionee upon request. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Plan.

          2.  Option; Option Price.
              --------------------

                    On the terms and subject to the conditions of this
Agreement, the Optionee is hereby granted the option (the "Option") to purchase
                                                           ------
Shares at the Option Price set forth on the signature page hereto. The Option is
not intended to qualify for federal income tax purposes as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
                 ----

          3.  Term.
              ----

                    The term of the Option (the "Option Term") shall commence
                                                 -----------
on the date hereof and expire on the tenth anniversary of the date hereof,
unless the Option shall have sooner been terminated in accordance with the terms
of the Plan or this Agreement.

          4.  Vesting.
              -------

                    25% of the Option shall become a Vested Option on each of
the first four Anniversary Dates, provided the Optionee is a member of the Board
on such date. The Option shall cease vesting as of the time that the Optionee
ceases to be a member of the Board, and any portion of the Option that is not a
Vested Option at such time shall become null and void and be of no further force
or effect.

                                       52

<PAGE>

          5.  Exercise.
              --------

              (a)  Payment.  The following forms of payment may be used by the
                   -------
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 12(c) of the Plan) upon exercise of the Option:

                    (i)   cash or personal or certified check payable to the
     Company in an amount equal to the aggregate Option Price of the Shares with
     respect to which the Option is being exercised;

                    (ii)  stock certificates (in negotiable form) representing
     Shares having a Fair Market Value on the date of exercise equal to the
     aggregate Option Price of the Shares with respect to which the Option is
     being exercised; or

                    (iii) a combination of the methods set forth in clauses (i)
     and (ii) above;

provided, however, that the Board may, in its sole discretion, specify the form
--------  -------
of payment to be used by providing notice thereof to the Optionee (or such other
person exercising in accordance with the provisions of Section 12(c) of the
Plan) on or prior to the exercise date.

              (b)  Notice.  The Optionee (or such other person exercising the
                   ------
Option in accordance with the provisions of Section 12(c) of the Plan) may
exercise the Option in whole or in part (but for the purchase of whole Shares
only) by delivering a written notice (the "Notice") to the Secretary of the
                                           ------
Company. The Notice shall be delivered at least 30 days prior to the date the
option may be exercised. This 30-day advance notice requirement shall not apply
following an Initial Public Offering nor within the 30-day period prior to the
termination or expiration of the Option, and such requirement may be waived in
whole or in part by the Company with the written consent of Apollo. The Notice
shall state:

                    (i)   that the Optionee elects to exercise the Option;

                    (ii)  the number of Shares with respect to which the Option
     is being exercised (the "Optioned Shares");
                              ---------------

                    (iii) the method of payment for the Optioned Shares;

                    (iv)  the date upon which the Optionee desires to consummate
     the purchase (which date must be prior to the termination of the Option);
     and

                    (v)   a copy of any election filed by the Optionee pursuant
     to Section 83(b) of the Code.

          (c)  Exercise Date.  The exercise date shall be the date on which the
               -------------
Company receives the Notice from the Optionee, or such later date as may be
specified in the Notice from the Optionee.

          (d)  Issuance of Certificates.  The Company shall issue a stock
               ------------------------
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the

                                       53

<PAGE>

provisions of Section 12(c) of the Plan) for the Shares purchased upon exercise
of an Option as soon as practicable after receipt of the Notice and payment of
the aggregate Option Price for such Shares. Neither the Optionee nor any person
exercising the Option in accordance with the provisions of Section 12(c) of the
Plan shall have any privileges as a stockholder of the Company with respect to
any Shares subject to the Option until the date of issuance of a stock
certificate.

          (e) Restrictions.  No Shares shall be issued and delivered upon the
              ------------
exercise of the Option unless and until the Company and/or the Optionee shall
have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction.  The Company shall make all reasonable
efforts to comply with such requirements that relate to the Company.

     6. Sale of the Company.
        -------------------

          Notwithstanding anything else in Sections 4 or 7 of this Agreement to
the contrary, upon a Sale of the Company (i) any unvested portion of the Option
shall become a Vested Option, and (ii) the Option shall be exercisable until the
closing of the Sale of the Company transaction, but shall terminate and be of no
further force or effect following the closing of the Sale of the Company
transaction.

     7. Automatic Termination of Option.
        -------------------------------

          Each Vested Option that has not previously been exercised by an
Optionee shall automatically terminate and shall become null and void and be of
no further force or effect upon the first of the following to occur:

               (i)   the tenth anniversary of the date on which such Option is
     granted;

               (ii)  if the Optionee's service with the Company is terminated
     for any reason other than the death or Disability of the Optionee, the
     ninetieth day following the date of such termination; or

               (iii) if the Optionee's service with the Company is terminated
     due to the death or Disability of the Optionee, twelve months after the
     date of such death or Disability.

     8.  Restriction on Transfer.
         -----------------------

          The Option may not be transferred, pledged, assigned, hypothecated or
otherwise disposed of in any way by the Optionee and may be exercised during the
lifetime of the Optionee only by the Optionee. The Option shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.

                                       54

<PAGE>

          9.  Optionee's Service.
              ------------------

                    Nothing in the Option shall confer upon the Optionee any
right to continue to be a member of the Board or interfere in any way with the
right of the Company or its Affiliates or stockholders, as the case may be, to
terminate the Optionee's service to the Company or any of its Affiliates or to
increase or decrease the Optionee's compensation at any time.

          10.  Shareholders' Agreement.
               -----------------------

                    The rights of an Optionee with respect to each Share
issuable upon exercise of an Option granted under the Plan shall be subject to
and benefit from the terms of the Shareholders' Agreement (in the case of an
Optionee subject to the Shareholders' Agreement) or to the terms of the
Shareholders' Rights Appendix attached as Exhibit C to the Plan (in the case of
an Optionee not subject to the Shareholders' Agreement), and an Optionee shall
be required, as a condition of exercising an Option, to execute and deliver all
such agreements and other instruments required by the Company for such purpose.

          11.  Notices.
               -------

                    All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

               (a)  if to the Company, to it at:

                              Pacer International, Inc.
                              1675 Larimer Street
                              Suite 620
                              Denver, Colorado 80202
                              Attention: Corporate Secretary
                              Telecopier: (303) 623-5310
                              Telephone: (303) 623-5115

                              with a copy to:

                              Apollo Management
                              1301 Avenue of the Americas, 38th Floor
                              New York, NY 10019
                              Attention: Joshua Harris
                              Telecopier: (212) 515-3263
                              Telephone: (212) 515-3221

               (b)  if to the Optionee, to him at his address set forth in the
Company's records or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Any such notice or communication shall be deemed to

                                       55

<PAGE>

have been received (i) in the case of personal delivery, on the date of such
delivery (or if such date is not a business day, on the next business after the
date sent), (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date sent, (iii) in the case of telecopy
transmission, when received (or if not sent on a business day, on the next
business day after the date sent), and (iv) in the case of mailing, on the third
business day following that on which the piece of mail containing such
communication is posted.

          12.  Waiver of Breach.
               ----------------

                    The waiver by either party of a breach of any provision of
this Agreement must be in writing and shall not operate or be construed as a
waiver of any other or subsequent breach.

          13.  Optionee's Undertaking.
               ----------------------

                    The Optionee hereby agrees to take whatever additional
actions and execute whatever additional documents the Company may in its
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on the Optionee pursuant
to the express provisions of this Agreement and the Plan.

          14.  Modification of Rights.
               ----------------------

                    Anything contained in this Agreement or the Plan to the
contrary notwithstanding, no provision of this Agreement may be modified or
amended without the prior written consent of the Company and the Optionee, and
no interpretation, modification, amendment or termination of any provision of
the Plan that would adversely affect the rights of the Optionee under or with
respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

          15.  Governing Law.
               -------------

                    All questions concerning the construction, interpretation
and validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

          16.  Counterparts.
               ------------

                    This Agreement may be executed in one or more counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

                                       56

<PAGE>

          17.  Entire Agreement.
               ----------------

                    This Agreement and the Plan (and the other writings referred
to herein) constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto.

                                       57

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                          PACER INTERNATIONAL, INC.

                                          By: __________________________________
                                              Name:
                                              Title:

                                          ______________________________________
                                          Optionee:

Dated:

                                      58<PAGE>

                                                                   EXHIBIT 10.30

                                                                  EXECUTION COPY
                                                                  --------------

================================================================================

                           STOCK PURCHASE AGREEMENT

                                 BY AND AMONG

                          PACER INTERNATIONAL, INC.,

                       GTS TRANSPORTATION SERVICES, INC.

                                      AND

                          ALL OF THE SHAREHOLDERS OF
                       GTS TRANSPORTATION SERVICES, INC.

                          Dated as of August 31, 2000

================================================================================
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>

ARTICLE I PURCHASE AND SALE OF SHARES..................................................................   1
    1.1   Transfer of Shares...........................................................................   1
    1.2   Purchase Price...............................................................................   1
    1.3   Payment at Closing...........................................................................   2
    1.4   Delivery of Shares...........................................................................   2
    1.5   Affiliate-Owned Assets.......................................................................   2
    1.6   Earn Out.....................................................................................   2
    1.7   Further Assurances...........................................................................   4

ARTICLE II THE CLOSING.................................................................................   4

ARTICLE III WORKING CAPITAL ADJUSTMENTS................................................................   4
    3.1   Initial Working Capital Adjustment...........................................................   4
    3.2   Delivery of the Closing Balance Sheet........................................................   5
    3.3   Review and Final Determination of Closing Net Working Capital................................   6
    3.4   Adjustment of Closing Payment; Payments......................................................   7
    3.5   Accounts Receivable Adjustment...............................................................   8

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS..........................................   9
    4.1   Title to the Shares..........................................................................   9
    4.2   Organization and Power.......................................................................   9
    4.3   Authority; Authorization, Execution and Delivery; Enforceability; No Conflict................   9
    4.4   Consents.....................................................................................  10
    4.5   Brokers......................................................................................  10

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER GROUP...........................................  11
    5.1   Organization, Power, Authority and Good Standing.............................................  11
    5.2   Authority; Authorization, Execution and Delivery; Enforceability; No Conflict................  11
    5.3   Consents.....................................................................................  12
    5.4   Capitalization...............................................................................  12
    5.5   Subsidiaries; Investments....................................................................  13
    5.6   Financial Information........................................................................  13
    5.7   Absence of Undisclosed Liabilities...........................................................  14
    5.8   Absence of Changes...........................................................................  14
    5.9   Tax Matters..................................................................................  15
    5.10  Title to Assets, Properties and Rights and Related Matters...................................  17
    5.11  Real Property - Owned or Leased..............................................................  17
    5.12  Intellectual Property........................................................................  18
    5.13  Agreements, No Defaults, Etc.................................................................  19
    5.14  Litigation, Etc..............................................................................  21
    5.15  Compliance with Laws.........................................................................  21
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                    <C>

    5.16  Insurance....................................................................................  22
    5.17  Labor  Relations; Employees..................................................................  22
    5.18  ERISA Compliance.............................................................................  24
    5.19  Environmental Matters........................................................................  26
    5.20  Brokers......................................................................................  27
    5.21  Related Party Transactions...................................................................  27
    5.22  Accounts and Notes Receivable................................................................  28
    5.23  Bank Accounts; Powers of Attorney............................................................  28
    5.24  Suppliers and Vendors........................................................................  28
    5.25  Customers....................................................................................  29
    5.26  Conflicts of Interest........................................................................  29
    5.27  Year 2000....................................................................................  29
    5.28  Disclosure...................................................................................  29

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................................  29
    6.1   Organization; Corporate Authority............................................................  30
    6.2   Authority; Authorization; Execution and Delivery; Enforceability; No Conflict................  30
    6.3   Consents.....................................................................................  30
    6.4   Brokers......................................................................................  31

ARTICLE VII COVENANTS AND AGREEMENTS...................................................................  31
    7.1   Non-competition Covenant.....................................................................  31
    7.2   Disclosure of Information....................................................................  32
    7.3   Use of Proprietary Name......................................................................  34
    7.4   Certain Employee Matters.....................................................................  34
    7.5   Reservation of Purchaser's Shares............................................................  34

ARTICLE VIII CLOSING OBLIGATIONS.......................................................................  35
    8.1   Closing Obligations of the Seller Group......................................................  35
    8.2   Closing Obligations of the Purchaser.........................................................  36

ARTICLE IX INDEMNIFICATION.............................................................................  37
    9.1   Generally....................................................................................  37
    9.2   Assertion of Claims..........................................................................  38
    9.3   Notice and Defense of Third Party Claims.....................................................  38
    9.4   Survival of Representations and Warranties...................................................  39
    9.5   Limitations on Indemnification...............................................................  40
    9.6   Satisfaction of Indemnification Obligations..................................................  41
    9.7   Recourse Against Options and Shares..........................................................  41

ARTICLE X MISCELLANEOUS PROVISIONS.....................................................................  42
    10.1  Amendment....................................................................................  42
    10.2  Entire Agreement.............................................................................  42
    10.3  Severability.................................................................................  42
    10.4  Benefits of Agreement........................................................................  42
    10.5  Expenses; Sales and Transfer Taxes...........................................................  43
    10.6  Remedies.....................................................................................  43
    10.7  Notices......................................................................................  43
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                    <C>

    10.8  Counterparts and Facsimile Execution.........................................................  45
    10.9  Governing  Law...............................................................................  45
    10.10 Jurisdiction and Venue.......................................................................  45
    10.11 Mutual Contribution..........................................................................  46
    10.12 No Third Party Beneficiaries.................................................................  46
    10.13 Independence of Covenants and Representations and Warranties.................................  46
    10.14 Interpretation; Construction.................................................................  47
</TABLE>

                                      iii
<PAGE>

                        ANNEXES, SCHEDULES AND EXHIBITS

Annexes
-------

Annex I              Shareholders
Annex II             Certain Definitions
Annex III            Company EBIT Amount

Schedules
---------

Schedule 1.3      -  Shareholder Percentages for Allocation of Purchase Price
Schedule 4.4      -  Shareholder Consents
Schedule 5.1      -  Foreign Qualifications for the Company
Schedule 5.3      -  Company Consents
Schedule 5.4(a)   -  Capitalization of the Company
Schedule 5.4(b)   -  Options, Warrants, Voting Agreements, etc.
Schedule 5.5      -  Subsidiaries and Investments
Schedule 5.6(a)   -  Financial Statements
Schedule 5.6(c)   -  Accounts Payable and Accounts Receivable
Schedule 5.7      -  Undisclosed Liabilities
Schedule 5.8      -  Absence of Changes
Schedule 5.9(a)   -  Tax Matters
Schedule 5.9(c)   -  Taxing Authority Notifications
Schedule 5.10(a)  -  Encumbrances
Schedule 5.10(b)  -  Tangible Personal Property
Schedule 5.11(a)  -  Real Property
Schedule 5.11(b)  -  Real Property Proceedings, Notices and Exceptions
Schedule 5.12(a)  -  Intellectual Property Rights
Schedule 5.12(b)  -  Actions to Protect Intellectual Property Rights
Schedule 5.13(a)  -  Material Contracts
Schedule 5.13(d)  -  Funded Indebtedness
Schedule 5.14(a)  -  Litigation, Etc.
Schedule 5.14(b)  -  Resolved Litigation
Schedule 5.15     -  Compliance with Laws
Schedule 5.16(a)  -  Insurance Policies
Schedule 5.16(b)  -  Insurance Claims, Etc.
Schedule 5.17(a)  -  Directors, Officers and Key Employees
Schedule 5.17(b)  -  Number of Employees, Independent Contractors, etc.
Schedule 5.17(c)  -  Labor Relations
Schedule 5.17(e)  -  Labor Proceedings
Schedule 5.17(f)  -  Joint Employer Matters
Schedule 5.17(g)  -  Independent Contractor Agreements
Schedule 5.18(a)  -  Employee Benefit Plans
Schedule 5.18(b)  -  ERISA Compliance
Schedule 5.19(a)  -  Environmental Laws - Violations
Schedule 5.19(b)  -  Environmental Compliance - Previously Owned Properties
Schedule 5.21     -  Related Party Transactions

                                      iv
<PAGE>

Schedule 5.22  -  Accounts and Notes Receivable
Schedule 5.23  -  Bank Accounts; Powers of Attorney
Schedule 5.24  -  Suppliers and Vendors
Schedule 5.25  -  Customers
Schedule 6.1   -  Foreign Qualifications for the Purchaser
Schedule 6.3   -  Purchaser Consents

Exhibits
--------

Exhibit A  -   Form of Opinion of the Seller Group's Counsel
Exhibit B  -   Form of Agreement and General Release
Exhibit C  -   Form of Employment Agreement with Jeff Roths
Exhibit D  -   Form of Option Agreement for Jeff Roths
Exhibit E  -   Form of Employment Agreement with Patrick Nolan
Exhibit F  -   Form of Option Agreement for Patrick Nolan
Exhibit G  -   Form of Spousal Consent
Exhibit H  -   Form of Opinion of the Purchaser's Counsel

                                       v

<PAGE>

                            INDEX OF DEFINED TERMS

          The following capitalized terms, which may be used in more than one
Section or other location of this Agreement, are defined in the following
Sections or other locations:

                                                                   Section or
     Term                                                        other Location
     ----                                                        --------------

     Acquisition Proposal                                            Annex II
     Affiliate                                                       Annex II
     Affiliate-Owned Assets                                               1.5
     Aggregate Consideration                                         Annex II
     Agreement                                                          10.14
     Annual Balance Sheet                                           5.6(a)(i)
     Annual Balance Sheet Date                                      5.6(a)(i)
     Annual Financial Statements                                    5.6(a)(i)
     Arbitrating Accountants                                         Annex II
     Best Knowledge                                                     10.14
     BCI                                                             Annex II
     Business                                                        Preamble
     Business Day                                                    Annex II
     Capital Lease                                                   Annex II
     Charter Documents                                               Annex II
     Closing                                                       Article II
     Closing Balance Sheet                                                3.2
     Closing Balance Sheet Adjustments                                    3.2
     Closing Date                                                  Article II
     Closing Net Working Capital                                          3.2
     Closing Net Working Capital Statement                                3.2
     Closing Payment                                                      1.3
     COBRA                                                      5.18(b)(viii)
     Code                                                              5.9(a)
     Commission                                                      Annex II
     Company                                                          Caption
     Company Employee Plans                                           5.18(a)
     Competing Business                                                7.1(b)
     Confidential Information                                          7.2(a)
     Contract                                                        Annex II
     Control                                                         Annex II
     Covered Properties                                               5.19(b)
     Disputed Accounts Receivable                                        3.5
     Earn Out Amount                                                   1.6(c)
     Earn Out Financial Statements                                     1.6(a)
     Earn Out Period                                                 Annex II
     EBIT Certificate                                                  1.6(a)

                                      vi
<PAGE>

                                                                   Section or
     Term                                                        other Location
     ----                                                        --------------

     EBIT Final Determination Date                                     1.6(b)
     EBIT Notice of Disagreement                                       1.6(b)
     Employee Benefit Plan                                           Annex II
     Encumbrances                                                    Annex II
     Environmental, Health and Safety Laws                           Annex II
     ERISA                                                           Annex II
     ERISA Affiliate                                                 Annex II
     Excluded Seller Representations                                   9.5(a)
     Financial Statements                                         5.6(a)(iii)
     Funded Indebtedness                                             Annex II
     GAAP                                                            Annex II
     General Release                                                8.1(c)(i)
     Governmental Entity                                             Annex II
     Guaranty                                                        Annex II
     HIPAA                                                      5.18(b)(viii)
     Hired Employees                                                      7.4
     Income Taxes                                                    Annex II
     Indemnified Persons                                             Annex II
     Indemnifying Persons                                            Annex II
     Initial Adjustment                                                3.1(b)
     Initial Adjustment Amount                                         3.1(b)
     Initial Payment                                                      1.2
     Intellectual Property Rights                                    Annex II
     Interim Balance Sheets                                        5.6(a)(ii)
     Interim Financial Statements                                  5.6(a)(ii)
     Latest Balance Sheet                                         5.6(a)(iii)
     Latest Balance Sheet Date                                    5.6(a)(iii)
     Latest Financial Statements                                  5.6(a)(iii)
     Law                                                             Annex II
     Leased Property                                                  5.11(a)
     Liability                                                       Annex II
     Licensed Requisite Rights                                     5.12(a)(i)
     Litigation Expense                                              Annex II
     Losses                                                          Annex II
     Management Shareholders                                         Annex II
     Material Adverse Change                                           5.8(i)
     Material Contracts                                               5.13(b)
     Maximum Earn Out Amount                                           1.6(c)
     Minimum Target EBIT Amount                                        1.6(c)
     Nolan Employment Agreement                                    8.1(c)(iv)
     Nolan Option Agreement                                         8.1(c)(v)
     Options                                                         Annex II
     Orders                                                          Annex II
     Overpayment Amount                                             3.4(a)(i)

                                      vii
<PAGE>

                                                                   Section or
     Term                                                        other Location
     ----                                                        --------------

     Owned Requisite Rights                                        5.12(a)(i)
     Permits                                                         Annex II
     Permitted Encumbrances                                          Annex II
     Person                                                          Annex II
     Plan                                                                 7.5
     Pre-Closing Balance Sheet                                         3.1(a)
     Pre-Closing Net Working Capital                                   3.1(a)
     Proceeding                                                      Annex II
     Purchase Price                                                       1.2
     Purchaser                                                        Caption
     Purchaser Indemnified Persons                                   Annex II
     Purchaser Indemnifying Persons                                  Annex II
     Purchaser Losses                                                Annex II
     Purchaser's Accountants                                         Annex II
     Purchaser's Notice of Adjustment                                     3.2
     Related Documents                                                 8.1(c)
     Representatives                                                   7.2(a)
     Requisite Rights                                              5.12(a)(i)
     Restrictive Period                                                7.1(a)
     Roths Employment Agreement                                    8.1(c)(ii)
     Roths Option Agreement                                       8.1(c)(iii)
     Securities                                                      Annex II
     Securities Act                                                  Annex II
     Seller Group                                                     Caption
     Seller Indemnified Persons                                      Annex II
     Seller Indemnifying Persons                                     Annex II
     Seller Losses                                                   Annex II
     Shares                                                          Preamble
     Stock                                                           Preamble
     Shareholders                                                     Caption
     Shareholders' Representative                                    Annex II
     Survival Date                                                     9.4(a)
     Target Net Working Capital Amount                               Annex II
     Tax Return                                                      Annex II
     Taxes                                                           Annex II
     Third Party                                                      5.17(f)
     Third Party Claim                                                    9.3
     Underpayment Amount                                            3.4(a)(i)
     Working Capital Holdback Amount                                 Annex II
     Working Capital Final Determination Date                             3.3
     Working Capital Notice of Disagreement                               3.3
     Working Capital Shortfall Amount                               3.4(b)(i)

                                     viii
<PAGE>

                                                                  EXECUTION COPY
                                                                  --------------

                           STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT, dated as of August 31, 2000, is by and among
PACER INTERNATIONAL, INC., a Tennessee corporation (the "Purchaser"), GTS
                                                         ---------
TRANSPORTATION SERVICES, INC., a California corporation (the "Company"), and
                                                              -------
those shareholders of the Company listed on Annex I attached to this Agreement
                                            -------
(collectively, the "Shareholders"; and the Shareholders and the Company are
                    ------------
collectively referred to as the "Seller Group").  Certain capitalized terms used
                                 ------------
in this Agreement are defined on Annex II attached to this Agreement.
                                 --------

                                   PREAMBLE

          The Company is engaged in the business (collectively, the "Business")
                                                                     --------
of providing intermodal (trucks and rail) transportation services to third party
shippers/customers in the food and beverage industry.

          The Shareholders represent all of the Company's shareholders, with the
Shareholders owning all of the outstanding shares of the common stock of the
Company (the "Stock").  The shares of Stock owned by the Shareholders are
              -----
collectively referred to as the "Shares."  The Shareholders desire to sell to
                                 ------
the Purchaser, and the Purchaser desires to purchase from the Shareholders, all
of the Shares, on the terms and subject to the conditions contained in this
Agreement.

          ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

                                   ARTICLE I

                          PURCHASE AND SALE OF SHARES

1.1  Transfer of Shares.

     On the terms and subject to the conditions contained in this Agreement, at
the Closing, the Shareholders shall sell, transfer, convey and assign to the
Purchaser, and the Purchaser shall purchase and acquire from the Shareholders,
all of the Shares, free and clear of all Encumbrances.

1.2  Purchase Price.

     The aggregate purchase price (the "Purchase Price") to be paid by the
                                        --------------
Purchaser to the Shareholders for the Shares shall consist of: (i) a cash
payment equal to $15,691,750 less the amount of the Funded Indebtedness set
forth on the certificate to be delivered at the Closing pursuant to Section
8.1(d)(iii) (the "Initial Payment"), subject to adjustment, if at all, pursuant
                  ---------------
to Article III, and (ii) the Earn Out Amount, if any, as finally determined in
accordance with Section 1.6.  The Initial Payment shall be paid in accordance
with Section 1.3.
<PAGE>

1.3  Payment at Closing.

     At the Closing, the Purchaser shall pay or deliver the Initial Payment less
the Initial Adjustment Amount determined pursuant to Section 3.1, if any (the
"Closing Payment"), to the Shareholders.  The Closing Payment shall be paid to
 ---------------
each Shareholder in accordance with the percentages set forth on Schedule 1.3,
                                                                 ------------
by wire transfer of immediately available funds to the account or accounts
designated to the Purchaser by the Shareholders in writing not later than three
(3) Business Days prior to the Closing Date, against receipt at the Closing of
the certificate or certificates representing all of the Shares pursuant to
Section 1.4.

1.4  Delivery of Shares.

     At the Closing, in consideration of the Purchaser's delivery of the Closing
Payment pursuant to Section 1.3, (a) the Shareholders shall deliver to the
Company the certificate or certificates representing the Shares, duly endorsed
for transfer to the Purchaser or accompanied by duly executed stock powers
transferring the Shares to the Purchaser, in each case sufficient in form and
substance to convey to the Purchaser good title to all of the Shares, free and
clear of all Encumbrances, and (b) the Company shall deliver to the Purchaser a
certificate registered in the name of the Purchaser representing the Shares.

1.5  Affiliate-Owned Assets.

     To the extent that any asset, property, interest in property or right
relating to, or used or held for use by the Company in the conduct of the
Business is owned by a Shareholder or any of his, her or its Affiliates or by
any other Affiliate of the Company, such asset, property, interest in property
or right shall be deemed to be an "Affiliate-Owned Asset" for purposes of this
                                   ---------------------
Agreement.

1.6  Earn Out.

          (a)  As soon as practicable, but in no event later than ninety (90)
days after the last day of the Earn Out Period, the Purchaser shall prepare and
deliver to the Shareholders (i) a statement of income of the Company for the
Earn Out Period (the "Earn Out Financial Statement"), which shall be reviewed by
                      ----------------------------
the Purchaser's Accountants and accompanied by their report of their review, and
(ii) a certificate from the Chief Financial Officer of the Purchaser (the "EBIT
                                                                           ----
Certificate") setting forth in reasonable detail the Purchaser's calculation of
-----------
the Company EBIT Amount (as defined on Annex III).  The Earn Out Financial
                                       ---------
Statement shall be prepared in accordance with GAAP applied on a basis
consistent with the Annual Financial Statements (to the extent that GAAP was
applied properly) and the Company EBIT Amount shall be calculated as set forth
on Annex III.  The Purchaser and the Shareholders shall use commercially
   ---------
reasonable efforts to confer with one another during the preparation of the Earn
Out Financial Statements.

          (b)  The Shareholders (together with the Shareholders' accountant)
shall be entitled to review and, if applicable, object to the Company EBIT
Amount for a period of thirty (30) days following the Shareholders receipt of
the Earn Out Financial Statement and the EBIT Certificate.  The Company EBIT
Amount set forth on the EBIT Certificate shall become final and binding upon the
parties hereto on the thirty-first day following delivery of the Earn Out
Financial Statement and the EBIT Certificate unless the Shareholders give
written notice prior to

                                       2
<PAGE>

such date to the Purchaser of their disagreement with the Company EBIT Amount
(an "EBIT Notice of Disagreement"). Any EBIT Notice of Disagreement shall
     ---------------------------
specify in reasonable detail the nature of any disagreement so asserted. If a
timely EBIT Notice of Disagreement is received by the Purchaser, then the
Company EBIT Amount set forth therein (as revised in accordance with clause (i)
or clause (ii) below) shall become final and binding upon the parties hereto on
the earlier of (i) the date on which the Purchaser and the Shareholders resolve
in writing any differences they have with respect to any and all matters
specified in the EBIT Notice of Disagreement, or (ii) the date on which any and
all matters in dispute are finally resolved in writing by the Arbitrating
Accountants. The date on which the Company EBIT Amount becomes final and binding
pursuant to this Section 1.6 is called the "EBIT Final Determination Date".
                                            -----------------------------
During the thirty (30) days immediately following the delivery of any EBIT
Notice of Disagreement, the Purchaser and the Shareholders shall seek in good
faith to resolve in writing all differences that they may have with respect to
the matters specified in such EBIT Notice of Disagreement. At the end of such
thirty (30) day period, the Purchaser and the Shareholders shall submit to the
Arbitrating Accountants for review and resolution any and all matters that
remain in dispute and that were included in any EBIT Notice of Disagreement, as
well as its calculation of the Company EBIT Amount, revised as such party deems
necessary or appropriate at the time of such submission. The Arbitrating
Accountants shall be required to reach a final, binding resolution of all
matters that remain in dispute and provide its own calculation of the Company
EBIT Amount, whereupon that calculation of the Company EBIT Amount submitted to
the Arbitrating Accountants by either the Purchaser or the Shareholders that is
closest to the Arbitrating Accountant's calculation thereof shall be the final
calculation of the Company EBIT Amount. The Arbitrating Accountant's resolution
of such dispute and calculation of the Company EBIT Amount shall be (a) in
writing, (b) furnished to the Purchaser and the Shareholders as soon as
practicable after the items in dispute have been referred to the Arbitrating
Accountants, (c) made in accordance with this Agreement, and (d) conclusive and
binding upon the parties to this Agreement. The Company EBIT Amount, as
determined by the Arbitrating Accountants, shall become final and binding on the
parties hereto on the date the Arbitrating Accountants deliver their final
resolution to the Purchaser and the Shareholders. The parties hereto shall
endeavor in good faith to cause the Arbitrating Accountants to so deliver their
final determination within one hundred and eighty (180) days after the date of
receipt by the Shareholders of the Earn Out Financial Statements and the EBIT
Certificate. Each party hereto shall pay his, her or its own fees, costs and
expenses incurred in connection with the discussion and negotiation of any and
all disputes that may arise as to the determination of the Company EBIT Amount;
provided, however, that the fees and disbursements of the Arbitrating
--------  -------
Accountants shall be borne one hundred percent (100%) by the party whose
determination of the Company EBIT Amount was not closest to the Company EBIT
Amount as determined by the Arbitrating Accountants.

          (c)  If the Company EBIT Amount as finally determined pursuant to
Section 1.6(b) exceeds $3,171,875 (the "Minimum Target EBIT Amount"), then the
                                        --------------------------
Purchaser shall pay to the Shareholders in accordance with the last sentence of
this Section 1.6(c) an amount (the "Earn Out Amount") equal to the product
                                    ---------------
arrived at by multiplying $2,231,250 (the "Maximum Earn Out Amount") by an
                                           -----------------------
amount equal to the quotient arrived at by dividing (A) an amount equal to the
difference arrived at by subtracting the Minimum Target EBIT Amount from the
Company EBIT Amount, by (B) an amount equal to the difference arrived at by
subtracting the Minimum Target EBIT Amount from $3,625,000.00 (provided,
                                                               --------
however, that in no event shall
-------

                                       3
<PAGE>

the Earn Out Amount exceed the Maximum Earn Out Amount). If the Company EBIT
Amount as finally determined pursuant to Section 1.6(b) is less than or equal to
the Minimum EBIT Target Amount, then the Earn Out Amount shall be deemed to be
zero and neither the Purchaser nor the Shareholders shall have any payment
obligation to the other under this Section 1.6. Any payment pursuant to this
Section 1.6 shall be deemed to be an increase in the amount of the Purchase
Price and shall be made to the Shareholders in accordance with the percentages
set forth on Schedule 1.3, as soon as practicable following the EBIT Final
             -------------
Determination Date, by the Purchaser's wire transfer of immediately available
funds to the account or accounts designated to the Purchaser by the Shareholders
in writing not later than three (3) Business Days following the EBIT Final
Determination Date.

1.7  Further Assurances.

     The Shareholders shall, at any time after the Closing, upon the request of
the Purchaser, do, execute, acknowledge and deliver, and cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and other assurances as may be
required to transfer, convey, grant and confirm to and vest in the Purchaser
good title to (i) the Shares and (ii) the Affiliate-Owned Assets, in each case
free and clear of all Encumbrances.

                                  ARTICLE II

                                  THE CLOSING

     On the terms and subject to the conditions contained in this Agreement, the
closing (the "Closing") of the transactions contemplated by this Agreement shall
              -------
take place at the offices of Holland & Knight LLP, counsel for the Purchaser, at
the address set forth in Section 10.7, on the date hereof.  The date on which
the Closing occurs shall be referred to as the "Closing Date."
                                                ------------

                                  ARTICLE III

                          WORKING CAPITAL ADJUSTMENTS

3.1  Initial Working Capital Adjustment.

          (a)  Prior to the Closing Date, the Company prepared and delivered to
the Purchaser a balance sheet (the "Pre-Closing Balance Sheet") of the Company
                                    -------------------------
reflecting the financial position of the Company as of the close of business on
the last day of the last month preceding the Closing Date, a statement setting
forth the Company's computation of the Pre-Closing Net Working Capital, as
adjusted to take into account the Closing Balance Sheet Adjustments (as defined
in Section 3.2), as of the close of business on the last day of the last month
preceding the Closing Date, and a notice setting forth its proposed adjustment,
if any, of the Initial Payment as contemplated hereby.  The Pre-Closing Balance
Sheet was prepared in accordance with GAAP applied on a basis consistent with
the Annual Balance Sheet (to the extent that GAAP was applied properly), as
adjusted to take into account the Closing Balance Sheet Adjustments, and was
certified by the Company's Chief Executive Officer or Chief Financial Officer.
As used in this Agreement, the "Pre-Closing Net Working Capital" shall be
                                -------------------------------

                                       4
<PAGE>

determined in accordance with this Section 3.1 and shall mean the total current
assets minus the total current liabilities of the Company as reflected on the
Pre-Closing Balance Sheet.

          (b)  If the Pre-Closing Net Working Capital is less than the Target
Net Working Capital Amount (the amount of such deficit being referred to herein
as the "Initial Adjustment Amount"), then the Initial Payment shall be reduced
        -------------------------
(the "Initial Adjustment"), and the Purchase Price shall be deemed to be
      ------------------
decreased, by an amount equal to the Initial Adjustment Amount. If the Pre-
Closing Net Working Capital is equal to or greater than the Target Net Working
Capital Amount, then the Initial Payment shall not be reduced and the Purchase
Price shall not be decreased.

3.2  Delivery of the Closing Balance Sheet.

     As soon as practicable following the Closing Date, but in no event later
than 90 days after the Closing Date, the Purchaser shall prepare and deliver to
the Shareholders a balance sheet (the "Closing Balance Sheet") of the Company
                                       ---------------------
reflecting the financial position of the Company as of the close of business on
the Closing Date, a statement (the "Closing Net Working Capital Statement")
                                    -------------------------------------
setting forth the Purchaser's computation of the Closing Net Working Capital as
of the close of business on the Closing Date, and a notice (the "Purchaser's
                                                                 -----------
Notice of Adjustment") setting forth its proposed adjustment, if any, of the
--------------------
Closing Payment as contemplated hereby.  The Closing Balance Sheet shall be
prepared in accordance with GAAP applied on a basis consistent with the Annual
Balance Sheet (to the extent that GAAP was applied properly), and shall be
certified by the Purchaser's Chief Executive Officer or Chief Financial Officer;
provided, however, that the Closing Balance Sheet shall contain an accrual for
--------  -------
(i) any and all fees, costs and expenses incurred by the Company in connection
with transactions contemplated hereby (including the fees, costs and expenses of
the Company's accountants, attorneys and other professional advisers), and (ii)
any and all sales, use, gains and excise Taxes and all registration or transfer
taxes that may be payable in connection with or arising as a result of the
consummation of the transactions contemplated by this Agreement and the Related
Documents, except to the extent that the Shareholders pay or reimburse the
Company for any such fees, costs, expenses and Taxes on or prior to the Closing
Date; provided further, however, that the Closing Balance Sheet shall also
      -------- -------  -------
reflect the following additional adjustments (collectively, the "Closing Balance
                                                                 ---------------
Sheet Adjustments"):  (A) an accrual in accordance with GAAP for any and all
-----------------
obligations that the Company owes to its employees for or with respect to
vacation, sick leave and personal time accrued through the date of such balance
sheet, (B) an accrual in accordance with GAAP for or with respect to actual or
anticipated employee bonus obligations of the Company with respect to all
periods through the date of such balance sheet, (C) the write-down of $917,000
of the accounts receivable owed to the Company by BCI as of the commencement
date of the BCI bankruptcy case, and (D) the recognition into income (and
resulting write-off) of $1,500,000 of outstanding accounts payable accrued by
the Company that have not yet been billed or invoiced to the Company.  The
Purchaser and the Shareholders shall use commercially reasonable efforts to
confer with one another during the preparation of the Closing Balance Sheet. As
used in this Agreement, the "Closing Net Working Capital" shall be determined in
                             ---------------------------
accordance with this Section 3.1 and shall mean the total current assets minus
the total current liabilities of the Company as reflected on the Closing Balance
Sheet.

                                       5
<PAGE>

3.3  Review and Final Determination of Closing Net Working Capital.

     The Shareholders (together with the Shareholders' accountant) shall be
entitled to review and, if applicable, object to the Purchaser's Notice of
Adjustment for a period of thirty (30) days following receipt of the same.  The
Purchaser's Notice of Adjustment shall become final and binding upon the parties
hereto on the thirty-first day following delivery thereof unless the
Shareholders prior to such date give written notice to the Purchaser of their
disagreement therewith (a "Working Capital Notice of Disagreement").  Any
                           --------------------------------------
Working Capital Notice of Disagreement shall specify in reasonable detail the
nature of any disagreement so asserted.  If a timely Working Capital Notice of
Disagreement is received by the Purchaser, then the Closing Net Working Capital
set forth therein (as revised in accordance with clause (i) or clause (ii)
below) shall become final and binding upon the parties hereto on the earlier of
(i) the date on which the Purchaser and the Shareholders resolve in writing any
differences they have with respect to any and all matters specified in the
Working Capital Notice of Disagreement, or (ii) the date on which any and all
matters in dispute are finally resolved in writing by the Arbitrating
Accountants.  The date on which the Closing Net Working Capital becomes final
and binding pursuant to this Section 3.3 is called the "Working Capital Final
                                                        ---------------------
Determination Date."  During the thirty (30) days immediately following the
------------------
delivery of any Working Capital Notice of Disagreement, the Purchaser and the
Shareholders shall seek in good faith to resolve in writing any differences that
they may have with respect to any matter specified in such Working Capital
Notice of Disagreement.  At the end of such thirty (30) day period, the
Purchaser and the Shareholders shall submit to the Arbitrating Accountants for
its review and resolution any and all matters that remain in dispute and that
were included in any Working Capital Notice of Disagreement as well as its
calculation of the Closing Net Working Capital, revised as such party deems
necessary or appropriate at the time of such submission.  The Arbitrating
Accountants shall be required to reach a final, binding resolution of the
matters that remain in dispute and provide its own calculation of the Closing
Net Working Capital, whereupon that calculation of the Closing Net Working
Capital submitted to the Arbitrating Accountants by either the Purchaser or the
Shareholders that is closest to the Arbitrating Accountant's calculation thereof
shall be the final calculation of the Closing Net Working Capital.  The
Arbitrating Accountant's resolution of such dispute and calculation of the
Closing Net Working Capital shall be (a) in writing, (b) furnished to the
Purchaser and the Shareholders as soon as practicable after the items in dispute
have been referred to the Arbitrating Accountants, (c) made in accordance with
this Agreement, and (d) conclusive and binding upon the parties to this
Agreement.  The Closing Net Working Capital, as determined by the Arbitrating
Accountants, shall become final and binding on the parties hereto on the date
the Arbitrating Accountants deliver its final resolution to the Purchaser and
the Shareholders.  The parties hereto shall endeavor in good faith to cause the
Arbitrating Accountants to so deliver their final determination within one
hundred and eighty (180) days after the Closing Date.  Each party hereto shall
pay his, her or its own fees, costs and expenses incurred in connection with the
discussion and negotiation of any and all disputes that may arise as to the
determination of the Closing Net Working Capital; provided, however, that the
                                                  --------  -------
fees and disbursements of the Arbitrating Accountants shall be one hundred
percent (100%) by the party whose determination of the Closing Net Working
Capital was not closest to the Closing Net Working Capital as determined by the
Arbitrating Accountants.

                                       6
<PAGE>

3.4  Adjustment of Closing Payment; Payments.

          (a)  If an Initial Adjustment was made at the Closing, then, as soon
as practicable following the Working Capital Final Determination Date, the
following adjustments and payments, if any, shall be made:

               (i)   if the Closing Net Working Capital is less than the Pre-
     Closing Net Working Capital (the amount of such deficit being referred to
     herein as the "Overpayment Amount") then, (A) the Purchaser shall retain
                    ------------------
     the Initial Adjustment Amount, (B) within five (5) Business Days following
     the Working Capital Final Determination Date, the Shareholders, jointly and
     severally, shall pay to the Purchaser, in cash, an amount equal to the
     Overpayment Amount, and (C) the Purchase Price shall be deemed to be
     decreased by an amount equal to the Overpayment Amount; or

               (ii)  if the Closing Net Working Capital is equal to the Pre-
     Closing Net Working Capital, then (A) the Purchaser shall retain the
     Initial Adjustment Amount and (B) no further adjustment to the Purchase
     Price shall be made; or

               (iii) if the Closing Net Working Capital is greater than the
     Pre-Closing Net Working Capital but less than the Target Net Working
     Capital Amount, then (A) the Purchaser shall retain the Initial Adjustment
     Amount, (B) the Purchaser shall pay to the Shareholders, in accordance with
     the percentages set forth on Schedule 1.3, by wire transfer of immediately
                                  ------------
     available funds to the account or accounts designated to the Purchaser by
     the Shareholders in writing not later than five (5) Business Days following
     the Working Capital Final Determination Date, an amount equal to the
     difference arrived at by subtracting the amount of the Pre-Closing Net
     Working Capital from the amount of the Closing Net Working Capital, and (C)
     the Purchase Price shall be deemed to be increased by the amount actually
     paid to the Shareholders pursuant to clause (B) of this Section
     3.4(a)(iii); or

               (iv)  if the Closing Net Working Capital is equal to or greater
     than the Target Net Working Capital, then, subject to Section 3.4(c), (A)
     the Purchaser shall pay to the Shareholders, in accordance with the
     percentages set forth on Schedule 1.3, at the times set forth in Section
                              ------------
     3.4(c), by wire transfer of immediately available funds to the account or
     accounts designated to the Purchaser by the Shareholders in writing not
     later than five (5) Business Days following the Working Capital Final
     Determination Date, an amount equal to the Initial Adjustment Amount plus,
     if applicable, the amount (but not more than $1,000,000) by which the
     Closing Net Working Capital exceeds the Target Net Working Capital, and (B)
     the Purchase Price shall be deemed to be increased by the aggregate amount
     actually paid to the Shareholders pursuant to clause (A) of this Section
     3.4(a)(iv).

          (b)  If an Initial Adjustment was not made at the Closing, then as
                                            ---
soon as practicable following the Working Capital Final Determination Date, the
following adjustments and payments, if any, shall be made:

               (i)   if the Closing Net Working Capital is less than the Target
     Working Capital Amount (the amount of such deficit being referred to herein
     as the "Working
             -------

                                       7
<PAGE>

     Capital Shortfall Amount") then, (A) within five (5) Business Days
     ------------------------
     following the Working Capital Final Determination Date, the Shareholders,
     jointly and severally, shall pay to the Purchaser, in cash, an amount equal
     to the Working Capital Shortfall Amount, and (B) the Purchase Price shall
     be deemed to be decreased by an amount equal to the Working Capital
     Shortfall Amount; or

               (ii) if the Closing Net Working Capital is equal to or greater
     than the Target Working Capital Amount, then, subject to Section 3.4(c),
     (A) the Purchaser shall pay to the Shareholders, in accordance with the
     percentages set forth on Schedule 1.3, at the times set forth in Section
                              ------------
     3.4(c), by wire transfer of immediately available funds to the account or
     accounts designated to the Purchaser by the Shareholders in writing not
     later than five (5) Business Days following the Working Capital Final
     Determination Date, an amount equal to the amount (but not more than
     $1,000,000) by which the Closing Net Working Capital exceeds the Target Net
     Working Capital, and (B) the Purchase Price shall be deemed to be increased
     by the aggregate amount actually paid to the Shareholders pursuant to
     clause (A) of this Section 3.4(b)(ii).

          (c)  The Purchaser's payment obligation, if any, under Section
3.4(a)(iv) or Section 3.4(b)(ii), as the case may be, shall be subject to (i)
the Company collecting in full the accounts receivable of the Company reflected
on the Closing Balance Sheet and (ii) the Company not having incurred as of the
Closing Date or otherwise becoming liable for any additional accounts payable or
accrued expenses or other current liabilities existing as of the Closing Date
and not reflected on the Closing Balance Sheet.  Subject to the immediately
preceding sentence, as promptly as practicable after the Company has collected
that portion of the accounts receivable of the Company reflected on the Closing
Balance Sheet that results in the Company having realized net working capital as
of the Closing Date of an amount equal to the Target Net Working Capital Amount,
the Purchaser shall pay to the Shareholders as aforesaid such amounts as are
subsequently collected on the remaining accounts receivable of the Company that
are reflected on the Closing Balance Sheet until such payment obligation of the
Purchaser is paid in full.

3.5  Accounts Receivable Adjustment.

     Anything in this Article III to the contrary notwithstanding, if any
accounts receivable owed to the Company that are specifically identified as to
the account debtor and amount owed to the Company on the Company's unaudited
balance sheet as of April 30, 2000, which balance sheet has been delivered to
the Purchaser prior to the date hereof (such accounts receivable being
collectively referred to as the "Disputed Accounts Receivable"), are written
                                 ----------------------------
down on the Closing Balance Sheet, then (i) the Purchaser shall use commercially
reasonable efforts for a period of one (1) year from and after the Closing Date
to collect the portion of the Disputed Accounts Receivable that are written down
on the Closing Balance Sheet, and (ii) to the extent that the Purchaser, during
the one (1) year period referred to in clause (i) of this Section 3.5, collects
amounts (whether in the form of cash, securities or other property) from such
account debtor(s) in payment of the Disputed Accounts Receivable, which amounts
in the aggregate exceed the aggregate amount of the Disputed Accounts Receivable
reflected on the Closing Balance Sheet (the amount of such excess being referred
to herein as the "Accounts Receivable Excess"), (A) as soon as practicable after
                  --------------------------
the receipt of any Accounts Receivable Excess, the Purchaser shall pay to the
Shareholders, in accordance with the percentages set forth on Schedule 1.3, and
                                                              ------------
in cash, an

                                       8
<PAGE>

amount equal to the amount of Accounts Receivable Excess actually received, and
(B) the Purchase Price shall be deemed to be increased by the amount actually
paid to the Shareholders pursuant to clause (A) of this Section 3.5.

                                  ARTICLE IV

              REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

     Each Shareholder hereby, severally as to himself, herself or itself only
and not jointly with or as to any of the other Shareholders, represents and
warrants to the Purchaser as of the date hereof as follows:

4.1  Title to the Shares.

     Such Shareholder (i) is the lawful owner, of record and beneficially, of
the number of Shares set forth opposite his, her or its name on Annex 1, and
                                                                -------
(ii) has good and marketable title to such Shares, free and clear of any and all
Encumbrances whatsoever and with no restriction on the voting rights and other
incidents of record and beneficial ownership pertaining thereto.  Such
Shareholder is not the subject of any bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Proceeding affecting
creditors' rights and remedies generally.  Except for this Agreement, there are
no Contracts or other understandings or arrangements between such Shareholder
and any other Person (including any of the other Shareholders or the Company)
with respect to the acquisition, disposition, transfer, registration or voting
of, or any other matters in any way pertaining or relating to, any of the
capital stock or other securities of the Company (including the Shares owned by
such Shareholder).  Such Shareholder does not have any right whatsoever to
receive or acquire any additional shares of capital stock or other securities of
the Company.

4.2  Organization and Power.

     If applicable, such Shareholder is a corporation, limited liability
company, partnership or trust duly organized or formed, validly existing, and in
good standing under the Laws of the jurisdiction of its incorporation or
formation and has all requisite power and authority (corporate, partnership or
otherwise) to own, lease and operate its assets and properties and to carry on
its business as presently conducted.  If applicable, the Purchaser has been
furnished with true, correct and complete copies of the such Shareholder's
Charter Documents, in each case as amended and in effect on and as of the date
this representation is being made and is deemed made hereunder.

4.3  Authority; Authorization, Execution and Delivery; Enforceability; No
Conflict.

          (a)  Such Shareholder has the full and absolute legal right, capacity,
power and authority (if applicable, corporate or partnership or otherwise) to
execute, deliver and perform his, her or its obligations under this Agreement
and each Related Document to which he, she or it is or will be a party, and to
consummate the transactions contemplated hereby and thereby.  If applicable,
such Shareholder's execution and delivery of this Agreement and each Related
Document to which he, she or it is or will be a party, and the performance by
such Shareholder of his, her or its obligations hereunder and thereunder, have
been duly and validly authorized by

                                       9
<PAGE>

all requisite action on the part of such Shareholder (including its board of
directors and all committees thereof and its shareholders). This Agreement and
each Related Document to which such Shareholder is or will be a party has been,
or upon the execution hereof and thereof will be, duly and validly executed and
delivered by such Shareholder, and this Agreement and each such Related Document
is, or upon the execution hereof and thereof will be, duly and validly executed
and delivered by such Shareholder and constitutes, or upon such Shareholder's
execution and delivery hereof and thereof, will constitute, a valid and binding
obligation of such Shareholder, enforceable against him, her or it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar Laws affecting
creditors' rights and remedies generally, and, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

          (b)  Neither the execution and delivery by such Shareholder of, nor
the performance of his, her or its obligations under, this Agreement or any of
the Related Documents to which he, she or it is or will be a party, nor the
consummation by such Shareholder of the transactions contemplated hereby or
thereby, nor the compliance by such Shareholder with any of the provisions
hereof or thereof, will (i) conflict with, or result in any violation of, or
cause a default (with or without notice or lapse of time or both) under, any
provision of the Company's Charter Documents, or, if applicable, such
Shareholder's Charter Documents, (ii) conflict with, or result in any violation
of, or cause a default (with or without notice or lapse of time or both) under,
or give rise to any right of termination, amendment, cancellation or
acceleration of any obligations contained in, or the loss of any benefit under,
any term, condition or provision of any provision of any Contract to which such
Shareholder or the Company is a party or by which such Shareholder, or the
Company, or any of his, her, its, or their assets or properties are or may be
bound, (iii) violate any Law applicable to such Shareholder or the Company, or
(iv) result in an Encumbrance on or against any assets, rights or properties of
such Shareholder or the Company, or on or against any capital stock or other
securities of the Company, or give rise to any claim against the Company or the
Purchaser.

4.4  Consents.

     Except as set forth on Schedule 4.4, no Permit, authorization, consent or
                            ------------
approval of or by, or any notification of or filing with, any Person
(governmental or private) is required for, as a result of, or in connection with
the execution, delivery and performance by such Shareholder of this Agreement or
any of the Related Documents to which such Shareholder is or will be a party or
the consummation of the transactions contemplated hereby or thereby.

4.5  Brokers.

     Such Shareholder has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents.

                                      10
<PAGE>

                                   ARTICLE V

                        REPRESENTATIONS AND WARRANTIES
                              OF THE SELLER GROUP

     Each member of the Seller Group hereby jointly and severally represents and
warrants to the Purchaser as of the date hereof as follows:

5.1  Organization, Power, Authority and Good Standing.

     The Company is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business (all of which
collectively comprise the Business) as presently conducted and as presently
proposed to be conducted.  The Company is duly qualified and in good standing to
transact business as a foreign Person in those jurisdictions set forth on
Schedule 5.1, which jurisdictions constitute all of the jurisdictions in which
------------
the character of the property owned, leased or operated by the Company or the
nature of the business or activities conducted by the Company makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified is not reasonably likely to have a materially adversely affect the
Business, properties, financial condition or results of operations of the
Company, taken as a whole.  The Purchaser has been furnished with true, correct
and complete copies of the Charter Documents of the Company, in each case as
amended and in effect on and as of the date this representation is being made
and is deemed made hereunder.  Except as set forth on Schedule 5.1, the Company
                                                      ------------
has not (i) engaged in any business or activity other than the Business, or (ii)
used any trade name or assumed name or other corporate name at any time.

5.2  Authority; Authorization, Execution and Delivery; Enforceability; No
     Conflict.

          (a)  The Company has all requisite power and authority (corporate or
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party, and to consummate
the transactions contemplated hereby and thereby.  The Company's execution and
delivery of this Agreement and each Related Document to which it is or will be a
party, and the performance by the Company of its obligations hereunder and
thereunder, have been duly and validly authorized by all requisite action on the
part of the Company (including its board of directors and all committees thereof
and its shareholders).  This Agreement and each Related Document to which the
Company is or will be a party has been, or upon the Company's execution hereof
and thereof will be, duly and validly executed and delivered by the Company and
constitutes, or upon the Company's execution and delivery hereof and thereof
will constitute, a valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors' rights and remedies generally,
and, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).

          (b)  Neither the execution and delivery by the Company and the
Shareholders of, nor the performance of their respective obligations under, this
Agreement or any of the

                                      11
<PAGE>

Related Documents, as applicable, nor the consummation by the Company and the
Shareholders of the transactions contemplated hereby or thereby, nor the
compliance by the Company and the Shareholders with any of the provisions hereof
and thereof, will (i) conflict with, or result in any violation of, or cause a
default (with or without notice or lapse of time or both) under, any provision
of the Company's Charter Documents, (ii) conflict with, or result in any
violation of, or cause a default (with or without notice or lapse of time or
both) under, or give rise to any right of termination, amendment, cancellation
or acceleration of any obligations contained in, or the loss of any benefit
under, any term, condition or provision of any provision of any Contract to
which the Company is a party, or by which the Company or any of its assets or
properties are or may be bound, (iii) violate any Law applicable to the Company,
or (iv) result in an Encumbrance on or against any assets, rights or properties
of the Company, or on or against any capital stock or other securities of the
Company, or give rise to any claim against the Company or the Purchaser.

5.3  Consents.

     Except as set forth on Schedule 5.3, no Permit, authorization, consent or
                            ------------
approval of or by, or notification of or filing with, any Person (governmental
or otherwise) is required for, as a result of, or in connection with the
execution, delivery and performance by the Company of this Agreement or any of
the Related Documents to which it is or will be a party or the consummation of
the transactions contemplated hereby or thereby.

5.4  Capitalization.

          (a)  The authorized capital stock of the Company and is set forth on
Schedule 5.4(a), which schedule also sets forth the total number of outstanding
---------------
shares of the Company.  All such outstanding shares disclosed on Schedule 5.4(a)
                                                                 ---------------
are duly and validly issued and outstanding, fully paid and non-assessable, with
no personal Liability attached to the ownership thereof, and are held of record
and beneficially by the Persons, and in the respective amounts, set forth on
Schedule 5.4(a), without Encumbrance.
---------------

          (b)  Except as set forth on Schedule 5.4(b), there are no outstanding
                                      ---------------
securities that are convertible into, exchangeable for, or carrying the right to
acquire, any equity securities of the Company, or subscriptions, warrants,
options, calls, puts, convertible securities, registration or other rights,
arrangements or commitments obligating the Company to issue, sell, register,
purchase or redeem any of its securities or any ownership interest or rights
therein.  Except as set forth on Schedule 5.4(b), there are no Contracts,
                                 ---------------
commitments, arrangements, understandings or restrictions to which any
Shareholder, or any other Person is bound relating in any way to any shares of
capital stock or other securities of the Company, including voting trusts or
other similar agreements or understandings with respect to the voting of the
Company's capital stock or other securities.  There are no stock appreciation
rights, phantom stock rights, or similar rights or arrangements outstanding with
respect to the Company.

          (c)  All securities issued by the Company have been issued in
transactions exempt from registration under the Securities Act and all
applicable state securities or "blue sky" Laws, and the Company has not violated
the Securities Act or any applicable state securities or "blue sky" Laws in
connection with the issuance of any such securities.

                                      12
<PAGE>

5.5  Subsidiaries; Investments.

     The Company has no Subsidiaries and, except as set forth on Schedule 5.5,
                                                                 ------------
does not own or hold, directly or indirectly, any equity interest in or debt
obligation of (excluding accounts receivable arising in the ordinary course of
business, consistent with past practice) any other Person.

5.6  Financial Information.

          (a)   Schedule 5.6(a) contains true, correct and complete copies of
                ---------------
the following:

             (i)   the unaudited balance sheet of the Company as of December 31,
     1999 (the "Annual Balance Sheet"; and such date being referred to as the
                --------------------
     "Annual Balance Sheet Date"), December 31, 1998, December 31, 1997, and
      -------------------------
     December 31, 1996, and the related unaudited statements of income,
     shareholders' equity and cash flows of the Company for the fiscal years
     then ended, including any footnotes and schedules thereto (all of the
     foregoing, including the Annual Balance Sheet being collectively referred
     to as the "Annual Financial Statements");
                ---------------------------

             (ii)  the unaudited balance sheet of the Company as of January 31,
     2000, February 29, 2000, March 31, 2000, April 30, 2000, and May 31, 2000
     (collectively, the "Interim Balance Sheets"), and the unaudited statements
                         ----------------------
     of income, shareholders' equity and cash flows of the Company for the
     respective one-month, two-month, three-month, four-month and five-month
     periods then ended, including any and all footnotes and schedules thereto
     (all of the foregoing, including the Interim Balance Sheets, being
     collectively referred to as the "Interim Financial Statements"); and
                                      ----------------------------

             (iii) the unaudited balance sheet of the Company as of June 30,
     2000 (the "Latest Balance Sheet"; and such date being referred to as the
                --------------------
     "Latest Balance Sheet Date"), and the unaudited statements of income,
      -------------------------
     shareholders' equity and cash flows of the Company for the six-month period
     then ended, including any and all footnotes and schedules thereto (all of
     the foregoing, including the Latest Balance Sheet, being collectively
     referred to as the "Latest Financial Statements"; and the Annual Financial
                         ---------------------------
     Statements, the Interim Financial Statements and the Latest Financial
     Statements being  collectively referred to as the "Financial Statements").
                                                        --------------------

          (b)   The Financial Statements (i) are true, correct and complete,
(ii) fairly present the financial position of the Company as of the dates
indicated and the results of operations of the Company for the periods
indicated, (iii) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby (subject to the absence of footnotes and
schedules that may be required by GAAP and, in the case of the Interim Financial
Statements and the Latest Financial Statements, normal year-end adjustments that
are not material individually or in the aggregate), and (iv) are in accordance
with the books and records of the Company, which books and records are true,
correct and complete and have been maintained in a manner consistent with
historical practice.

                                      13
<PAGE>

          (c)     Schedule 5.6(c) contains a true, correct and complete summary
                  ---------------
of all accounts payable, accrued expenses and accounts receivable of the Company
as of the most recent practicable date prior to the date hereof, which schedule
sets 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
such account debtor or owing to such account creditor (identifying the portion
of such amount that is current, thirty (30) days past due, sixty (60) days past
due, ninety (90) days past due, and more than ninety (90) days past due).

5.7  Absence of Undisclosed Liabilities.

     Except as set forth on Schedule 5.7, the Company has no Liability except
                            ------------
(i) to the extent expressly reflected or reserved against on the Latest Balance
Sheet, (ii) Liabilities under Contracts (other than any Liability arising from
any breach or violation thereof or default thereunder), and (iii) Liabilities
incurred in the ordinary course of business, consistent with past practice,
since the Latest Balance Sheet Date (other than any such Liability arising from
any breach or violation of, or default under, any Contract, or arising from any
breach of warranty, tort, infringement, or violation of any Law or any
Proceeding).  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 that are not
adequately provided for or disclosed on the Latest Balance Sheet or in the
footnotes or schedules thereto.  The Company has not, either expressly or by
operation of Law, assumed or undertaken any Liability of any other Person,
including any obligation for corrective or remedial action relating to
Environmental, Health and Safety Laws.

5.8  Absence of Changes.

     Since the Latest Balance Sheet Date, except as set forth on Schedule 5.8,
                                                                 ------------
the Company has been operated in the ordinary course of business, consistent
with past practice, and there has not been:

               (i)     any event or condition that has resulted in or could
     reasonably be expected to result in an adverse change in the business,
     operations, assets, condition (financial or otherwise), operating results,
     liabilities, relations with employees, customers, suppliers or prospects of
     the Company, or any casualty loss or damage to the assets or properties of
     the Company, whether or not covered by insurance (a "Material Adverse
                                                          ----------------
     Change");
     ------

               (ii)    any declaration, setting aside or payment of any dividend
     or other distribution with respect to any shares of capital stock or other
     securities of the Company, or any direct or indirect redemption, purchase
     or other acquisition of any capital stock or other securities of the
     Company, or any other payments of any nature directly or indirectly to or
     for the benefit of any Shareholder or any Affiliate of the Company (whether
     or not on or with respect to any shares of capital stock or other
     securities of the Company owned by such Shareholder or Affiliate), other
     than salaries and benefits paid in the ordinary course of business,
     consistent with past practice;

               (iii)   any general uniform increase in the compensation of
     employees (including any increase pursuant to any bonus, pension, profit-
     sharing or other plan or

                                      14
<PAGE>

     commitment) of the Company, or any increase in or prepayment of any such
     compensation payable to or to become payable to any director, officer or
     key employee;

               (iv)    any acquisition or disposition of assets or properties
     owned by the Company, other than the sale or other disposition of
     inventories for fair value in the ordinary course of business, consistent
     with past practice;

               (v)     any agreement or commitment on the part of the Company to
     merge, amalgamate or consolidate with or into, or otherwise acquire, any
     other Person or division thereof;

               (vi)    any change in depreciation or amortization policies or
     rates previously adopted, any change in income or expense recognition or
     bad debt reserve, write-down or write-off policies previously adopted, any
     write-up or write-down of inventory or other assets or any other change in
     other accounting or in Tax reporting or methods or practices followed by
     the Company;

               (vii)   any change in the manner in which products or services of
     the Company are marketed (including any change in prices), any change in
     the manner in which the Company extends discounts or credit to customers,
     or any change in the manner or terms by which the Company collects accounts
     receivable;

               (viii)  any failure by the Company to make scheduled capital
     expenditures or investments, or any failure to pay trade accounts payable
     or any other Liability of the Company when due; or

               (ix)    any Contract or other understanding or arrangement (other
     than this Agreement and the Related Documents), whether in writing or
     otherwise, to take any of the actions specified in the foregoing clauses
     (i) through (viii).

5.9  Tax Matters.

          (a)     Except as set forth on Schedule 5.9(a), the Company and each
                                         ---------------
other Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"), of which the Company is or has been a
                               ----
member:

               (i)     has timely paid or caused to be paid all Taxes required
     to be paid by it through the date hereof and as of the Closing Date
     (including any Taxes shown due on any Tax Return);

               (ii)    has filed or caused to be filed in a timely and proper
     manner (within any applicable extension periods) all Tax Returns required
     to be filed by it with the appropriate Governmental Entities in all
     jurisdictions in which such Tax Returns are required to be filed; and

               (iii)   has not requested or caused to be requested any extension
     of time within which to file any Tax Return, which Tax Return has not since
     been filed.

                                      15
<PAGE>

          (b)     The Company has previously delivered to the Purchaser true,
correct and complete copies of all Tax Returns filed by or on behalf of the
Company for all completed Tax years of the Company that remain open for audit or
review by the relevant Taxing authority.  All such Tax Returns were true,
correct and complete.

          (c)     Except as set forth in Schedule 5.9(c):
                                         ---------------

               (i)     the Company has not been notified by the Internal Revenue
     Service or any other Taxing authority that any issues have been raised (and
     no such issues are currently pending) by the Internal Revenue Service or
     any other Taxing authority in connection with any Tax Return of the
     Company, there are no pending Tax audits with respect to the Company, and
     no waivers of statutes of limitations related to Taxes have been given or
     requested with respect to the Company;

               (ii)    full and adequate provision has been made (A) on the
     Latest Balance Sheet for all Taxes payable by the Company for all periods
     ending on or prior to the Latest Balance Sheet Date, and (B) on the books
     and records of the Company for all Taxes payable by the Company for all
     periods beginning on or after the Latest Balance Sheet Date;

               (iii)   the Company has not incurred any Tax Liability from and
     after the Latest Balance Sheet Date other than Taxes incurred in the
     ordinary course of business, consistent with past practice;

               (iv)    the Company (A) is not, or has not made an election to be
     treated as, a "consenting corporation" under Section 341(f) of the Code, or
     (B) is not, or has not been, a "personal holding company" within the
     meaning of Section 542 of the Code;

               (v)     the Company has complied in all respects with all
     applicable Laws relating to the collection or withholding of Taxes
     (including sales Taxes and the withholding of Taxes from the wages of
     employees);

               (vi)    the Company is not, or has not ever been, a party to any
     Tax sharing, indemnity of similar agreement with any Person;

               (vii)   the Company has not incurred any Liability to make or
     possibly make any payments, either alone or in conjunction with any other
     payments, that:

                    (A)    are not deductible under, or would otherwise
             constitute a "parachute payment" within the meaning of, Section
             280G of the Code (or any corresponding provision of domestic or
             foreign income Tax Law); or

                    (B)    are or may be subject to the imposition of an excise
             Tax under Section 4999 of the Code;

               (viii)  the Company has not agreed to, or is not required to,
     make any adjustments or changes either on, before or after the Closing
     Date, to its accounting methods pursuant to Section 481 of the Code, and
     the Internal Revenue Service has not proposed any such adjustments or
     changes in the accounting methods of the Company;

                                      16
<PAGE>

               (ix)    no claim has ever been made by any Taxing authority in a
      jurisdiction in which the Company does not file Tax Returns that the
      Company is, or may be subject to, taxation by that jurisdiction; and

               (x)     neither the Company, nor any Shareholder is a foreign
      Person within the meaning of Section 1.1445-2(b) of the rules and
      regulations promulgated under Section 1445 of the Code.

5.10  Title to Assets, Properties and Rights and Related Matters.

          (a)     The Company has good and marketable title (or a valid
leasehold interest) to all of the assets, properties and interests in
properties, real, personal or mixed, reflected on the Latest Balance Sheet or
acquired after the Latest Balance Sheet Date (except for assets or properties
sold or otherwise disposed of since the Latest Balance Sheet Date in the
ordinary course of business, consistent with past practice, and accounts
receivable and notes receivable paid in full subsequent to the Latest Balance
Sheet Date in the ordinary course of business, consistent with past practice),
free and clear of all Encumbrances, of any kind or character, except for those
Encumbrances set forth on Schedule 5.10(a) and Permitted Encumbrances. Such
                          ----------------
assets are in good operating condition and repair (normal wear and tear
excepted), are sufficient to operate the Business as presently conducted and as
presently proposed to be conducted, are suitable for the uses for which they are
used in the Business, and are not subject to any condition that materially
interferes with the economic value or use thereof. With respect to any leased
assets, such assets are in such condition as to permit the surrender thereof to
the lessors thereunder on the date hereof without any cost or expense for repair
or restoration as if the related leases were terminated or expired on the date
hereof in the ordinary course of business, consistent with past practice.

          (b)     Schedule 5.10(b) contains a true, correct and complete list of
                  ----------------
all tangible personal property owned by the Company as of the Closing Date.
Except for any inventory, supplies, equipment, tractors, trailers and
automobiles in transit in the ordinary course of business, consistent with past
practice, all tangible personal property listed on Schedule 5.10(b) is located
                                                   ----------------
on the Company's premises listed on Schedule 5.11(a).
                                    ----------------

5.11  Real Property - Owned or Leased.

          (a)     Schedule 5.11(a) contains a list and brief description of all
                  ----------------
of the real property owned, leased, subleased or otherwise occupied by the
Company. The description of each parcel of real property subject to one or more
leases (the "Leased Property") includes the names of the lessor and the lessee
             ---------------
and the basic terms thereof. The lease rate charged to the Company for each
parcel of Leased Property that is leased by the Company from a Shareholder or
from an Affiliate of the Company is not greater than the fair market value
rental that would be obtained by the Company in an arms' length transaction with
a Person that is not an Affiliate. The real property listed on Schedule 5.11(a)
                                                               ----------------
constitutes all real property used or occupied by the Company in connection with
the Business.

          (b)     With respect to the real property listed on Schedule 5.11(a),
                                                              ----------------
except as set forth on Schedule 5.11(b):
                       ----------------

                                      17
<PAGE>

               (i)     no portion of the real property is subject to any pending
      condemnation or other Proceeding, and, to the best knowledge of the Seller
      Group, there is no threatened condemnation or other Proceeding with
      respect thereto;

               (ii)    the physical condition of the real property is sufficient
      to permit the continued conduct of the Business as presently conducted and
      as presently proposed to be conducted, subject to the provision of usual
      and customary maintenance and repairs performed in the ordinary course of
      business, consistent with past practice, with respect to similar
      properties of like age and construction;

               (iii)   the Company is the fee owner of the real property or the
      owner and holder of all the leasehold estates purported to be granted by
      the leases associated with the Leased Property, as applicable;

               (iv)    there are no Contracts to which the Company, or any of
      its Affiliates is a party, granting to any party or parties the right of
      use or occupancy of any portion of the real property;

               (v)     there are no parties (other than the Company) in
      possession of any portion of the real property; and

               (vi)    no notice of any increase in the assessed valuation of
      any portion of the real property and no notice of any contemplated special
      assessment with respect to any portion of the real property has been
      received by the Company, and, to the best knowledge of the Seller Group,
      there is no threatened increase in assessed valuation or threatened
      special assessment pertaining to any portion of the real property.

5.12  Intellectual Property.

          (a)     Except as set forth on Schedule 5.12(a):
                                         ----------------

               (i)     the Company owns, has the right to use, sell, license and
      dispose of, and has the right to bring actions for the infringement of,
      all Intellectual Property Rights used in, necessary for, or required for
      the conduct of the Business as presently conducted and as presently
      proposed to be conducted (collectively, the "Owned Requisite Rights"),
                                                   ----------------------
      other than those Intellectual Property Rights for which the Company has a
      valid license, all of which are listed on Schedule 5.12(a) (collectively,
                                                ----------------
      the "Licensed Requisite Rights"; and together with the Owned Requisite
           -------------------------
      Rights, the "Requisite Rights"), and such rights to use, sell, license,
                   ----------------
      dispose of and bring actions are exclusive with respect to the Owned
      Requisite Rights;

               (ii)    the Company has not granted any Person the right to use
      any of the Owned Requisite Rights;

               (iii)   there exists no default, or any event which upon the
      giving of notice or the passage of time, or both, would give rise to a
      claim of a default by the Company under the licenses granting the Company
      the Licensed Requisite Rights;

                                      18
<PAGE>

               (iv)    the Company has taken all commercially reasonable and
      practicable steps designed to safeguard and maintain (A) the secrecy and
      confidentiality of the Company's Confidential Information, and (B) the
      proprietary rights of the Company in all of the Requisite Rights;

               (v)     the Company has not interfered with, infringed upon,
      misappropriated or otherwise come into conflict with any Intellectual
      Property Rights of any Person or committed any acts of unfair competition
      or received from any Person in the past five years any notice, charge,
      complaint, claim or assertion thereof, and no such charge, complaint,
      claim or assertion is impliedly threatened by an offer to license from
      another Person; and

               (vi)    the Company has not sent to any Person in the past five
      years, or otherwise communicated to any Person, any notice, charge,
      complaint, claim or other assertion of any present, impending or
      threatened interference with, infringement upon, misappropriation of, or
      other conflict with any Intellectual Property Rights of the Company by
      such other Person or any acts of unfair competition by such other Person,
      nor, to the best knowledge of the Seller Group, is any such interference,
      infringement, misappropriation, conflict or act of unfair competition
      occurring or threatened.

          (b)     Schedule 5.12(b) contains a true, correct and complete list of
                  ----------------
all applications, filings and other formal actions made or taken pursuant to any
Laws by the Company to perfect or protect its interests in its Intellectual
Property Rights.

5.13  Agreements, No Defaults, Etc.

          (a)     Schedule 5.13(a) contains a true, correct and complete list
                  ----------------
and a brief description of all Contracts to which the Company is a party and (x)
that were entered into or made outside the ordinary course of business,
consistent with past practice, or (y) that were entered into or made in the
ordinary course of business, consistent with past practice, and are described in
clauses (i) through (xiii) of the next sentence of this Section 5.13. Except as
set forth on Schedule 5.13(a), the Company is not a party to any of the
             ----------------
following Contracts:

               (i)     distributorship, dealer, sales, advertising, agency,
      manufacturer's representative, or any other Contract relating to the
      payment of a commission;

               (ii)    any Contract relating to the employment of any officer,
      employee or consultant or any other type of Contract or other
      understanding or arrangement with any officer, employee or consultant,
      including any Contract or other understanding or arrangement relating to
      severance payments;

               (iii)   any indenture, mortgage, promissory note, loan agreement,
      pledge agreement, guaranty or conditional sale or other Contract relating
      to the borrowing of money, a line of credit or a Capital Lease;

               (iv)    any Contract for charitable contributions in excess of
      $5,000 individually or $10,000 in the aggregate;

                                      19
<PAGE>

               (v)     any Contract for capital expenditures in excess of
      $10,000 individually or $50,000 in the aggregate;

               (vi)    any Contract for the sale of any assets, properties or
      rights other than the sale of services or products in the ordinary course
      of business, consistent with past practice;

               (vii)   any Contract pursuant to which the Company is a lessee of
      or holds or operates any machinery, equipment, motor vehicles, office
      furniture, fixtures, products, merchandise or other personal property
      owned by any other Person in excess of $10,000 individually or $50,000 in
      the aggregate;

               (viii)  any Contract relating to the lending or investing of
      funds;

               (ix)    any Contract relating to any form of intangible property,
      including any Intellectual Property Rights;

               (x)     any Contract that restricts the Company from engaging in
      any aspect of the Business or any other business anywhere in the world;

               (xi)    any Contract or group of related Contracts with the same
      Person or group of Affiliated Persons (excluding purchase orders entered
       into in the ordinary course of business, consistent with past practice,
      that are to be completed within three months of entering into such
      purchase orders) for the purchase or sale of products or services under
      which the undelivered or unperformed balance or portion thereof (including
      the aggregate undelivered or unperformed balance or portion under any such
      Contracts between the same Person and the Company) has a selling price in
      excess of $50,000;

               (xii)   any Contract for the acquisition or disposition of a
      Person or a division of a Person made within the preceding five years
      (whether or not such acquisition or disposition was consummated); or

               (xiii)  any other Contract material to the Business.

          (b)     The Contracts disclosed on Schedule 5.4(b), the leases (and
                                             ---------------
any other Contracts) disclosed on Schedule 5.11(a), the licenses (and any other
                                  ----------------
Contracts) disclosed on Schedule 5.12(a), the insurance policies (and any other
                        ----------------
Contracts) disclosed on Schedule 5.16(a), the Company Employee Plans (and any
                        ----------------
other Contracts) disclosed on Schedule 5.18(a), and the Contracts disclosed on
                              ----------------
Schedule 5.21 are incorporated by reference onto Schedule 5.13. The Contracts
-------------                                    -------------
disclosed on Schedule 5.13, together with the Contracts incorporated by
             -------------
reference onto Schedule 5.13, are collectively referred to as the "Material
               -------------                                       --------
Contracts."
---------

          (c)     All Material Contracts (i) are in full force and effect, (ii)
constitute legal, valid and binding obligations of the Company and, to the best
knowledge of the Seller Group, the other parties thereto, and (iii) are
enforceable in accordance with their terms against the Company and, to the best
knowledge of the Seller Group, the other parties thereto, in each case subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a

                                      20
<PAGE>

proceeding at law or in equity). The Company has performed all of the
obligations required to be performed by it to date pursuant to the terms of the
Material Contracts, and there exists no default, or any event which upon the
giving of notice or the passage of time, or both, would give rise to a claim of
a default in the performance by the Company or, to the best knowledge of the
Seller Group, any other party to any of the Material Contracts of their
respective obligations thereunder. The Purchaser has been furnished with true,
correct and complete copies of all written Material Contracts and Schedule
                                                                  --------
5.13(a) (including Contracts incorporated by reference thereon) contains true,
-------
correct and complete descriptions of all oral Contracts listed on Schedule
                                                                  --------
5.13(a) (including Contracts incorporated by reference thereon).
-------

          (d)  Schedule 5.13(d) contains a true, correct and complete list of
               ----------------
all Funded Indebtedness of the Company, in each case showing the aggregate
principal amount thereof (and the aggregate amount of any undrawn commitments
with respect thereto), the name of the lender, and the name of the respective
borrower and any other Person that directly or indirectly guaranteed such Funded
Indebtedness.

5.14   Litigation, Etc.

          (a)  Except as disclosed on Schedule 5.14(a), there are no (i)
                                      ----------------
Proceedings pending or, to the best knowledge of the Seller Group, threatened
against the Company, whether at law or in equity, civil or criminal in nature,
or before or by any Governmental Entity or arbitrator, nor, to the best
knowledge of the Seller Group, does there exist any basis therefor, or (ii)
Orders of any Governmental Entity or arbitrator with respect to, involving or
against the Company.  The Company has delivered to the Purchaser all material
documents and correspondence relating to the matters disclosed on Schedule
                                                                  --------
5.14(a).
-------

          (b)  Schedule 5.14(b) lists each matter described in Section 5.14(a)
               ----------------
that (i) resulted in any criminal sanctions against the Company, or (ii) was in
existence within the last five years and resulted in payments in excess of
$10,000 by the Company (whether as a result of a judgment, civil fine,
settlement or otherwise).

5.15   Compliance with Laws.

       The Company (a) has been and continues to be in compliance in all
material respects with all Laws, Orders and Permits applicable to it and the
Business, and (b) has all material Permits used or necessary in the conduct of
the Business. All of the Permits referred to in the preceding sentence are
listed on Schedule 5.15 and are in full force and effect. No violations with
          -------------
respect to any of the Permits listed on Schedule 5.15 have occurred or are or
                                        -------------
have been recorded, and no Proceeding is pending or, to the best knowledge of
the Seller Group, threatened to revoke or limit any such Permits. No
investigation or review by any Governmental Entity with respect to the Company
is pending or, to the best knowledge of the Seller Group, threatened, nor has
any Governmental Entity notified the Company of its intention to conduct the
same. To the best knowledge of the Seller Group, there is no proposed change in
any applicable Law that would require the Company to obtain any Permit not
listed on Schedule 5.15 in order to conduct the Business as presently conducted
          -------------
and as presently proposed to be conducted. The Company has not received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any Liability or disadvantage that may
be material to its business, financial condition, operations, property or
affairs. No member of the Seller Group is

                                      21
<PAGE>

aware of any proposed Law that would prohibit or restrict the Company from, or
otherwise materially and adversely affect the Company in, conducting the
Business in any jurisdiction in which the Company is presently conducting
business or is presently proposing to conduct business.

5.16   Insurance.

          (a)  Schedule 5.16(a) contains a true, correct and complete list of
               ----------------
all policies of liability (including "bobtail"), theft, fidelity, life, fire,
product liability, cargo, workers' compensation, health and other forms of
insurance held by or on behalf of the Company (specifying the insurer, amount of
coverage, basis of coverage (i.e., "occurrence" or "claims made"), type of
insurance, policy number and any pending claims thereunder).  All such coverages
have been maintained at all times during the course of the operation of the
Business.  The Company is insured against all risks usually insured against by
Persons conducting similar businesses and operating similar properties in the
localities where the Business is conducted and the properties of the Company are
located under policies of such types and in such amounts as are customarily
carried by such Persons.

          (b)  Except as set forth on Schedule 5.16(b), with respect to each
                                      ----------------
policy of insurance listed on Schedule 5.16(a):  (i) all premiums with respect
                              ----------------
thereto are currently paid and are not subject to adjustment, (ii) the Company
is not in default in any respect with respect to its obligations under such
policy, (iii) to the best knowledge of the Seller Group, no basis exists that
would give any insurer under any such policy the right to cancel or unilaterally
reduce or limit the stated coverages contained in such policy, (iv) there are no
outstanding claims currently pending under such policy that could be expected to
cause an increase in the insurance rates of the Company, and no facts or
circumstances exist that might be expected to relieve the insurer under such
policy of its obligations to satisfy in full any claim thereunder, and (v) the
Company has not received any notice that any such policy has been or shall be
canceled or terminated or will not be renewed on substantially the same terms as
are now in effect or that the premium on such policy shall be increased on the
renewal thereof.

5.17   Labor Relations; Employees.

          (a)  Schedule 5.17(a) sets forth a list of all directors, officers and
               ----------------
key employees of the Company as of the date hereof, together with their
respective titles (if any) and positions held, their current compensation
(including salary, wages, bonuses and commissions), and the respective dates on
which they commenced employment.  To the extent any such employee is on a leave
of absence, Schedule 5.17(a) indicates the nature of such leave of absence and
            ----------------
such employee's anticipated date of return to active employment.  No officer or
key employee listed on Schedule 5.17(a) has given the Company notice, and, to
                       ----------------
the best knowledge of the Seller Group, no officer or key employee listed on
Schedule 5.17(a) has any plans or intends to terminate his or her employment
----------------
with the Company.  No former officer or key employee has left the service of the
Company within the last six months.

          (b)  Schedule 5.17(b) sets forth the aggregate number of employees,
               ----------------
other non-supervisory personnel, independent contractors and owner/operators
that work for the Company, specifying the number that belong to a union or are
otherwise covered by an employment agreement or a collective bargaining
agreement, identified by terminal location or facility.

                                      22
<PAGE>

          (c)  Except as set forth on Schedule 5.17(c), (i) the Company
                                      ----------------
generally enjoys good relations with all of its employees, and there is no labor
strike, dispute or grievance, or work slowdown or stoppage actually pending or,
to the best knowledge of the Seller Group, threatened against or involving the
Company, and (ii) the Company is not a party to or bound by any collective
bargaining agreement, union Contract or similar agreement, no such Contract or
agreement is currently being negotiated by the Company, no labor union has taken
any action with respect to organizing the employees of the Company, and no
representation question exists with respect to any such employees.

          (d)  The Company and each of its ERISA Affiliates have complied in all
respects with all Laws relating to the hiring and retention of all employees,
leased employees and independent contractors relating to wages, hours, Company
Employee Plans, workers' compensation, unemployment, equal opportunity,
collective bargaining, and the payment of social security and other Taxes.

          (e)  Schedule 5.17(e) sets forth a true, correct and complete list of
               ----------------
any and all unfair labor practice charges or other Proceedings before the
National Labor Relations Board, Equal Opportunity Employment Commission charges,
employment discrimination lawsuits, wrongful discharge lawsuits, Occupational
Safety and Health Administration citations and litigation, wage and hour charges
and litigation, and employment related litigation that are presently pending, or
to the best knowledge of the Seller Group, threatened at law or in equity,
involving the Company.  Schedule 5.17(e) also sets forth a true, correct and
                        ----------------
complete list of those charges, lawsuits, citations, litigation and Proceedings
falling within the above categories that have been settled or otherwise disposed
of within the previous two years.

          (f)  Except as set forth in Schedule 5.17(f), the Company is not a
                                      ----------------
joint employer or alter ego, as construed under the National Labor Relations
Act, as amended, with or of any of its suppliers, distributors, customers or
other Persons with which it has any Contract or other understanding or
arrangement, including any owner/operator with whom the Company has a Contract
or other understanding or arrangement, or any other Person with which the
Company has a leasing arrangement (collectively referred to for the purposes of
this Section 5.17(f) as "Third Parties"), and no Third Parties are alter egos of
                         -------------
the Company.  The Company (i) does not exercise management power or authority
over the operations or personnel of any Third Party, (ii) does not supervise the
employees of any Third Party, or (iii) is not responsible for, or does not have
the authority to establish, implement or effectively recommend the labor
relations or employment policies or actions, including wages, hours, working
conditions or any terms of employment, for any employee of any Third Party.
There is no interchange of personnel, no common boards of directors and no
common officers, managers or employees between the Company and any Third Party.
The Company does not provide any administrative services for any Third Party
that is not required by Law or that is not provided in a bona fide, arms-length
transaction at fair market value.  Any administrative services provided by the
Company for any Third Party have been detailed on Schedule 5.17(f).
                                                  ----------------

          (g)  Except as set forth on Schedule 5.17(g), the Company's Contracts
                                      ----------------
and other understandings with owner/operators and independent contractors
establish a bona fide arrangement where such individuals are independent
contractors to, and are not employees of, the Company, and there are not any
disputes, claims, charges or allegations pending or, to the best knowledge of
the Seller Group, threatened at law or in equity before any Governmental

                                      23
<PAGE>

Entity that challenges the independent contractor nature of such Contract or
other understanding or arrangement.

5.18   ERISA Compliance.

          (a)  Schedule 5.18(a) contains a true, correct and complete list of
               ----------------
all Employee Benefit Plans of the Company (collectively, the "Company Employee
                                                              ----------------
Plans"), (i) that cover any current or former employees, contract employees,
-----
independent contractors or consultants of or to the Company or any spouses,
family members or beneficiaries thereof (A) that are maintained, sponsored or
contributed to by the Company or (B) with respect to which the Company is
obligated to contribute or has any Liability, or (ii) with respect to which the
Company has any Liability on account of the maintenance or sponsorship thereof
or contribution thereto by any present or former ERISA Affiliate of the Company.

          (b)  Except as set forth on Schedule 5.18(b), with respect to each
                                      ----------------
Company Employee Plan:

               (i)    such Company Employee Plan has been established,
       maintained, operated and administered in accordance with its terms and in
       compliance with ERISA, the Code, and all other applicable Laws (including
       with respect to reporting and disclosure);

               (ii)   all required, declared or discretionary (consistent with
       past practice) payments, premiums, contributions, reimbursements or
       accruals for all periods ending prior to or as of the date hereof have
       been made or properly accrued on the Latest Balance Sheet, or with
       respect to accruals properly made after the Latest Balance Sheet Date, on
       the books and records of the Company and all amounts withheld from
       employees have been timely deposited into the appropriate trust or
       account;

               (iii)  there is no unfunded Liability relating to such Company
       Employee Plan that is not reflected on the Latest Balance Sheet, or with
       respect to accruals properly made after the Latest Balance Sheet Date, on
       the books and records of the Company;

               (iv)   neither the Company, any of its ERISA Affiliates, nor any
       other "disqualified person" or "party in interest" (as such terms are
       defined in Section 4975 of the Code and Section 3(14) of ERISA,
       respectively) with respect to such Company Employee Plan, has breached
       the fiduciary rules of ERISA or engaged in a prohibited transaction that
       could subject any of the foregoing Persons to any Tax or penalty imposed
       under Section 4975 of the Code or Section 502(i), Section 502(j) or
       Section 502(l) of ERISA;

               (v)    no Proceeding (other than routine claims for benefits) is
       pending or, to the best knowledge of the Seller Group, threatened against
       or relating to such Company Employee Plan or any fiduciary thereof, and
       there is, to the best knowledge of the Seller Group, no basis for any
       such Proceeding against any such Company Employee Plan;

               (vi)   each Company Employee Plan, if intended to be "qualified"
       within the meaning of Section 401(a) of the Code, has been determined by
       the Internal Revenue

                                      24
<PAGE>

       Service to be so qualified and the related trusts are exempt from Tax
       under Section 501(a) of the Code, and nothing has occurred that has or
       reasonably could be expected to adversely affect such qualification or
       exemption;

               (vii)   except as may be required under Laws of general
       application, no Company Employee Plan obligates the Company to provide
       any employee or former employee, or their spouses, family members or
       beneficiaries, any post-employment or post-retirement health or life
       insurance, accident or other "welfare-type" benefits;

               (viii)  each such Company Employee Plan that is subject to the
       requirements of the Consolidated Omnibus Budget Reconciliation of 1985,
       as amended ("COBRA"), and the Health Insurance Portability and
                    -----
       Accountability Act, as amended ("HIPAA"), has been maintained in
                                        -----
       compliance with COBRA and HIPAA, including all notice requirements, and
       no Tax payable on account of Section 4980B or any other section of the
       Code has been or is expected to be incurred;

               (ix)    neither the Company, any of its Subsidiaries, nor any of
       their respective ERISA Affiliates is or has ever maintained or been
       obligated to contribute to a Multi-employer Plan (as defined in Section
       3(37) of ERISA), a Multiple Employer Plan (as defined in Section 413 of
       the Code), or a Defined Benefit Pension Plan (as defined in Section 3(35)
       of ERISA);

               (x)     no benefit payable or that may become payable by the
       Company, or any or its respective ERISA Affiliates pursuant to such
       Company Employee Plan will constitute an "excess parachute payment"
       within the meaning of Section 280G of the Code, which is or may be
       subject to the imposition of a Tax under Section 4999 of the Code or that
       would not be deductible by reason of Section 280G of the Code;

               (xi)    each such Company Employee Plan that is intended to meet
       the requirements of Section 125 of the Code meets such requirements and
       each program of benefits for which employee contributions are provided
       pursuant to elections made under such Company Employee Plan meets the
       requirements of the Code applicable thereto;

               (xii)   there has not been any act or omission by the Company, or
       any of its respective ERISA Affiliates that has given rise to or could
       give rise to any fines, penalties or related charges under ERISA or the
       Code for which the Company, or any of its ERISA Affiliates could be
       liable;

               (xiii)  all reporting and disclosure obligations imposed under
       ERISA and the Code have been satisfied with respect to each Company
       Employee Plan;

               (xiv)   the Company has not made or agreed to make, and is not
       required to make (in order to bring any Company Employee Plan into
       compliance with ERISA or the Code) any changes in benefits that would
       materially increase the costs of maintaining any Company Employee Plan;

               (xv)    there has not been any act or omission by the Company, or
       any of its ERISA Affiliates, that has given rise to or could give rise to
       any fines, penalties or

                                      25
<PAGE>

       related charges under ERISA or the Code for which the Company, or any of
       its ERISA Affiliates, could be liable;

               (xvi)   the Company has timely deposited and transmitted all
       amounts withheld from employees for contributions or premium payments for
       each Company Employee Plan into the appropriate trusts or accounts; and

               (xvii)  each Company Employee Plan that allows loans to plan
       participants has been operated in accordance with its terms, the plan's
       written loan policy and all applicable laws. In addition, all outstanding
       loans from such Company Employee Plans are current as of the Closing
       Date, and there are no loans in default.

          (c)  The Purchaser has been provided with true, correct and complete
copies, to the extent applicable, of all documents pursuant to which each
Company Employee Plan is maintained and administered, the two most recent annual
reports (Form 5500 and attachments) and financial statements therefor, all
governmental rulings, determinations and opinions (and pending requests
therefor), and, if any Company Employee Plan provides post-employment or post-
retirement health and life insurance, accident or other "welfare-type" benefits,
the most recent valuation of the present and future obligations under such
Company Employee Plan.  The foregoing documents accurately reflect all of the
terms of such Company Employee Plan (including any agreement or provision that
would limit the ability of the Company to make any prospective amendments or to
terminate such Company Employee Plan).

5.19   Environmental Matters.

          (a)  Except as set forth on Schedule 5.19(a), neither the Company, nor
                                      ----------------
any of its Affiliates has received any written or oral notice, report or other
information (i) regarding any actual or alleged violation of any Environmental,
Health and Safety Laws, or any Liabilities, including any investigatory,
remedial or corrective obligations, relating to (A) the Company, any of its
respective Affiliates, or any of their predecessors, (B) the Business, or (C)
any of the Company's currently or formerly owned or leased properties or
operations, or (ii) that the Company is potentially responsible under any
Environmental, Health and Safety Laws for response costs, corrective action or
natural resource damages, as those terms are defined under the Environmental,
Health and Safety Laws, at any location.

          (b)  Schedule 5.19(b) sets forth a true, correct and complete list of
               ----------------
all properties and facilities previously owned, leased or operated by the
Company or any of its predecessors at any time (together with the Leased
Properties, the "Covered Properties").  There has been no release, discharge,
                 ------------------
spill or disposal of any substance at any of the Covered Properties so as to
give rise to any Liability of the Company under any Environmental, Health and
Safety Laws.  Except as set forth on Schedule 5.19(b), there is not now, nor has
                                     ----------------
there ever been, any asbestos-containing material in any form or condition,
underground storage tank, above-ground storage tank, landfill, waste pile,
surface impoundment, disposal area, or article or equipment containing
polychlorinated biphenyls on or at any of the Covered Properties.

          (c)  Neither the Company, any of its Affiliates, nor any of their
respective predecessors has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or released any substance, or
owned or operated any property or facility

                                      26
<PAGE>

(and no such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to Liability pursuant to any
Environmental, Health and Safety Laws, including any Liability for response
costs, corrective action costs, personal injury, property damage, natural
resources damage or attorney fees, or any investigative, corrective or remedial
obligations pursuant to any Environmental, Health and Safety Laws.

          (d)  No facts, events or conditions relating to the past or present
operations of the Company, any of its Affiliates, any of their respective
predecessors, or any of the Covered Properties will prevent, hinder or limit
continued compliance by the Company with any Environmental, Health and Safety
Laws, or give rise to any investigative, corrective or remedial obligations
pursuant to any Environmental, Health and Safety Laws, or give rise to any other
Liability pursuant to any Environmental, Health and Safety Laws, including any
relating to on-site or off-site releases or threatened releases of materials,
substances or wastes, personal injury, property damage or natural resources
damage.

          (e)  Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement or any of the Related Documents will result in
any obligations for site investigation or cleanup, or notification to or consent
of any Governmental Entity or other third party, pursuant to any of the so-
called "transaction-triggered" or "responsible property transfer" Environmental,
Health and Safety Laws.

          (f)  The Company has provided the Purchaser with true, correct and
complete copies of all reports and studies within the possession or control of
the Company with respect to past and present environmental conditions or events
at any of the Covered Properties (all of which are listed on Schedule 5.19(b)),
                                                             ----------------
and, to the best knowledge of the Seller Group, there are no other environmental
reports or studies with respect thereto.

5.20   Brokers.

       The Company has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents.

5.21   Related Party Transactions.

       Except as set forth on Schedule 5.21, and except for compensation to bona
                              -------------
fide employees of the Company for services rendered in the ordinary course of
business, consistent with past practice, no current or former Affiliate of the
Company or any "Associate" (as defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended) of any thereof, is now, or has been
during the last five fiscal years, (i) party to any transaction or Contract with
the Company (including any Contract or other understanding or arrangement
providing for the furnishing of services by, or the rental of real or personal
property from, or otherwise requiring payments to, any such Affiliate or
Associate), or (ii) the direct or indirect owner of an interest in any Person
that is a present or potential competitor, supplier or customer of the Company
(other than non-affiliated holdings in publicly held companies).  Except as set
forth on Schedule 5.21,  the Company is not a guarantor or otherwise liable for
         -------------
any actual or potential Liability of its Affiliates or their Associates.  Except
as set forth on Schedule 5.21, the Company does not (x)
                -------------

                                      27
<PAGE>

own or operate any vehicles, boats, aircraft, apartments or other residential or
recreational properties or facilities for executive, administrative or sales
purposes, or (y) own or pay for any social club memberships, whether or not for
the benefit of the Company, and/or any of its executives.

5.22   Accounts and Notes Receivable.

       Except as set forth on Schedule 5.22, and except for allowances for
                              -------------
doubtful accounts reflected on the Latest Balance Sheet, all accounts receivable
and notes receivable owing to the Company as of the date hereof constitute, and
as of the Closing shall constitute, valid and enforceable claims arising from
bona fide transactions in the ordinary course of business, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar Laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a knowledge of the Seller Group, there are no asserted
claims, refusals to pay or other rights of set-off against any thereof. Except
as set forth on Schedule 5.22 (including those items categorized as "legal" on
                -------------
such Schedule), there is (i) no account debtor or note debtor that is delinquent
by more than thirty (30) days for payments due from such account debtor or note
debtor in excess of $10,000 in the aggregate, (ii) no account debtor or note
debtor that has refused, or, to the best knowledge of the Seller Group,
threatened to refuse, to pay its obligations to the Company for any reason, or
has otherwise made a claim of set-off or similar claim (other than in amounts
not in excess of $5,000 per account debtor or note debtor, or $10,000 in the
aggregate), and (iii) to the best knowledge of the Seller Group, no account
debtor or note debtor that owes the Company amounts in excess of $10,000 in the
aggregate is insolvent or bankrupt. Those items categorized as "legal" on
Schedule 5.22 constitute all items that (x) have been placed in the hands of
-------------
third party collection agents, (y) are owed by account debtors or note debtors
with respect to whom bankruptcy or insolvency or other creditor protection
proceedings have been commenced, and/or (z) are owed by account debtors or note
debtors who have admitted to the Company an inability to pay all or any portion
of any such accounts or notes at any time.

5.23   Bank Accounts; Powers of Attorney.

       Schedule 5.23 sets forth a true and complete list of (i) all bank
       -------------
accounts and safe deposit boxes of the Company and all Persons who are
signatories thereunder or who have access thereto, and (ii) the names of all
Persons holding general or special powers of attorney from the Company and a
summary of the terms thereof (excluding ministerial powers of attorney granted
to representatives of the Company that are terminable at will).

5.24   Suppliers and Vendors.

       Except as set forth on Schedule 5.24, no material supplier or vendor to
                              -------------
the Company has canceled or otherwise terminated, or, to the best knowledge of
the Seller Group, threatened to cancel or otherwise terminate, its relationship
with the Company or has decreased, limited or otherwise modified, or, to the
best knowledge of the Seller Group, threatened to decrease, limit or otherwise
modify, the services, supplies or materials it provides to the Company.

                                      28
<PAGE>

5.25   Customers.

       Except as set forth on Schedule 5.25, no customer of the Company to which
                              -------------
more than $50,000 of annual sales were attributable during any of the preceding
three fiscal years has notified the Company that it intends, or, to the best
knowledge of the Seller Group, has threatened, to terminate or materially
curtail its relationship and dealings with the Company.

5.26   Conflicts of Interest.

       Neither the Company, any Shareholder, nor any officer, employee, agent or
other Person acting on their behalf has, directly or indirectly, given or agreed
to give, any money, gift or similar benefit (other than legal price concessions
to customers in the ordinary course of business, consistent with past practice)
to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of any Governmental Entity or other Person who was, is, or
may be in a position to help or hinder the Business (or assist in connection
with any actual or proposed transaction) that (i) might subject the Company to
any damage or penalty in any Proceeding, (ii) if not given in the past, would
have resulted in a Material Adverse Change, or (iii) if not continued in the
future, reasonably could be expected to result in a Material Adverse Change.
There is not now, and there has never been, any employment by the Company of, or
beneficial ownership in the Company by, any governmental or political official
in any jurisdiction in which the Company has conducted, presently is conducting,
or presently is proposing to conduct business.

5.27   Year 2000.

       The Company has not experienced any effects within the Business as a
result of the "Y2K" issue (that is, the risk that computer applications used by
the Company may be unable to recognize and perform property date-sensitive
functions involving certain dates prior to and any date after December 31,
1999). All computer applications that are material to the Business are able to
perform properly date-sensitive functions for all dates before and after January
1, 2000.

5.28   Disclosure.

       Neither this Agreement, including the Schedules, Annexes, attachments and
Exhibits hereto, nor any other written material delivered by or on behalf of the
Company, or any Shareholder to the Purchaser or any of its representatives,
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein, taken as a whole,
in light of the circumstances in which they were made, not misleading.

                                  ARTICLE VI

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

       The Purchaser represents and warrants to each member of the Seller Group
as of the date hereof as follows:

                                      29
<PAGE>

6.1    Organization; Corporate Authority.

       The Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Seller has been
furnished with true, correct and complete copies of the Purchaser's Charter
Documents, in each case as amended and in effect on the date this representation
is being made and is deemed made hereunder.

6.2    Authority; Authorization; Execution and Delivery; Enforceability; No
Conflict.

          (a)  The Purchaser has all requisite power and authority (corporate
and otherwise) to execute, deliver and perform its obligations under this
Agreement and each Related Document to which it is or will be a party and to
consummate the transactions contemplated hereby and thereby. The Purchaser's
execution and delivery of this Agreement and each Related Document to which it
is or will be a party, and the performance by the Purchaser of its obligations
hereunder and thereunder, have been duly and validly authorized by all requisite
action on the part of the Purchaser (including its board of directors and all
committees thereof and its shareholders). This Agreement and each Related
Document to which the Purchaser is or will be a party has been, or upon the
Purchaser's execution hereof and thereof will be, duly and validly executed and
delivered by the Purchaser and constitutes, or upon the Purchaser's execution
and delivery hereof and thereof will constitute, a valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally, and, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).

          (b)  Neither the execution and delivery by the Purchaser of, and
performance of its obligations under, this Agreement or any of the Related
Documents to which it is or will be a party, nor the consummation by the
Purchaser of the transactions contemplated hereby or thereby, nor the compliance
by the Purchaser with any of the provisions hereof or thereof, will (i) conflict
with, or result in any violation of, or cause a default (with or without notice
or lapse of time or both) under, any provision of the Purchaser's Charter
Documents, (ii) conflict with, or result in any violation of, or cause a default
(with or without notice or lapse of time or both) under, or give rise to any
right of termination, amendment, cancellation or acceleration of any obligations
contained in, or the loss of any benefit under, any term, condition or provision
of any provision of any Contract to which the Purchaser is a party, or by which
the Purchaser or any of its assets or properties is or may be bound, (iii)
violate any Law applicable to the Purchaser, or (iv) result in an Encumbrance on
or against any assets, rights or properties of the Purchaser, or on or against
any capital stock or other securities of the Purchaser, or give rise to any
claim against the Company or the Purchaser.

6.3    Consents.

       Except as set forth on Schedule 6.3, no Permit, authorization, consent or
                              ------------
approval of or by, or notification of or filing with, any Person (governmental
or otherwise) is required for, as a

                                      30
<PAGE>

result of, or in connection with the execution, delivery and performance by the
Purchaser of this Agreement or any of the Related Documents to which it is or
will be a party or the consummation of the transactions contemplated hereby or
thereby.

6.4    Brokers.

       The Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents.

                                  ARTICLE VII

                           COVENANTS AND AGREEMENTS

7.1    Non-Competition Covenant.

          (a)  Each Shareholder acknowledges and agrees that as a mutual
condition to the respective obligations of the parties at the Closing, and as a
material inducement to the Purchaser to enter into and perform its obligations
hereunder and in consideration of the payments and other consideration to be
received by the Shareholders under this Agreement and the Related Documents,
such Shareholder shall not, without the prior written consent of the Purchaser,
at any time during the period beginning on the Closing Date and ending on the
fifth anniversary thereof (the "Restrictive Period"), (i) directly or indirectly
                                ------------------
engage in, represent in any way, or be connected with, any Competing Business
(as defined below), whether such engagement shall be as a director, an officer,
an owner, an employee, a partner, an Affiliate or other participant in such
Competing Business, (ii) assist others in engaging in any Competing Business in
the manner described in clause (i) above, (iii) induce any employees of the
Purchaser or any of its Subsidiaries or other Affiliates, or any employees of
the Company, at any time during the Restrictive Period to terminate their
employment with the Purchaser or any of its Subsidiaries or other Affiliates, or
to terminate their employment with the Company, or to engage in any Competing
Business, or (iv) induce any customer, vendor or agent or any other Person with
which the Purchaser or any or its Subsidiaries or other Affiliates, or with
which the Company, has a business relationship, contractual or otherwise, at any
time during the Restrictive Period to terminate or alter such business
relationship.  This covenant is considered an integral part of this Agreement.
The foregoing restriction shall not apply to the ownership of publicly traded
Securities that represent less than five percent (5%) of the ownership interests
of the issuer.

          (b)  As used herein, the term "Competing Business" means (i) any
                                         ------------------
business conducted in (A) any county in the State of California, including
Alameda County, Alpine County, Amador County, Butte County, Calaveras County,
Colusa County, Contra Costa County, Del Norte County, El Dorado County, Fresno
County, Glenn County, Humboldt County, Imperial County, Inyo County, Kern
County, Kings County, Lake County, Lassen County, Los Angeles County, Madera
County, Marin County, Mariposa County, Mendocino County, Merced County, Modoc
County, Mono County, Monterey County, Napa County, Nevada County, Orange County,
Placer County, Plumas County, Riverside County, Sacramento County, San Benito
County, San Bernardino County, San Diego County, San Francisco County, San
Joaquin

                                      31
<PAGE>

County, San Luis Obispo County, San Mateo County, Santa Barbara County, Santa
Clara County, Santa Cruz County, Shasta County, Sierra County, Siskiyou County,
Solano County, Sonoma County, Stanislaus County, Sutter County, Tehama County,
Trinity County, Tulare County, Tuolumne County, Ventura County, Yolo County, and
Yuba County, and (B) every other state, province, or other political subdivision
of the United States, Canada, Mexico, Japan, China or Europe that is engaged in
the business of providing transportation services to third party shippers and
customers, or (ii) any business described in the foregoing clause (i) if such
business or the services or products provided or sold by it are competitive,
directly or indirectly, with the Business on the date hereof or on the Closing
Date (or with respect to which there are fixed plans on the date hereof or on
the Closing Date for the provision or sale of the same by the Business).
Anything contained in the immediately preceding sentence to the contrary
notwithstanding, any entity that has separate divisions or business units, one
or more of which are engaged in a business described above, will not be deemed a
Competing Business with respect to those portions of such entity that are not
engaged in a business described above so long as such Shareholder's association
with any such separate divisions or business units (fully taking into account
his, her or its functions and the nature of his, her or its work at such
division or business unit) does not involve existing customers of the Company or
relate in any material respect to that portion of such business which would be a
Competing Business hereunder.

          (c)  If, at the time of enforcement of this Section 7.1, a court holds
that the restrictions stated herein are unreasonable under the circumstances
then existing, the parties agree that the maximum period, scope or geographical
area reasonable under such circumstances shall be substituted for the stated
period, scope or geographical area.  Additionally, with respect to each county
in the State of California, the covenant not to compete set forth in Section
7.1(a) is intended as a separate covenant with respect thereto.  If any one of
such covenants is declared invalid for any reason, such determination shall not
affect the validity of the remainder of the covenants or any covenant covering
territory other than the State of California.  The other covenants set forth in
Section 7.1(a) shall remain in effect as if the provision had been executed
without the invalid covenants.  The parties hereto hereby declare that they
intend that the remaining covenants of the provision continue to be effective
without any covenants that have been declared invalid.  The parties hereto
acknowledge that money damages would be an inadequate remedy for any breach of
this Section 7.1.  Therefore, in the event of a breach or threatened breach of
this Section 7.1, the Purchaser and/or its successors or assigns may, in
addition to other rights and remedies existing in its or their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
relief in order to enforce or prevent any violations of the provisions of this
Section 7.1 (without posting a bond or other security).

7.2    Disclosure of Information.

          (a)  As used in this Agreement, the term "Confidential Information"
                                                    ------------------------
means, with respect to any Person, all information (whether written or oral)
furnished (whether before or after the date hereof) by such Person or its
owners, members, partners, directors, officers, employees, Affiliates,
representatives (including its financial advisors, attorneys and accountants) or
agents (collectively, "Representatives") to any other Person or its
                       ---------------
Representatives, and all analyses, compilations, forecasts, studies or other
documents prepared by such other Person or its Representatives in connection
with the transactions contemplated by this Agreement that contain or reflect any
such information; provided, however, that the term
                  -----------------

                                      32
<PAGE>

"Confidential Information" shall not include information that (i) is or becomes
publicly available other than as a result of a disclosure by any Person or its
Representatives in violation of this Agreement, or (ii) is or becomes available
to such other Person on a non-confidential basis from a source that is not
prohibited from disclosing such information by any legal, contractual or
fiduciary obligation; provided further, however, that for purposes of this
                      -------- -------  -------
Section 7.2, from and after the Closing, Confidential Information of the Company
shall be deemed Confidential Information of the Purchaser and shall, as of such
time, no longer be deemed Confidential Information of the Company, as
applicable.

          (b)  The Purchaser will keep all Confidential Information of the
Company confidential and will not (except as required by applicable Law,
regulation or legal process, and then only after compliance with the last
sentence of this Section 7.2(b)) without the prior written consent of the
Company, disclose any of such Confidential Information in any manner whatsoever,
directly or indirectly, and will not use any Confidential Information of the
Company except for the purposes contemplated by this Agreement; provided,
                                                                --------
however, that the Purchaser may reveal Confidential Information of the Company
-------
to its Representatives (i) who need to know such Confidential Information for
the purposes contemplated by this Agreement, (ii) who are informed by the
Purchaser of the confidential nature of the Confidential Information, and (iii)
who agree to act in accordance with the terms of this Section 7.2(b).  The
Purchaser will cause its Representatives to observe the terms of this Section
7.2(b), and will be responsible for any breach hereof by any of its
Representatives.  In the event that the Purchaser or any of its Representatives
is requested pursuant to, or required by, applicable Law, regulation or legal
process to disclose any Confidential Information of the Company, the Purchaser
will notify the Company promptly so that it may seek a protective order or other
appropriate remedy or, in its sole and absolute discretion, waive compliance
with the terms of this Section 7.2(b).  In any event, the Purchaser will furnish
only that portion of the Confidential Information of the Company that it is
advised by counsel is legally required and will exercise all commercially
reasonable efforts to obtain reliable assurance, to the extent it is possible to
obtain the same, that confidential treatment will be afforded to such
Confidential Information.

          (c)  The Company and each of the Shareholders will keep all
Confidential Information of the Purchaser confidential and will not (except as
required by applicable Law, regulation or legal process, and then only after
compliance with the last sentence of this Section 7.2(c)), without the prior
written consent of the Purchaser, disclose any of such Confidential Information
in any manner whatsoever, directly or indirectly, and will not use any
Confidential Information of the Purchaser except for the purposes contemplated
by this Agreement; provided, however, that the Company and the Shareholders may
                   --------  -------
reveal Confidential Information of the Purchaser to his, her or its
Representatives (i) who need to know such Confidential Information for the
purposes contemplated by this Agreement, (ii) who are informed by the Company or
such Shareholder of the confidential nature of the Confidential Information, and
(iii) who agree to act in accordance with the terms of this Section 7.2(c).  The
Company and each Shareholder will cause his, her or its Representatives to
observe the terms of this Section 7.2(c), and will be responsible for any breach
hereof by any of his, her or its Representatives.  In the event that the
Company, any Shareholder or any of their respective Representatives is requested
pursuant to, or required by, applicable Law, regulation or legal process to
disclose any Confidential Information of the Purchaser, the Company or such
Shareholder will notify the Purchaser promptly so that it may seek a protective
order or other appropriate remedy or, in its sole and absolute discretion, waive
compliance with the terms of

                                      33
<PAGE>

this Section 7.2(c). In any event, the Company or such Shareholder will furnish
only that portion of the Confidential Information of the Purchaser that he, she
or it is advised by counsel is legally required and will exercise all
commercially reasonable efforts to obtain reliable assurance, to the extent it
is possible to obtain the same, that confidential treatment will be afforded to
such Confidential Information.

          (d)  Each of the parties hereto recognizes and acknowledges that a
breach of his, her or its covenants in Section 7.2(b) or Section 7.2(c), as the
case may be, will cause irreparable and material loss and damage to the other
parties, the amount of which cannot be determined readily and as to which such
other parties will not have an adequate remedy at law or in damages.
Accordingly, in addition to any remedy such other parties may have in damages by
an action at law, such other parties shall be entitled to the issuance of an
injunction restraining any such breach or threatened breach or any other remedy
at law or in equity for any such breach.

7.3    Use of Proprietary Name.

       From and after the Closing, no Shareholder shall use the names "GTS,"
"GTS Transportation Services," or any derivation thereof for any purpose.

7.4    Certain Employee Matters.

       On the Closing Date the employees of the Company that are actively
employed by the Company in the Business on the Closing Date shall continue their
employment on terms and conditions similar to those provided by the Company
prior to the Closing Date (any such employees who continue their employment
being referred to herein as the "Hired Employees"), and the Purchaser shall
                                 ---------------
initially provide benefits to the Hired Employees, effective as to group health
insurance benefits on the Closing Date and effective as to other employee
benefits as soon as practicable after the Closing Date, in each case that are
reasonably comparable on an overall basis to the benefits provided by the
Company prior to the Closing Date to such employees, subject in the case of the
Management Shareholders to the terms and conditions of their respective
Employment Agreements, as applicable, entered into at the Closing.  Nothing
contained in this Agreement shall confer upon any Hired Employee any rights or
remedies of any nature or kind whatsoever under or by reason of this Agreement,
including any right to employment or continued employment or to any benefits
that may be provided, directly or indirectly, under any employee benefit plan,
policy or arrangement of the Purchaser, nor shall anything contained in this
Agreement constitute a limitation on or restriction against the right of the
Purchaser to amend, modify or terminate any such plan, policy or arrangement at
any time and from time to time.

7.5    Reservation of Purchaser's Shares.

       The Purchaser shall reserve under the Purchaser's 1999 Stock Option Plan
(the "Plan") eight thousand (8,000) shares of common stock, $.01 par value, of
      ----
the Purchaser for issuance to the Company's employees (other than the Management
Shareholders) upon such employees' exercise of stock options, if any, granted to
such employees under the Plan.  The Purchaser's board of directors, in its sole
and absolute discretion, will determine the grantees and all of the
<PAGE>

terms and conditions of such stock options, including the number of option
shares, vesting provisions and exercise prices.

                                 ARTICLE VIII

                              CLOSING OBLIGATIONS

8.1    Closing Obligations of the Seller Group.

       At the Closing, the Seller Group shall cause the following documents and
certificates to be executed and delivered to the Purchaser:

          (a)  Opinion of the Seller Group's Counsel.  The Seller Group shall
               -------------------------------------
deliver to the Purchaser an opinion of Gonzalves & Kozachenko, counsel for the
Seller Group, dated the Closing Date, substantially in the form of Exhibit A
                                                                   ---------
attached hereto.

          (b)  Consents and Approvals.  The Seller Group shall deliver to the
               ----------------------
Purchaser duly executed copies of all consents and approvals required for or in
connection with (i) the execution and delivery by the Company and each
Shareholder of this Agreement and each of the Related Documents to which each of
them is a party, and the consummation of the transactions contemplated hereby
and thereby, in form and substance reasonably satisfactory to the Purchaser and
its counsel, and (ii) the continued conduct of the Business as previously
conducted (including any consent identified on Schedule 5.3), in form and
                                               ------------
substance reasonably satisfactory to the Purchaser and its counsel.

          (c)  Related Documents.  The Seller Group shall cause each of the
               -----------------
following documents (each, a "Related Document," and collectively, the "Related
                              ----------------                          -------
Documents") to be executed and/or delivered by the parties thereto at the
---------
Closing:

               (i)    General Release. Each of the Shareholders shall enter into
                      ---------------
       an Agreement and General Release in favor of the Company substantially in
       the form of Exhibit B attached hereto (the "General Release");
                   ---------                       ---------------

               (ii)   Roths Employment Agreement.  Jeff Roths shall execute and
                      --------------------------
       deliver an employment agreement with the Company substantially in the
       form of Exhibit C attached hereto (the "Roths Employment Agreement");
               ---------                       --------------------------

               (iii)  Roths Option Agreement.  Jeff Roths and the Purchaser
                      ----------------------
       shall execute and deliver an option agreement substantially in the form
       of Exhibit D attached hereto (the "Roths Option Agreement");
          ---------                       ----------------------

               (iv)   Nolan Employment Agreement.  Patrick Nolan shall execute
                      --------------------------
       and deliver an employment agreement with the Company substantially in the
       form of Exhibit E attached hereto (the "Nolan Employment Agreement"); and
               ---------                       --------------------------

               (v)    Nolan Option Agreement.  Patrick Nolan and the Purchaser
                      ----------------------
       shall execute and deliver an option agreement substantially in the form
       of Exhibit F attached hereto (the "Nolan Option Agreement").
          ---------                       ----------------------

                                      35
<PAGE>

          (d)  Seller Certificates.  The Seller Group shall cause each of the
               -------------------
following certificates to be executed and/or delivered, as the case may be, by
the Person who or which is the subject thereof:

               (i)    a certificate of the secretary of the Company, dated as of
       the Closing Date, certifying (A) that true, correct and complete copies
       of the Company's Charter Documents as in effect on the Closing Date are
       attached thereto, (B) as to the incumbency and genuineness of the
       signatures of each officer of the Company executing this Agreement and
       the Related Documents on behalf of the Company; and (C) the genuineness
       of the resolutions (attached thereto) of the board of directors or
       similar governing body of the Company authorizing the execution, delivery
       and performance of this Agreement and the Related Documents to which the
       Company is a party and the consummation of the transactions contemplated
       hereby and thereby;

               (ii)   certificates dated within ten (10) days of the Closing
       Date of the secretaries of state of the states in which the Company is
       organized and qualified to do business, certifying as to the good
       standing and non-delinquent Tax status of such Person;

               (iii)  a certificate signed by a principal executive officer of
       the Company and each Shareholder, dated as of the Closing Date, and
       certifying as to the amount of Funded Indebtedness existing on the
       Closing Date; and

               (iv)   certificates of each Shareholder and a principal executive
       officer of the Company, each dated as of the Closing Date, certifying
       that such Shareholder and the Company, as applicable, are not foreign
       persons within the meaning of Section 1445 of the Code.

          (e)  Spousal Consents.  Each Shareholder shall deliver a Spousal
               ----------------
Consent executed by his spouse in the form attached hereto as Exhibit G.
                                                              ---------

8.2    Closing Obligations of the Purchaser.

       At the Closing, the Purchaser shall cause the following documents and
certificates to be executed and delivered to the Seller Group:

          (a)  Opinion of the Purchaser's Counsel.  The Purchaser shall deliver
               ----------------------------------
to the Seller Group an opinion of Holland & Knight LLP, counsel for the
Purchaser, dated the Closing Date, substantially in the form of Exhibit H
                                                                ---------
attached hereto.

          (b)  Consents and Approvals. The Purchaser shall deliver to the Seller
               ----------------------
Group duly executed copies of all consents and approvals required for or in
connection with the execution and delivery by the Purchaser of this Agreement
and each of the Related Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, in form and substance
reasonably satisfactory to the Seller Group.

          (c)  Related Documents.  The Purchaser shall cause each of the Related
               -----------------
Documents to which the Purchaser is a party to be executed and/or delivered by
the Purchaser at the Closing.

                                      36
<PAGE>

          (d)  Purchaser Certificates.  The Purchaser shall cause each of the
               ----------------------
following certificates to be executed and/or delivered, as the case may be, by
the Person who or which is the subject thereof:

               (i)    a certificate of the secretary of the Purchaser, dated as
       of the Closing Date, certifying (A) that true, correct and complete
       copies of the Purchaser's Charter Documents as in effect on the Closing
       Date are attached thereto, (B) as to the incumbency and genuineness of
       the signatures of each officer of the Purchaser executing this Agreement
       and the Related Documents on behalf of the Purchaser; and (C) the
       genuineness of the resolutions (attached thereto) of the board of
       directors or similar governing body of the Purchaser authorizing the
       execution, delivery and performance of this Agreement and the Related
       Documents to which the Purchaser is a party and the consummation of the
       transactions contemplated hereby and thereby; and

               (ii)   certificates dated within ten (10) days of the Closing
       Date of the secretaries of state of the states in which the Purchaser is
       organized, certifying as to the good standing and non-delinquent Tax
       status of the Purchaser.

                                  ARTICLE IX

                                INDEMNIFICATION

9.1    Generally.

          (a)  Subject to the further provisions of this Article IX, the Seller
Indemnifying Persons jointly and severally shall indemnify the Purchaser
Indemnified Persons for, and hold each of them harmless from and against, any
and all Purchaser Losses arising from or in connection with any of the
following:

               (i)    the untruth, inaccuracy or breach of any representation or
       warranty of the Company contained in this Agreement or any Related
       Document or in any certificate delivered by the Company in connection
       herewith or therewith at or before the Closing (or any facts or
       circumstances constituting any such untruth, inaccuracy or breach); and

               (ii)    the breach of any covenant or agreement of the Company
       contained in this Agreement or any Related Document.

          (b)  Subject to the further terms of this Article IX, each Shareholder
shall, severally and not jointly, indemnify the Purchaser Indemnified Persons
for, and hold each of them harmless from and against, any and all Purchaser
Losses arising from or in connection with any of the following:

               (i)    the untruth, inaccuracy or breach of any representation or
       warranty of such Shareholder contained in Article IV of this Agreement or
       any Related Document or in any certificate delivered by such Shareholder
       (in his, her or its capacity as a shareholder of the Company) in
       connection herewith or therewith at or before the Closing (or any facts
       or circumstances constituting any such untruth, inaccuracy or breach);
       and

                                      37
<PAGE>

               (ii)   the breach of any covenant or agreement of such
       Shareholder contained in this Agreement or any Related Document.

          (c) Subject to the further terms of this Article IX, the Purchaser
shall indemnify the Seller Indemnified Persons for, and hold each of them
harmless from and against, any and all Seller Losses arising from or in
connection with any of the following:

               (i)    the untruth, inaccuracy or breach of any representation or
       warranty of Purchaser contained in this Agreement or any Related Document
       or in any certificate delivered by the Purchaser in connection herewith
       or therewith at or before the Closing (or any facts or circumstances
       constituting any such untruth, inaccuracy or breach); and

               (ii)   the breach of any covenant or agreement of the Purchaser
       contained in this Agreement or any Related Document.

9.2    Assertion of Claims.

       No claim for indemnification shall be brought under Section 9.1 for a
breach of a representation or warranty unless the Indemnified Persons, or any of
them, at any time prior to the applicable Survival Date, give the Indemnifying
Persons (a) written notice of the existence of any such claim, specifying the
nature and basis of such claim and the amount thereof, to the extent known, or
(b) written notice pursuant to Section 9.3 of any Third Party Claim, the
existence of which might give rise to such a claim for indemnification.  Upon
the giving of such written notice as aforesaid, the Indemnified Persons, or any
of them, shall have the right to commence legal proceedings subsequent to the
Survival Date for the enforcement of their rights under Section 9.1.

9.3    Notice and Defense of Third Party Claims.

       The obligations and liabilities of an Indemnifying Person with respect to
Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
 -----------------

          (a)  The Indemnified Persons shall give prompt written notice to the
Indemnifying Persons of any Third Party Claim that might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
                                                   --------  -------
delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent that) the Indemnifying Person
thereby is prejudiced by the delay.  Such notice shall be accompanied by copies
of all relevant documentation with respect to such Third Party Claim, including
any summons, complaint or other pleading that may have been served, any written
demand or any other document or instrument.

          (b)  If the Indemnifying Persons acknowledge in a writing delivered to
the Indemnified Persons that such Third Party Claim is properly subject to their
indemnification obligations hereunder, and the Indemnifying Persons demonstrate
to the Indemnified Persons' reasonable satisfaction that the Indemnifying
Persons have the financial resources to meet such

                                      38
<PAGE>

indemnification obligations, then the Indemnifying Persons shall have the right
to assume the defense of any Third Party Claim at their own expense and by their
own counsel, which counsel shall be reasonably satisfactory to the Indemnified
Persons; provided, however, that the Indemnifying Persons shall not have the
         --------  -------
right to assume the defense of any Third Party Claim, notwithstanding the giving
of such written acknowledgment, if (i) the Indemnified Persons have been advised
by counsel that there are one or more legal or equitable defenses available to
them that are different from or in addition to those available to the
Indemnifying Persons, and, in the reasonable opinion of the Indemnified Persons,
counsel for the Indemnifying Persons could not adequately represent the
interests of the Indemnified Persons because such interests could be in conflict
with those of the Indemnifying Persons, (ii) such action or proceeding involves,
or could have a material effect on, any matter beyond the scope of the
indemnification obligation of the Indemnifying Persons, or (iii) the
Indemnifying Persons have not assumed the defense of the Third Party Claim in a
timely fashion.

          (c)  If the Indemnifying Persons assume the defense of a Third Party
Claim (under circumstances in which the proviso to Section 9.3(b) is not
applicable), the Indemnifying Persons shall not be responsible for any legal or
other defense costs subsequently incurred by the Indemnified Persons in
connection with the defense thereof.  If the Indemnifying Persons do not
exercise their right to assume the defense of a Third Party Claim by giving the
written acknowledgment referred to in Section 9.3(b), or are otherwise
restricted from so assuming by the proviso to Section 9.3(b), the Indemnifying
Persons nevertheless shall be entitled to participate in such defense with their
own counsel and at their own expense.  If the defense of a Third Party Claim is
assumed by the Indemnified Persons pursuant to clause (i) or clause (ii) of the
proviso to Section 9.3(b), the Indemnified Persons shall not be entitled to
settle such Third Party Claim without the prior written consent of the
Indemnifying Persons, which consent shall not be unreasonably withheld or
delayed.

          (d)  If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense, and
(ii) the Indemnifying Persons shall not make any settlement of any claims
without the prior written consent of the Indemnified Persons, which consent
shall not be unreasonably withheld or delayed.

9.4    Survival of Representations and Warranties.

          (a)  Subject to the further provisions of this Section 9.4, the
representations and warranties of the Seller Group contained in Article V or in
any certificate or other writing delivered in connection with this Agreement
shall survive the Closing, and shall expire and be of no further force or effect
on the second anniversary of the Closing Date; provided, however, that the
                                               --------  -------
representations and warranties contained in Article IV, Section 5.1, Section
5.2, Section 5.3, Section 5.4, Section 5.5, Section 5.10 and Section 5.20 shall
survive the Closing indefinitely and the representations and warranties
contained in Section 5.9, Section 5.15, Section 5.18 and Section 5.19 shall
survive the Closing until ninety (90) days after the expiration of the
applicable statutes of limitations for claims applicable to the matters covered
thereby.  Subject to the further provisions of this Section 9.4, the
representations and warranties of the Shareholders contained in Article IV or in
any certificate or other writing delivered in connection with this Agreement and
the representations and warranties of the Purchaser contained in Article VI or
in any certificate or other writing delivered in connection with this Agreement
shall survive the Closing

                                      39
<PAGE>

indefinitely. The covenants and other agreements of the Seller Group and the
Purchaser contained in this Agreement shall survive the Closing until they are
performed in full or otherwise expire or are terminated by their terms. For
convenience of reference, the date upon which any representation or warranty
contained herein shall terminate, if any, is referred to as the "Survival Date."
                                                                 -------------

          (b)  From and after the Closing, no Shareholder shall have any
recourse against the Company for any breach of any representation, warranty,
covenant or agreement of the Company set forth in this Agreement or in any
certificate or other writing delivered by the Company in connection with this
Agreement.

9.5    Limitations on Indemnification.

          (a)  Indemnity Baskets for the Shareholders.  From and after the
               --------------------------------------
Closing, the Purchaser Indemnified Persons shall not have the right to be
indemnified pursuant to Section 9.1(a) and/or Section 9.1(b) unless and until
the Purchaser Indemnified Persons (or any member thereof) shall have incurred on
a cumulative basis aggregate Losses in an amount exceeding $200,000 (the
"Shareholder Basket"), whereupon the Purchaser Indemnified Persons (or any
 ------------------
member thereof) shall be entitled to indemnification for all Losses incurred by
the Purchaser Indemnified Persons (or any member thereof); provided, however,
                                                           --------  -------
that in no event shall the limitations set forth in this Section 9.5(a) apply
with respect to (i) any breaches of those representations and warranties set
forth in Article IV, Section 5.1, Section 5.2, Section 5.3, Section 5.4, Section
5.5, Section 5.7 Section 5.9, Section 5.10, Section 5.18, Section 5.19 or
Section 5.20 (collectively, the "Excluded Seller Representations"), or (ii) any
                                 -------------------------------
willful or knowing breach or any fraudulent or intentional acts or intentional
misrepresentations of any member of the Seller Group; and provided further,
                                                          -------- -------
however, that the amount of the Shareholder Basket shall be reduced, dollar for
-------
dollar, by the amount of any Losses suffered or incurred by the Purchaser
Indemnified Persons arising from or in connection with (A) the lawsuit filed by
GST Corporation; against the Company in the State of Tennessee disclosed on
Schedule 5.14(a) to this Agreement; (B) the establishment, operation or
----------------
maintenance of the Company's 401(k) Plan disclosed on Schedule 5.18(a) to this
                                                      ----------------
Agreement; and (C) the pending claim by United Distillers and Vintners described
on Schedule 5.16(b) hereto.
   ----------------

          (b)  Indemnity Limitations for the Shareholders.  From and after the
               ------------------------------------------
Closing, the sum of all Losses pursuant to which indemnification is payable by
any Shareholder pursuant to Section 9.1(a) and/or Section 9.1(b) shall not
exceed his, her or its pro rata share of the Aggregate Consideration; provided,
                                                                      --------
however, that in no event shall the limitations set forth in this Section 9.5(b)
-------
apply with respect to (i) the Excluded Seller Representations, or (ii) any
willful or knowing breach of such representations or warranties or any
fraudulent or intentional acts or intentional misrepresentations of any
Shareholder.

          (c)  Indemnity Baskets for the Purchaser.  From and after the Closing,
               -----------------------------------
the Seller Indemnified Persons shall not have the right to be indemnified
pursuant to Section 9.1(c) unless and until the Seller Indemnified Persons (or
any member thereof) shall have incurred on a cumulative basis aggregate Losses
in an amount exceeding $100,000, whereupon the Seller Indemnified Persons (or
any member thereof) shall be entitled to indemnification for all Losses incurred
by the Seller Indemnified Persons (or any member thereof); provided, however,
                                                           --------  -------
that in no event shall the limitations set forth in this Section 9.5(c) apply
with respect to any willful or

                                      40
<PAGE>

knowing breach of such representations or warranties or any fraudulent or
intentional acts or intentional misrepresentations of the Purchaser.

          (d)  Indemnity Limitations for the Purchaser.  From and after the
               ---------------------------------------
Closing, the sum of all Losses pursuant to which indemnification is payable by
the Purchaser pursuant to Section 9.1(c) shall not exceed the Aggregate
Consideration; provided, however, that in no event shall the limitations set
               --------  -------
forth in this Section 9.5(d) apply with respect to any willful or knowing breach
of such representations or warranties or any fraudulent or intentional acts or
intentional misrepresentations of the Purchaser.

9.6  Satisfaction of Indemnification Obligations.

     The obligations of the Seller Indemnifying Persons to indemnify the
Purchaser Indemnified Persons for Purchaser Losses (including those incurred as
a result of the indemnification events set forth in Section 9.1(a) and Section
9.1(b)) shall be paid in cash by the Seller Indemnifying Persons to the
Purchaser Indemnified Persons by wire transfer of immediately available funds to
the accounts or accounts specified by the applicable Purchaser Indemnified
Persons for such purposes.  Anything in this Agreement to the contrary
notwithstanding, in the event of any breach or default of any provision of this
Agreement or any Related Document by any member of the Seller Group, the
Purchaser Indemnified Persons shall have, in addition to its indemnification
rights pursuant to this Article IX, the right and option to set-off against
amounts owed (including the Earn Out Amount) by any member of the Purchaser
Indemnified Persons to any Seller Indemnifying Person (a) any amount owed by any
member of the Seller Group to any member of the Purchaser Indemnified Persons
under this Agreement, the Related Documents or otherwise, and (b) any Purchaser
Losses, including those incurred as a result of the indemnification events set
forth in Section 9.1(a) and Section 9.1(b).  In the event of the election by the
Purchaser Indemnified Persons (or any member thereof) to exercise any right of
set-off pursuant to this Section 9.6, the Purchaser shall deliver a written
notice to each Seller Indemnifying Person specifying the specific right of set-
off to be exercised and the amount thereof.

9.7  Recourse Against Options and Shares.

     Anything in this Agreement to the contrary notwithstanding, in the event of
a breach or default of any provision of this Agreement or any Related Document
by any member of the Seller Group, the Purchaser Indemnified Persons shall have,
in addition to its indemnification rights pursuant to this Article IX, the right
and option to (a) cancel any and all unexercised Options, and (ii) repurchase
any and all shares of the Purchaser's common stock acquired by any and all
members of the Seller Group pursuant to the exercise of Options at a repurchase
price equal to the original price paid to the Purchaser for such shares.  In the
event of the election by the Purchaser Indemnified Persons (or any member
thereof) to exercise any right under this Section 9.7, the Purchaser shall
deliver a written notice to each member of the Seller Group specifying the
specific right to be exercised and the amount thereof.

                                      41
<PAGE>

                                   ARTICLE X

                           MISCELLANEOUS PROVISIONS

10.1 Amendment.

     This Agreement may not be altered or otherwise amended except pursuant to
an instrument in writing signed by each party, except that any party may waive
any obligation owed to it by another party under this Agreement.  No waiver by
any party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

10.2 Entire Agreement.

     This Agreement and the other agreements and documents referenced herein
(including the Schedules, Annexes and Exhibits (in their executed form) attached
hereto) and any other document or agreement contemporaneously entered into with
this Agreement contain all of the agreements among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto (including
the Letter of Intent dated on or about May 23, 2000 and the Extension of the
Letter of Intent dated on or about July 25, 2000, by and between the Company and
the Purchaser).

10.3 Severability.

     It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

10.4 Benefits of Agreement.

     All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.  Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing.
Anything contained herein to the contrary notwithstanding, (a) this Agreement
shall not be assignable by any member of the Seller Group without the express
written consent of the Purchaser and (b) the Purchaser may, without the consent
of any other party hereto, (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and designate one or more of its
Affiliates to perform its obligations hereunder, and (ii) assign any or all of
its rights and interests hereunder as security for any obligations arising in

                                      42
<PAGE>

connection with the financing of the transactions contemplated hereby, in any or
all of which cases the Purchaser nonetheless shall remain responsible for the
performance of its obligations hereunder.

10.5 Expenses; Sales and Transfer Taxes.

     Except as otherwise provided in this Agreement, the Purchaser on the one
hand and the Seller Group on the other hand shall each bear their own expenses
incurred in connection with this Agreement and the Related Documents (including
the legal, accounting and due diligence fees, costs and expenses incurred by
such party).

10.6 Remedies.

     The parties each shall have and retain all rights and remedies existing in
their favor under this Agreement, at law or in equity, including rights to bring
actions for specific performance, injunctive and other equitable relief
(including the remedy of rescission) to enforce or prevent a breach or violation
of any provision of this Agreement, and all such rights and remedies shall, to
the extent permitted by applicable Law, be cumulative and a party's pursuit of
any such right or remedy shall not preclude such party from exercising or
pursuing any other available right or remedy.

10.7 Notices.

     All notices or other communications pursuant to this Agreement shall be in
writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

               (i)  if to the Company, to:

                         GTS Transportation Services, Inc.
                         2021 Las Positas Court, Suite 101
                         Livermore, California  94550
                         Attention:  Mr. Jeff Roths
                         Telephone No.: (925) 455-9050 or
                                        (800) 877-7487
                         Facsimile No.: (925) 454-2222

                         with a copy, if prior to the Closing, to:

                         Gonzalves & Kozachenko
                         47460 Fremont Boulevard
                         Fremont, California  94538
                         Attention:  Paul Kozachenko, Esq.
                         Telephone No.: (510) 770-3900
                         Facsimile No.: (510)657-9876

                                      43
<PAGE>

                         and with a copy, if after the Closing, to the Purchaser
                         at its address below;

               (ii)  if to any Shareholder, to:

                         such shareholder at his address set forth on Annex I

                         with a copy to:

                         Gonzalves & Kozachenko
                         47460 Fremont Boulevard
                         Fremont, California 94538
                         Attention:  Paul Kozachenko, Esq.
                         Telephone No.: (510) 770-3900
                         Facsimile No.: (510)657-9876

               (iii) if to the Purchaser, to:

                         Pacer International, Inc.
                         1340 Treat Boulevard
                         Walnut Creek, California 94596
                         Attention:  Mr. Larry Yarberry
                         Telephone No.: (925) 979-4480
                         Facsimile No.: (925) 979-4215

                         with a copy to:

                         Apollo Management, L.P.
                         1301 Avenue of the Americas, 38/th/ Floor
                         New York, New York 10019
                         Attention:  Mr. Joshua Harris
                         Telephone No.: (212) 261-4032
                         Facsimile No.: (212) 261-4102

                         with a copy to:

                         Holland & Knight LLP
                         50 North Laura Street, 39/th/ Floor
                         Jacksonville, Florida 32202
                         Attention:  Michael F. Killea, Esq.
                         Telephone No.: (904) 353-2000
                         Facsimile No.: (904) 358-1872

All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally-recognized,

                                      44
<PAGE>

overnight courier, on the Business Day following dispatch, and (iv) in the case
of mailing, on the third Business Day following such mailing.

10.8  Counterparts and Facsimile Execution.

      This Agreement may be executed in two or more counterparts, and each such
counterpart shall be deemed to be an original instrument.  All such counterparts
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
(by facsimile or otherwise) to the other parties, it being understood that all
parties need not sign the same counterpart.  Any counterpart or other signature
hereupon delivered by facsimile shall be deemed for all purposes as constituting
good and valid execution and delivery of this Agreement by such party.

10.9  Governing  Law.

          (a)  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF
CALIFORNIA, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA TO BE APPLIED.

          (b)  BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH THAT APPLICABLE LAWS, EVIDENTIARY RULES AND
JUDICIAL PROCEDURES APPLY OR THAT APPLICABLE LAWS AND ARBITRATION RULES IN CASES
IN WHICH THE PARTIES HAVE EXPRESSLY AGREED TO SUBMIT ANY SUCH DISPUTES TO
BINDING ARBITRATION APPLY, THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY
A JUDGE APPLYING SUCH APPLICABLE LAWS, EVIDENTIARY RULES AND JUDICIAL
PROCEDURES, OR BY AN ARBITRATOR APPLYING APPLICABLE LAWS AND ARBITRATION RULES
IN SUCH CASES WHERE THEY HAVE EXPRESSLY AGREED TO BINDING ARBITRATION.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.  THE PARTIES
HERETO AGREE THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL
COURTS LOCATED IN THE CITIES OF OAKLAND OR SAN FRANCISCO, CALIFORNIA, AND ANY
APPELLATE COURT FROM ANY THEREOF.

10.10 Jurisdiction and Venue.

          (a)  Each of the parties hereto hereby irrevocably and unconditionally
submits, for himself, herself or itself and his, her or its property, to the
exclusive jurisdiction of any

                                      45
<PAGE>

California state court or federal court of the United States of America sitting
in San Francisco or Oakland, California, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, any of the Related Documents or the transactions contemplated
hereunder or thereunder or for recognition or enforcement of any judgment
relating thereto, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such California state court or, to
the extent permitted by law, in any such federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

          (b)  Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent he, she or it may legally and effectively do so,
any objection that he, she or it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement, any of the Related Documents or the transactions contemplated
hereunder or thereunder in any California state or federal court of the United
States of America sitting in San Francisco or Oakland, California.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent he, she or it
may legally and effectively do so, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court.

          (c)  Each of the parties hereto hereby agree that the mailing by
certified or registered mail, return receipt requested, of any process required
by any such court shall constitute valid and lawful service of process against
them, without the necessity for service by any other means provided by law.

10.11  Mutual Contribution.

       The parties to this Agreement and their respective counsel have
contributed mutually to the drafting of this Agreement. Consequently, no
provision of this Agreement shall be construed against any party on the ground
that a party drafted the provision or caused it to be drafted.

10.12  No Third Party Beneficiaries.

       Except as expressly provided in this Agreement, this Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.

10.13  Independence of Covenants and Representations and Warranties.

       All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant.  In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.

                                      46
<PAGE>

10.14  Interpretation; Construction.

       The term "Agreement" means this Stock Purchase Agreement together with
                 ---------
all Schedules, Annexes and Exhibits hereto, as the same may from time to time be
amended, modified, supplemented or restated in accordance with the terms hereof.
Certain capitalized terms used and not otherwise defined elsewhere in this
Agreement have the meanings given to them in Annex II attached hereto. In this
                                             --------
Agreement, the term "best knowledge" of any Person means (i) the actual
                     --------------
knowledge of such Person, and (ii) that knowledge that should have been acquired
by such Person after making such due inquiry and exercising such due diligence
as a prudent businessperson would have made or exercised in the management of
his or her business affairs, including due inquiry of those directors, officers,
key employees and professional advisors (including attorneys, accountants and
consultants) of such Person who could reasonably be expected to have actual
knowledge of the matters in question.  For purposes of the preceding sentence,
the knowledge, both actual and constructive, of each Shareholder and each other
director, officer and key employee of the Company shall be imputed to each
member of the Seller Group.  The use in this Agreement of the word "including"
means "including, without limitation."  The words "herein," "hereof,"
"hereunder," "hereby," "hereto," "hereinafter," and other words of similar
import refer to this Agreement as a whole, including the Schedules, Annexes and
Exhibits, as the same may from time to time be amended, modified, supplemented
or restated, and not to any particular article, section, subsection, paragraph,
subparagraph or clause contained in this Agreement.  All references to articles,
sections, subsections, paragraphs, subparagraphs, clauses, Schedules, Annexes
and Exhibits mean such provisions of this Agreement and the Schedules, Annexes
and Exhibits attached to this Agreement, except where otherwise stated.  The
title of and the article, section and paragraph headings in this Agreement are
for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement.  The use
herein of the masculine, feminine or neuter forms also shall denote the other
forms, as in each case the context may require.  Where specific language is used
to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates.  The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to them under GAAP.  Unless expressly provided otherwise, the measure of a
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if
                                                                --------
no corresponding date exists, the measure shall be that date of the following
month or year corresponding to the next day following the starting date.  For
example, one month following February 18 is March 18, and one month following
March 31 is May  1.

                           *     *     *     *     *

                                      47
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.

                              The Purchaser:
                              -------------

                              PACER INTERNATIONAL, INC.

                                  /s/ LC Yarberry
                              By:_______________________________________
                                             LC Yarberry
                                 Print Name:____________________________
                                        Executive Vice President
                                 Title:_________________________________

                              The Company:
                              -----------

                              GTS TRANSPORTATION SERVICES, INC.

                                 /s/ Patrick Nolan
                              By:_______________________________________
                                            Patrick Nolan
                                 Print Name:____________________________
                                        President
                                 Title:_________________________________

                              The Shareholders:
                              ----------------

                                /s/ Jeff Roths
                              __________________________________________
                                              JEFF ROTHS

                                /s/ Patrick Nolan
                              __________________________________________
                                            PATRICK NOLAN
<PAGE>

                                    ANNEX I

                                 Shareholders
                                 ------------

Name and Address                                         Number of Shares
----------------                                         ----------------

Jeff Roths                                                          2,649
c/o GTS Transportation Services, Inc.
2021 Las Positas Court, Suite 101
Livermore, California 94550
Telephone No.: (925) 455-9050 or
               (800) 877-7487
Facsimile No.: (925) 454-2222

Patrick Nolan                                                       2,649
c/o GTS Transportation Services, Inc.
2021 Las Positas Court, Suite 101
Livermore, California  94550
Telephone No.: (925) 455-9050 or
               (800) 877-7487
Facsimile No.: (925) 454-2222
<PAGE>

                                   ANNEX II

                              Certain Definitions
                              -------------------

          "Acquisition Proposal" means any offer, proposal or indication of
           --------------------
interest in (i) the direct or indirect acquisition or sale of all or any
material part of the Company (whether by stock sale or asset sale), (ii) a
merger, consolidation or other similar business combination, or a
reorganization, recapitalization or other similar transaction, directly or
indirectly involving the Company, (iii) the direct or indirect acquisition of
any capital stock or other securities of the Company, or (iv) any stock sale or
issuance or debt and/or equity financing directly or indirectly involving the
Company.

          "Affiliate" means, with respect to any Person, (i) a partner, member,
           ---------
owner, shareholder, trustee, director or officer of such Person or of any Person
identified in clause (iii) below, (ii) a spouse, parent, sibling or descendant
of such Person (or spouse, parent, sibling or descendant of any partner, member,
owner, shareholder, trustee, director or officer of such Person or of any Person
identified in clause (iii) below), and (iii) any other Person that, directly or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with such Person.

          "Aggregate Consideration" means the sum of the Purchase Price and the
           -----------------------
Funded Indebtedness as of the Closing Date.

          "Arbitrating Accountants" means such independent "Big 5" public
           -----------------------
accounting firm as shall be agreed upon by the Purchaser and the Shareholders'
Representative in writing or, if the Purchaser and the Shareholders'
Representative cannot so agree, by lot from among the independent "Big 5" public
accounting firms (other than the Purchaser's Accountants).

          "BCI" means Beverage Canners International Corporation, a Delaware
           ---
corporation and customer of the Company.

          "Business Day" means any day that is not a Saturday, Sunday or a day
           ------------
on which banking institutions in New York, New York are authorized or required
to be closed.

          "Capital Lease" means any obligation to pay rent or other amounts
           -------------
under any lease of (or other arrangement conveying the right to use) assets or
properties, whether real, personal or mixed, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person as of such date computed in accordance with GAAP.

          "Charter Documents" means, (i) as to any corporation, the articles,
           -----------------
certificate or memorandum of incorporation or association of such corporation,
the by-laws of such corporation, and each other instrument or other document
governing such corporation's existence and internal affairs, (ii) as to any
limited partnership, the certificate of limited partnership of such partnership,
the agreement of limited partnership of such partnership, and each other
instrument or other document governing such partnership's existence and internal
affairs, (iii) as to any limited liability company, the articles, certificate or
memorandum of organization of such limited liability company, the operating
agreement of such limited liability company, and each other instrument or other
document governing such limited liability company's existence and internal

                                     II-1
<PAGE>

affairs, and (iv) as to any trust, the agreement or other instrument creating
such trust and any and all other documents, instruments and certificates
granting (and limiting) the powers and authorities of such trust and the
trustee(s) thereof and governing the activities and operations of such trust and
the trustee(s) thereof, in each case in clauses (i) through (iv) above, as
amended and restated and in effect at the time in question.

          "Commission" means the Securities and Exchange Commission, or any
           ----------
Governmental Entity succeeding to the functions thereof.

          "Contract" means any loan or credit agreement, note, bond, mortgage,
           --------
indenture, license, lease, sublease, grant of easement, right of way, purchase
order, sale order, service order, or other contract, agreement, commitment,
instrument, permit, concession, franchise or license, whether written or oral.

          "Control" means, with respect to any Person, the possession, directly
           -------
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
Contract or otherwise.

          "Earn Out Period" means, with respect to the Company, the twelve-month
           ---------------
period commencing on January 1, 2001, and ending on December 31, 2001.

          "Employee Benefit Plan" means (i) any qualified or non-qualified
           ---------------------
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA), including
any Multi-employer Plan (as defined in Section 3(37) of ERISA), Multiple
Employer Plan (as defined in Section 413 of the Code), or Defined Benefit
Pension Plan (as defined in Section 3(35) of ERISA), (ii) any Employee Welfare
Benefit Plan (as defined in Section  3(1) of ERISA), or (iii) any employee
benefit, fringe benefit, compensation, severance, incentive, bonus, profit-
sharing, stock option, stock purchase or other plan, program or arrangement,
whether or not subject to ERISA and whether or not funded.

          "Encumbrances" means and includes security interests, mortgages,
           ------------
liens, pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.

          "Environmental, Health and Safety Laws" means all Laws, Permits,
           -------------------------------------
Orders, Contracts and common law relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, in each case as amended and in effect from time
to time.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
amended, and any successor legislation thereto, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.

                                     II-2
<PAGE>

          "ERISA Affiliate" means, with respect to any Person, any other Person
           ---------------
that is a member of a "controlled group of corporations" with, or is under
"common control" with, or is a member of the same "affiliated service group"
with such Person as defined in Section  414(b), 414(c), 414(m) or 414(o) of the
Code.

          "Funded Indebtedness" means, without duplication, the aggregate amount
           -------------------
(including the current portions thereof) of all (i) indebtedness for money
borrowed by the Company from other Persons (including any prepayment and similar
penalties) and purchase money indebtedness (other than accounts payable in the
ordinary course of business, consistent with past practice); (ii)  indebtedness
of the type described in clause (i) above guaranteed, directly or indirectly, in
any manner by the Company or in effect guaranteed, directly or indirectly, in
any manner by the Company through a Contract or other understanding or
arrangement, contingent or otherwise, to supply funds to, or in any other manner
invest in, the debtor, or to purchase indebtedness, or to purchase and pay for
property if not delivered or pay for services if not performed, primarily for
the purpose of enabling the debtor to make payment of the indebtedness or to
assure the owners of the indebtedness against loss (any such Contract or other
understanding or arrangement being referred to as a "Guaranty") (but the term
                                                     --------
"Guaranty" shall exclude endorsements of checks and other instruments in the
ordinary course or business, consistent with past practice); (iii) all
indebtedness of the type described in clause (i) above secured by any
Encumbrance upon assets or properties owned by the Company even though the
Company has not in any manner become liable for the payment of such
indebtedness; (iv) Capital Leases, and (v) all interest expense and other
charges accrued but unpaid, and all prepayment penalties and premiums, on or
relating to any of such indebtedness.  Funded Indebtedness of the Company as of
the date hereof is set forth on Schedule 5.13(d).
                                ----------------

          "GAAP" means generally accepted accounting principles in the United
           ----
States, as promulgated by the American Institute of Certified Public
Accountants, consistently applied.

          "Governmental Entity" means any domestic or foreign government or
           -------------------
political subdivision thereof, whether on a federal, state, provincial or local
level and whether legislative, executive, judicial in nature, including any
agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.

          "Guaranty" has the meaning given to it in the definition of Funded
           --------
Indebtedness.

          "Income Taxes" means all income Taxes (including any Tax on or based
           ------------
upon net income, gross income, income as specially defined, earnings, profits or
selected items of income, earnings or profits (including state Taxes imposed on
subchapter S corporations)).

          "Indemnified Persons" means and includes the Seller Indemnified
           -------------------
Persons and/or the Purchaser Indemnified Persons, as the case may be.

          "Indemnifying Persons" means and includes the Seller Indemnifying
           --------------------
Persons and/or the Purchaser Indemnifying Persons, as the case may be.

          "Intellectual Property Rights" means all intellectual property rights,
           ----------------------------
including patents, patent applications, trademarks, trademark applications,
trade names, service marks, service mark applications, trade dress, logos and
designs, and the goodwill connected with the

                                     II-3
<PAGE>

foregoing, copyrights and copyright applications, know-how, trade secrets,
proprietary processes and formulae, confidential information, franchises,
licenses, inventions, instructions, marketing materials and all documentation
and media constituting, describing or relating to the foregoing, including
manuals, memoranda and records.

          "Law" means any applicable domestic or foreign law, statute, treaty,
           ---
rule, directive, regulation, ordinance or similar provision having the force or
effect of law, whether on a federal, state, provincial or local level (including
all Environmental, Health and Safety Laws), or any applicable Order of any
Governmental Entity.

          "Liability" means any actual or potential liability or obligation,
           ---------
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, or liquidated or unliquidated, and whether due or to
become due, regardless of when asserted.

          "Litigation Expense" means any out-of-pocket expenses incurred in
           ------------------
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder, including court filing fees, court costs, arbitration fees or
costs, witness fees, and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals.

          "Losses" means any and all losses (including a diminution in the value
           ------
of the Company's capital stock), claims, shortages, damages, expenses (including
reasonable attorneys' and accountants' and other professionals' fees and
Litigation Expenses), assessments, Taxes (including interest and penalties
thereon), and insurance premium increases arising from or in connection with any
such matter that is the subject of indemnification under Article IX, as reduced
by (i) the amount actually recovered under insurance policies (net of
deductibles and incidental expenses resulting therefrom), and (ii) Tax benefits
actually realized under Tax Laws in respect of such Losses, net of all
reasonable costs and expenses of recovering any such Tax benefits. For purposes
of determining Tax benefits actually realized, there shall be included only
those Tax benefits resulting from such Loss that are actually realized before
the taxable year in which a payment for a Loss is received and Tax benefits
resulting from such Loss that are actually realized in the taxable year in which
a payment for a Loss is received, as increased by (x) the amount of any Taxes
                                     ---------
payable on such indemnification payment and (y) the amount of any Taxes payable
on the payment referred to in clause (x) hereof.  For purposes of calculating
the amount of Losses incurred by the Purchaser Indemnified Persons for which the
Seller Indemnifying Person is obligated to indemnify the Purchaser Indemnified
Persons, such amount shall be computed as the product arrived at by multiplying
(i) the actual amount of Losses incurred by the Purchaser Indemnified Persons by
(ii) the quotient arrived at by dividing the Aggregate Consideration by the
consolidated operating income of the Company and its Subsidiaries for the twelve
(12) months ended December 31, 1999, calculated in accordance with GAAP applied
on a basis consistent with the preparation of the statement of income for the
fiscal year then ended that is included in the Annual Financial Statements.  The
Purchaser and each member of the Seller Group hereby agree that the Purchase
Price shall be deemed to be decreased by the amount of any payment made by the
Seller Indemnifying Persons to the Purchaser with respect to Losses incurred by
the Purchaser Indemnified Persons for which the Seller Indemnifying Persons was
obligated to indemnify the Purchaser Indemnified Persons.

          "Management Shareholders" means Jeff Roths and Patrick Nolan.
           -----------------------

                                     II-4
<PAGE>

          "Options" means, collectively, all options that are the subject of the
           -------
Roths Option Agreement and the Nolan Option Agreement.

          "Orders" means judgments, writs, decrees, compliance agreements,
           ------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.

          "Permits" means all permits, licenses, authorizations, registrations,
           -------
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from a Governmental Entity.

          "Permitted Encumbrances" means (i) Encumbrances for Taxes not yet due
           ----------------------
and payable or being contested in good faith by appropriate Proceedings and for
which there are adequate reserves on the books, (ii) workers' or unemployment
compensation liens arising in the ordinary course of business, and (iii)
mechanic's, materialman's, supplier's, vendor's or similar liens arising in the
ordinary course of business, consistent with past practice, securing amounts
that are not delinquent.

          "Person" shall be construed as broadly as possible and shall include
           ------
an individual or natural person, a partnership (including a limited liability
partnership), a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization, a
business, a Governmental Entity, and any other entity.

          "Proceeding" means any action, suit, investigation or proceeding
           ----------
before any Governmental Entity or arbitrator.

          "Purchaser Indemnified Persons" means and includes the Purchaser and
           -----------------------------
its Affiliates (including, following the Closing, the Company), their respective
successors and assigns, and the respective officers, directors and controlling
parties of each of the foregoing; provided, however, that any such Person who
                                  --------  -------
was, prior to the Closing Date, an officer, director, employee, Affiliate,
successor or assign of the Company, or a Shareholder, shall not in such
capacity, be a Purchaser Indemnified Person with respect to a breach of this
Agreement or any Related Document based on facts or circumstances occurring, or
actions taken by such Person, at or prior to the Closing.

          "Purchaser Indemnifying Persons" means the Purchaser and its
           ------------------------------
successors.

          "Purchaser Losses" means any and all Losses sustained, suffered or
           ----------------
incurred by any Purchaser Indemnified Person arising from or in connection with
any matter that is the subject of indemnification under Article IX.

          "Purchaser's Accountants" means PricewaterhouseCoopers LLP.
           -----------------------

          "Securities" means "securities" as defined in Section 2(1) of the
           ----------
Securities Act.

          "Securities Act" means the Securities Act of 1933, as amended, or any
           --------------
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.

                                     II-5
<PAGE>

          "Seller Indemnified Persons" means and includes either (i) if the
           --------------------------
Closing does not occur, the Company, each Shareholder, and their respective
Affiliates, directors, officers, personal representatives, estates, heirs,
successors and permitted assigns or (ii) if the Closing occurs, each Shareholder
and his personal representatives, estate, heirs, successors and permitted
assigns.

          "Seller Indemnifying Persons" means each Shareholder and his personal
           ---------------------------
representative, estate, heirs, successors and permitted assigns.

          "Seller Losses" means any and all Losses sustained, suffered or
           -------------
incurred by any Seller Indemnified Person arising from or in connection with any
matter that is the subject of indemnification under Article IX.

          "Subsidiary" means, with respect to any Person, any other Person (i)
           ----------
whose Securities having a majority of the general voting power in electing the
board of directors or equivalent governing body of such Person (excluding
Securities entitled to vote only upon the failure to pay dividends thereon or
the occurrence of other contingencies) are, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting Subsidiaries, or (ii) a fifty
percent (50%) interest in the profits or capital of whom is, at the time as of
which any determination is being made, owned by such Person either directly or
indirectly through one or more other entities constituting Subsidiaries.

          "Target Net Working Capital Amount" means ($[2,850,000]) (negative).
           ---------------------------------

          "Tax Return" means any return, declaration, report, claim for refund,
           ----------
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

          "Taxes" means, with respect to any Person, (i) all Income Taxes and
           -----
all gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax, and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person,
and (ii) any liability for the payment of any amount of the type described in
the foregoing clause (i) as a result of (A) being a "transferee" (within the
meaning of Section  6901 of the Code or any other applicable Law) of another
Person, (B) being a member of an affiliated, combined or consolidated group, or
(C) a Contract or other understanding or arrangement.

                                     II-6
<PAGE>

                                   ANNEX III

                              Company EBIT Amount
                              -------------------

     As used in this Agreement, the term "Company EBIT Amount" means the
                                          -------------------
operating income of the Company during the Earn Out Period, calculated in
accordance with GAAP applied on a basis consistent with the preparation of the
statements of income included in the Annual Financial Statements, subject to the
following adjustments (provided that the following adjustments shall be made
                       --------
without duplication in calculating the Company EBIT Amount):

     (A)  the Company EBIT Amount shall not include any deduction for federal,
state or local income taxes (whether paid or accrued) or any credit or income
item related to federal, state or local income taxes (whether paid or accrued);

     (B)  the Company EBIT Amount shall not include any deduction for interest
expense (whether paid or accrued) or any credit or income item for interest
income (whether received or accrued);  and

     (C)  the Company EBIT Amount shall not include any extraordinary or one-
time income or gain that may be realized during the Earn Out Period.

                                     III-1

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