SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PLM International, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
$63,500,000 x 1% x 1/50
4. Proposed maximum aggregate value of transaction:
$63,500
5. Total fee paid:
$12,700
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party
4. Date Filed:
<PAGE>
July 26, 2000
[PLM LOGO]
SALE OF ASSETS OF BUSINESS -- YOUR VOTE IS VERY IMPORTANT
<PAGE>
Dear Stockholders:
We have agreed to sell our trailer leasing operations to Marubeni
America Corporation, if you authorize the proposed sale. We estimate, based on
an anticipated closing date of the sale of August 31, 2000, that Marubeni will
pay us approximately $65.8 million in cash for our 4,000 trailers (including
trailers owned by two of our subsidiaries) and assume $49.1 million in debt and
other liabilities, including the operation of up to all our 22 trailer yards
located throughout the United States. The proposed sale of the trailer leasing
operations would take place under an Asset Purchase Agreement, dated as of May
24, 2000. The full text of the Asset Purchase Agreement is included as Annex A
to the proxy statement that accompanies this letter.
It is not entirely clear under Delaware law whether the proposed sale
of the trailer leasing operations to Marubeni requires the authorization of
PLM's stockholders. To avoid any uncertainty, we are putting the proposed sale
to a stockholder vote, and the sale will not be completed unless it is
authorized by the holders of a majority of our outstanding shares of common
stock. We have scheduled a special meeting of our stockholders for this vote on
August 25, 2000. YOUR VOTE IS VERY IMPORTANT.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE PROPOSED
SALE OF THE TRAILER LEASING OPERATIONS TO MARUBENI IS IN THE BEST INTERESTS OF
PLM AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE
PROPOSED SALE AND THE ASSET PURCHASE AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" THE PROPOSED SALE.
The proposed sale of the trailer leasing operations is the result of
our efforts which we commenced in November 1999, to maximize PLM stockholder
value on a near-term basis (taking into account tax and financial market
considerations). If the sale of the trailer leasing operations is approved, our
sole remaining business will be the management of investment programs, and we
are also seeking a buyer for that business or for PLM. We would like to
emphasize that the proposed sale of the trailer leasing operations is not
conditioned on finding a buyer for PLM or PLM's remaining business, which search
is in a preliminary stage. Any such sale would require further stockholder
action (in the form of another stockholder vote or a tender of shares, or
perhaps both). No specific action other than the proposed sale of the trailer
leasing operations is currently proposed and we are not asking for your
authorization of any other transaction at this time.
Whether or not you plan to attend the meeting, please take the time to
vote by completing the enclosed proxy card and mailing it to us. A postage paid
envelope is provided for your convenience. If you sign, date and mail your proxy
card without indicating how you want to vote, your proxy will be counted as a
vote in favor of the proposed sale. If you fail to return your card and do not
vote at the meeting, it will have the same effect as a vote against the proposed
sale.
Only stockholders of record as of July 20, 2000 are entitled to attend
and vote at the special meeting.
<PAGE>
The date, time and place of the special meeting are as follows:
August 25, 2000
9:00 a.m.
World Trade Club
Word Trade Center, Suite 300
The Embarcadero at the foot of Market Street
San Francisco, California
The accompanying documents provide you with detailed information about
the proposed sale. In addition, you may obtain information about PLM from
documents that we have filed with the Securities and Exchange Commission. We
encourage you to read the accompanying documents carefully.
On behalf of our Board of Directors, we thank you for your continued
support and again urge you to vote for the proposed sale.
Very truly yours,
/s/ Robert N. Tidball
Robert N. Tidball
President, Chief Executive Officer
and Chairman of the Board
<PAGE>
PLM INTERNATIONAL, INC.
One Market
Steuart Street Tower, Suite 800
San Francisco, California 94105
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 25, 2000
To PLM Stockholders:
A special meeting of stockholders of PLM International, Inc., a
Delaware corporation, will be held at 9:00 a.m. on August 25, 2000 at the World
Trade Club located at the Word Trade Center, Suite 300, The Embarcadero at the
foot of Market Street, San Francisco, California. A proxy card and proxy
statement for the special meeting are enclosed.
The special meeting is for the purpose of:
1. Considering and voting upon a proposal to sell PLM's trailer leasing
operations to Marubeni America Corporation pursuant to the terms of an Asset
Purchase Agreement, dated as of May 24, 2000. A copy of the Asset Purchase
Agreement is attached as Annex A to the accompanying proxy statement.
2. Transacting such other business as may properly come before the
special meeting and any adjournment thereof. Our Board of Directors is not aware
of any other business that will be presented for consideration at the special
meeting.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
PROPOSED SALE ARE IN THE BEST INTERESTS OF PLM AND ITS STOCK-HOLDERS AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED SALE.
Only holders of PLM common stock of record as of the close of business
on July 20, 2000 are entitled to notice of and to vote at the special meeting.
The proposed sale will not be completed unless it is authorized by the
affirmative vote of the holders of a majority of the shares of PLM common stock
outstanding and entitled to vote at the special meeting.
Your vote is important. Whether or not you plan to attend the special
meeting, please complete, date and sign the enclosed proxy card and return it in
the enclosed envelope. If you attend the special meeting, you may revoke your
proxy and vote personally on each matter brought before the special meeting.
By Order of the Board of Directors,
/s/ Susan C. Santo
Susan C. Santo
Vice President, Secretary and General Counsel
San Francisco, California
July 26, 2000
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE PROMPTLY.
This proxy statement, dated July 26, 2000, will
first be mailed to stockholders on or
about July 26, 2000.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED SALE
Q: WHY ARE WE SELLING OUR TRAILER LEASING OPERATIONS?
A: In November 1999 we decided to seek to maximize near-term shareholder
value, taking into account tax and financial market considerations. To that end,
we retained Imperial Capital, LLC, an investment banking firm, to investigate
strategic alternatives, including the sale of all of PLM, either as a whole or
in separate parts. As part of this process, we determined that the aggregate
value of our two businesses was greater than the value reflected in our stock
price. We also determined that the trailer leasing operations could be more
readily sold separately from our other business operations and at a higher sales
price than if it were included as part of the sale of PLM as a whole. Our Board
of Directors believes that the price Marubeni has agreed to pay for the trailer
leasing operations is both fair and attractive.
Q: WHAT ARE WE PLANNING TO DO WITH THE NET PROCEEDS FROM THE SALE OF THE
TRAILER LEASING OPERATIONS?
A: We plan to use the after-tax proceeds from the sale of the trailer
leasing operations for one or a combination of the following alternatives: (1)
the repurchase of PLM's shares pursuant to PLM's share repurchase program; (2) a
self-tender for PLM's shares; and/or (3) a distribution to stockholders from the
net proceeds. Our Board of Directors will consider the tax and financial aspects
of these alternatives in determining which alternative or combination of
alternatives to pursue. The net proceeds will be invested in short-term money
market accounts pending our Board's decision.
Q: WHY ARE WE ASKING FOR A STOCKHOLDER VOTE? WHAT VOTE IS REQUIRED?
A: The proposed sale may constitute a sale of "substantially all" of our
assets under Delaware corporate law. If so, the proposed sale requires
authorization by the holders of a majority of our outstanding common stock.
Since it is not entirely clear whether the proposed sale requires stockholder
authorization, we are making the sale subject to a stockholder vote to avoid any
uncertainty, and we will not complete the sale unless it is authorized by the
affirmative vote of holders of a majority of PLM's common stock.
Q: WHAT DO I NEED TO DO NOW?
A: Just complete, sign and mail your signed proxy card in the enclosed
return envelope as soon as possible so that your shares may be represented at
the special meeting. The meeting will take place on August 25, 2000. Our Board
of Directors unanimously recommends that you vote in favor of the proposed sale.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before we vote your proxy at
the special meeting. You can do so in one of three ways. First, you can send a
written notice stating that you would like to revoke your proxy to the Secretary
of PLM at the address given below. Second, you can request a new proxy card and
complete and send it to the Secretary of PLM at the address given below. Third,
you can attend the special meeting and vote in person. You should send any
written notice or request for a new proxy card to the attention of the
Secretary, PLM International, Inc., One Market, Steuart Street Tower, Suite 800,
San Francisco, California 94105.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on
how to vote. Following the directions provided by your broker, you should
instruct your broker to vote your shares. Without your instructions, your shares
will not be voted, which will have the same effect as a "no" vote.
Q: WHEN DO YOU EXPECT THE PROPOSED SALE TO BE COMPLETED?
A: We are working to complete the proposed sale as quickly as possible.
If all necessary approvals have been obtained, we hope to complete the sale by
August 31, 2000.
Q: WHO CAN ANSWER FURTHER QUESTIONS?
A: If you have more questions about the proposed sale, you should contact:
PLM International, Inc.
One Market
Steuart Street Tower, Suite 800
San Francisco, California 94105
(415) 974-1399
(800) 626-7549
Attention: Investor Relations
<PAGE>
TABLE OF CONTENTS
Description Page
QUESTIONS AND ANSWERS ABOUT THE PROPOSED SALE.......i
SUMMARY OF PROPOSED SALE............................1
The Company....................................1
The Proposed Sale..............................1
Sale of the Trailer Leasing Operations.........1
Use of Proceeds................................1
Transition Services Agreement..................1
Our Reasons for the Proposed Sale...................1
The Special Meeting............................2
Record Date; Shares Entitled to Vote...........2
Vote Required..................................2
Our Recommendation to Stockholders.............2
Opinion of Financial Advisor...................2
The Asset Purchase Agreement...................2
Conditions to the Asset Purchase Agreement..........2
Termination or Abandonment of the Transactions
Contemplated by the Asset Purchase Agreement...2
Regulatory Approvals...........................3
Accounting Treatment...........................3
United States Federal Income Tax Consequences..3
No Appraisal Rights............................3
RISK FACTOR.........................................4
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA
FINANCIAL DATA.................................4
SELECTED CONSOLIDATED HISTORICAL....................5
INTRODUCTION........................................8
THE COMPANY.........................................8
THE SPECIAL MEETING.................................8
Date, Time and Place...........................8
Matters to be Considered.......................8
Record Date; Shares Outstanding and Entitled
to Vote...................................9
Quorum; Vote Required..........................9
Voting and Revocation of Proxies...............9
Proxy Solicitation............................10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................10
THE PROPOSED SALE..................................11
General.......................................12
Description of Trailer Leasing Operations.....12
Background of the Proposed Sale...............12
Reasons for the Proposed Sale.................13
Recommendation of Our Board of Directors......14
Opinion of Financial Advisor..................14
Use of Proceeds...............................17
Accounting Treatment for the Proposed Sale....18
United States Federal Income Tax Consequences.18
Appraisal Rights..............................18
Regulatory Filings and Approvals..............18
TERMS OF ASSET PURCHASE AGREEMENT..................18
Seller of Assets..............................18
Assets and Liabilities of the Trailer Leasing
Operations...............................19
Location of Assets............................20
Purchase Price................................20
Escrow........................................21
Related Transaction...........................21
The Closing...................................21
Representations and Warranties................21
Covenants.....................................21
Conditions....................................22
Termination or Abandonment....................23
Indemnification; Survival and Limits of
Indemnification Obligations..............23
Fees and Expenses.............................24
Intellectual Property.........................24
Transition Services Agreement.................24
Noncompetition Agreement......................25
MARKET PRICE DATA; DIVIDENDS.......................26
PLM INTERNATIONAL, INC. UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION..27
INDEPENDENT AUDITORS...............................36
STOCKHOLDER PROPOSALS..............................37
WHERE YOU CAN FIND MORE INFORMATION................37
PLM TRAILER LEASING UNAUDITED COMBINED FINANCIAL
STATEMENTS....................................38
ANNEX A - ASSET PURCHASE AGREEMENT
ANNEX B - OPINION OF IMPERIAL CAPITAL, LLC
ANNEX C - FINANCIAL PROJECTIONS
<PAGE>
SUMMARY OF PROPOSED SALE
This summary highlights selected information about the proposed sale
contained in this document and may not contain all of the information that is
important to you. To understand the proposed sale more fully and for a complete
description of the legal terms of the proposed sale, you should read carefully
this entire document and the documents we refer you to. We have included page
references parenthetically to direct you to the place in this document where you
can find a more complete description of the topics presented in the summary.
THE COMPANY
We own or manage a portfolio of transportation equipment and related
assets with a combined original cost of approximately $900 million. Our
operations are divided into two segments: refrigerated and dry van
(nonrefrigerated) over-the-road trailer leasing, and the management of
investment programs and other transportation equipment leasing.
THE PROPOSED SALE
SALE OF THE TRAILER LEASING OPERATIONS
(SEE PAGE 12)
We have agreed to sell our refrigerated and dry van over-the-road
trailer leasing operations to Marubeni subject to your vote. Specifically, both
we and some of our affiliates and subsidiaries, as more fully described under
the heading "Seller of Assets" on page 19, will sell to Marubeni our combined
trailer leasing operations, for an estimated purchase price of $65.8 million.
Marubeni will assume approximately $49.1 million of debt and other liabilities.
These estimates are based on an anticipated closing date of this transaction of
August 31, 2000. Additionally, certain investment programs managed by one of our
subsidiaries will also sell most of their trailers to Marubeni pursuant to a
separately negotiated agreement, for an estimated purchase price of $25.4
million (the "Related Transaction").
PLM and its subsidiaries, on a consolidated basis, had revenues from
continuing operations of $37.3 million and operating income of $8.2 million for
1999 and revenues of $9.9 million and operating income of $1.5 million for the
three months ended March 31, 2000. The trailer leasing operations had revenues
of $25.7 million and operating income of $5.3 million for 1999 and revenues of
$7.5 million and operating income of $1.1 million for the three-month period
ended March 31, 2000. The trailer leasing operations constituted about 58% of
our total assets as of December 31, 1999 and about 60% of our total assets as of
March 31, 2000.
USE OF PROCEEDS (SEE PAGE 17)
We anticipate receiving net after-tax proceeds from the proposed sale of
our trailer leasing operations of approximately $45.9 million, assuming a
closing on August 31, 2000. We expect to invest these proceeds in short-term
money market accounts while our Board of Directors considers whether to
repurchase a portion of PLM's shares pursuant to PLM's share repurchase program,
self-tender for PLM's shares, and/or make a distribution to shareholders from
the net proceeds. Our Board of Directors will consider the tax and financial
aspects of these alternatives in determining whether to pursue one or more of
these alternatives. Although the net proceeds may be invested in interest
bearing accounts pending the Board's decision, the attached proforma financial
statements do not reflect any interest income that might be earned by these
accounts.
TRANSITION SERVICES AGREEMENT(SEE PAGE 24)
At the completion of the sale of the trailer leasing operations, we
will enter into a Transition Services Agreement with Marubeni. Under this
agreement, we will be paid a monthly fee to provide various accounting and
administrative services to Marubeni for a limited period of time. We do not
expect the Transition Services Agreement to have any significant effect on our
results of operations.
OUR REASONS FOR THE PROPOSED SALE
In November 1999 we decided to seek to maximize near-term shareholder value,
taking into account tax and financial market considerations. To that end, we
retained Imperial Capital, LLC, an investment banking firm, to investigate
strategic alternatives, including the sale of all of PLM, either as a whole or
in separate parts. As part of this process, we determined that the aggregate
value of our two businesses was greater than the value reflected in our stock
price. We also determined that the trailer leasing operations could be more
readily sold separately from our other business operations at a higher sales
price, than if was it were included as part of the sale of PLM as a whole. Our
Board of Directors believes that the price Marubeni has agreed to pay for the
trailer leasing operations is both fair and attractive.
THE SPECIAL MEETING
We will hold the special meeting at the World Trade Club, World Trade
Center, Suite 300, The Embarcadero at the foot of Market Street, San Francisco,
California, at 9:00 a.m. on August 25, 2000. Stockholders will be asked to
consider and vote upon the proposed sale and to transact such other business as
may properly come before the special meeting.
RECORD DATE; SHARES ENTITLED TO VOTE
You are entitled to vote at the meeting if you owned shares of common
stock of PLM as of the close of business on July 20, 2000, the record date.
On the record date, there were 7,408,510 shares of PLM common stock
outstanding and entitled to vote at the special meeting. Stockholders will have
one vote at the special meeting for each share of PLM common stock owned by them
on the record date.
VOTE REQUIRED
The proposed sale may constitute a sale of "substantially all" of our
assets under Delaware corporate law. If so, the proposed sale requires
authorization by a majority of the shares of PLM common stock outstanding on the
record date. Since it is not entirely clear whether the proposed sale requires
stockholder authorization, we are making the proposed sale subject to a
stockholder vote to avoid any uncertainty, and we will not complete the sale
unless it is authorized by the affirmative vote of a majority of the shares of
PLM common stock outstanding and entitled to vote at the special meeting.
OUR RECOMMENDATION TO STOCKHOLDERS
Our Board of Directors believes that the proposed sale is in the best
interests of PLM and its stockholders and unanimously recommends that you vote
in favor of the proposed sale.
OPINION OF FINANCIAL ADVISOR (SEE PAGE 14)
In deciding to approve the proposed sale, our Board of Directors
considered the opinion of Imperial Capital, its financial advisor, that the
consideration that we will receive in the proposed sale is fair to us from a
financial point of view. The opinion of Imperial Capital is attached as Annex B
to this proxy statement.
We encourage you to read this opinion.
THE ASSET PURCHASE AGREEMENT
The Asset Purchase Agreement, dated as of May 24, 2000, is attached as
Annex A to this proxy statement. We encourage you to read the agreement as it is
the legal document that governs the proposed sale.
CONDITIONS TO THE ASSET PURCHASE AGREEMENT
(SEE PAGE 22)
The completion of the proposed sale depends upon a number of
conditions, which are summarized on page 22 of this proxy and listed in their
entirety in the Asset Purchase Agreement.
TERMINATION OR ABANDONMENT OF THE TRANSACTIONS CONTEMPLATED
BY THE ASSET PURCHASE AGREEMENT
(SEE PAGE 23)
Marubeni may mutually agree with us to terminate or abandon the
transactions contemplated by the Asset Purchase Agreement at any time prior to
the completion of the sale. Further, Marubeni may terminate or abandon the
transactions if we breach our representations, warranties or covenants contained
in the Asset Purchase Agreement or if our representations, warranties or
covenants were or are not true or correct and such breaches under the Asset
Purchase Agreement and any breaches by the sellers under the Related Transaction
results or would result in aggregate damages to Marubeni in excess of $2.2
million. We may terminate or abandon the transactions if Marubeni breaches its
representations, warranties, or covenants to us in the Asset Purchase Agreement
or its representations, warranties or covenants were or are not true or correct.
In addition, either we or Marubeni may terminate or abandon the transactions
contemplated by the Asset Purchase Agreement if:
o the proposed sale has not been completed by
September 30, 2000, or
o a majority of PLM's stockholders do not authorize the transaction.
If (1) we fail to have a stockholders' meeting for the purpose of obtaining
approval of the transactions by September 25, 2000 (other than as a result of
events substantially and reasonably beyond our control), or we materially breach
our obligations to negotiate exclusively with Marubeni (provided that our Board
has the right to pursue discussions with any party that offers a proposal
superior to Marubeni's in our Board's good faith judgment), or (2) our Board of
Directors withdraws its unanimous approval or recommendation of this transaction
and PLM stockholder approval is not obtained, or (3) PLM stockholder approval is
not obtained at a meeting duly called, held and convened for such purpose, and
we complete a transaction with a third party involving at least 50% of the
combined assets of our trailer leasing operations and the trailer assets which
are the subject of the Related Transaction within 9 months of the date of the
Asset Purchase Agreement, we will be required to pay Marubeni $3 million.
REGULATORY APPROVALS
(SEE PAGE 18)
The Hart-Scott-Rodino Act prohibits Marubeni and us from completing the
proposed sale until each of us has furnished information to the Antitrust
Division of the Department of Justice and the Federal Trade Commission and a
required waiting period has expired. We anticipate filing the required
notification and report forms with the Antitrust Division and the FTC by the end
of July, 2000, and both we and Marubeni will request early termination of the
required waiting period.
ACCOUNTING TREATMENT
After the sale, the trailer leasing operations will be treated for
accounting purposes as a discontinued operation of PLM. This means that
financial statements for all prior periods will be restated to show the
operations of the trailer leasing operations separately from PLM's continuing
operations.
PLM's gain on the sale of the trailer leasing operations will be
measured by the difference between the amount paid by Marubeni and the net book
value of the assets sold, reduced by transaction costs and applicable taxes.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The proposed sale of our trailer leasing operations will not result in
any United States federal income tax consequences to you. If completed, the
proposed sale will, however, be a taxable event to PLM for United States federal
income tax purposes.
NO APPRAISAL RIGHTS
Under Delaware law, PLM stockholders are not entitled to appraisal
rights in connection with the proposed sale of the trailer leasing operations.
<PAGE>
RISK FACTOR
IN CONSIDERING WHETHER TO AUTHORIZE THE PROPOSED SALE, YOU SHOULD
CONSIDER, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS DOCUMENT, THE
FOLLOWING MATTER.
The sale of the trailer leasing operations will significantly reduce
our revenues and income from operations. The timely sale of our remaining
investment program operations will therefore be important to ensure that we are
able to maximize the value to our shareholders of both the sale of the trailer
leasing operations and our remaining investment program operations.
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
We are providing the following financial data to aid you in your
analysis of the financial aspects of the proposed sale. With the exception of
(1) the selected pro forma data as of March 31, 2000 and 1999 and for the three
months ended March 31, 2000 and 1999 and (2) the pro forma data as of March 31,
2000 and for the three months ended March 31, 2000 and 1999 and the fiscal years
ended December 31, 1999, 1998 and 1997, we derived the information from our
audited historical consolidated financial statements. Our consolidated financial
statements as of December 31, 1999 and 1998, and for each of the three years in
the period ended December 31, 1999, have been audited by KPMG LLP, independent
auditors, and are included in our annual report on Form 10-K for the year ended
December 31, 1999, which is included with the materials mailed with this proxy
statement. PLM Trailer Leasing's unaudited combined financial position as of
December 31, 1999 and 1998, and results of operations for each of the three
years in the period ended December 1999, and PLM Trailer Leasing's unaudited
combined financial position as of March 31, 2000 and 1999 and results of
operations for the three months ended March 31, 2000 and 1999, appear in this
proxy statement starting on page 38. The selected pro forma data are derived
from the unaudited pro forma consolidated financial statements and accompanying
notes appearing elsewhere in this proxy statement. The selected financial data
as of March 31, 2000 and for the three months ended March 31, 2000 and 1999 have
been derived from our unaudited interim consolidated financial statements, which
are included in our quarterly report on Form 10-Q for the three-month period
ended March 31, 2000, which is included with the materials mailed with this
proxy statement. The selected pro forma data are derived from the unaudited pro
forma consolidated financial statements and accompanying notes appearing
elsewhere in this proxy statement.
The selected financial data as of March 31, 2000 and 1999 and for the
three months ended March 31, 2000 and 1999 reflect, in the opinion of our
management, all adjustments, consisting only of normal, recurring adjustments
necessary for a fair presentation of such data, and have been prepared in
accordance with the accounting principles followed in the presentation of our
audited financial statements for the year ended December 31, 1999. Operating
results for the three months are not necessarily indicative of the results to be
expected for the full fiscal year.
The selected financial data should be read in conjunction with the
unaudited pro forma consolidated financial statements and accompanying notes
appearing elsewhere in this proxy statement and with our consolidated financial
statements and accompanying notes and the information contained in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in our annual report on Form 10-K for the year ended December 31, 1999
and quarterly report on Form 10-Q for the three-month period ended March 31,
2000, which are included with the materials mailed with this proxy statement.
<PAGE>
PLM INTERNATIONAL, INC.
SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
Historical Historical
1999 1998 1997 1996 1995 2000 1999
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income
Statement Data
Total revenues $ 37,265 $ 30,120 $ 31,169 $ 39,751 $ 54,748 $ 9,907 $ 7,136
Operations (14,148) (12,383) (13,166) (18,691) (21,076) (4,273) (2,699)
support
Depreciation (8,097) (4,868) (4,489) (6,705) (8,607) (2,522) (1,577)
and
amortization
General and (6,828) (7,624) (9,536) (7,956) (11,955) (1,586) (1,484)
------ - ------ - ------ - ------ - -------- ------ - ------ -
administrative
Operating 8,192 5,245 3,978 6,399 13,110 1,526 1,376
income
Interest (5,424) (3,826) (4,572) (4,652) (7,110) (1,520) (1,097)
expense
Interest 343 941 1,311 1,063 1,973 203 97
income
Other income 721 473 (342) (650) (496) -- --
(expense)
(Provision
for) benefit
from
income tax (1,487) (1,154) 423 808 (1,679) (79) (145)
Income from
continuing
operations $ 2,345 $ 1,679 $ 798 $ 2,968 $ 5,798 $ 130 $ 231
Basic
earnings per
weighted-
average
common share
outstanding:
Income
from
continuing
$ 0.29 $ 0.20 $ 0.09 $ 0.30 $ 0.50 $ 0.02 $ 0.03
operations
Diluted
earnings per
weighted-
average
common share
outstanding:
Income
from
continuing
$ 0.29 $ 0.20 $ 0.09 $ 0.29 $ 0.49 $ 0.02 $ 0.03
operations
</TABLE>
<PAGE>
PLM INTERNATIONAL, INC.
SELECTED CONSOLIDATED PRO FORMA
FINANCIAL DATA
Three Months Ended
Year Ended December 31, March 31,
----------------------------------------------------------
Pro Forma(1) Pro Forma(1)
--------------------------------------------------------
1999 1998 1997 2000 1999
------- -------- ------- ------- ------
(in thousands, except per share mounts)
Income
Statement Data
Total revenues $ 11,584 $ 18,799 $ 23,535 $ 2,435 $ 3,161
Operations (1,405) (5,986) (8,663) (221) (470)
support
Depreciation (477) (1,066) (2,817) (157) (118)
and
amortization
General and (6,828) (7,624) (9,536) (1,586) (1,484)
administrative
---------------------------------------------------------
Operating 2,874 4,123 2,519 471 1,089
income
Interest (2,261) (2,072) (3,371) (431) (543)
expense
Interest income 343 941 1,311 203 97
Other income 721 473 (340) -- --
(expense)
(Provision for)
benefit from
Income tax (646) (1,400) 523 (93) (249)
---------------------------------------------------------
Income from
continuing
Operations $ 1,031 $ 2,065 $ 642 $ 150 $ 394
=========================================================
Basic earnings
per weighted-
Average
common share
Outstanding:
Income from
continuing
Operations $ 0.13 $ 0.25 $ 0.07 $ 0.02 $ 0.05
Diluted
earnings per
weighted-
Average
common share
Outstanding:
Income from
continuing
Operations $ 0.13 $ 0.24 $ 0.07 $ 0.02 $ 0.05
---------------------
(1) Gives effect to the proposed transaction for the sale of the assets
of the trailer leasing division assuming the transaction occurred
on January 1, 1997. See "Unaudited Pro Forma Consolidated Financial
Information."
<PAGE>
<TABLE>
<CAPTION>
PLM INTERNATIONAL, INC.
SELECTED CONSOLIDATED PRO FORMA AND
HISTORICAL FINANCIAL DATA
As of December 31, As of March 31,
---------------------------------------------------------- ----------------------------------
Pro Forma
Historical Historical <F1>(1)
---------------------------------------------------------- --------------------
1999 1998 1997 1996 1995 2000 1999 2000
-------- -------- -------- -------- -------- -------- -------- --------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents $ 2,089 $ 8,786 $ 5,224 $ 7,638 $ 13,764 $ 22,636 $ 3,903 $ 54,070
Receivables 8,437 5,003 3,461 3,744 4,571 10,329 4,878 5,563
Receivables from 2,962 2,944 5,007 6,019 8,690 4,248 2,766 4,248
affiliates
Assets held for sale -- -- -- 6,222 719 -- 6,841 --
Net assets of
discontinued
Operations 30,990 32,930 32,957 19,254 2,640 -- 25,505 --
Equity interest in 18,145 22,588 26,442 30,407 27,566 18,165 21,797 18,165
affiliates
Transportation equipment
held for operating
leases, net 81,907 47,528 23,271 24,796 47,840 84,974 54,071 --
Restricted cash and cash
Equivalents 1,812 2,261 14,503 14,662 10,621 1,477 2,670 1,434
Other assets, net 5,855 5,506 7,706 7,339 9,798 7,815 5,780 7,335
------------------------------------------------------------------------------------ ----------
Total assets $ 152,197 $ 127,546 $ 118,571 $ 120,081 $ 126,209 $ 149,644 $ 128,211 $ 90,815
==================================================================================== ==========
Short-term secured debt $ -- $ -- $ -- $ 4,080 $ -- $ -- $ 11,271 $ --
Long-term secured debt 80,200 56,047 44,844 43,618 47,853 76,255 52,398 18,799
Payables and other 8,445 9,675 11,996 10,367 13,880 8,570 8,629 7,356
liabilities
Deferred income taxes 14,139 11,627 14,860 15,334 15,493 15,503 5,789 10,901
Minority interest -- -- 323 362 363 -- -- --
Shareholders' equity 49,413 50,197 46,548 46,320 48,620 49,316 50,124 53,759
Total liabilities,
minority
interest, and
------------------------------------------------------------------------------------ ----------
Shareholders' equity $ 152,197 $ 127,546 $ 118,571 $ 120,081 $ 126,209 $ 149,644 $ 128,211 $ 90,815
==================================================================================== ==========
<FN>
-----------------
<F1>
(1) Gives effect to the proposed transaction for the sale of the assets of the
trailer leasing division assuming the transaction occurred on March 31,
2000.
</FN>
</TABLE>
<PAGE>
INTRODUCTION
This proxy statement and the accompanying form of proxy are being
furnished to the holders of shares of common stock, $.01 par value, of PLM
International, Inc., a Delaware corporation, in connection with the solicitation
of proxies by the Board of Directors of PLM for use at the special meeting of
the stockholders of PLM to be held on August 25, 2000, at the World Trade Club,
World Trade Center, Suite 300, The Embarcadero at the foot of Market Street, San
Francisco, California, at 9:00 a.m., local time.
THE COMPANY
We are a diversified equipment leasing corporation that owns and
manages transportation equipment, both domestically and internationally, formed
in Delaware in 1987. Through May 1996, we also syndicated investment programs
organized to invest primarily in transportation and related equipment. We
continue to manage these syndicated investment programs. We operate and manage
transportation equipment and related assets with a combined original cost of
approximately $900 million for our own account and for various investment
programs and third-party investors. We also owned 100% of the stock of American
Finance Group, Inc., which owned and leased industrial and commercial equipment
for its own account and for third party investors, until March 1, 2000 when we
completed the sale of American Finance Group's stock to Guaranty Federal Bank.
We are using the proceeds of this sale for day to day operations, including the
purchase of additional trailers.
As of May 31, 2000, we and our subsidiaries, including the companies
through which we carry on the trailer leasing operations, employed 130 persons.
After the sale of our trailer leasing operations, our sole remaining
business will be the management of investment programs, and we are also seeking
a buyer for that business or for PLM. These investment programs are designed to
liquidate over a period of time through 2007. We would like to emphasize that
the proposed sale of the trailer leasing operations is not conditioned on
finding a buyer for PLM or PLM's remaining business, which search is in a
preliminary stage. Any such sale would require further stockholder action in the
form of another stockholder vote or a tender of shares, or perhaps both.
THE SPECIAL MEETING
DATE, TIME AND PLACE
The special meeting is scheduled to be held at the World Trade Club,
World Trade Center, Suite 300, The Embarcadero at the foot of Market Street, San
Francisco, California, on August 25, 2000, beginning at 9:00 a.m., local time.
MATTERS TO BE CONSIDERED
At the special meeting, PLM stockholders will be asked to consider and
vote upon a proposal to authorize the sale to Marubeni America Corporation, a
New York corporation whose address is 450 Lexington Avenue, New York, New York
10017, of our trailer leasing operations, pursuant to the terms and conditions
of the Asset Purchase Agreement, dated as of May 24, 2000, by and between
Marubeni and us. See "The Proposed Sale" beginning on page 12 and "Terms of the
Asset Purchase Agreement" beginning on page 19. Our Board of Directors knows of
no other matters that will be presented for consideration at the special
meeting. If any other matters properly come before the special meeting, the
persons named in the enclosed form of proxy or their substitutes will vote in
accordance with their best judgment on such matters.
<PAGE>
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Our Board of Directors has fixed the close of business on July 20, 2000 as
the record date for the determination of the holders of PLM's common stock
entitled to notice of and to vote at the special meeting.
Only holders of record of PLM common stock as of the close of business on
the record date will be entitled to notice of and to vote at the special
meeting. As of the record date, there were 7,408,510 shares of PLM common stock
outstanding and entitled to vote at the special meeting, held by approximately
2,912 stockholders of record, with each share entitled to one vote.
QUORUM; VOTE REQUIRED
The presence, in person or represented by proxy, of the holders of a
majority of the shares of common stock issued and outstanding and entitled to
vote at the special meeting will constitute a quorum.
We have been advised by counsel that the proposed sale may constitute a
sale of "substantially all" of our assets under the Delaware General Corporation
Law although existing legal precedent does not provide a definitive conclusion
on this point. Under Section 271 of the Delaware General Corporation Law, a sale
of substantially all of a corporation's assets must be authorized by the
affirmative vote of the holders of a majority of the shares of outstanding stock
entitled to vote. Since the issue of whether the proposed sale constitutes a
sale of "substantially all" of our assets is not entirely clear, we have decided
to submit the proposed sale to PLM stockholders to avoid any uncertainty.
Accordingly, the proposed sale will not be completed unless it receives the
affirmative vote of a majority of the shares of PLM common stock entitled to
vote at the special meeting.
VOTING AND REVOCATION OF PROXIES
Stockholders are requested to complete, date, sign and promptly return the
accompanying form of proxy in the enclosed envelope. Shares of PLM common stock
represented by properly executed proxies received by PLM and not revoked will be
voted at the special meeting in accordance with the instructions contained in
the proxy cards. If instructions are not given, proxies will be voted FOR
authorization of the proposed sale. However, brokers do not have discretionary
authority to vote shares held in street name. Therefore, the failure of
beneficial owners of shares held in street name to give voting instructions to
brokers will result in broker non-votes. Broker non-votes, abstentions and the
failure to vote will have the same affect as votes cast against authorization of
the proposed sale.
If any other matters are properly presented at the special meeting for
consideration, the persons named in the enclosed form of proxy and acting under
the proxy will have discretion to vote on such matters in accordance with their
best judgment. Because our by-laws require advance notice of any business to be
properly transacted at a meeting of stockholders, our Board of Directors does
not expect any other matters to be presented at the special meeting, and the
persons named in the enclosed form of proxy will not use their discretionary
authority to present any material matters not discussed in this proxy statement.
In addition, we do not expect any changes to the terms of the proposed sale
described in this proxy statement, and the persons named in the enclosed form of
proxy will not use their discretionary authority to approve any changes to the
proposed sale that are materially different than the terms of the proposed sale
described in this proxy statement without giving stockholders an opportunity to
change their vote.
Any proxy card signed and returned by a stockholder may be revoked at any
time before it is voted either by delivering to the Secretary of PLM, at the
address of PLM set forth in this proxy statement, written notice of such
revocation or a duly executed proxy bearing a later date or by attending the
special meeting and voting in person. Attendance at the special meeting will
not, in and of itself, constitute revocation of a proxy.
<PAGE>
PROXY SOLICITATION
We will bear the costs of solicitation of proxies for the special meeting.
In addition to solicitation by mail, our directors, officers and regular
employees may solicit proxies from stockholders by telephone, telegram, personal
interview or otherwise. Our directors, officers and employees will not receive
additional compensation but may be reimbursed for out-of-pocket expenses in
connection with their solicitation of proxies. In addition to solicitation by
directors, officers and regular employees, we have retained MacKenzie Partners,
Inc. to aid in the solicitation of proxies for the special meeting. The fee for
such services is not expected to exceed $10,500, which will be borne by us.
Brokers, nominees, fiduciaries and other custodians have been requested to
forward soliciting material to the beneficial owners of shares of PLM common
stock held of record by them, and such custodians will be reimbursed by us for
their reasonable expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us
with respect to beneficial ownership of the common stock by (a) each stockholder
known by us to be the beneficial owner of more than 5% of the common stock, (b)
each of our directors, executive officers, and key executive officers of our
subsidiaries, and (c) all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Shares of Common Percent of Common Stock<F1>(1)
Name and Address of Beneficial Owner Stock<F1>(1)
---------------------------------------------------------- ---------------------------- ---------------------------
<S> <C> <C>
Steel Partners II, L.P<F2>(2) ........................... 1,337,300 18.05%
150 E. 52nd Street
New York, New York 10022
Dimensional Fund Advisors, Inc.<F3>(3)................... 501,600 6.77%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Oak Forest Investment Management, Inc.<F4>(4)............ 464,200 6.27%
6701 Democracy Blvd., Ste. 402
Bethesda, MD 20817
Stephen M. Bess<F5>(5)................................... 53,354 *
Randall L-W. Caudill<F6>(6).............................. 12,000 *
Douglas P. Goodrich<F7>(7)............................... 212,143 2.82%
Warren G. Lichtenstein<F8>(8)........................... 1,340,633 18.09%
750 Lexington Avenue, 27th Floor
New York, New York 10022
Howard M. Lorber<F9>(9).................................. 3,333 *
Susan C. Santo<F10>(10)................................... 29,166 *
Harold R. Somerset<F11>(11)............................... 46,000 *
Robert N. Tidball<F12>(12)................................ 377,338 5.03%
Robert L. Witt<F13>(13)................................... 15,000 *
All directors and executive officers as a group (10
people)<F14>(14).......................................... 2,122,050 27.36%
------------------
* Represents less than 1% of the outstanding shares.
<FN>
<F1>
(1) Computed on the basis of 7,408,510 shares of common stock outstanding
(excluding treasury stock) as of July 20, 2000. Beneficial ownership as
reported in the above table has been determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
<F2>
(2) As reported on Schedule 13D/A Amendment 6 filed with the Securities and
Exchange Commission on April 30, 1998, Steel Partners II, L.P. holds
1,337,300 shares. The general partner of Steel Partners II, L.P. is
Steel Partners L.L.C., of which Mr. Lichtenstein is the chief executive
officer, and Steel Partners II, L.P. reports that Mr. Lichtenstein may
be deemed to be the beneficial owner of all of such shares by virtue of
his power to vote and dispose of such shares.
<F3>
(3) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 3, 2000, Dimensional Fund Advisors Inc. holds
501,600 shares as investment advisor and investment manager on behalf
of four investment companies registered under the Investment Company
Act of 1940 and other investment vehicles, including commingled group
trusts. In its role as investment advisor and investment manager,
Dimensional Fund Advisors Inc. reports that it possesses both voting
and investment power over the shares, and Dimensional Fund Advisors
Inc. disclaims beneficial ownership of all such shares.
<F4>
(4) As reported on Schedule 13G/A filed with the Securities and Exchange
Commission on February 8, 2000, Oak Forest Investment Management, Inc.
holds 464,200 shares as an investment advisor registered under the
Investment Company Act of 1940. In its role as investment advisor, Oak
Forest Investment Management, Inc. reports that it possesses both the
power to vote and to dispose or direct the disposition of all such
shares.
<F5>
(5) Includes 23,333 shares of common stock issuable to Mr. Bess pursuant to
options exercisable within 60 days of July 20, 2000.
<F6>
(6) Includes 10,000 shares of common stock issuable to Mr. Caudill pursuant
to options exercisable within 60 days of July 20, 2000.
<F7>
(7) Includes 111,666 shares of common stock issuable to Mr. Goodrich
pursuant to options exercisable within 60 days of July 20, 2000.
<F8>
(8) Includes 1,337,300 shares held by Steel Partners II, L.P. The general
partner of Steel Partners II, L.P. is Steel Partners L.L.C., of which
Mr. Lichtenstein is the chief executive officer. Mr. Lichtenstein may
be deemed to be the beneficial owner of all of such shares by virtue of
his power to vote and dispose of such shares. Also includes 3,333
shares of common stock issuable to Mr. Lichtenstein pursuant to options
exercisable within 60 days of July 20, 2000.
<F9>
(9) Comprised of 3,333 shares of common stock issuable to Mr. Lorber
pursuant to options exercisable within 60 days of July 20, 2000.
<F10>
(10) Includes 26,666 shares of common stock issuable to Ms. Santo pursuant
to options exercisable within 60 days of July 20, 2000.
<F11>
(11) Includes 40,000 shares of common stock issuable to Mr. Somerset
pursuant to options exercisable within 60 days of July 20, 2000.
<F12>
(12) Includes 93,333 shares of common stock issuable to Mr. Tidball pursuant
to options exercisable within 60 days of July 20, 2000.
<F13>
(13) Includes 10,000 shares of common stock issuable to Mr. Witt pursuant to
options exercisable within 60 days of July 20, 2000.
<F14>
(14) Includes 348,330 shares of common stock issuable to members of the
Board of Directors and executive officers pursuant to options
exercisable within 60 days of July 20, 2000.
</FN>
</TABLE>
<PAGE>
THE PROPOSED SALE
GENERAL
Pursuant to the terms of the Asset Purchase Agreement, we propose to sell
to Marubeni the assets and liabilities of our trailer leasing operations. The
purchase price for the trailer leasing operations is based on the net book value
of specific assets and liabilities of the trailer leasing operations as of the
closing date of the transaction, including new trailer assets purchased up to
that date, plus a premium of $13.6 million. We expect the closing date to be
August 31, 2000. In that event, the purchase price that would be paid to us
would be approximately $65.8 million and Marubeni would assume approximately
$49.1 million in debt and other liabilities. At the completion of the proposed
sale, we will enter into a Transition Services Agreement with Marubeni. Under
that agreement we will be paid a monthly fee to provide various accounting and
administrative services to Marubeni for a limited period of time. See
"Transition Services Agreement" on page 25.
DESCRIPTION OF TRAILER LEASING OPERATIONS
Our trailer leasing operations specialize in the short-term rental of
refrigerated trailers from 22 rental yards located throughout the United States,
and our fleet includes approximately 2,660 refrigerated trailers and 1,340 dry
van trailers. Since 1996 we have focused our efforts on growing the refrigerated
trailer business and have targeted the foodservice distribution segment of the
food industry. We offer short-term leases of refrigerated trailers that are
specifically designed for the food service industry. This allows our customers
the opportunity to lease refrigerated trailers at peak times only, and to have
trailers in service while awaiting the arrival of additional trailers for their
permanent fleet. We have found that our customers are willing to pay
significantly higher lease rates for the flexibility of short-term rentals. For
the year ended December 31, 1999, our trailer leasing operations generated
approximately $25.7 million of revenues and $12.9 million of earnings before
interest, taxes, depreciation and amortization. For the three months ended March
31, 2000 our trailer leasing operations generated approximately $7.5 million of
revenues and $3.4 million of earnings before interest, taxes, depreciation and
amortization. Historical financial information for our trailer leasing
operations is set forth under the heading "Trailer Leasing" in the discussion of
our operating segments included as Note 16 in our consolidated financial
statements as of December 31, 1999 and 1998, which is included with the
materials mailed with this proxy statement.
BACKGROUND OF THE PROPOSED SALE
On an on-going basis, we consider various alternatives to maximize our
stockholders' value. Most recently, we completed the sale of our wholly owned
subsidiary, American Finance Group, Inc., after determining that we could not
effectively continue to build that business. Soon after negotiating the sale of
American Finance Group, in November 1999, we engaged Imperial Capital to review
additional strategic alternatives to maximize shareholder value, including the
sale of either one of our businesses, and to advise us concerning those
alternatives. In connection with Imperial Capital's engagement, we determined
that the aggregate value of our two businesses was greater than the value
reflected in our stock price. We also determined that the trailer leasing
operations could more readily and profitably be sold separately rather than as a
part of a sale of the company as a whole.
As part of its engagement, Imperial Capital distributed information
describing our trailer leasing operations and the trailer assets of our managed
investment programs to over 200 parties, including competitors, leasing
companies and financial buyers. The information was delivered under cover of a
confidentiality agreement, which, if signed, would allow such parties to receive
non-public information about the trailer leasing operations and assets. Imperial
Capital received over 50 signed confidentiality agreements and subsequently sent
a confidential offering memorandum to the interested parties. The confidential
offering memorandum includes the financial projections that are attached as
Annex C to this proxy statement. These financial projections were prepared by
us, and reflect various assumptions concerning anticipated results. These
projections are therefore subject to significant business, economic and
competitive uncertainties beyond our control. Consequently, these projections
are likely to vary from our actual results of operations, and those variations
could be material.
Imperial Capital received, on our behalf, six letters of interest and two
verbal indications of interest for the purchase of our trailer leasing
operations and the trailer assets of the managed investment programs or some
portion of those assets. The bids for the purchase of our trailer leasing
operations and the trailer assets of the managed investment programs ranged from
$80 million to approximately $130 million, including an expression of interest
by a third party for between $110 million and $130 million based on assets as of
November 30, 1999, and an expression of interest from Marubeni for $128 million
based on the net book value of assets as of December 31, 1999. Each of these was
subject to further due diligence and adjustments based on the purchase of
additional equipment following the dates listed above, and Marubeni's bid was
subject to further adjustment based on changes in the net book value of the
assets over time. The third party who provided an expression of interest for
between $110 million and $130 million decreased its bid during the time that it
conducted its due diligence, and indicated that this amount was subject to
further adjustment.
After receipt of the third party's revised expression of interest and
prior to our receipt of Marubeni's expression of interest, we entered into a
letter agreement with the third party which gave that party the exclusive right
to conduct due diligence and to negotiate with us for a specified list of
assets, including all of our trailer assets and certain of those owned by the
managed investment programs, in each case as of November 30, 1999. The letter
agreement stated that we would pay the third party a termination fee of $2
million if (a) we received a proposal from another party for the assets
described in the letter agreement during the period that the third party was
negotiating with us in good faith, and (b) within twelve months of the end of
such period we entered into an agreement for those assets with such other party
for a purchase price greater than the revised amount the third party was willing
to pay.
During and after extensive due diligence by the two leading bidders
(Marubeni and the third party), which included visits to all our rental yards
and a thorough examination of our books, records and customer lists, we
negotiated the terms and conditions of an asset purchase agreement with both
parties. The negotiations with the third party terminated when we reached an
impasse regarding certain of the terms and conditions, including indemnification
obligations, the right of our Board to exercise its fiduciary obligations, a
maximum payment in the event the transaction was cancelled, and adjustments to
the purchase price. The negotiations with Marubeni resulted in Marubeni's
agreement to purchase our trailer leasing operations for the net book value of
specific assets and liabilities plus a premium of $13.6 million and a premium of
$8.4 million for the assets Marubeni will purchase in the Related Transaction.
The purchase price agreed to between Marubeni and us is in excess of the amount
that was being negotiated with the third party, however we will be unable to
determine whether the conditions for our payment of the $2 million termination
fee have been met as a result of our entering into the Asset Purchase Agreement
with Marubeni until the transaction is completed. Therefore, if we determine
that the conditions have been met, we would be required to pay the third party
$2 million promptly after the closing.
REASONS FOR THE PROPOSED SALE
In reaching its decision to recommend and approve the Asset Purchase
Agreement, our Board of Directors consulted with its advisors and considered the
following factors:
o Our determination that the value of the trailer leasing operations was
greater than the value reflected in our stock price and that this
business could more readily and profitably be sold separately rather
than as a part of a sale of the company as a whole;
o Marubeni will pay us all cash;
o The consideration that Marubeni will pay us and the terms and
conditions that we agreed to with Marubeni are superior to all other
offers received;
o The Asset Purchase Agreement does not contain a financing condition for
Marubeni and, accordingly, we are not taking the risk that Marubeni
will be unable to obtain financing for the proposed sale;
o The other terms of the Asset Purchase Agreement, which is the product
of extensive, arm's-length negotiations;
o The fact that Marubeni intends to make an offer of employment to a
significant number of the employees of the trailer leasing operations.
Our Board of Directors understood that one of its members, who is also
an employee of ours, would be offered an executive position with
Marubeni.
o Our Board of Directors determined that the consideration to be received
for our trailer leasing operations is fair, based on its assessment of
the business and financial results of the trailer leasing operations as
well as the opinion of Imperial Capital, our financial advisor, that
the consideration that we would receive in the proposed sale is fair to
us and our stockholders from a financial point of view; and
o The risk arising from the fact that the sale of our trailer leasing
operations will reduce significantly our revenues and income from
operations and the related fact that the timely sale of our remaining
operations will be important in order to maximize shareholders' value.
No other factors considered by our Board of Directors were considered
material to its decision to approve the Asset Purchase Agreement and the
transactions contemplated by the agreement. Our Board of Directors did not find
it practical to and did not quantify or attempt to attach relative weight to any
of the specific factors that it considered. Our Board of Directors, however, did
find that the positive factors listed above outweighed the potential risks of
the proposed sale and found the opportunity to generate increased stockholder
value through completion of the proposed sale compelling.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
At a special meeting held on May 12, 2000 to consider the Asset Purchase
Agreement, our Board of Directors unanimously approved the proposed sale as
being in the best interests of PLM and its stockholders. FOR THE REASONS
DISCUSSED ABOVE, OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PLM
STOCKHOLDERS VOTE "FOR" THE PROPOSED SALE.
OPINION OF FINANCIAL ADVISOR
Imperial Capital, as part of its engagement by us, rendered an opinion as
to whether the proposed consideration to be received by us was fair to us from a
financial point of view. The full text of the Imperial Capital opinion, dated
May 17, 2000, which sets forth the assumptions made, procedures followed,
matters considered and limitations on the review undertaken, is attached as
Annex B to this document. You should read the Imperial Capital opinion carefully
and in its entirety. This summary of the Imperial Capital opinion is qualified
in its entirety by reference to the full text of the Imperial Capital opinion.
In connection with our Board of Directors' review of the Asset Purchase
Agreement, Imperial Capital delivered its preliminary opinion on May 12, 2000,
to the effect that, as of that date, and based upon its review and assumptions
and subject to the limitations summarized below, the consideration to be
received by us is fair to us from a financial point of view. The preliminary
opinion was finalized on May 17, 2000. The Imperial Capital opinion was prepared
at the request and for the benefit of our Board of Directors and does not
constitute a recommendation to any holder of PLM common stock as to how to vote
with respect to the transaction.
In connection with rendering its opinion, Imperial Capital, among other things:
o Analyzed certain historical business and financial information relating
to us and our trailer leasing operations, including our Annual Report
on Form 10-K for the year ended December 31, 1999, and our Quarterly
Report on Form 10-Q for the period ended March 31, 2000;
o Reviewed certain financial forecasts and other data provided to
Imperial Capital by us relating to our trailer leasing operations,
including the most recent business plans prepared by our senior
management responsible for day-to-day management of our trailer leasing
operations;
o Conducted discussions with members of our senior management with
respect to the historical operations, businesses and prospects of our
trailer leasing business, the strategic objectives of such business and
possible benefits that may be realized;
o Reviewed public information with respect to certain other companies
with financial profiles that Imperial Capital deemed to be generally
comparable in whole or in part to that of our trailer leasing
operations;
o Reviewed the historical market prices and trading activity for our
common stock and compared them with those of certain publicly traded
companies that Imperial Capital deemed relevant;
o Prepared and delivered to over 200 potential financial and strategic
buyers an executive summary describing our trailer leasing operations
and subsequently prepared and delivered to over 50 interested parties a
confidential information memorandum describing our trailer leasing
operations;
o Received six written letters of interest and two oral indications of
interest to purchase our trailer leasing operations and certain of the
trailer assets owned by investment programs managed by our subsidiary;
and
o Conducted such other financial studies, analyses and investigations as
Imperial Capital deemed appropriate.
In preparing its opinion, Imperial Capital relied on the accuracy and
completeness of the foregoing financial and other information and did not assume
responsibility for independent verification of such information or conduct any
independent valuation or appraisal of any of our assets, nor were they furnished
with any such appraisals. With respect to the financial forecasts, Imperial
Capital assumed, with our consent, that the financial forecasts were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of our management as to the future financial performance of our
trailer leasing operations. Imperial Capital also relied upon assurances of our
senior management that they were unaware of any facts that would make the
information or financial forecasts provided to Imperial Capital incomplete or
misleading. Imperial Capital assumed no responsibility for, and expressed no
view as to, such forecasts or the assumptions on which they were based.
The Imperial Capital opinion was based upon economic, monetary and
market conditions existing on the date of the opinion. Imperial Capital
expressed no opinion, nor should one be implied, as to the fair market value of
PLM's common stock or the prices at which PLM's common stock will trade at any
time.
The Imperial Capital opinion does not address the business decision of
our Board of Directors to engage in the transaction or the relative merits of
any alternatives. We did not place any limitations upon Imperial Capital with
respect to the procedures followed or factors considered in rendering its
opinion.
The following paragraphs summarize the significant analyses performed
by Imperial Capital in arriving at its opinion.
AUCTION PROCESS ANALYSIS. Imperial Capital believes that a company is
able to best determine the fair value of any of its operations by soliciting
bids from a number of the most logical buyers of those operations. This is
considered to be an auction process. As part of the auction process for our
trailer leasing operations, Imperial Capital distributed information describing
our trailer leasing operations to over 200 parties, including competitors,
leasing companies and financial institutions. The information was delivered with
a confidentiality agreement which, if signed, would allow the parties who signed
it to receive non-public information about our trailer leasing operations.
Imperial Capital received over 50 signed confidentiality agreements and
subsequently sent additional information to those parties. Imperial Capital
received, on our behalf, six letters of interest and two verbal bids for some or
all of our trailer leasing operations and certain of the trailer assets owned by
investment programs managed by one of our subsidiaries. The bids for our trailer
leasing operations and the trailer assets of the investment programs ranged from
$80 million to approximately $130 million. The two parties who submitted the
leading bids conducted extensive due diligence, including visits by those
parties to all our rental yards and a thorough examination of our books, records
and customer lists. After this due diligence period, we reached an agreement
with Marubeni pursuant to which Marubeni would purchase our trailer leasing
operations for the net book value of specific assets and liabilities, plus a
premium of $13.6 million, plus the assumption of debt. We estimate that, based
on the closing of the sale on or about August 31, 2000, Marubeni will pay us
$65.8 million in cash and assume $49.1 million in debt, for a total purchase
price of $114.9 million, as described elsewhere in this document (this amount
does not include the amount Marubeni will pay for the trailer assets of the
investment programs).
SELECTED COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available
information, Imperial Capital compared selected historical and projected
financial, operating and stock market performance data of our trailer leasing
operations to the corresponding data of certain publicly traded companies that
Imperial Capital deemed to be relevant for the purposes of comparison to our
trailer leasing operations. The comparable companies that Imperial Capital
identified are Rollins Truck Leasing Corp., Ryder Systems, Inc., and XTRA
Corporation.
Imperial Capital reviewed, among other information, the comparable
companies' multiples of total enterprise value ("TEV"), which consists of the
market value of equity plus total long-term debt and preferred stock less cash
and cash equivalents to:
o Latest twelve months revenue;
o Latest twelve months earnings before interest, taxes, depreciation and
amortization ("EBITDA");
o Latest twelve months earnings before interest and taxes ("EBIT");
o Latest twelve months free cash flow;
o Latest twelve months net income; and
o Latest twelve months book capitalization.
The comparable companies analysis resulted in the following range of
values as of May 8, 2000:
Analysis Range Median
TEV/Latest twelve months revenue 0.7x to 3.0x 2.2x
TEV/Latest twelve months EBITDA 2.3x to 4.6x 4.3x
TEV/Latest twelve months EBIT 3.8x to 10.8x 8.9x
TEV/Latest twelve months free cash flow Not meaningful to
TEV/Latest twelve months net income 23.4x to 31.0x 30.0x
TEV/Latest twelve months book capitalization 1.0x to 1.2x 1.2x
Imperial Capital determined that the most relevant multiple to utilize
was the TEV/EBITDA multiple based on the fact that this multiple is commonly
used and accepted in the financial industry for this type of analysis. Applying
the EBITDA of our trailer leasing operations for the latest twelve months ended
April 30, 2000 to the multiple range described above results in a TEV of between
$36-$72 million, which is less than the estimated $114.9 million consideration
that we will receive from Marubeni.
DISCOUNTED CASH FLOW ANALYSIS. Imperial Capital analyzed the
unleveraged after-tax cash flows of our trailer leasing operations based on
financial projections prepared by our management for five years. The discounted
cash flow analysis determined the present value of the unleveraged after-tax
cash flows generated over the projection period and then added a terminal value
based on ranges of multiples of EBITDA. Imperial Capital also analyzed the
present value of unleveraged after-tax cash flows assuming a range of perpetual
growth rates that Imperial Capital deemed relevant. For purposes of its
analysis, Imperial Capital used the revenue growth projections provided by our
management through 2004 and growth rates of 9.1% for periods thereafter. In
determining the present value, Imperial Capital used discount rates that it
deemed appropriate. Given the nature of our trailer leasing operations, market
position, volatility of revenues, cash flow and earnings and the illiquidity of
its equity and/or ownership interests as a small public company, Imperial
Capital chose a discount rate in the range of 10 - 18% for which to discount the
projected cash flow of our trailer leasing operations. This discounted cash flow
analysis indicated an aggregate net present value for our trailer leasing
operations of $ 53.0 million to $ 124.9 million.
ANALYSES SUMMARY. Imperial Capital performed an auction process that
produced eight competitive bids and resulted in Marubeni's agreement to purchase
our assets and assume our liabilities for approximately $114.9 million (based on
anticipated closing date of this transaction of August 31, 2000). Additionally,
Imperial Capital performed a discounted cash flow analysis and comparable public
company analysis, which resulted in valuations of $53 - $124.9 million and $36 -
$72 million, respectively. Both of these valuation ranges are indicative of the
fairness and attractiveness of the purchase price.
The summary of the Imperial Capital opinion set forth above describes
in all material respects, but is not a complete description of the data or
analyses presented by Imperial Capital. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant
quantitative methods of financial analyses and the application of those methods
to the particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. Accordingly, Imperial
Capital's analysis must be considered as a whole. The review of only a portion
of Imperial Capital's analysis and of the factors considered, without reviewing
all analyses and factors, could create a misleading or incomplete view of the
process underlying the Imperial Capital opinion.
We entered into an engagement letter with Imperial Capital dated
November 3, 1999. Under the terms of that engagement letter, Imperial Capital
earned a fee of $175,000 for rendering the Imperial Capital opinion, independent
of the result of the opinion. In addition, PLM will pay Imperial Capital a fee,
payable upon completion of the sale of our trailers, of approximately $1.1
million, against which the opinion fee will be credited, and will be reimbursed
for certain of its out-of-pocket expenses. Imperial Capital will not be entitled
to any additional fees or compensation in the event the transaction is not
approved or otherwise consummated. We also agreed, under a separate agreement,
to indemnify Imperial Capital, its affiliates and each of its directors,
officers, agents and employees and each person, if any, controlling Imperial
Capital or any of its affiliates against certain liabilities, including
liabilities under federal securities laws.
In the ordinary course of its business and in accordance with applicable
state and federal securities laws, Imperial Capital may trade PLM securities for
its own account and for the accounts of customers and, accordingly, may at any
time hold long or short positions in such securities.
USE OF PROCEEDS
We estimate that we will receive net after-tax proceeds of approximately
$45.9 million upon completion of the proposed sale. We plan to invest these
proceeds in short-term money market accounts while our Board of Directors
evaluates the following strategic alternatives:
o The repurchase of PLM shares pursuant to PLM's share repurchase
program.
o A self-tender for PLM shares.
o A distribution to shareholders from the net proceeds.
Our Board of Directors will consider the tax and financial aspects of
these alternatives in determining which alternative or combination of
alternatives to pursue. Although the net proceeds of the sale may be held in
interest-bearing accounts pending our Board's decision, the attached proforma
financial statements do not reflect any interest income that might be earned by
those accounts.
<PAGE>
ACCOUNTING TREATMENT FOR THE PROPOSED SALE
After the sale, the trailer leasing operations will be treated for
accounting purposes as a discontinued operation. This means that financial
statements for all prior periods will be restated to show the trailer leasing
operations separately from our continuing operations. Our gain on the sale will
be measured by the difference between the amount paid by Marubeni and the net
book value of the assets sold, reduced by transaction costs and applicable
taxes.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The proposed sale of the assets of our trailer leasing operations will not
result in any United States federal income tax consequences to you. The proposed
sale, however, will be a taxable event to us for United States federal income
tax purposes.
APPRAISAL RIGHTS
PLM stockholders are not entitled to appraisal rights under the Delaware
General Corporation Law with respect to the proposed sale or any other
transactions contemplated by the Asset Purchase Agreement.
REGULATORY FILINGS AND APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, Marubeni and we must make appropriate filings with the Federal Trade
Commission and the Antitrust Division of the Department of Justice concerning
the proposed transactions. There is a waiting period of 30 days after we make
these filings during which we can not complete the proposed transactions.
Marubeni and we plan to make the required filings by the end of July, 2000, and
we will both request early termination of this waiting period. If we are not
granted early termination of the waiting period, the waiting period should
expire on August 30, 2000. This waiting period could, however, be extended if
Marubeni or we receive a request for additional information from the FTC or the
Antitrust Division. In practice, complying with a request for additional
information can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises material issues in connection with the proposed
transactions, there may be a delay in the completion of the proposed
transactions while Marubeni and we address these issues.
At any time before or after the completion of the proposed
transactions, the Antitrust Division or the FTC could take any action under the
antitrust laws that they believe is necessary or desirable in the public
interest. This includes prohibiting the proposed transactions, imposing
additional conditions on the proposed transactions, or requiring Marubeni to
sell some of its assets. Additionally, at any time before or after the
completion of the proposed transactions, and even if the waiting period has
expired, any state could take any action under the antitrust laws that it
believes is necessary or desirable in the public interest. Private parties may
also seek to take legal action under the antitrust laws under certain
circumstances.
TERMS OF ASSET PURCHASE AGREEMENT
THE FOLLOWING DISCUSSION OF THE TERMS AND CONDITIONS OF THE ASSET PURCHASE
AGREEMENT, WHILE MATERIALLY COMPLETE, IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO THE PROVISIONS OF THE ASSET PURCHASE AGREEMENT, WHICH IS ATTACHED TO THIS
PROXY STATEMENT AS ANNEX A. TERMS NOT OTHERWISE DEFINED IN THIS DISCUSSION HAVE
THE MEANINGS SET FORTH IN THE ASSET PURCHASE AGREEMENT.
SELLER OF ASSETS
The assets to be sold to, and the liabilities to be assumed by, Marubeni
pursuant to the Asset Purchase Agreement are owned by the following entities:
o PLM International, Inc., a Delaware corporation;
o PLM Rental, Inc., a Delaware corporation (a wholly owned subsidiary of
PLM International, Inc.) which does business as PLM Trailer Leasing;
o TEC AquiSub, Inc., a California corporation (an indirect wholly owned
subsidiary of PLM International, Inc.); and
o PLM Transportation Equipment Corporation, a California corporation (a
wholly owned subsidiary of PLM International, Inc.).
For purposes of the description of the Asset Purchase Agreement that
follows, the sellers listed above are referred to as a group as the "PLM Group."
Any part of the description that follows that applies only to PLM International,
will refer to PLM International as "PLM".
ASSETS AND LIABILITIES OF THE TRAILER LEASING OPERATIONS
The assets to be sold or assigned to Marubeni include the following:
(1) The trailers owned by the PLM Group.
(2) The PLM Group's rights to the trailers leased by the PLM Group from various
financial institutions and the leases relating to such equipment. These leases
are referred to as TRAC leases.
(3) The right to acquire trailers that the PLM Group purchases before the
closing, and for which the PLM Group entered into purchase orders, and the
purchase orders for such trailers.
(4) The accounts receivable and prepayments of the PLM Group relating to the
assets being sold.
(5) The PLM Group's tire and parts inventory for the repair and maintenance of
the trailers.
(6) The leases and subleases for the facilities at which the PLM Group conducts
the trailer leasing operations.
(7) The customer trailer lease agreements, trailer rental agreements, and any
other agreements that the PLM Group has for the lease of the trailers to
customers.
(8) Other equipment, furniture, books, records, software and information systems
contracts used by the PLM Group in operating the trailer leasing operations.
Additionally, the PLM Group will license to Marubeni for 5 years the name "PLM
Trailer Leasing," and related service marks.
The liabilities to be assumed by Marubeni include the following:
(1) The purchase orders that the PLM Group has entered into for the purchase of
trailers.
(2) The leases and subleases for the facilities at which the PLM Group conducts
the trailer leasing operations other than those Marubeni chooses not to assume
as described below.
(3) The customer trailer lease agreements, trailer rental agreements, and any
other agreements that the PLM Group has for the lease of the trailers to
customers.
(4) The TRAC leases.
(5) The loan facility extended to PLM by Mees Pierson, N.V., as the lender.
(6) Various information systems contracts.
Marubeni may, up to 60 days after the date of the Asset Purchase
Agreement, elect not to assume up to 10 of the leased or subleased facilities if
Marubeni has received information about any of those facilities concerning
impairments of title to such facilities that would adversely affect the use of
such facilities, or due to the results of environmental assessments or other
environmental information received by Marubeni concerning such facilities. If
Marubeni has not received or reviewed definitive environmental assessments for
any facilities within 60 days after the date of the Asset Purchase Agreement due
to events beyond the control of Marubeni, Marubeni shall have up to an
additional 30 days, for a total of up to 90 days after the date of the Asset
Purchase Agreement to obtain and review environmental information and to elect
whether to assume those leases or subleases and the closing of the transaction
will be deferred until that time.
LOCATION OF ASSETS
The trailers owned or leased by the PLM Group that will be transferred
to Marubeni are located in various locations throughout the United States,
either in one of the PLM Group's rental yards or on lease to a customer. The PLM
Group leases and operates 22 rental yards. These rental yards are located in
California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland,
Massachusetts, Michigan, Missouri, New Jersey, Pennsylvania, Texas and
Washington. The PLM Group's interest in these facilities as lessee (and in some
cases also as sublessor) will be transferred to Marubeni pursuant to the terms
of the Asset Purchase Agreement other than those Marubeni chooses not to assume.
PURCHASE PRICE
The purchase price for the trailer leasing operations is the net book
value of some of the assets being purchased, less the net book value of some of
the liabilities being assumed (each as of the date of the closing of the
transaction), plus a premium of $13,587,270. The net book value of the assets is
calculated by aggregating the book value of:
o accounts receivable (net of reserves and bad debt allowances);
o the cost of the trailer equipment less accumulated depreciation;
o the cost of property, plant and equipment less accumulated
depreciation;
o prepaid expenses and real property lease deposits; and
o unamortized loan fees.
The net book value of the liabilities is calculated by aggregating the book
value of:
o the obligations under the TRAC leases;
o the principal amounts owing under Mees Pierson loan facility;
o accounts payable;
o accrued sales taxes arising out of the lease of trailer equipment;
o accrued interest on the TRAC leases and the Mees Pierson loan facility;
and
o customer lease deposits.
Marubeni will assume all of these liabilities and other liabilities of
the PLM Group.
ESCROW
Up to $2 million of the purchase price will be paid into an escrow
account to cover any obligations for certain pre-closing sales and use taxes or
employment taxes. In the event any of the escrowed funds are in excess of the
amounts required to be paid by the PLM Group and/or the managed investment
programs for such pre-closing obligations, those amounts will be disbursed to
the PLM Group once Marubeni has received confirmation that it will not be liable
for any such obligations as a successor to the trailer leasing operations of the
PLM Group or as a successor to the assets of the managed investment programs.
The managed investment programs will reimburse the PLM Group for any deductions
made from the escrow account to cover obligations of the managed investment
programs.
RELATED TRANSACTION
In the Related Transaction, Marubeni will purchase additional trailers for
an estimated $25.4 million, based on an anticipated closing date of August 31,
2000, from certain investment programs for which a subsidiary of PLM acts
as general partner or manager, pursuant to a separate purchase agreement
with those programs.
THE CLOSING
The sale and transfer of the assets by the PLM Group to Marubeni will take
place shortly after the special meeting of the PLM shareholders and after all
necessary governmental or regulatory approvals have been obtained.
The anticipated date of the closing is August 31, 2000.
REPRESENTATIONS AND WARRANTIES
The Asset Purchase Agreement contains various representations and
warranties by the PLM Group and Marubeni. These include representations and
warranties by the PLM Group as to (1) the organization and good standing of each
member of the PLM Group; (2) proper authority and requisite approvals; (3) no
violation of any organizing documents or other contracts; (4) ownership of or
valid TRAC leases for all of the trailers to be sold, valid purchase orders for
trailers on order, valid customer leases, insurance, and valid facilities
leases; (5) absence of litigation; (6) consents of government authorities; (7)
consents; (8) compliance with law; (9) assignability of assets and TRAC and
facility leases; (10) brokers, finders and fees; (11) insider interests; (12)
environmental, health and safety matters; (13) accounts receivable and
prepayment items; (14) validity of loan facility; (15) SEC filings and financial
statements; (16) absence of certain changes; (17) taxes; (18) conduct of
business; (19) employees; (20) no material misstatements or omissions; and (21)
ownership of the name "PLM Trailer Leasing" and the related service marks.
The Asset Purchase Agreement also contains representations and warranties
of Marubeni, including representations and warranties as to (1) the organization
and good standing of Marubeni, (2) proper corporate authority and requisite
approvals, (3) no violations of any organizing documents or other contracts, (4)
consents of government authorities, (5) absence of litigation, (6) consents, (7)
brokers, finders and fees and (8) availability of funding.
For a description of the survivability of the representations and
warranties and related indemnification, see "Indemnification; Survival and
Limits of Indemnification Obligations" beginning on page 24.
COVENANTS
The Asset Purchase Agreement also contains various covenants of the PLM
Group. During the period from the date of the Asset Purchase Agreement to the
date the transaction is completed, the PLM Group will (1) give Marubeni full
access to information and make any investigations that Marubeni requests with
respect to the trailer leasing operations of the PLM Group; (2) use commercially
reasonable efforts to obtain all consents necessary to be obtained by the PLM
Group to complete the proposed sale; (3) make all filings which are required
under the Hart-Scott-Rodino Act; (4) prepare and file with the Securities and
Exchange Commission a proxy statement soliciting the approval of PLM's
shareholders; (5) cause the trailer leasing operations to be conducted in the
ordinary course consistent with past practice; (6) use its best efforts to
preserve the trailer leasing operations and to preserve the goodwill of
customers, suppliers and others having business relations with the trailer
leasing business; (7) not materially breach any of its material contracts with
respect to the trailer assets or leased facilities; (8) not solicit, initiate,
encourage, discuss or agree to a transaction for the acquisition of 50% or more
of the net book value of the trailer leasing business and the assets being sold
in the Related Transaction (except that PLM's Board of Directors has the right
to pursue discussions with any party that offers a proposal superior to
Marubeni's in the Board's good faith judgment); (9) notify Marubeni of breaches
of the representations or warranties made by the PLM Group in the Asset Purchase
Agreement; (10) cooperate in Marubeni's efforts to hire employees of the trailer
leasing operations designated by Marubeni; and (11) file with the Securities and
Exchange Commission the Asset Purchase Agreement, the non-competition agreement,
and the license for use of the name "PLM Trailer Leasing." Within 15 days of the
date of the Asset Purchase Agreement PLM will disclose to Marubeni information
relating to environmental, health and safety laws relevant to PLM's trailer
leasing operations. Further, following the closing, the PLM Group will change
the name of the entity PLM Rental, Inc., to another name not confusingly similar
to the name "PLM Rental, Inc."
The Asset Purchase Agreement also contains various covenants of Marubeni.
Marubeni will (1) make all filings which are required under the
Hart-Scott-Rodino Act; (2) offer employment to employees of the PLM Group as
chosen by Marubeni on employment terms at least as favorable as those that those
employees have with the PLM Group; (3) be responsible for all transfer taxes
associated with the transfer to Marubeni of the PLM Group's trailer leasing
operations; (4) notify the PLM Group of breaches of the representations or
warranties made by Marubeni in the Asset Purchase Agreement; (5) arrange for
environmental assessments for all of the trailer leasing facilities to be
provided to Marubeni not later than 50 days after the date of the Asset Purchase
Agreement; and (6) use commercially reasonable efforts to obtain releases of the
PLM Group's obligations under the loan facility, the TRAC leases and the
facilities leases. Following the closing of the transaction, Marubeni will be
responsible for obtaining titles for the trailers in its name.
CONDITIONS
BOTH PARTIES' CLOSING CONDITIONS. The respective obligations of each party
to complete the sale and transfer of the assets of the trailer leasing
operations are subject to the satisfaction or waiver at or prior to the closing
date of various conditions, including the following: (1) the representations and
warranties of each party being true, complete and accurate; (2) each party
having performed and complied with all agreements, obligations and conditions of
the Asset Purchase Agreement; (3) the application waiting period under the
Hart-Scott-Rodino Act expires or terminates; (4) the absence of any action, suit
or proceeding by any governmental body that questions the validity of the sale
of the assets; (5) no injunction, writ or restraining order has been issued by
any court directing that the sale not occur or imposing conditions on the sale;
(6) each party having delivered an opinion of counsel; (7) the stockholders of
PLM having approved the transaction; and (8) each party having entered into an
escrow agreement concerning the amount of the purchase price that will be held
in escrow.
MARUBENI'S CLOSING CONDITIONS. The obligation of Marubeni to complete the
sale and transfer of the assets is further subject to the satisfaction or waiver
on or prior to the closing date of the following conditions: (1) consents under
the TRAC leases, the loan facility, and the facility leases shall have been
obtained; (2) Marubeni shall be purchasing not less than 90% of the net book
value of the PLM Group's trailer leasing operations and the assets being sold in
the Related Transaction; (3) the PLM Group shall have obtained insurance on
behalf of Marubeni for environmental, health and safety matters arising out of
the pre-closing condition of the leased facilities; (4) the PLM Group shall have
entered into a license for the use of the PLM name, a transition services
agreement, and a non-competition agreement; (5) Marubeni shall have consummated
the Related Transaction; (6) Marubeni shall have entered into employment
agreements with a certain number of employees of the PLM Group; and (7) there
shall have been no material adverse change in the trailer leasing business since
March 31, 2000.
PLM GROUP'S CLOSING CONDITIONS. The obligation of the PLM Group to effect
the closing is further subject to the satisfaction or waiver on or prior to the
closing date of the following conditions: (1) Marubeni shall have provided
officers' certificates certifying compliance with the Asset Purchase Agreement
and (2) Marubeni shall have offered employment to a certain number of employees
of the PLM Group.
TERMINATION OR ABANDONMENT
The Asset Purchase Agreement may be terminated or the purchase and sale
may be abandoned at any time prior to the completion of the purchase and sale of
the trailer leasing operations: (1) by mutual written consent of the PLM Group
and Marubeni; (2) by the PLM Group or Marubeni if the completion of the
transaction has not occurred on or prior to September 30, 2000 unless the
failure to complete the sale is the result of the actions or omissions of the
party seeking to terminate the agreement; (3) by either party if the majority of
PLM's stockholders do not approve the transaction; (4) by Marubeni if it
reasonably determines that any representation, warranty or covenant of the PLM
Group has been breached or was not true and correct and such breach under the
Asset Purchase Agreement and/or any similar breaches under the Related
Transaction documents would result in aggregate damages to Marubeni in excess of
$2.2 million; or (5) by the PLM Group if it reasonably believes that any
representation, warranty or covenant of Marubeni has been breached or was not
true and correct.
In the event of abandonment of the transactions contemplated by the Asset
Purchase Agreement, as provided above: (1) each party will return all documents
and materials to the other party; (2) all confidential material will continue to
be treated as confidential as required by the Asset Purchase Agreement; and (3)
neither party shall have any further obligation to any other party except for
breaches of the Asset Purchase Agreement that occur prior to its abandonment. If
(a) PLM fails to have a stockholders' meeting for the purpose of obtaining
approval of the transaction by September 25, 2000 (other than as a result of
events substantially and reasonably beyond the control of PLM), or PLM
materially breaches its obligations to negotiate exclusively with Marubeni; or
(b) the PLM Board of Directors withdraws its unanimous approval or
recommendation of this transaction and PLM stockholder approval is not obtained;
or (c) PLM stockholder approval is not obtained at a meeting duly called, held
and convened for that purpose and a transaction between PLM and a third party
involving at least 50% of the net book value of the trailer leasing operations
and the assets being sold in the Related Transaction occurs within 9 months of
the date of the Asset Purchase Agreement, PLM will be required to pay Marubeni
$3 million.
INDEMNIFICATION; SURVIVAL AND LIMITS OF INDEMNIFICATION OBLIGATIONS
Each of the PLM Group, jointly and severally, has agreed to indemnify,
defend and hold Marubeni and its affiliates harmless from and against all losses
and liabilities incurred by any of Marubeni and its affiliates, resulting from
or relating to: (1) any breach of any representation or warranty of the PLM
Group contained in the Asset Purchase Agreement; (2) any liabilities not assumed
by Marubeni under the Asset Purchase Agreement, (3) the breach of any covenant
or agreement of the PLM Group contained in the Asset Purchase Agreement; and (4)
any liabilities or obligations attributable to any period prior to the closing
of the transaction arising under any environmental or health and safety laws.
PLM has also agreed to be liable for any claim that Marubeni may have under the
Related Transaction. The managed investment programs must reimburse PLM for any
such costs that PLM incurs.
Marubeni will indemnify, defend, and hold the PLM Group and its affiliates
harmless from and against all losses and liabilities incurred by any of the PLM
Group and its affiliates, resulting from: (1) a breach of any representation or
warranty of Marubeni contained in the Asset Purchase Agreement; (2) any
liabilities assumed by Marubeni or arising after the closing of the transaction;
and (3) the breach of any covenant or agreement of Marubeni contained in the
Asset Purchase Agreement.
The representations, warranties and covenants of the PLM Group relating to
the sale of the assets of the trailer leasing operations and assignment of
related contracts, confidentiality, access to books and records, transfer fees
and taxes, the change of the name of "PLM Rental", the filing of related
agreements, retitling, and the indemnification provisions of the Asset Purchase
Agreement shall survive either according to their terms or until the applicable
statute of limitations has expired. All other representations, warranties
covenants and obligations of the PLM Group shall terminate upon the later of
December 31, 2000 or six months after the closing of the transaction, except
that (1) the PLM Group's covenants and indemnification relating to ownership of
the name "PLM Trailer Leasing" and environmental, health and safety liabilities
shall survive for three years following the completion of the transaction and
(2) the PLM Group's representation concerning taxes and obligations for any
liabilities not assumed by Marubeni shall survive until the applicable statute
of limitations has expired. The representations and warranties of Marubeni shall
survive until the applicable statute of limitations has expired.
The PLM Group shall not be required to indemnify Marubeni or any of its
affiliates until the aggregate amount of damages suffered by Marubeni and its
affiliates under the Asset Purchase Agreement and under the Related Transaction
exceeds $1.25 million. If Marubeni's damages reach this amount, PLM has agreed
to indemnify Marubeni for all damages, including the first $1.25 million of
damages. The managed investment programs must reimburse PLM for any such costs
that PLM incurs due to indemnification obligations under the Related Transaction
documents. The PLM Group shall also be responsible for all damages, regardless
of whether the $1.25 million threshold is met, relating to liabilities not
assumed by Marubeni under the Asset Purchase Agreement, including liabilities
arising out of any pre-closing obligations of the PLM Group to pay sales and use
tax in connection with their ownership or leasing of the trailer leasing
operations. The PLM Group's indemnification obligations will not exceed $22.2
million; except for (1) any claim relating to any liability or obligation
attributable to any period prior to the closing of the transactions arising
under any environmental or health and safety law in which event the PLM Group's
indemnification obligation will not exceed the deductible of the insurance
coverage the PLM Group is required to obtain for such claims if such claim is
covered by such insurance, or the maximum amount of such insurance if such claim
is not covered; and (2) any claim arising from any liabilities not assumed by
Marubeni under the Asset Purchase Agreement, including liabilities arising out
of any pre-closing obligations of the PLM Group to pay sales and use tax in
connection with the trailer leasing operations, in which event there will be no
limit to the PLM Group's indemnification obligation.
FEES AND EXPENSES
Whether or not the proposed sale is completed, all costs and expenses
incurred in connection with the Asset Purchase Agreement and the consummation of
the transactions contemplated by the Asset Purchase Agreement will be paid by
the party incurring those expenses, except as specifically provided in the Asset
Purchase Agreement and except that the PLM Group and Marubeni will each bear 50%
of the fee payable in connection with the filings required by the
Hart-Scott-Rodino Act. Marubeni will pay all sales, use, transfer, and other
taxes that may be payable in connection with the sale and transfer of the
purchased assets except (1) taxes or related interest or penalties relating to
activities of the PLM Group prior to the completion of the transaction, (2)
taxes or related interest or penalties that would otherwise not be payable but
for the PLM Group's failure to comply with any required tax filings in
connection with this transaction, and (3) taxes relating to any pre-closing
liabilities of the PLM Group and any interest or penalties relating to the PLM
Group's failure to make any state or local filings that are required in
connection with a transaction of this type if Marubeni requested the PLM Group
to make such filings.
INTELLECTUAL PROPERTY
Marubeni is licensing the name "PLM Trailer Leasing," and other related
service marks on an exclusive basis for a period of 5 years following the
completion of the transactions. PLM and Marubeni will execute a License
Agreement that will permit Marubeni to exclusively use the name "PLM Trailer
Leasing" in connection with the trailer leasing operations of Marubeni or its
affiliates. Within 30 days of the completion of the transaction, PLM Rental,
Inc., will change its name, and the PLM Group shall not use the name "PLM
Trailer Leasing" during the term of the license granted to Marubeni.
TRANSITION SERVICES AGREEMENT
PLM and Marubeni will enter into an agreement whereby PLM or its
affiliates will provide administrative and support services to Marubeni such as
MIS and communications systems and support, rental of headquarters space,
payables and receivables services, tax and accounting services, and other
similar services. Marubeni will pay PLM a monthly fee for these services based
on PLM's cost to provide these services. The term of the agreement will be from
the date of the completion of the transactions until the later of December 31,
2000 or six months after the completion of the transactions. Marubeni may
terminate the services agreement with respect to any one or more of the
categories of services prior to the expiration of the term of the agreement. PLM
may terminate the services agreement if Marubeni fails to pay for the services
PLM provides under the agreement.
NONCOMPETITION AGREEMENT
The PLM Group and Marubeni will enter into an agreement whereby the PLM
Group will agree not to engage in any competitive activities with any trailer
leasing operations of Marubeni, or solicit employees of or divert business from
Marubeni. The PLM Group also will agree not to purchase more than 5% of the
stock of any publicly traded corporation that engages in any of the restricted
activities under the agreement. This agreement will terminate on the earlier of
the date Marubeni no longer operates a trailer leasing or similar business in a
given area (as to that area only), or 5 years from the completion of the
transaction. The agreement will not restrict the PLM Group from being acquired
by any entity that is already engaged in an activity that is competitive with
the trailer leasing operations being sold to Marubeni if that entity will not
use any name that includes the phrase "PLM" in connection
with such competitive activity. Marubeni may assign its assets and rights under
the noncompete agreement to any affiliates or successors to Marubeni, and the
agreement will remain in effect for the benefit of such affiliates or
successors.
<PAGE>
MARKET PRICE DATA; DIVIDENDS
PLM's common stock trades under the ticker symbol "PLM" on the American
Stock Exchange. The table below sets forth, for the calendar periods indicated,
the quarterly high and low prices of PLM common stock as reported by the AMEX.
----------------------------------------------------------------------
HIGH LOW
1998
First Quarter............. $6.250 $5.063
Second Quarter............ 9.250 5.813
Third Quarter............. 7.750 5.438
Fourth Quarter............ 7.000 5.063
----------------------------------------------------------------------
1999
First Quarter............. $6.250 $5.310
Second Quarter............ 6.750 5.500
Third Quarter............. 5.940 4.500
Fourth Quarter............ 6.130 4.440
----------------------------------------------------------------------
2000
First Quarter............. $7.125 $5.750
Second Quarter............ $7.438 $6.250
----------------------------------------------------------------------
On May 23, 2000, the last full trading day before the public announcement
of the proposed sale, the high sales price per share of PLM common stock, as
quoted by the AMEX, was $6.375 and the low sales price per share was $6.250.
The closing sales price for the shares of PLM common stock as reported by
the AMEX on July 20, 2000 (the latest practicable date prior to mailing this
proxy statement) was $6.875. As of the close of business on the record date,
there were approximately 2,912 holders of record of PLM common stock.
On July 24, 1997, PLM redeemed all outstanding share purchase rights under
its Shareholder Rights Plan at a cost of $.01 per right. Between January 1, 1997
and May 23, 2000 PLM repurchased a total of 1,599,651 shares of its common
stock. Since November 1991, PLM has not paid cash dividends on any of its common
stock. See the consolidated financial statements of PLM and the accompanying
notes contained in PLM's annual report on Form 10-K for the year ended December
31, 1999 and quarterly report on Form 10-Q for the three-month period ended
March 31, 2000, which are included with the materials mailed with this proxy
statement, concerning restrictions on dividends.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated financial information as of
March 31, 2000 and for the three months ended March 31, 2000 and 1999 and the
years ended December 31, 1999, 1998 and 1997 presented in this proxy statement
gives effect to the sale of our trailer leasing operations. The unaudited pro
forma condensed consolidated statement of income for the three months ended
March 31, 2000 and 1999 and the unaudited pro forma condensed consolidated
statements of income for the years ended December 31, 1999, 1998 and 1997 assume
that the proposed sale occurred on January 1, 1997. Accordingly, the pro forma
financial information for the 2000 and 1999 periods is based upon our historical
financial statements for the three months ended March 31, 2000 and 1999. The pro
forma financial information for 1999, 1998 and 1997 is based upon our historical
financial statements.
The unaudited pro forma condensed consolidated financial statements give
effect to events that are directly attributable to the proposed sale.
Explanations for these adjustments are included in the notes accompanying the
unaudited pro forma condensed consolidated balance sheet and income statements.
Our unaudited pro forma condensed consolidated financial information should
be read in conjunction with our historical financial statements and the
information contained in our "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in our annual report on Form 10-K
for the year ended December 31, 1999 and quarterly report on Form 10-Q for the
three-month period ended March 31, 2000, which are included with the materials
mailed with this proxy statement. The unaudited pro forma condensed consolidated
financial data should not be construed to be indicative of our financial
condition, results of operations or covenant compliance had the proposed sale
and events described above been completed on the dates assumed and are not
intended to project our financial condition on any future date or our results of
operations for any future period.
<PAGE>
<TABLE>
<CAPTION>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2000
Trailer Proposed Unaudited
Historical Leasing Transaction Pro Forma
------------ ------------- ------------- ------------
(in thousands of dollars)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents $ 22,636 $ -- $ 31,434 (3) $ 54,070
Receivables 10,329 (4,766) -- 5,563
Receivables from affiliates 4,248 -- -- 4,248
Equity interest in affiliates 18,165 -- -- 18,165
Transportation equipment
held for operating leases, net 84,974 (84,974) -- --
Restricted cash and cash
Equivalents 1,477 (43) -- 1,434
Other, net 7,815 (480) -- 7,335
===============================================================
Total assets $ 149,644 $ (90,263) $ 31,434 $ 90,815
===============================================================
Long-term secured debt $ 76,255 $ (57,456) $ -- $ 18,799
Payables and other liabilities 8,570 (1,214) -- 7,356
Deferred income taxes 15,503 (5,967) 1,365 (3) 10,901
Shareholders' equity 49,316 (25,626) 30,069 (2) 53,759
Total liabilities and
===============================================================
shareholders' equity $ 149,644 $ (90,263) $ 31,434 $ 90,815
===============================================================
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial
statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
1. TRAILER LEASING
The pro forma condensed consolidated balance sheet gives effect to the
proposed sale of the assets of the trailer leasing division assuming the
sale occurred on March 31, 2000.
2. PROPOSED TRANSACTION
The proposed transaction assumes the following for PLM (in millions of
dollars):
Projected sales proceeds after transaction costs $ 46.6
Net assets of trailer leasing division at March 31, 2000 (39.1)
Senior loan fees written off (0.1)
Additional transaction tax liability of PLM due to sale
of trailer leasing division (2.9)
---------
Gain from transaction $ 4.5
=========
The net gain amount has been included in shareholders' equity in the
pro forma condensed consolidated balance sheets as of March 31, 2000.
3. USE OF PROCEEDS
The following table represents the net sale proceeds (in millions of
dollars):
Projected sales proceeds after transaction costs $ 46.6
Tax liability (8.9)
Tax liability partially offset by the deferred tax
assets of PLM 1.4
Liabilities of the trailer leasing division not assumed
by the purchaser to be paid at the close of the
transaction (7.7)
--------
Net sale proceeds $ 31.4
========
The net sale proceeds will be deposited into the bank and are presumed
to be non-interest bearing cash for the proforma statements of income.
4. CLOSING ADJUSTMENTS
The actual sales proceeds will be adjusted at the closing date
from the amounts presented herein on a dollar for dollar basis for
increases or decreases in the net book value of the assets sold and
liabilities assumed of the trailer division between March 31, 2000 and
the closing date.
5. SEVERANCE AGREEMENTS
PLM has entered into Severance Agreements with the Chief
Executive Officer and the Senior Vice President, which allows either
PLM or the employee to terminate the individual's employment after the
assets of the trailer leasing division are sold. Upon termination of
their employment, the individuals would be entitled to a lump sum
payment of 2 to 3 years of their annual base compensation. In addition,
they will be entitled to certain benefits for a similar period. The
total cost under these agreements is $1.5 million. This expense is not
considered as part of the proposed transaction and accordingly has not
been included in the accompanying pro forma financial statements.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
Trailer Unaudited
Historical Leasing Pro Forma
------------ ------------- ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Income Statement Data
Total revenues $ 9,907 $ (7,472) $ 2,435
Operations support 4,273 (4,052)(2) 221
Depreciation and amortization 2,522 (2,365) 157
General and administrative 1,586 -- 1,586
---------------------------------------------------
Operating income 1,526 (1,055) 471
Interest expense (1,520) 1,089 (431)
Interest income 203 -- 203
Provision for income tax (79) (14)(5) (93)
---------------------------------------------------
Income from continuing
Operations $ 130 $ 20 $ 150
===================================================
Basic earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.02 $ 0.02
Diluted earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.02 $ 0.02
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial
statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Trailer Unaudited
Historical Leasing Pro Forma
------------- ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Income Statement Data
Total revenues $ 7,136 $ (3,975) $ 3,161
Operations support 2,699 (2,229)(2) 470
Depreciation and amortization 1,577 (1,459) 118
General and administrative 1,484 -- 1,484
---------------------------------------------------
Operating income 1,376 (287) 1,089
Interest expense (1,097) 554 (543)
Interest income 97 -- 97
Provision for income tax (145) (104)(5) (249)
---------------------------------------------------
Income from continuing operations $ 231 $ 163 $ 394
===================================================
Basic earnings per weighted-average common share outstanding:
Income from continuing operations $ 0.03 $ 0.05
Diluted earnings per weighted-average common share outstanding:
Income from continuing operations $ 0.03 $ 0.05
</TABLE>
The notes to the unaudited pro forma condensed consolidated
financial statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Trailer Unaudited
Historical Leasing Pro Forma
------------ ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Income Statement Data
Total revenues $ 37,265 $ (25,681) $ 11,584
Operations support 14,148 (12,743)(2) 1,405
Depreciation and amortization 8,097 (7,620) 477
General and administrative 6,828 -- 6,828
--------------------------------------------------
Operating income 8,192 (5,318) 2,874
Interest expense (5,424) 3,163 (2,261)
Interest income 343 -- 343
Other income 721 -- 721
(Provision for) benefit from income tax (1,487) 841 (5) (646)
--------------------------------------------------
Income (loss) from continuing operations $ 2,345 $ (1,314) $ 1,031
==================================================
Basic earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.29 $ 0.13
Diluted earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.29 $ 0.13
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial
statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Trailer Unaudited
Historical Leasing Pro Forma
------------- ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Income Statement Data
Total revenues $ 30,120 $ (11,321) $ 18,799
Operations support 12,383 (6,397)(2) 5,986
Depreciation and amortization 4,868 (3,802) 1,066
General and administrative 7,624 -- 7,624
---------------------------------------------------
Operating income 5,245 (1,122) 4,123
Interest expense (3,826) 1,754 (2,072)
Interest income 941 -- 941
Other income 473 -- 473
Provision for income tax (1,154) (246)(5) (1,400)
---------------------------------------------------
Income from continuing operations $ 1,679 $ 386 $ 2,065
===================================================
Basic earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.20 $ 0.25
Diluted earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.20 $ 0.24
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial
statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Trailer Unaudited
Historical Leasing Pro Forma
------------- ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Income Statement Data
Total revenues $ 31,169 $ (7,634) $ 23,535
Operations support 13,166 (4,503)(2) 8,663
Depreciation and amortization 4,489 (1,672) 2,817
General and administrative 9,536 -- 9,536
---------------------------------------------------
Operating income 3,978 (1,459) 2,519
Interest expense (4,572) 1,201 (3,371)
Interest income 1,311 -- 1,311
Other income (expense) (342) 2 (340)
Benefit from income tax 423 100 (5) 523
---------------------------------------------------
Income (loss) from continuing operations $ 798 $ (156) $ 642
===================================================
Basic earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.09 $ 0.07
Diluted earnings per weighted-average
common share outstanding:
Income from continuing operations $ 0.09 $ 0.07
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial
statements are an integral part of this statement.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED INCOME STATEMENTS
1. TRAILER LEASING
The pro forma condensed consolidated statements of income give effect
to the proposed sale of the assets of the trailer leasing division assuming
the sale occurred on January 1, 1997. The pro forma condensed consolidated
statements of income exclude all direct expenses and overhead costs of the
trailer leasing division that will be eliminated on the completion of the
sale of the assets of the trailer leasing division. In addition, the fees
earned from the management of the trailers owned by affiliated entities,
which will be disposed of in a separate but related transaction, are also
eliminated in the pro forma income statements.
2. OPERATIONS SUPPORT
The pro forma condensed consolidated statements of income exclude all
direct expenses and overhead costs of PLM International, Inc. related to
the trailer leasing division that will be eliminated on the completion of
the sale of the assets of the trailer leasing division.
3. PROPOSED TRANSACTION
The estimated gain on sale of the assets of the trailer leasing
division, net of taxes, is $4.5 million. The estimated gain has not been
included in any of the pro-forma income statements.
4. USE OF PROCEEDS
The following table represents the net sale proceeds (in millions of
dollars):
Projected sales proceeds after transaction costs $ 46.6
Tax liability (8.9)
Tax liability partially offset by the deferred
tax assets of PLM 1.4
Liabilities of the trailer leasing division not
assumed by the purchaser to be paid at the
close of the transaction (7.7)
--------
Net sale proceeds $ 31.4
=========
The net sale proceeds will be deposited into the bank and are presumed
to be non-interest bearing cash for the pro forma statements of income.
5. INCOME TAXES
The pro forma condensed consolidated statements of income give effect
to the tax adjustments at a statutory rate of 39%, of which 35% is for
Federal tax and 4% for state tax.
6. CLOSING ADJUSTMENTS
The actual sales proceeds will be adjusted at the closing date from the
amounts presented herein on a dollar for dollar basis for increases or
decreases in the net book value of the assets sold and liabilities assumed
of the trailer division between March 31, 2000 and the closing date.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED INCOME STATEMENTS
7. SEVERANCE AGREEMENTS
PLM has entered into Severance Agreements with the Chief Executive
Officer and the Senior Vice President, which allows either PLM or the
employee to terminate the individual's employment after the assets of the
trailer leasing division are sold. Upon termination of their employment,
the individuals would be entitled to a lump sum payment of 2 to 3 years of
their annual base compensation. In addition, they will be entitled to
certain benefits for a similar period. The total cost under these
agreements is $1.5 million. This expense is not considered as part of the
proposed transaction and accordingly has not been included in the
accompanying pro forma financial statements.
8. RECONCILIATION OF PRO FORMA STATEMENTS OF OPERATIONS TO HISTORICAL
FINANCIAL STATEMENTS
The following table reconciles income (loss) in the trailer leasing
division's pro forma statements of operations to income (loss) in the
trailer leasing division's historical financial statements.
<TABLE>
<CAPTION>
For the Twelve Months Ended For the Three Months
December 31, Ended March 31,
1999 1998 1997 2000 1999
---------------------------------- ---------------------
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Income (loss) in the trailer leasing division's
- pro forma statements $ 1,314 $ (386) $ 156 $ (20) $ (163)
Pro forma adjustments to reflect
income earned from management of trailers
by non-trailer subsidiaries, net of tax (189) (279) (299) (40) (54)
Indirect costs allocated to trailer leasing that
will not be eliminated as a result of the sale,
net of tax (517) (273) (228) (200) (90)
--------------------------------------------------------------
Income (loss) in the trailer leasing division's
- historical financial statements $ 608 $ (938) $ (371) $ (260) $ (307)
==============================================================
</TABLE>
INDEPENDENT AUDITORS
We expect representatives of KPMG LLP, PLM's independent auditors,
to be present at the special meeting. We will afford them the opportunity
to make a statement if they desire to do so and expect them to be available
to respond to questions.
<PAGE>
STOCKHOLDER PROPOSALS
Pursuant to PLM's by-laws, a stockholder who desires to present a
proposal at a meeting of stockholders of PLM without inclusion of such
proposal in PLM's proxy materials relating to the meeting must give timely
notice of the proposal in writing to the Secretary of PLM. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of PLM not less than 50 days nor more than 75
days prior to the meeting; provided, however, that if less than 65 days'
prior notice or prior public disclosure of the date of the meeting is given
or made to stockholders, a stockholder's notice must be so received not
later than the close of business on the fifteenth day following the day on
which notice of the date of the meeting was mailed or public disclosure was
made, whichever occurs first. PLM reserves the right to reject, rule out of
order, or take other appropriate action with respect to any proposal that
does not comply with these and other applicable requirements.
All notices of proposals of stockholders should be sent to the
attention of the Secretary, PLM International, Inc., One Market, Steuart
Street Tower, Suite 800, San Francisco, California 94105.
WHERE YOU CAN FIND MORE INFORMATION
PLM files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission.
Stockholders may read and copy any reports, statements or other information
that PLM files at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information about the public reference rooms. Our filings are
also available from commercial document retrieval services and at the
Internet web site maintained by the SEC at http:www.sec.gov. PLM's annual
report on Form 10-K for the year ended December 31, 1999 and quarterly
report on Form 10-Q for the three-month period ended March 31, 2000 are
included with the materials mailed with this proxy statement.
The SEC allows us to "incorporate by reference" information into
this proxy statement, which means that we can disclose important
information to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is deemed to be
part of this proxy statement, except for any information superseded by
information contained directly in this proxy statement. This proxy
statement incorporates by reference the documents set forth below that we
have previously filed with the SEC. These documents contain important
information about us and our financial condition.
PLM SEC FILINGS (FILE NO. 1-9670) PERIOD
Annual Report on Form 10-K............. Year ended December 31, 1999
Quarterly Report on Form 10-Q.......... Quarter ended March 31, 2000
Documents incorporated by reference are available from us without
charge, excluding all exhibits unless we have specifically incorporated by
reference an exhibit in this proxy statement, by requesting them in writing
or by telephone from PLM at the following address:
PLM International, Inc.
One Market
Steuart Street Tower, Suite 800
San Francisco, California 94105
Attention: Investor Relations
Telephone: (415) 974-1399
(800) 626-7549
Please request documents by August 17, 2000 to ensure receipt before the
special meeting.
<PAGE>
PLM TRAILER LEASING
Unaudited Combined Financial Statements
- Combined Statements of Operations for the Three Months Ended March 31,
1999 and 2000 (unaudited)
- Combined Balance Sheets as of March 31, 1999 and 2000 (unaudited)
- Combined Statements of Changes in Stockholders' Equity for the Year
Ended December 31, 1999 and the Three Months Ended March 31, 2000
(unaudited)
- Combined Statements of Cash Flows for the Three Months Ended March 31,
1999 and 2000 (unaudited)
- Notes to Unaudited Combined Financial Statements
- Combined Statements of Operations for the Years Ended December 31,
1997, 1998 and 1999 (unaudited)
- Combined Balance Sheets as of December 31, 1998 and 1999 (unaudited)
- Combined Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1997, 1998 and 1999 (unaudited)
- Combined Statements of Cash Flows for the Years Ended December 31,
1997, 1998 and 1999 (unaudited)
- Notes to Unaudited Combined Financial Statements
<PAGE>
PLM TRAILER LEASING
COMBINED STATEMENTS OF OPERATIONS
(in thousands of dollars)
Unaudited
For the Three Months
Ended March 31,
2000 1999
--------------------------
REVENUES
Lease income $ 7,245 $ 3,691
Management fees 173 205
Loss on the sale or disposition of assets, net (13) (9)
Other 3 --
---------------------------
Total revenues 7,408 3,887
---------------------------
Costs and expenses
Operations support 3,640 1,899
Depreciation and amortization 2,365 1,459
General and administrative expenses 740 478
---------------------------
Total costs and expenses 6,745 3,836
---------------------------
Operating income 663 51
Interest expense (1,089) (554)
---------------------------
Loss before income taxes (426) (503)
Benefit from income taxes (166) (196)
---------------------------
Net loss $ (260) $ (307)
=============================
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
COMBINED BALANCE SHEETS
(in thousands of dollars)
Unaudited
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------------------------------
<S> <C> <C>
Receivables (net of allowance for doubtful accounts of $0.8 million and
$0.5 million as of March 31, 2000 and December 31, 1999, respectively) $ 4,766 $ 6,367
Trailers held for operating leases 108,272 103,000
Less accumulated depreciation (23,298) (21,093)
-------------------------------------
84,974 81,907
Restricted cash and cash equivalents 43 46
Other assets, net 480 581
=====================================
Total assets $ 90,263 $ 88,901
=====================================
LIABILITIES AND EQUITY
LIABILITIES
Senior secured loan $ 7,353 $ 8,824
Other secured debt 50,103 50,697
Payables and other liabilities 488 2,438
Deferred income taxes 5,967 4,202
-------------------------------------
Total liabilities 63,911 66,161
EQUITY
Total equity 26,352 22,740
=====================================
Total liabilities and equity $ 90,263 $ 88,901
=====================================
</TABLE>
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
COMBINED STATEMENTS OF CHANGES IN EQUITY
For the Year Ended December 31, 1999 and the Three Months Ended March 31, 2000
(in thousands of dollars)
Unaudited
Total
Equity
------------------------
Balance, December 31, 1998 $ 19,879
Capital contributions from Parent 2,253
Net income 608
--------------------
Balance, December 31, 1999 22,740
Capital contributions from Parent 3,872
Net loss (260)
---------------------
Balance, March 31, 2000 $ 26,352
=======================
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING For the Three Months
COMBINED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
Unaudited
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
2000 1999
---------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (260) $ (307)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,365 1,459
Deferred income tax 1,765 661
Loss on sale or disposition of assets, net 13 9
(Decrease) increase in payables and other liabilities (1,950) 369
Decrease in receivables 1,601 109
Decrease (increase) in other assets 91 (40)
--------------------------------
Net cash provided by operating activities 3,625 2,260
--------------------------------
INVESTING ACTIVITIES
Purchase of property, plant, and equipment -- (6)
Purchase of transportation equipment and capital improvements (5,480) (8,106)
Proceeds from the sale of transportation equipment for lease 45 103
Decrease (increase) in restricted cash and restricted cash equivalents 3 (25)
--------------------------------
Net cash used in investing activities (5,432) (8,034)
--------------------------------
FINANCING ACTIVITIES
Borrowings of short-term warehouse credit facilities -- 5,800
Repayment of senior secured loan (1,471) (1,471)
Borrowings of other secured debt 273 --
Repayment of other secured debt (867) (298)
Capital contributions from Parent 3,872 1,743
--------------------------------
Net cash provided by financing activities 1,807 5,774
--------------------------------
Net change in cash and cash equivalents -- --
Cash and cash equivalents at beginning of period -- --
================================
Cash and cash equivalents at end of period $ -- $ --
================================
</TABLE>
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
MARCH 31, 2000
1. GENERAL
In the opinion of management, the accompanying unaudited combined financial
statements contain all adjustments necessary, consisting primarily of normal
recurring accruals, to present fairly PLM Trailer Leasing financial position as
of March 31, 2000 and December 31, 1999, statements of operations for the three
months ended March 31, 2000 and 1999, statements of changes in equity for the
year ended December 31, 1999 and the three months ended March 31, 2000 and
statements of cash flows for the three months ended March 31, 2000 and 1999.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the accompanying unaudited combined
financial statements.
2. DEBT
During the first quarter of 2000, PLM Trailer Leasing borrowed $0.3 million
under the $15.0 million credit facility used to purchase trailers. This
facility's outstanding balance at March 31, 2000 was $15.0 million.
During the first quarter of 2000, PLM Trailer Leasing repaid $1.5 million of the
senior secured loan and $0.9 million of the other secured debt, in accordance
with the debt repayment schedules.
3. TRANSACTIONS WITH AFFILIATES
The Parent and its various subsidiaries, including PLM Trailer Leasing, incur
costs associated with management, accounting, legal, data processing, and other
general and administrative activities. Direct costs are charged directly to PLM
Trailer Leasing as incurred. Indirect costs are allocated among PLM Trailer
Leasing, the Parent, and other subsidiaries of the Parent using an allocation
method that management believes is reasonable when compared to business
activities.
General and administrative expenses allocated from the Parent to PLM Trailer
Leasing totalled $0.7 million, and $0.5 million for the three months ended March
31, 2000 and 1999, respectively.
4. PURCHASE COMMITMENTS
As of June 20, 2000, PLM Trailer Leasing had committed to purchase $16.5 million
of trailer equipment.
5. SUBSEQUENT EVENTS
From January 1 to June 20, 2000, PLM Trailer Leasing purchased 257 trailers for
$10.4 million.
On May 24, 2000, PLM International, Inc. and Marubeni America Corporation signed
an asset purchase agreement to sell the refrigerated and dry trailer assets of
PLM International, Inc. to Marubeni America Corporation. It is estimated that at
the closing of the sale, Marubeni America Corporation will pay approximately $63
million in cash to the Parent for its 4,000 trailers and assume $50 million in
debt and other liabilities, including the operation of up to 22 of PLM Trailer
Leasing's trailer yards located throughout the United States. The estimated
$63 million cash proceeds assumes PLM Trailer Leasing's purchases of $7.9
million in trailer equipment prior to the close, in addition to the $10.4
million of trailers purchased from January 1 to June 20, 2000. The trans-
action is expected to close in the third quarter of 2000.
<PAGE>
PLM TRAILER LEASING
COMBINED STATEMENTS OF OPERATIONS
Years Ended December 31,
(in thousands of dollars)
UNAUDITED
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------
REVENUES
<S> <C> <C> <C>
Lease income (Note 2) $ 24,561 $ 9,743 $ 5,544
Management fees (Note 1) 835 1,022 1,283
(Loss) gain on the sale or disposition of assets, net (49 ) 94 313
Other 23 4 2
----------------------------------------------
Total revenues 25,370 10,863 7,142
----------------------------------------------
COSTS AND EXPENSES
Operations support (Notes 7) 11,422 5,127 3,282
Depreciation and amortization (Note 1) 7,620 3,802 1,672
General and administrative expense (Note 9) 2,169 1,717 1,594
----------------------------------------------
Total costs and expenses 21,211 10,646 6,548
----------------------------------------------
Operating income 4,159 217 594
Interest expense (Note 5) (3,163) (1,754) (1,201)
Other expenses, net -- -- (2)
----------------------------------------------
Income (loss) before income taxes 996 (1,537) (609)
Provision for (benefit from) income taxes (Note 6) 388 (599) (238)
----------------------------------------------
Net income (loss) $ 608 $ (938) $ (371)
==============================================
</TABLE>
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
COMBINED BALANCE SHEETS
As of December 31,
(in thousands of dollars)
UNAUDITED
ASSETS
<TABLE>
<CAPTION>
1999 1998
-------------------------------
<S> <C> <C>
Receivables (net of allowance for doubtful accounts of $0.5 million and
$0.1 million as of December 31, 1999 and 1998, respectively) $ 6,367 $ 2,772
Trailers held for operating leases (Note 2) 103,000 63,044
Less accumulated depreciation (21,093) (15,516)
------------------------------
81,907 47,528
Restricted cash and cash equivalents (Note 3) 46 115
Other assets, net (Note 4) 581 404
==============================
Total assets $ 88,901 $ 50,819
==============================
LIABILITIES AND EQUITY
LIABILITIES
Senior secured loan (Note 5) $ 8,824 $ 14,081
Other secured debt (Note 5) 50,697 13,142
Payables and other liabilities 2,438 1,147
Deferred income taxes (Note 6) 4,202 2,570
------------------------------
Total liabilities 66,161 30,940
EQUITY
Total equity (Note 10) 22,740 19,879
==============================
Total liabilities and equity $ 88,901 $ 50,819
==============================
</TABLE>
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
COMBINED STATEMENT OF CHANGES IN EQUITY
Years Ended December 31, 1999, 1998, and 1997
(in thousands of dollars)
UNAUDITED
Total
Equity
---------------------
Balance, December 31, 1996 $ 780
Capital contributions from Parent 12,771
Net loss (371)
-------------------
Balance, December 31, 1997 13,180
Capital contributions from Parent 7,637
Net loss (938)
--------------------
Balance, December 31, 1998 19,879
Capital contributions from parent 2,253
Net income 608
--------------------
Balance, December 31, 1999 $ 22,740
====================
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
COMBINED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in thousands of dollars)
UNAUDITED
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ 608 $ (938) $ (371)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 7,620 3,802 1,672
Deferred income tax 1,632 (1,027) (2,915)
Loss (gain) on the sale or disposition of assets, net 49 (94) (313)
Increase (decrease) in payables and other liabilities 1,291 841 (10)
Increase in receivables (3,595) (1,318) (417)
(Increase) decrease in other assets (221) 93 86
--------------------------------------------------
Net cash provided by (used in) operating activities 7,384 1,359 (2,268)
Investing activities
Principal payments received on finance leases -- 12 38
Purchase of property, plant, and equipment (19) (53) (29)
Purchase of trailer equipment and capital improvements (42,542) (34,150) (9,115)
Proceeds from the sale of trailer equipment held for lease 557 5,301 2,540
Decrease in restricted cash and cash equivalents 69 12,634 475
---------------------------------------------------
Net cash used in investing activities (41,935) (16,256) (6,091)
FINANCING ACTIVITIES
Repayment of senior secured loan (5,257) (5,882) (4,412)
Borrowings of other secured debt 39,727 13,142 --
Repayment of other secured debt (2,172) -- --
Capital contributions from Parent 2,253 7,637 12,771
------------------------------------------------
Net cash provided by financing activities 34,551 14,897 8,359
Net change in cash and cash equivalents -- -- --
Cash and cash equivalents at beginning of year -- -- --
==================================================
Cash and cash equivalents at end of year $ -- $ -- $ --
==================================================
</TABLE>
See accompanying notes to these unaudited combined financial statements.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited combined financial statements contain all necessary
adjustments, consisting primarily of normal recurring accruals, to present
fairly the results of operations, financial position, changes in equity, and
cash flows of PLM Trailer Leasing.
PLM Trailer Leasing is not a legal entity. PLM Trailer Leasing represents the
dry and refrigerated trailer leasing operations of PLM International, Inc. (the
Parent) as well as operations conducted by two of PLM International's wholly
owned subsidiaries, PLM Rental, Inc. and TEC AcquiSub, Inc.
These financial statements have been prepared on the accrual basis of accounting
in accordance with generally accepted accounting principles. This requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
LEASING OPERATIONS
PLM's trailer leasing operations specialize in the short-term rental of dry and
refrigerated trailers from 22 rental yards located throughout the United States.
Trailers are depreciated over their estimated useful life. Rental payments are
recorded as revenue over the lease term as earned in accordance with Financial
Accounting Standards Board (FASB) Statement of Financial Accounting Standards
(SFAS) No. 13, "Accounting For Leases".
EQUIPMENT
Trailer equipment held for operating lease is stated at cost. Depreciation is
computed on the straight-line method down to the equipment's estimated salvage
value, utilizing the estimated useful lives in 10 to 18 years. Salvage values
for transportation equipment are 20% of original equipment cost.
In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," PLM Trailer Leasing reviews
the carrying value of its equipment at least quarterly and whenever
circumstances indicate that the carrying value of an asset may not be
recoverable. If projected undiscounted future cash flows are lower than the
carrying value of the equipment, the loss on revaluation is recorded. There were
no equipment revaluation required during 1999, 1998, and 1997.
Repairs and maintenance costs are usually the obligation of PLM Trailer Leasing.
Repair and maintenance expenses were $4.8 million, $1.7 million, and $1.3
million for 1999, 1998, and 1997, respectively.
MANAGEMENT FEES
Management fees are earned for managing the trailer portfolios owned by
affiliated third parties as provided for in various agreements, and are
recognized as revenue over time as they are earned.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES
PLM Trailer Leasing recognizes income tax expense using the liability method.
Deferred income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities.
PLM Trailer Leasing is included in the consolidated federal and certain combined
state income tax returns of the Parent. Income taxes have been calculated on a
separate company basis pursuant to SFAS No. 109, "Accounting for Income Taxes".
PLM Trailer Leasing provides for the income tax expense (benefit) using a
combined federal and state tax rate applied to pretax earnings.
Deferred income taxes arise primarily because of differences in the timing of
reporting equipment depreciation and certain accruals for financial statement
and income tax reporting purposes.
INTANGIBLES
Intangibles consist primarily of loan fees and software. They are reported at
the lower of net amortized cost or fair value and are generally included on the
balance sheet in other assets, net. Loan fees are amortized over the life of the
related loan. Software is amortized over three to five years from the
acquisition date.
COMPREHENSIVE INCOME
PLM Trailer Leasing's net income is equal to comprehensive income for the years
ended December 31, 1999, 1998, and 1997.
CASH AND CASH EQUIVALENTS
PLM TRAILER LEASING DOES NOT MAINTAIN ANY CASH BALANCES. CASH OPERATION
REQUIREMENTS ARE FINANCED BY CAPITAL CONTRIBUTION FROM THE PARENT.
2. EQUIPMENT HELD FOR OPERATING LEASES
As of December 31, 1999 and 1998, transportation equipment held for operating
leases consisted of refrigerated and dry van trailers.
During 1999, PLM Trailer Leasing purchased trailers for $42.5 million and sold
trailers with a net book value of $0.6 million for $0.6 million. During 1998,
PLM Trailer Leasing purchased trailers for $34.1 million and sold trailers with
a net book value of $5.2 million for $5.3 million. During 1997, PLM Trailer
Leasing purchased trailers for $9.1 million and sold trailers with a net book
value of $2.2 million for $2.5 million.
Per diem and short-term rentals consisting of utilization rate lease payments
included in revenue amounted to approximately $20.9 million in 1999, $8.4
million in 1998, and $5.2 million in 1997.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. RESTRICTED CASH
Restricted cash consists of a bank account that is subject to withdrawal
restrictions per a loan agreement. The senior loan agreement requires proceeds
from the sale of pledged assets be deposited into a collateral bank account and
the funds used to purchase additional equipment to the extent required to meet
certain debt requirements or to reduce the outstanding loan balance (refer to
Note 5).
4. OTHER ASSETS, NET
Other assets, net consists of the following as of December 31 (in thousands of
dollars):
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Loan fees, net of accumulated amortization of $1,143 and $1,043
in 1999 and 1998, respectively $ 290 $ 208
Prepaid expenses, deposits, and other 218 79
Furniture, fixtures, and equipment, net of accumulated
depreciation of $145 and $82 in 1999 and 1998, respectively 73 117
---------------------------
Total other assets, net $ 581 $ 404
===========================
5. SECURED DEBT
Secured debt in various legal entities related to PLM Trailer Leasing consisted
of the following as of December 31 (in thousands of dollars):
1999 1998
-------------------------------
Senior secured loan:
Institutional debt, bearing interest at 9.78%, interest due quarterly,
principal payments due quarterly beginning June 30, 1997 through June 30,
2001, secured by certain of PLM Trailer Leasing's trailer equipment assets
and associated leases, and cash in a cash collateral account
$ 8,824 $ 14,081
Other secured debt:
Eight debt agreements, bearing interest from 5.35% to 7.05%, each with
payments of $0.1 million due monthly in advance secured by certain trailer
equipment. The final payments total $9.1 million and are due between
December 2005 and October 2006. In return for favorable financing terms,
these agreements give beneficial tax treatment in these secured trailers to
the lenders
35,970 13,142
Credit facility agreement, bearing interest at LIBOR plus 1.5%, the
facility allows PLM Trailer Leasing to borrow up to $15.0 million within a
one-year period with quarterly payments of $0.5 million. This debt is
secured by certain trailer equipment. A final payment of $2.9 million is
due August
2006 14,727 --
-------------------------------
Total secured debt $ 59,521 $ 27,223
================================
</TABLE>
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
5. SECURED DEBT (continued)
During 1999, PLM Trailer Leasing repaid $5.3 million of the senior secured loan,
in accordance with the debt repayment schedule. The senior secured loan facility
provides that equipment sale proceeds from collateralized equipment or cash
deposits be placed into cash collateral accounts or used to purchase additional
equipment to the extent required to meet certain debt covenants. The senior
secured loan agreement contains financial covenants related to net worth, ratios
for leverage, interest coverage ratios, and collateral coverage. These covenants
are tested using PLM International Inc.'s results of operations and financial
position. The senior secured loan also contains a covenant requiring
diversification of the equipment in the collateral pool. PLM Trailer Leasing is
not in compliance with this covenant as virtually all of the pledged equipment
are trailers. The lender has verbally waived this covenant and is expected to
waive it in the future. As of December 31, 1999, the cash collateral balance was
$46,000.
AS OF DECEMBER 31, 1999, PLM TRAILER LEASING HAD $36.0 MILLION OUTSTANDING IN
EIGHT DEBT AGREEMENTS, BEARING INTEREST FROM 5.35% TO 7.05%, EACH WITH MONTHLY
PAYMENTS OF $0.1 MILLION. THE DEBT IS SECURED BY CERTAIN TRAILER EQUIPMENT.
DURING 1999, PLM TRAILER LEASING REPAID $2.2 MILLION ON THE EIGHT DEBT
AGREEMENTS ACCORDANCE WITH ITS DEBT AMORTIZATION SCHEDULES. THE FINAL PAYMENTS
DUE UNDER THESE AGREEMENTS, WHICH EQUAL 15% TO 25% OF THE ORIGINAL LOAN TOTAL
$9.1 MILLION AND ARE DUE BETWEEN DECEMBER 2005 AND OCTOBER 2006.
In the second quarter of 1999, PLM Trailer Leasing entered into a $15.0 million
credit facility loan agreement bearing interest at LIBOR plus 1.5%. This
facility allows PLM Trailer Leasing to borrow up to $15.0 million within a
one-year period. The credit facility agreement contains financial covenants
related to net worth, ratios for leverage, interest coverage ratios, and
collateral coverage. These covenants are tested using PLM International Inc.'s
results of operations and financial position. As of December 31, 1999, PLM
Trailer Leasing had borrowed $14.7 million under this facility. Payments of $0.5
million are due quarterly beginning August 2000, with a final payment of $2.9
million due August 2006.
Scheduled principal payments on long-term secured debt as of December 31, 1999
are (in thousands of dollars):
2000 $ 10,344
2001 8,539
2002 5,842
2003 6,101
2004 6,378
Thereafter 22,317
-----------
Total $ 59,521
===========
6. INCOME TAXES
The provision for (benefit from) income taxes attributable to income from
operations consists of the following (in thousands of dollars):
1999
-------------------------------------------
Federal State Total
-------------------------------------------
Current $ (1,087) $ (157) $ (1,244)
Deferred 1,426 206 1,632
===========================================
Total $ 339 $ 49 $ 388
===========================================
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
6. INCOME TAXES (continued)
1998
---------------------------------------------
Federal State Total
---------------------------------------------
Current $ 373 $ 55 $ 428
Deferred (896) (131) (1,027)
=============================================
Total $ (523) $ (76) $ (599)
=============================================
1997
---------------------------------------------
Federal State Total
---------------------------------------------
Current $ 2,300 $ 377 $ 2,677
Deferred (2,504) (411) (2,915)
=============================================
Total $ (204) $ (34) $ (238)
=============================================
Amounts for the current year are based upon estimates and assumptions as of the
date of this report and could vary significantly from amounts shown on the tax
returns ultimately filed.
The difference between the effective rate and the expected federal statutory
rate is reconciled below:
1999 1998 1997
-----------------------------------
Federal statutory tax expense (benefit) rate 35% (35)% (35)%
State income tax expense (benefit) rate 3 (3) (3)
Other 1 (1) (1)
-----------------------------------
Effective tax expense (benefit) rate 39% (39)% (39)%
===================================
The tax effects of temporary differences that give rise to significant portions
of the deferred tax liabilities as of December 31 are presented below (in
thousands of dollars):
1999 1998
----------------------------
Deferred tax liabilities from continuing operations:
Equipment, principally differences in depreciation $ 5,279 $ 6,373
============================
Management has reviewed all established tax interpretations of items reflected
in its consolidated tax returns and believes that these interpretations do not
require valuation allowances, as described in SFAS No. 109 "Accounting for
Income Taxes".
7. COMMITMENTS AND CONTINGENCIES
LITIGATION
PLM Trailer Leasing is involved as plaintiff or defendant in various legal
actions incidental to its business. Management does not believe that any of
these actions will be material to the financial condition of PLM Trailer
Leasing.
LEASE AGREEMENTS
PLM Trailer Leasing has entered into operating leases for its rental yard
operations. PLM Trailer Leasing's total rent expense was $1.3 million, $1.0
million, and $0.8 million in 1999, 1998, and 1997, respectively.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
7. COMMITMENTS AND CONTINGENCIES (continued)
Annual lease commitments for all of PLM Trailer Leasing's locations total $0.9
million in 2000, $0.6 million in 2001, $0.4 million in 2002, $0.3 million in
2003, and $0.1 million in 2004.
8. PROFIT SHARING AND 401(k) PLAN
PLM Trailer Leasing participated in the Parent's Profit Sharing and 401(k) Plan
(the Plan) effective as of February 1996. The Plan provides for deferred
compensation as described in Section 401(k) of the Internal Revenue Code. The
Plan is a contributory plan available to essentially all full-time employees of
PLM Trailer Leasing in the United States. In 1999, employees who participated in
the Plan could elect to defer and contribute to the trust established under the
Plan up to 9% of pretax salary or wages up to $10,000. PLM Trailer Leasing
matched up to a maximum of $4,000 of employees' 401(k) contributions in 1999,
1998, and 1997 to vest in four equal installments over a four-year period. PLM
Trailer Leasing's total 401(k) contributions, net of forfeitures, were $0.1
million, $0.1 million, and $44,000 for 1999, 1998, and 1997, respectively.
During 1999, 1998, and 1997, PLM Trailer Leasing accrued discretionary
profit-sharing contributions. Profit-sharing contributions are allocated equally
among the number of eligible Plan participants. PLM Trailer Leasing's total
profit-sharing contributions were $47,000, $44,000, and $0.1 million for 1999,
1998, and 1997, respectively.
9. TRANSACTIONS WITH AFFILIATES
The Parent and its various subsidiaries, including PLM Trailer Leasing, incur
costs associated with management, accounting, legal, data processing, and other
general and administrative activities. Direct costs are charged directly to PLM
Trailer Leasing as incurred. Indirect costs are allocated among PLM Trailer
Leasing, the Parent, and other subsidiaries of the Parent using an allocation
method that management believes is reasonable when compared to business
activities.
General and administrative expenses, including direct costs of PLM Trailer
Leasing and indirect costs of PLM International, allocated from the Parent to
PLM Trailer Leasing totaled $2.2 million, $1.7 million, and $1.6 million in
1999, 1998, and 1997, respectively.
10. RISK MANAGEMENT
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject PLM Trailer Leasing to
concentrations of credit risk consist principally of receivables and leases.
Concentrations of credit risk with respect to leases are limited, due to the
large number of customers comprising PLM Trailer Leasing's customer base and
their dispersion across different businesses and geographic areas.
Currently, none of PLM Trailer Leasing's equipment is leased internationally.
No single lessee of PLM Trailer Leasing's equipment accounted for more than 10%
of revenues for the years ended December 31, 1999, 1998, or 1997. As of December
31, 1999 and 1998, management believes PLM Trailer Leasing had no significant
concentrations of credit risk that could have a material adverse effect on PLM
Trailer Leasing's business, financial condition, or results of operations.
<PAGE>
PLM TRAILER LEASING
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
11. ESTIMATED FAIR VALUE OF PLM TRAILER LEASING'S FINANCIAL INSTRUMENTS
PLM Trailer Leasing estimates the fair value of it's financial instruments based
on recent similar transactions PLM Trailer Leasing has entered into. The
estimated fair values of PLM Trailer Leasing's financial instruments are as
follows as of December 31 (in thousands of dollars):
<TABLE>
<CAPTION>
1999 1998
------------------------------ -------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Financial assets:
Restricted cash (Note 3) $ 46 $ 46 $ 115 $ 115
Financial liabilities:
Senior loan (Note 5) 8,824 8,940 14,081 14,503
Other secured debt (Note 5) 50,697 50,191 13,142 13,142
</TABLE>
12. PURCHASE COMMITMENTS
As of June 20, 2000, PLM Trailer Leasing had committed to purchase $16.5 million
of trailer equipment.
13. SUBSEQUENT EVENTS
From January 1 to June 20, 2000, PLM Trailer Leasing purchased 257 trailers for
$10.4 million.
On May 24, 2000, PLM International, Inc. and Marubeni America Corporation signed
an asset purchase agreement to sell the refrigerated and dry trailer assets of
PLM International, Inc. to Marubeni America Corporation. It is estimated that at
the closing of the sale, Marubeni America Corporation will pay approximately $63
million in cash to the Parent for its 4,000 trailers and assume $50 million in
debt and other liabilities, including the operation of up to 22 of PLM Trailer
Leasing's trailer yards located throughout the United States. The estimated
$63 million cash proceeds assumes PLM Trailer Leasing's purchases of $7.9
million in trailer equipment prior to the close, in addition to the $10.4
million of trailers purchased from January 1 to June 20, 2000. The trans-
action is expected to close in the third quarter of 2000.
<PAGE>
ANNEX A
ASSET PURCHASE AGREEMENT
among
MARUBENI AMERICA CORPORATION
and
PLM INTERNATIONAL, INC.
PLM Rental, Inc.
TEC AcquiSub, Inc.
PLM TRANSPORTATION EQUIPMENT CORPORATION
dated
May 24, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I -PURCHASE AND SALE OF ACQUIRED ASSETS AND ASSUMED LIABILITIES............................... 1
1.1 DEFINITIONS............................................................................. 1
1.2 PURCHASE AND SALE OF ASSETS AND ASSIGNMENT AND ASSUMPTION OF OBLIGATIONS................ 9
1.3 CONSIDERATION........................................................................... 12
1.4 CLOSING................................................................................. 12
1.5 POST-CLOSING ADJUSTMENT TO THE ESTIMATED PURCHASE PRICE (OTHER THAN THE HOLDBACK AMOUNT) 14
ARTICLE II -RELATED MATTERS........................................................................... 15
2.1 CONFIDENTIALITY......................................................................... 16
2.2 FURTHER ASSURANCES; ACCESS TO BOOKS AND RECORDS......................................... 16
2.3 ACCOUNTS RECEIVABLES/PREPAYMENT ITEMS PROCEEDS.......................................... 18
2.4 ASSIGNMENT AND TRANSFER FEES AND TAXES.................................................. 18
ARTICLE III -REPRESENTATIONS AND WARRANTIES OF SELLERS................................................ 19
3.1 CORPORATE ORGANIZATION, ETC............................................................. 20
3.2 AUTHORIZATION, ETC...................................................................... 20
3.3 NO VIOLATION............................................................................ 21
3.4 TITLE TO ASSETS; ENCUMBRANCES........................................................... 21
3.5 LITIGATION.............................................................................. 25
3.6 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES...................................... 25
3.7 CONSENTS................................................................................ 25
3.8 COMPLIANCE WITH LAW..................................................................... 25
3.9 ASSIGNMENT.............................................................................. 26
3.10 BROKERAGE.............................................................................. 26
3.11 INSIDER INTERESTS...................................................................... 26
3.12 ENVIRONMENTAL, HEALTH AND SAFETY....................................................... 27
3.13 ACCOUNTS AND NOTES RECEIVABLE.......................................................... 27
3.14 MEES PIERSON FACILITY.................................................................. 28
3.15 SEC FILINGS; FINANCIAL STATEMENTS...................................................... 28
3.16 ABSENCE OF ABSENCE OF CERTAIN CHANGES OR EVENTS........................................ 28
3.17 TAXES.................................................................................. 29
3.18 CONDUCT OF BUSINESS.................................................................... 29
3.19 EMPLOYEES.............................................................................. 29
3.20 MATERIAL MISSTATEMENTS OR OMISSIONS.................................................... 30
3.21 LICENSE OF PLM NAME.................................................................... 30
3.22 NO OTHER WARRANTIES OR REPRESENTATIONS................................................. 30
ARTICLE IV -REPRESENTATIONS AND WARRANTIES OF BUYER................................................... 30
4.1 CORPORATE ORGANIZATION.................................................................. 30
4.2 AUTHORIZATION, ETC...................................................................... 31
4.3 NO VIOLATION............................................................................ 31
4.4 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES...................................... 31
4.5 LITIGATION.............................................................................. 31
4.6 CONSENTS................................................................................ 31
4.7 BROKERAGE............................................................................... 32
4.8 FUNDING................................................................................. 32
ARTICLE V -COVENANTS OF SELLER........................................................................ 32
5.1 FULL ACCESS............................................................................. 32
5.2 CONSENTS................................................................................ 32
5.3 HSR ACT FILINGS......................................................................... 32
5.4 PROXY STATEMENT; STOCKHOLDERS'MEETING................................................... 33
5.5 CERTIFICATES............................................................................ 33
5.6 AGREEMENTS.............................................................................. 33
5.7 DELIVERY OF ASSETS AND DOCUMENTS........................................................ 33
5.8 REGULAR COURSE OF BUSINESS.............................................................. 33
5.9 BUSINESS RELATIONS...................................................................... 34
5.10 NO DEFAULT............................................................................. 34
5.11 INTENTIONALLY OMITTED.................................................................. 35
5.12 EXCLUSIVITY............................................................................ 36
5.13 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE........................................... 37
5.14 EMPLOYEES OF THE BUYERS................................................................ 38
5.15 CHANGE OF NAME OF PLM RENTAL........................................................... 38
5.16 FILING OF MATERIAL CONTRACTS OF PLM..................................................... 38
5.17 ENVIRONMENTAL INFORMATION............................................................... 38
ARTICLE VI -COVENANTS OF BUYER........................................................................ 38
6.1 CERTIFICATES............................................................................ 39
6.2 HSR ACT FILINGS......................................................................... 39
6.3 AGREEMENTS.............................................................................. 39
6.4 EMPLOYEES............................................................................... 39
6.5 RE-TITLING; TRANSFER TAXES.............................................................. 40
6.6 DISCHARGE OF OBLIGATIONS................................................................ 41
6.7 NOTIFICATION............................................................................ 41
6.8 ENVIRONMENTAL ASSESSMENTS............................................................... 41
6.9 RELEASES................................................................................ 41
ARTICLE VII -CONDITIONS TO THE OBLIGATIONS OF SELLERS................................................. 42
7.1 REPRESENTATIONS AND WARRANTIES TRUE..................................................... 42
7.2 PERFORMANCE............................................................................. 42
7.3 HSR ACT WAITING PERIODS; NO GOVERNMENTAL PROCEEDING OR LITIGATION....................... 42
7.4 NO INJUNCTION........................................................................... 42
7.5 CERTIFICATES............................................................................ 42
7.6 OPINION OF BUYER'S COUNSEL.............................................................. 42
7.7 STOCKHOLDER APPROVAL.................................................................... 43
7.8 ESCROW AGREEMENT........................................................................ 43
7.9 EMPLOYMENT ARRANGEMENTS.................................................................. 43
ARTICLE VIII -CONDITIONS TO OBLIGATIONS OF BUYER...................................................... 43
8.1 REPRESENTATIONS AND WARRANTIES TRUE..................................................... 43
8.2 PERFORMANCE............................................................................. 43
8.3 HSR ACT WAITING PERIODS; NO GOVERNMENTAL PROCEEDING OR LITIGATION....................... 43
8.4 NO INJUNCTION........................................................................... 44
8.5 OPINION OF SELLER'S COUNSEL............................................................. 44
8.6 CONSENTS OBTAINED; 90% OF THE BUSINESS OBTAINED; ENVIRONMENTAL INSURANCE OBTAINED....... 44
8.7 AGREEMENTS.............................................................................. 45
8.8 PLM STOCKHOLDER APPROVAL................................................................ 45
8.9 EMPLOYMENT ARRANGEMENTS................................................................. 45
8.10 PARTNERSHIP'S ASSET PURCHASE AGREEMENT.................................................. 45
8.11 NO BUSINESS MATERIAL ADVERSE EFFECT SINCE MARCH 31, 2000................................ 45
ARTICLE IX -SURVIVAL; INDEMNIFICATION................................................................. 45
9.1 SURVIVAL................................................................................ 45
9.2 INDEMNIFICATION BY BUYER................................................................ 46
9.3 INDEMNIFICATION BY SELLERS.............................................................. 46
9.4 INDEMNIFICATION PROCEDURES.............................................................. 46
9.5 INDEMNIFICATION LIMITS.................................................................. 47
ARTICLE X -TERMINATION AND ABANDONMENT................................................................ 48
10.1 METHODS OF TERMINATION.................................................................. 48
10.2 PROCEDURE UPON TERMINATION.............................................................. 49
10.3 BREAK-UP FEE........................................................................... 49
ARTICLE XI -MISCELLANEOUS............................................................................. 50
11.1 TIME OF THE ESSENCE..................................................................... 50
11.2 AMENDMENT AND MODIFICATION.............................................................. 50
11.3 WAIVER OF COMPLIANCE................................................................... 50
11.4 EXPENSES................................................................................ 50
11.5 NOTICES................................................................................. 50
11.6 ASSIGNMENT.............................................................................. 51
11.7 PUBLICITY............................................................................... 51
11.8 GOVERNING LAW........................................................................... 52
11.9 ARBITRATION............................................................................. 52
11.10 COUNTERPARTS........................................................................... 53
11.11 HEADINGS............................................................................... 53
11.12 ENTIRE AGREEMENT....................................................................... 53
11.13 THIRD PARTIES.......................................................................... 53
11.14 SEVERABILITY........................................................................... 53
11.15 SOLE REMEDY............................................................................ 53
11.16 PLM LIABILITY WITH RESPECT TO THE PARTNERSHIPS ASSET PURCHASE AGREEMENT................ 53
</TABLE>
<PAGE>
EXHIBITS
A-1 Owned Transportation Equipment
A-2 Customer Equipment Leases
A-3 TRAC Lease Transportation Equipment and TRAC Leases
A-4 Equipment Purchase Orders and Purchase Order Transportation Equipment
B-1 Leased Facilities and Facility Leases
B-2 Subleased Facilities and Facility Subleases
C-1 Other Assets
C-2 Information Systems Contracts
C-3 Miscellaneous Contractual Obligations
C-4 Receivables/Prepayment Items
D Form of Assignment and Assumption of Equipment Purchase Orders
E-1 and E-1A Form of Assignment and Assumption of Customer Equipment Leases
E-2 Form of Assignment and Assumption of Information Systems Contracts
E-3 Form of Assignment and Assumption of Miscellaneous Contractual
Obligations
F Form of Assignment and Assumption of TRAC Leases
G-1 Form of Assignment and Assumption of Facility Leases
G-2 Form of Assignment and Assumption of Facility Subleases
G-3 Form of Assignment and Assumption of Mees Pierson Facility
G-4 Form of Transition Services Agreement
H Form of Sellers Bill of Sale
J Form of License of PLM Name
K Form of Opinion of Buyer's Counsel
L Form of Opinion of Sellers' Counsel
N Intentionally Omitted
P Intentionally Omitted
Q Escrow Agreement
R Releases
S Form of Partnerships Asset Purchase Agreement
T Form of Non-Competition Agreement
U PLM Name
SCHEDULES
Schedule 1 - Purchase Price
Schedule 2.4-List of Taxing Jurisdictions
Schedule 3 - Sellers Disclosure Schedule
Schedule 8.6 - Consents obtained for satisfaction of Condition and Environmental
Insurance
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") dated May 24, 2000 is among
Marubeni America Corporation, a New York corporation, PLM International, Inc., a
Delaware corporation, PLM Rental, Inc, a Delaware corporation, TEC AcquiSub,
Inc., a California corporation, and PLM Transportation Equipment Corporation, a
California corporation.
This Agreement sets forth the terms and conditions upon which Sellers
will sell, and Buyer will purchase, all of the Acquired Assets and the Assumed
Liabilities. As herein set forth, Buyer is permitted to assign its rights
hereunder to MAC Leasing, Inc. or any Affiliate that is a direct or indirect
subsidiary of Marubeni Corporation. Concurrently herewith, the Partnerships and
Buyer will enter into the Partnerships Asset Purchase Agreement whereby the
Partnerships will sell, and Buyer will purchase, those assets and agreements of
the Business that are owned by the Partnerships.
In consideration of the mutual agreements contained herein, intending
to be legally bound hereby, the parties hereto agree as follows:
Article I
PURCHASE AND SALE OF ACQUIRED ASSETS AND ASSUMED LIABILITIES
1.1 Definitions. For purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
"Acquired Assets" means, collectively, the Transportation Equipment,
the Receivables/Prepayment Items, the Inventory, the PLM Name, the Other Assets,
the Equipment Purchase Orders, the Facility Leases, the Facility Subleases, the
Customer Equipment Leases, the TRAC Leases, the Information Systems Contracts
and the assets that are set forth on Schedule 1 to the extent not otherwise
identified in the foregoing items.
"Acquisition Proposal" means any inquiry, proposal or offer for a
transaction involving the lease other than in the ordinary course of business,
sale or other disposition of all, or any portion or portions representing in
aggregate 50% or more of the net book value, of the Business.
"Affiliate" shall have the meaning prescribed by Rule 12b-2 of the
regulations promulgated pursuant to the Securities Exchange Act.
"Assignment and Assumption of Customer Equipment Leases" means an
assignment and assumption of Customer Equipment Leases substantially in the form
attached hereto as Exhibit E-1 (and E-1A with respect to Customer Equipment
Leases owned by PLM Investment Management or PLM FSI).
"Assignment and Assumption of Information System Contracts" means an
assignment and assumption of Information System Contracts substantially in the
form attached hereto as Exhibit E-2.
"Assignment and Assumption of Facility Leases" means an assignment and
assumption of Facility Leases substantially in the form attached hereto as
Exhibit G-1.
"Assignment and Assumption of Facility Subleases" means an assignment
and assumption of Facility Subleases substantially in the form attached hereto
as Exhibit G-2.
"Assignment and Assumption of Equipment Purchase Orders" means an
assignment and assumption of Equipment Purchase Orders substantially in the form
attached hereto as Exhibit D.
"Assignment and Assumption of Mees Pierson Facility" means an
assignment and assumption of the Mees Pierson Facility substantially in the form
attached hereto as Exhibit G-3.
"Assignment and Assumption of Miscellaneous Contractual Obligations"
means an assignment and assumption of the Miscellaneous Contractual Obligations
substantially in the form attached hereto as Exhibit E-3.
"Assignment and Assumption of TRAC Leases" means an assignment and
assumption of the TRAC Leases substantially in the form attached hereto as
Exhibit F.
"Assumed Liabilities" means, collectively, the Equipment Purchase
Orders, the Facility Leases, the Facility Subleases, the Customer Equipment
Leases, TRAC Leases, the Mees Pierson Facility, the Miscellaneous Contractual
Obligations, the Information Systems Contracts and the liabilities that are set
forth on Schedule 1 to the extent not otherwise identified in the foregoing
items.
"Business" means all of those assets and agreements of Sellers,
Affiliates of Sellers and the Partnerships that are necessary for those trailer
leasing operations carried on under the PLM Name.
"Business Material Adverse Effect" shall mean, for purposes of this
Agreement, any change, event or effect that is materially adverse to the
business, assets (including intangible assets), condition (financial or
otherwise), prospects, properties, or results of operations of the Business or
the Acquired Assets, except for those changes, events and effects that are
caused by (i) general business or economic conditions affecting the U.S. economy
as a whole, (ii) conditions affecting the industry in which the Business
competes as a whole, (iii) conditions resulting from the announcement of this
Agreement or the pendency of the consummation of this Agreement, and (iv)
conditions resulting from or relating to the taking of any action contemplated
by this Agreement and not in violation of Section 5.8 or otherwise agreed to in
writing by Buyer.
"Buyer" means Marubeni America Corporation, a corporation formed under
the laws of the State of Delaware.
"Closing" means the closing referred to in Section 1.4 of this
Agreement.
"Closing Date" means 12:01 a.m. of the date on which the Closing
occurs.
"Closing List" means the lists in substantially the form of the
relevant Exhibits, wherever such Exhibits are applicable, which: (A) shall be
prepared by Sellers as of not less than three business days prior to Closing and
provided to Buyer not less than three business days prior to Closing, but shall
be updated and made accurate as of the Closing Date and provided to Buyer when
the Closing Financial Statements are delivered to Buyer pursuant to Section
1.5(a) below, and (B) shall be of: (a) Owned Transportation Equipment, TRAC
Lease Transportation Equipment and TRAC Leases, and Purchase Order
Transportation Equipment and Equipment Purchase Orders, (b) Leased Facilities,
Facility Leases, Subleased Facilities and Facility Subleases, and (c)
Receivables/Prepayment Items, Customer Equipment Leases, the Information Systems
Contracts, PLM Name, and Other Assets as of the Closing Date.
"Customer Equipment Leases" means the trailer lease agreements, trailer
rental agreements and any other leases or subleases, together, in each case,
with any amendments thereto and related security and other deposits (to the
extent that such deposits have not been used to reduce the Purchase Price),
guarantees and security agreements, related to (i) the Transportation Equipment
with Sellers as lessor or sublessor, and (ii) the Equipment owned by any of the
Partnerships or PLM Investment Management or PLM FSI with such entity as lessor
or sublessor, in either case whether existing in written form or evidenced by
computer records and data of Sellers, all of such Customer Equipment Leases, as
of the date hereof being listed on Exhibit A-2 hereto.
"Damages" means, whether suffered in connection with this Agreement or
the Partnerships Asset Purchase Agreement, any assessments, losses, damages,
judgments, liabilities, claims, losses, charges, actions, suits, proceedings,
Taxes, deficiencies, interest, penalties, costs and expenses, including without
limitation reasonable attorneys' fees, removal costs, remediation costs, closure
costs, fines, penalties and expenses of investigation and ongoing monitoring),
which for the avoidance of doubt it is expressly agreed and understood are
irrespective of any actual or potential recovery under any insurance (except to
the extent specifically set forth in Section 9.5), and all references herein to
Damages shall be determined by reference not only to those suffered in
connection with this Agreement but also the Partnerships Asset Purchase
Agreement.
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Resource
Conservation and Recovery Act of 1976, each as amended, together with all other
laws (including without limitation, statutes, common law, rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings and changes
thereunder) of federal, state and local governments (and all agencies thereof)
concerning pollution or protection of the environment and public health and
safety, including without limitation laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes into ambient air, surface
water, ground water or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or chemical, industrial, hazardous or toxic
materials, substances or wastes.
"Equipment" means new or used trailers, refrigeration units for use on
trailers, and all ancillary components for trailers and refrigeration units.
"Equipment Purchase Orders" means the equipment purchase orders, vendor
invoices and/or other obligations of Sellers relating to the purchase of
Equipment, all of such Equipment Purchase Orders as of the date hereof being
listed on Exhibit A-4 hereto.
"Escrow Agreement" means an agreement substantially in the form
attached hereto as Exhibit Q and the escrow agent thereunder shall be any of
Harris Bank, Wells Fargo Bank, Imperial Bank or any such other bank independent
of the parties mutually agreed upon by the parties.
"Estimated Purchase Price" shall mean the amount as calculated in
accordance with Schedule 1, which schedule sets forth the methodology by which
the Purchase Price will be determined, such amount to be determined using such
methodology and reviewed by KPMG, LLP with Buyer to be notified of the amount
thereof not less than three business days before the Closing, and such amount
will reflect the estimated net book value of the estimated assets that are set
forth on Schedule 1 less the estimated liabilities that are set forth on
Schedule 1, estimated as of the Closing Date, plus the Premium.
"Excluded Liabilities" means all liabilities or obligations that are
either: (A) not fairly and accurately identified herein as Assumed Liabilities,
or (B) Pre-Closing Liabilities.
"Exhibit A" means Exhibits A-1, A-2 , A-3 and A-4.
"Exhibit B" means Exhibits B-1 and B-2.
"Exhibit C" means Exhibits C-1, C-2, C-3 and C-4.
"Facility Leases" means the leases relating to the Leased Facilities,
all of such Facility Leases, as of the date hereof, together with all relevant
permits or authorizations relating to zoning or land use in connection
therewith, being listed and described on Exhibit B-1.
"Facility Subleases" means the subleases relating to the Subleased
Facilities, all of such Facility Subleases as of the date hereof, together with
all relevant permits or authorizations relating to zoning or land use in
connection therewith and any deposits that relate to the Subleased Facilities,
being listed and described on Exhibit B-2.
"GAAP" means generally accepted accounting principles consistently
applied as in the consolidated financial statements of PLM for the period ended
December 31, 1999.
"Holdback Amount" shall bear the same meaning as shall be assigned to
such term in the Escrow Agreement.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Inventory" means the entire tire and parts inventory of the Sellers
relating to the repair and maintenance of the Transportation Equipment as such
Inventory exists on the Closing Date.
"Information Systems Contracts" means the contracts concerning
information systems relating to the Business as set forth on Exhibit C-2.
"Knowledge" with respect to:(i) the Sellers, means, after having made
reasonable inquiries of each of their respective officers, directors and
responsible employees, (and in the case of Section 3.12(a)(ii), (c) and (d) to
the extent the defined term is referred to in such subsections, having
interviewed those of Sellers' employees with knowledge of environmental-related
issues associated with any of the Leased Facilities), the actual knowledge of,
or the receipt of notification by, Mr. Tidball, Mr. Goodrich, Mr. Chandler, Mr.
Jardine, Mr. Bronson, Mr. Rhea, Mr. Alpert, Mr. Headley, Mr. Brock, Ms. Austin
and Ms. Santo; and (ii) the Buyer, means, after having made reasonable inquiries
of its officers, directors and responsible employees, the actual knowledge of,
or the receipt of notification by, any senior executive officer of Buyer.
"Leased Facility" or "Leased Facilities" means the land and buildings
which are leased by Sellers as lessees pursuant to the Facility Leases, all of
such Leased Facilities as at the date hereof being listed and described on
Exhibit B-1 hereto.
"License of PLM Name" means the irrevocable, royalty-free license of
the PLM Name, substantially in the form attached hereto as Exhibit J.
"Mees Pierson Facility" means that certain loan facility extended to
PLM pursuant to the Facility Agreement dated as of May 6, 1999 between PLM as
borrower and Mees Pierson N.V. as lender, as consented and agreed to by PLM
Rental.
"Miscellaneous Contractual Obligations" means the types of obligations
of the Business as set forth on Exhibit C-3, to the extent fairly and accurately
identified and not incurred in violation of Section 5.8.
"Non-Competition Agreement" means the agreement substantially in the
form attached as Exhibit T.
"Other Assets" means Sellers' owned and leased interests and licenses
in and of the service vehicles, yard tractors, equipment, office furniture,
computer hardware and software, books and records and other tangible and
intangible personal property of Sellers relating to the Business being listed
and described on Exhibit C-1 hereto.
"Owned Transportation Equipment" means the units of Equipment owned by
Sellers as of the date hereof and listed and described on Exhibit A-1 hereto.
"Partnerships" means, collectively, PLM Equipment Growth Fund, a
California limited partnership, PLM Equipment Growth Fund II, a California
limited partnership, PLM Equipment Growth Fund III, a California limited
partnership, PLM Equipment Growth Fund IV, a California limited partnership, PLM
Equipment Growth Fund V, a California limited partnership, PLM Equipment Growth
Fund VI, a California limited partnership, PLM Equipment Growth & Income Fund
VII, a California limited partnership, and Professional Lease Management Income
Fund, L.L.C., a California limited liability company
"Partnerships Asset Purchase Agreement" means that certain asset
purchase agreement dated as of the date hereof between the Partnerships and
Buyer.
"PLM" means PLM International, Inc., a Delaware corporation.
"PLM FSI" means PLM Financial Services, Inc., a Delaware corporation.
"PLM Investment Management" means PLM Investment Management, Inc., a
California corporation.
"PLM Rental" means PLM Rental, Inc., a Delaware corporation.
"PLM Trailer Leasing" means any trade name under which Sellers or the
Partnerships are "doing business as" in connection with the Business (including
without limitation PLM Rental) and, in the case of the name of PLM Trailer
Leasing, which is the trade name under which PLM has registered a service mark
and obtained a Certificate of Registration with the United States Patent and
Trademark Office.
"PLM Name" means "PLM Trailer Leasing" and related marks as listed and
described on Exhibit U hereto.
"PLM Stockholder Approval" means the affirmative vote of holders of a
majority of the outstanding shares of the Common Stock of PLM approving the sale
by PLM to the Buyer of the Acquired Assets owned by it for itself and not the
other Sellers.
"PLM Subsidiaries" means collectively: (i) PLM Rental, Inc., a Delaware
corporation; (ii) TEC AcquiSub, Inc., a California corporation; (iii) PLM
Transportation Equipment Corporation, a California corporation; (iv) PLM
Investment Management, Inc., a California corporation; and (iv) PLM Financial
Services, Inc., a Delaware corporation.
"PLM TEC" means PLM Transportation Equipment Corporation, a California
corporation.
"Post-Closing Liabilities" means liabilities or obligations arising
from or relating to the ownership, use or operation of the Acquired Assets or
the Assumed Liabilities or the Business on or after the Closing Date.
"Pre-Closing Liabilities" means (other than those that are fairly and
accurately identified herein as Assumed Liabilities) liabilities or obligations
arising from or relating to the ownership, use or operation of the Acquired
Assets or the Assumed Liabilities or the Business before the Closing Date,
including without limitation with respect to (i) all liabilities or obligations
of Sellers for sales and use and employment Taxes arising from or relating to
transactions of Sellers prior to Closing, for unpaid Taxes of any person or
entity under Treasury Regulation 1.1502-6 (or any similar provision of state,
local or foreign law), or otherwise for Taxes due, accrued or relating to the
period prior to Closing, (ii) all liabilities or obligations of Sellers under
any arbitration or litigation proceeding, or any claims alleged or asserted
relating to any event, circumstance or occurrence, arising prior to Closing, or
(iii) all liabilities or obligations attributable to any period prior to Closing
arising under any Environmental, Health and Safety Laws.
"Premium" is the amount identified in the defined term "Premium" set
forth in Schedule 1.
"Purchase Order Transportation Equipment" means any unit of Equipment
for which the Sellers have entered into an Equipment Purchase Order, and which
is purchased by Sellers between the date hereof and the Closing Date, which is
described on Exhibit A-4 hereto.
"Purchase Price" shall have the meaning ascribed thereto in Section
1.5(c).
"Receivables/Prepayment Items" means all of Sellers' accounts
receivable related to or arising from the Acquired Assets or the Assumed
Liabilities, net of any loss reserves, and together with any prepaid expenses
related to or arising from the Acquired Assets or the Assumed Liabilities, any
claims related to or arising from the Acquired Assets or the Assumed Liabilities
against any third party, and any rebates or recoveries or proceeds from
insurance coverage or third parties related to or arising from the Acquired
Assets or the Assumed Liabilities, the types of all of which are set forth on
Exhibit C-4.
"Reconciliation Schedule" means a list of all Equipment deleted or
added to the Transportation Equipment after the date hereof and as of the
Closing Date. Such "deleted" units of Transportation Equipment are those units
of Transportation Equipment that are listed on Exhibits A-1, A-2 and A-3 but are
not listed on the Closing List. Such "added" units of Transportation Equipment
are those units of Purchase Order Transportation Equipment which are not listed
on Exhibits A-1, A-2 and A-3 but are listed on the Closing List. The
Reconciliation Schedule shall be prepared by Sellers as of not less than three
business days prior to Closing and provided to Buyer not less than three
business days prior to Closing, but shall be updated and made accurate as of the
Closing Date and provided to Buyer when the Closing Financial Statements are
delivered to Buyer pursuant to Section 1.5(a) below.
"Rental Contract" means those Customer Equipment Leases identified and
listed on Exhibit A-2 and which are documented in substantially the form of
Section 3.4.4 of the Sellers Disclosure Schedule.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Sellers" means PLM, PLM Rental, TEC, and PLM TEC.
"Sellers Bill of Sale" means the bill of sale in the form attached
hereto as Exhibit H delivered by each Seller pursuant to Section 1.4(b)(i).
"Sellers Disclosure Schedule" means the document delivered by Sellers
to Buyer simultaneously with the execution hereof containing the information
required to be included therein pursuant to this Agreement.
"Subleased Facility" means each Leased Facility that a Seller has
subleased as sublessor pursuant to a Facility Sublease, all of such Subleased
Facilities as of the date hereof being listed and described on Exhibit B-2.
"Superior Proposal" means any unsolicited bona fide written Acquisition
Proposal, for which financing, to the extent required, is committed, from a
party other than Buyer or its Affiliates, which the board of directors of PLM
determines in good faith in compliance with its fiduciary duties under Delaware
law based upon the advice of outside legal counsel and after consultation with
reputable investment bankers is superior to the transaction contemplated by this
Agreement.
"Taxes" shall mean all federal, state, local or foreign taxes,
including but not limited to income, gross receipts, windfall profits, value
added, severance, property, production, sales, use, license, excise, franchise,
custom duty, employment, withholding or similar taxes, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties.
"TEC" means TEC AcquiSub, Inc., a California corporation.
"Term Lease" means those Customer Equipment Leases that are not Rental
Contracts.
"TRAC Lease Transportation Equipment" means the units of transportation
equipment leased by Sellers as lessee from certain financial institutions
pursuant to the TRAC Leases , all of such TRAC Lease Transportation Equipment at
the date hereof being listed and described on Exhibit A-3 hereto.
"TRAC Leases" means the TRAC leases which relate to the TRAC Leased
Transportation Equipment, pursuant to which a Seller is lessee, all of such TRAC
Leases as of the date hereof being listed and described on Exhibit A-3 hereto.
"Transition Services Agreement" means an agreement between PLM and
Buyer, in the form attached hereto as Exhibit G-4.
"Transportation Equipment" means the Owned Transportation Equipment,
the TRAC Lease Transportation Equipment and the Purchase Order Transportation
Equipment.
The plural or singular of any defined term shall have a meaning
correlative to such defined term.
1.2 Purchase and Sale of Assets and Assignment and Assumption of
Obligations. Upon and subject to the terms and conditions of this Agreement, at
the Closing:
(a) Sellers will sell, transfer, convey, assign and deliver to
Buyer, and Buyer shall purchase, acquire and accept from Sellers, all
of Sellers' right, title, interest and obligations in the Acquired
Assets and the Assumed Liabilities, together with (i) all
manufacturers' warranties (to the extent assignable), technical
information and specifications, license plates (where permitted by
law), certificates of title and all other rights relating to the
Transportation Equipment, (ii) all security and other deposits paid to
or deposited with Sellers under the terms of any Customer Equipment
Lease and which have not been refunded or paid pursuant to the terms of
such Customer Equipment Lease, to the extent that such deposits have
not been used to reduce the Purchase Price, (iii) all existing
correspondence and contract files relating to the Acquired Assets and
the Assumed Liabilities, and (iv) the books, records (including without
limitation, with respect to Purchase Order Transportation Equipment,
copies of correspondence, specifications and delivery dates for such
units of equipment), copies of electronic data files, billing files and
credit files relating to vendors and customers of the Business;
(b) Sellers will assign to Buyer, and Buyer will assume,
acquire and accept, all of Sellers' right, title, interest and
obligations as lessee in and to the Facility Leases and the TRAC Leases
described on the Closing List, in the form of Assignments attached as
Exhibits F and G-1;
(c) Sellers will assign to Buyer, and Buyer will assume,
acquire and accept all of Sellers' right, title and interest as lessor
in and to the Facility Subleases and the Customer Equipment Leases
described on the Closing List, in the form of Assignments attached as
Exhibits G-2 and E-1 (other than those of the Customer Equipment Leases
owned by PLM Investment Management and PLM FSI);
(d) Sellers will assign to Buyer, and Buyer will assume,
acquire and accept, all of Sellers' right, title, interest and
obligations in and to Equipment Purchase Orders listed and described on
the Closing List, in the form of Assignments attached as Exhibit D;
(e) Sellers will enter into the License of PLM Name to license
to Buyer and/or other entity or entities designated by Buyer, on an
exclusive basis, the PLM Name, and Sellers will enter into with Buyer
and/or other entity or entities designated by Buyer the Transition
Services Agreement and the Non-Competition Agreement;
(f) Seller will assign to Buyer and Buyer will assume, acquire
and accept, all of Seller's right, title, interest and obligations in
and to the Mees Pierson Facility, in the form of Assignment attached as
Exhibit G-3;
(g) Sellers will assign to Buyer and Buyer will assume,
acquire and accept, all of Seller's right, title, interest and
obligations in and to the Miscellaneous Contractual Obligations, in the
form of Assignment attached as Exhibit E-3; and
(h) Sellers will assign to Buyer and Buyer will assume,
acquire and accept, all of Seller's right, title, interest and
obligations in and to the Information Systems Contracts, in the form of
Assignment attached as Exhibit E-2.
(i) Sellers will cause each of PLM Investment Management and
PLM FSI to transfer and/or assign to Buyer and Buyer will assume,
acquire and accept, all of PLM Investment Management and PLM FSI's
right, title, interest and obligations in and to those of the Customer
Equipment Leases owned by PLM Investment Management and PLM FSI, in the
form of Assignment attached as Exhibit E-1A.
Other than the Assumed Liabilities, Buyer will not assume or have any
responsibility with respect to any other obligation or liability of Sellers. For
the avoidance of doubt, it is expressly agreed and understood that the Threshold
(as defined in Section 9.5) and other limitations on survival or otherwise in
Article IX are not applicable with respect to the Excluded Liabilities, with the
exception of those liabilities or obligations attributable to any period prior
to Closing arising under any Environmental, Health and Safety Laws.
Notwithstanding anything herein to the contrary, Buyer may, based upon (x)
information received concerning impairments to title that are disclosed by
Sellers to Buyer after the date hereof which materially and adversely affects
the use consistent with past practice of the Leased Facilities, or (y) the
results of environmental assessments received by Buyer, or if no definitive
environmental assessment has been received by Buyer based upon any environmental
information received up to the time of Buyer's determination, select, up to
sixty (60) days after the date hereof, or if Buyer has not had sufficient time
to receive definitive environmental assessments, or to review any definitive
environmental assessment received, as a result of events substantially and
reasonably beyond the control of Buyer, up to such date being no later than
ninety (90) days after the date hereof (with Closing being deferred until ninety
(90) days after the date hereof in the event that all conditions to Closing have
otherwise been satisfied or waived prior to such date), any one or more of the
Leased Facilities, up to a maximum of ten (10) Leased Facilities, that Buyer
shall determine not to purchase hereunder, so that Acquired Assets and Assumed
Liabilities no longer include any such Leased Facility; provided that Buyer
shall only be permitted not to purchase any such Leased Facility to the extent
that Buyer nevertheless remains responsible for acquiring all of those assets
that are Acquired Assets relating to that Leased Facility and that to the extent
that Closing has been deferred for the reasons set forth above, Buyer shall have
used its best efforts to have received and reviewed such environmental
assessments within such ninety (90) day period.
1.3 Consideration. Upon and subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties and agreements of
Sellers contained herein, and in consideration of the sale, assignment, transfer
and delivery of the Acquired Assets, referred to in Section 1.2 hereof, Buyer
will deliver, or cause to be delivered, the Estimated Purchase Price (less the
Holdback Amount) at the Closing, and the Holdback Amount to the escrow agent
under the Escrow Agreement, together with the following:
(a) the Assignment and Assumption of TRAC Leases;
(b) the Assignment and Assumption of Customer Equipment
Leases;
(c) the Assignment and Assumption of Facility Leases;
(d) the Assignment and Assumption of Facility Subleases;
(e) the Assignment and Assumption of Equipment Purchase
Orders;
(f) the Assignment and Assumption of Mees Pierson
Facility;
(g) the Assignment and Assumption of the Information
Systems Contracts; and
(h) the Assignment and Assumption of Miscellaneous
Contractual Obligations.
1.4 Closing.
(a) Subject to the terms and provisions of this Agreement, the
Closing of the transactions contemplated by this Agreement will take
place at the offices of Greene Radovsky Maloney & Share LLP, Four
Embarcadero Center, Suite 4000, San Francisco, California 94111 on the
later of sixty days after the date hereof (unless deferred in
accordance with Section 1.2 or Section 2.4) and the second business day
following satisfaction or waiver of all of the conditions set forth in
Articles VII and VIII, at 10:00 A.M., local time, or at such other time
and place as may be agreed upon by the parties hereto.
(b) At the Closing, each Seller will deliver to Buyer (or, in
the case of (v), will cause PLM Investment Management and PLM FSI to
deliver to Buyer): (i) a duly executed Sellers Bill of Sale; (ii) all
documents of title, instruments and deeds necessary to transfer, assign
and convey ownership to Buyer of all of the Acquired Assets and the
Assumed Liabilities, which, at Sellers' option and only for the Owned
Transportation Equipment, may take the form of executed powers of
attorney; (iii) duly executed counterparts of each Assignment and
Assumption of TRAC Leases, together with an original fully executed
copy of each TRAC Lease (if in Sellers' possession and, if not in
Sellers' possession, a true and complete copy thereof); (iv) a duly
executed counterpart of the Assignment and Assumption of Mees Pierson
Facility together with a fully executed copy thereof; (v) a duly
executed counterpart of the Assignment and Assumption of Customer
Equipment Leases, (together with all security and other deposits
required under the Customer Equipment Leases, to the extent that such
deposits have not been used to reduce the Purchase Price); (vi) a duly
executed counterpart of each Assignment and Assumption of Facility
Sublease described in Section 1.2(c) hereof together with an original
Facility Sublease (together also with all security and other deposits
required under the Facility Subleases, to the extent that such deposits
have not been used to reduce the Purchase Price); (vii) a duly executed
counterpart of each Assignment and Assumption of Facility Lease,
together with an original executed copy of each Facility Lease, (viii)
a duly executed counterpart of each Assignment and Assumption of
Equipment Purchase Order, together with an original copy of each
agreement, invoice or other document relating to each Equipment
Purchase Order; (ix) an original executed copy of the License of PLM
Name; (x) executed copies of the consents referred to in Section 8.6
hereof; (xi) the opinions of counsel referred to in Section 8.5 hereof;
(xii) the Closing List and the Reconciliation Schedule; (xiii) a duly
executed Transition Services Agreement and a duly executed
Non-Competition Agreement; (xiv) a duly executed Assignment and
Assumption of the Information Systems Contracts; and (xv) a duly
executed Assignment and Assumption of Miscellaneous Contractual
Obligations.
(c) At the Closing, Buyer will deliver to Sellers (or, in the
case of (iii), will deliver to PLM Investment Management and PLM FSI):
(i) duly executed counterparts of each Assignment and Assumption of
TRAC Leases; (ii) a duly executed counterpart of the Assignment and
Assumption of Mees Pierson Facility; (iii) a duly executed counterpart
of the Assignment and Assumption of Customer Equipment Leases; (iv) a
duly executed counterpart of each Assignment and Assumption of Facility
Lease; (v) a duly executed counterpart of each Assignment and
Assumption of Facility Sublease; (vi) a duly executed counterpart of
each Assignment and Assumption of Equipment Purchase Order; (vii) duly
executed counterparts of the License of PLM Name; (viii) the Estimated
Purchase Price (less the Holdback Amount) and the Holdback Amount to
the escrow agent under the Escrow Agreement; (ix) executed copies of
the consents referred to in Section 7.9 hereof; (ix) the opinion of
counsel referred to in Section 7.6 hereof; (x) a duly executed
counterpart of the Transition Services Agreement and a duly executed
counterpart of the Non-Competition Agreement; (xi) a duly executed
Assignment and Assumption of the Information Systems Contracts; and
(xii) a duly executed Assignment and Assumption of Miscellaneous
Contractual Obligations.
1.5 Post Closing Adjustment to the Estimated Purchase Price (other
than the Holdback Amount).
(a) Within 30 days following the Closing, Sellers shall
prepare, or cause to be prepared, and deliver to Buyer financial
statements (the "Closing Financial Statements") which shall set forth
the actual net book value of the assets that are set forth on Schedule
1 less the liabilities that are set forth on Schedule 1 as of the
Closing Date. The Closing Financial Statements shall be prepared using
the same methodology, other than as to the Premium and other than that
the net book value will reflect the actual net book value of the assets
that are set forth on Schedule 1 less the liabilities that are set
forth on Schedule 1 as of the Closing Date, as set forth in Schedule 1
and reviewed by KPMG, LLP.
(b) Buyer and Buyer's accountants shall, within 15 days after
the delivery by Sellers of the Closing Financial Statements, complete
their review of the actual net book value of the assets that are set
forth on Schedule 1 less the liabilities that are set forth on Schedule
1 as of the Closing Date as derived using the same methodology, other
than as to the Premium and other than that the net book value will
reflect the actual net book value of the assets that are set forth on
Schedule 1 less the liabilities that are set forth on Schedule 1 as of
the Closing, as set forth on Schedule 1 (the "Net Book Value"). In the
event that Buyer objects to the Net Book Value, as derived from the
Closing Financial Statements, Buyer shall inform Sellers in writing
(the "Buyer's Objection"), setting forth a specific description of the
basis of Buyer's Objection and the adjustments to the Net Book Value
which Buyer believes should be made, on or before the last day of such
15-day period. Sellers shall then have 7 days to review and respond to
Buyer's Objection. The parties shall use all reasonable efforts to
resolve any dispute as to the proper calculation of Net Book Value as
of the Closing Date. If Sellers and Buyer are unable to resolve all of
their disagreements with respect to the determination of the foregoing
items within 10 days following the completion of Sellers' review of
Buyer's Objection, they shall refer their remaining differences to a
nationally recognized firm of independent public accountants with a San
Francisco office, jointly selected by Buyer and Sellers (the "CPA
Firm"), who shall, acting as experts and not as arbitrators, determine
on the basis of using the same methodology, other than as to the
Premium and other than that the net book value will reflect the actual
net book value of the assets that are set forth on Schedule 1 less the
liabilities that are set forth on Schedule 1 as of the Closing, and
only with respect to the remaining differences so submitted, whether
and to what extent, if any, the Net Book Value, as derived from the
Closing Financial Statements, requires adjustment. The parties shall
instruct the CPA Firm to deliver its written determination to Buyer and
Sellers no later than the twentieth day after the remaining differences
underlying the Buyer's Objection are referred to the CPA Firm. The CPA
Firm's determination shall be conclusive and binding upon Buyer and
Seller. The fees and disbursements of the CPA Firm shall be shared
equally by Buyer and Sellers. Buyer and Sellers shall make readily
available to the CPA Firm all relevant books and records and any work
papers (including those of the parties' respective accountants)
relating to the consolidated financial statements of PLM for the period
ended December 31, 1999 and the Closing Financial Statements and all
other items reasonably requested by the CPA Firm. The "Adjusted Closing
Financial Statements" shall be (i) the Closing Financial Statements in
the event that (x) no Buyer's Objection is delivered to Sellers during
the 15-day period specified above or (y) Sellers and Buyer so agree,
(ii) the Closing Financial Statements, adjusted in accordance with the
Buyer's Objection in the event that Sellers do not respond to Buyer's
Objection within the 7-day period following receipt by Sellers of
Buyer's Objection, or (iii) the Closing Financial Statement, as
adjusted by either (x) the agreement of Sellers and Buyer or (y) the
CPA Firm.
(c) Within ten business days following issuance of the
Adjusted Closing Financial Statements, the adjustment payments payable
pursuant to this Section 1.5(c) shall be paid by wire transfer of
immediately available funds to a bank account designated by Buyer or
Sellers, as the case may be. Buyer or Sellers, as the case may be,
shall make an adjustment payment in respect of Net Book Value in an
amount equal to the difference between (x) the amount equal to the
Estimated Purchase Price less the Premium (the "Estimated Net Book
Value") and (y) the Net Book Value as derived from the Adjusted Closing
Financial Statements. The adjustment payment in respect of Net Book
Value will be made by Sellers to Buyer to the extent that Net Book
Value on the Adjusted Closing Financial Statements is less than
Estimated Net Book Value and by Buyer to Sellers to the extent that Net
Book Value on the Adjusted Closing Financial Statements is greater than
Estimated Net Book Value. The Estimated Purchase Price as adjusted by
such adjustment payment shall be the "Purchase Price" for the purposes
of this Agreement. For the avoidance of doubt, it is expressly agreed
and understood that the Threshold (as defined in Section 9.5) and other
limitations on survival or otherwise in Article IX are not applicable
with respect to any obligations under this Section 1.5. For the
avoidance of doubt, it is further expressly agreed and understood that
in calculating the Purchase Price hereunder there shall be no double
counting so that the Holdback Amount shall be irrelevant for the
purposes of this Section and no adjustment to the Estimated Purchase
Price shall affect the Holdback Amount or result in Buyer having to
make more than one payment of the Holdback Amount hereunder to the
escrow agent under the Escrow Agreement.
Article II
RELATED MATTERS
2.1 Confidentiality. Each party hereto and their respective Affiliates
will hold, and will cause all of its consultants and advisors to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of its counsel, by other requirements of law, all documents
and information concerning the other party and their respective Affiliates
furnished to it by such other party or its representatives in connection with
the transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by the party to which
it was furnished, (ii) in the public domain through no fault of such party, or
(iii) later lawfully acquired from other sources by the party to which it was
furnished), and each party will neither use such information nor release or
disclose such information to any other person, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in connection
with this Agreement, as well as to any others to whom disclosure may be required
by applicable law. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained, except to the extent such
information comes into the public domain through no fault of the party required
to hold it in confidence; and such information shall not be disclosed to any
employees or representatives of the party required to hold such information in
confidence, except as is necessary to evaluate the transactions contemplated by
this Agreement; and all such documents (including copies thereof) shall be
returned to the other party immediately upon the written request of such other
party, except to the extent copies are required to be retained to meet
regulatory or other legal requirements. Without limiting the generality of the
foregoing, Sellers agree to enforce any confidentiality agreements relating to
the Business that have been entered into (including without limitation with any
third parties that have acquired information in connection with any possible
Acquisition Proposal whether before or after the date of this Agreement) and to
cooperate and give reasonable assistance to Buyer in the enforcement thereof for
the protection of the Business. In the case where such confidentiality
agreements are to be enforced against individuals who are or were employees of
the Business prior to Closing, Sellers shall bear the expenses thereof but shall
be reimbursed by Buyer following Closing taking place. Otherwise, all expenses
of enforcement of confidentiality agreements shall be borne by Buyer.
2.2 Further Assurances; Access to Books and Records.
(a) After the Closing, each party hereto shall from time to
time, at the request of the other party, (i) execute and deliver such
other necessary instruments of conveyance and transfer as the other
party may reasonably request, in order to more effectively consummate
the transactions contemplated hereby and to vest in the other party
good and marketable title to the assets being transferred hereunder
(including, without limitation, assistance in the collection or
reduction to possession of any of such assets being transferred
hereunder, assignments of warranties and certificates of title) and
(ii) provide to the other party such information as is, in the opinion
of counsel to the other party, necessary to enable the other party to
comply with applicable laws and regulations relating to the
transactions contemplated hereby and the disclosure thereof.
(b) Buyer agrees that after the Closing, during normal
business hours and upon reasonable prior notice, it will permit Sellers
and its auditors, through their authorized representatives, to have
access to and examine and take copies of (all under the supervision of
Buyer's personnel and at Seller's expense) all books and records
relating to the Acquired Assets which were acquired from Sellers
(including but not limited to correspondence, memoranda, books of
account and the like) and relating to events occurring prior to the
Closing Date and to transactions or events occurring subsequent to the
Closing Date which are related to or arise out of transactions or
events occurring prior to the Closing Date.
(c) Notwithstanding anything to the contrary in this
Agreement, this Agreement shall not constitute an agreement to assign
or transfer any governmental approval or application therefor,
instrument, contract, lease, permit or other agreement or arrangement,
or any claim, right or benefit arising thereunder or resulting
therefrom, if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would
constitute a breach or violation thereof or affect adversely the rights
of the Buyer or Sellers, and any transfer or assignment of any interest
under any such instrument, contract, lease, permit or other agreement
or arrangement that requires the consent of a third party shall be made
subject to such consent or approval being obtained. In the event any
such consent or approval is not obtained on or prior to the Closing
Date, Sellers shall continue to use all reasonable efforts to obtain
such approval or consent after the Closing Date until such time as such
consent or approval has been obtained, and Sellers will cooperate with
the Buyer in any lawful and economically feasible arrangement to
provide that the Buyer shall receive the benefits under any such
instrument, contract, lease, permit or other agreement or arrangement,
including performance by Sellers as agent, if economically feasible,
provided that the Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the
extent Buyer would have been responsible therefor if such consent or
approval had been obtained. To the extent any of the rights and
obligations with respect to an Acquired Asset or Assumed Liability are
not transferred to Buyer, Buyer's sole rights under this Agreement with
respect to Sellers' failure to obtain consent to the transfer thereof
is as provided in this Section 2.2.
(d) The parties shall allocate on or before Closing the
Purchase Price (other than the Holdback Amount for so long as it has
not been released under the Escrow Agreement) among the Acquired Assets
and the Assumed Liabilities except to the extent that modifications are
necessary to reflect changes in the Acquired Assets and the Assumed
Liabilities between the date hereof and the Closing Date or to the
extent that modifications are necessary to reflect any adjustment made
to the Estimated Purchase Price in order to establish the Purchase
Price pursuant to Section 1.5(c), and the parties agree to report for
state and federal Tax purposes in accordance with such allocation of
the Purchase Price.
2.3 Accounts Receivables/Prepayment Items Proceeds. The Sellers hereby
agree to remit, or assign any claims they may have with respect to, and to
endorse to Buyer any payment they receive after the Closing in respect of any
Receivable/Prepayment Item as promptly as reasonably practicable, and in any
event within three business days of receipt thereof.
2.4 Assignment and Transfer Fees and Taxes. Buyer and Sellers shall
cooperate reasonably with each other and keep each other reasonably informed in
the preparation and filing of all legally required or permitted documentation
relating to, and in the minimization or, if possible, the elimination of, fees
or Taxes to be paid by Buyer or Sellers to any third party (including government
entities) or each other (as a result of an indemnification provision or
provision allocating responsibility) arising from the transfer and/or assignment
from Sellers to Buyer of the Acquired Assets and the Assumed Liabilities,
including but not limited to all documents for the purposes of sales and use or
other similar Taxes and employment Taxes in every state and local jurisdiction
on the attached Schedule 2.4. Without limiting the obligations of Sellers as set
forth in this Section 2.4, Sellers shall use all commercially reasonable efforts
to assist Buyer to obtain and deliver, at the earliest practicable date, to
Buyer all legally required or permitted documentation which has the effect that
Buyer is not liable for any amounts for sales or use or other similar Taxes and
employment Taxes as a successor to the business or assets of the Sellers (or
other comparable documentation under state or local law). Notwithstanding the
foregoing, subject to any of the parties' right to attempt to minimize or, if
possible, eliminate any fees or Taxes through negotiation or appeal, Buyer and
Sellers will comply with all lawful instructions and/or requirements imposed by
taxing or other governmental authorities resulting from or associated with the
filing of the aforementioned documents.
Sellers intend to negotiate a voluntary disclosure agreement with state
taxing or governmental authorities in Illinois with respect to sales or use
Taxes, including Illinois Retailers Occupation and Use Taxes, and employment
Taxes, in Illinois attributable to periods prior to the Closing. In such
negotiations, Sellers are entitled to negotiate for the reduction or elimination
of Sellers' Taxes provided that they do not hold out Buyer or make reference to
Buyer as an alternative source for the payment of such Taxes. Buyer shall have
the burden of proof in the event that Buyer asserts that any of Sellers have
held out Buyer or made reference to Buyer as an alternative source for the
payment of such Taxes. Sellers shall use reasonable efforts to reach such a
voluntary disclosure agreement with state taxing or governmental authorities in
Illinois within sixty (60) days of the date hereof, but if any of Sellers shall
not have reached such agreement by such date, as a result of events
substantially and reasonably beyond the control of Sellers, Sellers shall have
the right to defer the Closing to a date ninety (90) days after the date hereof
in the event that all conditions to Closing have otherwise been satisfied or
waived prior to such date; provided that to the extent that Closing has been
deferred for the reasons set forth above, Sellers shall have used their best
efforts to have reached such an agreement within such ninety (90) period.
Notwithstanding anything contained in this Agreement or any Exhibit or
Schedule to the contrary, except for the immediately succeeding sentence, Buyer
shall not make any filings with, notify, contact, or otherwise communicate with
any Illinois revenue or taxing authorities, prior to five (5) days from the date
of Closing, with respect to any of the Taxes, interest or penalties referred to
in Section 6.5 or employment Taxes of Sellers. Notwithstanding the foregoing, to
the extent that Buyer receives any communication or contact from such taxing
authorities, to which Buyer believes it is legally required to respond, Buyer
will inform Sellers of the communication or contact and make reasonable efforts
in coordination with the Sellers to jointly develop a response to such
communication or contact. If Buyer and Sellers cannot develop a mutually
satisfactory response or disagree as to whether a response is required or the
extent to which a response is required to meet Buyer's legal obligations, Buyer
and Sellers agree to seek and abide by an opinion of an independent law firm,
waiving any potential objections to the opinion and, with respect to such law
firm, any potential or actual conflicts of interest that such law firm may have.
Such counsel shall be requested to address in its opinion any statutory,
regulatory or other authority which would permit Buyer to legally delay the date
upon which such response is required. Such counsel shall be retained within a
reasonable time with respect to the due date for response specified in the
communication or contact from such revenue or taxing authority, but shall not
exceed more than five (5) days from the date Buyer informs Seller of such
communication or notice. Buyer and Sellers further agree that such opinion will
be sought from a law firm recognized as experts in the field of state and local
tax law in Illinois (such as, Horwood, Marcus & Berk, Chartered). The reasonable
fees and expenses of such legal counsel shall be the responsibility of the
Sellers.
From the period beginning five (5) days prior to Closing and
thereafter, Buyer, after an initial three (3) days prior written notice (which
will only be required to be made by Buyer once under this Agreement) may file a
completed application for a seller's permit and all other legally required
permits and applications and make all legally required filings under such
permits or registrations once granted, in order to conduct business in Illinois
post Closing.
Article III
REPRESENTATIONS AND WARRANTIES OF SELLERS
For purposes of the representations and warranties made in this Article
III as of the date hereof, "Transportation Equipment" shall mean the
Transportation Equipment listed on Exhibit A. For purposes of the
representations and warranties made in this Article III as of the Closing Date,
"Transportation Equipment" shall mean the Transportation Equipment specified in
the Closing List. For purposes of the representations and warranties of Sellers
contained herein, disclosure in any section of the Sellers Disclosure Schedule
shall be deemed to be adequate response and disclosure of such facts or
circumstances with respect to all representations or warranties by Sellers which
would reasonably call for disclosure of such information, whether or not such
disclosure is specifically associated with or purports to respond to one or more
or all of such representations or warranties; provided such disclosure is fair
and accurate. The inclusion of any information in any section of the Sellers
Disclosure Schedule or other document delivered by Sellers pursuant to this
Agreement shall not be deemed to be an admission or evidence of the materiality
of such item, nor shall it establish a standard of materiality for any purpose
whatsoever. PLM and each other Seller hereby represents and warrants, jointly
and severally, to Buyer as follows:
3.1 Corporate Organization, Etc.
(a) Each Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
organization as listed in Section 3.1 of the Sellers Disclosure
Schedule and has full power and authority, directly or indirectly, to
own and lease the Acquired Assets and to carry on its business as
presently conducted; and is duly qualified or licensed to do business
as a foreign corporation in good standing in such other jurisdictions
in which their direct or indirect ownership or possession of the
Acquired Assets requires such qualification or, if one or more of the
PLM Subsidiaries are not so qualified in any such jurisdiction, it or
they can become so qualified in such jurisdiction without any material
adverse effect upon the Acquired Assets.
(b) PLM Rental, TEC, PLM TEC, PLM Investment Management, and
PLM FSI are direct and indirect wholly-owned subsidiaries of PLM.
3.2 Authorization, Etc. The execution, delivery and performance by each
Seller of this Agreement and the consummation by each Seller of the transactions
contemplated hereby are within each Seller's powers and, except for the PLM
Stockholder Approval for the sale by PLM of the Acquired Assets owned by it for
itself and not the other Sellers, have been duly authorized by all necessary
corporate action on the part of each Seller. The PLM Stockholder Approval is the
only vote of the Sellers and the holders of any of the Sellers' equity or debt
securities necessary in connection with the consummation of the transactions
contemplated hereby. This Agreement constitutes a valid and binding agreement of
each Seller, enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws relating to creditors'
rights generally and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
3.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation, bylaws or other organizational
documents of any Seller, or, except as specified in Section 3.3 of the Sellers
Disclosure Schedule, violate, or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or acceleration of the maturity
of any debt or obligation pursuant to, or result in the creation or imposition
of any security interest, lien or other encumbrance upon any of the Acquired
Assets under any agreement or commitment with respect to the Acquired Assets to
which any Seller is a party or by which any Seller is bound, or to which any of
the Acquired Assets is subject, or violate any statute or law or in any respect
any judgment, decree, order, regulation or rule of, or proposed settlement
before, any court or governmental authority.
3.4 Title to Assets; Encumbrances.
3.4.1 Owned Transportation Equipment. Except as set forth in
Section 3.4.1 of Sellers Disclosure Schedule and except for the
Customer Equipment Leases and liens that a lessee is required to
discharge, all such Owned Transportation Equipment is free and clear of
all title defects, liens, claims, charges, security interests or other
encumbrances of any nature whatsoever including, without limitation,
chattel mortgages, conditional sales contracts, purchase options,
collateral security arrangements and other title or interest retention
arrangements, has been duly registered and licensed by appropriate
governmental authorities, which registration is in full force and
effect, and all registration and license fees due and payable relating
to the Owned Transportation Equipment have been paid, and each unit of
Owned Transportation Equipment has a valid license plate, registration,
and certificate of title corresponding to such unit of Owned
Transportation Equipment. The liens or encumbrances over any of the
Acquired Assets or Assumed Liabilities securing the Senior Loan
referred to in Section 3.4.1 of Sellers Disclosure Schedule shall have
been released and discharged as of Closing. Exhibit A-1 contains, and
the Closing List as of the Closing Date will contain, a fair, complete
and accurate list of all Owned Transportation Equipment and a fair,
complete and accurate description of the information disclosed under
the categories addressed therein. Except as specifically identified in
Section 3.4.1 of the Sellers Disclosure Schedule, all units that are
off-lease of the Owned Transportation Equipment are in roadworthy,
cargoworthy condition without incurring in excess of $500 of repairs
(excluding the cost of repairing and replacing tires associated with
normal wear and tear).
3.4.2 TRAC Lease. Sellers have made available to Buyer
current, correct and complete copies of all TRAC Leases and all
amendments, modifications, renewals and addenda to such TRAC Leases.
Each Seller has valid and effective TRAC Leases relating to all of the
TRAC Lease Transportation Equipment which it purports to lease as
lessee as of the date hereof as set forth on Exhibit A-3 hereto and, as
of the Closing Date, will have valid and effective leasehold interests
pursuant to the relevant TRAC Leases to all of the TRAC Lease
Transportation Equipment listed on the Closing List. Except as set
forth in Section 3.4.2 of the Sellers Disclosure Schedule, each TRAC
Lease is valid, binding and enforceable in accordance with its terms
(except as enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
relating to creditors' rights generally and to general principles of
equity), and is in full force and effect; there are no existing
material defaults thereunder; no event of default has occurred which
(whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a material default
thereunder. Except as set forth in Section 3.4.2 of the Sellers
Disclosure Schedule and except for TRAC Leases and the Customer
Equipment Leases and liens that a lessee is required to discharge, all
such TRAC Lease Transportation Equipment is free and clear of all title
defects, liens, claims, charges, security interests or other
encumbrances of any nature whatsoever including, without limitation,
chattel mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements, has
been duly registered and licensed by appropriate governmental
authorities, which registration is in full force and effect, and all
registration and license fees due and payable relating to the TRAC
Lease Transportation Equipment have been paid, and each unit of TRAC
Lease Transportation Equipment has a valid license plate, registration,
and certificate of title corresponding to such unit of TRAC Lease
Transportation Equipment. Exhibit A-3 contains, and the Closing List as
of the Closing Date will contain, a fair, complete and accurate list of
all TRAC Lease Transportation Equipment and TRAC Leases and a fair,
complete and accurate description of the information disclosed under
the categories addressed therein. Except as specifically identified in
Section 3.4.2 of the Sellers Disclosure Schedule, all units that are
off-lease of the TRAC Lease Transportation Equipment are in roadworthy,
cargoworthy condition without incurring in excess of $500 of repairs
(excluding the cost of repairing and replacing tires associated with
normal wear and tear).
3.4.3 Equipment Purchase Orders. Exhibit A-4 contains, and the
Closing List shall contain, a complete and accurate list of all
Equipment Purchase Orders Sellers have entered into (including without
limitation details of specifications and delivery dates). Sellers have
made available to Buyer current, correct and complete copies of all
Equipment Purchase Orders and all amendments, modifications, renewals
and addenda to such Equipment Purchase Orders. Except as set forth in
Section 3.4.3 of the Sellers Disclosure Schedule, to Sellers' Knowledge
each Equipment Purchase Order is valid, binding and enforceable in
accordance with its terms (except as enforceability may be subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to creditors' rights
generally and to general principles of equity), and is in full force
and effect.
3.4.4 Customer Equipment Leases. Exhibit A-2 contains as of
May 15, 2000, and the Closing List shall contain, a complete and
accurate list of all Customer Equipment Leases, which are constituted
only of either Rental Contracts or Term Leases. Exhibit A-2 identifies
the amount of each security and other deposit paid to or deposited with
Sellers under the terms of the relevant Customer Equipment Lease.
Exhibit A-2 identifies, and the Closing List shall identify, each
Customer Equipment Lease as either a Rental Contract or a Term Lease.
Each Customer Equipment Lease constituting a Rental Contract is
documented in substantially the form that is included in Exhibit A-2.
All Customer Equipment Leases constituting Term Leases are listed and
described in Exhibit A-2, and Buyer has been provided a copy of all
such Term Leases. Except as set forth in Section 3.4.4 of the Sellers
Disclosure Schedule, to Sellers' Knowledge each Customer Equipment
Lease is valid, binding and enforceable in accordance with its terms
(except as enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
relating to creditors' rights generally and to general principles of
equity), and is in full force and effect; to Sellers' Knowledge there
are no existing material defaults thereunder; to Sellers' Knowledge no
event of default has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default thereunder; and subject to the TRAC
Leases, to Sellers' Knowledge and except for liens that a lessee is
required to discharge, the Customer Equipment Leases are free and clear
of any liens, charges, encumbrances, pledges or other rights of others
of any nature or kind related to or affecting the rental and other
payments due under the Customer Equipment Leases.
3.4.5 Other Agreements. Other than with respect to liabilities
of no more than $5,000 in aggregate, Schedule 1 prepared as of the
Closing Date and Exhibits A through C and the Closing List shall
contain, a complete, fair and accurate list of each of the Acquired
Assets (other than Inventory) and Assumed Liabilities. Sellers have
made available to Buyer current, correct and complete copies of all
such other agreements and all amendments, modifications, renewals and
addenda to such other agreements. Section 3.4.5 of the Sellers
Disclosure Schedule contains, and will contain as of the Closing Date,
a complete list of the nature, scope and dollar amounts of coverage of
all insurance policies relating to the Business maintained by Sellers
and of the nature of coverage maintained by third parties for the
benefit of Sellers under Customer Equipment Leases. All such insurances
have been obtained and maintained consistent with Sellers' past
policies, practices and procedures. To the Knowledge of Sellers, no
event, circumstance or occurrence has occurred which has resulted in or
could result in the invalidation of any claim under such insurances
insofar as they relate to Transportation Equipment that is off-lease or
the invalidation of any policy or in material adjustment in the amount
of the premiums relating thereto insofar as they relate to
Transportation Equipment that is off-lease.
3.4.6 Facilities. Exhibit B contains, and the Closing List
shall contain, a complete and accurate list of all Leased Facilities,
Subleased Facilities, Facility Leases and Facility Subleases. Sellers
own no real property relating to the Business. Each Seller is the owner
and holder of all the leasehold estates purported to be granted to it
by Facility Leases listed on Exhibit B-1 hereto, and all such Facility
Leases, and all Facility Subleases listed on Exhibit B-2, constitute
valid and binding obligations of such Seller (except as enforceability
may be subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws related to creditors'
rights generally and general principles of equity), and are in full
force and effect. Except as set forth in Section 3.4.6 of the Sellers
Disclosure Schedule, (a) all rent and other sums and charges payable
under any Facility Lease or Facility Sublease are current, (b) no
notice of default, termination or breach or a condition or limitation
has been received by any Seller with respect to any such Facility Lease
or Facility Sublease, (c) no event or condition has occurred or exists
which, with the giving of notice or the lapse of time or both, would
constitute a default or breach of a condition or limitation or give
rise to a right of termination by the lessor under any such Facility
Lease or, to Seller's Knowledge, by the lessee under any such Facility
Sublease and (d) the leasehold interest in and leasehold estate under
each Facility Lease is held by the relevant Seller free and clear of
all liens except for the Facility Subleases. Sellers have made
available to Buyer current, correct and complete copies of all Facility
Leases referred to in Exhibit B-1 hereto and all Facility Subleases
referred to in Exhibit B-2 hereto and all amendments, modifications,
renewals and addenda to such Facility Leases and Facility Subleases.
Sellers have not been notified of any lis pendens or other filings
regarding the pendency of any litigation or claim affecting any Leased
Facility. Except for the Facility Subleases or as set forth in Section
3.4.6 of the Sellers Disclosure Schedule, no Seller owns or holds nor
is obligated under, or a party to, any option, right of first refusal
or other contractual right to purchase, acquire, sell or dispose of any
portion of or interest in any Leased Facility. Except for the Facility
Subleases, no Seller is the lessor, sublessor or grantor under any
lease or contract granting to another person any right to the
possession, use occupancy or enjoyment of any Leased Facility. Except
as set forth in Section 3.4.6 of the Sellers Disclosure Schedule, no
condemnation proceeding or other regulatory action is pending or, to
Sellers' knowledge, threatened, which would preclude or impair the use
of any Leased Facility.
3.4.7 Other Assets. Exhibit C-1 sets forth, and the Closing
List will contain, a complete list of the Other Assets.
3.5 Litigation. Except as disclosed in Section 3.5 of the Sellers
Disclosure Schedule, there is no action, suit, inquiry, proceeding, arbitration
or investigation by or before any court or governmental or other regulatory or
administrative agent or commission pending or, to the Knowledge of Sellers,
threatened against any Seller which relates to the Acquired Assets or the
Assumed Liabilities or which challenge the validity of this Agreement or any
action taken or to be taken by Sellers pursuant to this Agreement or in
connection with the transactions contemplated hereby. No Seller is subject to
any judgment, order or decree entered in any lawsuit or proceeding which may
have an adverse effect on the Acquired Assets, or the operation thereof.
3.6 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of any governmental or regulatory authority is
required in connection with the execution, delivery and performance of this
Agreement by any Seller or the consummation by it of the transactions
contemplated hereby other than compliance by the Closing with any applicable
requirements of the HSR Act and the Securities Exchange Act of 1934.
3.7 Consents. Except as set forth in Section 3.7 of the Sellers
Disclosure Schedule, no consent of any person other than PLM Stockholder
Approval is necessary to the consummation of the transactions by any Seller or
any of the Partnerships contemplated hereby, including, without limitation,
consents from parties to loans, contracts, leases or other agreements and
consents from governmental agencies, whether federal, state or local. The
consents required with respect to item 4 of Section 3.3 of the Sellers
Disclosure Schedule and item 2 of Section 3.7 of the Sellers Disclosure Schedule
shall have been obtained and any liens or encumbrances arising in connection
therewith shall have been released and discharged as against the Acquired Assets
and the Assumed Liabilities as of Closing.
3.8 Compliance with Law. To Sellers' Knowledge, the operations relating
to the Acquired Assets have been conducted in accordance with all applicable
laws, regulations and other requirements of all national governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over Sellers, including, without
limitation, all such laws, regulations and requirements relating to antitrust,
consumer protection, environmental, zoning and land use, currency exchange,
equal opportunity, health, occupational safety, pension, securities and trading
with-the-enemy matters. Since June 1, 1998, no Seller has received any
notification of any asserted present or past failure by any Seller to comply
with such laws, rules or regulations.
3.9 Assignment. Each Seller has complete and unrestricted power and the
unqualified right to sell, assign, transfer and deliver to Buyer, and upon
consummation of the transactions contemplated by this Agreement, Buyer will
acquire, good, valid and marketable title to the Acquired Assets, and, in the
case of the Assumed Liabilities, TRAC Lease Transportation Equipment and the
Leased Facilities, legal, valid and enforceable possessory rights therein, free
and clear of all mortgages, pledges, liens, claims, purchase options, security
interests, encumbrances or charges of any kind, except for those listed in
Section 3.4.1 or 3.4.2 or 3.9 of the Sellers Disclosure Schedule or as
contemplated by Section 3.4.1 or 3.4.2 hereof. Any liens or encumbrances arising
in connection with item 4 of Section 3.3 of the Sellers Disclosure Schedule and
item 2 of Section 3.7 of the Sellers Disclosure Schedule shall have been
released and discharged as against the Acquired Assets and the Assumed
Liabilities as of Closing. The Sellers Bill of Sale and the deeds, endorsements,
assignments and other instruments to be executed and delivered to Buyer by
Sellers at the Closing will be valid and binding obligations of Sellers
enforceable in accordance with their terms (except as enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium, or other similar
laws relating to creditors' rights generally and to general principles of
equity), and will effectively vest in Buyer good, valid and marketable title to
the Acquired Assets, and, in the case of TRAC Lease Transportation Equipment and
the Leased Facilities, legal, valid and enforceable possessory rights therein.
If in accordance with Section 8.6 Sellers are unable to obtain the consent of
any lessor under one or more of the TRAC Leases or the lender under the Mees
Pierson Facility and Buyer has waived the requirement to obtain such consent and
the parties have consummated the transactions that are the subject of this
Agreement, then without prejudice to Section 8.6 all obligations and liens or
encumbrances arising under the relevant TRAC Lease(s) or the Mees Pierson
Facility, as the case may be, shall have been discharged and released, and Buyer
will acquire, good, valid and marketable title to the Owned Transportation
Equipment to the extent the subject thereof, free and clear of all liens and
encumbrances and applicable ownership rights of any lessor under the relevant
TRAC Lease(s) or the lender under the Mees Pierson Facility, as the case may be
3.10 Brokerage. Except for Imperial Capital, LLC ("Imperial"), Sellers
have not retained any broker or finder in connection with the transactions
contemplated by this Agreement. All fees of Imperial shall be exclusively for
the account of Sellers, and any brokerage or finder's fee due to any broker or
finder in violation of the foregoing representation shall be paid by Sellers.
3.11 Insider Interests. No officer or director of any Seller nor any
Affiliate of any Seller has any interest in any property, real or personal,
tangible or intangible, including without limitation, inventions, patents,
trademarks or trade names, used in or pertaining to the Acquired Assets or the
Assumed Liabilities. None of the Assumed Liabilities will include any amount or
liability owing to any Seller except as listed on Section 3.11 of the Sellers
Disclosure Schedule.
3.12 Environmental, Health and Safety.
(a) (i) Each Seller has complied with all Environmental,
Health and Safety Laws; and (ii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been
filed, commenced or, to the Knowledge of Sellers threatened, against
any Seller alleging any failure so to comply. Each Seller has obtained
and been in compliance with all of the terms and conditions of all
permits, licenses and other authorizations which are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables which are contained in, all Environmental, Health and Safety
Laws.
(b) Each Seller has not handled, disposed of, arranged for the
disposal of or exposed any individual to any substance, material or
condition or owned or operated any property or facility in any manner
that could form the basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand
under any Environmental, Health and Safety Laws or otherwise against
the Business or any Seller giving rise to any liability for damage to
any Leased Facility (surface or subsurface), or for any illness of or
personal injury to any individual.
(c) To the Knowledge of Sellers, there are no past or present
actions, activities, circumstances, conditions, events or incidents
under any Environmental, Health and Safety Laws or otherwise which
could form the basis of any claim against the Business or the Acquired
Assets or against any person or entity whose liability for any claim
the Business has or may have retained or assumed either contractually
or by operation of law.
(d) To the Knowledge of Sellers, none of the Transportation
Equipment has been used other than in compliance with Environmental,
Health and Safety Laws.
3.13 Accounts and Notes Receivable. Exhibit C-4 sets forth as of May
12, 2000, and the Closing List will contain, a complete list of
Receivables/Prepayment Items. Except as set forth in Section 3.13 of the Sellers
Disclosure Schedule, all of the Receivables/Prepayment Items and notes
receivable (including direct financing leases and rental receivables) owing to
Sellers as of the date hereof constitute, and as of the Closing Date will
constitute valid claims arising from bona fide transactions in the ordinary
course of business, and as of the date hereof Sellers have not received any
written notice denying such obligations or asserting rights to set-off. None of
the Receivables/Prepayment Items have been pledged to any third party. All loss
reserves relating to the Business have been created and maintained consistent
with Sellers' past policies, practices and procedures, including without
limitation with respect to Ameriserv and other bankruptcies. For the avoidance
of doubt, it is expressly agreed and understood that the Receivables/Prepayment
Items acquired by Buyer hereunder are those Receivables/Prepayment Items related
to or arising from the Acquired Assets or the Assumed Liabilities as of the
Closing Date.
3.14 Mees Pierson Facility. Except as set forth in Section 3.14 of the
Sellers Disclosure Schedule, the Mees Pierson Facility is valid, binding and
enforceable in accordance with its terms (except as enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to creditors' rights generally and to
general principles of equity), and is in full force and effect; there are no
existing material defaults thereunder; and no event of default has occurred
which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a material default thereunder.
Sellers have made available to Buyer a current, correct and complete copy of the
Mees Pierson Facility and all amendments, modifications, renewals and addenda to
the Mees Pierson Facility.
3.15 SEC Filings; Financial Statements. PLM's consolidated revenues for
refrigerated and dry van trailers for its fiscal years ended December 31, 1997
and December 31, 1998 were respectively $5,544,000 and $9,744,000. Utilization
of Sellers' refrigerated trailers increased from 62% in 1998 to approximately
76% in 1999. Utilization of Sellers' dry vans decreased from approximately 77%
in 1998 to approximately 74% in 1999. Transportation Equipment has been
depreciated by Sellers on a straight-line method down to such equipment's
estimated salvage value. During the three months ended March 31, 2000 Sellers
purchased Transportation Equipment for $5,500,000.00 and sold Transportation
Equipment with a net book value of $58,000.00 for $45,000.00. As of May 2, 2000
Sellers had committed to purchase $19,700,000.00 of Transportation Equipment.
The information presented in Note 9 regarding the trailer leasing segment in
PLM's Notes to Consolidated Financial Statements March 31, 2000 as filed in
PLM's Quarterly Report on Form 10Q for the period ended March 31, 2000 fairly
presents the information stated therein insofar as it is applicable to the
Acquired Assets and Assumed Liabilities.
3.16 Absence of Certain Changes or Events. Except as listed on Section
3.16 of the Sellers Disclosure Schedule, since December 31, 1999, there has not
been (i) any Business Material Adverse Effect, (ii) any material loss or damage
(whether or not covered by insurance) to any of the Acquired Assets, which
materially affects or impairs the ability of any Seller to conduct the Business,
or any other event or condition of any character which has materially and
adversely affected the business or operation of the Business, (iii) any mortgage
or pledge of any of the Acquired Assets or the Assumed Liabilities other than in
the ordinary course of business, (iv) any indebtedness incurred by any Seller
creating an encumbrance on the Acquired Assets or the Assumed Liabilities other
than in the ordinary course of business, (v) any contract or other transaction
entered into by any Seller relating to, or otherwise affecting in any way, the
Acquired Assets or the Assumed Liabilities, other than in the ordinary course of
business, (vi) any sale or transfer of the Acquired Assets or the Assumed
Liabilities, except in the ordinary course of business, (vii) any material
changes in the accounting systems, accounting policies or accounting practices
of any Seller, (viii) any waiver by any Seller of any rights affecting the
Acquired Assets or the Assumed Liabilities which have any material value, and
(ix) no person has made or, to the Knowledge of the Sellers, threatened to make
any claim that the operation of the Business is in violation or infringement of
any patent, patent license, tradename, trademark, servicemark, copyright,
know-how or other proprietary or trade right (collectively, "Intellectual
Property Rights") of any third party. Since December 31, 1999, the Business has
been conducted in all respects only in the ordinary course.
3.17 Taxes. Each Seller has made all withholding of Taxes required to
be made under all applicable tax laws and regulations. No claim has ever been
made by any authority in any jurisdiction in which no Tax return has been filed
with respect to the Business that any of the Sellers or the Business is or may
be subject to Tax in that jurisdiction. Subject as set forth in the second
paragraph of Section 6.5, Buyer will not be liable for any Taxes attributable to
any Seller as a result of the consummation of the transactions contemplated by
this Agreement. None of the Assumed Liabilities is an obligation to make a
payment that will not be deductible under Section 280G of the Code or an
obligation to pay sales or use Taxes in any jurisdiction with respect to
transactions of Sellers arising prior to Closing.
3.18 Conduct of Business. Except for rights of PLM under the License of
PLM Name, those overhead facilities, personnel, working capital, insurance
policies (except to the extent claims, rebates, recoveries or proceeds comprise
Receivables/Prepayment Items), or functions or services to be provided by
Sellers under the Transition Services Agreement, the Acquired Assets and Assumed
Liabilities, when taken together with those assets or agreements that are being
concurrently purchased by Buyer pursuant to the Partnerships Asset Purchase
Agreement, constitute all of the assets and agreements of Sellers, Affiliates of
Sellers and the Partnerships that are necessary for the operation of the
Business as presently conducted by Sellers, Affiliates of Sellers and the
Partnerships including constituting all or substantially all of the operating
assets and goodwill of the Business.
3.19 Employees. No payments will be required to be made by Buyer to
those employees who accept employment by Buyer effective as of the Closing as a
result of the consummation of this Agreement, except to the extent set forth in
the second sentence of Section 6.4. No employee of the Business is a member of a
union and there is no collective bargaining agreement relating to any of the
employees of the Business and no efforts have been made to organize for union or
collective bargaining purposes any such employees. None of Sellers, nor any
trade or business, whether or not incorporated, that would be treated as a
single employer with any of Sellers under Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code"),
maintains, contributes to, or is obligated to contribute to, or has ever
maintained, contributed to or been obligated to contribute to, any employee
benefit plan that is subject to Title IV of ERISA or Section 412 of the Code.
3.20 Material Misstatements or Omissions. No representation or warranty
by any Seller and no document, certificate or other information furnished in
Sellers Disclosure Schedule or the Closing List or any Schedule or Exhibit
hereto or required hereunder to be furnished to Buyer, in the context of the
other representations or warranties by any Seller or any other information
furnished in Sellers Disclosure Schedule or any Schedule or Exhibit hereto or
required hereunder to be furnished to Buyer as a whole, contains or will contain
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements of fact contained herein or therein, in light
of the circumstances in which they are made, not misleading.
3.21 License of PLM Name. PLM is the exclusive owner of the entire and
unencumbered right, title and interest in and to the Service Marks (as defined
in the License of PLM Name) that are the subject of the License of PLM Name and
such Service Marks are subsisting and have not been adjudged invalid or
unenforceable, in whole or in part.
3.22 No Other Warranties or Representations. SUBJECT TO THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III, SELLERS MAKE NO
WARRANTY THAT ANY OF THE ACQUIRED ASSETS ARE MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE NOR IS THERE ANY OTHER WARRANTY OR CONDITION WITH RESPECT
THERETO, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT WITH
RESPECT TO SUCH ACQUIRED ASSETS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES
OR CONDITIONS WITH RESPECT TO THE MERCHANTABLE QUALITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY SUCH ACQUIRED ASSETS, PROPERTIES AND PRODUCTS WHICH
MIGHT OTHERWISE BE IMPLIED BY THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW.
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, BUYER SPECIFICALLY ACKNOWLEDGES
THAT THE ACQUIRED ASSETS BEING TRANSFERRED AND CONVEYED PURSUANT TO THIS
AGREEMENT ARE BEING SOLD AND PURCHASED ON AN "AS IS" AND "WHERE IS" BASIS AND
THAT NO WARRANTY OF COLLECTIBILITY OF ANY SPECIFIC RECEIVABLE/PREPAYMENT ITEM OR
NOTE RECEIVABLE IS MADE UNDER THIS AGREEMENT.
Article IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
4.1 Corporate Organization. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization, Etc. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby are within Buyer's corporate power and authority and have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement constitutes a valid and binding agreement of Buyer, enforceable
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4.3 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will violate any
provisions of the Certificates of Incorporation or bylaws of Buyer, or violate,
or be in conflict with, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any security interest, lien or other encumbrance
upon any property or assets of Buyer under, any material agreement or commitment
to which Buyer is a party or by which Buyer is bound, or to which the property
of Buyer is subject, or materially violate any statute or law or in any material
respect any judgment, decree, order, regulation or rule of any court or
governmental authority.
4.4 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of any governmental or regulatory authority is
required in connection with the execution, delivery and performance of this
Agreement by Buyer or the consummation by it of the transactions contemplated
hereby other than compliance by the Closing with any applicable requirements of
the HSR Act.
4.5 Litigation. There is no material action, suit, inquiry, proceeding
or investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the Knowledge of Buyer,
threatened against Buyer or any of its Affiliates which challenges the validity
of this Agreement or any action taken or to be taken by Buyer pursuant to this
Agreement or in connection with the transactions by Buyer contemplated hereby.
4.6 Consents. Except as set forth in section 3.7 of the Sellers
Disclosure Schedule, no consent of any person is necessary to the consummation
of the transactions by Buyer contemplated hereby, including, without limitation,
consents from parties to loans, contracts, leases or other agreements and
consents from governmental agencies, whether federal, state or local.
4.7 Brokerage. Except for J.P. Morgan & Co. Incorporated ("J.P.
Morgan"), Buyer has not retained any broker or finder in connection with the
transactions contemplated by this Agreement. All fees of J.P. Morgan shall be
exclusively for the account of Buyer, and any brokerage or finder's fee due to
any broker or finder in violation of the foregoing representation shall be paid
by Buyer.
4.8 Funding. Buyer has immediately available funds sufficient to make
all of its payment obligations hereunder at the times set forth herein.
Article V
COVENANTS OF SELLER
Sellers hereby covenant and agree with Buyer:
5.1 Full Access. Sellers shall afford to Buyer, its counsel,
accountants and other representatives full access (under supervision of Sellers'
personnel and at Buyer's expense) prior to the Closing Date to the offices,
facilities, properties, books and records of Sellers in order that Buyer may
have full opportunity to make such investigations as it shall desire to make of
the affairs of Sellers with respect to the Acquired Assets, TRAC Lease
Transportation Equipment, the Leased Facilities and the Assumed Liabilities;
provided, however, that any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the businesses of
Sellers.
5.2 Consents. Sellers will use all commercially reasonable efforts to
obtain, prior to the Closing, all consents necessary to be obtained by Sellers
and will cooperate reasonably in obtaining all approvals and consents necessary
to be obtained by Buyer in connection with the consummation of the transactions
contemplated hereby. All such consents if obtained will be in writing, and
executed counterparts thereof will be delivered to Buyer at or prior to the
Closing.
5.3 HSR Act Filings. Promptly following the date hereof, the Sellers
shall make any and all filings which are required under the HSR Act. The Sellers
will furnish to Buyer such necessary information and reasonable assistance as
Buyer may request in connection with its preparation of necessary filings or
submissions under provisions of the HSR Act. The Sellers will supply Buyer
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between any of the Sellers or their
representatives, on the one hand, and the Federal Trade Commission, the
Antitrust Division of the U.S. Department of Justice or any other governmental
agency or authority or members of their respective staffs on the other hand,
with respect to this Agreement or the transactions contemplated hereby, other
than confidential or proprietary information therein.
5.4 Proxy Statement; Stockholders' Meeting. In connection with the PLM
Stockholder Approval, after the date hereof PLM will promptly prepare and file
with the SEC a proxy statement (the "PLM Proxy Statement"), soliciting the PLM
Stockholder Approval. The PLM Proxy Statement shall be filed no later than the
date that the proxy statement for the annual meeting of PLM is filed and such
proxy statement for such annual meeting may comprise part of the PLM Proxy
Statement. PLM will promptly respond to any comments of the SEC, and will cause
the PLM Proxy Statement to be mailed to all stockholders of PLM at the earliest
practicable time and in any event no later than the proxy statement for the
annual meeting of PLM, notwithstanding any exercise of its fiduciary-out
pursuant to Section 5.12. PLM will notify Buyer promptly upon the receipt of any
comments from the SEC or its staff of any request by the SEC or its staff for
amendments or supplements to the PLM Proxy Statement or for additional
information, and will supply Buyer with all such portions of correspondence
between such party or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, as relate to the PLM Proxy Statement insofar as
it relates to the transaction the subject of this Agreement. Buyer shall be
afforded a reasonable opportunity to review the PLM Proxy Statement and all
other related proxy materials insofar as affecting Buyer. PLM shall duly call,
hold and convene its stockholders' meeting to obtain the PLM Stockholder
Approval as promptly as practicable after the date on which the PLM Proxy
Statement is mailed to its stockholders. PLM shall solicit from its stockholders
proxies in favor of the PLM Stockholder Approval, and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by the Delaware General Corporation Law and the certificate of
incorporation and bylaws of the Company to obtain such approval. Unless acting
in compliance with the specific terms of the fiduciary-out provided pursuant to
Section 5.12, the Board of Directors of PLM shall unanimously recommend that
PLM's stockholders vote in favor of the PLM Stockholder Approval, the PLM Proxy
Statement shall include a statement to such effect, and neither the Board of
Directors of PLM nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify such unanimous recommendation.
5.5 Certificates. At the Closing, Sellers will furnish Buyer with such
certificates of their respective officers to evidence compliance with the
covenants set forth in this Article V.
5.6 Agreements. Sellers shall deliver to Buyer on the Closing Date
executed counterparts of the documents set forth in Section 1.4(b) hereof.
5.7 Delivery of Assets and Documents. Sellers will deliver the items
set forth in Section 1.4(b)hereof.
5.8 Regular Course of Business. Except as otherwise required by the
terms of this Agreement, Sellers will promptly provide to Buyer a copy of all
PLM SEC Reports and will:(i) not take or, if within Sellers' control, suffer or
permit any action, which would render untrue any representations and warranties
contained in this Agreement (ii) take any commercially reasonable action, in any
one instance up to $10,000.00 and in a maximum aggregate of instances under this
Agreement and the Partnerships Asset Purchase Agreement up to $250,000.00, to
cure, to the extent capable of cure, any inaccuracy in any representation or
warranty contained in this Agreement, (iii) operate the Acquired Assets and the
Assumed Liabilities in the ordinary and usual course, substantially in the same
manner as heretofore operated, and (iv) not institute any new methods of
purchase, sale, lease, management, accounting or operation or engage in any
transaction, enter into any agreement or make any commitment that is not in the
ordinary course of the business unless required by law. Without limiting the
generality of the foregoing, except as otherwise contemplated by the terms of
this Agreement, from the date hereof until the Closing, Sellers will: (a)
maintain the Acquired Assets consistent with past practice; (b) keep in full
force and effect, to the extent commercially reasonable, insurance comparable in
amount and scope of coverage to that now maintained; (c) perform in all material
respects all obligations under all material contracts of the Business and not
defer necessary maintenance; (d) maintain the books of account and records and
loss reserves of the Business in the usual and regular manner, and not sell or
encumber the Acquired Assets or the Assumed Liabilities other than in the
ordinary course of business; (e) not, except with Buyer's consent which consent
will not be unreasonably withheld, delayed or conditioned, approve any new
individual capital expenditures in excess of $10,000.00 (excluding Purchase
Order Transportation Equipment), incur any liability that would otherwise
constitute any of the Assumed Liabilities (excluding Customer Equipment Leases)
in excess of $10,000.00, transfer, encumber or otherwise deal with any of the
Acquired Assets having a book value or fair market value in any one transaction
in excess of $50,000.00, and vary the pricing schedule for Customer Equipment
Leases other than in accordance with Sellers' past pricing practices and
procedures; (f) comply in all material respects with all laws and regulations
applicable to the Business; (g) maintain and protect all Intellectual Property
Rights relating to the Business; and (h) not make, other than in the ordinary
course of business, any change in any benefit plan or compensation to officers,
directors or employees or adopt any new benefit Plan relating to its employees
who work primarily for the Business, provided that any change affecting any
senior executive that is not of broad application to employees at large shall be
deemed to be outside the ordinary course of business. Sellers may fill vacancies
for positions as employees of the Business in the ordinary course of business
other than with respect to senior executives.
5.9 Business Relations. Sellers shall use their best efforts to
preserve for Buyer the Business and the relationships with licensors, lessors,
creditors, suppliers, distributors, customers, depots, employees and others
having business relations with respect to the Acquired Assets, the Assumed
Liabilities and the Business.
5.10 No Default. Sellers shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a material breach of any
Assumed Liability or any material contract or commitment of Sellers with respect
to the Transportation Equipment or Leased Facilities.
5.11 Intentionally Omitted.
5.12 Exclusivity.
(a) Until the earlier of (i) the Closing or (ii) the date of
termination of this Agreement pursuant to the provisions of Article X
(the "Exclusivity Period"), each of Sellers shall not, and shall not
authorize or permit any of its officers, directors or employees or any
investment banker, attorney or other advisor or representative retained
by any of them to directly or indirectly, (i) solicit, initiate,
encourage or induce the making, submission or announcement of any
Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any person or entity any
non-public information with respect to, or take any action to
facilitate any inquiries or the making of any proposal that constitutes
or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person or entity with respect to
any Acquisition Proposal, or (iv) enter into any letter of intent or
any agreement relating to any Acquisition Proposal; provided, however,
that at any time prior to obtaining the PLM Stockholder Approval, the
Board of Directors of PLM, in response to a Superior Proposal, may
authorize Sellers to (x) furnish non-public information with respect to
Sellers to the person or entity which made such Acquisition Proposal
pursuant to a customary written confidentiality agreement, and (y)
participate in negotiations and discussions regarding such Acquisition
Proposal. PLM will immediately cease and cause to be terminated any
existing activities, discussions and negotiations conducted prior to
the date hereof with respect to any Acquisition Proposal with any third
party. PLM shall provide Buyer with (i) at least 48 hours prior notice
of any meeting of the Board of Directors of PLM at which they are
reasonably expected to consider an Acquisition Proposal, and (ii) five
business days prior written notice of a meeting of the Board of
Directors, or any committee thereof, at which they are reasonably
expected to withdraw, amend or modify their unanimous recommendation to
vote in favor of PLM Stockholder Approval or to make the determination
to recommend instead a Superior Proposal.
(b) During the Exclusivity Period, each of the Sellers also
agree to:
notify Buyer immediately upon receiving any inquiry from any person or
entity relating to any Acquisition Proposal; and
disclose the identity of any person or entity, making a bona
fide offer relating to an Acquisition Proposal, the terms and
conditions of such offer, and keep Buyer fully informed on a current
basis of the status and details of any Acquisition Proposal.
(c) Each of the Sellers acknowledges that this Section 5.12
was a significant inducement for Buyer to enter into this Agreement and
the absence of such provision would have resulted in either (i) a
material reduction in the Purchase Price or (ii) a failure to induce
Buyer to enter into this Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions of this
Section 5.12 were not performed in accordance with their specific terms
or were otherwise breached. The parties hereto agree that Buyer shall
be entitled to seek an injunction or injunctions to prevent breaches of
the provisions of this Section 5.12 and to enforce specifically the
terms and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy
to which Buyer may be entitled at law or in equity.
5.13 Notification; Updates to Disclosure Schedule.
(a) During the period between the date hereof and the Closing,
the Sellers shall promptly notify Buyer in writing of the discovery by
any of the Sellers of: any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement and that
caused or constitutes a breach of or inaccuracy in any representation
or warranty made by the Sellers in this Agreement; any event,
condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a breach of
or inaccuracy in any representation or warranty made by the Sellers in
this Agreement if (A) such representation or warranty had been made as
of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of
this Agreement; any breach of any covenant or obligation of any of the
Sellers contained in this Agreement; and any event, condition, fact or
circumstance that may make the timely satisfaction of any of the
conditions set forth in Article VIII impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to this Section 5.13 requires any
change in any disclosure schedule hereunder, or if any such event,
condition, fact or circumstance would require such a change assuming
the disclosure schedule were dated as of the date of the occurrence,
existence or discovery of such event, condition, fact or circumstance,
then the Sellers shall promptly deliver to Buyer an update to the
disclosure schedule (a "Disclosure Schedule Update") specifying such
change. No such Disclosure Schedule Update shall be deemed to
supplement or amend the disclosure schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties
made by the Sellers in this Agreement as of the Closing, or (ii)
determining whether the conditions set forth in Article 8 have been
satisfied; provided, however that the Closing of the transaction
contemplated by this Agreement will be deemed a waiver by Buyer of any
untrue representation or warranty made by Sellers if and to the extent
such inaccuracy is fairly and accurately disclosed in any of Sellers
Disclosure Schedules or any such Disclosure Schedule Update.
5.14 Employees of the Buyers. Each of the Sellers agrees that Buyer is
under no obligation to offer to or to hire any employee of the Business and
agrees (i) to cooperate in Buyer's efforts to hire those employees of the
Business designated by Buyer; (ii) to advise Buyer of the terms and conditions
of employment (including existing severance, retirement benefits, etc.) of all
such employees; (iii) to make such employees available for interview by Buyer;
and (iv) to encourage all such employees as are selected by Buyer to consider
employment with Buyer. In addition, for those employees whom Buyer has agreed to
hire and who have agreed to become employees of Buyer effective as of the
Closing ("New Hires"), each of the Sellers agrees during the period between the
date hereof and the Closing (i) not to terminate the employment of any of the
New Hires (other than for cause in line with Sellers' current employment
policies) without the express written permission of Buyer (which shall not be
unreasonably withheld); and (ii) to continue to pay the compensation, withhold
and pay taxes and other deductions, provide the benefits to which the New Hires
are entitled pursuant to federal and state law and pursuant to the policies and
practices of Sellers.
5.15 Change of Name of PLM Rental. Within 30 days following the
Closing, Sellers shall have changed the name of PLM Rental to another name not
confusingly similar to the current name of PLM Rental and provided evidence of
the amendment of PLM Rental's charter for this purpose having taken effect in
PLM Rental's state of incorporation and in any state that such corporation is
qualified to do business.
5.16 Filing of Material Contracts of PLM. PLM shall file with the
Securities and Exchange Commission this Agreement, the Non-Competition Agreement
and the License of PLM Name (in each case without Exhibits or Schedules or any
information that PLM requests confidential treatment for from the Securities and
Exchange Commission, if PLM shall so request) as material contracts, in the case
of this Agreement, as part of the exhibits to the PLM Proxy Statement and, in
the case of the Non-Competition Agreement and the License of PLM Name, after the
Closing as part of the exhibits to PLM's next periodic report under the
Securities Exchange Act of 1934.
5.17 Environmental Information. Sellers shall have disclosed to Buyer
no later than fifteen (15) business days after the date hereof, having
interviewed those of Sellers' employees with knowledge of environmental-related
issues associated with any of the Leased Facilities, all written information and
all documents in Sellers' possession, custody or control, that discuss, arise
from, or otherwise relate to the generation, transportation, use, storage,
emission, discharge, release, or threatened release of any material or substance
regulated or defined by any Environmental, Health and Safety Laws.
Article VI
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Sellers:
6.1 Certificates. At the Closing, Buyer will furnish Sellers with such
certificates of its officers and others to evidence compliance with the
covenants set forth in this Article VI.
6.2 HSR Act Filings. Promptly following the date hereof, Buyer shall
make any and all filings which are required under the HSR Act. Buyer will
furnish to the Sellers such necessary information and reasonable assistance as
the Sellers may request in connection with its preparation of necessary filings
or submissions under provisions of the HSR Act. Buyer will supply the Sellers
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between Buyer or its representatives, on the one
hand, and the Federal Trade Commission, the Antitrust Division of the U.S.
Department of Justice or any other governmental agency or authority or members
of their respective staffs on the other hand, with respect to this Agreement or
the transactions contemplated hereby, other than confidential or proprietary
information therein.
6.3 Agreements. Buyer shall deliver to Sellers on the Closing Date
executed counterparts of the documents set forth in Section 1.4(c) hereof.
6.4 Employees. Buyer will offer as promptly as reasonably practicable
following the date hereof employment to no less than sixty (60) employees of the
Business designated by Buyer that Buyer selects on such terms and conditions as
Buyer will determine, but on terms that are at least as good with respect to job
responsibility, salary, and bonus and commission plans and that are comparable
overall, to the extent reasonably feasible, with respect to benefits to those
currently enjoyed by such employees. The parties shall work together to insure
that at Closing at least fifty (50) of the employees of the Business designated
by Buyer that Buyer selects shall have accepted employment and become employees
of Buyer. Buyer shall notify PLM within forty-five (45) days after the date
hereof, in the event that the transactions that are the subject of this
Agreement have not been consummated by such date, of the progress made by such
date with respect to the number of employees of the Business who are reasonably
anticipated to have entered into employment arrangements with Buyer by Closing
and whether five of those seven individuals identified in writing previously by
Buyer to Seller are reasonably anticipated to have entered into employment
arrangements with Buyer by Closing. Buyer shall have financial responsibility
for those employee severance costs which are associated with any employee who
accepts employment with Buyer in accordance with Buyer's employee severance
policies, having given credit for prior employment with Sellers. As to any
employees of Sellers who receive severance payments from Sellers and are
subsequently hired by Buyer or any of its Affiliates (either as employees or
contractors) within 5 months from the Closing Date, the aggregate amount of
severance payments made by Sellers to all such employees shall be promptly paid
by Buyer to Sellers.
6.5 Re-Titling; Transfer Taxes. Following the Closing, Buyer will take
all steps necessary to re-title all units of Transportation Equipment acquired
hereunder out of the name of Sellers and into Buyer's name within 60 days after
Closing, or if not feasible by such date, as promptly as reasonably practicable
thereafter, and to pay the fees payable to the relevant DMV for re-titling of
Transportation Equipment. Sellers will cooperate reasonably with Buyer in
connection therewith.
For purposes of this Section 6.5, "Transfer Taxes" means sales and use
Taxes, or other similar Taxes, imposed upon and related to sales or uses of
tangible personal property. Notwithstanding anything to the contrary in this
Agreement, Buyer shall be responsible for all Transfer Taxes associated with the
consummation of the transactions that are the subject of this Agreement,
including Taxes or any related interest or penalties arising from or relating to
the position that the transfers made pursuant to this Agreement qualify or are
asserted by Buyer to qualify for exemption or exclusion from Transfer Taxes.
Sellers shall be responsible for (i) Transfer Taxes and any related interest and
penalties arising from or relating to transactions or activities of Sellers
prior to Closing, however they arise, e.g., whether assessed to Buyer or any of
Sellers directly or indirectly, (ii) Taxes and any related interest and
penalties which would otherwise not be payable by Buyer, but for, any of
Sellers' failure to comply with Transfer Tax filings or notifications that are
legally required to be filed by any of Sellers with taxing and other
governmental authorities in connection with a sale of this type, unless such
failure resulted from any action or inaction of any of Sellers approved, in
advance, by Buyer in writing, and (iii) any Taxes, directly or indirectly
related to or arising from Pre-Closing liabilities, and interest and penalties,
with respect thereto, arising from or relating to any of Sellers' failure to
make any filings or notifications that are permitted to be filed by any of
Sellers with state and local taxing and other governmental authorities in
connection with a sale of this type for the states listed in Schedule 2.4 in
circumstances where Buyer has reasonably requested any of Sellers to make such
filings or notifications. Provided, however, that to the extent Buyer requests
any of Sellers to make any filings or notifications for which any of Sellers are
not legally required to make, Buyer shall reimburse Seller for any reasonable
out-of-pocket costs, including legal and accounting expenses and fees, and any
amounts payable to a governmental or regulatory authority, not directly or
indirectly related to or arising from Pre-Closing Liabilities, for which Seller
otherwise would not be responsible hereunder.
Buyers and Sellers agree to use all commercially reasonable efforts to
separately determine the Transfer Tax filings and notifications that they are
legally required to make in a transaction of this type for the state and local
jurisdictions of the states listed in Schedule 2.4. After using such
commercially reasonable efforts, Buyers and Sellers will inform each other as to
their respective determination as to the required filings along with any
permitted filings of which they are or become aware. After so informing each
other, Buyer and Sellers will reasonably cooperate with each other and will make
available copies of each filing or notification upon reasonable request that
they respectively make (whether legally required or permitted).
To the extent Seller's payment of sales or use Taxes attributable to
periods prior to the Closing generate credits, deductions, exemptions or
exclusions in Illinois, which may be available to Buyer or any of Sellers in
determining the Illinois sales and use and other similar taxes due in Illinois
in connection with the transactions under this Agreement, Buyer shall, to the
extent not legally prohibited, receive the benefit of any such credits,
deductions, exemptions or exclusions, directly or indirectly.
6.6 Discharge of Obligations. Buyer will timely pay, perform and
discharge all obligations assumed pursuant to Section 1.3.
6.7 Notification. During the period between the date hereof and the
Closing, Buyer shall promptly notify the Sellers in writing of:
(a) the discovery by Buyer of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a breach of or inaccuracy in
any representation or warranty made by Buyer in this Agreement;
(b) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause
or constitute a breach of or inaccuracy in any representation or
warranty made by Buyer in this Agreement if (i) such representation or
warranty had been made as of the time of the occurrence, existence or
discovery of such event, condition, fact or circumstance, or (ii) such
event, condition, fact or circumstance had occurred, arisen or existed
on or prior to the date of this Agreement;
(c) any breach of any covenant or obligation of Buyer; and
(d) any event, condition, fact or circumstance that may make
the timely satisfaction of any of the conditions set forth in Article VII
impossible or unlikely.
6.8 Environmental Assessments. Buyer will promptly following the date
hereof organize for environmental assessments to be carried out on each of the
Leased Facilities and will use reasonable efforts to provide in any engagement
arrangement entered into with any firm of environmental consultants that the
results of such assessments shall be provided to Buyer no later than fifty (50)
days after the date hereof.
6.9 Releases. Buyer will use all commercially reasonable efforts to
obtain prior to Closing releases substantially in the form set forth in Exhibit
R in respect of the Mees Pierson Facility, the TRAC Leases and the Facility
Leases.
Article VII
CONDITIONS TO THE OBLIGATIONS OF SELLERS
Each and every obligation of Sellers under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Sellers:
7.1 Representations and Warranties True. All of the representations and
warranties of Buyer set forth in this Agreement that are qualified as to
materiality shall be true and complete when taken as a whole and any such
representations and warranties that are not so qualified shall be true and
complete in all material respects when taken as a whole as of the date of this
Agreement and as of the Closing Date as if made on and as of the Closing Date
(except to the extent that any such representation or warranty is made as of a
specific date, in which case such representation or warranty shall be true and
complete, or true and complete, as the case may be, as of such specified date).
7.2 Performance. Buyer shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Closing, including without limitation the agreements in Section 1.4(c) hereof.
7.3 HSR Act Waiting Periods; No Governmental Proceeding or Litigation.
All waiting periods applicable to the transactions contemplated hereby with
respect to the Acquired Assets under the HSR Act shall have expired or been
terminated. No suit, action or other proceeding by any governmental body shall
have been instituted which questions in any material way the validity or
legality of the transfer of the Acquired Assets and the Business.
7.4 No Injunction. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transactions contemplated hereby which
Sellers deems unacceptable in its sole discretion.
7.5 Certificates. Buyer shall have furnished Sellers with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably requested by
Sellers.
7.6 Opinion of Buyer's Counsel. Buyer shall have delivered to Sellers
an opinion of Morrison & Foerster, counsel to Buyer, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit K.
7.7 Stockholder Approval. PLM Stockholder Approval shall have been
obtained.
7.8 Escrow Agreement. Buyer shall have entered into the Escrow
Agreement.
7.9 Employment Arrangements. Buyer shall have as promptly as reasonably
practicable following the date hereof made offers of employment arrangements to
not less than sixty (60) of the employees of the Business on terms that are at
least as good with respect to job responsibility, salary, and bonus and
commission plans and that are comparable overall, to the extent reasonably
feasible, with respect to benefits to those currently enjoyed by such employees.
This condition shall terminate automatically and no longer be applicable sixty
(60) days after the date hereof.
Article VIII
CONDITIONS TO OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be performed
on or before the Closing shall be subject to the satisfaction, on or before the
closing, of each of the following conditions, unless waived in writing by Buyer:
8.1 Representations and Warranties True. All of the representations and
warranties of Sellers set forth in this Agreement that are qualified as to
materiality shall be true and complete when taken as a whole and any such
representations and warranties that are not so qualified shall be true and
complete when taken as a whole as of the date of this Agreement and as of the
Closing Date as if made on and as of the Closing Date (except to the extent that
any such representation or warranty is made as of a specific date, in which case
such representation or warranty shall be true and complete, or true and complete
in all material respects, as the case may be, as of such specified date).
Notwithstanding the foregoing, Buyer agrees that this condition shall be
satisfied for all purposes hereunder so long as the aggregate amount of any
Damages Buyer would have with respect to any breaches of the representations and
warranties of (x) Sellers set forth in this Agreement, and (y) the Partnerships
set forth in the Partnerships Asset Purchase Agreement, does not exceed in the
aggregate Two Million Two Hundred Thousand Dollars ($2,200,000.00).
8.2 Performance. Sellers shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Closing, including without limitation the agreements in Section 1.4(b) hereof.
8.3 HSR Act Waiting Periods; No Governmental Proceeding or Litigation.
All waiting periods applicable to the transactions contemplated hereby with
respect to the Acquired Assets under the HSR Act shall have expired or been
terminated. No suit, action or other proceeding by any governmental body shall
have been instituted which questions in any material way the validity or
legality of the transfer of the Acquired Assets and the Business.
8.4 No Injunction. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transactions contemplated hereby which
Buyer deems unacceptable in its sole discretion.
8.5 Opinion of Seller's Counsel. Sellers shall have delivered to Buyer
the opinion of Greene Radovsky Maloney & Share LLP, counsel to Sellers, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit L.
8.6 Consents Obtained; 90% of the Business Obtained; Environmental
Insurance Obtained. All approvals and consents referred to in Schedule 8.6 in a
form reasonably satisfactory to Buyer, including without limitation under the
TRAC Leases, the Facility Leases and the Mees Pierson Facility, shall have been
obtained; provided, however, that, at the request of Sellers, if Sellers are
unable to obtain the consent of any lessor under one or more of the TRAC Leases
or the lender under the Mees Pierson Facility and Buyer is willing to waive the
requirement to obtain such consent and is willing to consummate the transactions
that are the subject of this Agreement, then the Estimated Purchase Price shall
be adjusted as a result of adjusting the Assumed Liabilities to take into
account the amounts owing to such lessor(s) or lender, as the case may be,
(excluding prepayment and breakage fees and expenses), and all obligations and
liens or encumbrances arising under the relevant TRAC Lease(s) or the Mees
Pierson Facility, as the case may be, shall have been discharged and released.
Not less than 90% of the net book value of the Business shall as a result of
consummation of this Agreement and the Partnerships Asset Purchase Agreement be
owned by Buyer. Sellers shall have paid all premiums on and incepted coverage
with reputable insurers on behalf of Buyer (with Buyer named as loss payee) on a
policy of insurance on no less favorable terms to the parties than those set
forth in the specimen policy and related memo attached as Schedule 8.6 hereto
with respect to any liability relating to investigation, removal, remediation,
containment, cleanup or abatement required under any Environmental, Health and
Safety Laws, whether on-site or off-site, arising out of or relating to, in
whole or in part, any event, release, circumstance or occurrence arising prior
to the Closing, whether or not disclosed in this Agreement; such coverage to
relate to any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand under any Environmental,
Health and Safety Laws against the Business or Buyer and giving rise to any
liability for Damage in connection with any Leased Facility (surface or
subsurface) that is assumed by Buyer as an Assumed Liability at Closing, or for
any illness of or bodily injury to any individual and to include without
limitation business interruption in relation thereto; such coverage also to have
a per occurrence limit of $5,000,000.00 and an aggregate maximum limit of
$15,000,000.00, and to be effective for a period of not less than 3 years
following the Closing Date.
8.7 Agreements. Sellers shall have entered into the License of PLM
Name, the Transition Services Agreement, the Non-Competition Agreement, and the
Escrow Agreement.
8.8 PLM Stockholder Approval. The PLM Stockholder Approval shall have
been obtained.
8.9 Employment Arrangements. Buyer shall have entered into employment
arrangements with not less than fifty (50) of the employees of the Business, who
shall include not less than five of those seven individuals identified in
writing previously by Buyer to Seller. This condition shall terminate
automatically and no longer be applicable sixty (60) days after the date hereof.
8.10 Partnerships Asset Purchase Agreement. At the Closing, the
transactions contemplated by the Partnerships Asset Purchase Agreement shall be
consummated.
8.11 No Business Material Adverse Effect since March 31, 2000. There
shall have been no Business Material Adverse Effect since March 31, 2000.
Article IX
SURVIVAL; INDEMNIFICATION
9.1 Survival. The representations, warranties, covenants and
obligations of the parties contained in this Agreement shall survive the Closing
for the period set forth in this Section 9.1 and shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by, or the Knowledge of, any of the parties. The covenants
and obligations of each of the Sellers in Sections 1.2, 1.5, Article II,
Sections 5.15, 5.16 and 6.5, Article IX and XI shall survive the Closing in
accordance with their terms and otherwise until the applicable statute of
limitations has run thereon. Save as set forth above and below, following the
Closing all of the representations, warranties, covenants and obligations of
Sellers contained in this Agreement and all claims and causes of action with
respect thereto, shall terminate upon expiration of the later of December 31,
2000 or six months after the Closing Date, except that (i) the representations
and warranties in Section 3.21 and 3.12 (and the covenants and obligations
related thereto) and the indemnification in Section 9.3(iv) (and the covenants
and obligations related thereto) shall survive the Closing until the third
anniversary of the Closing Date, and (ii) the representations and warranties in
Section 3.17 (and the covenants and obligations related thereto) and the
indemnification in Section 9.3(ii) (and the covenants and obligations related
thereto) shall survive the Closing until the applicable statute of limitations
has run thereon, and the representations, warranties, covenants and obligations
of Buyer contained in this Agreement and all claims and causes of action with
respect thereto shall survive the Closing until the applicable statute of
limitations has run thereon, it being understood that in the event notice of any
claim for indemnification under Section 9.2 or Section 9.3 hereof shall have
been given within the applicable survival period, the representations,
warranties, covenants and obligations that are the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved.
9.2 Indemnification by Buyer. Buyer hereby agrees that it shall
indemnify, defend and hold harmless Sellers, their Affiliates, and, if
applicable, their respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees and their heirs, successors and
assigns (the "Seller Indemnified Parties") from, against and in respect of any
Damages imposed on, sustained, incurred or suffered by or asserted against any
of the Seller Indemnified Parties, directly or indirectly relating to or arising
out of (i) any breach of any representation or warranty made by Buyer contained
in this Agreement, (ii) the Assumed Liabilities and the Post-Closing
Liabilities, and (iii) the breach of any covenant or agreement of Buyer
contained in this Agreement.
9.3 Indemnification by Sellers. Each of the Sellers hereby jointly and
severally agrees that it shall indemnify, defend and hold harmless Buyer, its
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and their
heirs, successors and assigns (the "Buyer Indemnified Parties" collectively with
the Seller Indemnified Parties, "Indemnified Parties" and each an "Indemnified
Party") from, against and in respect of any Damages imposed on, sustained,
incurred or suffered by or asserted against any of the Buyer Indemnified
Parties, directly or indirectly relating to or arising out of (i) any breach of
any representation or warranty made by any of the Sellers contained in this
Agreement for the period such representation or warranty survives, (ii) the
Excluded Liabilities (with the exception of those liabilities or obligations
attributable to any period prior to Closing arising under any Environmental,
Health and Safety Laws), (iii) the breach of any covenant or agreement of any of
the Sellers contained in this Agreement for the period that such covenant or
agreement survives the Closing, and (iv) liabilities or obligations attributable
to any period prior to Closing arising under any Environmental, Health and
Safety Laws.
9.4 Indemnification Procedures. With respect to third party claims, all
claims for indemnification by any Indemnified Party hereunder shall be asserted
and resolved as set forth in this Section 9.4. In the event that any written
claim or demand for which an indemnifying party, any Seller or Buyer as the case
may be (a "Seller Indemnifying Party" or a "Buyer Indemnifying Party" as the
case may be and collectively, an "Indemnifying Party") would be liable to any
Indemnified Party hereunder is asserted against or sought to be collected from
any Indemnified Party by a third party, such Indemnified Party shall promptly,
but in no event more than 15 days following such Indemnified Party's receipt of
such claim or demand, notify the Indemnifying Party of such claim or demand and
the amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and demand)
(the "Claim Notice"). The Indemnifying Party shall have 30 days from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to notify
the Indemnified Party whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand. All costs and expenses incurred by the
Indemnifying Party in defending such claim or demand shall be a liability of,
and shall be paid by, the Indemnifying Party. In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the Indemnified Party
may proceed with the defense of such claim or demand and the Indemnifying Party
shall bear and pay all costs and expenses (including reasonable attorneys' fees
and costs) in connection with the Indemnified Party's defense of any such claim
or demand (whether or not incurred by the Indemnified Party). The Indemnified
Party shall not settle, adjust or compromise a claim or demand without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. If the Indemnified Party permits the Indemnifying Party to have
control of the defense of any such claim or demand, then the Indemnifying Party
shall not, without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld, settle, adjust or compromise any
such claim or demand. If the Indemnifying Party elects not to contest such claim
or demand, whether by not giving the Indemnified Party timely notice as provided
above or otherwise, then the amount of any such claim or demand, or, if the same
be contested by the Indemnified Party, then that portion thereof as to which
such defense is unsuccessful (and the reasonable costs and expenses pertaining
to such defense) shall be the liability of the Indemnifying Party hereunder. The
Indemnifying Party will give the Indemnified Party and its counsel access to,
during normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnifying Party.
9.5 Indemnification Limits. Other than in the case of any claim arising
under Section 6.5 and 9.3(ii), a Seller Indemnifying Party shall not be required
to indemnify any Buyer Indemnified Party with respect to any claim for
indemnification pursuant to this Article IX unless and until the aggregate
amount of Damages suffered by the Buyer Indemnified Parties under this Agreement
or by the Buyer Indemnified Parties (as defined therein) under the Partnerships
Asset Purchase Agreement exceeds in aggregate One Million Two Hundred And Fifty
Thousand Dollars ($1,250,000.00) (the "Threshold"), at which point the Seller
Indemnifying Parties shall indemnify the full amount of the Damages, subject to
any applicable limitations in this Article IX on the Seller Indemnifying Party's
indemnification obligations. Buyer shall notify PLM as promptly as reasonably
practicable of all claims that count towards the Threshold. In addition, to the
extent the Threshold is applicable, the aggregation of claims must only reach
the Threshold once, and after such point the Buyer Indemnified Parties may seek
indemnification for all claims that may arise under this Article IX. Other than
in the case of any claim arising under Section 6.5 and 9.3(ii), the
indemnification obligations of the Seller Indemnifying Parties under this
Article IX shall not exceed in the aggregate an amount equal to the Premium
under this Agreement and the Premium (as defined therein) under the Partnerships
Asset Purchase Agreement in aggregate; provided that, in the case of any claim
relating to any liability or obligation attributable to any period prior to
Closing arising under any Environmental, Health and Safety Laws, the
indemnification obligations of the Seller Indemnifying Parties under this
Article IX shall not exceed in aggregate the amount of the deductible of the
coverage obtained pursuant to Section 8.6, except above the amount of such
deductible, if applicable, to the extent of any exclusion or limitation in such
coverage or lack of coverage in which case the indemnification obligations of
the Seller Indemnifying Parties under this Article IX shall not exceed the
excess of the per occurrence limit of $5,000,000.00 and the aggregate maximum
limit of $15,000,000.00 that would otherwise have been applicable under such
coverage had it been available, as the case may be, over the sum of (x) any
proceeds actually received by, or actually paid by the insurer for the benefit
of, Buyer in accordance with the policy of insurance referred to in Section 8.6
and (y) such deductible, if applicable, to the extent paid by Sellers hereunder.
Other than in the case of any claim arising under Section 6.5 and 9.3(ii), with
respect to any claim for indemnification hereunder made after Closing (but not
with respect to assessing the extent of Damages suffered by Buyer with respect
to Sections 8.1 and 10.1) if and to the extent that an Indemnified Party has
actually recovered from a third party (including without limitation an insurer)
on an absolute basis that is not contingent in any way the amount of any
liability recoverable hereunder, then to the extent of such actual recovery and
only when actually received by the recovering party the amount thereof shall
accordingly reduce the extent of any claim that would otherwise have arisen
hereunder. Each party agrees to use its reasonable efforts to pursue any rights
that it may have against any such third party, but unless and until there is any
such actual receipt by the recovering party from such third party no liability
shall be reduced hereunder to any Indemnified Party.
Article X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. The transactions contemplated herein may
be terminated and/or abandoned in whole at any time before the Closing (i) by
any party if the PLM Stockholder Approval shall not have been obtained by reason
of the failure to obtain the required vote at a meeting of PLM's stockholders
duly convened therefor or at any adjournment thereof; provided however, that the
right to terminate this Agreement under this Section 10.1(i) shall not be
available to any of Sellers where the failure to obtain the PLM Stockholder
Approval shall have been caused by the action or failure to act of any of
Sellers and such action or failure to act constitutes a breach by any of Sellers
of this Agreement, (ii) by mutual consent of the parties, (iii) by Buyer at any
time prior to the Closing in the event that Buyer reasonably believes that any
representation, warranty or covenant of any Seller in this Agreement has been
breached or was or is not true and correct, provided that such breach results or
would result in aggregate Damages under this Agreement and under the
Partnerships Asset Purchase Agreement in excess of Two Million Two Hundred
Thousand Dollars ($2,200,000.00), and provided that such Seller shall have 5
business days to cure any such breach after receipt of written notice thereof
from Buyer, (iv) by Sellers at any time prior to the Closing if Sellers
reasonably believe that any representation, warranty or covenant of Buyer in
this Agreement has been materially breached or was or is not materially true and
correct, provided that Buyer shall have 5 business days to cure any such breach
after receipt of written notice thereof from Sellers, or (v) by any party, if
the Closing has not occurred on or prior to September 30, 2000, unless the
failure to close is a result of the actions or omissions of the party seeking to
terminate this Agreement.
10.2 Procedure upon Termination. In the event of termination and/or
abandonment by the Buyer or by the Sellers pursuant to Article X hereof, written
notice thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated and abandoned, without
further action by Buyer or Sellers. If the transactions contemplated by this
Agreement are terminated and abandoned as a whole or if the obligations
hereunder expire as provided pursuant to Article IX:
(a) each party will re-deliver all documents, work papers and
other material of any other party (including all copies) relating to
the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same;
(b) all confidential information received by any party hereto
with respect to the business of any other party or its subsidiaries and
partners shall be treated in accordance with Section 2.1 hereof; and
(c) no party hereto shall have any liability or further
obligation to any other party to this Agreement except as stated in
subparagraphs (a) and (b) of this Section 10.2, except for breaches of
this Agreement occurring prior to termination of this Agreement that
were intentional or for representations or warranties that were
fraudulent or incorrect when made, and except to the extent remaining
applicable for Section 10.3 and Article XI.
10.3 Break-Up Fee. If: (A) there shall be a failure by PLM to have duly
called, held and convened its stockholders' meeting for the purpose of obtaining
PLM Stockholder Approval by September 25, 2000 (other than as a result of events
substantially and reasonably beyond the control of PLM) or any material breach
by PLM of Section 5.12, or (B) the PLM Board of Directors or any committee
thereof withdraws its unanimous approval or recommendation of this Agreement and
PLM Stockholder Approval is not obtained at a meeting duly called, held and
convened for such purpose, or (C) PLM Stockholder Approval is not obtained at a
meeting duly called, held and convened for such purpose and any Acquisition
Proposal with any person or entity other than with Buyer is consummated within 9
months of the date of this Agreement, then PLM shall pay to Buyer $3,000,000
(which payment the parties acknowledge is an integral part of the transactions
contemplated by this Agreement and that without this provision Buyer would not
have entered into this Agreement and that in any event such payment would be a
reasonable and genuine estimate of Damages that would be suffered by Buyer if
the eventualities in which it would be payable occur) in immediately available
funds within one (1) business day after demand by Buyer. In the case of such fee
becoming payable pursuant to Section 10.3(A) or (B), Buyer agrees to reimburse
such fee if nevertheless Closing shall subsequently occur within 9 months of the
date of this Agreement.
Article XI
MISCELLANEOUS PROVISIONS
11.1 Time of the Essence. Time is of the essence under this Agreement.
11.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of the
Sellers and Buyer at any time prior to the Closing with respect to any of the
terms contained herein.
11.3 Waiver of Compliance. Any failure of any Seller, on the one hand,
or Buyer, on the other, to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by Buyer or Sellers,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
11.4 Expenses. (With the exception of the fees and expenses incurred in
relation to filings under the HSR Act, which shall be shared equally between the
parties), whether or not the transactions contemplated by this Agreement shall
be consummated, each Seller agrees that all fees and expenses incurred by it in
connection with this Agreement shall be borne by Sellers, and Buyer agrees that
all fees and expenses incurred by it in connection with this Agreement shall be
borne by Buyer including, without limitation, all fees of counsel and
accountants.
11.5 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
(a) If to Buyer, to:
Marubeni America Corporation
450 Lexington Avenue
New York, New York 10017
Attention: General Counsel
with a copy to:
Morrison & Foerster
425 Market Street
San Francisco, California 94105
Attention: Robert Townsend, Esq.
or to such other person or address as Buyer shall furnish to Sellers in
writing.
(b) If to Sellers, to:
PLM International, Inc.
One Market
Steuart Street Tower, Suite 800
San Francisco, California 94105
Attention: Susan Santo, Esq.
with a copy to:
Greene Radovsky Maloney & Share LLP
Four Embarcadero Center, Suite 4000
San Francisco, California 94111
Attention: Joseph S. Radovsky
or to such other person or address as Sellers shall furnish to Buyer in
writing.
11.6 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and, except as otherwise provided in this Section, inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, except by operation of law and
except that Buyer may assign its rights and interests (but not its obligations)
under this Agreement to MAC Leasing, Inc. or any Affiliate that is a direct or
indirect subsidiary of Marubeni Corporation.
11.7 Publicity. Neither party shall make or issue, or cause to be made
or issued, any announcement or written statement concerning this Agreement or
the transactions contemplated hereby for dissemination to the general public
without first providing the other parties a copy of any such statement or
announcement and the parties shall, whenever practicable, consult with each
other concerning the timing and content of such announcement before such
announcement is made. Sellers have provided to Buyer a copy of PLM's proposed
announcement of the signing of this Agreement and permitted Buyer to have a
reasonable opportunity to consult thereon and to organize for Buyer's parent to
announce as contemporaneously as reasonably possible in Japan.
11.8 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of California without regard to its conflicts of law doctrine.
11.9 Arbitration. Subject to Sections 1.5 and 5.12, any dispute arising
out of this Agreement, or its performance or breach, shall be resolved by
binding arbitration at San Francisco, California, under the Commercial
Arbitration Rules (the "AAA Rules") of the American Arbitration Association (the
"AAA"). This arbitration provision is expressly made pursuant to and shall be
governed by the Federal Arbitration Act, 9 U.S.C. Section 1-14. The Parties
agree that pursuant to Section 9 of the Federal Arbitration Act, a judgment of a
United States District Court of competent jurisdiction shall be entered upon the
award made pursuant to the arbitration. A single arbitrator, who shall have the
authority to allocate the costs of any arbitration initiated under this
paragraph, shall be selected according to the AAA Rules within ten (10) days of
the submission to the AAA of the response to the statement of claim or the date
on which any such response is due, whichever is earlier. The arbitrator shall be
required to furnish to the parties to the arbitration a preliminary statement of
the arbitrator's decision that includes the legal rationale for the arbitrator's
conclusion and the calculations pertinent to any damage award being made by the
arbitrator. The arbitrator shall then furnish each of the parties to the
arbitration the opportunity to comment upon and/or contest the arbitrator's
preliminary statement of decision either, in the discretion of the arbitrator,
through briefs or at a hearing. The arbitrator shall render a final decision
following any such briefing or hearing. The arbitrator shall conduct the
arbitration in accordance with the Federal Rules of Evidence. The arbitrator
shall decide the amount and extent of pre-hearing discovery which is
appropriate. The arbitrator shall have the power to enter any award of monetary
and/or injunctive relief (including the power to issue permanent injunctive
relief and also the power to reconsider any prior request for immediate
injunctive relief by any party and any order as to immediate injunctive relief
previously granted or denied by a court in response to a request therefor by any
party), including the power to render an award as provided in Rule 43 of the AAA
Rules; provided, however, THAT THE ARBITRATOR SHALL NOT HAVE THE POWER TO AWARD
CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES UNDER ANY CIRCUMSTANCES
(WHETHER STYLED AS LOSS OF PROFIT, LOSS OF EXPECTED ECONOMIC ADVANTAGE,
PUNITIVE, EXEMPLARY OR TREBLE DAMAGES, OR ANY PENALTY OR PUNITIVE TYPE OF
DAMAGES) REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER ANY
APPLICABLE LAW, THE PARTIES ARE HEREBY WAIVING THEIR RIGHTS, IF ANY, TO RECOVER
ANY SUCH DAMAGES, WHETHER IN ARBITRATION OR LITIGATION. The arbitrator shall
have the power to award the prevailing party its costs and reasonable attorneys'
fees; provided, however, that the arbitrator shall not award attorneys' fees to
a prevailing party if the prevailing party received a settlement offer unless
the arbitrator's award to the prevailing party is greater than such settlement
offer without taking into account attorneys' fees in the case of the settlement
offer or the arbitrator's award. Any arbitration shall be held in San Francisco,
California, for any claim brought by the parties. In addition to the above
courts, the arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration.
11.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.11 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
11.12 Entire Agreement. This Agreement, including the Exhibits hereto,
the Sellers Disclosure Schedule and the other documents and certificates
delivered pursuant to the terms hereof, sets forth the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
11.13 Third Parties. Except with respect to MAC Leasing, Inc. or any
Affiliate that is a direct or indirect subsidiary of Marubeni Corporation,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or corporation other than the parties hereto and
their successors or assigns any rights or remedies under or by reason of this
Agreement.
11.14 Severability. If a court of competent jurisdiction should hold
any of the provisions of this Agreement invalid, illegal or unenforceable in any
respect, the remaining provisions shall nevertheless be given full effect and
shall be construed as if such invalid, illegal or unenforceable provisions or
part of a provision had never been contained in this Agreement.
11.15 Sole Remedy. Buyer's sole and exclusive remedy for breach of any
representation, warranty or covenant herein (other than with respect to Article
II) following Closing having occurred hereunder shall be the indemnification
provision contained in Article IX.
11.16 PLM Liability with respect to the Partnerships Asset Purchase
Agreement. PLM agrees hereunder that PLM shall be jointly and severally liable
to Buyer with respect to any claim that may be made against any or all of the
Partnerships or PLM FSI by Buyer with respect to the Partnerships Asset Purchase
Agreement and for which any or all of the Partnerships or PLM FSI would have
liability to Buyer thereunder (except that for the purposes of PLM being liable
under this Section of this Agreement, if any one or more of the Partnerships or
PLM FSI is liable with respect to the Partnerships Asset Purchase Agreement, it
shall not be necessary for Buyer to show which of the Partnerships or PLM FSI is
individually liable or to have to allocate liability among the Partnerships or
PLM FSI with respect to the Partnerships Asset Purchase Agreement), without
prejudice to the liabilities and obligations of the Partnerships or PLM FSI
under the Partnerships Asset Purchase Agreement. For the avoidance of doubt, it
is hereby expressly agreed and understood that the only limitations applicable
to any claim against PLM under this Section 11.16 shall be those limitations
that would be applicable to any claim under the Partnerships Asset Purchase
Agreement and that no other limitations shall be applicable hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed , all as of the day and year first above written.
MARUBENI AMERICA CORPORATION
By: /s/ Toru Nishimi
Name: Toru Nishimi
Title: Senior Vice President
PLM INTERNATIONAL, INC.
By /s/ Robert N. Tidball
Name: Robert N. Tidball
Title: President and CEO
PLM RENTAL, INC.
d/b/a PLM TRAILER LEASING
By /s/ Susan C. Santo
Name: Susan C. Santo
Title: Vice President and Secretary
TEC ACQUISUB, INC.
By /s/ Robert N. Tidball
Name: Robert N. Tidball
Title: President
PLM TRANSPORTATION EQUIPMENT CORPORATION
By /s/ Susan C. Santo
Name: Susan C. Santo
Title: Vice President and Secretary
<PAGE>
ANNEX B
OPINION OF IMPERIAL CAPITAL, LLC
May 17, 2000
The Board of Directors
PLM International, Inc.
One Market
Steuart Street Tower, Eighth Floor
San Francisco, California 94105
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to PLM International, Inc. (the "Company"), regarding the sale of assets
(the "Transaction") related to the Company's trailer leasing business ("Trailer
Leasing") to Marubeni America Corporation or a subsidiary thereof (the
"Acquiror") for aggregate consideration (the "Consideration") equal to the book
value of Trailer Leasing, which consists of the book value of assets owned by
the Company and the book value of assets owned by eight investment programs
managed by the Company (the "Partnerships") plus (a) $22.2 million, of which, as
per your instruction, $13.6 million was to be allocated to the Company and $8.6
million was to be allocated to the Partnerships plus (b) an amount equal to the
aggregate price paid by the Company for additional trailers purchased by the
Company after December 31, 1999. Based on the forecasted books and records as of
July 31, 2000 you presented to us, the book value of Company owned assets is
expected to be $99.8 million thereby resulting in $113.4 million of
Consideration to be received by the Company. Additionally, the Acquiror has
agreed to assume the present value of TRAC leases plus the outstanding amount
under the senior credit facility provided by Mees Pierson as of the closing
date. We render no opinion in regard to any other transaction or potential
transaction of the Company or its subsidiaries. Additionally, we render no
opinion with respect to the Partnership's portion of the Transaction.
In connection with the rendering of this opinion, we have:
(i) analyzed certain historical business and financial information relating
to the Company and Trailer Leasing, including Form 10-K for the year
ended December 31, 1999 and Form 10-Q for the period ended March 31,
2000;
(ii) reviewed certain financial forecasts and other data provided to us by
the Company relating to Trailer Leasing, including the most recent
business plans prepared by senior management of the Company responsible
for day to day management of Trailer Leasing furnished to us;
(iii) conducted discussions with members of senior management of the Company
with respect to the historical operations, businesses and prospects of
Trailer Leasing, the strategic objectives of Trailer Leasing and
possible benefits which might be realized;
(iv) reviewed public information with respect to certain other companies
with financial profiles which we deemed to be generally comparable in
whole or in part to that of Trailer Leasing;
(v) reviewed the historical market prices and trading activity for the
common stock and compared them with those of certain publicly traded
companies which we deemed to be relevant;
(vi) prepared and delivered to over 200 potential financial and strategic
buyers an executive summary describing Trailer Leasing and subsequently
prepared and delivered to over 50 interested parties a confidential
information memorandum describing Trailer Leasing;
(vii) received six written letters of interest and two oral indications of
interest to purchase Trailer Leasing; and
(viii) conducted such other financial studies, analyses and investigation, as
we deemed appropriate.
With your consent, we have relied upon the accuracy and completeness of the
foregoing financial and other information and have not assumed responsibility
for independent verification of such information or conducted any independent
valuation or appraisal of any assets of the Company, nor have we been furnished
with any such appraisals. With respect to the financial forecasts, we have
assumed, with your consent, that they have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of management of
the Company as to the future financial performance of Trailer Leasing. We have
also relied upon the assurances of senior management of the Company that they
are unaware of any facts that would make the information or financial forecasts
provided to us incomplete or misleading. We assume no responsibility for, and
express no view as to such forecasts or the assumptions on which they are based.
Our engagement and the opinion expressed herein are for the benefit of the Board
of Directors and our opinion is rendered in connection with the sale of Trailer
Leasing to the Acquiror. This opinion does not constitute a recommendation to
any holder of common stock as to how such holder should vote on the Transaction.
This opinion does not address the business decision of the Board of Directors to
engage in the Transaction or address the relative merits of any alternatives. No
opinion is expressed herein, nor should one be implied as to the fair market
value of the Company's common stock or the prices at which it may trade at any
time. It is understood that this opinion may not be disclosed or otherwise
referred to or used for any other purpose without our prior written consent,
except as may otherwise be required by law or by a court of competent
jurisdiction; provided, however, that this opinion may be reproduced in full in
the proxy statement related to the transaction.
In the ordinary course of its business and in accordance with applicable state
and federal securities laws, Imperial Capital, LLC may trade the securities of
the Company for its own account and for the accounts of customers and,
accordingly, may at any time hold long or short positions in such securities.
Imperial Capital, LLC is currently acting as financial advisor to the Board of
Directors of the Company in connection with the sale of Trailer Leasing and will
receive a fee in connection with the rendering of this opinion and upon the sale
of Trailer Leasing.
Based on and subject to the foregoing, we are of the opinion that as of the date
hereof, the Consideration to be received by the Company is fair to the Company
from a financial point of view.
Very truly yours,
/s/ Imperial Capital, LLC
IMPERIAL CAPITAL, LLC
<PAGE>
ANNEX C
THE FINANCIAL PROJECTIONS SET FORTH BELOW WERE PREPARED BY PLM FOR
INCLUSION IN THE CONFIDENTIAL OFFERING MEMORANDUM PREPARED BY IMPERIAL CAPITAL
AND DELIVERED TO MARUBENI. THE FINANCIAL PROJECTIONS ARE HYPOTHETICAL AND
MAKE ASSUMPTIONS CONCERNING ANTICIPATED RESULTS. THESE PROJECTIONS ARE
THEREFORE SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, AND COMPETITIVE
UNCERTAINTIES BEYOND OUR CONTROL. CONSEQUENTLY, THESE PROJECTIONS ARE LIKELY
TO VARY FROM OUR ACTUAL RESULTS OF OPERATIONS, AND THOSE VARIATIONS COULD BE
MATERIAL.
FINANCIAL PROJECTIONS
HISTORICAL AND PROJECTED FINANCIALS
The projections of financial performance, statements regarding
management's plans and objectives for future acquisitions, statements regarding
projected operational and economic performance and the assumptions made by
Trailer Leasing in determining and relating to the foregoing contained in this
Memorandum constitute "forward looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
and Exchange Act of 1934, as amended. These forward looking statements involve
known and unknown risks, uncertainties and other factors which may cause actual
results, performance or achievements of Trailer Leasing to be materially
different from any future results, performance or achievements expressed or
implied by these forward looking statements, including significant business,
economic, regulatory and competitive uncertainties and contingencies, many of
which are beyond the control of Trailer Leasing.
These forward looking statement were not prepared in accordance with
the published guidelines of the American Institute of Certified Public
Accountants or the rules and regulations of the Securities and Exchange
Commission. These forward looking statements have not been reviewed or compiled
by PLM's independent public accountants, legal counsel, or Imperial Capital and
opinion or assurance regarding these statements is expressed by such persons.
Neither PLM nor Imperial Capital make any representation, warranty or
assurance as to the accuracy of these forward looking statements or their
underlying assumptions or whether Trailer Leasing's actual results will resemble
those indicated in the forward looking statements.
UNDER NO CIRCUMSTANCES SHOULD ANY FORWARD LOOKING STATEMENTS CONTAINED
IN THIS MEMORANDUM BE CONSTRUED AS A REPRESENTATION OR WARRANTY THAT TRAILER
LEASING WILL ACHIEVE OR IS LIKELY TO ACHIEVE ANY PARTICULAR RESULTS.
NEITHER PLM NOR IMPERIAL CAPITAL IS UNDER ANY OBLIGATION TO UPDATE ANY
FORWARD LOOKING STATEMENTS CONTAINED IN THIS MEMORANDUM. ANY RECIPIENTS OF THIS
MEMORANDUM SHOULD CONSULT THEIR OWN LEGAL AND FINANCIAL ADVISORS CONCERNING
THESE FORWARD LOOKING STATEMENTS AND RELY UPON THEIR OWN ANALYSIS OF SUCH
STATEMENTS.
ASSUMPTIONS
REVENUES
Trailer Leasing's revenue is expected to increase from $36.6 million in 1999 to
$71.6 million in 2004. This growth can be attributed to the opening of three
refrigerated yards in 2000 and three additional refrigerated yards per year
thereafter and the expansion of existing yards. All refrigerated trailers at the
rental yards are assumed to be rented at a 65% short-term utilization rate. The
current refrigerated trailer utilization rate, including term leases, is 74%.
Management believes that the 65% short-term utilization rate assumption is
conservative as the overall utilization rate for Trailer Leasing was 74% for the
twelve months ended November 30, 1999. The 74% overall utilization rate breaks
out into two components: (i) a 68% short-term utilization rate on the
approximately 80% of Trailer Leasing's fleet that is leased on a short-term
basis and (ii) a 100% utilization rate on the approximately 20% of Trailer
Leasing's fleet that is on term lease. Trailer Leasing expects to add over 3,600
refrigerated trailers to its fleet over the next five years.
EXPENSES
Direct costs consist of maintenance for the trailers and the refrigeration units
and commissions paid to branch managers. Direct costs have averaged
approximately 25% of revenues since PLM began its refrigerated trailer leasing
business and these costs have been projected at 25% for future years. As Trailer
Leasing has matured, bad debt expense has decreased substantially. As a result,
bad debt expense has been projected at 2.0% of revenue, or approximately the
current rate.
Operations support consists of general and administrative expenses at the branch
level. These expenses consist of lease expense, personnel at the yards
(excluding the branch manager's commission) and other expenses. Trailer Leasing
believes it will open three refrigerated trailer rental facilities per year and
will incur general and administrative expenses similar to those as presented in
the model trailer yard section (See Section III Business Overview).
Corporate Overhead consists of general and administrative expenses associated
with the management of the trailer yards from the San Francisco headquarters.
These expenses include salaries of senior management of Trailer Leasing, rent at
the San Francisco headquarters and administrative functions such as accounting,
legal and marketing. The increase in Corporate Overhead commencing in 2000
reflects Trailer Leasing operating as a standalone entity. Additional expenses
include accounting, information systems, legal and human resources.
ALLOCATIONS TO FSI-MANAGED INVESTMENT PROGRAMS
Approximately 2,100 of Trailer Leasing's refrigerated trailers are owned by
Trailer Leasing while the remaining 700 trailers are owned by FSI-managed
investment programs. In return for managing partnership trailers, Trailer
Leasing receives a 7% management fee. Additionally, Trailer Leasing charges the
investment programs for direct costs, bad debt expense and an allocation of
operations support at the rental yard level. The allocation of operations
support expenses is based on the percentage of total revenue generated by FSI
managed trailers. These allocations will not be made if the purchaser buys the
trailers managed by FSI.
DEPRECIATION
Refrigerated trailers owned by Trailer Leasing are depreciated down to a 20%
residual value on a straight-line basis until the trailer is ten years old.
CAPITAL EXPENDITURES
Refrigerated trailers are assumed to be purchased throughout the year using
long-term debt. All additional foodservice trailers and all trailers purchased
to replace retired trailers are assumed to be new trailers. Other additions can
be new or used trailers. Debt levels are assumed to equal 70% of (a) the sum of
the (i) net book value of the trailers at the beginning of the year and (ii) the
original equipment cost of the additional trailers less (b) the net book value
of any trailers disposed. Refrigerated trailers are assumed to be disposed of
after 10 years at book value. The debt for additional trailers amortizes over 7
years and has an interest rate of 8.0%. The remainder of the purchase price is
assumed to be paid with cash. Any cash deficit from operations, investments
and/or financing activities is covered by a revolving credit facility. Trailer
Leasing does not currently have such a facility and a purchaser of Trailer
Leasing will need to determine how it will finance the capital expenditures
projected by Trailer Leasing's management.
<PAGE>
The following is the historical and projected income statement for Trailer
Leasing.
<TABLE>
<CAPTION>
INCOME STATEMENT For The Year Ending December 31,
$ in 000s 1996 1997 1998 1999 2000 2001 2002 2003 2004
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rental
Yards 10 10 16 22 25 28 31 34 37
Refrigerated
Trailers 1,800 1,676 2,147 2,916 4,078 4,895 5,435 5,975 6,515
Refrigerated Trailers
Owned by PLM $ 1,335 $ 1,682 $ 6,189 $ 22,386 $ 32,772 $ 43,093 $ 50,943 $ 58,034 $ 64,000
Managed by FSI 6,912 9,721 9,061 6,472 6,366 6,199 5,279 4,023 3,501
-----------------------------------------------------------------------------------------
Total Refrigerated Revenues 8,247 11,403 15,250 28,858 39,137 49,293 56,222 62,057 67,501
Dry Van Trailers
Owned by PLM 4,617 3,862 3,555 3,435 2,851 2,618 2,132 1,647 1,083
Managed by FSI 5,096 6,311 6,095 4,289 3,974 3,033 3,003 2,986 2,969
----------------------------------------------------------------------------------------
Total Dry Van Revenues 9,713 10,173 9,649 7,723 6,825 5,652 5,135 4,633 4,053
-----------------------------------------------------------------------------------------
Total Revenue 17,960 21,576 24,899 36,581 45,962 54,945 61,357 66,689 71,553
Expenses:
Direct Expenses 4,795 5,207 5,342 8,988 10,778 13,736 15,339 16,672 17,888
Bad Debt Expense 759 465 424 810 919 1,099 1,227 1,334 1,431
Operation Support 3,259 3,169 4,196 5,068 6,704 7,096 7,684 8,271 8,859
-----------------------------------------------------------------------------------------
Total Expenses 8,814 8,840 9,961 14,866 18,402 21,931 24,250 26,278 28,179
----------------------------------------------------------------------------------------
EBITDAP before Corp.Overhead(a) 9,146 12,736 14,938 21,716 27,560 33,013 37,107 40,412 43,375
Corporate Overhead 1,103 1,172 1,532 2,077 3,745 3,745 3,745 3,745 3,745
-----------------------------------------------------------------------------------------
EBITDAP 8,043 11,564 13,406 19,639 23,815 29,268 33,362 36,667 39,630
Allocations to FSI(b)
Revenue 93.0% 11,167 14,909 14,094 10,008 9,616 8,587 7,702 6,518 6,017
Direct Costs (2,939) (3,460) (3,205) (3,236) (2,695) (2,308) (2,070) (1,752) (1,617)
Bad Debt Expense (240) (321) (303) (215) (207) (185) (166) (140) (129)
Allocation of Operations
Support (2,329) (2,991) (2,730) (2,459) (1,508) (1,192) (1,037) (869) (801)
------------------------------------------------------------------------------------------
Total Allocations to FSI 5,660 8,138 7,857 4,097 5,206 4,901 4,429 3,756 3,469
EBITDA 2,383 3,426 5,549 15,542 18,609 24,367 28,933 32,910 36,161
Depreciation 7,610 9,684 13,160 15,473 17,313 18,984
----------------------------------------------------------
EBIT 7,932 8,925 11,207 13,460 15,597 17,177
Net Interest Expense 3,328 5,656 8,045 6,605 7,074 6,992
----------------------------------------------------------
Pre-Tax Income 4,604 3,270 3,162 6,855 8,523 10,184
Prov. For Income 38.0%
Tax 1,749 1,242 1,201 2,605 3,239 3,870
----------------------------------------------------------
Net Income $ 2,854 $ 2,027 $ 1,960 $ 4,250 $ 5,284 $ 6,314
----------------------------------------------------------
</TABLE>
(a) Earnings before interest, taxes, depreciation, amortization and partnership
allocations.
(b) Represents the net allocation to the investment programs managed by FSI
(total revenue less allocated expenses) for the trailers owned by the
investment programs. Allocations will not be made if a buyer purchases the
trailers owned by FSI managed investment programs.
<PAGE>
The following is the projected balance sheet for Trailer Leasing.
<TABLE>
<CAPTION>
BALANCE SHEET(a)
$ in 000s For the Year Ending December 31,
1999 2000 2001 2002 2003 2004
--------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Cash $ - $ - $ - $ - $ - $ 3,108
Receivables 5,400 6,785 8,111 9,057 9,844 10,562
-------------------------------------------------------------
Total Current Assets 5,400 6,785 8,111 9,057 9,844 13,670
Transportation Equipment 94,577 140,631 170,292 188,323 205,574 223,246
Less: Accumulated Depreciation (11,287) (20,971) (34,131) (49,604) (66,917) (85,901)
--------------------------------------------------------------
Net Transportation Equipment 83,290 119,660 136,161 138,719 138,657 137,345
Other Assets 530 530 530 530 530 530
-------------------------------------------------------------
Total Assets $ 89,220 $ 126,975 $ 144,801 $ 148,306 $ 149,031 $ 151,545
==============================================================
LIABILITIES & EQUITY
Accounts Payable $ 6,425 $ 8,073 $ 9,650 $ 10,777 $ 11,713 $ 12,567
Accrued Liabilities - - - - - -
---------------------------------------------------------------
Total Current Liabilities 6,425 8,073 9,650 10,777 11,713 12,567
Revolver - 15,021 21,347 20,004 18,159 -
Long-term Debt 59,795 78,853 86,817 86,289 82,637 96,141
Shareholder Equity 23,000 25,027 26,987 31,237 36,522 42,836
--------------------------------------------------------------
Total Liabilities & Equity $ 89,220 $ 126,975 $ 144,801 $ 148,306 $149,031 $151,545
==============================================================
</TABLE>
(a) - Does not include any assets, including trailers owned by the
investment programs managed by FSI.
<PAGE>
The following is the projected statement of cash flow for Trailer Leasing:
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOW For the Year Ending December 31,
$ in 000s 2000 2001 2002 2003 2004
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Income $ 2,027 $ 1,960 $ 4,250 $ 5,284 $ 6,314
Plus:
Depreciation 9,684 13,160 15,473 17,313 18,984
Equipment Disposal - 416 1,840 2,544 2,056
Less:
Capital Expenditures 46,054 30,077 19,871 19,795 19,728
Change in Working Capital (263) (252) (180) (149) (136)
-------------------------------------------------
Cash Flow From Operations &
Investments (34,080) (14,289) 1,871 5,496 7,762
Financing Activities
Additional Borrowing 34,360 25,108 16,234 25,257 18,073
Amortization of Debt (15,301) (17,144) (16,762) (28,908) (4,569)
-------------------------------------------------
Cash Flow from Financing 19,058 7,964 (528) (3,652) 13,504
-------------------------------------------------
Net Cash Flow (15,021) (6,325) 1,343 1,844 21,267
Revolver Payback - - 1,343 1,844 18,159
Revolver Drawdown 15,021 6,325 - - -
Cash at Beginning of the Year - - - - -
Cash at the End of the Year - - - - 3,108
</TABLE>
<PAGE>
LONG-TERM DEBT
PLM entered into a senior notes transaction with SunAmerica in 1994 (the "Senior
Notes"). As of December 31, 1999, PLM expects to have an outstanding balance of
$8.8 million on the Senior Notes. The Senior Notes bear interest at 9.78% and
are due on June 30, 2001. The Senior Notes are secured by approximately 700
refrigerated trailers and approximately 1,400 dry trailers. A prepayment penalty
of approximately $150,000 is owed if the Senior Notes are prepaid.
Trailer Leasing recently entered into a $15.0 million revolving credit facility
with Meespierson, NV of the Netherlands (the "Meespierson Facility") for the
purposes of acquiring additional trailers. Trailer Leasing has until May 2000 to
drawdown on the facility before amortization on the facility begins. Trailer
Leasing believes it will use substantially all of the facility to acquire
additional trailers. After May 2000, Trailer Leasing will make 23 quarterly
payments equal to 2% of the OEC that is collateralized plus accrued interest.
For the 24th payment, Trailer Leasing will owe the outstanding principal plus
any unpaid fees and accrued interest. The interest rate equals LIBOR plus 1.5%.
If Trailer Leasing terminates the facility prior to May 2000, it will owe a
termination fee of $150,000. Once the loan has begun to amortize, prepayment
penalties can be as much as 1% of the prepaid principal. This percentage varies
depending on when prepayment is made. As of December 31, 1999, Trailer Leasing
expects to fully utilize the Meespierson Facility and have an outstanding
balance of $15.0 million.
Trailer Leasing has recently begun to use terminal rental adjustment clause
("TRAC Leases") leases as a way to finance the acquisition of additional
trailers. Trailer Leasing has financed 100% of the purchase price of newly built
trailers using TRAC Leases. Although, Trailer Leasing has several TRAC Leases
outstanding, the terms of these facilities are similar. TRAC Leases offer lower
interest rates because Trailer Leasing does not receive the tax depreciation
deductions for the trailers while they are under lease. At the present time, PLM
is an alternative minimum taxpayer thereby making the tax deductions less
important to PLM. Typically, TRAC Leases (i) are for seven years; (ii) give the
tax benefits of the trailer under the TRAC lease to the lessor; (iii) have
imputed interest rates between 5.3-7.0%; and (iv) have residual payment clauses
that allow Trailer Leasing to purchase the trailers for 15-25% of the original
purchase price at the end of the lease term. Trailer Leasing believes that TRAC
Leases currently offer the best form of financing. As of December 31, 1999,
Trailer Leasing expects to have a total TRAC Lease balance of $36.0 million.
Because the debt and leases are trailer specific, the purchaser of Trailer
Leasing or the trailers would assume the debt and lease obligations that have
liens attached to those trailers.
The following is a detailed schedule of Trailer Leasing debt including the
assumed revolving credit facility.
<PAGE>
<TABLE>
<CAPTION>
DEBT SCHEDULE For the Year Ending December 31,
$ in 000s 1999 2000 2001 2002 2003 2004
-------------------------------------------------------------
REVOLVER
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance $ - $ 15,021 $ 21,347 $ 20,004 $ 18,159
Additions 15,021 6,325 - - -
Interest Rate 8.50% 8.50% 8.50% 8.50% 8.50%
Interest Expense - 638 907 850 772
Amortization - - 1,343 1,844 18,159
------------------------------------------------------------
Ending Balance - 15,021 21,347 20,004 18,159 -
SUNAMERICA SENIOR NOTES
Beginning Balance $ 8,826 $ 2,946 $ - $ - $ -
Interest Rate 9.78% 9.78% 9.78% 9.78% 9.78%
Interest Expense 863 144 - - -
Amortization 5,880 2,946 - - -
------------------------------------------------------------
Ending Balance 8,826 2,946 - - - -
MEESPIERSON FACILITY
Beginning Balance $ 15,000 $ 14,040 $ 12,120 $ 10,200 $ -
Interest Rate 7.70% 7.70% 7.70% 7.70% 7.70%
Interest Expense 1,155 2,500 467 393. -
Amortizatization 960 1,920 1,920 10,200 -
----------------------------------------------------------
Ending Balance 15,000 14,040 12,120 10,200 - -
US BANCORP TRAC
Beginning Balance $ 9,365 $ 8,366 $ 7,312 $ 6,200 $ 5,028
Interest Rate 5.35% 5.35% 5.35% 5.35% 5.35%
Interest Expense 501 448 391 332 269
Amortization 999 1,054 1,112 1,172 1,243
------------------------------------------------------------
Ending Balance 9,365 8,366 7,312 6,200 5,028 3,785
WELLS FARGO TRAC
Beginning Balance $ 2,571 $ 2,298 $ 2,009 $ 1,704 $ 1,382
Interest Rate 5.55% 5.55% 5.55% 5.55% 5.55%
Interest Expense 143 128 112 95 77
Amortization 273 288 305 322 341
-----------------------------------------------------------
Ending Balance 2,571 2,298 2,009 1,704 1,382 1,042
WELLS FARGO TRAC #2
Beginning Balance $ 4,656 $ 4,194 $ 3,704 $ 3,182 $ 2,627
Interest Rate 6.20% 6.20% 6.20% 6.20% 6,20%
Interest Expense 289 260 230 197 163
Amortization 462 490 522 555 590
-----------------------------------------------------------
Ending Balance 4,656 4,194 3,704 3,182 2,627 2,037
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Year Ending December 31,
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------------
ASSOCIATES TRAC
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance $ 4,802 $ 4,359 $ 3,884 $ 3,377 $ 2,833
Interest Rate 6.81% 6.81% 6.81% 6.81% 6.81%
Interest Expense 327 297 265 230 193
Amortization 443 474 508 544 582
---------------------------------------------------------
Ending Balance 4,802 4,359 3,884 3,377 2,833 2,251
FLEET TRAC
Beginning Balance $ 4,838 $ 4,400 $ 3,930 $ 3,426 $ 2,886
Interest Rate 6.90% 6.90% 6.90% 6.90% 6.90%
Interest Expense 334 304 271 236 199
Amortization 438 470 504 540 578
---------------------------------------------------------
Ending Balance 4,838 4,400 3,930 3,426 2,886 2,308
SAFECO TRAC
Beginning Balance $ 4,829 $ 4,393 $ 3,925 $ 3,423 $ 2,885
Interest Rate 7.05% 7.05% 7.05% 7.05% 7.05%
Interest Expense 340 310 277 241 203
Amortization 436 468 502 539 578
--------------------------------------------------------
EndingBalance 4,829 4,393 3,925 3,423 2,885 2,307
WELLS FARGO TRAC #3
Beginning Balance $ 2,597 $ 2,331 $ 2,047 $ 1,743 $ 1,417
Interest Rate 6.71% 6.71% 6.71% 6.71% 6.71%
Interest Expense 174 156 137 117 95
Amortization 266 285 304 325 348
---------------------------------------------------------
Ending Balance 2,597 2,331 2,047 1,743 1,417 1,069
WELLS FARGO TRAC #4
Begoinning Balance $ 2,311 $ 2,074 $ 1,821 $ 1,550 $ 1,261
Interest Rate 6.71% 6.71% 6.71% 6.71% 6.71%
Interest Expense 155 139 122 104 85
Amortization 237 253 271 289 310
---------------------------------------------------------
Ending Balance 2,311 2,074 1,821 1,550 1,261 951
DEBT FOR ADDITIONAL TRAILERS
Beginning Balance $ - $ 29,451 $ 46,064 $ 51,483 $ 62,317
Additions 34,360 25,108 16,234 25,257 18,073
Interest Rate 8.00% 8.00% 8.00% 8.00% 8.00%
Interest Expense 1,374 3,360 4,334 5,129 5,708
Amortization 4,909 8,495 10,814 14,423 -
---------------------------------------------------------
Ending Balance - 29,451 46,064 51,483 62,317 80,390
Total Amortization 15,301 17,144 16,762 28,908 4,569
Total Interest Expense 5,656 8,045 6,605 7,074 6,992
</TABLE>
