10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 28, 2007

OR

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                                               

Commission file number 000-49828

PACER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Tennessee	62-0935669
(State or other jurisdiction	(I.R.S. employer
of organization)	identification no.)

2300 Clayton Road, Suite 1200

Concord, CA 94520

Telephone Number (887) 917-2237

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of exchange on which registered
Common Stock, par Value $0.01	The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes    x    No            

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes            No    x    

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    x    No            

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.            

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    x	Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes            No    x    

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $820,648,245 at June 29, 2007 (based on the NASDAQ National Market closing price on that date). For purposes of this calculation, the registrant has assumed that its directors and executive officers are affiliates. On February 8, 2008, the registrant had 34,669,194 outstanding shares of Common Stock, par value $.01 per share.

Documents Incorporated by Reference – Portions of the registrant’s definitive Proxy Statement for the 2008 annual meeting of shareholders to be held on May 6, 2008 which will be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 28, 2007, have been incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described herein.

TABLE OF CONTENTS

General Information		3
Special Note Regarding Forward-Looking Statements		3
Part I.
Item 1.	Business	5
	Overview	5
	Available Information	5
	Our Service Offerings	5
	Information Technology	9
	Customers	10
	Sales and Marketing	10
	Development of Our Company	10
	Suppliers	11
	Equipment	12
	Risk Management and Insurance	13
	Relationship with APL Limited	14
	Business Cycle	14
	Competition	14
	Employees	15
	Government Regulation	15
	Legal Contingencies	16
	Environmental	16
	Seasonality	17
Item 1A.	Risk Factors	17
	Risks Related to Our Business	17
	Risks Related to Our Common Stock	27
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	28
Item 4.	Submission of Matters to a Vote of Security Holders	29
	Executive Officers of the Registrant	29
Part II.
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
Item 6.	Selected Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 8.	Financial Statements and Supplementary Data	57
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	57
Item 9A.	Controls and Procedures	57
Item 9B.	Other Information	58
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	60
Item 11.	Executive Compensation	60
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13.	Certain Relationships and Related Transactions, and Director Independence	62
Item 14.	Principal Accountant Fees and Services	62
Part IV.
Item 15.	Exhibits and Financial Statement Schedules	63
	Signatures	68
	Index to Consolidated Financial Statements and Financial Statement Schedules	F-1

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General Information

In this Annual Report on Form 10-K, “our company,” “Pacer International,” “we,” “us” and “our” refer to Pacer International, Inc. and its consolidated subsidiaries, and “Pacer Logistics” refers to our former subsidiary Pacer Logistics, Inc., which merged into Pacer International, Inc. on May 31, 2003. Our business that provides intermodal equipment and arranges rail transportation operates under the name Pacer Stacktrain and is referred to as “Stacktrain” or “Pacer Stacktrain” in this Annual Report on Form 10-K. References to our intermodal segment operations include our Stacktrain operations, our local cartage operations (also referred to as local trucking and drayage) conducted through our subsidiary Pacer Cartage, Inc., and our intermodal marketing operations (also referred to as rail brokerage) conducted through our subsidiary Pacer Global Logistics, Inc. References to our logistics segment operations include our highway brokerage, truck services, international freight forwarding, supply chain management services and warehousing and distribution services. Our highway brokerage and supply chain management services are conducted through our subsidiary Pacer Global Logistics, Inc.; our warehousing and distribution services are conducted through our subsidiaries Pacer Distribution Services, Inc. and PDS Trucking, Inc.; our international freight forwarding operations are conducted through our subsidiaries RF International, Ltd. and Ocean World Lines, Inc.; and our truck services operations are conducted through our subsidiaries Pacer Transport, Inc., S&H Transport, Inc. and S&H Leasing, Inc. Statements in this Annual Report on Form 10-K as to our size or position relative to our competitors are based on revenues.

Special Note Regarding Forward-looking Statements

This Annual Report on Form 10-K contains forward looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning our possible future consolidated results of operations, business and growth strategies, financing plans, our competitive position and the effects of competition, the projected growth of the industries in which we operate, and the benefits and synergies to be obtained from any future acquisitions. Forward-looking statements include all statements that are not historical facts and can be identified by forward-looking words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “may”, “should”, “will”, “would”, “project” and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements we make in this Annual Report on Form 10-K are discussed under “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K and include:

· general economic and business conditions;

· changes in our business strategy, development plans or cost savings plans;

· industry trends, including changes in the costs of services from rail and motor transportation providers;

· the loss of one or more of our major customers;

· the impact of competitive pressures in the marketplace;

· the frequency and severity of accidents, particularly involving our trucking operations;

· difficulties in maintaining or enhancing our information technology systems including potential delays and cost overruns in the implementation of an enterprise suite of software applications that we purchased in the fourth quarter of 2007;

· availability of qualified personnel;

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· congestion, work stoppages, equipment and capacity shortages, weather related issues and service disruptions affecting our rail and motor transportation providers;

· the possibility of future goodwill impairment charges;

· changes in, or the failure to comply with, government regulations;

· increases in interest rates;

· increases in our leverage;

· our ability to integrate acquired businesses; and

· terrorism and acts of war.

Our actual consolidated results of operations and the execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate future results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our consolidated results of operations, financial condition or cash flows. In evaluating our forward-looking statements, you should specifically consider the risks and uncertainties discussed under “Item 1A. Risk Factors” in this Annual Report on Form 10-K. Except as otherwise required by federal securities laws, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this Annual Report on Form 10-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Annual Report on Form 10-K.

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Part I.

ITEM 1. BUSINESS

Overview

We are a leading non-asset based North American logistics provider. Within North America, we are one of the largest intermodal marketing companies, which facilitate the movement of freight by trailer or container using two or more modes of transportation. We focus our business on our core intermodal product, with intermodal sales representing approximately 80% of our total revenues. We believe that our competitive advantages include: the ability to pass volume rate savings and economies of scale to our customers; a significant opportunity to cross-sell services to existing customers; the flexibility to tailor services to our customers’ needs in rapidly changing freight markets; and the ability to provide reliable and consistent services. Using our proprietary information systems, we provide logistics services to numerous Fortune 500 and multi-national companies, including Big Lots, C.H. Robinson, General Electric, Sony, Union Pacific, Toyota and Conagra, which together represented approximately 19.0% of our revenues for the fiscal year ended December 28, 2007, as well as to numerous intermodal marketing companies. We utilize a non-asset based strategy by which we seek to limit our investment in equipment and facilities and reduce working capital requirements through arrangements with transportation carriers and equipment providers. This strategy provides us with access to freight terminals and facilities and control over transportation-related equipment without owning assets.

We believe our non-asset based strategy results in reduced working capital requirements, as compared to those of asset-based transportation providers. In our intermodal segment, our contractual arrangements with our underlying rail carriers and local trucking or drayage companies do not require us to pay for rail or truck transportation services that are not needed to service our customers’ shipping needs. In our logistics segment, our contractual arrangements with truck carriers and equipment providers also do not require us to purchase or pay for carrier services or for equipment usage or availability that are not required to service our customers’ shipping needs. We believe that this is customary in the non-asset based highway brokerage industries in which our logistics segment competes. Also, our trucking services units utilize independent owner-operators, who own and operate their equipment, to provide truck transportation for our customers, and our agreements with these owner-operators do not require us to pay for truck services or for equipment usage or availability that are not actually used to transport our customers’ goods. We believe that our non-asset based competitors in the trucking services sector utilize a similar model.

Available Information

We file or furnish with or to the Securities and Exchange Commission (“SEC”) our quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, annual reports to shareholders and annual proxy statements and amendments to such filings. Our SEC filings are available to the public on the SEC’s website at http://www.sec.gov. These reports are also available free of charge from our website at http://www.pacer-international.com, as soon as reasonably practical after we electronically file or furnish such material with or to the SEC. Information contained on our website is not part of this Annual Report on Form 10-K or of any registration statement that incorporates this Annual Report on Form 10-K by reference.

Our Service Offerings

We provide our transportation services from two operating segments, our intermodal segment, which provides services principally to transportation intermediaries, beneficial cargo owners and international shipping companies who utilize intermodal transportation, and our logistics segment, which provides truck brokerage, truck transport (including specialized haulage), supply chain services, freight forwarding, ocean shipping and warehousing and distribution services to a wide variety of end-user customers. The intermodal segment consists of our Stacktrain, Cartage and Rail Brokerage operations. The logistics segment consists of our Highway Brokerage, Truck Services, International Freight Forwarding Services, Warehousing and Distribution Services and Supply Chain Management Services. Both segments

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have separate management teams and offer different but related products and services. Information about our segments, including revenues, income from operations, and geographic information is included in Note 8 to the notes to consolidated financial statements included in this report.

Intermodal Services

Stacktrain

Intermodal transportation is the movement of freight via trailer or container using two or more modes of transportation which nearly always include rail and truck segments. Our use of the doublestack method, consisting of the movement of cargo containers stacked two high on special railcars, significantly improves the efficiency of our service by increasing capacity at low incremental cost without sacrificing quality of service. We are a major non-railroad provider of intermodal rail service in North America. We sell intermodal service primarily to intermodal marketing companies, truck brokerage companies, truckload carriers, large automotive intermediaries and international shipping companies, as well as to our own wholly-owned internal intermodal marketing company. We offer both ramp-to-ramp services (only rail services) as well as a door-to-door service offering called PacerDirect. We compete primarily with rail carriers and other rail equipment and service providers offering intermodal service and with over-the-road full truckload carriers.

Through long-term contracts and other operating arrangements with North American railroads, including Union Pacific, Burlington Northern Santa Fe, CSX, KCSM in Mexico, and Canadian National Railroad, we have access to over a 52,000-mile North American rail network serving most major population and commercial centers in the United States, Canada and Mexico. These contracts and arrangements provide for, among other things, competitive rates, minimum service standards, capacity assurances, priority handling and the utilization of nationwide terminal facilities.

We maintain an extensive fleet of doublestack railcars, containers and chassis, substantially all of which are leased. As of December 28, 2007, our equipment fleet consisted of 1,850 doublestack railcars, 28,025 containers and 30,423 chassis (steel frames with rubber tires used to transport containers over the highway). In addition, through arrangements with APL Limited and other shipping companies, we provide customers with access to a large fleet of smaller International Standards Organization (“ISO”) international containers, allowing us to provide additional transportation capacity using these containers as they are being repositioned from destinations within North America back to the West Coast. Our fleet, combined with ocean shipping companies ISO containers, makes us a major provider of capacity in all container sizes.

The size of our leased and owned equipment fleet (as well as the smaller ISO international container westbound fleet), the frequent departures available to us through our rail contracts and the geographic coverage of our rail network provide our customers with single-company control over their transportation requirements, which we believe gives us an advantage in attaining at a competitive price the responsiveness and reliability required by our customers. In addition, our access to information technology enables us to continuously track containers, chassis and railcars throughout our transportation network. Through our equipment fleet and arrangements with rail carriers, we can control the equipment used in our intermodal operations and employ full-time personnel on-site at many terminals to ensure close coordination of the services provided at these facilities.

Rail Brokerage

Our intermodal marketing company arranges for and optimizes the movement of our end-user customers’ freight in containers and trailers throughout North America using truck and rail transportation. We arrange for a container or trailer shipment to be picked up at origin by truck (using either our cartage services or other truck carriers directly) and transported to a site for loading onto a train. The shipment is then transported via railroad (using either our Stacktrain services or rail carriers directly) to a site for unloading from the train in the vicinity of the final destination. After the shipment has been unloaded from the train and is available for pick-up, we arrange for the shipment to be transported by truck (using either our cartage services or other truck carriers directly) to the final destination. We provide customized

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electronic tracking and analysis of charges, our own negotiated rail, truck and intermodal rates, and we determine the optimal routes. We also track and monitor shipments in transit, consolidate billing, handle claims of freight loss or damage on behalf of our customers and manage the handling, consolidation and storage of freight throughout the process. Our rail brokerage operations are based in Rutherford (New Jersey), Dublin and Dayton (Ohio), Lincolnton (Georgia), and Jacksonville (Florida). Our experienced transportation personnel are responsible for operations, customer service, marketing, management information systems and our relationships with the rail carriers.

Through our rail brokerage operations, we assist the railroads and our Pacer Stacktrain operation in balancing freight resulting in improved asset utilization. In addition, we serve our customers by passing on economies of scale that we achieve as a volume buyer from railroads, trucking companies and other third party transportation providers, providing access to large equipment pools and streamlining the paperwork and logistics of an intermodal move.

Local Cartage

Our subsidiary, Pacer Cartage, Inc., provides local motor transportation (also called local cartage) largely in and around major U.S. cities rail ramps and ports, including Los Angeles, Long Beach, San Diego, Lathrop, Oakland and Sacramento (California), Dallas (Texas), Jacksonville and Miami (Florida), Chicago (Illinois), Detroit (Michigan), Columbus, Cleveland and Marysville (Ohio), Memphis (Tennessee), Charleston (South Carolina), Seattle (Washington), Portland (Oregon), South Kearney (New Jersey), Worcester (Massachusetts) and Atlanta, Savannah and Dalton (Georgia). We contract with independent trucking contractors and maintain interchange agreements with many major steamship lines, railroads and intermodal equipment providers for the interchange and use of equipment supplied by these providers. This network allows us to supply the local transportation requirements across the country of shippers, ocean carriers and freight forwarders.

Logistics Services

Highway Brokerage and Truck Services

Through our highway brokerage unit, which is a division of our subsidiary Pacer Global Logistics, Inc., we arrange the movement of freight in containers or trailers by truck using a nationwide network of over 3,000 independent trucking companies. By utilizing our aggregate volumes to negotiate rates, we are able to provide quality service at attractive prices. We provide highway brokerage services throughout North America through our customer service centers in Dallas (Texas), Chicago (Illinois), Rutherford (New Jersey), and Dublin (Ohio). We manage all aspects of these services for our customers, including selecting qualified carriers, negotiating rates, tracking shipments, billing and resolving difficulties.

Our separate truck services unit, Pacer Transport, Inc., provides dry van and flatbed and specialized heavy-haul trucking services on behalf of our customers. We provide these trucking services through independent agents and contractors who operate approximately 650 trucks equipped with van, flatbed and heavy-haul trailers.

We believe that our ability to provide a range of trucking services through our separate highway brokerage and truck services units and our local cartage operations provides a competitive advantage as companies increasingly seek to outsource their transportation and logistics needs to companies that can manage multiple transportation requirements.

International Freight Forwarding and NVOCC Services

As an international freight forwarder, our subsidiary, RF International, Ltd., provides freight forwarding services that involve transportation of freight into or out of the United States. As a non-vessel operating common carrier (or indirect ocean carrier) and customs broker, we manage international shipping for our customers and provide or connect them with the range of services necessary to run a global business. We also provide airfreight forwarding services as an indirect air carrier. Our international product offerings serve more than 1,000 clients internationally through offices in Lake Success (New York),

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Norfolk (Virginia), Chicago (Illinois), Seattle (Washington), San Francisco (California), Los Angeles (California), Miami (Florida), Dublin (Ohio), Cincinnati (Ohio), a regional office in Hamburg, Germany and approximately 100 agents worldwide.

As a non-vessel operating common carrier (or indirect ocean carrier), our subsidiary, Ocean World Lines, Inc., arranges transportation of our customers’ freight by contracting with the actual vessel operator to obtain transportation for a fixed number of containers between various points during a specified time period at an agreed wholesale discounted volume rate. We then are able to charge our customers rates lower than the rates they could obtain directly from actual vessel operators for similar type shipments. We consolidate the freight bound for a particular destination from a common shipping point, prepare all required shipping documents, arrange for any inland transportation, deliver the freight to the vessel operator and arrange transportation to the final destination. At the destination port, acting directly or through our agent, we deliver the freight to the receivers of the goods, which may include customs clearance and inland freight transportation to the final destination. Our contracts with ocean carriers generally require us to pay a small liquidated damage amount for each committed container that we do not ship during the relevant contract period. The aggregate amount of such damages that we have been required to pay in the past has not been material, however, and management believes that such contract terms will not have a material adverse effect on our operating results in the future.

As a customs broker, we are licensed by the U.S. Customs and Border Protection Service to act on behalf of importers in handling customs formalities and other details critical to the importation of goods. We prepare and file formal documentation required for clearance through customs agencies, obtain customs bonds, facilitate the payment of import duties on behalf of the importer, arrange for the payment of collect freight charges, assist with determining and obtaining the best commodity classifications for shipments and assist with qualifying for duty drawback refunds. We provide customs brokerage services to direct domestic importers in connection with many of the shipments that we handle as a non-vessel operating common carrier, as well as shipments arranged by other freight forwarders, non-vessel operating common carriers or vessel operating common carriers.

Warehousing and Distribution

Our warehousing and distribution unit, Pacer Distribution Services, Inc., primarily specializes in “import logistics,” or servicing the needs of importers looking to move their goods in a timely and efficient manner, either directly to a retailer or to an inland distribution point. To accomplish this objective and deliver superior service to our import customers, we operate multiple facilities in the Los Angeles area that occupy more than 800,000 square feet. All of these facilities are located within 18 miles of the Southern California ports, making possible a timely and efficient flow of ocean containers to and from our warehouses. To further boost the quality of service and expedite the delivery of ocean freight, our subsidiary, PDS Trucking, Inc., also manages a trucking fleet of 125 owner-operators, many of whom service the Southern California ports on a daily basis. To help our customers reduce their import costs, we have extended the hours of operation of our harbor trucking fleet to take maximum advantage of the program implemented by the Ports of Los Angeles and Long Beach to encourage the movement of cargo at night and on weekends to reduce truck traffic during peak daytime hours.

Our warehousing and distribution unit performs multiple services specifically designed for importers, including:

· warehousing/distribution – receiving inventory to stock in order to fulfill future outbound orders,

· value-added services – labeling, price tagging, palletizing, pick/pack and reworking,

· transloading – transferring freight from ocean containers to domestic equipment, rail or road,

· deconsolidation – the sorting of freight for distribution to multiple outbound destinations, and

· consolidation – the collecting of multiple smaller inbound shipments to build full truckloads.

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Supply Chain Management

We use the information from our advanced information system to provide consulting and supply chain management services to our customers. These specialized services, offered through our subsidiary, Pacer Global Logistics, Inc., allow our customers to realize cost savings and concentrate on their core competencies by outsourcing to us the management and transportation of their materials and inventory throughout their supply chains and the distribution of finished goods to the end-user. We provide infrastructure and equipment, integrated with our customers’ existing systems, to handle distribution planning, just-in-time delivery and automated ordering. We also manage warehouses, distribution centers and other facilities for selected customers and consult on identifying bottlenecks in our customers’ supply chains by analyzing freight patterns and costs, optimizing facility locations and developing internal policies and procedures. We leverage these capabilities to drive additional volume to our other service offerings.

Information Technology

Our current intermodal and logistics transportation technology systems provide a scalable migration path designed for the electronic interchange of data between our customers and us, and an Internet-based connectivity that allows us to communicate directly with our customers and transportation service providers. Our systems provide us with performance, utilization and profitability indicators as they monitor and track shipments across various transportation modes, providing timely visibility regarding shipment status, location and estimated delivery times. Our exception notification system informs us of any potential delays so we can alert our customers to minimize the impact of any problems. Our systems also report transit times, rates, equipment availability and the logistics activity of our transportation service providers, enabling us to plan and execute freight movements more reliably, efficiently and cost effectively.

We manage our intermodal services through the continuous monitoring and tracking of our containers, chassis and railcars throughout the network. This allows us to monitor equipment location and availability and therefore plan and provide for increased equipment utilization and balanced freight flows. We can also prepare and distribute customized accounting and billing reports for our customers as well as management reports to meet federal highway authority requirements.

Pursuant to a long-term information technology services agreement, APL Limited provides us with the computers, software and other information technology services necessary for the operation of and accounting for our Stacktrain business. We paid an annual fee of $10.6 million in 2007 to APL Limited under this agreement (of which $3.4 million has been subject to a 3% compounded annual increase since May 2003). This agreement with APL Limited has a term expiring in May 2019, and is cancelable by us on 120 days notice without penalty.

To further enhance our information technology capabilities, on September 30, 2007, we entered into a software license agreement with SAP America, Inc. (“SAP”) for an enterprise suite of applications, including the latest release of SAP’s Transportation Management Solution. Under the agreement, we were granted a perpetual license for the suite of SAP software. Total capital expenditures in 2007 including the license fee and other expenditures were $10.6 million.

The new system is expected to provide an improved integrated, streamlined platform across all business units, provide better information management, eliminate duplicated work effort and dispersed data, and enhance customer services and communications. Elements of the new system are expected to be implemented over the next 9 to 28 months.

We will continue to avail ourselves of the services and support under our existing long-term technology services agreement with APL Limited until the SAP implementation project is completed. See “Management’s Discussion of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional discussion.

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Customers

We currently provide intermodal and logistics and transportation services on a nationwide basis to retailers, manufacturers, intermodal marketing companies and other companies, including a number of Fortune 500 and multi-national companies such as Big Lots, C.H. Robinson, General Electric, Sony, Union Pacific, Toyota and Conagra, which together represented approximately 19.0% of our 2007 revenues, as well as numerous intermodal marketing companies. Other important customers include The Scotts Company, Whirlpool, Shaw Industries, and Costco.

For the fiscal years ended December 28, 2007 and December 29, 2006, one customer contributed 10.4% and 10.3% of our consolidated revenues, respectively. For the fiscal year ended December 30, 2005, there was no single customer that contributed more than 10% of our consolidated revenues.

Sales and Marketing

As of December 28, 2007, we have over 125 direct sales and customer service representatives in our intermodal and logistics segments that sell and support our portfolio of services to a diverse customer base which includes intermodal marketing companies, steamship lines, truckload carriers, logistics companies, truck brokers and beneficial cargo owners.

Our sales representatives are directly responsible for managing our business relationships with our customers. They expand our business base by cross-selling our portfolio of services to our current and future customer base. They also collaborate with our customer service groups in an effort to provide problem-solving, cargo tracking services and the efficient processing of customer orders and inquiries. The domestic direct sales force is also supplemented with over 30 sales agents and agencies.

In addition to our direct domestic sales force, we also have an extensive international network of sales and customer service representatives for our international NVOCC and freight forwarding business located in eight offices in North America, and a regional office in Hamburg, Germany along with approximately 100 agents worldwide.

In 2007, we established a new corporate level marketing department to support our sales and customer representatives. The new marketing department is primarily responsible for all sales related and corporate communications, market research and development, product development and integration, public relations, as well as the further development of the Pacer corporate brand identity.

Development of Our Company

We commenced operations as an independent, stand-alone company upon our recapitalization in May 1999. From 1984 until our recapitalization, our Stacktrain business was conducted by various entities owned directly or indirectly by APL Limited.

In May 1999, we were recapitalized through the purchase of shares of our common stock from APL Limited by two affiliates of Apollo Management, and an affiliate of each of Credit Suisse First Boston LLC and Deutsche Bank Securities Inc. and our redemption of a portion of the remaining shares of common stock held by APL Limited. On the date of the recapitalization, we also began providing retail and logistics services to customers through our acquisition of Pacer Logistics. In connection with these transactions, our name was changed from APL Land Transport Services, Inc. to Pacer International, Inc.

Pacer Logistics, Inc. was originally incorporated on March 5, 1997 under the name PMT Holdings, Inc., and acquired the successor to a company formed in 1974. Between the time of its formation and our acquisition of Pacer Logistics in May 1999, Pacer Logistics acquired and integrated six logistics services companies.

In 2000, we acquired four companies that complemented our business operations and expanded our geographic reach and service offerings for intermodal marketing, highway brokerage, international freight forwarding and other logistics services. In 2001, we integrated our intermodal marketing, highway brokerage and supply chain services business operations into our Pacer Global Logistics, Inc. subsidiary.

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In June 2002, we completed our initial public offering of common stock, and used the net proceeds to repay a significant portion of our outstanding long-term debt. During June and July 2003, we completed the refinancing of our credit facilities, including the early redemption of $150 million of 11.75% senior subordinated notes originally issued in connection with our May 1999 recapitalization. In August 2003, we completed an underwritten secondary public offering of common stock on behalf of a number of selling stockholders; no new shares were issued and we received no proceeds from this offering.

On January 7, 2004, we filed with the SEC a “shelf” registration statement, providing for our issuance of up to $150 million in additional common stock, preferred stock and warrants to purchase any of such securities and for the sale by a number of selling stockholders of 8,702,893 shares of common stock. In offerings under the registration statement in April and November 2004, all 8,702,893 shares of common stock of the selling stockholders were sold with no new shares issued or proceeds received by the Company. Upon completion of the offerings, Apollo Management and its affiliated entities no longer owned any shares of our common stock. There are currently no arrangements in place for the Company to issue any additional securities.

On April 5, 2007, we entered into a new $250 million, five-year revolving credit agreement and repaid the principal balance due under the term loan portion of our prior bank credit facility, which was terminated.

Suppliers

Railroads

We have long-term contracts with our primary rail carriers, Union Pacific, CSX, and KCSM in Mexico, and we maintain other operating arrangements with the other North American railroads, including Burlington Northern Santa Fe Railroad and Canadian National Railroad. These contracts and arrangements generally provide for access to terminals controlled by the railroads as well as support services related to our Stacktrain operations. Through these contracts and arrangements, our intermodal business has established an extensive North American rail transportation network. Our rail brokerage business also maintains contracts with the railroads that govern the transportation services and payment terms pursuant to which the railroads handle intermodal shipments. These contracts are typically of short duration, usually twelve-month terms, and subject to regular renewal or extension. We maintain close working relationships with all of the major railroads in the United States and will continue to focus our efforts on strengthening these relationships. The long-term rail contracts with Union Pacific and CSX represent a majority of our Stacktrain unit’s cost of purchased transportation, while other business with Union Pacific and CSX is covered by shorter-term commercial arrangements. Business with other railroads, including the Burlington Northern Santa Fe, Canadian National Railroad and KCSM, constituted approximately 7% of our Stacktrain unit’s cost of purchased transportation in 2007.

Through our contracts and arrangements with these rail carriers, we have access to a 52,000 mile rail network throughout North America. Our rail contracts and arrangements generally require the rail carriers to perform point-to-point linehaul transportation and terminal services for us. Pursuant to the service provisions, the rail carriers provide transportation of our intermodal equipment across their rail networks and terminal services related to loading and unloading of containers, equipment movement and general administration. Our rail contracts and arrangements generally establish per container rates for Stacktrain shipments made on the rail carriers’ transportation networks, and the long-term contracts typically provide that we are obligated to transport a specified percentage of our total Stacktrain shipments with each of the rail carriers (subject to the rail carrier’s achievement of certain service performance standards). The terms of our rail contracts and arrangements, including rates, are generally subject to adjustment or renegotiation throughout the term of the contract or arrangement, based on factors such as the continuing fairness of the contract terms, prevailing market conditions and changes in the rail carriers’ costs to provide rail service. Based upon these provisions, and the volume of freight that we ship with each of the rail carriers, we believe that we enjoy competitive transportation rates for our Stacktrain shipments.

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Agents and Independent Contractors

In our long haul and local trucking services operations, we rely on the services of independent agents, who procure business for and manage a group of trucking contractors. Although we own a small number of tractors and trailers, the majority of our truck equipment and drivers are provided by agents and independent contractors. Our relationships with agents and independent contractors allow us to provide customers with a broad range of trucking services without the need to commit capital to acquire and maintain a large trucking fleet. Although our agreements with independent agents and trucking contractors are typically long-term in practice, they are generally terminable by either party on short notice.

Independent agents and trucking contractors are compensated on the basis of mileage rates, fixed fees between particular origins and destinations, fixed fees within certain distance-based zones or a fixed percentage of the revenue generated from the shipments that they arrange or haul. Under the terms of our typical lease contracts, independent agents and trucking contractors must pay all of the expenses of operating their equipment, including driver wages and benefits, fuel, physical damage insurance, maintenance and debt service.

Local Trucking Companies

To support our intermodal operations, we have established a good working relationship with a large network of local truckers in many major urban centers throughout the United States. The quality of these relationships helps ensure reliable pickups and deliveries, which is a major differentiating factor among intermodal marketing companies. Our strategy has been to concentrate business with a select group of local truckers in a particular urban area, which increases our economic value to the local truckers and in turn raises the quality of service that we receive from them.

Equipment

Our intermodal equipment fleet consists of a large number of doublestack railcars, containers and chassis that are owned or subject to short and long-term leases. We lease almost all of our containers, approximately 84% of our chassis and approximately 89% of our doublestack railcars.

In addition, all of our railcar equipment is associated with revenue generating arrangements. Our railcar fleet consists of “free running” railcars operating under the publicly reported “BRAN” mark. These railcars are in general service with railroads throughout North America to haul not only our own intermodal containers but also those of the railroads and their other customers. Under this system, our railcars are freely interchanged from one rail carrier to another throughout the North American rail system. To use our railcars, the rail carrier pays us a fee, known as the car hire rate, which takes into account the miles traveled by a railcar and the railcar’s time in service with a railroad. The actual rate payable is determined under our bilateral rate agreement with the railroad, or in the case of a railroad with which we have no rate agreement, under our schedule of car hire rates maintained in the Car Hire Accounting Rate Master (CHARM) administered by Railinc in association with the Association of American Railroads. We are solely responsible for the costs of operating our railcars, and do not have any recourse to our customers for the lease or purchase of our railcars.

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As of December 28, 2007, our Stacktrain equipment fleet consisted of the following:

	Owned	Leased	Total
Containers
48’ Containers	20	3,498	3,518
53’ Containers	11	24,496	24,507
Total	31	27,994	28,025
Chassis
20’ and 40’ Chassis	-	2,481	2,481
48’ Chassis	4,757	2,539	7,296
53’ Chassis	48	20,598	20,646
Total	4,805	25,618	30,423
Doublestack Railcars	203	1,647	1,850

During 2007, we received 1,658 primarily 53-ft. leased containers and 1,072 53-ft., 48-ft. and 40-ft. leased chassis, and we returned 2,191 primarily 48-ft. leased containers, 1,596 primarily 48-ft. and 40-ft. leased chassis, and sold 618 48-ft. owned chassis in an effort to more closely align our container and chassis fleets. During 2007, four railcars were destroyed.

During 2006, we received 2,360 53-ft. leased containers and 4,552 53-ft. and 40-ft. leased chassis, and we returned 2,033 primarily 48-ft. leased containers and 1,684 primarily 48-ft. and 40-ft. leased chassis. During 2006, four railcars were destroyed.

During 2005, we received 4,422 primarily 53-ft. leased containers and 3,926 primarily 53-ft. leased chassis, and we returned 2,106 primarily 48-ft. leased containers and 1,106 primarily 48-ft. leased chassis. During 2005, four railcars were destroyed.

We also own or lease a limited amount of equipment to support our trucking operations. The majority of our trucking operations are conducted through contracts with independent trucking companies and contractors that own and operate their own equipment.

Risk Management and Insurance

In our rail and highway brokerage operations, we typically require all motor carriers to which we tender freight to carry at least $1,000,000 in truckers’ commercial automobile liability insurance, $1,000,000 in commercial general liability insurance and $100,000 in motor truck cargo insurance. Many carriers provide insurance exceeding these minimums. Railroads, which are largely self-insured, provide limited common carrier liability protection, generally up to $250,000 per container. We maintain an all-risk form of cargo insurance to protect us against cargo damage claims that may not be recoverable from the responsible carriers or their insurers.

In our operations as an authorized carrier or warehouseman, we maintain legal liability insurance to protect us against catastrophic claims arising from damage or loss to freight in transit or warehouse storage. We also maintain property damage insurance to protect us against damage to our railcars and intermodal equipment.

Our terms of carriage on international and ocean shipments limit our liability consistent with industry standards. We offer our freight forwarding customers the option to purchase all risk cargo insurance for their shipments.

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We also purchase insurance policies for commercial automobile liability, truckers’ commercial automobile liability, commercial general liability, employers liability, and umbrella and excess umbrella liability, with a total insurance limit of $50 million. Our historical self-retained (deductible) levels vary based on claim frequency, severity and timing factors. Our current deductible level per occurrence for commercial automobile liability is $25,000. Our current deductible level per occurrence for truckers’ commercial automobile liability is $500,000 for our Pacer Transport and Pacer Cartage operations and $100,000 for our PDS Trucking operation. Our current deductible level per occurrence for commercial general liability is $100,000. Our current workers compensation and employers liability deductible is $150,000 per incident. Our current deductible per occurrence for freight damage as an authorized carrier or warehouseman is $250,000, with the exception of our cartage operations which carry a $10,000 deductible.

Relationship with APL Limited

We are a party to a long-term agreement with APL Limited involving domestic transportation of APL Limited’s international freight by our Stacktrain operation. The majority of APL Limited’s imports to the United States are transported by rail from ports on the West Coast to population centers in the Midwest and Northeast. Domestic intermodal freight that originates in the United States, however, moves predominantly westbound from eastern and Midwestern production centers to consumption centers on the West Coast. Combining the typical westbound freight movement with the predominantly eastbound APL Limited freight movement allows us to achieve higher train-set utilization (loads per train) and higher eastbound/westbound volumes, thereby improving our bargaining position with the railroads regarding contract terms. We also provide APL Limited with equipment repositioning services through which we transport APL Limited’s empty containers from destinations within North America to their West Coast points of origin. To the extent we are able to fill these empty containers with the westbound freight of other customers, we receive compensation from both APL Limited for our repositioning service on a cost reimbursement basis and from the other customers for the shipment of their freight.

APL Limited also supplies us with computer software and other information technology services for our Stacktrain business. See “Information Technology,” above.

Business Cycle

The transportation industry has historically performed cyclically as a result of economic recession, customers’ business cycles, increases in prices charged by third-party carriers, interest rate fluctuations and other economic factors, many of which are beyond our control. Because we offer a variety of transportation modes and, we believe, an economical intermodal product, we generally retain shipping volumes and benefit from increased use of our Stacktrain services at the expense of long-haul trucking competitors during down business cycles. In periods of strong economic growth, demand for limited transportation resources can result in increased rail network congestion and resulting operating inefficiencies. Although rail service deterioration increases our costs and may slow demand, we believe that our personnel on-site at many terminals, extensive equipment fleet and customer service capabilities enable us to provide comparatively better service than others affected by rail service deterioration and thereby to retain shipping volumes. We also participate during periods of business expansion when speed of service to fill inventories increases in importance.

Competition

The transportation services industry is highly competitive. Our intermodal business competes primarily with over-the-road full truckload carriers, conventional intermodal movement of trailers-on-flatcars and containerized intermodal rail services offered directly by railroads and other intermodal services providers. Our logistics business competes primarily against other domestic non-asset-based transportation and logistics companies, asset-based transportation and logistics companies, third-party freight brokers, freight forwarders and private shipping departments. We also compete with transportation services companies for the services of independent commissioned agents, and with trucklines for the services of independent contractors and drivers. Competition in our intermodal and logistics business is based primarily on freight rates, quality of service, such as damage-free shipments,

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on-time delivery and consistent transit times, reliable pickup and delivery and scope of operations. Our major competitors include Union Pacific, CSX Intermodal, J.B. Hunt Transport and Hub Group. Other competitors include C.H. Robinson, Exel, Alliance Shippers, Burlington Northern Santa Fe and the supply chain solutions divisions of Ryder and Menlo Worldwide. Some of these competitors, such as C.H. Robinson, Expeditors International, Union Pacific and CSX Intermodal, have significantly larger operations, revenues and resources than we have.

Employees

As of December 28, 2007, we had a total of 1,443 employees. None of our employees are represented by unions, and we generally consider our relationships with our employees to be satisfactory.

Government Regulation

Regulation of Our Trucking and Intermodal Operations

The transportation industry has been subject to legislative and regulatory changes that have affected the economics of the industry by requiring changes in operating practices or influencing the demand for, and cost of, providing transportation services. We cannot predict the effect, if any, that future legislative and regulatory changes may have on our business or consolidated results of operations.

Our highway brokerage operations are licensed by the U.S. Department of Transportation, or “DOT,” as a national freight broker in arranging for the transportation of general commodities by motor vehicle. The DOT prescribes qualifications for acting as a national freight broker, including surety bonding requirements. Our truck services and local cartage operations provide motor carrier transportation services that require registration with the DOT and compliance with economic regulations administered by the DOT, including a requirement to maintain insurance coverage in minimum prescribed amounts. Other sourcing and distribution activities may be subject to various federal and state food and drug statutes and regulations. Although Congress enacted legislation in 1994 that substantially preempts the authority of states to exercise economic regulation of motor carriers and brokers of freight, we continue to be subject to a variety of state vehicle registration and licensing requirements. We and the carriers upon which we rely are also subject to various federal and state safety and environmental regulations. Although compliance with regulations governing licenses in these areas has not had a material adverse effect on our consolidated results of operations, financial condition or cash flows in the past, there can be no assurance that these regulations or changes in these regulations will not adversely affect our consolidated results of operations, financial condition or cash flows in the future. Violations of these regulations could also subject us to fines or, in the event of serious violations, suspension or revocation of operating authority as well as increased claims liability.

Intermodal operations like ours were exempted from virtually all active regulatory supervision by the U.S. Interstate Commerce Commission, predecessor to the regulatory responsibilities now held by the U.S. Surface Transportation Board. Such exemption is revocable by the Surface Transportation Board, but the standards for revocation of regulatory exemptions issued by the Interstate Commerce Commission or Surface Transportation Board are high. While that exemption remains in place, the DOT issued proposed regulations in December 2006 that would make intermodal equipment providers like our Stacktrain unit subject to the Federal Motor Carrier Safety Regulations for the first time. This proposed regulation would, among other requirements, obligate Stacktrain to register and file with the Federal Motor Carrier Safety Administration an Intermodal Equipment Provider Report, establish a systematic inspection, repair and maintenance program on its chassis and maintain documentation of the program. We provided comments to the Federal Motor Carrier Safety Administration regarding the proposed regulation both directly and in participation with industry groups. It is now expected that final regulations will not be published until late July 2008, at which time we will be in a position to understand the new regulations’ requirements and effective date, evaluate their operational impact and determine the cost of compliance.

Regulation of Our International Freight Forwarding Operations

We maintain licenses issued by the U.S. Federal Maritime Commission as an ocean transportation intermediary. These licenses govern both our operations as an ocean freight forwarder and as a non-vessel operating common carrier. The Federal Maritime Commission has established qualifications for ocean

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transportation intermediaries, including surety bond requirements. The Federal Maritime Commission also is responsible for the regulation and oversight of non-vessel operating common carriers that contract for space with vessel operating carriers and sell that space to commercial shippers and other non-vessel operating common carriers for freight originating and/or terminating in the United States. Non-vessel operating common carriers are required to publish and maintain tariffs that establish the rates to be charged for the movement of specified commodities into and out of the United States. The Federal Maritime Commission has the power to enforce these regulations by commencing enforcement proceedings seeking the assessment of penalties for violation of these regulations. For ocean shipments not originating or terminating in the United States, the applicable regulations and licensing requirements typically are less stringent than in the United States. We believe that we are in substantial compliance with all applicable regulations and licensing requirements in all countries in which we transact business.

We are also licensed as a customs broker by the U.S. Customs and Border Protection Service of the Department of Treasury in each United States customs district in which we do business. All United States customs brokers are required to maintain prescribed records and are subject to periodic audits by the Customs Service. In other jurisdictions in which we perform customs brokerage services, we are licensed, where necessary, by the appropriate governmental authority. We believe we are in substantial compliance with these requirements.

Legal Contingencies

In connection with certain pending litigation and other claims, we have estimated the range of probable loss and provided for such losses through charges to our consolidated statements of operations. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based upon new information and future events.

From time to time, we are involved in disputes that arise in the ordinary course of business, and we expect such disputes to continue to arise from time to time in the future. We are currently involved in certain legal proceedings as discussed in “Item 3. Legal Proceedings,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and “Note 7. – Commitments and Contingencies” to our consolidated financial statements included in this report. Based on currently available information and advice of counsel, we believe that we have meritorious defenses to the claims against us, and that none of these items will have a material adverse impact on our consolidated financial position, results of operations or cash flows. Our present assessment of these claims could change, however, based on new information and future events. In addition, even if successful, our defense against certain actions could be costly and could divert the time and resources of our management and staff.

Environmental

Our facilities and operations are subject to federal, state and local environmental, hazardous materials transportation and occupational health and safety requirements, including those relating to the handling, labeling, shipping and transportation of hazardous materials, discharges of substances into the air, water and land, the handling, storage and disposal of wastes and the cleanup of properties affected by pollutants. In particular, a number of our facilities have underground and above-ground storage tanks for diesel fuel and other petroleum products. These facilities are subject to requirements regarding the storage of such products and the clean-up of any leaks or spills. We could also have liability as a responsible party for costs to clean-up contamination at off-site locations where we have sent, or arranged for the transport of, wastes. We have not received any notices that we are potentially responsible for material clean-up costs at any off-site waste disposal location. We do not currently anticipate any material adverse effect on our capital expenditures, consolidated results of operations or competitive position as a result of our efforts to comply with environmental requirements, nor do we believe that we have any material environmental liabilities. We also do not expect to incur material capital expenditures for environmental controls in 2008. However, future changes in environmental regulations or liabilities from newly discovered environmental conditions could have a material adverse effect on our business, competitive position, consolidated results of operations, financial condition or cash flows.

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Seasonality

Our revenues generally show a seasonal pattern as some customers reduce shipments during and after the winter holiday season. In addition, the auto companies that we serve generally shut down their assembly plants for new model re-tooling during the summer months.

ITEM 1A. RISK FACTORS

Risks Related to Our Business

We are dependent upon third parties for equipment, capacity and services essential to operate our business, and if we fail to secure sufficient equipment, capacity or services, we could lose customers and revenues.

We are dependent upon rail, truck and ocean transportation services and transportation equipment such as chassis and containers provided by independent third parties. We, along with competitors in our industry, have experienced equipment and capacity shortages in the past, particularly during peak shipping season in October and November. We also depend upon the rail carriers to provide sufficient rail slots on the train to transport our containers and access to the rail terminal for the delivery of our containers for shipment. From time to time, as with other users of Union Pacific’s rail service, we have not been able to obtain sufficient gate reservations for all containers to be shipped on a particular day and have had to wait for the gate reservation necessary to allow the container to enter the rail terminal and to be loaded on the train. If we cannot secure sufficient transportation equipment, capacity or services from these third parties to meet our customers’ needs and schedules, customers may seek to have their transportation and logistics needs met by other providers on a temporary or permanent basis, which could materially adversely affect our business, consolidated results of operations and financial condition.

Likewise, the intermodal industry from time to time faces excess demand for the current rail network size that cause network congestion and service delays and allow rail carriers to implement rate increases and to limit volumes. In addition, the trucking industry, including the local drayage community, is facing an ongoing shortage of drivers. This shortage may cause our motor transportation suppliers to increase drivers’ compensation, thereby increasing our cost of providing motor transportation, including the local cartage portion of an intermodal move, to our customers. Driver shortages and tight rail capacity could adversely impact our profitability and limit our ability to expand our intermodal and highway service offerings.

In addition, we maintain long-term rail contracts with Union Pacific (expiring in October 2011), CSX (expiring in December 2014), and KCSM in Mexico (expiring in December 2012). Although we believe we will be able to enter into renewal or replacement contracts with these or other carriers on favorable terms as our current long-term agreements expire, we cannot guarantee that we will be able to do so.

Changes in freight rates, as a result of competition in our industry and pricing strategies of our transportation suppliers, could adversely affect our business and results of operations.

The transportation services industry is highly competitive. Our logistics businesses compete primarily against other domestic non-asset based transportation and logistics companies, asset-based transportation and logistics companies, third-party freight brokers, shipping departments of our customers and other freight forwarders. Our intermodal business competes primarily with over-the-road full truckload carriers, conventional intermodal movement of trailers on flat cars, and containerized intermodal rail services offered by railroads and other intermodal service providers. Some of our competitors have substantially greater financial, marketing and other resources than we do, which may allow them to withstand better an economic downturn, reduce their prices more easily than we can or expand or enhance the marketing of their products. There are a number of large companies competing in one or more segments of our industry, although the number of companies with a North American network that offer a full complement of logistics services is more limited. Depending on the location of the customer and the scope of services requested, we must compete against both the niche players and larger entities. In addition, customers are increasingly soliciting competitive bids for transportation services from a number of

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competitors, including competitors that are larger than we are. We also face competition from Internet-based freight exchanges, or electronic bid environments, that provide an online marketplace for buying and selling supply chain services.

Historically, competition has created downward pressure on freight rates. In the past, we have experienced downward pressure in the pricing of our intermodal and logistics services that has affected our revenues and operating results. In particular, our intermodal segment has offered lower rates to its customers to match lower rates offered by our railroad competitors in the intermodal business. Rate reductions by truckload carriers may also exert downward pressures on intermodal rates. Such rate reductions could adversely affect the yields of our intermodal product.

Rate increases, particularly when taken by our railroad and highway transportation suppliers, may also have an adverse impact if our brokerage operations are unable to obtain commensurate price increases from our customers. For example, during 2005, due to increased demand, all the major rail carriers instituted price increases. Price increases were also taken in 2006 and 2007. Although the application of rate increases to a portion of our Stacktrain business is limited by our long-term rail contracts, such increases have resulted in higher costs to some of our Stacktrain business and to our rail brokerage operation that we have not been able to fully pass on as quickly as the increases are implemented by the rail carriers. While our Stacktrain operation may benefit from the intermodal rate increases, such rate increases may have the impact of slowing overall demand for intermodal services and thereby affect our consolidated results of operations.

Our operating results are subject to cyclical fluctuations and our quarterly revenues may also fluctuate, potentially affecting our stock price.

Historically, sectors of the transportation industry have been cyclical as a result of economic recession, customers’ business cycles, increases in prices charged by third-party carriers, interest rate fluctuations and other economic factors such as changes in fuel costs or the timing of changes in fuel surcharge assessments (compared to fuel surcharge collections) over which we have little or no control. Increased operating expenses incurred by third-party carriers can be expected to result in higher costs to us, and our income from operations could be materially adversely affected if we were unable to pass through to our customers the full amount of increased transportation costs or if we were to experience a dramatic change in the timing of our recovery of such costs relative to our requirements to pay such costs to our third party carriers. We have a large number of customers in the automotive and consumer goods industries. If these customers experience cyclical movements in their business activity, due to an economic downturn, work stoppages or other factors over which we have no control, the volume of freight shipped by those customers may decrease and our operating results could be adversely affected. For example, the economic downturn in 2007, impacting particularly the housing and related building products industries, has negatively impacted our truck brokerage and truck services operations in our logistics segment in 2007 due to decreased demand to transport materials. Any unexpected reduction in revenues for a particular quarter could cause our quarterly operating results to be below the expectations of public market analysts or stockholders. In this event, the trading price of our common stock may fall significantly.

We may be required to record a significant charge to earnings if our goodwill becomes impaired.

At December 28, 2007, we had recorded $288.3 million of goodwill, net of amortization, allocated to our two reporting units, which are our intermodal and logistics operating segments. A total of $169.0 million is allocated to our intermodal segment and $119.3 million is allocated to our logistics segment. The fair value of our operating segments is determined under Financial Accounting Standards Board Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” on at least an annual basis. Under this statement, the fair value of each operating segment is compared to the carrying value to determine if goodwill impairment exists. The larger the excess of a unit’s fair value over its carrying value, the better a reporting unit or company can survive negative financial events or results and determine that its goodwill is unimpaired. This determination for 2007 resulted in a significant reduction from prior years in the excess of fair value over carrying value for both of our operating segments. The excess of fair value over carrying value for our intermodal and logistics segments as of December 28, 2007 was approximately $288 million and $3 million, respectively, as compared to $1.1 billion and approximately $23 million,

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respectively, as of December 29, 2006. Should the economic downturn in 2007 continue or worsen, growth rates in the transportation industry decline, the trading price of our common stock deteriorate or other adverse events occur, the determination of fair value in the future could result in a goodwill impairment with respect to one or both of our reporting units, but particularly our logistics segment, which would negatively impact the operating results and net worth of the logistics segment and the company. We plan to monitor the fair value calculations of our reporting units on a quarterly basis during 2008. See ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates for further discussion on goodwill evaluation.

Congestion, work stoppages, capacity shortages, weather related issues or other disruptions affecting the transportation network could adversely affect our operating results.

As transportation services are provided through a network of rail and trucking transportation providers, a disruption in one area or in one sector can affect the flow of traffic over the entire network. In addition, our business could be adversely affected by labor disputes between the railroads and their union employees; since February 2006 negotiations have been in progress between the railroads and rail unions for new collective bargaining agreements to replace the existing contracts which expire at various times over the next twelve months. In January 2008, the nation’s major freight railroads and the United Transportation Union reached tentative agreement on a new contract covering wages, benefits and other issues. The agreement is still to be ratified by the union which represents about 44,000 members. Our business could also be adversely affected by a work stoppage affecting providers of local trucking services to and from rail terminals. For example, during 2004, independent owner-operators providing local drayage services in parts of California refused to transport shipments to and from the rail facilities, leading to terminal congestion and a Union Pacific embargo on shipments to Northern California destinations which adversely affected our consolidated results of operations in the second quarter of 2004. We have also experienced service disruptions due to other conditions, such as hurricanes, flooding and other adverse weather conditions, that hinder the railroads’ and local trucking companies’ ability to provide transportation services and negatively impact our operating results.

Work stoppages affecting seaports may also adversely impact our operations as we experienced in the second half of 2002 when West Coast ports were shut down as a result of a labor dispute with the longshoremen who offload freight that we subsequently transport. Third party international loadings, container repositioning revenue and railcar utilization revenues from our intermodal segment were adversely impacted during the port shutdown. The shutdown also impacted our local cartage and harbor drayage on the West Coast with lower volumes and our international freight forwarding operations with reduced ship sailings. Other work stoppages, slowdowns or other disruptions, such as those that could result from an act of terrorism or war, are beyond our control and could adversely affect our operating income and cash flows in both our intermodal and logistics segments, particularly if they have a material effect on major railroad interchange facilities or areas through which significant amounts of our rail shipments pass, such as the Los Angeles and Chicago gateways.

If we fail to develop, integrate, upgrade or replace our information technology systems, we may lose orders and customers or incur costs beyond our expectations.

Increasingly, we compete for customers based upon the flexibility and sophistication of the information technologies that support our current services or any new services that we may introduce. The failure of the hardware or software that supports our information technology systems, the loss of data contained in the systems, or our customers’ inability to access or interact with our website and other systems could significantly disrupt our operations, prevent our customers from placing orders, or cause us to lose orders or customers. If our information technology systems are unable to handle additional volume for our operations as our business and scope of services grow, our service levels, operating efficiency and future freight volumes will decline. In addition, we expect customers to continue to demand more sophisticated, fully integrated information systems from their supply chain management service providers. If we fail to hire qualified personnel to implement and maintain our information technology systems or fail to upgrade or replace our information technology systems to handle increased volumes, meet the demands of our customers and protect against disruptions of our operations, we may lose orders and customers which could adversely affect our business.

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During the fourth quarter of 2007, we entered into a software license agreement with SAP America, Inc. (“SAP”) under which we licensed an enterprise suite of applications, including the latest release of SAP’s transportation management solution to be implemented over the next 9 to 28 months. If we fail to integrate the new system efficiently and on a timely basis, the cost to implement could be significantly higher than anticipated. If the systems to be implemented with the SAP software do not operate as anticipated or contain unforeseen problems, our business, consolidated results of operations financial condition and cash flows could be materially adversely affected.

Our revenues could be reduced by the loss of major customers.

We have derived, and believe we will continue to derive, a significant portion of our revenues from our largest customers. In 2007, Union Pacific affiliate(s) accounted for approximately 10.4% of our revenues and our 10 largest customers accounted for approximately 42.4% of our revenues. The loss of one or more of our major customers or a significant change in their shipping patterns could have a material adverse effect on our revenues, business and prospects. For example, during 2005, we completed the transition of one of our highway brokerage customers to another service provider, reducing revenues by approximately $128 million in our logistics segment. The impact of this loss on consolidated income from operations was significantly less, however, due to the low margins provided by this customer.

Service instability in the intermodal industry could increase costs and decrease demand for our intermodal services.

We depend on the major railroads in the United States for substantially all of the intermodal transportation services that we provide. In many markets, rail service is limited to a few railroads or even a single railroad. Any reduction in service by the railroads we use is likely to increase the cost of the rail-based services that we provide and reduce the reliability, timeliness and overall attractiveness of our rail-based services. Prior to 2006, high demand for rail transportation, train resource shortages, severe weather and operating inefficiencies resulted in increased transit times, terminal congestion and decreased equipment velocity. Rail carrier efforts over the past years to improve rail service did not seem to generate the expected improvements. In the latter part of 2006 and in 2007 we saw progress in the reduction of transit times. While we believe that our customer service capabilities, extensive equipment fleet and network of personnel on-site at many terminals enables us to lessen the impact to our intermodal customers of these service disruptions, rail service issues increase our costs and create a challenging operating environment. To the extent that we operate on rail carriers that experience poor service performance, demand for our intermodal services may be adversely affected. In addition, customers may switch to alternate providers to avoid intermodal transportation delays. Although we have not been significantly adversely affected by past service disruptions resulting from rail industry consolidation and rail network congestion, we could be substantially affected by such service disruptions in the future.

Ongoing insurance and claims expenses could adversely affect our earnings.

We are exposed to claims related to property damage, personal injury, cargo loss and damage and workers’ compensation. We carry significant insurance with third party insurance carriers. The cost of such insurance has increased over the past five years, reflecting our operational growth, the insurance environment in our industry and our claim experience. We have maintained self-retained (deductible) levels for our public liability risk exposures to optimize cost efficiency, reflecting our increasing operating volume and claim experience. Our current deductible per occurrence for commercial automobile liability is $25,000. Our current deductible level for truckers’ commercial automobile liability is $500,000 for our truck services and cartage operations and $100,000 for trucking operations related to our warehousing and distribution operations. Our current deductible level per occurrence for commercial general liability is $100,000. Our current workers compensation and employers liability deductible is $150,000 per incident. Our current deductible per occurrence for freight damage as an authorized motor carrier or warehouseman is $250,000, except for our cartage operations which carry a $10,000 deductible. We are also responsible for legal expenses within our deductible levels for liability and workers’ compensation claims. We currently reserve the estimated probable loss for incurred but not yet paid claim amounts and expenses, and regularly evaluate and adjust our claim reserves to reflect actual experience. If the ultimate results differ from our estimates, we could incur costs in excess of reserved amounts. To cover claims and expense in

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excess of our deductible levels, we maintain insurance with insurance companies that we believe are financially sound. Although we believe our aggregate insurance limits are sufficient to cover reasonably expected claims, it is possible that one or more claims could exceed those limits. If the number or severity of claims within our deductible levels increases, or if we are required to accrue or pay additional amounts because the claims prove to be more severe than our original assessment, our operating results would be adversely affected.

If we have difficulty attracting and retaining agents and independent contractors, our consolidated results of operations could be adversely affected.

We rely extensively on the services of agents and independent contractors to provide our trucking services. We rely on a fleet of vehicles which are owned and operated by independent trucking contractors and on agents representing groups of trucking contractors to transport customers’ goods by truck. Although we believe our relationships with our agents and independent contractors are good, we may not be able to maintain our relationships with them. Contracts with agents and independent contractors are, in most cases, terminable upon short notice by either party. If an agent terminates its relationship with us, some customers and independent contractors with which such agent has a direct relationship may also terminate their relationship with us. We may have difficulty replacing our agents and independent contractors with equally qualified persons. We compete with transportation service companies and trucking companies for the services of agents and with trucking companies for the services of independent contractors and drivers. The pool of agents, contractors and drivers is limited, and therefore competition from other transportation service companies and trucking companies can increase the price we must pay to obtain services from agents, contractors and drivers. The industry is currently experiencing a shortage of independent contractors resulting in increased compensation expenses to us and our competitors who also rely on them. In addition, because independent contractors are not employees, they may not be as loyal to our company, requiring us to pay more to retain their services and to implement aggressive recruitment efforts to offset turnover. If we are unable to attract or retain agents and independent contractors or need to increase the amount paid for their services, our consolidated results of operations could be adversely affected and we could experience difficulty increasing our business volume. This adverse effect was seen in 2005 and 2006 as the cost of qualified driver acquisition and retention increased and negatively impacted our consolidated results of operations. Driver acquisition and retention issues remain a focus of our trucking operations, and during 2007, programs were implemented to more effectively manage driver turnover.

Our customers who are also competitors could transfer their business to their non-competitors and our suppliers who are also competitors could provide preferences to others, including their own competing operations, which in both cases would decrease our profitability.

As a result of our company operating in two distinct but related channels, we buy and sell transportation services from and to many companies with which we compete. For example, Hub Group, NYK Logistics and Alliance Shippers, three of the 10 largest customers of our Stacktrain operations, who accounted for 12.2% of the 2007 revenues of our intermodal segment operations, are also competitors. It is possible that these customers could transfer their business away from us to other companies with which they do not compete. The loss of one or more of these customers could have a material adverse effect on the profitability of our intermodal operations. In addition, rather than outsourcing their transportation logistics requirements to us, some of our customers could decide to provide these services internally, which could further adversely affect our business volumes and revenues.

Similarly, our Stacktrain business competes in some cases with the intermodal service offerings of our rail transportation providers and their affiliated equipment provider operations. For example, CSX Intermodal, one of our primary rail transportation providers, offers transcontinental and other services that compete with our Stacktrain services. Our rail transportation providers may provide preferences to their internal service offerings or to other customers that are not competitors. These preferences could have a material adverse effect on the profitability of our intermodal operations and on our ability to continue to provide efficient intermodal services to our customers.

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We, our suppliers and our customers are subject to changes in government regulation which could result in additional costs and thereby affect our consolidated results of operations.

The transportation industry is subject to legislative and regulatory changes that can affect its economics. Although we primarily operate in the intermodal segment of the transportation industry, which has been essentially deregulated, changes in the levels of regulatory activity in the intermodal segment could potentially affect us and our suppliers and customers. Our trucking operations and those of the trucking companies and independent contractors whom we engage are subject to regulation by the DOT and various state and local agencies, which govern such activities as authorization to engage in motor carrier operations, safety, and insurance requirements. As an example, on January 4, 2004, revised DOT hours of service regulations became effective and after further regulatory and court action, were revised effective October 1, 2005. Since 2005, additional court and regulatory actions have occurred, and our trucking operations now operate under interim and final DOT rules substantially the same as those effective in 2005. These revised regulations reduced the amount of time that drivers can spend driving. Since these regulations went into effect, we have endeavored to make appropriate pricing, operational and training adjustments to address the regulations and mitigate their impact on our consolidated results of operations. While difficult to quantify, we believe that the hours of service regulations have negatively impacted our operating results due to the slight productivity decreases experienced by our drivers. These changes, in effect, increase the amounts charged by the trucking companies and independent contractors whom we engage to provide transportation for our customers. If we cannot pass the additional costs through to our customers, our consolidated operating results could be adversely affected.

Future laws and regulations may be more stringent and require changes in our operating practices, influence the demand for our transportation services or require the outlay of significant additional costs. Additional expenditures incurred by us, or by our suppliers and passed on to us, could adversely affect our consolidated results of operations. For instance, in December 2006, the DOT issued proposed regulations mandated by the Safe, Accountable, Flexible, Efficient Transportation Equity Act enacted in August 2005. The proposed regulations would regulate intermodal equipment providers like our Stacktrain unit and require them to establish a systematic inspection, repair and maintenance program on chassis and to provide a means to effectively respond to driver and motor carrier reports about chassis defects and deficiencies. The new regulation is scheduled to take effect in late July 2008, at which time we will be in a position to understand the new regulations’ requirements and effective date, evaluate their operational impact and determine the cost of compliance. Depending on the final provisions and implementation timelines of the regulations, we believe that the annual impact of the chassis maintenance and repair costs will be between $3 million and $7 million. Similarly, a January 2007 ruling by the Surface Transportation Board found that the railroad’s practice of assessing fuel surcharges based on a percentage calculation of the base rate charged to the shipper was unreasonable. Although the ruling expressly does not apply to intermodal shipments, if the railroads change their methodology for assessing fuel surcharges on intermodal traffic to a per mile or other calculation, our Pacer Stacktrain and rail brokerage units may also change their fuel surcharge methodology. Such a change may adversely affect our revenues. Other potential effects are more difficult to quantify as we generally pass through fuel surcharges to our customers but may experience timing issues where we are unable to adjust charges to our customers to match fuel adjustments from our suppliers.

In addition, we have a substantial number of wholesale customers who provide ocean carriage of intermodal shipments. These wholesale customers and our own international freight forwarding operations are subject to regulation by the Federal Maritime Commission, U.S. Customs and other international, foreign, federal and state authorities. Regulatory changes in the ocean shipping or international freight forwarding industries could adversely affect our freight forwarding operations or have a material impact on the competitiveness or efficiency of operations of our various ocean carrier customers, which could adversely affect our business.

In addition, as a publicly-traded company, we are also affected by new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, SEC rules and regulations and the NASDAQ Stock Market rules. Our efforts to comply with these continually evolving laws, regulations and standards have resulted in, and are likely to continue

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to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. During 2004, for instance, we paid our auditors and consultants approximately $4.1 million pre-tax ($0.07 per diluted share after tax) to comply with Section 404 of the Sarbanes-Oxley Act of 2002. On-going costs of compliance in 2005 and 2006 paid to our auditors and consultants was approximately $1.8 million pre-tax ($0.03 per diluted share after tax) and $0.8 million pre-tax ($0.01 per diluted share after tax), respectively. Pre-tax costs for 2007 were $0.4 million. In addition to the time and expense, these changing laws, regulations and standards impose other risks. For instance, while we have been able to determine in 2007 that our internal controls over financial reporting are effective, failure to maintain the adequacy of our internal controls over financial reporting, may cause our internal controls over financial reporting to be ineffective. Such a conclusion that our internal controls over financial reporting are not effective could adversely impact our reputation with investors and our stock price.

If we fail to comply with or lose any required licenses, governmental regulators could assess penalties against us or issue a cease and desist order against our operations which are not in compliance.

Our rail and highway brokerage and Stacktrain operations are licensed by the DOT as a broker in arranging for the transportation of general commodities by motor vehicle. The DOT has established requirements for acting in this capacity, including insurance and surety bond requirements. Our truck services and local cartage operations are regulated as motor carriers by the DOT and various state agencies, subjecting these operations to insurance, surety bond, safety and other regulatory requirements. Our international freight forwarding operation is licensed as an ocean transportation intermediary by the U.S. Federal Maritime Commission. The Federal Maritime Commission regulates ocean freight forwarders and non-vessel operating common carriers like us that contract for space with the actual vessel operator and sell that space to commercial shippers and other non-vessel operating common carriers for freight originating or terminating in the United States. Non-vessel operating common carriers must publish and maintain tariffs for the movement of specified commodities into and out of the United States. The Federal Maritime Commission may enforce these regulations by instituting proceedings seeking the assessment of penalties for violations of these regulations. For ocean shipments not originating or terminating in the United States, the applicable regulations and licensing requirements typically are less stringent than in the United States. Our international freight forwarding operation is also licensed, regulated and subject to periodic audit as a customs broker by the Customs Service of the Department of Treasury in each United States customs district in which we do business. In other jurisdictions where we perform customs brokerage services, we are licensed, where necessary, by the appropriate governmental authority. Our failure to comply with the laws and regulations of any of these governmental regulators, and any resultant suspension or loss of our licenses, could result in penalties or a cease and desist order against any operations that are not in compliance. Such an occurrence would have an adverse effect on our consolidated results of operations, financial condition and liquidity.

Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.

As of December 28, 2007, our long-term debt was $64.0 million. We have the ability to incur new debt, subject to limitations in our credit agreement. Our level of indebtedness could have important consequences to us, including the following:

· Payments on our indebtedness will reduce the funds that would otherwise be available for our operations and future business opportunities;

· A substantial decrease in our net operating cash flows could inhibit our ability to meet our debt service requirements and force us to modify our operations;

· We may be more highly leveraged than our competitors, which may place us at a competitive disadvantage;

· Our debt level may make us more vulnerable than our competitors to a downturn in our business or the economy generally;

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· Our debt level reduces our flexibility in responding to changing business and economic conditions;

· Our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; and

· All of our debt has a variable rate of interest, which increases our vulnerability to interest rate fluctuations.

Our debt agreements contain operating and financial restrictions which may restrict our business and financing activities.

The operating and financial restrictions and covenants in our credit agreement and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage in other business activities. In addition, our credit agreement restricts or limits our ability to: (1) pay dividends and redeem or repurchase capital stock; (2) prepay, redeem or purchase debt; (3) incur liens and engage in sale and leaseback transactions; (4) make loans and investments; (5) incur additional indebtedness; (6) amend or otherwise change debt and other material agreements; (7) make capital expenditures; (8) engage in mergers, acquisitions and asset sales; (9) enter into transactions with affiliates; and (10) change our primary business. Our credit facility also requires us to satisfy interest coverage and leverage ratios.

A breach of any of the restrictions, covenants, ratios or tests in our debt agreements could result in defaults under these agreements. A significant portion of our indebtedness then may become immediately due and payable. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our credit agreement are secured by a pledge of all of the capital stock of our domestic subsidiaries and a portion of the capital stock or other equity interests of certain of our foreign subsidiaries.

We may not have sufficient cash to service our indebtedness.

Our ability to service our indebtedness will depend upon, among other things:

· Our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control; and

· The future availability of borrowings under our credit facility or any successor facility, the availability of which may depend on, among other things, our complying with certain covenants.

If our operating results and borrowings under our credit facility are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying acquisitions, investments, strategic alliances or capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital or bankruptcy protection. There is no assurance that we can effect any of these remedies on satisfactory terms, or at all.

If we lose key personnel and qualified technical staff, our ability to manage the day-to-day aspects of our business will be weakened which could adversely affect our operating results and ability to grow our business.

We believe that the attraction and retention of qualified personnel is critical to our success. If we lose key personnel or are unable to recruit qualified personnel, our ability to manage the day-to-day aspects of our business will be adversely affected. Our operations and prospects depend in large part on the performance of our senior management team. The loss of the services of one or more members of our senior management team could have a material adverse effect on our business, results of operation,

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financial condition or cash flows. We face significant competition in attracting and retaining personnel who possess the skill sets that we seek. Because our senior management team has unique experience with our company and within the transportation industry, it would be difficult to replace them without adversely affecting our business operations. In addition to their unique experience, our management team has fostered key relationships with our suppliers and customers. Such relationships are especially important in a non-asset based company such as ours. Loss of these relationships could have a material adverse effect on our profitability.

We have an extensive relationship with APL Limited, and we depend on APL Limited for essential services. Our business and consolidated results of operations could be adversely affected if APL Limited failed or refused to provide such services or terminated the relationship.

Pursuant to long-term contracts that expire in May 2019, APL Limited, the former owner of our Stacktrain services business, supplies us with chassis from its equipment fleet for the transport of international freight on behalf of other international shippers. In addition, we transport APL Limited’s international cargo on our Stacktrain network to locations in the United States using chassis and equipment supplied by APL Limited. The additional volume attributable to the transport of APL Limited’s international cargo contributes to our ability to obtain favorable provisions in our rail contracts. APL Limited pays us a fee for repositioning its empty containers within North America so that the containers can be reused in trans-Pacific shipping operations. In addition, APL Limited is currently providing us with computers, software and other information technology services necessary for the operation of our Stacktrain business pursuant to a long-term contract that expires in May 2019. We are in the process of replacing the information technology services provided by APL Limited with SAP software which will require substantial resources and time. If any of our contracts with APL Limited were terminated or if APL Limited were unwilling or unable to fulfill its obligations to us under the terms of these contracts, or if the systems to be implemented with the SAP software do not operate as anticipated or contain unforeseen problems, our business, consolidated results of operations, financial condition and cash flows could be materially adversely affected.

If we make future acquisitions, they may be financed in a way that reduces our reported earnings or imposes additional restrictions on our business.

If we make future acquisitions, we may issue shares of capital stock that dilute other stockholders, incur debt, assume significant liabilities or create additional expenses related to intangible assets, any of which might reduce our reported earnings or reduce earnings per share and cause our stock price to decline. In addition, any financing that we might need for future acquisitions may be available to us only on terms that restrict our business.

If we are unable to identify, make and successfully integrate acquisitions, our profitability could be adversely affected.

Identifying, acquiring and integrating businesses requires substantial management, financial and other resources and may pose risks with respect to customer service and market share. Further, acquisitions involve a number of special risks, some or all of which could have a material adverse effect on our business, results of operation, financial condition and cash flows. These risks include:

· unforeseen operating difficulties and expenditures;

· difficulties in assimilation of acquired personnel, operations and technologies;

· the need to manage a significantly larger and more geographically dispersed business;

· impairment of goodwill and other intangible assets;

· the cost of integrating and documenting the internal controls of the acquired business and potential material weaknesses in internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

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· diversion of management’s attention from ongoing development of our business or other business concerns;

· potential loss of customers;

· failure to retain key personnel of the acquired businesses; and

· the use of substantial amounts of our available cash.

We have acquired a number of businesses in the past and we may consider acquiring businesses in the future that provide complementary services to those we currently provide or that expand our geographic presence. We cannot predict whether we will be able to identify suitable acquisition candidates or to acquire them on reasonable terms or at all, and a failure to do so could limit our ability to expand our business. While we believe that we have sufficient financial and management resources and experience to successfully conduct our acquisition activities and integrate the acquired businesses into our operations, our acquisition activities involve more difficult integration issues than those of many other companies because the value of the companies we acquire comes mostly from their business relationships, rather than their tangible assets. The integration of business relationships poses more of a risk than the integration of tangible assets because relationships may suddenly weaken or terminate, or key personnel responsible for those relationships may depart. Further, logistics businesses that we have acquired and that we may acquire in the future compete with many customers of our Stacktrain operations, and these customers may shift their business elsewhere if they believe our logistics operations receive favorable treatment from our Stacktrain operations. If we are unable to successfully integrate any business that we may acquire in the future, we could experience difficulties with customers, personnel or others, and our acquisitions might not enhance our competitive position, business or financial prospects.

As we expand our services internationally, we may become subject to international economic and political risks.

A portion of our business is providing services internationally. International revenues accounted for approximately 11% to 12% of our revenues in each of 2007, 2006 and 2005. Doing business outside the United States subjects us to various risks, including changing economic and political conditions, major work stoppages, exchange controls, currency fluctuations, armed conflicts and unexpected changes in United States and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. Significant expansion of our services in foreign countries will expose us to the increased effect of foreign currency fluctuations and exchange controls as well as longer accounts receivable payment cycles. We have no control over most of these risks and may be unable to anticipate changes in international economic and political conditions and, therefore, unable to alter our business practices in time to avoid the adverse effect of any of these changes.

A determination by regulators that our independent contractors are employees could expose us to various liabilities and additional costs and adversely affect our operating results.

From time to time, tax and other regulatory authorities have sought to assert that independent contractors in the trucking industry are employees, rather than independent contractors. In the future these authorities could be successful in asserting this position, or the interpretations and tax laws that consider these persons independent contractors could change. If our independent contractors are determined to be our employees, that determination could materially increase our exposure under a variety of federal and state tax, worker’s compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits. Our business model assumes that our independent contractors are not deemed to be our employees, and exposure to any of the above increased costs would impair our competitiveness in the industry and materially adversely affect our operating results.

If the markets in which we operate do not grow, our business could be adversely affected.

The failure of the transportation and logistics industries and their segments, including the third-party logistics market, to continue to grow may have a material adverse effect on our business and the market price of our common stock.

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Risks Related to Our Common Stock

Because we have various mechanisms in place to discourage takeover attempts, a change in control of our company that a stockholder may consider favorable could be prevented.

Provisions of our charter and bylaws or Tennessee law may discourage, delay or prevent a change in control of our company that a stockholder may consider favorable. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:

· Authorizing the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares in order to thwart a takeover attempt;

· A classified Board of Directors with staggered, three-year terms, which may lengthen the time required to gain control of the Board of Directors;

· Prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

· Requiring super-majority voting to effect particular amendments to our restated charter and amended bylaws;

· Limitations on who may call special meetings of stockholders;

· Requiring all stockholder actions to be taken at a meeting of the stockholders unless the stockholders unanimously agree to take action by written consent in lieu of a meeting;

· Establishing advance notice requirements for nominations of candidates for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

· Prohibiting business combinations with interested stockholders unless particular conditions are met.

As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. In addition, the Tennessee Greenmail Act and the Tennessee Control Share Acquisition Act may discourage, delay or prevent a change in control of our company.

Should we not be able to declare and pay cash dividends as anticipated, our stock price could be negatively impacted.

Since the third quarter of 2005, we have declared and paid quarterly dividends of $0.15 per common share. The declaration of future dividends by the Company and the amount thereof is in the discretion of our Board of Directors and will depend on our consolidated results of operations, financial condition, compliance with financial ratios and other limitations in our credit agreement, cash requirements, future prospects and other factors deemed relevant by the Board of Directors. There is no assurance that we will be able to continue to pay dividends at all or at this level in the future.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease space in office buildings in Concord, California for our Stacktrain operation and our corporate headquarters and an office building in Dublin, Ohio for our Pacer Global Logistics headquarters. We also lease space in office buildings in many other locations including Fort Worth, Texas, Oakbrook,

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Illinois, Commerce, California, DeSoto, Texas, Jacksonville, Florida, Lake Success, New York, Memphis, Tennessee, and Orange, California. We lease four facilities in Los Angeles, California for dock space, warehousing and parking for tractors and trailers.

Our Stacktrain transportation network operates out of more than 77 railroad terminals across North America. Our integrated rail network, combined with our leased equipment fleet, enables us to provide our customers with single-company control over rail transportation to locations throughout North America.

Substantially all of the terminals we use are owned and managed by rail or highway carriers. However, we employ full-time personnel on-site at many major locations to ensure close coordination of the services provided at the facilities. In addition to these terminals, other locations throughout the eastern United States serve as stand-alone container depots, where empty containers can be picked up or dropped off, or supply points, where empty containers can be picked up only. In connection with our trucking services, agents provide marketing and sales, terminal facilities and driver recruiting, while operations centers provide, among other services, insurance, claims handling, safety compliance, credit, billing and collection and operating advances and payments to drivers and agents.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to routine litigation arising in the ordinary course of business, none of which is expected to have a material adverse effect on the Company’s business, consolidated results of operations, financial condition or cash flows. Most of the lawsuits to which the Company is a party are covered by insurance and are being defended in cooperation with insurance carriers.

Two of our subsidiaries engaged in local cartage and harbor drayage operations, Interstate Consolidation, Inc., which was subsequently merged into Pacer Cartage, Inc., and Intermodal Container Service, Inc., were named defendants in a class action filed in July 1997 in the State of California, Los Angeles Superior Court, Central District (the “Albillo” case), alleging, among other things, breach of fiduciary duty, unfair business practices, conversion and money had and received in connection with monies (including insurance premium costs) allegedly wrongfully deducted from truck drivers’ earnings. The plaintiffs and defendants entered into a Judge Pro Tempore Submission Agreement in October 1998, pursuant to which they waived their rights to a jury trial, stipulated to a certified class, and agreed to a minimum judgment of $250,000 and a maximum judgment of $1.75 million. In August 2000, the trial court ruled in our subsidiaries’ favor on all issues except one, namely that in 1998 our subsidiaries failed to issue to the owner-operators new certificates of insurance disclosing a change in the subsidiaries’ liability insurance retention amount, and ordered that restitution of $488,978 be paid for this omission. Plaintiffs’ counsel then appealed all issues except one (the independent contractor status of the drivers), and the subsidiaries appealed the insurance retention disclosure issue.

In December 2003, the appellate court affirmed the trial court’s decision as to all but one issue, reversed the trial court’s decision that the owner-operators could be charged for the workers compensation insurance coverage that they voluntarily elected to obtain through our subsidiaries (a case of first impression in California), and remanded back to the trial court the question of whether the collection of workers compensation insurance charges from the owner-operators violated California’s Business and Professions Code and, if so, to determine an appropriate remedy. Our subsidiaries sought review at the California Supreme Court of this workers compensation issue, and the plaintiffs sought review only of whether our subsidiaries’ providing insurance for the owner-operators constituted engaging in the insurance business without a license under California law. In March 2004, the Supreme Court of California denied both parties’ petitions for appeal, thus ending all further appellate review.

As a result, we had successfully defended and prevailed over the plaintiffs’ challenges to our subsidiaries’ core operating practices, establishing that (i) the owner-operators were independent contractors and not employees of our subsidiaries and (ii) our subsidiaries may charge the owner-operators for liability insurance coverage purchased by our subsidiaries. Following the California Supreme Court’s decision, the only remaining issue was whether our subsidiaries’ collection of workers compensation

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insurance charges from the owner-operators violated California’s Business and Professions Code and, if so, what restitution, if any, should be paid to the owner-operator class. This issue was remanded back to the same trial court that heard the original case in 1998.

During the second quarter of 2005, the Company engaged in earnest discussions with the plaintiffs in an attempt to structure a potential settlement of the case within the original $1.75 million cap but on a claims-made basis that would return to the Company any settlement funds not claimed by members of the plaintiff class. The Company believed that the ongoing cost of litigating the final issue in the case (including defending appeals that the plaintiffs’ counsel had assured would occur if the Company were to prevail in the remand trial) would exceed the net liability to the Company of a final settlement on a claims-made basis within the cap of $1.75 million. During the second quarter of 2005, the Company reached an agreement in principle with the plaintiffs to settle the litigation on a claims-made basis within the cap of $1.75 million. Based on the settlement agreement, the Company increased its reserve to the full amount of the $1.75 million cap at the end of the second quarter of 2005. In the first quarter of 2006, the court granted final approval to the settlement. The claims process, payment calculations and final settlement payments were concluded in the second quarter of 2006, with the Company retaining approximately $560,000 in unclaimed funds.

The same law firm that brought the Albillo case filed a separate class action lawsuit against our same subsidiaries in March 2003 in the same jurisdiction on behalf of a class of owner-operators (the “Renteria” class action) not included in the Albillo class. Each of the claims in the Renteria case, which had been stayed pending full and final disposition of the remaining issue in Albillo, mirror claims in Albillo, specifically that our subsidiaries’ providing insurance for their owner-operators constitutes engaging in the insurance business without a license in violation of California law and that charging the putative class of owner-operators in Renteria for workers compensation insurance that they elected to obtain through our subsidiaries violated California’s Business and Professions Code. In June 2007, our motion for summary adjudication on the insurance issue was granted, so that the only remaining issue in the case is the workers compensation claim. In August 2007, we agreed to settle this last remaining claim on a “claims-made” basis under which the Company’s maximum exposure would not exceed our previously established $750,000 liability reserve. The settlement has received preliminary court approval, but remains subject to completion of the claims filing and payment process, and then final court approval. Based on information presently available, management does not expect the Renteria case to have a material adverse impact on the Company’s consolidated financial position, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2007.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information regarding our executive officers.

Name	Age	Title
Michael E. Uremovich	64	Chairman and Chief Executive Officer
Adriene B. Bailey	44	Executive Vice President, Strategy and Organizational Development
Jeffrey R. Brashares	55	Executive Vice President, Chief Operating Officer – Logistics Segment
Marc L. Jensen	53	Vice President, Corporate Controller
Brian C. Kane	52	Executive Vice President, Chief Operating Officer – Intermodal Segment
Michael F. Killea	45	Executive Vice President, Chief Legal Officer and General Counsel
Donald C. Orris	66	Interim President, Intermodal Segment
Dan M. Beers	58	Executive Vice President, Chief Commercial Officer, Intermodal Segment
James E. Ward	56	Executive Vice President, Chief Information Officer
Lawrence C. Yarberry	64	Executive Vice President, Chief Financial Officer

Michael E. Uremovich has served as Chairman and Chief Executive Officer of our company since November 2006. He served as Vice Chairman of our company from October 2003 until his promotion to Chairman and Chief Executive Officer. Mr. Uremovich served as a consultant to our company from 1998 until October 2003. From 1991 until 1995, Mr. Uremovich was the Vice President of Marketing for the

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Southern Pacific Railroad. Prior to Southern Pacific Railroad, Mr. Uremovich held a variety of positions at American President Companies, including Vice President of Marketing and Logistics Services. Prior to employment at American President, he was a Principal at the consulting firm of Booz, Allen and Hamilton.

Adriene B. Bailey has served as Executive Vice President, Strategy and Organizational Development since October 2007. From February 2007 until October 2007, she led our Development Team focused on cost efficiencies and organizational effectiveness across all of our company’s operations. Since joining our company in 2000 as Vice President of Planning, Ms. Bailey has held several executive management positions with our Stacktrain operation, including Executive Vice President, Wholesale Product Development from November 2005 to February 2007, Executive Vice President, Business Development and Transportation Purchasing from November 2002 to November 2007, and Executive Vice President, Equipment and Logistics from January 2001 to November 2002. Prior to joining our company, her positions included Assistant Vice President for Service Planning and Operations Research for CSX Transportation, Vice President of Service Planning and Design for Southern Pacific Railroad, and consultant for Mercer Management Consulting and its predecessor firm, Temple, Barker & Sloane.

Jeffrey R. Brashares has served as Executive Vice President, Chief Operating Officer – Logistics Segment since June 2007. He served as Vice Chairman of Commercial Sales from January 2005 through May 2007. From December 2000 to December 2004, he served as President of Transportation Services of Pacer Global Logistics, Inc. From 1984 until its acquisition by our company in December 2000, Mr. Brashares was an owner and served as President of Rail Van, Inc. since 1984. Mr. Brashares joined Rail Van, Inc. as Regional Sales Manager in 1976.

Marc L. Jensen has served as Vice President, Corporate Controller since June 2007. From January 2006 until June 2007, he was Assistant Vice President, Internal Audit and Compliance. Before joining the Company, Mr. Jensen was President of MLJ Consulting, Inc. from May 2000 to December 2005, providing business process and systems consulting services, primarily to the Company. Previously, Mr. Jensen served as Director of Worldwide System Support of ACS Logistics, Inc, a subsidiary of American President Lines, LTD, from 1998 to 2000 and as Director of Customer Information Support of ACS Logistics, Inc. from 1997 to 1998.

Brian C. Kane has served as Executive Vice President and Chief Operating Officer of our Intermodal segment since October 2006. Mr. Kane served as Vice President and Corporate Controller of our company from November 2003 until October 2006. Mr. Kane served as Vice President and Controller of Pacer Stacktrain from May 1999 until November 2003 and prior to that as Director of Financial Reporting from May 1998 until May 1999. Prior to joining our company, Mr. Kane was Vice President of Finance for the Shell Martinez Refining Company from November 1996 until May 1998 and Controller for Southern Pacific Transportation Company from April 1990 until November 1996.

Michael F. Killea has served as Executive Vice President, Chief Legal Officer and General Counsel of our company since August 2001. From October 1999 through July 2001, he was a partner at the law firm of Holland & Knight LLP in New York City and Jacksonville, Florida, and from September 1987 through September 1999, he was a partner and an associate at the law firm of O’Sullivan LLP (now O’Melveny & Myers LLP) in New York City.

Donald C. Orris was appointed to serve as Interim President, Intermodal Segment in November 2007. He served as our Chief Executive Officer and Chairman of the Board from May 1999 to November 2006 and as President from May 1999 through May 2006. He became Vice Chairman of the Company in November 2006 with Mr. Uremovich’s appointment as Chief Executive Officer and Chairman and retired from the Company effective March 31, 2007. From January 1995 to September 1996, Mr. Orris served as President and Chief Operating Officer, and from 1990 until January 1995, he served as an Executive Vice President of Southern Pacific Transportation Company. Mr. Orris was the President and Chief Operating Officer of American President Domestic Company and American President Intermodal Company from 1982 until 1990. Mr. Orris is also a director of Quality Distribution, Inc., a provider of bulk transportation services.

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Dan M. Beers has served as Executive Vice President, Chief Commercial Officer for Pacer’s Intermodal Segment with responsibility for both Pacer Stacktrain and Pacer Global Logistics sales since November 2005. He is accountable for the ocean carrier and Mexico business units as well as customer support for Pacer Stacktrain. Prior to joining the Company, Mr. Beers was President of Swift Intermodal from August 2004 to November 2005, and Senior Vice President of Intermodal, Automotive and North American Carload Sales for the TFM Railroad in Mexico City from June 1997 to August 2004. Previous positions held include Assistant Vice President of Intermodal Sales for the Burlington Northern Railroad, as well as various roles in the less-than-truckload industry.

James E. Ward has served as Executive Vice President, Chief Information Officer of the Company since April 2007. As an independent contractor, Mr. Ward served as acting Chief Information Officer for the Company from August 2006 until joining the Company as an employee. From May 2003 to April 2007, Mr. Ward served as a consultant to Dynotech, LLC., a consulting firm focusing on global ERP implementations, IT evaluations, offshore development, interim CIO positions, and data center outsourcing. During his time as a consultant, he also held interim CIO positions with Clark Steel framing, a steel framing manufacturer (from April 2005 to April 2007) and with Norton Lilly International, a provider of shipping, logistics and marines services in the United States, Canada, Panama and Caribbean port (from May 2004 to December 2006). From July 1996 to April 2003, Mr. Ward served as Senior Vice President and Chief Information Officer of Inchcape Shipping Services, a leading marine services provider.

Lawrence C. Yarberry has served as an Executive Vice President and the Chief Financial Officer of our company since May 1999. Mr. Yarberry served as Executive Vice President, Chief Financial Officer and Treasurer of a predecessor company from May 1998 until May 1999 and as a consultant to that predecessor company from February 1998 until April 1998. From April 1990 until December 1997, Mr. Yarberry served as a Vice President of Finance of Southern Pacific Transportation Company and was Vice President of Finance and Chief Financial Officer of Southern Pacific Rail Corporation.

There is no family relationship between any of our executive officers or directors, and there are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any of them was appointed or elected as an officer or director, other than arrangements or understandings with our directors or officers acting solely in their capacities as such.

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Part II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed and traded on The NASDAQ Stock Market’s Global Select Market (“NASDAQ”) under the symbol “PACR”.

The following table sets forth, for our two most recent fiscal years, the per share range of high and low sales prices of our common stock as reported on NASDAQ and dividends declared.

	High		Low		Cash Dividends Declared
2007
1st quarter	$	33.80	$	25.00	$	0.15
2nd quarter	$	28.39	$	23.27	$	0.15
3rd quarter	$	24.64	$	19.13	$	0.15
4th quarter	$	19.56	$	12.96	$	0.15
2006
1st quarter	$	33.80	$	24.63	$	0.15
2nd quarter	$	36.19	$	27.65	$	0.15
3rd quarter	$	33.60	$	25.60	$	0.15
4th quarter	$	31.95	$	26.39	$	0.15

As of December 28, 2007 there were approximately 36 record holders of our common stock.

Dividend Policy

During the third quarter of 2005, our Board of Directors instituted a quarterly dividend policy of $0.15 per common share ($0.60 per common share per annum) to enhance shareholder value and return profits to stockholders. In September 2005, the first quarterly dividend of $0.15 per common share was declared by our Board of Directors, and for each quarter since that time, the $0.15 per share quarterly dividend has been declared and paid. The declaration of future dividends and the amount thereof is in the discretion of our Board of Directors and will depend on our consolidated results of operations, financial condition, cash requirements, future prospects and other factors deemed relevant by the Board of Directors. In addition, our credit agreement imposes restrictions on our ability to pay cash dividends, including that no event of default has occurred, or would result therefrom and that we demonstrate to the administrative agent and the required lenders under the credit facility that as of the last day of the fiscal quarter most recently ended our leverage ratio on a pro forma basis after giving effect to the dividend was less than or equal to 2.50 to 1.00.

Equity Compensation Plan Information

Information concerning our equity compensation plans is shown under “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” included elsewhere in this Annual Report on Form 10-K.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On June 12, 2006, we announced that our Board of Directors had authorized the purchase of up to $60 million of our common stock, and, on April 3, 2007, we announced that our Board of Directors had authorized the purchase of an additional $100 million of our common stock. Both authorizations expire on

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June 15, 2008. We repurchased a total of 965,818 shares at an average price of $27.72 per share through December 29, 2006, and 2,938,635 shares at an average price of $24.64 per share during 2007. At December 28, 2007, $60.7 million remains available for the purchase of common stock under the current Board authorizations. We intend to make further share repurchases from time to time as market conditions warrant. Our credit agreement imposes restrictions on our ability to repurchase our capital stock, including that no event of default has occurred or would result therefrom and that we demonstrate to the administrative agent and the required lenders under the credit facility that as of the last day of the fiscal quarter most recently ended our leverage ratio on a pro forma basis after giving effect to the repurchase was less than or equal to 2.50 to 1.00.

Common Stock Repurchases

The following table presents repurchases by the Company of our common stock during the fourth quarter of fiscal 2007:

Issuer Purchases of Equity Securities

Period 1/	Total Number of Shares Purchased 2/	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 3/	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 3/
Month No. 1
(Sept. 22, 2007-
Oct. 19, 2007)	-		-	-	$	62.1 million
Month No. 2
(Oct. 20, 2007-
Nov. 16, 2007)	100,000	$	14.36	100,000	$	60.7 million
Month No. 3
(Nov. 17, 2007-
Dec. 28, 2007)	-		-	-	$	60.7 million
Total	100,000	$	14.36	100,000	$	60.7 million

1/ Represents the Company’s fiscal months.

2/ All purchases were open-market transactions, and were repurchased pursuant to a publicly announced plan.

3/ On June 12, 2006, the Company announced that our Board of Directors had authorized the purchase of up to $60 million of our common stock, and, on April 3, 2007, the Company announced that our Board of Directors had authorized the purchase of an additional $100 million of our common stock. Both authorizations expire on June 15, 2008. The Company intends to make further share repurchases from time to time as market conditions warrant.

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Performance Graph*

The graph below shows, for the five years ended December 28, 2007, the cumulative total return on an investment of $100 assumed to have been made on December 27, 2002 (the last day of trading for the fiscal year ended December 27, 2002) in our common stock. The graph compares such return with that of comparable investments assumed to have been made on the same date in the Nasdaq Composite Index and the Nasdaq Transportation Index. Cumulative total stockholder returns for our common stock, the Nasdaq Composite Index and the Nasdaq Transportation Index are based on our fiscal year.

The total return for the assumed investment assumes the reinvestment of all dividends. We began paying dividends in the third quarter of 2005.

Our common stock is listed and traded on The Nasdaq Stock Market’s Global Select Market (trading symbol: PACR).

The comparisons in the graph below are based upon historical data and are not indicative of, or intended to forecast, future performance of our common stock.

	Dec-02		Dec-03		Dec-04		Dec-05		Dec-06		Dec-07
Pacer International	$	100	$	153	$	160	$	197	$	228	$	116
NASDAQ Composite	$	100	$	148	$	163	$	165	$	181	$	200
NASDAQ Transportation	$	100	$	135	$	172	$	188	$	199	$	208

* The performance graph is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of our company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.

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ITEM 6. SELECTED FINANCIAL DATA

The following table presents, as of the dates and for the periods indicated, selected historical financial information for our company. The selected historical information at December 28, 2007 and December 29, 2006 and for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005 have been derived from, and should be read in conjunction with, our audited consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The selected historical information at December 30, 2005, December 31, 2004 and December, 26, 2003 and for the fiscal years ended December 31, 2004 and December 26, 2003 have been derived from our audited financial statements which are not included in this Annual Report on Form 10-K.

The following table should also be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

	Fiscal Year Ended
	Dec. 28, 2007			Dec. 29, 2006			Dec. 30, 2005			Dec. 31, 2004			Dec. 26, 2003
	(in millions, except share and per share amounts)
Statements of Operations Data:
Revenues	$	1,969.4		$	1,887.8		$	1,860.1		$	1,808.1		$	1,668.6
Cost of purchased transportation and services		1,537.7			1,446.4			1,428.6			1,413.1			1,293.7
Direct operating expenses (excluding depreciation)		130.5			123.1			115.4			110.7			106.9
Selling, general and administrative expenses		200.5	1/		193.0			204.8			190.6			180.9
Write-off of computer software		-			-			11.3	2/		-			-
Depreciation and amortization		6.2			7.0			6.9			7.2			7.9
Income from operations		94.5			118.3			93.1			86.5			79.2
Net income		54.3			68.3			50.9			47.2			31.3
Net income per share:
Basic	$	1.53		$	1.83		$	1.36		$	1.27		$	0.85
Diluted	$	1.51		$	1.80		$	1.34		$	1.24		$	0.82
Weighted average common shares outstanding:
Basic		35,587,755			37,354,785			37,381,647			37,257,076			37,003,785
Diluted		35,911,246			38,020,862			38,042,454			38,140,409			37,988,697
Cash dividends declared per common share	$	0.60		$	0.60		$	0.30		$	-		$	-
Balance Sheet Data (at period end):
Total assets	$	574.1		$	565.3		$	590.2		$	605.5		$	594.5
Total debt including capital leases		64.0			59.0			90.0			154.1			214.1
Total stockholders’ equity		302.7			337.1			306.7			264.5			216.1
Working capital		34.5			64.3			55.0			61.7			58.7
Cash Flow Data:
Net cash provided by operating activities	$	108.0		$	66.7		$	82.3		$	63.0		$	55.1
Net cash used in investing activities		(13.1	)		(3.5	)		(5.0	)		(4.3	)		(3.2	)
Net cash used in financing activities		(87.9	)		(72.1	)		(67.9	)		(59.3	)		(52.6	)
Other Financial Data:
Capital expenditures	$	14.0	3/	$	3.7		$	5.3		$	4.6		$	3.4

1/ 2007 includes $6.0 million for facility closings and other severance costs. See note 3 to the notes to our consolidated financial statements.

2/ Based upon the completed evaluation of software development work in our Stacktrain unit that had been performed by a developer, we determined to abandon the software and to write-off all $11.3 million of capitalized costs. See Note 9 to the notes to our consolidated financial statements.

3/ Includes $10.6 million for a software license agreement with SAP America, Inc. See Note 9 to the notes to our consolidated financial statements.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Overview

We are a leading non-asset based North American third-party logistics provider offering a broad array of services to facilitate the movement of freight from origin to destination. We operate in two segments, the intermodal segment and the logistics segment. The intermodal segment comprises the former wholesale segment units, Pacer Cartage and Pacer Stacktrain, with the addition of the rail brokerage unit. The logistics segment comprises all of the former retail units except the rail brokerage unit which is now part of the intermodal segment. See Note 8 to the notes to our consolidated financial statements included in this report for segment information. Our intermodal segment provides intermodal rail transportation, local cartage and intermodal marketing services. Our logistics segment provides non-intermodal highway brokerage and truck services, warehousing and distribution, international freight forwarding and supply chain management services.

Executive Summary

In 2007 Pacer took a series of steps to position our company for the future. We maintained our focus on four major initiatives: (1) continuing the development of a world-class intermodal product, (2) redefining our relationships with our major rail suppliers, (3) improving performance in our logistics segment and (4) rationalizing our cost structure and improving productivity. We made good progress in all of these areas.

As shown in the table below, our revenues have grown each year since our 2002 IPO reaching a record level in 2007, and validating our focus on our core intermodal product, and our operating cash flows remain strong. While our income from operations, net income and diluted earnings per share were below those of 2006, they were above all other years since our IPO. As we have noted previously and describe below, 2006 benefited from the overall favorable settlements of several arbitration cases and other rate disputes which did not recur in 2007. Our 2007 performance was accomplished in a difficult transportation market and with an economy that weakened as the year progressed. Our gross margins decreased 1.5 percentage points from 2006 reflecting increased rail costs and the challenges of a more competitive freight environment.

	2007		2006		2005		2004		2003		2002
	($ in millions, except per share amounts)
Revenues	$	1,969.4	$	1,887.8	$	1,860.1	$	1,808.1	$	1,668.6	$	1,608.2
Income from operations .		94.5		118.3		93.1		86.5		79.2		74.1
Interest expense, net		5.5		6.6		8.2		9.6		18.0		31.7
Net income		54.3		68.3		50.9		47.2		31.3		24.8
Operating cash flows		108.0		66.7		82.3		63.0		55.1		23.1
Diluted EPS	$	1.51	$	1.80	$	1.34	$	1.24	$	0.82	$	0.74

Our intermodal segment remains strong, and our logistics segment continued its improvement with operating income of $4.1 million, 156% above last year. Each unit within the logistics segment improved over last year with the exception of our trucking operations which continue to be impacted by the economic downturn. The overall logistics segment’s gross margin percentage, calculated as revenues less the cost of purchased transportation divided by revenues, decreased from 18.0% in 2006 to 17.8% in 2007 because of competitive pressures and business mix changes primarily in our trucking operations.

The intermodal segment contributed $112.0 million to income from operations compared to $132.6 million in 2006. The year-to-year comparison for our intermodal segment is difficult due to the overall favorable settlements of several arbitration cases and other rate disputes in 2006 that improved results in that year. Revenues for all three Stacktrain lines of business improved over 2006, increasing by 14.9%, 12.6% and 7.1% for the Stacktrain international, automotive and third-party domestic lines of business, respectively. Rail brokerage revenues also increased over 2006 by 3.6% and revenues for our cartage operations were 2.1% higher than in 2006. The overall gross margin percentage for the intermodal

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segment decreased from 24.8% in 2006 to 23.0% in 2007 due to the arbitration and other rate dispute settlements benefiting 2006, increased competition in 2007 and lower pricing in 2007 to maintain equipment flow and minimize repositioning costs. Gross margins were also impacted by increases in underlying rail transportation costs both in contract lanes pursuant to market rate adjustment provisions and in non-contract lanes.

During 2007, we undertook several initiatives that we believe will position our company for the future. We instituted a facility rationalization and severance program during the past year that reduced employment by 134 personnel, or 8.4% from 2006, and closed 4 facilities. The costs of this program, which is nearly complete, decreased our 2007 income from operations by $6.0 million, but we believe the program has laid the foundation for improved profits in the future. As another step to improve future performance, in September 2007, we entered into a software license agreement with SAP America, Inc. (“SAP”) for an enterprise suite of applications including the latest release of SAP’s Transportation Management Solution. Under the agreement, we were granted a perpetual license for the suite of SAP software. Once implemented, the new system is expected to provide an integrated, streamlined platform across business units, providing better management information, eliminating duplicated work effort and dispersed data, and enhancing services and communications with customers. Elements of the new system are expected to be implemented over the next 9 to 28 months. See “Liquidity and Capital Resources.”

In April 2007, we refinanced our term loan and revolving credit facility with a $250 million, five-year revolving credit facility. In connection with the refinancing, we paid $0.8 million in fees and expenses and charged to expense $1.8 million for the write-off of existing deferred loan fees related to the prior facility. Also during 2007, we reduced our outstanding shares of common stock by 2,938,635 shares, or approximately 7.9%, pursuant to our stock repurchase program which began in 2006. A total of $60.7 million remains under the repurchase authorization which expires on June 15, 2008.

We are confident about the steps we have taken and continue to take to strengthen our company and during 2008 we will continue to focus on improving performance and building on recent successes.

At our May 2007 annual meeting, our shareholders approved our 2006 Long-Term Incentive Plan under which awards of 195,000 shares of restricted stock were granted to members of our senior management in 2006 (subject to the May 2007 shareholder approval). The awards vest in equal installments over four years beginning on June 1, 2007. An additional 87,000 shares of restricted stock were granted in 2007, bringing the total restricted stock awards to 282,000. In 2007, $2.0 million was expensed for the restricted stock awards. The annual expense for all restricted stock awards will be approximately $1.5 million in each of the next three years. In addition, in 2007 we accrued $3.0 million for performance bonus and discretionary incentive and retention payments compared to no bonuses in 2006.

Our overall gross margin percentage (calculated as revenues less cost of purchased transportation and services divided by revenues) was 21.9% in 2007 and is expected to decline slightly to a forecasted 21.0% in 2008 due primarily to changes in business mix. We plan to continue to take selective rate increases where feasible, although these will be partially offset by increased costs charged by our underlying service providers.

Our tax payments in 2007 were $24.1 million compared to $37.4 million in 2006. We expect tax payments to be approximately $26.0 million in 2008.

Our capital budget in 2008 is forecasted at $22.0 million and includes $18.9 million for the SAP project with the remainder for normal computer and equipment replacement items. Capital expenditures in 2008 will be funded by operating cash flows. The SAP project is also budgeted to incur $4.9 million of operating expenses during 2008.

Actual results may differ materially from the estimates, expectations and projections described above. Some of the factors that could affect these estimates and expectations are described above under the caption “Item 1A. Risk Factors – Risks Related to Our Business” and “Special Note Regarding Forward-Looking Statements.”

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Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be predicted with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

· Recognition of Revenue

We recognize revenue when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is determinable and collectability is reasonably assured. We maintain signed contracts with many of our customers and have bills of lading specifying shipment details including the rates charged for our services. Our Stacktrain operation recognizes revenue for loads that are in transit at the end of an accounting period on a percentage-of-completion basis. Revenue is recorded for the portion of the transit that has been completed because reasonably dependable estimates of the transit status of loads is available in our computer systems. In addition, our Stacktrain operation offers volume discounts based on annual volume thresholds. We estimate our customers’ annual shipments throughout the year and record a reduction to revenue accordingly. Should our customers’ annual volume vary significantly from our estimates, a revision to revenue for volume discounts would be required. During 2007, our total volume discounts (excluding discounts for our own rail brokerage operations) were $13.2 million. Our intermodal segment cartage and rail brokerage operations and our logistics segment recognize revenue after services have been completed. The following table illustrates volume discounts as a percentage of intermodal segment revenues for 2007, 2006 and 2005 (in millions, except percentages):

	2007			2006			2005
Intermodal segment revenues	$	1,567.9		$	1,491.7		$	1,402.6
Total volume discounts		13.2			12.8			16.3
Volume discounts as a percentage of intermodal segment revenues		0.8	%		0.9	%		1.2	%

Based on our results for the fiscal year ended December 28, 2007, a 25 basis point deviation from our estimates of volume discounts would have resulted in an increase or decrease in revenues of approximately $3 to $4 million. The following analysis demonstrates the potential effect that a 25 basis point deviation from our estimates would have had on our consolidated results of operations and is not intended to provide an estimated range of exposure or expected deviation (in millions, except per share data):

	-25 Basis Points		Management’s 2007 Estimate		+25 Basis Points
Total volume discounts	$	8.6	$	13.2	$	16.5
Income from operations		99.1		94.5		91.2
Net income		57.1		54.3		52.3
Diluted earnings per share	$	1.59	$	1.51	$	1.46

· Recognition of Cost of Purchased Transportation and Services

Both our intermodal and logistics segments estimate the cost of purchased transportation and services and accrue an amount on a load by load basis in a manner that is consistent with revenue recognition. In addition, our rail brokerage operations may earn discounts to the cost of purchased transportation and services that are primarily based on the annual volume of loads transported

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over major railroads. We estimate our annual volume throughout the year and record a reduction to cost of purchased transportation accordingly. Should our annual volume vary significantly from our estimates, a revision to the cost of purchased transportation would be required. Total discounts earned (excluding discounts earned from our Stacktrain operations) for 2007, 2006 and 2005 were none, none and $0.8 million, respectively.

· Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Estimates are used in determining this allowance based on our historical collection experience, current trends, credit policy and a percentage of our accounts receivable by aging category. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances could be required. The following table illustrates the allowance for doubtful accounts as a percentage of accounts receivable for 2007, 2006 and 2005 (in millions, except percentages):

	2007			2006			2005
Accounts receivable	$	209.9		$	215.7		$	225.7
Allowance for doubtful accounts		4.6			5.3			6.4
Allowance for doubtful accounts as a percentage of accounts receivable		2.21	%		2.46	%		2.84	%

Historically, our actual losses have been within the estimated allowances. However, unexpected or significant future events or changes in trends could result in a material impact to future consolidated results of operations. For example, during 2007 and 2006 our allowance for doubtful accounts declined significantly from the 2005 level due to an increased number of customer bankruptcies during 2006 and 2005. Based on our results for the fiscal year ended December 28, 2007, a 25 percent deviation from our estimates would have resulted in an increase or decrease in expense of approximately $1.1 million. The following analysis demonstrates the potential effect that a 25 percent deviation from our estimates would have had on our consolidated results of operations and is not intended to provide an estimated range of exposure or expected deviation (in millions, except per share data):

	-25 Percent		Management’s 2007 Estimate		+25 Percent
Allowance for doubtful accounts	$	3.5	$	4.6	$	5.8
Income from operations		95.6		94.5		93.3
Net income		55.0		54.3		53.6
Diluted earnings per share	$	1.53	$	1.51	$	1.49

· Goodwill

At December 28, 2007, we had recorded $288.3 million of goodwill, net of amortization prior to the adoption on December 29, 2001 (the first day of our fiscal 2002) of the Financial Accounting Standards Board Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The carrying amount of goodwill at December 28, 2007 assigned to our intermodal and logistics segments was $169.0 million and $119.3 million, respectively. Goodwill and other intangible assets are subject to periodic testing, at least annually, for impairment and recognition of impairment losses in the future could be required based on the methodology for measuring impairments described below. SFAS 142 requires a two-step method for determining goodwill impairment where step one is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates that the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. We determine the fair value of the reporting units using an income approach based on the present value of estimated future cash flows, and a market approach based on market price data of stocks of

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corporations engaged in similar businesses. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss must be recognized for the excess and charged to operations.

We base our fair value estimates on projected financial information which we believe to be reasonable. However, actual future results may differ from those projections, and those differences may be material. The valuation methodology used to estimate the fair value of our total company and reporting units requires inputs and assumptions that reflect current market conditions as well as management judgment. The current economic downturn has negatively impacted many of those inputs and assumptions. For example, the assumed control premium (the amount in excess of the current stock price that a buyer would be willing to pay to acquire our company based on an analysis of the comparable market transactions used in our analysis) has declined compared to year-end 2006. While our year-end 2007 annual goodwill impairment analysis did not result in an impairment charge, the excess of fair value over carrying value for both operating segments declined substantially. The excess of fair value over carrying value for our intermodal and logistics segments (our reporting units) as of December 28, 2007, the annual testing date, was approximately $288 million and $3 million, respectively, as compared to $1.1 billion and approximately $23 million, respectively, as of December 29, 2006. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, control premium, discount rates, etc. In order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test, we applied a hypothetical 5% decrease to the fair values of each reporting unit. This hypothetical 5% decrease would result in excess fair value over carrying value for our intermodal segment of $262 million at December 28, 2007. The logistics segment decrease in fair value at December 28, 2007 would result in an impairment of goodwill for that reporting unit due to the factors discussed above.

Background

Our intermodal segment’s Stacktrain operation’s fiscal year ends on the last Friday in December and the intermodal segment’s local cartage and rail brokerage operations’ fiscal year and our logistics segment’s fiscal year end on the last day in December. The following section describes some of our revenue and expense categories and is provided to facilitate investors’ understanding of the discussion of our historical financial results, including these revenue and expense items, discussed under the caption “Results of Operations.”

Revenues

The intermodal segment’s revenues from Stacktrain operations are generated through rates, fuel surcharges and other fees charged to customers for the transportation of freight utilizing the rail transportation services that we purchase from rail carriers under our transportation agreements with North American railroads. The growth of these revenues is primarily driven by increases in volume of freight shipped and rate changes on a route-by-route basis. The average rate is impacted by product mix, rail routes utilized, fuel surcharge and market conditions. Also included in revenues are railcar rental income, container per diem charges and incentives paid by APL Limited and others for the repositioning of empty containers with domestic westbound (backhaul) loads. Revenues are reported net of volume discounts provided to customers. Our intermodal segment Stacktrain operation generates revenues from three lines of business: international (shipments tendered by ocean shipping companies), automotive (shipments tendered by intermediaries arranging transportation for automotive manufacturers and parts suppliers) and domestic (shipments tendered by intermodal marketing companies for shippers within North America). Growth in the intermodal segment’s revenues from local cartage operations, which primarily support our Stacktrain operations and intermodal marketing companies (including our rail brokerage unit) through the use of independent owner-operators, is driven primarily by increased volume as well as length of haul and the rates charged to the customer. Our rail brokerage unit generates revenues through intermodal marketing operations which involves arranging the movement of freight in containers and trailers utilizing truck and rail transportation. Increases in revenues from intermodal marketing operations are generated from increased volumes, rate increases, product mix and route changes.

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The logistics segment’s revenues are generated through rates and other fees charged for our portfolio of freight transportation services, including highway brokerage and truck services, warehousing and distribution, international freight forwarding and supply chain management services. Overall growth in revenues for the logistics segment is driven by expanding our service offerings and marketing our broad array of transportation services to our existing customer base and to new customers. Growth in revenues from highway brokerage is driven primarily through increased volume and outsourcing by companies of their transportation and logistics needs. Growth in revenues from truck services operations, which primarily provide specialized transportation services to customers through independent contractors and owner-operators, is driven primarily by increased volume as well as length of haul and the rate per mile charged to the customer. Increases in revenues for warehousing and distribution, which includes the handling, consolidation/deconsolidation and storage of freight on behalf of the shipper, are driven by increased outsourcing and import volumes and by shipping lines’ increased use of third-party containers, rather than their own containers, on the West Coast to move freight inland. Through our supply chain management services, we manage all aspects of the supply chain from inbound sourcing and delivery logistics through outbound shipment, handling, consolidation, deconsolidation, distribution, and just-in-time delivery of end products to our customers’ customers. Revenues for supply chain management services are recognized on a net basis and increases are driven by increased outsourcing. We also provide international freight forwarding services, which involves arranging transportation and other services necessary to move our customers’ freight to and from a foreign country. Increases in revenues for international freight forwarding are driven by increases in international trade volumes, rate increases, product mix and route changes.

Cost of Purchased Transportation and Services

The intermodal segment’s cost of purchased transportation and related services consists primarily of the amounts charged to us by railroads and local trucking companies under our agreements with these carriers. Third-party rail costs are charged through agreements with the railroads and are dependent upon product mix and traffic lanes. In addition, terminal and cargo handling services represent the variable expenses directly associated with handling freight at a terminal location. The cost of these services is variable in nature and is based on the volume of freight shipped and rates charged.

The logistics segment’s cost of purchased transportation and related services consists of amounts paid to third parties under our agreements with them to provide such services, such as independent contractor truck drivers, freight terminal operators and dock workers. Sub-contracted or independent operators are paid on a percentage of revenues, mileage or a fixed fee from point-to-point or between zones.

Direct Operating Expenses

Direct operating expenses are both fixed and variable expenses directly relating to our Stacktrain operations and consist of equipment lease expense, equipment maintenance and repair costs, fixed terminal and cargo handling expenses and other direct variable expenses. Our fleet of leased equipment is financed through a variety of short- and long-term leases. Increases to our equipment fleet will primarily be through additional leases as the growth of our business dictates. Equipment maintenance and repair costs consist of the costs related to the upkeep of the equipment fleet, which can be considered semi-variable in nature, as a certain amount relates to the annual preventative maintenance costs in addition to amounts driven by fleet usage. Fixed terminal and cargo handling costs primarily relate to the fixed rent and storage expense charged to us by terminal operators and is expected to remain relatively fixed.

Selling, General and Administrative Expenses

The intermodal segment’s selling, general and administrative expenses consist of costs relating to customer acquisition, billing, customer service, salaries and related expenses of the executive and administrative staff, office expenses and professional fees, and includes the $10.6 million annual fee currently paid to APL Limited for information technology services under a long-term agreement (of which $3.4 million has been subject to a 3% compounded annual increase since May 2003).

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The logistics segment’s selling, general and administrative expenses relate to the costs of customer acquisition, billing, customer service and salaries and related expenses of marketing, as well as the executive and administrative staff’s compensation, office expenses and professional fees. The logistics segment anticipates that it will incur increased overall selling-related costs as it grows its operations, but that such costs will remain relatively consistent as a percentage of net revenues.

The absolute costs related to corporate functions, such as administration, finance, legal, human resources and facilities, will likely increase as the business grows, but will likely decrease over time as a percentage of net revenues.

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Results of Operations

Fiscal Year Ended December 28, 2007 Compared to Fiscal Year Ended December 29, 2006

The following table sets forth our historical financial data for the fiscal years ended December 28, 2007 and December 29, 2006.

Financial Data Comparison by Reportable Segment

Fiscal Years Ended December 28, 2007 and December 29, 2006

(in millions)

	2007			2006			Change			% Change
Revenues
Intermodal	$	1,567.9		$	1,491.7		$	76.2		5.1	%
Logistics		402.1			397.0			5.1		1.3
Inter-segment elimination		(0.6	)		(0.9	)		0.3		(33.3	)
Total		1,969.4			1,887.8			81.6		4.3
Cost of purchased transportation and services
Intermodal		1,207.9			1,121.7			86.2		7.7
Logistics		330.4			325.6			4.8		1.5
Inter-segment elimination		(0.6	)		(0.9	)		0.3		(33.3	)
Total		1,537.7			1,446.4			91.3		6.3
Direct operating expenses
Intermodal		130.5			123.1			7.4		6.0
Logistics		-			-			-		-
Total		130.5			123.1			7.4		6.0
Selling, general & administrative expenses
Intermodal		112.2			108.5			3.7		3.4
Logistics		66.8			68.7			(1.9	)	(2.8	)
Corporate		21.5			15.8			5.7		36.1
Total		200.5			193.0			7.5		3.9
Depreciation and amortization
Intermodal		5.3			5.8			(0.5	)	(8.6	)
Logistics		0.8			1.1			(0.3	)	(27.3	)
Corporate		0.1			0.1			-		-
Total		6.2			7.0			(0.8	)	(11.4	)
Income from operations
Intermodal		112.0			132.6			(20.6	)	(15.5	)
Logistics		4.1			1.6			2.5		156.3
Corporate		(21.6	)		(15.9	)		(5.7	)	35.8
Total		94.5			118.3			(23.8	)	(20.1	)
Interest expense/income		3.7			6.6			(2.9	)	(43.9	)
Loss on extinguishment of debt		1.8			-			1.8		n.m.
Income tax expense		34.7			43.4			(8.7	)	(20.0	)
Net income	$	54.3		$	68.3		$	(14.0	)	(20.5	)%

Revenues. Revenues increased $81.6 million, or 4.3%, for the fiscal year ended December 28, 2007 compared to the fiscal year ended December 29, 2006. Intermodal segment revenues increased $76.2 million for 2007, reflecting increases in our Stacktrain, rail brokerage and cartage operations. Stacktrain

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revenues increased $58.8 million in 2007 compared to 2006 and reflected increases in all three Stacktrain lines of business, partially offset by lower avoided repositioning cost “ARC” revenues (the incremental revenue to Pacer for moving international containers in domestic service) and lower container and chassis per diem revenues. The period-over-period increases in the three Stacktrain lines of business were as follows:

· The 7.1% increase in Stacktrain third-party domestic revenues was due to a 5.1% increase in domestic containers handled coupled with a 1.9% increase in the average freight revenue per container for 2007 compared to 2006. The average fuel surcharge in effect during 2007 was 21.0% compared to 19.2% during 2006. The increase in domestic containers handled was due to increases in Pacer container volumes partially offset by an 8.5% reduction in ARC international container volumes. One of our major suppliers of international boxes has had increased export loadings which reduced our supply of international containers available for repositioning.

· The 12.6% increase in automotive revenues reflected a volume increase of 6.0% over 2006 coupled with a 6.2% increase in the average freight revenue per container. The increase in the average freight revenue per container was due to a combination of business mix, rate increases and slightly higher fuel surcharges.

· The 14.9% increase in Stacktrain international revenues resulted from an 8.7% increase in containers handled primarily from additional customers which began shipping during the first quarter of 2006, coupled with a 5.7% increase in the average freight revenue per container. The increase in average freight revenue per container was due primarily to changes in business mix and slightly higher fuel surcharges.

The $3.2 million decline in container and chassis per diem revenues in 2007 compared to 2006 reflected recoveries of container and chassis misuse charges from several third parties (a result of improved billing and collection practices) which benefited 2006 combined with a reduction in the number of days equipment was controlled by the customer. While the reduction in customer controlled days reduces per diem revenue, it provides an operational benefit allowing faster equipment reloading. Container and chassis per diem revenues have declined over the past two years due primarily to the reduction in the number of customer controlled days, and we anticipate that this reduction may continue but at a slower rate. Westbound ARC revenues for 2007 were $0.7 million below 2006 because of rate competition and the use by international shipping companies of their own equipment for export loading. Rail brokerage revenues for 2007 were $15.3 million, or 3.6%, above 2006 primarily due to a 4.3% increase in volume partially offset by competitive rate pressures. The average revenue per load for our rail brokerage unit declined by 0.6% in 2007 compared to 2006. Cartage revenues increased $2.1 million due primarily to increased revenues in the Midwest and Pacific Northwest regions including two additional business locations which began operations in the latter part of 2006, partially offset by reduced Southern California business including reduced container repositioning revenue as well as reduced port to rail terminal drayage related to decreases from two international customers.

Revenues in our logistics segment increased $5.1 million, or 1.3%, in 2007 compared to 2006 reflecting increased revenues in all units except the truck services and truck brokerage units. The warehousing and distribution unit’s revenues increased 15.8% because of current customers requiring year-round storage and increased storage and warehouse handling revenues. In addition, this unit started a container transload facility in Southern California in June 2007, which, while not yet profitable, contributed to the revenue increase. Our supply chain services unit’s revenues increased 44.8% principally due to the addition of a new customer, and our international unit’s revenues increased 11.5% because of increased import/export business partially offset by reduced overseas aid cargo and agricultural shipments. Our truck services unit’s revenues decreased by 5.4% as a result of lower truck counts and soft demand and our truck brokerage unit’s revenues decreased by 30.3% in 2007 compared to 2006 due to fewer shipments and competitive rate pressures.

Cost of Purchased Transportation and Services. Cost of purchased transportation and services increased $91.3 million, or 6.3%, in 2007 compared to 2006. The intermodal segment’s cost of purchased transportation and services increased $86.2 million, or 7.7%, for 2007 compared to 2006 reflecting

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increases in Stacktrain and rail brokerage costs, partially offset by reduced cartage costs. The larger percentage increase in intermodal segment purchased transportation and services costs compared to intermodal segment revenue was due to arbitration and other settlements benefiting 2006, increases in underlying service provider costs in 2007, increases in local dray costs and equipment repositioning costs discussed below. The Stacktrain increase was related to the increased shipments noted above combined with a 5.9% increase in the cost per container because of increased fuel costs and rates from our underlying service providers, and changes in business mix. Reducing the Stacktrain 2006 costs was a gross benefit of $5.3 million, related to expenses accrued in prior years, from the settlement of a series of arbitration cases and other rate disputes during 2006 that resulted in the reversal of prior year expense accruals in 2006. In addition, in connection with our periodic reconciliation and settlement of amounts owed to our carriers based on actual usage, during the first quarter of 2006 we reached favorable settlements of several prior period rail payables that resulted in lower reported transportation costs in 2006 compared to 2007. Local dray costs from the ramp to the customer location increased $5.1 million in 2007 compared to 2006 due primarily to the increase in PacerDirect product volumes and Stacktrain international volumes. Equipment repositioning costs were up 1.7% in 2007 compared to 2006 due to increased chassis repositioning costs to support our trailer-on-flatcar product. The increased rail brokerage costs were related to the increased shipments noted above combined with increased fuel costs and rates from our underlying service providers, and changes in business mix. The cartage decrease in costs is related to less ocean port to rail terminal and back type of movements, also known as landbridge movements. Ocean shipping lines are loading containers onto rail cars at the port rather than moving them inland to the rail terminal for loading to a larger extent in 2007 compared to 2006.

The overall gross margin percentage, revenues less the cost of purchased transportation divided by revenues, for the intermodal segment decreased from 24.8% in 2006 to 23.0% in 2007 because of the arbitration and rail payable settlements in 2006 discussed above, competition and lower pricing to maintain equipment flow and minimize repositioning costs. Gross margins were also impacted by increases in underlying rail costs both in contract lanes pursuant to market rate adjustment provisions and in non-contract lanes.

Cost of purchased transportation and services in our logistics business increased $4.8 million in 2007 compared to 2006 reflecting the increased business in the majority of the logistics segment units. The overall gross margin percentage for our logistics segment decreased from 18.0% in 2006 to 17.8% in 2007 due primarily to business mix changes and competitive pressures primarily in our truck services unit due to the recent economic downturn. The gross margin percentage in each of our other logistics segment units was slightly higher in 2007 compared to 2006.

Direct Operating Expenses. Direct operating expenses, which are only incurred by our Stacktrain operations, increased $7.4 million, or 6.0%, in 2007 compared to 2006 because of higher container and chassis lease costs for newer 53 ft. equipment and higher maintenance costs associated with increased per unit material costs and increased equipment velocity. Our overall fleet size declined in 2007 compared to 2006 due to the retirement of more 48-ft. equipment than the additional 53-ft. equipment leased during the year. At December 28, 2007, we had 1.9% or 533 fewer containers and 3.6% or 1,142 fewer chassis than at December 29, 2006. Container and chassis lease costs have increased over the last two years due to year-over-year increases in newer, higher cost equipment. This trend should continue into the near future as we continue to replace older 48-ft. equipment with newer 53-ft. equipment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $7.5 million, or 3.9%, in 2007 compared to 2006. During 2007, $6.0 million was incurred for the severance of 134 personnel and for facility exit activities ($2.1 million in the logistics segment, $2.1 million in corporate and $1.8 million in the intermodal segment), $3.0 million was incurred for performance bonus and discretionary retention and incentive payments and stock compensation cost increased by $1.4 million in 2007 compared to 2006. The stock compensation cost increase was due to the initial year’s vesting and dividends related to the June 2006 and August 2007 restricted stock awards under the 2006 Long-Term Incentive Plan as approved by shareholders in May 2007. The timing of the shareholders’ approval resulted in a full year of vesting during 2007, with the initial dividends prior to shareholder approval treated as compensation expense. On an on-going basis, the compensation cost

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related to current awards will be approximately $2.0 million per year with dividends charged to retained earnings. There were neither severance or facility exit costs nor bonus accruals during 2006. Selling, general and administrative expenses in 2006 also benefited from the adjustment of previously accrued expenses for third party vendor services that were determined would not be payable under the contract with the provider. Our cartage and warehousing and distribution units also incurred increased damage claim costs in 2007 compared to 2006.

Partially offsetting the increase in 2007 was reduced employment in both of our operating segments and reduced legal fees during 2007 compared to 2006. Our overall average employment level decreased by 122, or 7.6%, in 2007 compared to 2006 due to our cost reduction efforts and normal attrition, with reductions across all business units. Average employment levels for 2007 were down 71 in our logistics segment and 53 in our intermodal segment. The average corporate employment level increased by two for 2007 compared to 2006. In addition, during the 2006 period, we settled a motor vehicle accident case adversely impacting our truck services unit’s and corporate results in that period.

Depreciation and Amortization. Depreciation and amortization expenses decreased $0.8 million for 2007 compared to 2006 as a result of normal property retirements.

Income From Operations. Income from operations decreased $23.8 million, or 20.1%, from $118.3 million in 2006 to $94.5 million in 2007. Corporate expenses were $5.7 million above 2006 of which $3.0 million represented the 2007 performance bonus and discretionary retention and incentive payments and $2.1 million was for severance costs. Corporate expenses were also affected in 2007 by increased stock compensation costs. Intermodal segment income from operations decreased $20.6 million reflecting a $12.0 million decrease in Stacktrain income from operations, an $8.8 million decrease in rail brokerage income from operations and a $0.2 million increase in cartage income from operations. The Stacktrain decrease was due, in part, to the 2006 transactions that benefited that year but did not recur in 2007, including the recoveries of chassis misuse charges from several third parties (a result of improved billing and collection efforts), various settlements of prior period rail payables, the adjustment of a previously accrued expense for third party vendor services and the 2006 arbitration and rate dispute settlements, combined with higher direct operating expenses, reduced ARC business and reduced margins in the 2007 period. The rail brokerage decrease was due to competitive rate pressures and increases in underlying service provider costs and an increase in lower average revenue westbound business to balance traffic flows. The increase in our cartage unit was because of additional business including two additional locations in 2007 and additional business from our Stacktrain and rail brokerage units compared to 2006, partially offset by increased personal injury/property damage costs during 2007. Income from operations in 2007 for the intermodal segment was reduced by severance costs of $1.8 million.

Logistics segment income from operations improved $2.5 million to $4.1 million in 2007 compared to $1.6 million in 2006 reflecting increases in all business units except the truck services and truck brokerage units. The $0.5 million increase in our warehousing and distribution unit was because of additional storage and handling business partially offset by start-up related costs from the new Southern California transload facility and higher cargo claims costs. Our supply chain services unit increase of $3.6 million was due primarily to the addition of a new customer, and included $0.6 million in severance and facility closure costs. Our international unit’s increase of $0.1 million reflected strong import/export business partially offset by reduced overseas aid and agricultural shipments and $0.4 million of severance and facility closure costs. The $0.3 million decrease for our truck services unit was due primarily to lower truck counts in 2007 and soft demand, and included $0.3 million of severance and facility closure costs. The $1.4 million decrease in our truck brokerage unit’s income from operations was due to decreased shipments and competitive rate pressure, and included $0.8 million of severance and facility closure costs. In total, the logistics segment’s income from operations in 2007 was reduced by severance and facility closure costs of $2.1 million.

Interest Expense/Income. Interest expense, net, decreased by $2.9 million, or 43.9%, for 2007 compared to 2006 reflecting the award of $1.6 million of interest as part of an arbitration settlement during 2007 coupled with a lower average debt balance outstanding during 2007 as compared to 2006 during which we repaid approximately $31.0 million of long-term debt, and lower interest rates. At December 28, 2007, total long-term debt was $64.0 million compared to $59.0 million at December 29, 2006. The average interest rate during 2007 was 5.7% compared to 6.9% during 2006.

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Loss on Extinguishment of Debt. On April 5, 2007, we completed the refinancing of our term loan and revolving credit facility with a new $250 million, five-year revolving credit facility. See the discussion under “Liquidity and Capital Resources” below. Charges totaling $1.8 million were incurred due to the write-off of existing deferred loan fees related to the prior credit facility.

Income Tax Expense. Income tax expense decreased $8.7 million in 2007 compared to 2006 because of lower pre-tax income in 2007. The effective tax rate was equivalent between years. In October 2007, Mexico enacted a new tax law which replaces the existing asset tax with a new flat tax to supplement the regular income tax in that country. The new tax was effective on January 1, 2008, and is not expected to have a material impact on our results of operations and financial condition.

Net Income. Net income decreased by $14.0 million, or 20.5%, from $68.3 million in 2006 to $54.3 million in 2007 reflecting the lower income from operations (down $23.8 million, of which $6.0 million related to severance and facility closure costs and $3.0 million to bonuses) as discussed above, and the write-off of loan fees associated with the refinancing of debt ($1.8 million), partially offset by reduced net interest costs (down $2.9 million) including interest income from the settlement of an arbitration case. Net income in 2007 also reflected lower income tax expense (down $8.7 million) related to a lower pre-tax income.

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Fiscal Year Ended December 29, 2006 Compared to Fiscal Year Ended December 30, 2005

The following table sets forth our historical financial data for the fiscal years ended December 29, 2006 and December 30, 2005.

Financial Data Comparison by Reportable Segment

Fiscal Years Ended December 29, 2006, and December 30, 2005

(in millions)

	2006			2005			Change			% Change
Revenues
Intermodal	$	1,491.7		$	1,402.6		$	89.1		6.4	%
Logistics		397.0			458.1			(61.1	)	(13.3	)
Inter-segment elimination		(0.9	)		(0.6	)		(0.3	)	50.0
Total		1,887.8			1,860.1			27.7		1.5
Cost of purchased transportation and services
Intermodal		1,121.7			1,049.7			72.0		6.9
Logistics		325.6			379.5			(53.9	)	(14.2	)
Inter-segment elimination		(0.9	)		(0.6	)		(0.3	)	50.0
Total		1,446.4			1,428.6			17.8		1.2
Direct operating expenses
Intermodal		123.1			115.4			7.7		6.7
Logistics		-			-			-		-
Total		123.1			115.4			7.7		6.7
Selling, general & administrative expenses
Intermodal		108.5			111.2			(2.7	)	(2.4	)
Logistics		68.7			71.9			(3.2	)	(4.5	)
Corporate		15.8			21.7			(5.9	)	(27.2	)
Total		193.0			204.8			(11.8	)	(5.8	)
Write-off of computer software
Intermodal		-			11.3			(11.3	)	(100.0	)
Logistics		-			-			-		-
Corporate		-			-			-		-
Total		-			11.3			(11.3	)	(100.0	)
Depreciation and amortization
Intermodal		5.8			5.5			0.3		5.5
Logistics		1.1			1.3			(0.2	)	(15.4	)
Corporate		0.1			0.1			-		-
Total		7.0			6.9			0.1		1.4
Income from operations
Intermodal		132.6			109.5			23.1		21.1
Logistics		1.6			5.4			(3.8	)	(70.4	)
Corporate		(15.9	)		(21.8	)		5.9		(27.1	)
Total		118.3			93.1			25.2		27.1
Interest expense/income		6.6			8.2			(1.6	)	(19.5	)
Income tax expense		43.4			34.0			9.4		27.6
Net income	$	68.3		$	50.9		$	17.4		34.2	%

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Revenues. Revenues increased $27.7 million, or 1.5%, for the fiscal year ended December 29, 2006 compared to the fiscal year ended December 30, 2005. Intermodal segment revenues increased $89.1 million, or 6.4%, reflecting increases in our cartage and Stacktrain operations, partially offset by a reduction in rail brokerage revenues. Stacktrain revenues increased $99.2 million in 2006 compared to 2005 and reflected increases in all three Stacktrain lines of business, partially offset by lower avoided repositioning cost ARC revenues and lower container and chassis per diem revenues. Stacktrain revenues for 2005 were slightly depressed as a result of the first quarter 2005 Union Pacific embargo of Southern California locations due to severe weather. The year-over-year increases in the three Stacktrain lines of business were as follows:

· The 0.1% increase in Stacktrain third-party domestic freight revenues was due primarily to a 19.2% average fuel surcharge in effect during 2006 compared to a 14.8% average surcharge during 2005. Domestic containers handled decreased 4.5% from 2005 due, in part, to reduced ARC volumes, the cancellation of the Northern California to Texas route by the Union Pacific and the less than anticipated peak season demand. While the eastbound container imbalance was corrected during the third quarter of 2006, it negatively impacted our domestic loadings eastbound during 2006. The average freight revenue per container increased 4.8% for Stacktrain third-party domestic business.

· The 24.2% increase in automotive freight revenues was due to a volume increase of 9.6% over 2005 coupled with a 13.3% increase in the average freight revenue per container. The increase in the average freight revenue per container was due to a combination of business mix, rate increases and fuel surcharges.

· The 61.3% increase in Stacktrain international revenues was due to a 44.6% increase in containers handled primarily from additional customers coupled with an 11.5% increase in the average freight revenue per container. The increase in average freight revenue per container was due primarily to increased fuel surcharges.

Westbound ARC revenues for 2006 were $4.2 million below 2005 due primarily to rate competition and the use of their own equipment by the international shipping companies for export loading. The $2.9 million decline in container and chassis per diem revenues in 2006 compared to 2005 was due primarily to customers returning containers in a shorter period of time. Cartage revenues increased $9.9 million due to increases in all of our cartage regions including increased intra-segment business with our Stacktrain unit and expansion of business in the South region. Our cartage unit experienced a large revenue increase in our West region due to increased volumes during 2006 in Southern California resulting in part from the first quarter 2005 Union Pacific embargo of Southern California locations due to severe weather that depressed revenues in that quarter. Our rail brokerage unit, which reported an operating income of $4.0 million in both years due to yield management and cost control efforts during 2006, reported a 4.5% decline in revenues compared to 2005 due to decreased intermodal volumes.

Revenues in our logistics segment decreased $61.1 million, or 13.3%, for 2006 compared to 2005 due primarily to a $56.0 million decline in revenues related to the transitioning of a truck brokerage customer to another service provider which began during the second quarter of 2005 and was completed during the latter part of 2005. Revenues for our truck brokerage unit decreased 40.9% compared to 2005 due primarily to the completion of this transitioning. Warehousing and distribution revenues were up 3.8% due to revenues from new customers and additional business from existing customers, partially offset by a customer moving from our warehousing operations to its own regional distribution center in late 2005. Our international unit revenues increased 1.4% compared to 2005 due to a strong import/export business partially offset by reduced overseas aid cargo and agricultural shipments. Revenues for our supply chain services unit decreased 13.0% due to decreases from existing customers as well as the loss of a customer in the second quarter of 2006. Our truck services revenues were up 2.4% due to additional agents in 2006 and an increase in the amount of freight brokered due to demand.

Cost of Purchased Transportation and Services. Cost of purchased transportation and services increased $17.8 million, or 1.2%, for the fiscal year ended December 29, 2006 compared to the fiscal year ended December 30, 2005. The intermodal segment’s cost of purchased transportation and services

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increased $72.0 million, or 6.9%, for 2006 compared to 2005 reflecting increases in Stacktrain and cartage costs, partially offset by reduced rail brokerage costs. The higher percentage increase in purchased transportation and services costs compared to intermodal segment revenues was due to increases in local dray costs and container repositioning costs discussed below. The Stacktrain increase was related to the increased shipments noted above combined with a 6.9% increase in the cost per container due primarily to increased fuel costs from our underlying service providers, rate increases from our underlying carriers and changes in business mix. In addition, local dray costs from the port to the rail terminal increased $3.0 million in 2006 compared to 2005 due to the large increase in Stacktrain international volumes. Container repositioning costs increased $4.7 million in 2006 due to the need to reposition containers from the Los Angeles basin to Eastern U.S. locations to support westbound volumes. The majority of these increased costs were incurred during the first quarter of 2006, after which the container imbalance situation had been corrected. These Stacktrain increases were partially offset by a favorable settlement of prior period rail payables to one of our rail service providers, as under our rail contract we periodically reconcile and settle amounts owed to the carrier based on actual usage. Also reducing the Stacktrain increase in cost was a gross benefit of $5.3 million from the settlement of a series of arbitration cases and other rate disputes during the third quarter of 2006 that resulted in the reversal of prior year expense accruals. The cartage increase was also due to the increased shipments noted above. The rail brokerage decrease was due to the decreased intermodal volumes noted above. The overall gross margin percentage, revenues less the cost of purchased transportation divided by revenues, for the intermodal segment decreased from 25.2% in 2005 to 24.8% in 2006 due primarily to changes in business mix.

Cost of purchased transportation and services in our logistics business decreased $53.9 million in 2006 compared to 2005 due primarily to the completion of transition of a truck brokerage customer to another service provider during the latter part of 2005. The overall gross margin percentage for our logistics business increased from 17.2% in 2005 to 18.0% in 2006 due primarily to changes in business mix and improved yield management. The reduction in business from the transitioning of a customer in our truck brokerage unit to another transportation provider contributed to the gross margin percentage increase as this customer was a low margin account. The margin percentage for our international unit also increased due to changes in business mix. The warehousing and distribution unit gross margin percentage declined due to the changed business mix that resulted after a customer, as mentioned above, moved from our warehousing operations to its own regional distribution center. New customers required additional warehouse handling at increased costs. Our truck services unit gross margin percentage also declined due to increases in fuel costs and the increase in the amount of brokerage business which is priced at a lower margin percentage than when using trucks of our independent owner-operators.

Direct Operating Expenses. Direct operating expenses, which are only incurred by our Stacktrain operations, increased $7.7 million, or 6.7%, in 2006 compared to 2005 due primarily to increased container and chassis lease and maintenance costs attributable to the larger fleet size during 2006. At December 29, 2006, we had 1.2% or 327 more containers and 10.0% or 2,868 more chassis than at December 30, 2005.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $11.8 million, or 5.8%, in 2006 compared to 2005. Our logistics segment average employment decreased by 84 persons in 2006 compared to 2005 due primarily to reductions related to the completion of the transition of a truck brokerage customer to another service provider and reductions in our supply chain services unit. Our intermodal segment average employment decreased by 9 persons in 2006 compared to 2005 due to reductions in our rail brokerage unit partially offset by increases in our Stacktrain unit related to the continued implementation of our PacerDirect product and by increases in our cartage unit due to two additional operating locations. 2006 also benefited from the reversal of previously accrued expenses for a service provided for our Stacktrain operations that we determined would not be payable under the contract with the provider, as well as reduced costs associated with complying with the Sarbanes-Oxley Act of 2002 and $7.9 million less accrued for employee bonuses. Our cartage operations experienced increased personal injury/property damage claim costs during 2006. There was also a 4% increase in compensation expense with staggered effective dates in May and August 2006. Overall legal expenses for 2006 were $2.1 million above 2005 due to on-going legal proceedings including the settlement of a litigation during 2006 that adversely impacted our truck services unit and corporate results. This increase was partially offset by the settled arbitrations noted above and a legal case settled in December 2006. During 2006, we expensed $1.5 million for stock based compensation costs resulting from our adoption of SFAS No. 123(R) on December 31, 2005.

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Write-off of Computer Software. During the second quarter of 2005, based on an internal analysis of the cost to continue a computer software development project started in 2001 and an assessment of a review by an independent third-party, we decided to abandon the conversion from APL Limited’s computer systems to a stand-alone capability for our Stacktrain operations. A total of $11.3 million, which had been capitalized in property and equipment for the development of the software, was written-off in the second quarter of 2005. We will continue to avail ourselves of the services and support for up to the next 12 years under the existing long-term agreement with APL Limited. See “Liquidity and Capital Resources.”

Depreciation and Amortization. Depreciation and amortization expenses increased $0.1 million for 2006 compared to 2005 due to property additions.

Income From Operations. Income from operations increased $25.2 million, or 27.1%, from $93.1 million in 2005 to $118.3 million in 2006. Intermodal segment income from operations increased $23.1 million reflecting a $22.6 million increase in Stacktrain income from operations, a $0.5 million increase in cartage income from operations and no change in rail brokerage income from operations. The Stacktrain increase was due, in part, to the write-off during 2005 of $11.3 million of software development costs, the settlement of a series of arbitration cases and other rate disputes during 2006 that resulted in the reversal of prior expense accruals of $4.2 million, net of related legal costs of $1.1 million, strength in all three lines of Stacktrain business and the 2006 general and administrative accrual adjustment. The cartage increase was due primarily to increased business during 2006 partially offset by higher compensation costs associated with increased employment and higher personal injury/property damage costs during 2006. Our rail brokerage income from operations was the same in both years and reflected yield management and cost control efforts which offset declining intermodal volumes in 2006.

Logistics segment income from operations decreased $3.8 million compared to 2005. The decrease for our truck services unit was due primarily to the increase in lower rated brokerage business coupled with higher fuel costs. Our warehousing and distribution unit reported lower income from operations due to the customer moving to their own regional distribution center, as mentioned above, coupled with increased handling and cargo claim costs. The decrease in income from operations for our supply chain services unit was due to the loss of a customer as well as decreases from existing customers and expenses related to a legal case. These decreases in income from operations were partially offset by increases in income from operations for our international unit where import/export business remains strong, our truck brokerage unit due to yield management and cost control efforts, and reduced corporate costs due primarily to legal settlements and reduced bonus accruals.

Interest Expense/Income. Interest expense, net, decreased by $1.6 million, or 19.5%, for 2006 compared to 2005 due primarily to a lower level of outstanding debt during 2006. At December 29, 2006, total long-term debt was $59.0 million, $31.0 million less than the $90.0 million at December 30, 2005. Interest rates increased from approximately 5.2% during 2005 to 6.9% during 2006.

Income Tax Expense. Income tax expense increased $9.4 million in 2006 compared to 2005 due to higher pre-tax income in 2006, partially offset by a slightly lower effective tax rate of 38.8% for 2006 compared to 40.0% for 2005. The decline in the effective tax rate was due to a revaluation of state tax rates.

Net Income. Net income increased by $17.4 million from $50.9 million in 2005 to $68.3 million in 2006 reflecting the higher income from operations (up $25.2 million) as discussed above, combined with reduced interest costs (down $1.6 million) associated with the lower level of outstanding debt during 2006. Net income in 2006 also reflected higher income tax expense (up $9.4 million) related to a higher pre-tax income, partially offset by a lower effective tax rate in 2006. The 2005 write-off of software development costs impacted net income by $6.8 million in that year.

Liquidity and Capital Resources

Cash provided by operating activities was $108.0 million, $66.7 million and $82.3 million for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005, respectively. The increase in cash provided by operating activities in 2007 was due primarily to the increase in accounts

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payable and other accrued liabilities compared to 2006. During 2006 there was a bonus payout (related to and accrued in the 2005 fiscal year) as well as increased payouts in 2006 compared to 2007 for taxes and litigation settlements. In addition, accounts payable is higher in 2007 due to the increase in business in 2007. The Del Monte arbitration settlement, which was received in the second quarter of 2007, reduced receivables between 2006 and 2007 and was partially offset by higher receivables associated with increased business in 2007. Also contributing to the increased cash flow from operating activities were $24.1 million of tax payments in 2007 compared to $37.4 million during 2006. The lower payment in the 2007 period was due to a lower federal extension payment which is based on the timing of earnings during the year. The decrease in cash provided by operating activities in 2006 as compared to 2005 was due primarily to higher tax and bonus payments in 2006 (accrued in 2005), partially offset by a higher income from operations and reduced interest charges in 2006. In addition, the completion of the transitioning of a highway brokerage customer to another service provider and the $11.3 million non-cash write-off of computer software in 2005 due to the developer’s bankruptcy also contributed to the 2005 amount. Income taxes paid were $24.1 million, $37.4 million and $24.6 million in 2007, 2006 and 2005, respectively. Interest paid was $4.7 million, $6.7 million and $7.7 million in 2007, 2006 and 2005, respectively. Interest expense, net for 2008 is expected to be in line with the 2007 amount.

We had working capital of $34.5 million and $64.3 million at December 28, 2007 and December 29, 2006, respectively. The decrease in 2007 was due primarily to the Del Monte settlement which decreased receivables combined with decreased accrued liabilities in 2006 due to litigation settlements.

Our operating cash flows are also the primary source for funding our contractual obligations. The table below summarizes as of December 28, 2007, our major commitments (in millions).

Contractual Obligations

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt	$	64.0	$	-	$	-	$	64.0	$	-
Interest on long-term debt		17.4		4.1		8.2		5.1		-
Operating leases		399.3		82.4		142.1		97.1		77.7
Equipment obligation		42.9		3.6		10.7		10.7		17.9
Dividends		5.2		5.2		-		-		-
Volume incentives		13.3		13.3		-		-		-
APL IT agreement		129.7		10.7		21.7		22.2		75.1
SAP IT agreement		11.5		2.9		4.3		4.3		-
Other IT agreements		16.4		5.4		6.2		4.0		0.8
HR agreements		0.5		0.2		0.2		0.1		-
Income tax contingencies		4.1		3.5		0.6		-		-
Severance liability		2.3		2.3		-		-		-
Purchased transportation		27.9		27.9		-		-		-
Total	$	734.5	$	161.5	$	194.0	$	207.5	$	171.5

Of our total long-term debt, as refinanced, $59.0 million was originally incurred to finance our recapitalization and acquisition of Pacer Logistics in 1999 and four acquisitions in our former retail segment in 2000, with the remaining $5.0 million, net incurred in second and third quarters of 2007 to finance the repurchase of common stock. Cash interest expense on long-term debt was estimated using current rates for all periods based upon the current outstanding balance. The majority of the operating lease obligations relate to our intermodal segment’s lease of railcars, containers and chassis. In addition, each year a portion of the operating leases must be renewed or can be terminated based upon equipment requirements. Partially offsetting these lease payment requirements are railcar and container per diem revenues (not reflected in the table above) which were $66.2 million in 2007, $69.5 million in 2006, $70.7 million in 2005 and $67.8 million in 2004. The equipment obligation is our estimate of operating lease

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payments on 3,000 53-foot containers and 1,400 53-foot chassis ordered, but yet to be financed. We anticipate financing the equipment through operating leases. The dividends reflected in the table were paid on January 10, 2008. Volume incentives (which are recorded as a reduction of revenues in our consolidated financial statements) relate to amounts payable to companies that ship on our Stacktrain unit that met certain volume shipping commitments for the year 2007. Our APL IT agreement is a long-term contract expiring in May 2019. The amounts in the table above are based on the contractual annual increases in costs of this agreement through expiration. The agreement, however, is cancelable by us on 120 days notice without penalty. Accordingly, upon any such termination, our obligation under the contract would be limited to only $3.6 million. The SAP IT agreement reflects commitments for on-going maintenance and support. The Other IT agreements reflect a telecommunications commitment for voice, data and frame relay services and the costs of outsourcing our computer help desk function and IT licensing, hosting and maintenance commitments. The human resources agreements reflect our human resources benefit system and payroll processing contract. Income tax contingencies relate to uncertain tax positions, including accrued interest, as of December 28, 2007 (see “Recently Issued Accounting Pronouncements” below). The severance liability relates to amounts to be paid related to our 2007 severance and facility exit activities. The purchased transportation amount reflects our estimate of the cost of transportation purchased by our segments that is in process at year-end but not yet completed and minimum container commitments to ocean carriers made by our non-vessel operating common carrier operation. A discussion of the SAP agreement is set forth below.

Based upon the current level of operations and the anticipated future growth in both operating segments, management believes that operating cash flow and availability under our revolving credit facility will be adequate to meet our working capital, capital expenditure, dividend and other cash needs for at least the next two years, although no assurance can be given in this regard. Our revolving credit facility matures in April 2012. Should the recent economic downturn continue or worsen, our operating cash flows may be adversely impacted.

Cash flows used in investing activities were $13.1 million, $3.5 million and $5.0 million for 2007, 2006 and 2005, respectively. The use of cash in 2007 included $10.6 million under the enterprise software agreement with SAP America, Inc. (“SAP”) as discussed below. The remaining capital expenditure of $3.4 million was primarily for normal computer replacement items, partially offset by net proceeds of $0.9 million from the sale of property. The use of cash in 2006 was primarily for normal computer replacement items, partially offset by net proceeds of $0.2 million from the sale of property. The use of cash in 2005 was primarily for normal computer replacement items. This was partially offset by net proceeds of $0.3 million from the sale of property.

On September 30, 2007, we entered into a software license agreement with SAP under which we licensed an enterprise suite of applications, including the latest release of SAP’s transportation management solution. Under the agreement, we were granted a perpetual license for the suite of SAP software, and agreed to a two-year maintenance and support commitment for an annual fee of $2 million. During 2007, total expenditures for the SAP project were $10.9 million, $10.6 million of which was capitalized (including the initial license fee of $9.3 million) and $0.3 million was included in the Selling, General and Administrative line item of the Consolidated Statement of Operations. Elements of the new system are expected to be implemented over the next 9 to 28 months and to require a total capital investment ranging from $30 million to $35 million (not reflected in the above table) over the course of the project. It is anticipated that these amounts will be financed from a combination of operating cash flows and borrowings under our revolving credit agreement. We will continue to avail ourselves of the services and support under our existing long-term technology services agreement with APL Limited until such time as the SAP implementation project is completed. Accordingly, the table above assumes payments in respect of both the SAP IT agreement over the 5-year period even though we currently expect that the new SAP system will be operational and replace the APL system prior to the end of the 5-year period.

Capital expenditures for 2008 are budgeted at $22.0 million including $18.9 million for the SAP implementation project and $3.1 million primarily for normal computer and equipment replacement items.

Cash flows used in financing activities were $87.9 million, $72.1 million and $67.9 million for 2007, 2006 and 2005, respectively. During 2007, we refinanced our prior bank revolving credit and term loan facility and the $59.0 million outstanding thereunder with a new $250 million revolving credit facility

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(see the discussion below). During 2007, we borrowed an additional net $5.0 million under the new facility to repurchase common stock and for general corporate purposes. During 2007, options to purchase 169,132 shares of our common stock were exercised for total proceeds of $1.8 million. The excess tax benefit associated with the exercise of the options and vesting of restricted stock pursuant to SFAS No. 123 (R) was $0.2 million. Also during the 2007 period, 2,938,635 shares of our common stock were repurchased and retired for $72.5 million and we paid $21.6 million in common stock cash dividends. During 2006, we repaid $31.0 million of long-term debt, paid $22.5 million in common stock cash dividends and repurchased and retired $26.8 million of our common stock under a stock repurchase program announced in June 2006. During 2006, options to purchase 647,117 shares of our common stock were exercised for total proceeds to the Company of $4.4 million. The excess tax benefit associated with the exercise of options was $3.8 million during 2006. During 2005, we repaid $64.1 million of long-term debt and paid our first common stock dividend to shareholders of $5.6 million. During 2005, options to purchase 177,110 shares of our common stock were exercised for total proceeds to the Company of $1.8 million. The proceeds were used for general corporate purposes.

On April 5, 2007, we entered into a new $250 million, five-year revolving credit agreement (the “2007 Credit Agreement”). We have utilized $59.0 million of the 2007 Credit Agreement to repay the principal balance due under the term loan portion of our prior bank credit facility, which was terminated. In connection with the refinancing, we paid $0.8 million of fees and expenses ($0.6 million to lenders and $0.2 million to other third parties) and $0.5 million of interest due under the prior credit facility at closing. We also charged to expense $1.8 million for the write-off of existing deferred loan fees related to the prior credit facility.

Borrowings under the 2007 Credit Agreement bear interest, at our option, at a base rate plus a margin between 0.0% and 0.5% per annum, or at a Eurodollar rate plus a margin between 0.625% and 1.75% per annum, in each case depending on our leverage ratio. The base rate is the higher of the prime lending rate of the administrative agent or the federal funds rate plus  ¹/2 of 1%. Our obligations under the 2007 Credit Agreement are guaranteed by all of our direct and indirect domestic subsidiaries and is secured by a pledge of all of the stock or other equity interests of our domestic subsidiaries and a portion of the stock or other equity interest of certain of our foreign subsidiaries.

The 2007 Credit Agreement also provides for letter of credit fees between 0.625% and 1.75%, and a commitment fee payable on the unused portion of the facility, which accrues at a rate per annum ranging from 0.125% to 0.350%, in each case depending on our leverage ratio.

The 2007 Credit Agreement contains affirmative, negative and financial covenants customary for such financings, including, among other things, limits on the incurrence of debt, the incurrence of liens, and mergers and consolidations and leverage and interest coverage ratios. We were in compliance with these covenants at December 28, 2007. It also contains customary representations and warranties. Breaches of the covenants, representations or warranties may give rise to an event of default. Other events of default include our failure to pay certain debt, the acceleration of certain debt, certain insolvency and bankruptcy proceedings, certain ERISA events or unpaid judgments over a specified amount, or a change in control of the Company as defined in the 2007 Credit Agreement.

At December 28, 2007, we had $168.0 million available under the 2007 Credit Agreement, net of $64.0 million outstanding and $18.0 million of outstanding letters of credit. At December 28, 2007, borrowings under the 2007 Credit Agreement bore a weighted average interest rate of 5.7% per annum.

During 2007, we received 1,658 primarily 53-ft. leased containers and 1,072 53-ft., 48-ft. and 40-ft. leased chassis, and we returned 2,191 primarily 48-ft. leased containers, 1,596 primarily 48-ft. and 40-ft. leased chassis, and sold 618 48-ft. owned chassis in an effort to more closely align our container and chassis fleets. During 2007, four railcars were destroyed. On order at the end of 2007 were 3,000 53-ft. containers and 1,400 53-ft chassis to be delivered by September 2008.

During 2006, we received 2,360 53-ft. leased containers and 4,552 53-ft. and 40-ft. leased chassis, and we returned 2,033 primarily 48-ft. leased containers and 1,684 primarily 48-ft. and 40-ft. leased chassis. During 2006, four railcars were destroyed.

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During 2005, we received 4,422 primarily 53-ft. leased containers and 3,926 primarily 53-ft. leased chassis, and we returned 2,106 primarily 48-ft. leased containers and 1,106 primarily 48-ft. leased chassis. During 2005, four railcars were destroyed.

Common Stock Repurchase Program

On June 12, 2006, we announced that our Board of Directors had authorized the purchase of up to $60 million of our common stock, and, on April 3, 2007, the Company announced that our Board of Directors had authorized the purchase of an additional $100 million of our common stock. Both authorizations expire on June 15, 2008. We repurchased a total of 965,818 shares at an average price of $27.72 per share through December 29, 2006, and 2,938,635 shares at an average price of $24.64 per share during 2007. At December 28, 2007, $60.7 million remains available for the purchase of common stock under the current Board authorizations. We intend to make further share repurchases from time to time as market conditions warrant.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us.

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business Combinations,” which establishes principles and requirements for how an acquirer recognizes and measures assets acquired, liabilities assumed including any noncontrolling interest, and goodwill or gain from a bargain purchase. It also establishes the information to disclose regarding the nature and financial effects of a business combination. SFAS No. 141 (revised 2007) will be effective for us on December 26, 2008 (the first day of our 2009 fiscal year). Based on acquisitions to date, we do not expect that the implementation of SFAS No. 141 (revised 2007) will have a material impact on our results of operations or financial condition.

In December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51,” which establishes accounting and reporting standards that require: ownership interests held by parties other than the parent be clearly identified and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; consolidated net income attributable to the parent and to the noncontrolling interest be identified and presented on the face of the consolidated statement of income; and that changes in ownership interest while the parent retains its controlling interest be accounted for consistently and disclosed. SFAS No. 160 will be effective for us on December 26, 2008 (the first day of our 2009 fiscal year). We do not expect that the implementation of SFAS No. 160 will have a material impact on our results of operations or financial condition.

In June 2007, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 requires that tax benefits generated by dividends paid during the vesting period on certain equity-classified share-based compensation awards be classified as additional paid-in capital and included in a pool of excess tax benefits available to absorb tax deficiencies from share-based payment awards. EITF 06-11 is effective as of January 1, 2008. We do not expect the adoption of EITF 06-11 to have a material impact on our results of operations or financial condition.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.” This Statement permits the Company to choose to measure many financial instruments and certain other items at fair value. It also establishes presentation and disclosure requirements. SFAS No. 159 was effective for us on December 29, 2007 (the first day of our 2008 fiscal year). We are currently assessing the impact that the implementation of SFAS No. 159 will have on our results of operations and financial condition.

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In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States of America and expands disclosures about fair value measurements. SFAS No. 157 was effective for us on December 29, 2007 (the first day of our 2008 fiscal year) with the exception of application to nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis for which the standard will be applicable on December 27, 2008 (the first day of our 2009 fiscal year). We are currently assessing the impact that the implementation of SFAS No. 157 will have on our results of operations and financial condition.

In September 2006, the FASB issued Staff Position (“FSP”) No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities,” which prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods. This FSP should be applied retrospectively for all financial statements presented, unless it is impracticable to do so. We adopted this FSP on December 30, 2006 (the first day of our 2007 fiscal year) and determined that the effect on prior year balances was immaterial and therefore did not apply retroactively. We will account for our maintenance activities going forward using the deferral method.

In June 2006, FASB issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that we recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 was effective for us as of December 30, 2006. As a result of this implementation, we recognized a $0.4 million tax reserve increase for uncertain tax positions. The increase was accounted for as an adjustment to the beginning balance of retained earnings. Including the cumulative effect increase, at the beginning of 2007, we had a liability of approximately $3.9 million of total reserves relating to uncertain tax positions and a total of $4.1 million at December 28, 2007, including accrued interest.

Inflation

We contract with railroads and independent truck operators for our transportation requirements. These third parties are responsible for providing their own diesel fuel. To the extent that changes in fuel prices are passed along to us, we have historically passed these changes along to our customers. There is no guarantee, however, that this will be possible in the future.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk is affected primarily by changes in interest rates. Under our policies, we may use hedging techniques and derivative financial instruments to reduce the impact of adverse changes in market prices. The quantitative information presented below and the additional qualitative information presented above in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 and 2 to the notes to our consolidated financial statements included in this Annual Report on Form 10-K describe significant aspects of our financial instrument programs which have market risk.

We have market risk in interest rate exposure, primarily in the United States. We manage interest exposure through floating rate debt. Interest rate swaps may be used to adjust interest rate exposure when appropriate based on market conditions. No interest rate swaps were outstanding at December 28, 2007 or December 29, 2006.

Based upon the average variable interest rate debt outstanding during 2007, a 100 basis point change in our variable interest rates would have affected our 2007 pre-tax earnings by approximately $0.6 million. For 2006, a 100 basis point change in our variable interest rates would have affected our 2006 pre-tax earnings by approximately $0.8 million. For 2005, a 100 basis point change in our variable interest rates would have affected our 2005 pre-tax earnings by approximately $1.2 million.

As our foreign business expands, we will be subjected to greater foreign currency risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements, including supplementary data and the accompanying report of independent registered public accounting firm, are listed in the Index to Consolidated Financial Statements and Financial Statement Schedules on page F-1 filed as part of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of Disclosure Controls. We evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 28, 2007. This evaluation (the “disclosure controls evaluation”) was done under the supervision and with the participation of management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”). Rules adopted by the SEC require that in this section of our Annual Report on Form 10-K we present the conclusions of the CEO and the CFO about the effectiveness of our disclosure controls and procedures as of December 28, 2007 based on the disclosure controls evaluation.

Objective of Controls. Our disclosure controls and procedures are designed so that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Conclusion. Based upon the disclosure controls evaluation, our CEO and CFO have concluded that as of December 28, 2007, our disclosure controls and procedures were effective to provide reasonable assurance that the foregoing objectives are achieved.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended December 28, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

The management of Pacer is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Management, under the supervision and with participation of the CEO and CFO, has assessed the effectiveness of the company’s internal control over financial reporting as of December 28, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on management’s assessment and that criteria, management concludes that, as of December 28, 2007, the company’s internal control over financial reporting is effective.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 28, 2007 as stated in their report beginning on page F-2.

ITEM 9B. OTHER INFORMATION

On February 14, 2008, the Compensation Committee of the Company’s Board of Directors approved the 2008 Bonus Plan, which is filed as Exhibit 10.28 hereto. The 2008 Bonus Plan, under which the named executive officers participate (including the Chief Executive Officer and Chief Financial Officer but excluding the Interim President, Intermodal Segment) provides for payment of cash bonuses subject to achievement of specified financial objectives. The bonuses payable to the named executive officers, all of whom are currently employees of the corporate unit, are contingent on the Company’s actual fiscal year 2008 consolidated earnings per share (calculated before any accrual for bonuses) falling within the specified minimum and maximum consolidated earnings per share targets established by the Committee and the Board, and are capped at 100% of a participant’s bonus opportunity (stated as a percentage of base salary). For the Chief Executive Officer, the target bonus opportunity is set at 100% of annual base salary. For the Chief Financial Officer, the General Counsel, and the Chief Operating Officer – Logistics Segment, who are other named executive officers participating in the 2008 Bonus Plan, the target bonus opportunity is set at 50% of annual base salary.

Executives and other employees employed by a particular business unit (rather than the corporate unit) have 50% of their bonus opportunity subject to the corporate earnings per share bonus described above and the other 50% subject to that unit’s achievement of an operating income or gross margin target applicable to that unit. The corporate earnings per share bonus component and the business unit bonus component are independent of each other, such that the business unit bonus may be payable even if the corporate earnings per share target for payment of the corporate earnings per share bonus is not achieved, and vice versa.

Also on February 14, 2008, the Compensation Committee approved in respect of 2007 a special discretionary incentive payment to the Company’s current employees, including the named executive officers currently employed by the Company (other than the Interim President, Intermodal Segment), of 20% of the employee’s applicable 2007 target bonus or $750, whichever is greater. The Compensation Committee determined to pay the special discretionary incentive awards in recognition of employees’ achievements in a challenging year and to motivate the employees’ continuing efforts to improve the Company’s performance in the current year. Amounts payable to the named executive officers are as follows: the Chief Executive Officer, Mr. Uremovich – $90,000; the Chief Financial Officer, Mr. Yarberry – $32,051; the General Counsel, Mr. Killea – $30,934; and the Chief Operating Officer – Logistics Segment, Mr. Brashares – $31,500.

On February 14, 2008, the Compensation Committee also approved a supplemental severance retention program in which all of the current named executive officers, other than the Interim President, Intermodal Segment, are participants. Under the program, if within 18 months following a change in control of the Company a participant’s employment is terminated by the Company without cause or by the participant with “good reason” (as defined in the supplemental program), the period during which the participant is entitled to severance pay will double, up to a maximum of 24 months. Each of Messrs. Brashares’ and Yarberry’s employment agreements currently provides for severance pay equivalent to his base salary (currently $315,000 and $320,154 per year, respectively) over a period of 12 months after termination; under the supplemental program, each of these officers would be entitled to severance pay equivalent to his base salary over a period of 24 months after a termination without cause or for good reason following a change of control (thus totaling $630,000 and $640,308, respectively, under the

58

supplemental program). Each of Messrs. Uremovich’s and Killea’s employment agreements currently provides for severance pay equivalent to his base salary (currently $450,000 and $309,338 per year, respectively) over a period of 24 months after termination (thus totaling $900,000 and $618,674, respectively); due to the 24-month cap under the supplemental program, these officers would be entitled to the same severance pay equivalent to his base salary over a period of 24 months after a termination without cause or for good reason following a change of control (thus totaling the same $900,000 and $618,674, respectively, under the supplemental program). Prior to adoption of the supplemental program, the employment agreements of Messrs. Uremovich, Yarberry, Brashares and Killea provided for severance payment if the employee was terminated without cause following a change of control but did not permit them to terminate their employment with “good reason” as defined in the supplemental program and still be entitled to severance pay. Under the supplemental program, these executives and other participants will have the right to terminate their employment within 18 months after a change in control and to receive the severance benefit under the program if they have “good reason” to do so. A participant will have “good reason” to terminate his or her employment with the Company if, within 18 months after a change in control, his or her base salary, target bonus percentage, contractual employee benefits, or title, responsibilities or authorities are reduced, or if the Company materially breaches the participant’s employment agreement, or if the participant is required to relocate more than 50 miles from his or her current business office location and such event is not cured within any applicable cure period. The definition of a “change in control” under the supplemental program is the same as the definition used in the Company’s equity incentive plans, including the 2006 Long-Term Incentive Plan included as Appendix A to the proxy statement for the 2007 annual meeting of shareholders.

Pacer will provide additional information regarding the compensation of our executive officers in our proxy statement for our 2008 annual meeting of shareholders.

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Part III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

(a) Identification of Directors.

The information required by this Item, with respect to our directors, is incorporated herein by reference to the discussion under the heading “Proposal 1: Election of Directors” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

(b) Identification of Executive Officers.

Certain information concerning our executive officers is presented in Part I of this Annual Report on Form 10-K under the heading “Executive Officers of the Registrant” in accordance with General Instruction G(3) of Form 10-K.

(c) Audit Committee Information; Financial Expert.

The information required by this Item with respect to the Audit Committee of our Board of Directors and the Audit Committee financial expert is incorporated herein by reference to the discussion under the heading “Audit Committee” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

(d) Section 16(a) Compliance.

The information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, is incorporated herein by reference to the discussion under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

(e) Code of Ethics.

Our code of ethics applicable to all directors and employees, including our CEO, CFO, principal accounting officer or controller, or persons performing similar functions, was adopted by our Board of Directors on January 27, 2004. Our code of ethics is posted on our website at www.pacer-international.com in the “Investor Relations” sub-pages and is also available free of charge by written request to our CFO at Pacer International, Inc., 2300 Clayton Road, Suite 1200, Concord, California 94520. Any amendment to, or waiver from, our code of ethics will be posted on our website within four business days following such amendment or waiver.

(f) Policy for Nominees.

The information required under Item 407(c)(3) of Regulation S-K is incorporated herein by reference to the discussion concerning procedures by which shareholders may recommend nominees contained under the heading “Nominating and Corporate Governance Committee” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year. No material changes to the nominating process have occurred.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item, with respect to compensation of our directors and executive officers, is incorporated herein by reference to the discussions under the headings “2007 Director Compensation,” “Executive Compensation” and “Compensation Committee Interlocks and Insider

60

Participation” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year. The information required under Item 407(e)(5) of Regulation S-K is set forth under the heading “Compensation Committee Report” in our Proxy Statement for our 2008 annual meeting of shareholders, and is being furnished in this Annual Report on Form 10-K and is not incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	879,615	(1)	$	15.28	2,236,750	(1)
Equity compensation plans not approved by security holders	-			-	-
Total	879,615	(1)	$	15.28	2,236,750	(1)

(1) Under our 1999 Plan, options to purchase 492,215 shares of our common stock were outstanding as of December 28, 2007, our fiscal year end, and no further option grants can be made under that plan. Under our 2002 Plan, options to purchase 373,400 shares of our common stock were outstanding as of December 28, 2007, and no further option grants can be made under that plan. As of December 28, 2007, options to purchase 12,000 shares of our common stock were outstanding under the 2006 Plan. In addition, at December 28, 2007, 251,250 restricted shares of common stock had been issued and were outstanding under the 2006 Plan. As of December 28, 2007, we have available 2,236,750 shares of our common stock for future issuance under the 2006 Plan.

The Board has reserved a total of 2.5 million shares of common stock for issuance under the 2006 Plan. The 2.5 million shares authorization is subject to adjustment for a stock split, reverse stock split, stock dividend, combination or reclassification of the shares, or any other similar transaction (but not the issuance or conversion of convertible securities). If an award, other than a Substitute Award (defined below), is forfeited or otherwise terminates without the issuance or delivery of some or all of the shares underlying the award to the grantee, or becomes unexercisable without having been exercised in full, the remaining shares that were subject to the award will become available for future awards under the 2006 Plan (unless the 2006 Plan has terminated). The grant of a stock appreciation right will not reduce the number of shares that may be subject to awards, but the number of shares issued upon the exercise of a stock appreciation right will so reduce the available number of shares.

Substitute Awards will not reduce the number of shares available for issuance under the 2006 Plan. “Substitute Awards” are awards granted in assumption of or in substitution for outstanding awards previously granted by a company acquired by or merged into the Company or any of its subsidiaries or with which the Company or any of its subsidiaries.

The other information required by this Item, with respect to security ownership of certain of our beneficial owners and management, is incorporated herein by reference to the discussion under the heading “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to the discussion under the headings “Certain Relationships and Related Transactions,” “Review, Approval or Ratification of Transactions with Related Persons” and “Director Independence” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference to the discussion under the headings “Fees Billed by Independent Registered Public Accounting Firm” and “Pre-Approval of Audit and Non-Audit Services” in our Proxy Statement for our 2008 annual meeting of shareholders which is expected to be filed with the SEC no later than 120 days after the end of our 2007 fiscal year.

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Part IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as a part of this annual report on Form 10-K:

(1) List of Financial Statements Filed as Part of this Annual Report on Form 10-K:

A list of our consolidated financial statements, notes to consolidated financial statements, and accompanying report of independent registered public accounting firm appears in the Index to Consolidated Financial Statements and Financial Statement Schedules on page F-1, which is filed as part of this Annual Report on Form 10-K.

(2) Financial Statement Schedules:

Schedule II – Valuation and Qualifying Accounts, for each of the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005, which appears on page S-1, is filed as part of this Annual Report on Form 10-K.

All other schedules are omitted because they are not applicable, the amounts are not significant, or the required information is shown in our consolidated financial statements or the notes thereto.

(3) Exhibits:

The following exhibits are filed herewith or are incorporated herein by reference to exhibits previously filed with the SEC:

Exhibit Number	Exhibit Description
3.1	Second Amended and Restated Charter of Pacer International, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended June 28, 2002). (Commission File No. 0-49828).
3.2	Second Amended and Restated Bylaws of Pacer International, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 28, 2002). (Commission File No. 0-49828).
4.1	Credit Agreement, dated April 5, 2007, among Pacer International, Inc., the lenders from time to time party thereto, the issuers of letters of credit from time to time party thereto, Bank of Montreal, as Syndication Agent, BMO Capital Markets Corp., as Joint Lead Arranger, Union Bank of California, N.A., LaSalle Bank National Association and Deutsche Bank Trust Company Americas, as Co-Documentation Agents, Banc of America Securities LLC, as Joint Lead Arranger and Sole Book Manager, and Bank of America, N.A., as Swing Line Lender and Administrative Agent. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 9, 2007). (Commission File No. 0-49828).
4.2	Guaranty dated April 5, 2007 of the Guarantors named on the signature pages thereof in favor of the Administrative Agent, the lenders from time to time party thereto, the issuers of letters of credit from time to time party thereto and certain other persons. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 9, 2007). (Commission File No. 0-49828).
4.3	Pledge Agreement, dated as of April 5, 2007, between each Pledgor named on the signature pages thereof and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 9, 2007). (Commission File No. 0-49828).

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Exhibit Number	Exhibit Description
10.1	Non-Competition Agreement, dated as of May 28, 1999, among Neptune Orient Lines Limited, APL Limited, Pacer International, Inc. and Coyote Acquisition LLC. (Incorporated by reference to Exhibit No. 4.5 to the Company’s Registration Statement on Form S-4 dated August 12, 1999). (Registration File No. 333-85041).
10.2	Administrative Services Agreement, dated as of May 29, 2000, between APL Limited and Pacer International, Inc. (Incorporated by reference to Exhibit No. 10.12 to the Company’s Registration Statement on Form S-1 dated January 12, 2001). (Registration File No. 333-53700).
10.3	IT Supplemental Agreement, dated as of May 11, 1999, between APL Limited, APL Land Transport Services, Inc. and Coyote Acquisition LLC. (Incorporated by reference to Exhibit No. 10.10 to the Company’s Registration Statement on Form S-4 dated November 5, 1999). (Registration File No. 333-85041).
10.4	Stacktrain Services Agreement, dated as of May 28, 1999, among American President Lines, Ltd., APL Co. Pte Ltd., APL Limited and Pacer International, Inc. (Incorporated by reference to Exhibit No. 4.8 to the Company’s Registration Statement on Form S-4 dated August 12, 1999). (Registration File No. 333-85041).
10.5	Equipment Supply Agreement, dated as of May 28, 1999, among American President Lines, Ltd., APL Co. Pte Ltd., APL Limited and Pacer International, Inc. (Incorporated by reference to Exhibit No. 4.10 to the Company’s Registration Statement on Form S-4 dated August 12, 1999). (Registration File No. 333-85041).
10.6	Primary Obligation and Guaranty Agreement, dated as of March 15, 1999, by Neptune Orient Lines Limited in favor of Coyote Acquisition LLC and APL Land Transport Services, Inc. (Incorporated by reference to Exhibit No. 4.11 to the Company’s Registration Statement on Form S-4 dated August 12, 1999). (Registration File No. 333-85041).
10.7	Amended and Restated Intermodal Transportation Agreement No. 11111, dated as of May 13, 2002, between CSX Intermodal, Inc., Pacer International, Inc. d/b/a Pacer Stacktrain, APL Limited and APL Co. Pte Ltd. (Incorporated by reference to Exhibit No. 10.22 to the Company’s Registration Statement on Form S-1 dated June 11, 2002). (Registration File No. 333-53700).
10.8	Domestic Incentive Agreement, dated as of May 4, 1999, between CSX Intermodal, Inc. and Pacer International, Inc. (Incorporated by reference to Exhibit No. 10.20 to the Company’s Registration Statement on Form S-4 dated October 7, 1999). (Registration File No. 333-85041).
10.9	Amended and Restated Rail Transportation Agreement, dated as of May 15, 2002, between Union Pacific Railroad Company, Pacer International, Inc. d/b/a Pacer Stacktrain, Inc., American President Lines, Ltd., and APL Co. Pte Ltd. (Incorporated by reference to Exhibit No. 10.22 to the Company’s Registration Statement on Form S-1 dated June 11, 2002). (Registration File No. 333-53700).
10.10	Rail Car Lease Agreement, dated September 1, 2000, among GATX Third Aircraft Corporation and the Company. (Incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 22, 2000). (Commission File No. 333-85041).

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Exhibit Number	Exhibit Description
10.11	Pacer International, Inc. 1999 Stock Option Plan, including forms of stock option agreements (Incorporated by reference to Exhibit 10.29 to the Company’s Registration Statement on Form S-1 dated January 12, 2001). Registration File No. 333-53700).+
10.12	Amendment No. 1 to the Pacer International, Inc. 1999 Stock Option Plan (Incorporated by reference to Exhibit 10.38 to the Company’s Registration Statement on Form S-1 dated May 15, 2002). (Registration File No. 333-53700).+
10.13	Amendment No. 2 to the Pacer International, Inc. 1999 Stock Option Plan (Incorporated by reference to Exhibit 10.50 to the Company’s Registration Statement on Form S-1 dated May 15, 2002).(Registration File No. 333-53700).+
10.14	Amendment to the Pacer International, Inc. 1999 Stock Option Plan and the Stock Option Agreements Evidencing Outstanding Options Granted Thereunder (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 8, 2006). (Commission File No. 0-49828).+
10.15	Pacer International, Inc. 2002 Stock Option Plan (Incorporated by reference to Exhibit 10.51 to the Company’s Registration Statement on Form S-1 dated May 15, 2002).(Registration File No. 333-53700).+
10.16	Amendment to the Stock Option Agreements Evidencing Outstanding Options Granted Under the Pacer International, Inc. 2002 Stock Option Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 8, 2006). (Commission File No. 0-49828).+
10.17	Pacer International, Inc. 2002 Stock Option Plan Form of Stock Option Agreement – Employee (Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006). (Commission File No. 0-49828).+
10.18	Pacer International, Inc. 2002 Stock Option Plan Form of Stock Option Agreement – Non-Employee Director (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006). (Commission File No. 0-49828).+
10.19	Equipment Use Agreement, dated May 28, 1999, between PAMC LLC and Pacer International, Inc. (Incorporated by reference to Exhibit No. 10.35 to the Company’s Registration Statement on Form S-1 dated January 12, 2001). (Registration File No. 333-53700).
10.20	Amendment No. 1 to Domestic Incentive Agreement, dated January 1, 2001, between CSX Intermodal, Inc. and Pacer International, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended April 6, 2001). (Registration File No. 333-53700).
10.21	Rail Car Lease Agreement, dated September 25, 2001 by and between General Electric Railcar Services Corporation and the Company. (Incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2001). (Commission File No. 333-85041).
10.22	Rail Car Lease Agreement, dated January 2001, between LaSalle National Leasing Corporation and the Company. (Incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2001). (Commission File No. 333-85041).

65

Exhibit Number	Exhibit Description
10.23	Rail Car Lease Agreement, dated February 14, 2001, between Greenbrier Leasing Corporation and the Company. (Incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2001). (Commission File No. 333-85041).
10.24#	License Agreement, dated as of September 30, 2007, by and between SAP America, Inc. and Pacer International, as amended by Amendment No. 1 thereto effective as of October 1, 2007.
10.25	Amended and Restated Employment Agreement, dated March 1, 2003, between Pacer Global Logistics, Inc. and Jeffrey R. Brashares. (Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2002). (Commission File No. 333-85041).+
10.26	Pacer International, Inc. 2006 Long-Term Incentive Plan (Incorporated by reference to Appendix A of the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on March 9, 2007). (Commission File No. 0-49828).+
10.27	Form of Restricted Stock Award Agreement pursuant to the Pacer International, Inc. 2006 Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 6, 2007). (Commission File No. 0-49828).+
10.28	Pacer International, Inc. 2008 Performance Bonus Plan.+
10.29	Employment Agreement, dated December 1, 1998, between Pacer International, Inc. and Lawrence C. Yarberry, (Incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2000). (Commission File No. 333-85041).+
10.30	Employment Agreement, dated August 22, 2001, between Pacer International, Inc. and Michael Killea. (Incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the year ended December 28, 2001). (Commission File No. 333-85041).+
10.31	Master Lease Agreement, dated April 16, 2003, between LaSalle National Leasing Corporation and Pacer International, Inc. for 53 foot steel containers. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2003). (Commission File No. 0-49828).
10.32	Master Equipment Lease Agreement, dated December 1, 2003, between Fleet Capital Corporation and Pacer International, Inc. for 53 foot steel containers. (Incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K/A for the year ended December 26, 2003). (Commission File No. 0-49828).
10.33	Employment Agreement, dated October 1, 2003, between Pacer International, Inc. and Michael Uremovich. (Incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K/A for the year ended December 26, 2003). (Commission File No. 0-49828).+
#	Application has been made to the Securities and Exchange Commission to seek confidential treatment of certain provisions. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

66

Exhibit Number	Exhibit Description
10.34	Amendment dated June 30, 2004 to Master Lease Agreement, dated April 16, 2003, between LaSalle National Leasing Corporation and Pacer International, Inc. for 53 foot steel containers. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 17, 2004). (Commission File No. 0-49828).
10.35	Amended and Restated Employment Agreement, dated October 26, 2004, between Pacer International, Inc. and Brian C. Kane (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 17, 2004). (Commission File No. 0-49828).+
10.36	Employment Agreement, dated May 1, 2007, between Pacer International, Inc. and James Ward (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q dated April 6, 2007). (Commission File No. 0-49828).+
10.37	Amendment dated February 19, 2007 to Employment Agreement, dated August 22, 2001 between Pacer International, Inc. and Michael F. Killea (Incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006). (Commission File No. 0-49828).+
10.38	Separation and Release Agreement, dated June 18, 2007, between Pacer International, Inc. and Alex Munn.+
10.39	Form of Stock Option Award Agreement pursuant to the Pacer International, Inc. 2006 Long-Term Incentive Plan.+
10.40	Separation Agreement, dated November 7, 2007, between Pacer International, Inc. and C. Thomas Shurstad.+
10.41	Form of Supplemental Severance Benefit Letter dated February 14, 2008 from the Company to Michael E. Uremovich, Lawrence E. Yarberry, Michael F. Killea and Jeffrey R. Brashares.+
10.42	Employment Agreement, dated December 14, 2007, between Pacer International, Inc. and Dan M. Beers.+
14	Code of Ethics (Incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K/A for the year ended December 26, 2003). (Commission File No. 0-49828).
21	Subsidiaries of the Pacer International, Inc.
23	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Michael E. Uremovich pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Lawrence C. Yarberry pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Michael E. Uremovich and Lawrence C. Yarberry pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.

+ Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PACER INTERNATIONAL, INC.
Date: February 19, 2008	By:	/s/    Lawrence C. Yarberry
		Lawrence C. Yarberry Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Date: February 19, 2008	By:	/s/    Michael E. Uremovich
		Michael E. Uremovich Chairman, Chief Executive Officer and Director (Principal Executive Officer)
Date: February 19, 2008	By:	/s/    Marc L. Jensen
		Marc L. Jensen Vice President and Controller (Principal Accounting Officer)
Date: February 19, 2008	By:	/s/    Donald C. Orris
		Donald C. Orris Director
Date: February 19, 2008	By:	/s/    Robert F. Starzel
		Robert F. Starzel Director
Date: February 19, 2008	By:	/s/    Andrew C. Clarke
		Andrew C. Clarke Director
Date: February 19, 2008	By:	/s/    Robert S. Rennard
		Robert S. Rennard Director
Date: February 19, 2008	By:	/s/    P. Michael Giftos
		P. Michael Giftos Director
Date: February 19, 2008	By:	/s/    J. Douglass Coates
		J. Douglass Coates Director

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PACER INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULES

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 28, 2007 and December 29, 2006	F-3
Consolidated Statements of Operations for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005	F-4
Consolidated Statements of Stockholders’ Equity for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005	F-5
Consolidated Statements of Cash Flows for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005	F-6
Notes to Consolidated Financial Statements	F-7
Schedule II – Valuation and Qualifying Accounts	S-1

All other schedules are omitted because they are not applicable or because the required information is shown in the consolidated financial statements or the notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable.

F-1

Report of Independent Registered Public Accounting Firm

To Board of Directors and Stockholders of Pacer International, Inc.:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15 present fairly, in all material respects, the financial position of Pacer International, Inc. and its subsidiaries at December 28, 2007 and December 29, 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index appearing under Item 15, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

San Francisco, CA

February 18, 2008

F-2

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 28, 2007			December 29, 2006
	(in millions)
ASSETS
Current assets
Cash and cash equivalents	$	6.7		$	-
Accounts receivable, net of allowances of $4.6 million and $5.3 million, respectively		205.3			210.4
Prepaid expenses and other		15.1			15.5
Deferred income taxes		4.3			2.4
Total current assets		231.4			228.3
Property and equipment
Property and equipment at cost		110.6			97.6
Accumulated depreciation		(69.2	)		(64.8	)
Property and equipment, net		41.4			32.8
Other assets
Goodwill		288.3			288.3
Deferred income taxes		-			1.5
Other assets		13.0			14.4
Total other assets		301.3			304.2
Total assets	$	574.1		$	565.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt and capital leases	$	-		$	-
Book overdraft		12.8			3.1
Accounts payable and other accrued liabilities		184.1			160.9
Total current liabilities		196.9			164.0
Long-term liabilities
Long-term debt and capital leases		64.0			59.0
Deferred income taxes		8.4			-
Other		2.1			5.2
Total long-term liabilities		74.5			64.2
Total liabilities		271.4			228.2
Commitments and contingencies (Notes 7, 9 & 11)
Stockholders’ equity
Preferred stock, par value $0.01 per share; 50,000,000 shares authorized; none issued and outstanding
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 34,626,794 and 37,145,047 issued and outstanding		0.4			0.4
Additional paid-in capital		294.5			289.1
Retained earnings		7.9			47.7
Accumulated other comprehensive loss		(0.1	)		(0.1	)
Total stockholders’ equity		302.7			337.1
Total liabilities and stockholders’ equity	$	574.1		$	565.3

The accompanying notes are an integral part of the consolidated financial statements.

F-3

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Fiscal Year Ended
	Dec. 28, 2007			Dec. 29, 2006			Dec. 30, 2005
	(in millions, except share and per share data)
Revenues	$	1,969.4		$	1,887.8		$	1,860.1
Operating expenses:
Cost of purchased transportation and services		1,537.7			1,446.4			1,428.6
Direct operating expenses (excluding depreciation)		130.5			123.1			115.4
Selling, general and administrative expenses		200.5			193.0			204.8
Write-off of computer software (Note 9)		-			-			11.3
Depreciation and amortization		6.2			7.0			6.9
Total operating expenses		1,874.9			1,769.5			1,767.0
Income from operations		94.5			118.3			93.1
Interest expense		(5.5	)		(7.1	)		(8.7	)
Interest income		1.8			0.5			0.5
Loss on extinguishment of debt (Note 2)		(1.8	)		-			-
Income before income taxes		89.0			111.7			84.9
Income taxes		34.7			43.4			34.0
Net income	$	54.3		$	68.3		$	50.9
Earnings per share (Note 13):
Basic:
Earnings per share	$	1.53		$	1.83		$	1.36
Weighted average shares outstanding		35,587,755			37,354,785			37,381,647
Diluted:
Earnings per share	$	1.51		$	1.80		$	1.34
Weighted average shares outstanding		35,911,246			38,020,862			38,042,454

The accompanying notes are an integral part of the consolidated financial statements.

F-4

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Preferred Stock			Common Stock				Additional Paid-in- Capital		Unearned Compen- sation			Retained Earnings (Accumulated Deficit)			Accumulated Other Compre- hensive Income (Loss)			Total Stockholders’ Equity
	No. of Shares	Amount		No. of Shares		Amount
	(in millions, except share amounts)
Balance December 31, 2004	-	$	-	37,286,638		$	0.4	$	275.4	$	(0.1	)	$	(11.0	)	$	(0.2	)	$	264.5
Net income	-		-	-			-		-		-			50.9			-			50.9
Other comprehensive loss	-		-	-			-		-		-			-			-			-
Total comprehensive income	-		-	-			-		-		-			50.9			-			50.9
Common stock dividends; $0.30 per share	-		-	-			-		-		-			(11.2	)		-			(11.2	)
Amortization – unearned compensation	-		-	-			-		-		0.1			-			-			0.1
Tax benefit from exercise of options	-		-	-			-		0.6		-			-			-			0.6
Issuance of common stock for exercise of options	-		-	177,110			-		1.8		-			-			-			1.8
Balance December 30, 2005	-	$	-	37,463,748		$	0.4	$	277.8	$	-		$	28.7		$	(0.2	)	$	306.7
Net income	-		-	-			-		-		-			68.3			-			68.3
Other comprehensive income	-		-	-			-		-		-			-			0.1			0.1
Total comprehensive income	-		-	-			-		-		-			68.3			0.1			68.4
Common stock dividends; $0.60 per share	-		-	-			-		-		-			(22.5	)		-			(22.5	)
Stock based compensation	-		-	-			-		1.5		-			-			-			1.5
Tax benefit from exercise of options	-		-	-			-		5.4		-			-			-			5.4
Repurchase and retirement of Pacer common stock	-		-	(965,818	)		-		-		-			(26.8	)		-			(26.8	)
Issuance of common stock for exercise of options	-		-	647,117			-		4.4		-			-			-			4.4
Balance December 29, 2006	-	$	-	37,145,047		$	0.4	$	289.1	$	-		$	47.7		$	(0.1	)	$	337.1
Net income	-		-	-			-		-		-			54.3			-			54.3
Other comprehensive income	-		-	-			-		-		-			-			-			-
Total comprehensive income	-		-	-			-		-		-			54.3			-			54.3
Common stock dividends; $0.60 per share	-		-	-			-		-		-			(21.2	)		-			(21.2	)
Stock based compensation	-		-	-			-		2.9		-			-			-			2.9
Tax benefit from stock based compensation	-		-	-			-		0.7		-			-			-			0.7
Cumulative effect of adoption of FIN 48 (Note 1)	-		-	-			-		-		-			(0.4	)		-			(0.4	)
Issuance of restricted stock	-		-	251,250			-		-		-			-			-			-
Repurchase and retirement of Pacer common stock	-		-	(2,938,635	)		-		-		-			(72.5	)		-			(72.5	)
Issuance of common stock for exercise of options	-		-	169,132			-		1.8		-			-			-			1.8
Balance December 28, 2007	-	$	-	34,626,794		$	0.4	$	294.5	$	-		$	7.9		$	(0.1	)	$	302.7

The accompanying notes are an integral part of the consolidated financial statements.

F-5

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal Year Ended
	Dec. 28, 2007			Dec. 29, 2006			Dec. 30, 2005
	(in millions)
Cash flows from operating activities
Net income	$	54.3		$	68.3		$	50.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6.2			7.0			6.9
Gain on sale of property and equipment		(0.9	)		(0.2	)		(0.1	)
Deferred taxes		8.0			9.2			2.5
Loss on extinguishment of debt		1.8			-			-
Stock based compensation expense		2.9			1.5			-
Excess tax benefit from exercise of stock options		(0.2	)		(3.8	)		-
Write-off of computer software		-			-			11.3
Change in operating assets and liabilities
Accounts receivable, net		5.1			8.9			12.8
Prepaid expenses and other		0.4			(4.7	)		(0.6	)
Accounts payable and other accrued liabilities		32.7			(20.4	)		(2.1	)
Other		(2.3	)		0.9			0.7
Net cash provided by operating activities		108.0			66.7			82.3
Cash flows from investing activities
Capital expenditures		(14.0	)		(3.7	)		(5.3	)
Proceeds from sales of property and equipment		0.9			0.2			0.3
Net cash used in investing activities		(13.1	)		(3.5	)		(5.0	)
Cash flows from financing activities
Net borrowings under revolving line of credit agreement, net of debt issuance costs		63.2			-			-
Proceeds from exercise of stock options		1.8			4.4			1.8
Excess tax benefit from exercise of stock options		0.2			3.8			-
Dividends paid to shareholders		(21.6	)		(22.5	)		(5.6	)
Repurchase and retirement of Pacer common stock		(72.5	)		(26.8	)		-
Debt and capital lease obligation repayment		(59.0	)		(31.0	)		(64.1	)
Net cash used in financing activities		(87.9	)		(72.1	)		(67.9	)
Effect of exchange rate changes on cash		(0.3	)		(0.2	)		(0.3	)
Net increase (decrease) in cash and cash equivalents		6.7			(9.1	)		9.1
Cash and cash equivalents at beginning of year		-			9.1			-
Cash and cash equivalents at end of year	$	6.7		$	-		$	9.1

The accompanying notes are an integral part of the consolidated financial statements.

F-6

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Pacer International, Inc. (“Pacer” or the “Company”) is a leading non-asset based North American third-party logistics provider offering a broad array of services to facilitate the movement of freight from origin to destination. The Company operates in two segments, the intermodal segment and the logistics segment (see Note 8 to the consolidated financial statements for segment information). The intermodal segment provides services principally to intermodal marketing companies, truck brokers, truckload carriers, transportation intermediaries and international shipping companies. The intermodal segment’s Stacktrain operations’ fiscal year ends on the last Friday in December and the intermodal segment’s local cartage and rail brokerage operations’ fiscal year ends on the last day in December. The logistics segment provides services principally to end-user customers and includes highway brokerage and truck services, warehousing and distribution, international freight forwarding and supply chain management services. Its fiscal year ends on the last day in December.

The Company has operated as an independent, stand-alone company since its recapitalization in May 1999. From 1984 until the recapitalization, the intermodal segment’s Stacktrain business was conducted by various entities owned directly or indirectly by APL Limited.

As of May 28, 1999, APL Land Transport Services, Inc. (“APLLTS”) was recapitalized through the purchase of shares of its common stock from APL Limited by affiliates of Apollo Management, L.P. and two other investors and its redemption of a portion of the remaining shares of common stock held by APL Limited. After the recapitalization, APLLTS formed a transitory subsidiary that was merged with and into Pacer Logistics, Inc., making Pacer Logistics a wholly-owned subsidiary of APLLTS. In connection with these transactions, APLLTS was renamed Pacer International, Inc. Pacer Logistics merged into the Company in May 2003.

As part of the recapitalization, the assets and liabilities of the Company remained at their historical basis for financial reporting purposes; for income tax purposes, the transaction has been treated as a taxable transaction such that the consolidated financial statements reflect a “step-up” in tax basis resulting in the establishment of a deferred tax asset.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all entities that the Company controls. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

The Company has made a reclassification to the 2006 and 2005 Consolidated Statements of Cash Flows to conform to the 2007 presentation. The “book overdraft” line item has been reclassified from cash flows from financing activities to cash flows from operating activities in the amount of $3.1 million and $(18.6) million for the 2006 and 2005 years, respectively. All periods presented have been reclassified with no effect on the Company’s consolidated income from operations, net income, financial position or the change in cash and cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

F-7

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Significant estimates include recognition of revenue, costs of purchased transportation and services, allowance for doubtful accounts, valuation of deferred income taxes and goodwill. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with an original maturity of three months or less.

Accounts Receivable

Accounts receivable are carried at original invoice amount less allowance made for doubtful accounts. Estimates are used when determining this allowance based on the Company’s historical collection experience, current trends, credit policy and a percentage of the accounts receivable by aging category. At December 28, 2007 and December 29, 2006, accounts receivable included unbilled amounts of $15.3 million and $19.4 million, respectively.

Property and Equipment

Property and equipment are recorded at cost. The Company capitalizes certain costs of internally developed software. Capitalized costs include purchased materials and services, and payroll and payroll related costs. For assets financed under capital leases, the present value of the future minimum lease payments is recorded at the date of acquisition as property and equipment, with a corresponding amount recorded as a capital lease obligation. In June 2006, the Company’s capitalization policy was updated to reflect a change in estimated useful lives based on economic benefit. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:

Classification	Estimated Useful Life
Rail cars	28 Years
Containers and chassis	15 Years
Autos/trucks and revenue equipment	5 to 7 Years
Leasehold improvements	Shorter of term of lease or life of improvement
Other (including computer hardware and software)	3 to 7 Years

When assets are sold, the applicable costs and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. Expenditures, including those on leased assets, which extend an asset’s useful life or increase its utility are capitalized and amortized. Expenditures for maintenance and repairs are expensed as incurred.

Deferred Financing Costs

The deferred financing costs included in other assets relate to the cost incurred in the placement of the Company’s debt. The balance of $0.8 million at December 28, 2007 relates to those costs, amortized over 5 years, associated with the revolving credit facility entered into in April 2007. The $2.0 million balance at December 29, 2006 related to the Company’s prior term loan and revolving credit facility and were being amortized using the effective interest method over the terms of the related debt which ranged from 5 to 7 years.

Goodwill

Goodwill represents the excess of cost over the estimated fair value of the net tangible and intangible assets acquired. The Company evaluates the carrying value of goodwill and recoverability at least annually and otherwise should events or circumstances occur that bring into question the realizable

F-8

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

value or impairment of goodwill. Determination of impairment requires comparison of the reporting unit’s fair value with the unit’s carrying amount, including goodwill. If this comparison indicates that the fair value is less than the carrying value, then the implied fair value of the reporting unit’s goodwill is compared with the carrying amount of the reporting unit’s goodwill to determine the impairment loss to be charged to operations. The fair values of the reporting units are determined using an income approach based on the present value of estimated future cash flows and a market approach based on market price data of stocks of corporations engaged in similar businesses.

The Company has allocated goodwill to the reporting units as shown in the table below as of December 28, 2007 and December 29, 2006 (in millions):

	Logistics Segment		Intermodal Segment		Total
Balance at December 28, 2007	$	119.3	$	169.0	$	288.3
Balance at December 29, 2006	$	119.3	$	169.0	$	288.3

Revenue Recognition

The Company’s intermodal segment Stacktrain operation recognizes revenue and rail linehaul expenses on a percentage-of-completion basis and remaining expenses as incurred. The intermodal segment local cartage and rail brokerage operations recognize revenues when delivery requirements are met. Revenues from the logistics segment transportation activities, including highway brokerage, truck services and international freight forwarding, are recorded when delivery requirements are met. Logistics segment revenues from warehousing activities are recorded upon receipt at the warehouse and storage revenues are recorded as earned. Logistics segment supply chain management/consulting services net revenues are recorded as earned. Revenues are reported net of volume discounts provided to customers.

Income Taxes

The Company recognizes income tax expense using the liability method of accounting for deferred income taxes. A deferred tax asset or liability is recorded based upon the tax effect of temporary differences between the tax bases of assets and liabilities and their carrying value for financial reporting purposes. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities during the year.

Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes foreign currency translation adjustments, net of related tax. Other comprehensive income (loss) consists of the following (in millions):

	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2004	$	(0.2	)	$	(0.2	)
Activity during 2005 (net of $0.01 million tax)		-			-
Balance at December 30, 2005	$	(0.2	)	$	(0.2	)
Activity during 2006 (net of $0.02 million tax)		0.1			0.1
Balance at December 29, 2006	$	(0.1	)	$	(0.1	)
Activity during 2007 (net of $- million tax)		-			-
Balance at December 28, 2007	$	(0.1	)	$	(0.1	)

F-9

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The assets and liabilities of the Company’s foreign operations have been translated at rates of exchange at the balance sheet date, and related revenues and expenses have been translated at average rates of exchange in effect during the year.

Common Stock Repurchases

On June 12, 2006, the Company announced that its Board of Directors had authorized the purchase of up to $60 million of its common stock, and, on April 3, 2007, the Company announced that its Board of Directors had authorized the purchase of an additional $100 million of its common stock. Both authorizations expire on June 15, 2008. The Company repurchased a total of 965,818 shares at an average price of $27.72 per share for the year 2006 and repurchased a total of 2,938,635 shares at an average price of $24.64 per share for the year 2007. At December 28, 2007, $60.7 million remains available for the purchase of common stock under the current Board authorizations; the Company intends to make further share repurchases from time to time as market conditions warrant.

Stock-Based Compensation

Effective December 31, 2005, the Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standard (“SFAS”) No. 123(R), “Share-Based Payments,” or SFAS No. 123(R), which establishes the accounting for employee stock-based awards. Under the provisions of SFAS No. 123(R), stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). The Company adopted SFAS No. 123(R) using the modified prospective method and, as a result, periods prior to December 31, 2005 have not been restated. The Company recognized stock-based compensation for awards issued under the Company’s long-term incentive plans in the Selling, General and Administrative line item of the Consolidated Statement of Operations. Additionally, no modifications were made to outstanding stock options prior to the adoption of SFAS No. 123(R), and no cumulative adjustments were recorded in the Company’s financial statements.

Prior to December 31, 2005, the Company accounted for stock-based compensation in accordance with provisions of Accounting Principles Board Opinion No. 25 (“APB No. 25”), “Accounting for Stock Issued to Employees,” and related interpretations. Under APB No. 25, compensation cost was recognized based on the difference, if any, on the date of grant between the fair value of the Company’s stock and the amount an employee must pay to acquire the stock. The Company grants stock options at an exercise price equal to 100% of the market price on the date of grant. Accordingly, no compensation expense was recognized for the stock option grants in periods prior to the adoption of SFAS No. 123(R).

F-10

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

SFAS No. 123(R) requires disclosure of pro-forma information for periods prior to the adoption. The pro-forma disclosures are based on the fair value of awards at the grant date, amortized to expense over the service period. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” for the period prior to the adoption of SFAS No. 123(R), and the actual effect on net income and earnings per share for the period after the adoption of SFAS No. 123(R) (in millions).

	Fiscal Year Ended December 30, 2005
Net income, as reported	$	50.9
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		-
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1.2	)
Net income, pro forma	$	49.7
Earnings per share:
Basic, as reported	$	1.36
Basic, pro forma	$	1.33
Diluted, as reported	$	1.34
Diluted, pro forma	$	1.31

The fair value of each option grant is estimated using the Black-Scholes valuation model and the assumptions noted in the following table. The expected term of stock options is based on an analysis of historical exercise behavior. The expected volatility is based on the change in weekly prices of the Company’s stock over a 104-week period preceding each grant date. The risk free interest rate is based on the implied yield on U.S. Treasury issues with a term equal to the expected term of the option. The dividend yield reflects an estimated annual dividend of $0.60 per share divided by the market price at date of grant.

	Fiscal Year Ended
	December 28, 2007		December 29, 2006		December 30, 2005
Black-Scholes option-pricing model assumptions:
Weighted average risk-free interest rate		4.1%		4.8%		4.2%
Weighted average volatility		33%		32%		33%
Weighted average dividend yield		3.0%		2.0%		2.2%
Weighted average expected option term		5.0 years		5.9 years		6.1 years
Weighted average fair value of options granted	$	5.26	$	9.53	$	8.92

The Company also granted 282,000 shares of restricted stock to certain employees during 2007 (including a 2006 grant of 195,000 shares which was subject to approval by shareholders of the 2006 Plan which occurred in May 2007) with a weighted average market price at date of grant of $25.93. No shares were granted in 2005.

F-11

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Earnings per Share

The computation of earnings per share-basic is based on net income available to common shareholders and the weighted-average number of outstanding common shares. The computation of earnings per share-diluted is based on net income available to common shareholders and the weighted-average number of outstanding common shares including the effect of dilutive stock based compensation awards.

Financial Instruments

The carrying amounts for cash, accounts receivables and accounts payable approximate fair value due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value due to the floating nature of the interest rates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company sells primarily on net 30-day terms, performs credit evaluation procedures on its customers and generally does not require collateral on its accounts receivable. The Company maintains an allowance for doubtful accounts.

During 2007, the Company had one customer representing 10.4% of total revenues. During 2006, the Company had one customer representing 10.3% of total revenues. The Company had no customers in 2005 accounting for 10% or more of revenues.

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business Combinations,” which establishes principles and requirements for how an acquirer recognizes and measures assets acquired, liabilities assumed including any noncontrolling interest, and goodwill or gain from a bargain purchase. It also establishes the information to disclose regarding the nature and financial effects of a business combination. SFAS No. 141 (revised 2007) will be effective for the Company on December 26, 2008 (the first day of the Company’s 2009 fiscal year). Based on acquisitions to date, the Company does not expect that the implementation of SFAS No. 141 (revised 2007) will have a material impact on its results of operations or financial condition.

In December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51,” which establishes accounting and reporting standards that require: ownership interests held by parties other than the parent be clearly identified and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; consolidated net income attributable to the parent and to the noncontrolling interest be identified and presented on the face of the consolidated statement of income; and that changes in ownership interest while the parent retains its controlling interest be accounted for consistently and disclosed. SFAS No. 160 will be effective for the Company on December 26, 2008 (the first day of the Company’s 2009 fiscal year). The Company does not expect that the implementation of SFAS No. 160 will have a material impact on its results of operations or financial condition.

In June 2007, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 requires that tax benefits generated by dividends paid during the vesting period on certain equity-classified share-based compensation awards be classified as additional paid-in capital and included in a pool of excess tax benefits available to absorb tax deficiencies from share-based payment awards. EITF 06-11 is effective as of January 1, 2008. The Company does not expect the adoption of EITF 06-11 to have a material impact on its results of operations or financial condition.

F-12

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.” This Statement permits the Company to choose to measure many financial instruments and certain other items at fair value. It also establishes presentation and disclosure requirements. SFAS No. 159 was effective for the Company on December 29, 2007 (the first day of the Company’s 2008 fiscal year). The Company is currently assessing the impact that the implementation of SFAS No. 159 will have on its results of operations and financial condition.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States of America and expands disclosures about fair value measurements. SFAS No. 157 was effective for the Company on December 29, 2007 (the first day of the Company’s 2008 fiscal year) with the exception of application to nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis for which the standard will be applicable on December 27, 2008 (the first day of the Company’s 2009 fiscal year). The Company is currently assessing the impact that the implementation of SFAS No. 157 will have on its results of operations and financial condition.

In September 2006, the FASB issued Staff Position (“FSP”) No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities,” which prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods. This FSP should be applied retrospectively for all financial statements presented, unless it is impracticable to do so. The Company adopted this FSP on December 30, 2006 (the first day of its 2007 fiscal year) and determined that the effect on prior year balances was immaterial and therefore did not apply retroactively. The Company will account for its maintenance activities going forward using the deferral method.

In June 2006, FASB issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 was effective for the Company as of December 30, 2006. As a result of this implementation, the Company recognized a $0.4 million tax reserve increase for uncertain tax positions. The increase was accounted for as an adjustment to the beginning balance of retained earnings. Including the cumulative effect increase, at the beginning of 2007, the Company had a liability of approximately $3.9 million of total reserves relating to uncertain tax positions and a total of $4.1 million at December 28, 2007, including accrued interest. See Note 4.

NOTE 2. LONG-TERM DEBT AND CAPITAL LEASES

Long-term debt and capital leases are summarized as follows (in millions):

	December 28, 2007		December 29, 2006
2007 Credit Agreement (5.7%; due April 5, 2012)	$	64.0	$	-
Term loan		-		59.0
Less current portion		-		-
Long-term portion	$	64.0	$	59.0

F-13

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On April 5, 2007, the Company entered into a new $250 million, five-year revolving credit agreement (the “2007 Credit Agreement”). The Company utilized $59.0 million of the 2007 Credit Agreement to repay the principal balance due under the term loan portion of the Company’s prior bank credit facility, which was terminated. In connection with the refinancing, the Company paid $0.8 million of fees and expenses ($0.6 million to lenders and $0.2 million to other third parties) and $0.5 million of interest due at closing under the prior facility. The Company also charged to expense $1.8 million for the write-off of existing deferred loan fees related to the prior credit facility.

Borrowings under the 2007 Credit Agreement bear interest, at the Company’s option, at a base rate plus a margin between 0.0% and 0.5% per annum, or at a Eurodollar rate plus a margin between 0.625% and 1.75% per annum, in each case depending on the Company’s leverage ratio. The base rate is the higher of the prime lending rate of the administrative agent or the federal funds rate plus  ¹/2 of 1%. The Company’s obligations under the 2007 Credit Agreement are guaranteed by all of its direct and indirect domestic subsidiaries and is secured by a pledge of all of the stock or other equity interests of its domestic subsidiaries and a portion of the stock or other equity interest of certain of its foreign subsidiaries.

The 2007 Credit Agreement also provides for letter of credit fees between 0.625% and 1.75%, and a commitment fee payable on the unused portion of the facility, which accrues at a rate per annum ranging from 0.125% to 0.350%, in each case depending on the Company’s leverage ratio.

The 2007 Credit Agreement contains affirmative, negative and financial covenants customary for such financings, including, among other things, limits on the incurrence of debt, the incurrence of liens, and mergers and consolidations and leverage and interest coverage ratios. It also contains customary representations and warranties. Breaches of the covenants, representations or warranties may give rise to an event of default. Other events of default include the Company’s failure to pay certain debt, the acceleration of certain debt, certain insolvency and bankruptcy proceedings, certain ERISA events or unpaid judgments over a specified amount, or a change in control of the Company as defined in the 2007 Credit Agreement.

At December 28, 2007, the Company had $168.0 million available under the 2007 Credit Agreement, net of $64.0 million outstanding and $18.0 million of outstanding letters of credit. At December 28, 2007, borrowings under the 2007 Credit Agreement bore a weighted average interest rate of 5.7% per annum. The Company borrowed a net $5.0 million in 2007 in addition to the refinancing, repaid $31.0 million in 2006 and $64.1 million in 2005. Operating cash flows funded the repayment of the debt.

Contractual maturities of long-term debt during each of the five years subsequent to 2007 and thereafter are as follows (in millions):

2008	$	-
2009		-
2010		-
2011		-
2012		64.0
Thereafter		-
Total	$	64.0

NOTE 3. FACILITY CLOSINGS AND OTHER SEVERANCE COSTS

In March 2007, the Company began a facility rationalization and other severance program to close facilities and reduce employment in order to improve efficiency and profitability. The program included exit activities as well as ongoing employment reduction initiatives. Through December 28, 2007, a total of $6.0 million has been expensed for the severance of 134 employees and the closure of four facilities. Set forth below are separate discussions of the exit activities and ongoing employment reduction initiatives:

The Company closed four logistics segment facilities, terminated employees at these facilities, and absorbed the work at these facilities at other existing facilities. Costs associated with these exit activities in

F-14

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

the logistics segment include employee severance costs and lease termination costs. A total of $0.5 million of employee severance costs were expensed during 2007, $0.4 million of which has been paid for the severance of 32 employees. Lease termination costs of $0.2 million have been expensed and paid during the 2007 period for the termination of leases at the four facilities.

The Company also engaged in a series of initiatives, not in connection with an exit or other disposal activity, which further reduced employment. These initiatives were undertaken in a number of business units and at corporate. Post-employment severance costs of the personnel laid-off aggregating $5.3 million were expensed in 2007, of which $1.4 million was incurred by the logistics segment, $1.8 million by the intermodal segment and $2.1 million by the corporate office. Through December 28, 2007, $3.1 million has been paid for the severance of 102 employees. At December 28, 2007, a balance of $2.3 million remains for payments in 2008.

All of these costs are included in the Selling, General and Administrative line item of the Consolidated Statement of Operations for 2007.

NOTE 4. INCOME TAXES

For federal and state income tax purposes, the 1999 recapitalization of the Company was a taxable business combination and a qualified stock purchase. The buyer and seller jointly agreed to treat the transaction as an asset acquisition in accordance with Section 338(h)(10) of the Internal Revenue Code and such election has been made. An allocation of the purchase price to the tax basis of assets and liabilities based on their respective fair value at May 28, 1999 was finalized for income tax purposes during 1999.

The provision for income taxes is as follows (in millions):

	Fiscal Year Ended
	Dec. 28, 2007		Dec. 29, 2006		Dec. 30, 2005
Current:
Federal	$	23.6	$	29.7	$	26.8
State		3.1		4.4		4.1
Total current		26.7		34.1		30.9
Deferred:
Federal		7.2		7.9		2.5
State		0.8		1.4		0.6
Total deferred		8.0		9.3		3.1
Total provision	$	34.7	$	43.4	$	34.0

The reconciliation of the net effective income tax rate to the U.S. federal statutory income tax rate is as follows:

	Fiscal Year Ended
	Dec. 28, 2007		Dec. 29, 2006		Dec. 30, 2005
U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
Increases in rate resulting from:
State tax, net of federal benefit	3.4	%	3.5	%	3.5	%
Revisions to prior years’ estimated liability including tax audit adjustments	-	%	-	%	1.2	%
Other permanent book/tax differences	0.6	%	0.3	%	0.3	%
Net effective tax rate	39.0	%	38.8	%	40.0	%

F-15

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For 2005, the revisions to prior years’ estimated liability included an adjustment of the effective state tax rate.

All federal income tax returns of Pacer International, Inc. are closed through 2002 and filed through 2006.

The following table shows the tax effects of the Company’s cumulative temporary differences included in the consolidated balance sheets at December 28, 2007 and December 29, 2006 (in millions):

	December 28, 2007			December 29, 2006
Tax loss carry-forwards	$	0.6		$	0.2
Property and equipment		(9.6	)		(9.0	)
Allowance for doubtful accounts		1.8			2.0
Accrued liabilities		(3.8	)		(5.0	)
Tax basis in excess of book – recapitalization		3.7			12.7
Other		3.2			3.0
Total net deferred tax asset	$	(4.1	)	$	3.9
Current deferred tax asset	$	7.6		$	6.4
Non-current deferred tax asset		5.8			15.3
Current deferred tax liability		(3.3	)		(4.0	)
Non-current deferred tax liability		(14.2	)		(13.8	)
Total net deferred tax asset	$	(4.1	)	$	3.9

In connection with the recapitalization, the Company recorded a deferred tax asset of approximately $81.2 million at May 28, 1999 related to future tax deductions for the net excess of the tax basis of the assets and liabilities over the financial statement carrying amounts with a corresponding credit to Stockholders’ Equity.

In June 2006, FASB issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 was effective for the Company as of December 30, 2006. As a result of this implementation, the Company recognized a $0.4 million tax reserve increase for uncertain tax positions. The increase was accounted for as an adjustment to the beginning balance of retained earnings. Including the cumulative effect increase, at the beginning of 2007, the Company had a liability of approximately $3.9 million of total reserves relating to uncertain tax positions and a total of $4.1 million at December 28, 2007 including accrued interest. There was no increase or decrease in uncertain tax positions during the last three fiscal years.

The total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $4.1 million.

The Company recognized $0.2 million, $0.1 million and $0.5 million of accrued interest and no penalties related to unrecognized tax benefits in its income tax expense for the years ending December 28, 2007, December 29, 2006 and December 30, 2005, respectively.

During the next twelve months, the Company expects to reduce its unrecognized tax benefits by approximately $3.5 million as a result of certain expiration of federal statutes of limitations.

F-16

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 5. 401(K) PLAN AND LONG-TERM INCENTIVE PLANS

Under the Pacer International, Inc. 401(k) plan, the Company matches 50% of the first 6% of base salary contributed by the employee. Matching contributions by the Company to the plan in 2007, 2006 and 2005 were $1.6 million, $1.7 million and $1.7 million, respectively.

On May 3, 2007, the shareholders of the Company approved the 2006 Long-Term Incentive Plan (the “2006 Plan”) which had been adopted by the Board of Directors in August 2006 subject to shareholder approval. The 2006 Plan expands the range of equity-based incentive awards that may be issued to attract, retain, incentivize, and reward directors, officers, employees and consultants. The 2006 Plan gives the Company the ability to provide incentives through issuance of stock options, stock appreciation rights, restricted stock or restricted stock units, performance or performance unit awards and other stock-based awards.

Prior to May 3, 2007, the Company had two stock option plans, the 1999 Stock Option Plan (the “1999 Plan”) and the 2002 Stock Option Plan (the “2002 Plan”). Upon adoption of the 2002 Plan, no further awards were able to be made under the 1999 Plan, although outstanding awards under that plan were not affected. As of May 3, 2007, with the adoption of the 2006 Plan, no further awards may be made under the 2002 Plan, although outstanding awards under the 2002 Plan were not affected.

A total of 2.5 million shares of common stock have been reserved for issuance under the 2006 Plan. If an award, other than a Substitute Award (defined below), is forfeited or otherwise terminates without the issuance or delivery of some or all of the shares underlying the award to the grantee, or becomes unexercisable without having been exercised in full, the remaining shares that were subject to the award will become available for future awards under the 2006 Plan (unless the 2006 Plan has terminated). The grant of a stock appreciation right (“SAR”) will not reduce the number of shares that may be subject to awards, but the number of shares issued upon the exercise of a SAR will so reduce the available number of shares.

Substitute Awards will not reduce the number of shares available for issuance under the 2006 Plan. Substitute Awards are awards granted in assumption of or in substitution for outstanding awards previously granted by a company acquired by or merged into the Company or any of its subsidiaries or with which the Company or any of its subsidiaries combines.

Subject to any required action by the Company’s shareholders, the number of shares reserved for issuance under the 2006 Plan, the maximum award limitations set forth in the 2006 Plan, the number of shares underlying an outstanding award, as well as the price per share (or exercise, base or purchase price) of the underlying shares, will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the shares, or any other similar transaction (but not the issuance or conversion of convertible securities). Subject to any required action by the Company’s shareholders, the 2006 Plan administrator (presently the Compensation Committee of the Board of Directors), in its sole discretion, may make similar adjustments to reflect a change in the capitalization of the Company, including a recapitalization, repurchase, rights offering, reorganization, merger, consolidation, combination, exchange of shares, spin-off, spin-out or other distribution of assets to shareholders or other similar corporate transaction or event.

F-17

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the stock option transactions under the 1999 Plan, the 2002 Plan and the 2006 Plan as of December 28, 2007.

	Options		Weighted Avg. Exercise Price		Aggregate Intrinsic Value
					($ millions)
Balance at December 31, 2004	1,977,073		$	10.64
Options exercisable, end of year	739,248		$	7.51
Granted	124,500		$	23.05
Canceled or expired	(118,733	)	$	16.14
Exercised	(177,110	)	$	10.14
Balance at December 30, 2005	1,805,730		$	11.18
Options exercisable, end of year	681,305		$	8.27
Granted	178,000		$	29.83
Canceled or expired	(119,366	)	$	22.36
Exercised	(647,117	)	$	6.76
Balance at December 29, 2006	1,217,247		$	15.16
Granted	12,000		$	19.99
Canceled or expired	(180,500	)	$	19.04
Exercised	(169,132	)	$	10.78
Balance at December 28, 2007	879,615		$	15.28	$	-
Options exercisable, end of year	525,715		$	13.23	$	0.8
Options available for future grant	2,236,750

The following table summarizes information about stock options outstanding at December 28, 2007:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
Common Stock
$      5.00	98,215	1.4	$	5.00	98,215	$	5.00
$    10.00	80,900	2.5	$	10.00	68,900	$	10.00
$    12.50	286,300	3.0	$	12.50	150,800	$	12.50
$    13.74	41,000	3.9	$	13.74	33,000	$	13.74
$    15.00	26,800	4.3	$	15.00	19,600	$	15.00
$    15.78	46,000	5.4	$	15.78	36,000	$	15.78
$15.80 - $19.66	151,500	6.4	$	19.03	78,300	$	19.28
$19.67 - $25.88	73,900	7.7	$	23.47	25,900	$	23.71
$25.89 - $35.17	75,000	8.4	$	30.00	15,000	$	30.00
Total	879,615	4.3	$	15.28	525,715	$	13.23

The compensation cost that has been charged against income for the share-based compensation plans was $2.9 million and $1.5 million for 2007 and 2006, respectively. The excess tax benefit realized for the tax deductions from the share-based compensation plans totaled $1.2 million, $5.4 million and $0.6 million for 2007, 2006 and 2005, respectively. The tax benefit for stock compensation expense included in

F-18

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

the provision for income taxes totaled $1.2 million and $0.6 million for 2007 and 2006, respectively. The total intrinsic value of options exercised was $1.9 million, $14.3 million and $2.2 million for 2007, 2006 and 2005, respectively. As of December 28, 2007, there was $1.0 million of total unrecognized compensation costs related to stock options assuming no new grants or forfeitures. These costs are expected to be recognized over a weighted-average period of approximately 1.9 years.

The Company has also issued time-based restricted stock under the 2006 Plan to certain employees with an initial grant in 2006 subject to shareholder approval of the 2006 Plan which occurred in May 2007. For reporting purposes, the initial grant is deemed to have occurred in 2007 upon shareholder approval of the 2006 Plan. Restricted stock is subject to restrictions and cannot be sold, transferred or disposed of during the restriction period. The holders of restricted stock generally have the same rights as a stockholder of the Company with respect to such shares, including the right to vote and receive dividends with respect to the shares. Restricted stock awards vest in 25% increments, on June 1 of each year over a four year period. Restricted stock is not considered issued and outstanding until it vests. A summary of restricted stock activity for the year ended December 28, 2007 is presented below:

	Shares	Weighted Avg. Grant-Date Fair Value
Nonvested at December 30, 2006	-	$	-
Granted	282,000	$	25.93
Vested	48,750	$	27.64
Forfeited	30,750	$	27.64
Nonvested at December 28, 2007	202,500	$	25.25

The total fair value of restricted shares vested during 2007 was $1.3 million, based on the market price at the grant date. As of December 28, 2007, there was $3.6 million of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted-average period of approximately 1.9 years.

NOTE 6. RELATED PARTY TRANSACTIONS

The following table summarizes related party transactions recorded in the consolidated statements of operations (in millions).

Related Party	Type	Fiscal Year Ended December 28, 2007		Fiscal Year Ended December 29, 2006		Fiscal Year Ended December 30, 2005
Cost of purchased transportation and services:
Panther Expedited	Truck transportation	$	4.5	$	0.7	$	-
Selling, general and administrative expenses:
A&G Investments	Facility lease	$	-	$	-	$	0.6
Perimeter West	Facility lease		-		1.8		1.6
Total related party SG&A expenses		$	-	$	1.8	$	2.2
Total related party expenses		$	4.5	$	2.5	$	2.2

The Company engages, in the ordinary course of its business, Panther Expedited Services, Inc. as a transportation broker to provide transportation services from time to time. Andrew C. Clarke, a member of the Company’s Board of Directors, is President of Panther Expedited Services, Inc. The Company paid Panther Expedited Services, Inc. $4.5 million and $0.7 million in 2007 and 2006, respectively.

F-19

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company leases a facility consisting of office, warehousing and trucking space from A&G Investments, a California general partnership, of which Messrs. Goldfein and Steiner are the only partners. Mr. Goldfein is a former Director and Executive Vice President of the Company and was a stockholder until January 2005. Mr. Steiner was a stockholder until February 2005 and a former Executive Vice President of the Company. Lease payments were $0.6 million for the year ended December 30, 2005.

In connection with the acquisition of Rail Van, the Company assumed a lease of a building that had been entered into by Rail Van with Perimeter West LLC, an entity associated with Mr. Brashares, an executive officer of the Company, and certain former shareholders of Rail Van. This lease commenced in April 2001, with an initial annual base rental payment of approximately $1.3 million. Lease payments were $1.8 million and $1.6 million for the years ended December 29, 2006 and December 30, 2005, respectively. In November 2006, Perimeter West LLC sold the land and building to an unaffiliated entity.

Management believes that the terms of the related party transactions listed above were at fair market rates.

NOTE 7. COMMITMENTS AND CONTINGENCIES

The Company is subject to routine litigation arising in the ordinary course of business, none of which is expected to have a material adverse effect on the Company’s business, consolidated results of operations, financial condition or cash flows. Most of the lawsuits to which the Company is a party are covered by insurance and are being defended in cooperation with insurance carriers.

Two of our subsidiaries engaged in local cartage and harbor drayage operations, Interstate Consolidation, Inc., which was subsequently merged into Pacer Cartage, Inc., and Intermodal Container Service, Inc., were named defendants in a class action filed in July 1997 in the State of California, Los Angeles Superior Court, Central District (the “Albillo” case), alleging, among other things, breach of fiduciary duty, unfair business practices, conversion and money had and received in connection with monies (including insurance premium costs) allegedly wrongfully deducted from truck drivers’ earnings. The plaintiffs and defendants entered into a Judge Pro Tempore Submission Agreement in October 1998, pursuant to which they waived their rights to a jury trial, stipulated to a certified class, and agreed to a minimum judgment of $250,000 and a maximum judgment of $1.75 million. In August 2000, the trial court ruled in our subsidiaries’ favor on all issues except one, namely that in 1998 our subsidiaries failed to issue to the owner-operators new certificates of insurance disclosing a change in the subsidiaries’ liability insurance retention amount, and ordered that restitution of $488,978 be paid for this omission. Plaintiffs’ counsel then appealed all issues except one (the independent contractor status of the drivers), and the subsidiaries appealed the insurance retention disclosure issue.

In December 2003, the appellate court affirmed the trial court’s decision as to all but one issue, reversed the trial court’s decision that the owner-operators could be charged for the workers compensation insurance coverage that they voluntarily elected to obtain through our subsidiaries (a case of first impression in California), and remanded back to the trial court the question of whether the collection of workers compensation insurance charges from the owner-operators violated California’s Business and Professions Code and, if so, to determine an appropriate remedy. Our subsidiaries sought review at the California Supreme Court of this workers compensation issue, and the plaintiffs sought review only of whether our subsidiaries’ providing insurance for the owner-operators constituted engaging in the insurance business without a license under California law. In March 2004, the Supreme Court of California denied both parties’ petitions for appeal, thus ending all further appellate review.

As a result, we had successfully defended and prevailed over the plaintiffs’ challenges to our subsidiaries’ core operating practices, establishing that (i) the owner-operators were independent contractors and not employees of our subsidiaries and (ii) our subsidiaries may charge the owner-operators for liability insurance coverage purchased by our subsidiaries. Following the California Supreme Court’s

F-20

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

decision, the only remaining issue was whether our subsidiaries’ collection of workers compensation insurance charges from the owner-operators violated California’s Business and Professions Code and, if so, what restitution, if any, should be paid to the owner-operator class. This issue was remanded back to the same trial court that heard the original case in 1998.

During the second quarter of 2005, the Company engaged in earnest discussions with the plaintiffs in an attempt to structure a potential settlement of the case within the original $1.75 million cap but on a claims-made basis that would return to the Company any settlement funds not claimed by members of the plaintiff class. The Company believed that the ongoing cost of litigating the final issue in the case (including defending appeals that the plaintiffs’ counsel had assured would occur if the Company were to prevail in the remand trial) would exceed the net liability to the Company of a final settlement on a claims-made basis within the cap of $1.75 million. During the second quarter of 2005, the Company reached an agreement in principle with the plaintiffs to settle the litigation on a claims-made basis within the cap of $1.75 million. Based on the settlement agreement, the Company increased its reserve to the full amount of the $1.75 million cap at the end of the second quarter of 2005. In the first quarter of 2006, the court granted final approval to the settlement. The claims process, payment calculations and final settlement payments were concluded in the second quarter of 2006, with the Company retaining approximately $560,000 in unclaimed funds.

The same law firm that brought the Albillo case filed a separate class action lawsuit against our same subsidiaries in March 2003 in the same jurisdiction on behalf of a class of owner-operators (the “Renteria” class action) not included in the Albillo class. Each of the claims in the Renteria case, which had been stayed pending full and final disposition of the remaining issue in Albillo, mirror claims in Albillo, specifically that our subsidiaries’ providing insurance for their owner-operators constitutes engaging in the insurance business without a license in violation of California law and that charging the putative class of owner-operators in Renteria for workers compensation insurance that they elected to obtain through our subsidiaries violated California’s Business and Professions Code. In June 2007, our motion for summary adjudication on the insurance issue was granted, so that the only remaining issue in the case is the workers compensation claim. In August 2007, we agreed to settle this last remaining claim on a “claims-made” basis under which the Company’s maximum exposure would not exceed our previously established $750,000 liability reserve. The settlement has received preliminary court approval, but remains subject to completion of the claims filing and payment process, and then final court approval. Based on information presently available, management does not expect the Renteria case to have a material adverse impact on the Company’s consolidated financial position, results of operations or liquidity.

At December 28, 2007, the Company had a commitment to acquire 3,000 53-ft. containers and 1,400 53-ft. chassis through operating leases. Delivery will take place during 2008.

NOTE 8. SEGMENT INFORMATION

The Company changed the components and the names of its two reportable operating segments in 2006. All periods presented have been reclassified, with no effect on the Company’s consolidated income from operations, net income or financial position. During 2006, the rail brokerage unit was transferred to the intermodal segment (previously called the wholesale segment) and is now be managed and reported along with Stacktrain and cartage operations. The intermodal segment provides intermodal rail transportation, intermodal marketing and local trucking services. The retail segment has been renamed the logistics segment and provides highway brokerage, truck services, warehousing and distribution, international freight forwarding and supply chain management services.

F-21

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents revenues generated by country or geographical area for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005 (in millions).

	Fiscal Year Ended
	Dec. 28, 2007		Dec. 29, 2006		Dec. 30, 2005
United States	$	1,730.7	$	1,674.2	$	1,661.1
Foreign revenues
Mexico		68.2		58.3		46.8
Europe		44.0		31.6		30.0
Russia/China		31.7		33.6		39.9
Far East		26.8		19.3		21.5
Canada		18.8		19.2		18.0
Australia/New Zealand		7.9		7.8		9.5
Mideast		7.8		7.4		3.6
South America		6.7		4.5		4.4
Africa		2.3		1.7		2.6
All other		24.5		30.2		22.7
Total foreign revenues	$	238.7	$	213.6	$	199.0
Total	$	1,969.4	$	1,887.8	$	1,860.1

All of the foreign revenues are generated by the logistics segment with the exception of Mexico, where the majority of such Mexican revenues are generated by the Company’s intermodal segment Stacktrain operation. All material assets are located in the United States of America.

The following table presents reportable segment information for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005 (in millions):

	Intermodal			Logistics			Corp./Other			Consolidated
Fiscal year ended December 28, 2007
Revenues	$	1,567.9		$	402.1		$	-		$	1,970.0
Intersegment elimination		(0.1	)		(0.5	)		-			(0.6	)
Subtotal		1,567.8			401.6			-			1,969.4
Income from operations 1/		112.0			4.1			(21.6	)		94.5
Depreciation and amortization		5.3			0.8			0.1			6.2
Capital expenditures 2/		11.6			2.1			0.3			14.0
Fiscal year ended December 29, 2006
Revenues	$	1,491.7		$	397.0		$	-		$	1,888.7
Intersegment elimination		(0.2	)		(0.7	)		-			(0.9	)
Subtotal		1,491.5			396.3			-			1,887.8
Income from operations		132.6			1.6			(15.9	)		118.3
Depreciation and amortization		5.8			1.1			0.1			7.0
Capital expenditures		2.2			1.5			-			3.7
Fiscal year ended December 30, 2005
Revenues	$	1,402.6		$	458.1		$	-		$	1,860.7
Intersegment elimination		(0.2	)		(0.4	)		-			(0.6	)
Subtotal		1,402.4			457.7			-			1,860.1
Income from operations 3/		109.5			5.4			(21.8	)		93.1
Depreciation and amortization		5.5			1.3			0.1			6.9
Capital expenditures		3.9			1.4			-			5.3

F-22

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Data in the “Corp./Other” column includes corporate amounts (primarily compensation, tax and overhead costs unrelated to a specific segment) and elimination of intercompany balances and subsidiary investment. The Chief Operating Decision Maker does not review assets by segment for purposes of allocating resources and as such they are not disclosed here.

1/ Intermodal segment, Logistics segment, corporate and consolidated income from operations for the year ended December 28, 2007 included $1.8 million, $2.1 million, $2.1 million and $6.0 million, respectively, of costs associated with facility closings and other severance activities.

2/ Included in the capital expenditures for 2007 is $10.6 million related to a software license agreement with SAP America, Inc. under which an enterprise suite of applications was licensed ($9.6 million intermodal segment, $0.7 million logistics segment and $0.3 million corporate). See Note 9. All other capital expenditure amounts relate to normal computer replacement items.

3/ Intermodal segment and consolidated income from operations for the fiscal year ended December 30, 2005 includes $11.3 million for the write-off of previously capitalized computer software development costs. See Note 9.

NOTE 9. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 28, 2007 and December 29, 2006 (in millions):

	2007			2006
Railcars	$	26.0		$	26.0
Containers and chassis		24.4			25.9
Leasehold improvements and other (including computer hardware and software)		48.8			45.7
Software under development		11.4			-
Total		110.6			97.6
Less: accumulated depreciation		(69.2	)		(64.8	)
Property and equipment, net	$	41.4		$	32.8

Depreciation and amortization of property and equipment was $6.2 million, $7.0 million and $6.9 million for the years ended December 28, 2007, December 29, 2006 and December 30, 2005, respectively. The Company retired $1.7 million, $0.7 million and $0.2 million of accumulated depreciation associated with the sale of containers and chassis in 2007, 2006 and 2005, respectively. Equipment under capital lease is included above with a cost of $1.1 million and $1.1 million and accumulated amortization of $1.0 million and $1.0 million at December 28, 2007 and December 29, 2006, respectively.

During 2007, the Company had cash capital expenditures of $14.0 million. On September 30, 2007, the Company entered into a software license agreement with SAP America, Inc. (“SAP”) under which an enterprise suite of applications was licensed, including the latest release of SAP’s transportation management solution. Under the agreement, the Company was granted a perpetual license for the suite of SAP software. Cash capital expenditures for the SAP software and installation totaled $10.6 million for 2007, with an additional $0.8 million accrued in work-in-progress. Elements of the new system are expected to be implemented over the next 9 to 28 months. The Company will continue to avail itself of the services and support under its existing long-term technology services agreement with APL Limited, until such time as the SAP project is complete. The remaining $3.4 million of capital expenditures in 2007 was for normal computer replacement items. The Company received $0.9 million from the sale of containers and other equipment and retired $1.7 million of property during the year.

F-23

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During 2006, the Company had capital expenditures of $3.7 million primarily for normal computer replacement items. The Company received $0.2 million from the sale of containers and other equipment and retired $0.8 million of property during the year.

During 2005, the Company had capital expenditures of $5.3 million primarily for normal computer replacement items. The Company received $0.3 million from the sale of containers and other equipment and retired $0.4 million of property during the year in addition to the $11.3 million write-off of software development costs (see the discussion below).

As part of the recapitalization of the Company and its acquisition of Pacer Logistics in May 1999, the Company received $39.6 million in net proceeds from the sale and leaseback of 199 railcars originally purchased in 1998. A deferred gain of $1.6 million was recorded upon sale and is being amortized over the 13-year life of the lease.

In March 2001, the Company commenced plans for the conversion from APL Limited’s computer systems to a stand-alone capability for its Stacktrain operation. At July 1, 2005, an aggregate of $11.3 million had been paid to third parties for the acquisition and development of software in connection with the conversion project, which had been capitalized in property and equipment under Statement of Position No. 98-1, “Accounting for Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”). During the development phase of the project, the third party developer went bankrupt, executing a general assignment for creditors under California law. Under a settlement agreement with the assignee, the Company received a cash payment of approximately $102,000 out of the developer’s assets and took delivery of the partially completed software code that had been developed under the contract. With the assistance of independent consultants, the Company evaluated the extent of the software development work that had been performed and the feasibility of completing the development of the software and placing it into service. In the second quarter of 2005, following completion of our evaluation, the Company determined to abandon the software and to write-off the $11.3 million of capitalized costs in that quarter, constituting all of the development costs previously capitalized in connection with this project.

NOTE 10. ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

Accounts payable and other accrued liabilities at December 28, 2007 and December 29, 2006 were as follows (in millions):

	2007		2006
Accounts payable	$	67.3	$	60.6
Accrued rail liability		52.2		49.9
Accrued volume rebates payable		13.3		12.5
Accrued freight payable		6.4		6.9
Accrued equipment maintenance and lease		6.5		6.4
Accrued compensation and benefits		9.0		5.9
Accrued dividends payable		5.2		5.6
Uncertain tax positions		3.5		-
Severance and facility exit liability		2.3		-
Accrued litigation liability		3.3		0.8
Accrued administrative costs		0.6		0.3
Accrued interest payable		0.5		0.2
Accrued income taxes payable		0.3		-
Other accrued liabilities		13.7		11.8
Total accounts payable and other accrued liabilities	$	184.1	$	160.9

The change in compensation and benefits is due to a $3.0 million performance bonus and discretionary incentive and retention accrual in 2007 compared to no such accrual in 2006.

F-24

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 11. LEASES

The Company leases doublestack railcars, containers, chassis, tractors, data processing equipment and real and other property. Future minimum lease payments under noncancelable leases at December 28, 2007 for the five years subsequent to 2007 and thereafter are summarized as follows (in millions):

	Operating Leases
2008	$	82.4
2009		75.2
2010		66.9
2011		54.5
2012		42.6
Thereafter		77.7
Total minimum payments	$	399.3

Rental expense was $109.5 million, $103.6 million and $100.5 million for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005, respectively.

During 2007, the Company received 1,658 primarily 53-ft. leased containers and 1,072 53-ft., 48-ft. and 40-ft. leased chassis, and returned 2,191 primarily 48-ft. leased containers, 1,596 primarily 48-ft. and 40-ft. leased chassis, and sold 618 48-ft. owned chassis in an effort to more closely align our container and chassis fleets. During 2007, four railcars were destroyed.

During 2006, the Company received 2,360 53-ft. leased containers and 4,552 53-ft. and 40-ft. leased chassis, and returned 2,033 primarily 48-ft. leased containers and 1,684 primarily 48-ft. and 40-ft. leased chassis. During 2006, four railcars were destroyed.

The Company receives income from others for the use of its doublestack railcars and containers. These income amounts are included in revenues. Rental income was $66.2 million, $69.5 million and $70.7 million for the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005, respectively.

NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows (in millions):

	Fiscal Year Ended
	December 28, 2007		December 29, 2006		December 30, 2005
Cash payments:
Interest	$	4.7	$	6.7	$	7.7
Income taxes	$	24.1	$	37.4	$	24.6

F-25

PACER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 13. EARNINGS PER SHARE

The following table sets forth the computation of earnings per share-basic and diluted (in millions, except share and per share amounts):

	Fiscal Year Ended
	December 28, 2007		December 29, 2006		December 30, 2005
Numerator:
Net income – basic	$	54.3	$	68.3	$	50.9
Numerator for earnings per share-diluted	$	54.3	$	68.3	$	50.9
Denominator:
Denominator for earnings per share-basic - Common shares outstanding		35,587,755		37,354,785		37,381,647
Effect of dilutive securities:
Stock options/Restricted stock		323,491		666,077		660,807
Denominator for earnings per share-diluted		35,911,246		38,020,862		38,042,454
Earnings per share-basic	$	1.53	$	1.83	$	1.36
Earnings per share-diluted	$	1.51	$	1.80	$	1.34

Anti-dilutive shares attributable to outstanding stock options and restricted stock were excluded from the calculation of diluted net income per share. For the years ended December 28, 2007, December 29, 2006 and December 30, 2005, the weighted average shares outstanding that were anti-dilutive were 353,618 shares, 171,994 shares and 23,413 shares, respectively.

NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table sets forth selected quarterly financial data for each of the quarters in 2007 and 2006 (in millions, except per share amounts):

	Quarters
	First		Second		Third		Fourth
Fiscal year ended December 28, 2007
Revenues	$	465.1	$	474.9	$	489.3	$	540.2
Gross profit 1/		66.4		70.4		73.4		88.8
Income from operations		14.4		21.5		23.3		35.2
Net income		7.8		12.5		13.4		20.6
Basic earnings per share	$	0.21	$	0.34	$	0.39	$	0.59
Diluted earnings per share	$	0.21	$	0.34	$	0.38	$	0.59
Fiscal year ended December 29, 2006
Revenues	$	469.4	$	458.2	$	458.2	$	502.0
Gross profit 1/		74.4		73.8		84.7		83.1
Income from operations		24.4		25.2		31.6		37.1
Net income		13.9		14.5		18.3		21.5
Basic earnings per share	$	0.37	$	0.39	$	0.49	$	0.58
Diluted earnings per share	$	0.36	$	0.38	$	0.48	$	0.57

1/ Gross profit is calculated as revenues less cost of purchased transportation and services and less direct operating expenses including depreciation.

F-26

Schedule II

Pacer International, Inc. and Subsidiaries

Valuation and Qualifying Accounts

(in millions)

Column A	Column B			Column C			Column D					Column E
Description	Balances at Beginning of Fiscal Period			Additions (Charged)/ Credited to Income			Deductions (1)		Other (2)			Balances at End of Fiscal Period
December 28, 2007
Allowance for doubtful accounts	$	(5.3	)	$	(1.9	)	$	2.6	$	-		$	(4.6	)
December 29, 2006
Allowance for doubtful accounts	$	(6.4	)	$	(2.0	)	$	3.4	$	(0.3	)	$	(5.3	)
December 30, 2005
Allowance for doubtful accounts	$	(3.9	)	$	(3.9	)	$	1.4	$	-		$	(6.4	)

(1) Represents write-off of amounts.

(2) Represents recovery of amounts.

S-1

EXHIBIT INDEX

Exhibit	Document Description
10.24#	License Agreement, dated as of September 30, 2007, by and between SAP America, Inc. and Pacer International, as amended by Amendment No. 1 thereto effective as of October 1, 2007.
10.28	Pacer International, Inc. 2008 Performance Bonus Plan.
10.38	Separation and Release Agreement, dated June 18, 2007, between Pacer International, Inc. and Alex Munn.
10.39	Form of Stock Option Award Agreement pursuant to the Pacer International, Inc. 2006 Long-Term Incentive Plan.
10.40	Separation Agreement, dated November 7, 2007, between Pacer International, Inc. and C. Thomas Shurstad.
10.41	Form of Supplemental Severance Benefit Letter dated February 14, 2008 from the Company to Michael E. Uremovich, Lawrence E. Yarberry, Michael F. Killea and Jeffrey R. Brashares.
10.42	Employment Agreement, dated December 14, 2007, between Pacer International, Inc. and Dan M. Beers.
21	Subsidiaries of Pacer International, Inc.
23	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Michael E. Uremovich pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Lawrence C. Yarberry pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Michael E. Uremovich and Lawrence C. Yarberry pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
#	Application has been made to the Securities and Exchange Commission to seek confidential treatment of certain provisions. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

EX-10.24

EXHIBIT 10.24

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

SOFTWARE LICENSE AGREEMENT

(“Agreement”)

This Agreement is made effective as of the 30 day of September, 2007, by and between SAP America, Inc., a Delaware corporation, with offices at 3999 West Chester Pike, Newtown Square, PA 19073 (“SAP”), and Pacer International, Inc., a Tennessee corporation, with offices at 2300 Clayton Road, Concord, CA 94520 (“Licensee”).

1. DEFINITIONS.

1.1 “Affiliate” means a legal entity (A) in which Licensee owns, directly or indirectly, (i) at least fifty percent (50%) of the voting securities or (ii) in the case of a limited liability company (“LLC”) or limited liability partnership (“LLP”), (1) owns directly or indirectly at least fifty percent (50%) equity interest (i.e. [ *1 ]) and (2) possesses the controlling interest [ *2 ] and Licensee [ *3 ] has the contractual power and right to direct the day to day management and policies of such entity or (B) other entities as mutually agreed upon by the parties as listed in Part II of Exhibit B. Any such entity shall be considered an Affiliate only for such time as Licensee continues to own at least such equity interest or maintains at least such equity or controlling interest in such entity or other criteria as agreed upon by the parties for the entities on Part II of Exhibit B.

1.2 “Business Partner” means an entity that requires access to the Software in connection with the operation of Licensee’s or its [ *4 ] business, including, but not limited to, [ *5 ].

1.3 “Documentation” means SAP’s documentation, including SAP’s standard manuals, [ *6 ] which is part of the Software as defined in Section 1.7 hereof), [ *7 ], and complete or partial copies of the foregoing, which is delivered to Licensee under this Agreement or as otherwise generally available to SAP’s licensee base.

1.4 “Modification” means a change to the Software that changes the delivered source code or an enhancement to the Software that is made using SAP tools [ *8 ] or utilizing or incorporating SAP Proprietary Information.

1.5 “Named Users” means any combination of users licensed under this Agreement. [ *9 ]

1.6 “Proprietary Information” means: (i) with respect to SAP and SAP AG (the licensor of the SAP Proprietary Information to SAP), the Software and Documentation, any other third-party software licensed with or as part of the Software, benchmark results, manuals, program listings, data structures, flow charts, logic diagrams, functional specifications; (ii) with respect to SAP and SAP AG, the concepts, techniques, ideas, and know-how embodied and expressed in the Software; (iii) with respect to both parties, information reasonably identifiable as the confidential and proprietary information of SAP or Licensee or their licensors; and (iv) with respect to Licensee, (1) non-public information relating to Licensee’s technology, products, business plans, promotional and marketing activities, finances and other business affairs; (2) third party information that Licensee is obligated to keep confidential; (3) data of or with respect to employees of Licensee or its Affiliates; and (4) all supplier and customer and supplier and customer transactional information. Proprietary Information does not include any part of the SAP or Licensee Proprietary Information which: (a) is or becomes publicly available through no act or failure of the other party; or (b) was or is rightfully acquired without obligation of confidence by the other party from a source other than the disclosing party prior to receipt from the disclosing party; or (c) can be shown by documentation to have been independently developed by the receiving party without reference to any Proprietary Information of the other party.

1.7 “Software” means (i) all software, which may be in [ *10 ] as delivered [ *11 ] specified in agreed upon Appendices hereto, developed by or for SAP and/or SAP AG and delivered to Licensee hereunder; (ii) any new releases thereof made generally available [ *12 ] as Licensee is then receiving from SAP; and (iii) any complete or partial copies of any of the foregoing.

1.8 “Territory” means the United States of America [ *13 ]. Named Users may be located outside the Territory, except in those countries to which export of the SAP Confidential Information is restricted by U.S. export control laws.

1.9 “Use” means to activate the processing capabilities of the Software, load, execute, access, employ the Software, or display [ *14 ] information resulting from such capabilities.

2. LICENSE GRANT.

2.1 License.

(a) SAP grants Licensee a non-exclusive, perpetual (unless terminated in accordance with Section 5 herein) license to Use the Software, Documentation, other SAP Proprietary Information, at specified site(s) within the Territory to run Licensee’s internal business operations and to provide internal training and testing for such internal business operations and as further set forth in Appendices hereto. This license does not permit Licensee to use the SAP Proprietary Information to provide business process outsourcing, service bureau applications, third party training or similar services to third parties. Business Partners may have screen and other access to the Software solely in conjunction with Licensee’s Use and may not Use the Software to run any of their business operations separate from their business interaction with Licensee.

SAP CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

(b) Licensee agrees to install the Software only on hardware [ *15 ] identified by Licensee pursuant to this Agreement that has been previously approved by SAP in writing or otherwise officially made known to the public as appropriate for Use or interoperation with the Software or otherwise set forth in the Documentation (the “Designated Unit”). Except as otherwise provided in the Appendix applicable to the Software, any individuals that Use the Software including employees or agents of Affiliates and Business Partners, must be licensed as Named Users. Use may occur by way of an interface delivered with or as a part of the Software, a Licensee or third-party interface, or another intermediary system.

(c) Provided Licensee does not exceed the number of Named Users licensed hereunder, Licensee may transfer the Software from one Designated Unit to another, or may add additional Designated Units [ *16 ] additional license fee, and shall provide written notice to SAP within [ *17 ] business days of such installation. Licensee shall be responsible for the cost of any migration tools, third-party database costs or third-party software required for the new or additional Designated Unit(s). In the event of a transfer from one Designated Unit to another, the Software must be promptly deleted in their entirety from the Designated Unit no longer in use and from each back-up copy for that Designated Unit.

2.2 Affiliate Use. The Affiliates identified in Exhibit B may Use the Software provided a breach by any such Affiliate shall be considered a breach by Licensee hereunder. Affiliates listed on Exhibit B may Use the Software. In the event an Affiliate is not listed on Exhibit B, Affiliates may Use the Software provided that: (i) in the event the Affiliate uses a copy of the Software, each such Affiliate agrees to be bound by the terms herein in the form of Exhibit A attached hereto prior to delivery of the Software copy; and (ii) a breach of such Exhibit by Affiliate shall be considered a breach by Licensee hereunder. Exhibit B may be amended (a) by Licensee to remove an Affiliate by notice to SAP; (b) by Licensee to add an Affiliate described by clause (A) of the definition of “Affiliate” by notice to SAP and (c) by written agreement of the parties to add as an Affiliate any entity not described by clause (A) of the definition of “Affiliate”.

2.3 Delivery of Software and Maintenance.

(a) The Software [ *18 ], and the Documentation, shall be delivered as specified in Appendices hereto. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver SAP Software and Support by making it available for download or other electronic transmission to Licensee’s location in: Concord, California. Notwithstanding the foregoing, in the event Licensee requests physical delivery of the Software, the parties agree to amend this Agreement to reflect Licensee’s delivery preference and SAP shall promptly so deliver the Software to a Licensee location within the Territory designated by Licensee in writing.

(b) Licensee will defend and indemnify SAP for any Taxes, penalties and related interest (excluding taxes based on SAP’s income or upon its property) should such taxes result from the license of the Software and provision of Maintenance, as SAP makes no representations regarding the taxability of such transaction but is simply complying with Licensee’s request. Licensee agrees that, in the event any physical delivery of Software or Maintenance should occur, such delivery shall be rejected by Licensee if Licensee has not requested the same. Licensee additionally acknowledges that should any Software or Maintenance be unavailable electronically, and unless Licensee requests physical delivery, then a delay in receipt of such Software or Maintenance deliverable may extend until electronic delivery is available or until SAP and Licensee agree contractually on another form of delivery, as provided in Section 2.3(a) above.

2.4 Archival Copy; Restriction on Copies; Legends to be Reproduced.

(a) Licensee may make one copy of the Software for archival purposes, one copy for each Designated Unit and such number of backup copies of the Software as are consistent with Licensee’s normal periodic backup and recovery procedures. Licensee shall maintain a log of the number and location of all originals and copies of the Software. [ *19 ]

(b) Licensee shall include, and shall under no circumstances remove, SAP’s and its licensors’ copyright, trademark, service mark, and other proprietary notices on any complete or partial copies of the Software, Documentation or SAP Proprietary Information in the same form and location as the notice appears on the original work. The inclusion of a copyright notice on any portion of the Software, Documentation or SAP Proprietary Information shall not cause or be construed to cause it to be a published work.

2.5 Outsourcing. Licensee may permit the services providers to be identified by executing the Confidentiality Agreement in the form attached as Exhibit C, to have a copy and to operate the Software solely for the purpose of providing facility, systems, or disaster recovery services to Licensee in connection with the business of Licensee for which the Software is herein licensed provided: (i) SAP, Licensee, and each such services provider execute the Confidentiality Agreement in the form attached as Exhibit C prior to such access; (ii) all employees of such services provider authorized to access the Software shall be considered Named Users; (iii) such services provider shall be permitted to Use the Software solely to perform the services required by Licensee in connection with Licensee’s operation of its business as set forth herein, (including in the case of a disaster recovery vendor, to provide disaster recovery services); (iv) under no circumstances may such services provider Use the Software to operate or provide processing services to any other party, or in connection with such services provider’s own business operations; (v) Licensee shall be responsible for any additional Software, migration tools, or third party software needed to effect such transition; and (vi) Licensee expressly agrees to indemnify SAP, its officers, employees, agents and subcontractors from and against all claims, liabilities, losses, damages and costs (including reasonable attorney fees) suffered by SAP arising from a breach by the services provider of the conditions of this Agreement or the Confidentiality Agreement.

2

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

3. VERIFICATION. Upon SAP’s reasonable request [ *20 ] Licensee shall deliver to SAP a report, as defined by SAP, and produced by the Software evidencing Licensee’s usage of the Software licensed under this Agreement. In the event an audit reveals Licensee’s non-compliance with the terms of the Agreement, SAP shall be permitted to perform a re-audit [ *21 ]. Should Licensee fail to produce such report within the period reasonably defined in SAP’s request, SAP (or its authorized representative) reserves the right to access Licensee’s Software installation(s) upon [ *22 ] prior written notice during normal business hours and subject to any restrictions imposed by Licensee’s reasonable access and other information technology security policies to generate a usage report and Licensee shall pay SAP’s reasonable costs of generating such report. Such reports shall be maintained by Licensee and generated using reporting software either embedded in the Software or provided by SAP for the purpose of Licensee generating reports in accordance with this provision. In the event an onsite or electronic audit reveals that Licensee underpaid License and/or applicable Support Fees to SAP, SAP will so notify Licensee of the underpayment [ *23 ]. Licensee shall pay such underpaid fees based upon the prices and conditions set forth in this Agreement and the applicable Appendix, or if not so set forth herein or therein, on SAP’s list of prices and conditions[ *24 ].

4. PRICE AND PAYMENT.

4.1 License Fees. Licensee shall pay to SAP license fees for the Software and applicable Support fees [ *25 ] such level of support as Licensee is then receiving from SAP) on the terms and conditions in Appendices hereto. Fees for Services will be paid as set forth in the Professional Services Schedule hereto. Any [ *26 ] fees not paid when due shall accrue interest at the rate of [ *27 ] per annum, but not to exceed the maximum amount as allowed by law.

4.2 Taxes. Fees and other charges described in this Agreement, or in SAP’s most recent list of prices and conditions, do not include federal, state or local sales, foreign withholding, use, property, excise, service, or similar [ *28 ] taxes (“Tax(es)”) now or hereafter levied, all of which shall be for Licensee’s account. Taxes shall not include taxes on SAP’s income or on its property. With respect to state/local sales tax, direct pay permits or valid tax-exempt certificates must be provided to SAP prior to the execution of this Agreement. If SAP is required to pay Taxes, Licensee shall reimburse SAP for such amounts. [ *29 ]

SAP shall contact Licensee during the course of its audits conducted by the tax authorities to determine whether Licensee has already been audited for the same periods, has been assessed taxes or has self-assessed taxes on the same transactions. SAP shall supply Licensee with information and documents as Licensee may reasonably request in regard to the tax authorities’ potential assessments of Licensee’s transactions. Licensee’s responses and any supporting documentation will be timely presented to the tax authorities. Licensee hereby agrees to indemnify SAP for any Taxes and related costs, interest and penalties paid or payable by SAP.

5. TERM.

5.1. Term. This Agreement and the license granted hereunder shall become effective as of the date first set forth above and shall continue in effect thereafter unless terminated upon the earliest to occur of the following: (i) thirty (30) days after Licensee gives SAP written notice of Licensee’s desire to terminate this Agreement, for any reason, but only after payment of all License and applicable Support Fees then due and owing; (ii) [ *30 ] days after either party gives notice of the other party’s material breach of any provision of the Agreement (other than a party’s breach of its obligations under Sections [ *31 ] including more than [ *32 ] days delinquency in Licensee’s payment of any [ *33 ] money due hereunder, unless such party has cured such breach during such [ *34 ] day period or if such breach is not [ *35 ] cured within such [ *36 ] day period, [ *37 ]; or (iii) [ *38 ] days after a party gives the other party notice of such other party’s material breach of Section [ *39 ] which is not cured in such [ *40 ] day period or otherwise such longer period as reasonably agreed upon by the parties in good faith; or (iv) by written notice with immediate effect by a party upon the existence of any one or more of the following circumstances, uncorrected for more than [ *41 ] days: entry of an order for relief under Title 11 of the United States Code as to the other party; the making by the other party of a general assignment for the benefit of creditors; the appointment of a general receiver or trustee in bankruptcy of the other party’s business or property; or action by the other party under any state insolvency or similar law for the purpose of its bankruptcy, reorganization, or liquidation. [ *42 ] With respect to (iii) above, this Agreement shall not be terminable in the event a party has filed for bankruptcy under Chapter 11 of Title 11 of the U.S. Code, and provides adequate written assurances to the other party within thirty (30) days of such filing of such party’s willingness and ability to cure any default and continue to perform its obligations pursuant to the terms and conditions of this Agreement.

5.2 End of Term Duties. Upon [ *43 ]. Upon any termination hereunder, Licensee and its Affiliates shall immediately cease Use of all SAP Proprietary Information. Within thirty (30) days after any termination, Licensee shall deliver to SAP or destroy all copies of the SAP Proprietary Information in every form. Licensee agrees to certify in writing to SAP that it and each of its Affiliates has performed the foregoing. Sections 4, 6, 7.2, 7.6, 8, 9, 11.4, 11.5 and 11.6 shall survive such termination. In the event of any termination hereunder, Licensee shall not be entitled to any refund of any payments made by Licensee[ *44 ]. Within thirty (30) days after any termination, SAP shall return the Licensee Proprietary Information to Licensee.

6. PROPRIETARY RIGHTS.

6.1 Protection of Proprietary Information. Except as provided herein, Licensee shall not copy, translate, disassemble, or decompile, nor create or attempt to create, by reverse engineering or otherwise, the source code from the object code of the Software. Except for the rights set forth below, Licensee is not permitted to make derivative works of the Software and ownership of any unauthorized derivative works shall vest in SAP. SAP and Licensee agree to take all reasonable steps and the same protective precautions to protect the Proprietary Information of the other party hereto from disclosure to third parties as with its own proprietary and confidential information, and each party will use the other party’s Proprietary Information solely as reasonably necessary for

3

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

such party to perform its obligations and exercise its rights as contemplated hereunder. The receiving party will take commercially reasonable measures to avoid disclosure, dissemination or unauthorized use of the disclosing party’s Proprietary Information. The parties acknowledge that the disclosing party’s Proprietary Information may constitute material non-public information under U.S. securities laws and regulations, and each party agrees that it will not transact in securities of the other party based on any such Proprietary Information in violation of any applicable securities laws. Neither party shall, without the other party’s prior written consent, disclose any of the Proprietary Information of the other party to any person, except to its bona fide employees, officers, directors, or third parties whose access is necessary to enable such party to exercise its rights or fulfill its obligations hereunder. Each party agrees that prior to disclosing any Proprietary Information of the other party to any third party, it will obtain from that third party a written acknowledgment that such third party will be bound by the same terms as specified in this Section 6 with respect to the Proprietary Information. The receiving party may disclose Proprietary Information of the other party as required to comply with binding orders of governmental entities that have jurisdiction over it or as otherwise required by law (e.g., disclosure obligations to any securities regulatory agency or stock agency), provided that the receiving party (i) gives the disclosing party reasonable written notice to allow the disclosing party to seek a protective order or other appropriate remedy (except to the extent that the receiving party’s compliance with the foregoing would cause it to violate a court order or other legal requirement), (ii) discloses only such information as is required by the governmental entity or otherwise required by Law, and (iii) uses commercially reasonable efforts to obtain confidential treatment for any Proprietary Information so disclosed.

6.2 Modifications.

(a) Licensee may make Modifications to the Software, other than third party software, for Use on the Designated Unit(s) under the terms set forth in this Section. Licensee shall register all Modifications to the Software with SAP prior to making such Modifications. Licensee agrees to insert in all copies of the Software as modified all copyright, trade secret, or other notices thereon or therein as SAP may from time to time direct.

(b) [ *45 ]

(c) In the event SAP develops either independently, or jointly with Licensee, any Modification to the licensed Software, such Modification and all rights associated therewith will be the exclusive property of SAP and SAP AG, and Licensee will not grant, either expressly or impliedly, any rights, title, interest, or licenses to such Modifications to any third party. [ *46 ] Licensee agrees to assign all right, title and interest in and to jointly developed Modifications to SAP. Licensee agrees to execute, acknowledge and deliver to SAP all documents and do all things necessary[ *47 ] to enable SAP to obtain and secure such Modifications throughout the world. Licensee agrees to secure the necessary rights and obligations from relevant employees, or third parties in order to satisfy the above obligations.

(d) The parties hereto agree that the granting of any rights, title, or interest to Licensee in any Modification shall not be construed by the parties hereto, any court of law or equity, or any arbitration panel to mean that SAP has granted or given up any rights, title, or interest in or to the SAP Proprietary Information.

(e) Except for enforcement of its rights under this Agreement or enforcement of its own intellectual property rights, Licensee agrees not to take any action that would limit SAP’s independent development, sale, assignment, licensing or use of SAP’s own Software or SAP’s own independently developed Modifications thereto.

7. WARRANTIES.

7.1 [ *48 ] Warranty. SAP warrants that the Software will materially conform to the functional specifications contained in the Documentation [ *49 ], for [ *50 ] months following delivery. The warranty shall not apply: (i) if the Software is not used in accordance with the Documentation; or (ii) if the defect is caused by a Modification, Licensee, third-party software [ *51 ], or by a third party database [ *52 ] Without limiting the foregoing, SAP does not warrant that the Software will operate uninterrupted or that it will be free from minor defects or errors that do not materially affect such performance, or that the applications contained in the Software are designed to meet all of Licensee’s business requirements.

7.2 Supplemental Warranties. SAP represents that (i) it or its licensors own the Proprietary Information licensed by SAP hereunder, including all intellectual property rights therein, and that SAP has all rights from its licensors necessary to license, in accordance with the terms of this Agreement, such Proprietary Information to Licensee; and (ii) SAP’s Services shall be performed consistent with generally accepted industry standards.

7.3 General Warranty. SAP warrants that: (i) it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and it has the corporate power and has all necessary licenses, rights and authorities to grant the License and perform its obligations under this Agreement, including all Schedules and Appendices, (ii) the execution of this Agreement and the performance of its obligations hereunder will not result in any violation or default of or conflict with (a) its Certificate or Articles of Incorporation or Bylaws, or (b) the provisions of any other agreement to which it is a party or by which it is bound and (iii) it has performed all corporate actions and received all corporate authorizations necessary, if any, to execute and deliver this Agreement and to perform its obligations hereunder. SAP further warrants that it shall use commercially reasonable efforts to comply with all applicable laws, judgments or regulations of any governmental authority.

7.4 No Virus. SAP warrants and represents that it has taken reasonable steps to ensure that Software is free from Computer Virus at the time of delivery. “Computer Virus” is defined as a computer program attached to or a section of code hidden within the Software that performs a function unauthorized by Software published documentation which adversely affects Licensee’s computer systems or the Software itself.

7.5 No Disabling Code. SAP warrants and represents that it has taken reasonable steps to test the Software for Disabling Code (as defined herein) and to the best of its knowledge, the Software is free of Disabling Code as of the date of delivery by SAP. “Disabling Code” is defined as computer instructions that alter, destroy or inhibit the licensed Software and/or Licensee’s processing environment, including but not limited to other program’s data storage and computer libraries, programs that self-replicate without manual intervention, instructions programmed to activate at a predetermined time upon a specified event, and/or programs purporting to do a meaningful function but designed for a different function.

4

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

7.6 Express Disclaimer. [ *53 ] SAP AND ITS LICENSORS DISCLAIM ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT TO THE EXTENT THAT ANY WARRANTIES IMPLIED BY LAW CANNOT BE VALIDLY WAIVED.

8. INDEMNIFICATION.

8.1 Indemnification of Licensee. SAP shall defend, indemnify and hold harmless Licensee [ *54 ] against all claims, liabilities, and costs, including reasonable attorneys’ fees, reasonably incurred in the [ *55 ] defense [ *56 ] of any claim brought against Licensee in the Territory by third parties alleging that Licensee’s Use of the Software and Documentation infringes or misappropriates (i) any patent of the United States [ *57 ]; or (ii) a copyright; (iii) trade secret rights or (iv) other proprietary right of any third party, provided that: such indemnity shall not apply if the alleged infringement results from Use of the Software in conjunction with any other [ *58 ], an apparatus other than a Designated Unit, or unlicensed activities by Licensee. Licensee will promptly notify SAP in writing of any such claim and permit SAP to control fully the defense of such claim [ *59 ] any settlement of such claim as long as such settlement shall not include a financial obligation on Licensee [ *60 ]. Licensee shall cooperate fully in the defense of such claim and may appear, at its own expense, through counsel reasonably acceptable to SAP. SAP may settle any claim on a basis requiring SAP to substitute for the Software and Documentation alternative substantially equivalent non-infringing programs and supporting documentation. Licensee shall not undertake any action in response to any infringement or alleged infringement of the Software and Documentation [ *61 ].

In the event that any preliminary injunction, temporary restraining order or final injunction shall be obtained in the Territory, SAP shall, at its sole option, either:

(a) obtain the right for continued use of the infringing Software and Documentation; or

(b) modify the infringing Software and Documentation to avoid such infringement while obtaining at least equivalent functionality; or

(c) substitute for the Software and Documentation alternative equivalent software and supporting documentation; or

(d) provide a refund to Licensee of paid license fees for that part of the Software under claim of infringement[ *62 ]. All such refunds shall be depreciated on a [ *63 ], with such depreciation beginning [ *64 ] following the initial delivery of the Software under claim of infringement.

For clarity, SAP shall first attempt to perform the actions set forth in clauses (a), (b) and (c), and only if such actions are not feasible despite SAP’s commercially reasonable best efforts shall SAP perform the actions set forth in clause (d), in accordance with the above terms.

8.2 THE PROVISIONS OF THIS SECTION 8 STATE THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF SAP AND ITS LICENSORS TO LICENSEE, AND IS LICENSEE’S SOLE REMEDY, WITH RESPECT TO THE INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS BY SAP.

9. LIMITATIONS OF LIABILITY.

9.1 Licensee’s Remedies. Except for: (i) unauthorized use or disclosure of Licensee’s Proprietary Information, or (ii) SAP indemnification requirements under Section 8.1 herein, or (iii) SAP’s violation of Section 10 herein, Licensee’s sole and exclusive remedies for any damages or loss in any way connected with the operation or functional characteristics of the Software furnished by SAP and its licensors, whether due to SAP’s negligence or breach of any other duty, shall be, at SAP’s option: (i) to bring the performance of the Software into material compliance with the functional specifications or to the characteristics of the warranty set forth in Section 7.1, as the case may be; (ii) re-perform Support or (iii) return of an appropriate portion of any payment [ *65 ] made by Licensee with respect to the applicable portion of the Software (together with any prepaid but unearned [ *66 ] Support [ *67 ] Fees therefor).

9.2 Not Responsible. SAP will not be responsible under this Agreement (i) if the Software is not used in accordance with the Documentation; or (ii) if a defect in the Software is caused by Licensee, a Modification [ *68 ] third-party software, or third party database [ *69 ] SAP AND ITS LICENSORS SHALL NOT BE LIABLE FOR ANY CLAIMS OR DAMAGES ARISING FROM INHERENTLY DANGEROUS USE OF THE SOFTWARE AND/OR THIRD PARTY SOFTWARE LICENSED HEREUNDER.

9.3 Limitation of Liability.

(a) ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, EXCEPT FOR (I) DAMAGES RESULTING FROM UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION, [ *70 ] UNDER NO CIRCUMSTANCES SHALL SAP, ITS LICENSORS OR LICENSEE BE LIABLE TO EACH OTHER OR ANY OTHER PERSON OR ENTITY FOR AN AMOUNT OF DAMAGES IN EXCESS OF [ *71 ] OR BE LIABLE IN ANY AMOUNT FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES, LOSS OF GOOD WILL OR BUSINESS PROFITS, WORK STOPPAGE, DATA LOSS, COMPUTER FAILURE OR MALFUNCTION, OR EXEMPLARY OR PUNITIVE DAMAGES.

(b) The foregoing limitation of liability on direct damages only does not apply to damages arising out of personal injury or death caused by the negligence or willful misconduct of SAP. In addition, the foregoing limitation of liability on direct damages only does not apply to damages arising out of tangible property damage caused by the negligence or willful misconduct of SAP up to [ *72 ].

5

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

9.4 Severability of Actions. SUBJECT TO THE TERMS OF THIS AGREEMENT, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES, OR EXCLUSION OF DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE ENFORCED AS SUCH.

9.5 Coordination of Provisions. The limitation of liability and remedies provisions contained in this Section 9 shall not apply to Services provided pursuant to either the Professional Services Schedule to this Agreement (“PSS”) or a statement of work issued pursuant to the PSS; the limitation of liability and available remedies for such Services shall be as set forth in the PSS. Furthermore, in each instance in which provisions of the PSS contradict or are inconsistent with the provisions of this Agreement, the provisions of the PSS shall prevail and govern. Additionally, in each instance in which provisions of a statement of work contradict or are inconsistent with the provisions of the PSS, the provisions of the statement of work shall prevail and govern.

10. ASSIGNMENT.

10.1 In General. Neither party may, without the other party’s prior written consent, which shall not be unreasonably withheld or delayed, assign, pledge, or otherwise transfer this Agreement, or any of its rights or obligations under this Agreement, or the other party’s Proprietary Information, to any party. Notwithstanding the foregoing, Licensee shall have the right to assign this Agreement and its rights to SAP’s Proprietary Information [ *73 ] to any United States headquartered entity [ *74 ] which is not a Competitor of SAP and which acquires all or substantially all of Licensee’s operating assets, or, in the event Licensee is merged or reorganized pursuant to any plan of merger or reorganization, subject to the condition that Licensee provides SAP with: (1) a statement, signed on behalf of the Assignee, that such Assignee agrees to abide by the terms of this Agreement; (2) evidence, satisfactory to SAP, of such Assignee’s corporate authority to enter into this Agreement; and (3) a copy of the Assignee’s most current audited financial statements, prepared in accordance with generally accepted accounting principals consistently applied, showing that such Assignee has a minimum net worth sufficient to allow Assignee to perform its obligations under this Agreement; provided, however, that an Assignee with a net worth equal to or greater than Licensee’s net worth as of the Effective Date of this Agreement shall be deemed to be sufficient to allow such Assignee to perform its obligations hereunder. [ *75 ] SAP may assign this to Agreement to its affiliates [ *76 ]. A “Competitor” of SAP is an entity whose primary business is marketing and licensing computer software equivalent to the computer software marketed and licensed by SAP.

10.2 Departing Business Units. Should Licensee, from time to time, sell or otherwise transfer the assets or equity ownership of any Licensee division, Affiliate or business unit (all jointly hereafter referred to as “Business Unit”) and such Business Unit ceases to be otherwise eligible hereunder to Use the Software as Licensee or as an Affiliate, and as part of such transfer Licensee agrees to provide transitional services to the Business Unit in connection with the transfer of such Business Unit, including the use of Software by Licensee for such Business Unit, then Licensee shall have the right to do so for a period of [ *77 ] as if such Business Unit were still part of Licensee or an Affiliate, as the case may be. If Licensee, as part of any agreement with such Business Unit, is required to provide such services for a period beyond [ *78 ], then Licensee shall have the right to so provide such services for up to [ *79 ] subject to a mutually agreed upon payment to SAP. Upon Licensee no longer providing services to such Business Unit pursuant to this provision, SAP agrees that SAP will offer to license the Software to such Business Unit on SAP’s then current prices [ *80 ] in effect.

10.3 Bankruptcy. Except for any trademarks contained therein, the parties agree that the licenses granted hereunder are of intellectual property (as defined in 11 U.S.C. §101(35A). In the event of an entry of an order for relief under Title 11, United States Code, as to Licensee, the trustee may elect, pursuant to 11 U.S.C. §365(b) or, if rejected by the trustee, Licensee may elect, pursuant to 11 U.S.C. §365(n), to continue Licensee’s rights under the Agreement following notice and assumption of Licensee’s obligations hereunder. [ *81 ] However, nothing in this Section 10.3 shall be construed to be consent by SAP required for any assignment of this Agreement by the trustee or Licensee in a proceeding under Title 11, United States Code.

10.4 Assignment of Software as Part of Transfer. Upon (i) a sale or transfer of assets or equity ownership of any Business Unit permitted hereunder, (ii) the voluntary end or expiration of the transitional period described above, and (iii) such Business Unit subsequently entering into a separate SAP license agreement, Licensee may assign the applicable Software licenses (entirely [ *82 ]; but specifically excluding licenses for third party software and/or third party database) and license to such Business Unit any Modifications [ *83 ] (as defined in this Agreement) accessed as part of transitional services for such Business Unit (collectively, the “Transferred Software”), provided that [ *84 ]. Upon the occurrence of the foregoing, Licensee’s rights to the Software licenses included within Terminated Software shall immediately cease and the parties hereto shall mutually execute an amendment to the Agreement memorializing the termination of the applicable Software licenses, and associated Maintenance Fees. [ *85 ]

11. GENERAL PROVISIONS.

11.1 Severability. It is the intent of the parties that in case any one or more of the provisions contained in this Agreement shall be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

11.2 No Waiver. If either party should waive any breach of any provision of this Agreement, it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision hereof.

11.3 Counterparts. This Agreement and any amendments, appendices, schedules and exhibits hereto, may be executed (if required) in multiple counterparts, and each such counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. Photocopies, facsimiles and all other electronic versions of any such documents shall be deemed originals for all purposes.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

11.4 Export Control Notice. The Software, Documentation and Proprietary Information are being released or transferred to Licensee in the United States and are therefore subject to the U.S. export control laws. Licensee acknowledges its obligation to ensure that its exports from the United States are in compliance with the U.S. export control laws. Licensee shall also be responsible for complying with all applicable governmental regulations of any foreign countries with respect to the use of the Proprietary Information by its Subsidiaries outside of the United States. Licensee agrees that it will not submit the Software to any government agency for licensing consideration or other regulatory approval without the prior written consent of SAP.

11.5 Confidential Terms and Conditions. Neither party shall disclose the terms and conditions of this Agreement or the pricing contained therein to any third party except as required by applicable law, rule, or regulation. Provided, however, that either party may disclose such terms, conditions or pricing to legal, accounting and professional advisors bound by formal ethical or fiduciary duties requiring such advisors to treat, hold and maintain such information in accordance with the terms and conditions of this Agreement. Except as set forth in Appendices, neither party shall use the name of the other party in publicity, advertising, or similar activity, without the prior written consent of the other.

11.6 Governing Law. This Agreement shall be governed by and construed under the Commonwealth of Pennsylvania law without reference to its conflicts of law principles. In the event of any conflicts between foreign law, rules, and regulations, and United States of America law, rules, and regulations, United States of America law, rules, and regulations shall prevail and govern. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this agreement. The Uniform Computer Information Transactions Act as enacted shall not apply. Process may be served on either party by U.S. Mail, postage prepaid, certified or registered, return receipt requested, or by such other method as is authorized by applicable law or court rule.

11.7 Notices. All notices or reports which are required or may be given pursuant to this Agreement shall be in writing and shall be delivered to the respective executive offices of SAP and Licensee at the addresses first set forth above. All such notices or reports shall be deemed to have been delivered (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iii) in the case of mailing, on the fourth business day where sent after such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location are authorized or required to be closed. Either party may change its address(es) for notices by notice to the other party given consistent with this Section 11.7.

11.8 Force Majeure. Any delay or nonperformance of any provision of this Agreement (other than for the payment of amounts due hereunder) caused by conditions beyond the reasonable control of the performing party shall not constitute a breach of this Agreement, and the time for performance of such provision, if any, shall be deemed to be extended for a period equal to the duration of the conditions preventing performance; provided the party claiming force majeure (a) promptly [ *86 ] notifies the other party of the event, (b) takes all reasonably diligent steps to reduce and overcome the event’s impact and (c) immediately resumes performance when the event ends. The foregoing, however, will not excuse SAP from meeting any service and disaster response and recovery times set forth in any support schedule or Appendix.

11.9 Entire Agreement. This Agreement and each Schedule and Appendix hereto constitute the complete and exclusive statement of the agreement between SAP and Licensee, and all previous representations, discussions, and writings are merged in, and superseded by, this Agreement. This Agreement may be modified only by a writing signed by both parties. This Agreement and each Appendix hereto shall prevail over any additional, conflicting, or inconsistent terms and conditions which may appear on any purchase order or other document furnished by Licensee to SAP or by SAP to Licensee.

11.10 Licensee Policies. SAP represents that it has received and such SAP Consultants shall abide by Licensee’s reasonable policies governing passwords, acceptable use, code of ethics, access controls and systems security policies, safety, workplace conduct and no smoking policies (the “Licensee Policies”), which may be updated from time to time. In the event there are material changes to such Licensee Policies, Licensee agrees to provide SAP with updated copies prior to any engagement of SAP Consultants. SAP agrees, and agrees to cause each service team member, to report immediately to Licensee’s project manager any information that it may learn concerning a violation of any of the Licensee Policies or of any law. SAP shall, and shall cause all employees and contractors to comply with all applicable laws and Licensee Policies.

11.11 Controls Summary. Subject to a mutually agreeable Statement of Work and related terms, including fees, upon request by Licensee, SAP agrees reasonably to cooperate with Licensee in complying with the Sarbanes-Oxley Act of 2002, as amended, and related laws, rules and regulations, in preparing a Controls Summary. As used herein a “Controls Summary” is a document that addresses how the Software incorporates controls and procedures: (i) to support accuracy and completeness of transaction processing, authorization and validity; (ii) to maintain the accuracy and validity of data inputs, including edit, validity and bound checks; (iii) to report errors identified in processing (i.e., audit trails or exception reports); (iv) to enable access controls and authorize compliance with system requirements; and (v) to support security as well as Software program output integrity, completeness, accuracy and validity.

12. ESCROW OF SOURCE CODE.

12.1 SAP warrants that the source code for the Software, together with related Documentation as it is or becomes available has been deposited in an escrow account maintained by a third party provider (the “Escrow Agent”), pursuant to an agreement between the Escrow Agent and SAP, (the “Escrow Agreement”). SAP will at all times maintain in force and perform its obligations under either (i) the Escrow Agreement or (ii) a successor escrow agreement with a successor escrow agent. SAP will (i) notify Licensee of any change of the escrow agent under the Escrow Agreement, of any change to the terms of the Escrow Agreement or of any termination thereof; and (ii) provide in all Escrow Agreements for release of the source code of the Software to Licensee on at least those conditions set forth below and provide for Licensee to have rights under such arrangement consistent with this Agreement. Licensee is an intended beneficiary under the Escrow Agreement, and will be an intended beneficiary under any successor escrow agreement.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

12.2 SAP will from time to time deposit into the escrow account copies of source code for Releases and Versions of the Software and related Documentation promptly following availability of the same to SAP’s licensees generally.

12.3 SAP or SAP’s trustee in bankruptcy shall authorize the Escrow Agent to make and release a copy of the applicable deposited materials to Licensee upon the occurrence of any of the following events:

(a) The existence of any one or more of the following circumstances, uncorrected for more than thirty (30) days: entry of an order for relief under Title 11 of the United States Code; the making by SAP of a general assignment for the benefit of creditors; the appointment of a general receiver or trustee in bankruptcy of SAP’s business or property; or action by SAP under any state insolvency or similar law for the purpose of its bankruptcy, reorganization, or liquidation; unless within the specified thirty (30) day period, SAP (including its receiver or trustee in bankruptcy) provides to Licensee adequate assurances, reasonably acceptable to Licensee, of its continuing ability and willingness to fulfill its maintenance obligations under this Agreement;

(b) SAP has ceased its on-going business operations or that portion of its business operations relating to the sale, licensing and maintenance of the Software; or

(c) Failure of SAP to carry out the material maintenance obligations imposed on it pursuant to this Agreement after reasonable opportunity has been provided to SAP and SAP AG to perform such obligations.

12.4 Upon the occurrence of any of the events set forth in Section 12.3 above, Licensee may obtain from the trustee, pursuant to 11 U.S.C. §365(n)(3)(A), as amended, a copy of the source code to updates, patches and/or fixes to the deposited material (and any documentation relating to such source code) held by the trustee, if any, after Licensee (i) provides the trustee with a written request for a copy of any such source code or its related documentation, and (ii) provides SAP with written notice of Licensee’s request at least [ *87 ] before the trustee is required to comply with such request. Notwithstanding the foregoing, Licensee may only avail itself of 11 U.S.C. §365(n)(3)(A), as amended, if obtaining the subject source code or its related documentation thereunder either (i) does not interfere in any material fashion with the administration of the underlying bankruptcy proceedings, or (ii) is approved by order of the bankruptcy court having jurisdiction over the subject matter.

12.5 In no event shall Licensee have the right to access the applicable deposited materials if SAP AG agrees to assume SAP’s maintenance obligations under this Agreement.

12.6 In the event of release under this Agreement, Licensee agrees that it will treat and preserve the deposited materials as a trade secret of SAP AG in accordance with the same precautions adopted by Licensee to safeguard its own trade secrets against unauthorized use and disclosure and in all cases at least with a reasonable degree of care. Release under this provision shall not extend Licensee any greater rights or lesser obligations than are otherwise provided or imposed under this Agreement. This provision shall survive any termination of this Agreement.

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly executed this Agreement to become effective as of the date first above written.

SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	9/26/07

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SAP CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

EXHIBIT A

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September     , 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

AFFILIATE USE AGREEMENT

This Affiliate Use Agreement is made effective as of the      day of             , 200   between SAP America, Inc., a Delaware Corporation, with offices at 3999 West Chester Pike, Newtown Square, PA 19073 (“SAP”) and                                 , a corporation, with offices at                                                                                                                            (“Subsidiary”).

1. Affiliate is entitled to have Named Users Use the Software on the Designated Unit(s) identified in the SAP America, Inc. / Pacer International, Inc. Software License Agreement (“Agreement”).

2. Affiliate agrees to abide by and be bound by all of the terms and conditions of the Agreement applicable to Subsidiary and applicable to Licensee. SAP may directly enforce all such terms and conditions against it directly.

3. Affiliate agrees that its right to Use SAP Software and receive applicable Support services shall be governed solely by the Agreement. In the event that the Agreement is terminated, this Affiliate Use Agreement is terminated or if Affiliate ceases to meet the definition of “Affiliate” therein, Affiliate agrees that all of its rights to the Software will cease effective as of the termination date.

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly executed this Affiliate Use Agreement.

SAP America, Inc.
(SAP)	(Subsidiary)
By:	By:
Title:	Title:
Date:	Date:

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EXHIBIT B

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

LIST OF AFFILIATES

Part I. The following Affiliates otherwise qualify under Clause (A) of the Affiliate definition:

Intermodal Container Service, Inc.

Manufacturing Consolidation Service of Canada, Inc.

Ocean World Lines, Inc.

Ocean World Lines Bremen GmbH

Ocean World Lines Bremen GmbH & Co. Kommanditgesellschaft

Ocean World Lines Europe GmbH

Ocean World Lines (UK) Ltd.

Pacer Cartage, Inc.

Pacer Distribution Services, Inc.

Pacer Global Logistics, Inc.

Pacer Stacktrain, Inc.

Pacer Stacktrain S. de R.L. de C.V.

Pacer Transport, Inc. (formerly known as Pacific Motor Transport Company)

PDS Trucking, Inc.

Rail to Rail Transport, Inc.

RF International, Ltd.

S&H Transport, Inc.

S&H Leasing, Inc.

Stacktrain Mexico, S. de R.L. de C.V.

Part II. The following entities do not otherwise qualify as Affiliates under Clause (A) of the Affiliate definition, but will be deemed Affiliates hereunder. If minimum requirements are listed below for any such entity, it will be deemed an Affiliate only so long as such minimum requirements are met:

None, as of the effective date of the Agreement.

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EXHIBIT C

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

Confidentiality Agreement

This Agreement made this         th day of         , 200   among SAP America, Inc. having its principal place of business at 3999 West Chester Pike, Newtown Square, Pennsylvania 19073 (hereinafter referred to as “SAP”),                             , having its principal place of business at                                                                   (hereinafter referred to as “Vendor”) and Pacer International, Inc., a Tennessee corporation, with offices at 2300 Clayton Road, Concord, CA 94520 (hereinafter referred to as “Pacer”).

WHEREAS, SAP is in the business of providing proprietary software, documentation, and related services to its customers; and

WHEREAS, Pursuant to the Software License Agreement dated September         , 2007, between SAP and Pacer (“License Agreement”), SAP has licensed its proprietary Software (“Software”) to Pacer for use in its business operations.

WHEREAS, Pacer has engaged Vendor to perform certain facilities and/or information systems management services as set forth in the                                      Agreement between Vendor and Pacer dated                          (“Services”) that will require Vendor to have access to the Software.

WHEREAS, SAP and/or Pacer will disclose to Vendor the Software, whether in source or object code, including unique concepts or techniques embodied therein and the Documentation therefor, and any other information marked or reasonably identifiable as proprietary or confidential (hereinafter referred to as “Proprietary Information”) for the sole purpose of allowing Vendor to provide the Services to Pacer.

NOW THEREFORE, in consideration of disclosure to Vendor of the Proprietary Information, and intending to be legally bound, the parties agree as follows:

1. Permissible Users.

Vendor agrees that it will use the Proprietary Information solely for providing the Services to Pacer and that Vendor will not use the Proprietary Information to process its own business information or to provide processing or facilities management or other services to any party other than Pacer.

2. SAP Proprietary Information.

(a) Vendor acknowledges SAP’s assertion that ownership of and title in and to all intellectual property rights, including patent, trademark, service mark, copyright, and trade secret rights, in the Proprietary Information are and shall remain in SAP and SAP AG and their respective licensors. Vendor acquires only the right to use the Proprietary Information under the terms and conditions of this Agreement and does not acquire any ownership rights or title in or to the Proprietary Information and that of their respective licensors.

(b) SAP agrees that no restrictions are made upon Vendor with respect to any Proprietary Information that: (a) is already rightfully possessed by Vendor without obligation of confidentiality; or (b) is developed independently by Vendor without breach of this Agreement; or (c) is rightfully received by Vendor from a third party without obligation of confidentiality; or (d) is, or becomes, publicly available without breach of this Agreement.

(c) Vendor shall not remove any proprietary, copyright, trademark, or service mark legend from the Software or Documentation.

(d) Vendor shall maintain a log of the number and location of all originals and copies of the Software. The inclusion of a copyright notice on any portion of the Software or Documentation shall not cause or be construed to cause it to be a published work.

3. Protection of Proprietary Information.

(a) Vendor agrees that it will not disclose, provide, or make available any of the Proprietary Information in any form to any person, except to bona fide employees, officers, or directors whose access is necessary to enable Vendor to exercise its rights hereunder, without the SAP’s prior written consent.

(b) Vendor shall not copy, translate, disassemble, or decompile, nor create or attempt to create the source code from the object code of the Software licensed hereunder or use it to create a derivative work, unless authorized in writing by SAP.

(c) Vendor acknowledges that any disclosure to third parties of Proprietary Information may cause immediate and irreparable harm to SAP, therefore, Vendor agrees to take the same protective precautions to protect the Proprietary Information from disclosure to third parties as it takes with its own proprietary and Proprietary information of a similar nature.

4. Duties Upon Termination.

Upon any termination hereunder, Vendor shall immediately cease Use of the Proprietary Information and shall irretrievably delete the Software, Third-Party Database and Documentation from all Vendor computer hardware, including CPU,

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application servers, terminals, workstations, and data files. Within thirty days after any termination, Vendor shall deliver to SAP at Vendor’s expense (adequately packaged and insured for safe delivery) or, at SAP’s request, destroy all copies of the Proprietary Information in every form. Vendor further agrees to erase the Software and Documentation from any storage media. Vendor shall certify in writing to SAP that it has performed the foregoing.

5. No Rights Transferred.

The furnishing of the Proprietary Information for the limited purposes set forth herein does not constitute the grant, option, license, sublicense, assignment, or other form of transfer to Vendor of any rights, title or interest in or to such Proprietary Information.

6. Modifications and Extensions.

Vendor, under the terms of this Agreement, expressly warrants and represents on its behalf, and on behalf of its agents and employees, that no Modifications or Extensions for the licensed Software will be performed without providing prior written notice to SAP. All Modifications and Extensions to the Software owned by SAP shall be considered part of the Software for purposes of this Agreement.

7. Indemnification.

(a) Vendor agrees to indemnify and defend SAP, its parent, affiliates, its and their officers, directors and employees, from and against any and all loss, claim or damage, including attorney’s fees and costs, which SAP may suffer, that arise from or are in any way connected with Vendor’s provision of the Services to Pacer or breach of Vendor’s obligations hereunder.

(b) ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, UNDER NO CIRCUMSTANCES SHALL SAP OR VENDOR BE LIABLE TO THE OTHER OR ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES, LOSS OF GOOD WILL OR BUSINESS PROFITS, WORK STOPPAGE, DATA LOSS, COMPUTER FAILURE OR MALFUNCTION, ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSS, OR EXEMPLARY OR PUNITIVE DAMAGES. THE FOREGOING LIMITATIONS OF LIABILITY DOES NOT APPLY TO DAMAGES ARISING OUT OF BREACH OF SECTIONS 3, 5 AND 8 HEREOF, OR TO PERSONAL INJURY OR DEATH CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF VENDOR.

8. Assignment.

Vendor may not, without SAP’s prior written consent, assign, delegate, sublicense, pledge, or otherwise transfer this Agreement, or any of its rights or obligations under this Agreement. Any permitted assignment of this Agreement shall provide that the provisions of this Agreement shall continue in full force and effect and that Vendor shall guaranty the performance of its assignee and shall remain liable for all obligations hereunder.

9. Miscellaneous.

(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns.

(b) The provisions of this Agreement, together with any agreements incorporated or referred to herein, shall (i) with regard to the subject matter hereof, supersede all prior agreements and negotiations, and (ii) be modified only by a written agreement.

(c) In the event that any provision of this Agreement shall, for any reason, be determined to be invalid, illegal, or unenforceable in any respect, the parties hereto shall negotiate in good faith and agree to such amendments, modifications, or supplements of or to this Agreement or such other appropriate actions as shall, to the maximum extent practicable in light of such determination, implement and give effect to the intentions of the parties as reflected herein, and the other provisions of this Agreement shall, as so amended, modified, or supplemented, or otherwise affected by such action, remain in full force and effect.

(d) This Agreement shall be governed by and construed under the Commonwealth of Pennsylvania law without reference to its conflicts of law principles. The parties consent to the jurisdiction of any federal or state court sitting in Delaware County, Pennsylvania, for all claims, suits, or actions arising under this Agreement.

This Agreement shall be in effect beginning on the date first above written and shall continue in effect until otherwise agreed upon by the parties in writing.

IN WITNESS HEREOF, and intending to be legally bound, the parties have executed this Agreement on the date and year first written above.

SAP AMERICA, INC.	(VENDOR)
By:	By:
Title:	Title:
Date:	Date:

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PACER INTERNATIONAL, INC.

By:

Title:

Date:

14

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

PREMIUM SUPPORT SCHEDULE (“Schedule”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Schedule is hereby annexed to and made a part of the Agreement specified above. In each instance in which provisions of this Schedule contradict or are inconsistent with the provisions of the Agreement, the provisions of this Schedule shall prevail and govern.

Licensee may request and SAP shall provide, to such degree as SAP makes such services generally available in the Territory, premium support services for the Software (“Premium Support”). Premium Support currently includes the delivery of new releases of the Software and Software correction packages, support via telephone, remote support/update, Service Level Agreement, SAP Premium Support Advisor, Assessment Services, Proactive Remote Services, Early Watch Alert and SAP’s support portal.

Alternately, Licensee may request and SAP shall provide, to such degree as SAP makes such services generally available in the Territory, maintenance for the Software (“Maintenance”). Maintenance currently includes the delivery of new releases of the Software and Software correction packages, support via telephone, remote support/update, Early Watch Alert, and SAP’s support portal. In order to receive Maintenance, Licensee must make all required remote support and update connections to each Designated Unit as reasonably requested by SAP. In order to receive Premium Support, Licensee must make all required remote support and update connections to each Designated Unit as requested by SAP. In the event SAP licenses third party software to Licensee under the Agreement, SAP shall provide Premium Support or Maintenance on such third party products to the degree the applicable third party makes such Premium Support or Maintenance services available to SAP. Premium Support or Maintenance services are only provided for the software ordered by the customer and for the then current standard releases as defined in http://service.sap.com/releasestrategy. Notwithstanding the foregoing, SAP agrees to support each Version of its Software for not less [ *88 ] after it is made commercially available. “Version” means each issuance of each Release of the Software, excluding third party software, identified by the numeral to the right of the decimal point, e.g., 3.1. “Release” means each issuance of the Software, excluding third party software, identified by the numeral to the left of the decimal point, e.g., 3.0.

1. SAP Premium Support Services. SAP Premium Support Services include the following:

1.1 Service Level Agreement. The following Service Level Agreement (“SLA”) commitments shall be offered commencing in the first full Calendar Quarter following the completion of Licensee’s implementation of the material recommendations resulting from the Initial Assessment specified in Section 1.3 below. As used herein, “Calendar Quarter” is the three month period ending on March 31, June 30, September 30 and December 31 respectively of any given calendar year. Licensee will classify each Support Message according to the criteria established in Section 1.1.1 below.

1.1.1 SLA for Initial Response Times:

a. Priority 1 Support Messages (“Very High”). SAP shall respond to Priority 1 support messages (defined as production system shut-down or severe restrictions in the SAP productive system that prevent productive work) within one (1) hour of SAP’s receipt (twenty-four hours a day, seven days a week) of such Priority 1 support messages.

b. Priority 2 Support Messages (“High”). SAP shall respond to Priority 2 support messages (defined as severe loss of functionality, significant restrictions in the SAP productive system) within four (4) hours of SAP’s receipt (during SAP’s normal business hours (in the region Licensee is located) Monday-Friday, excluding United States and German legal and public holidays) of such Priority 2 support messages.

c. For further information on assigning priority levels see SAP Note 67739 available in the SAP Notes Database on the SAP Service Marketplace via www.service.sap.com/support.

1.1.2 SLA for Corrective Action Response Time for Priority 1 Support Messages: SAP shall provide a solution, work around or action plan for resolution (“Corrective Action”) of Licensee’s Priority 1 support message within four (4) hours of SAP’s receipt (twenty-four hours a day, seven days a week) of such Priority 1 support messages. In the event an action plan is submitted to Licensee as a Corrective Action, such action plan shall include: (i) status of the error resolution process; (ii) planned next steps, including identifying responsible SAP resources; (iii) required Licensee actions to support error resolution process; (iv) to the extent possible, due dates for SAP’s actions; and (v) date and time for next status update from SAP. Subsequent status updates shall include a summary of the actions undertaken so far; planned next steps; and date and time for next status update. The time for Corrective Action refers only to that part of the processing time when the support message is in the status “in-process” at SAP.

1.1.3 Service Level Credit. SAP shall have met the stated SLAs provided SAP reacts within the stated time frames in ninety-five percent (95%) or greater of the aggregate cases for all SLAs within a Calendar Quarter. In the event Licensee submits less than twenty (20) messages (in the aggregate for all SLAs) subject to the above stated SLAs in any Calendar Quarter during the Premium Support Services term, Licensee agrees that SAP shall be deemed to have met the stated SLA provided it does not exceed the stated SLA time-frame in more than one support message during the applicable Calendar Quarter. In the event Licensee claims in writing to SAP that SAP failed to meet the stated SLAs as measured in accordance with this Section 1.1.3, SAP shall investigate such claim and provide a written report of SLA performance during the applicable Calendar

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Quarter. Should the report show that SAP failed to meet the stated SLAs as measured in accordance with this Section 1.1.3, SAP shall apply a Service Level Credit (“SLC”) to Licensee’s next Premium Support Service Fee invoice equal to [ *89 ] of Licensee’s Premium Support Service Fee for the applicable Calendar Quarter for each failure reported and demonstrated in accordance with this Section 1.1.3, subject to a maximum SLC cap per Calendar Quarter of [ *90 ] of Licensee’s Premium Support Service Fee for such Calendar Quarter. In order to be considered for SLC hereunder, Licensee must notify SAP in writing of the alleged failure to meet the SLAs within thirty (30) days of the close of the applicable Calendar Quarter. The SLC stated in this Section 1.1.3 is Licensee’s sole and exclusive remedy with respect to any alleged or actual failure of SAP to achieve any applicable SLA. Licensee shall provide reasonable assistance to SAP in its effort to correct any problems or processes inhibiting SAP’s ability to achieve the SLA.

1.1.4 In the event Licensee’s productive use of the Software or the Priority 1 message is not closed or the Priority 1 message status is not lowered within two (2) business days (Monday-Friday, excluding United States and German legal or public holidays), SAP reserves the right, in SAP’s sole judgment, to provide additional support at Licensee’s site where the Designated Unit is located for the purpose of restoring productive use of the Software. The parties shall agree in writing as to the scope and duration of the on-site support on a case-by-case basis. The additional on-site support shall in no case extend past the time when Licensee resumes productive use of the Software and shall not depend on closure of the Priority 1 message or the lowering of its status to a lower priority level.

1.1.5 Licensee shall submit such support messages via the SAP Solution Manager Software in accordance with SAP’s then current support message processing log-in procedure which contain the relevant details necessary (as specified in SAP Note 16018 or any future SAP Note which replaces SAP Note 16018) for SAP to take action on the reported error related to an identified Licensee productive installation of SAP Software. SAP Solution Manager Software includes tools and reporting capabilities that allow Licensee to track SLA compliance. Licensee must provide reproducible errors in order for SAP to provide the SLAs specified herein. The SLAs specified herein shall not apply to: (i) support messages related to SAP Software products that are in shipment status “restricted shipment” as identified in SAP’s Release Strategy published on the SAP Service Marketplace; (ii) support messages related to SAP Software products that are in a support status of “Customer Specific Maintenance”; (iii) support message for a release, version and/or functionality of SAP Software developed specifically for Licensee, e.g. by SAP Custom Development and/or by an SAP AG subsidiary; (iv) support messages regarding country versions that are not part of the SAP standard software and instead are realized as partner add-ons, enhancements, or modifications (even if these country versions were created by SAP or an associated organization); (v) the root-cause of the reported error is functionality not covered in the Documentation and not an error in the SAP Software; and (vi) submitted error messages that have been assigned to remote consulting (i.e., error messages related to configuration or custom code).

1.2 SAP Premium Support Advisor. SAP shall designate one (1) resource in the SAP Active Global Support (“AGS”) Organization at one of SAP’s support centers to be Licensee’s support contact person. Upon request from Licensee, this Support Advisor shall be responsible for: (i) planning, coordinating and delivering (in cooperation with Licensee) the Assessments described in Section 1.3 below; (ii) advising Licensee on the implementation of recommended actions resulting from delivery of SAP support services; (iii) periodic follow-up with the Licensee with respect to mutually agreed actions resulting from the Assessments; (iv) acting as an additional escalation contact for exception handling in the support process; (v) providing information regarding SAP products, strategy, news and best practices as related to support and operational issues; and (vi) facilitating Licensee’s certification of the Customer Competence Center. The designated SAP Support Advisor shall be available via telephone and email during normal business hours in a time zone mutually agreed to by the parties. Normal business hours are 8:30 am to 5:30 pm local time, Monday through Friday unless otherwise agreed to in writing by the parties. SAP shall make available a substitute Support Advisor during any periods where the primary Support Advisor is unavailable. All Services of the designated SAP Support Advisor shall be coordinated with Licensee’s designated Premium Support Program Manager, as described in Section 2 below.

1.3 Assessment Services. Licensee and SAP agree to jointly conduct an initial assessment (“SAP Premium Support Setup Service”) and thereafter one (1) assessment per calendar year during the Premium Support Services term (“Annual Assessment”). The focus of the SAP Premium Support Setup Service may include: (i) securing remote connectivity between Licensee and SAP; (ii) explaining best practices for collaboration with SAP Active Global Support Organization; (iii) reviewing Licensee solution landscape for SLA readiness; (iv) review of Licensee project roadmap; and (v) initiating Licensee’s use of SAP Solution Manager. Thereafter, the Annual Assessments shall be a review of Licensee’s solution landscape and priorities as may be mutually agreed by the parties. Such Annual Assessments may address the following areas: (i) technical risk analysis of a planned SAP solution (system landscape and core business processes) and plan for SAP related implementation projects; (ii) software operational readiness or software operational optimization assessment and plan for supporting a new SAP solution; and (iii) SAP Solution Optimization Assessment for a productive SAP solution (including potential landscape optimization possibilities). The output of such Assessments shall be a summary service report which may include findings, risks or issues identified, and corresponding recommendations. Such Assessments shall be scheduled for delivery at dates and times mutually agreed to by the parties. Licensee is responsible for making the necessary and timely internal arrangements to facilitate the Assessment Services hereunder. Licensee agrees to provide appropriate resources, including but not limited to equipment, data, information, workspace and appropriate and cooperative personnel, to facilitate the performance of the Assessment Services hereunder.

1.4 Proactive Remote Services: Premium Support currently includes a choice of one of the following services per live installation per year:

A. One GoingLive Check for any new Software or other SAP application implementation;

B. One GoingLive Upgrade Check for an upgrade to a higher functional release (e.g. from R/3 4.0 to 4.6); or

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

C. One GoingLive OS/DB Migration Check. This OS/DB Migration Check assists the Licensee in preparing for a migration of an operating system or database. Migration is the responsibility of the Licensee.

In addition to these options, Premium Support currently includes up to two EarlyWatch Sessions per live SAP installation for the continual optimization of Licensee’s already live system.

To schedule GoingLive Check, GoingLive OS/DB Migration Check, or EarlyWatch Sessions, Licensee must contact Americas Customer Premium Supports at 800-677-7271 or internationally at 610-661-7241 and choose option 3. To assist Licensee in this, SAP has established the following scheduling pre-requisites:

A. The Licensee must provide remote access to its productive system.

B. To receive the GoingLive Check or GoingLive Upgrade Check Licensee must inform SAP at least three months prior to your go live or upgrade date.

C. To receive the EarlyWatch Sessions, SAP requests a minimum of three months advanced notification. In addition, Licensee must send the EarlyWatch Alert data to SAP on at least a monthly basis and cooperate with SAP in reviewing the data and determining the proper deployment of the EarlyWatch Sessions based on the EarlyWatch Alert data.

D. To receive the GoingLive OS/DB Migration Check, Licensee must comply with all of the then current pre-Check requirements. These requirements currently include hiring a certified OS/DB migration consultant, proper testing, installation of tools, and advance scheduling. Contact your local SAP Customer Support Representative for more information.

Further information and detail about individual SAP services can be found on SAPNet site (http://www.service.sap.com/support).

FAILURE TO UTILIZE THE PREMIUM SUPPORT SERVICES PROVIDED BY SAP MAY PREVENT SAP FROM BEING ABLE TO IDENTIFY AND ASSIST IN THE CORRECTION OF POTENTIAL PROBLEMS WHICH, IN TURN, COULD RESULT IN UNSATISFACTORY SOFTWARE PERFORMANCE.

2. Licensee Requirements for SAP Premium Support Services.

2.1 SAP Premium Support Services Program Management. Licensee shall designate an English speaking Premium Support Program Manager. Such Premium Support Program Manager shall cooperate with the designated SAP Support Advisor to administer the terms of this Schedule. Licensee’s designated Premium Support Program Manager shall be Licensee’s authorized representative empowered to make necessary decisions for Licensee or bring about such decision without undue delay.

2.2 Other Requirements.

2.2.1 In order to receive Premium Support Services hereunder, Licensee must: (i) continue to pay all Premium Support Service Fees for the Software licensed under and in accordance with the Agreement; (ii) otherwise fulfill its obligations under the Agreement and this Schedule; (iii) have installed, configured and be using the then current release of SAP Solution Manager Software system or (available in accord with SAP Premium Support Services), with the latest patch levels for Basis, ABAP, and the latest SAP Solution Manager Software support packages, as the Service delivery platform for documenting top issues, core business processes and critical system information for the SAP Software products for which Licensee is receiving standard support services; (iv) document all core business processes and system landscapes in the SAP Solution Manager Software system; (v) activate SAP EarlyWatch Alert for all SAP Software for which Licensee receives support services; and (vi) inform SAP of planned changes to Licensee’s system landscape. [ *91 ].

2.2.2 Licensee agrees to promptly disclose to SAP and maintain adequate and current records of all Modifications and, if needed to provide Premium Support Services, provide such records to SAP.

2.2.3 Premium Support from SAP for the Software licensed hereunder is limited to the following site(s): (1) U.S.; (2) Asia-Pacific; and (3) Europe (collectively, the “Designated Site(s)”).

2.2.4. Licensee agrees to establish and maintain [ *92 ] Competency Center(s) (“CCC”) from among the site(s) specified above within twelve months after the delivery of the Software. Each CCC must maintain an internal Help Desk to provide first level support to Licensee’s Named Users. Such internal Help Desk(s) must be staffed during Licensee’s normal working hours, but no less than eight hours a day, five days a week (excluding Licensee’s standard holidays). All Named Users may have access to SAP’s support portal however, only Licensee CCC employees are authorized to contact SAP after attempting to resolve the matter. Each CCC shall coordinate Licensee’s Modification notification and disclosure requirements and shall coordinate Licensee’s development requests. Licensee’s CCC is responsible for the administration and management of the requirements specified in the Agreement including, but not limited to, performing periodic self audits to ensure Licensee’s compliance with the license grant, maintaining master and installation data and managing the release order process. In the event Licensee does not establish and maintain CCC(s) in accordance with the above, SAP [ *93 ] reserves the right to increase [ *94 ] Licensee’s then current maintenance percentage factor then in effect. [ *95 ]

2.2.5 Premium Support Fees shall be paid annually in advance and shall be specified in Appendices to the Agreement. Premium Support Services offered by SAP may be changed annually by SAP at any time upon [ *96 ] prior written notice provided such changes to the Premium Support Services are applied to all SAP licensees receiving Premium Support Services. After Year 2, the Premium Support Fees and any limitations on increases are subject to Licensee’s compliance with the CCC requirements specified above. Licensee is required to certify their CCC in accordance with SAP’s CCC certification program. Certification may be subject to future requirements. Contact your account team for further details on this program.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

3. Term and Termination. The term of the Premium Support Services specified herein shall be [ *97 ] from the effective date of this Schedule (“Initial Term”). Following the expiration of the Initial Term, this Schedule shall automatically renew for additional [ *98 ] terms unless terminated by either party upon [ *99 ] written notice prior to the anniversary date of this Schedule. Premium Support Services offered by SAP may only be changed after the Initial Term. [ *100 ]

Notwithstanding anything to the contrary herein, Licensee may terminate Premium Support Services and/or Maintenance Services for the Software or any third party software at any time after the Initial Term upon [ *101 ] prior written notice to SAP.

In the event of termination of Premium Support or Maintenance under this Section, Licensee shall be entitled to a pro-rata refund of prepaid Premium Support or Maintenance fees. In the event Licensee declines support services completely, whether Maintenance Services alone or in conjunction with Premium Support Services, for some period of time, and then subsequently requests or reinstates support services, SAP will invoice Licensee the accrued Premium Support Fees and/or Maintenance Fees associated with the support program Licensee wishes to reinstate for such time period plus a reinstatement fee. [ *102 ]

At its sole option, after the Initial Term, Licensee may at any time elect to change [ *103 ] Support [ *104 ] for the Software or any third party software [ *105 ] prior written notice SAP. Following any election to change to Maintenance, any prepaid but unearned [ *106 ] Support Fees will be credited to the [ *107 ] Fees applicable to future Maintenance.

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EXHIBIT A

to

PREMIUM SUPPORT SCHEDULE (“Schedule”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

Pacer International, Inc. (“Licensee”)

A narrative description of SAP’s current standard support services is attached hereto as Exhibit A solely for informational purposes.

SAP Active Global Support Services

SAP Active Global Support

SAP Active Global Support (AGS) maintains a Regional Support Center in the US, Active Global Support Americas (AGSA) which provides support services to the United States and Canada. Additionally, the AGSA Support Center is part of the global, follow-the-sun support service network that provides 24 x 7 coverage for Priority 1 (Very High) messages with the SAP Global Support Centers (GSC’s) in Austria, China, India, Ireland, Malaysia, and Spain. All Support consultants around the world utilize one real-time system that prevents replication issues from impairing SAP’s ability to serve the customer base. SAP consultants remain in communication with you throughout the process and consider your satisfaction their top priority.

SAP Active Global Support provides “Follow the Sun” support for Very High, or mission critical issues. This standard assures that there is always a fully staffed support center available to work on our customers’ critical issues. Hours/Location of SAP’s support centers is as follows:

Region: Americas*	Region: EMEA*	Region: Asia Pacific*
Mon-Fri 14:00 - 02:00	Mon-Fri 08:00 - 18:00	Mon-Fri 01:00 - 10:00
Sat-Sun 18:00 - 02:00	Sat-Sun 09:00 - 18:00	Sat-Sun 01:00 - 10:00

* CET Central European

AGS maintains local offices in over 40 countries which are responsible for managing questions of an administrative or country-specific nature, as well as translating issues before forwarding to a GSC. Regional Support Centers are located in Australia; Brazil; Japan; Germany; Singapore; and Newtown Square, PA (US).

Maintenance (Standard Support) currently includes:

Continuous Improvement covering updates and corrections of the licensed software such as:

• New software releases of the licensed SAP software and tools, procedures and services for upgrades. SAP supports upgrades to releases in mainstream maintenance. SAP does not support upgrades to releases in extended or customer specific maintenance, unless this is necessary as one step in a multi-step upgrade to a target release in mainstream maintenance.

• Support Packages – correction packages to reduce the effort of implementing single corrections. Support Packages may also contain corrections to adapt existing functionality to changed legal and regulatory requirements, for example in the area of Human Resources.

• Technology updates to support third-party operating systems and databases

• Available ABAP source code for SAP applications and additionally released and supported function modules

• Software Change Management, such as changed configuration settings or SAP software upgrades, is extensively supported – for example with templates for phased roll out, roadmaps, tools for client copy and entity copy, and tools for comparing and synchronizing of customizing

Problem Resolution, covering solution of customer issues by various means, such as:

• Mission-critical support:

• Global 24x7 message handling for messages with very high priority (See the Global Message Handling description below).

• Global 24x7 escalation procedures – to get access to resources available to provide a solution to severe problems (See the Escalation Procedures description below).

• Global message handling for problems related to SAP software (See the Global Message Handling description below).

• SAP Notes – SAP’s knowledge database. SAP Notes document software errors and contain information on how to remedy, avoid and bypass these errors. SAP Notes may contain coding corrections that customers can implement into their SAP system. SAP Notes also document other problems or customer questions and recommended solutions (e.g. customizing settings).

• SAP Note Assistant - a tool to install specific corrections and improvements to SAP software.

Quality Management, covering content, tools and services such as:

• Monitoring tools for systems and core business processes – to optimize available resources and business processes with, for example, SAP EarlyWatch Alert and SAP Solution Manager

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• SAP Early Watch Alert - a monitoring tool that monitors the essential administrative areas of SAP components and keeps you up to date on their performance and stability. SAP EarlyWatch Alert is activated by the customer for each of its SAP components and runs automatically to keep you informed, so you can react to issues proactively, before they become critical. It is included in the SAP Solution Manager and it is from here that you activate it and read the weekly reports.

• The SAP Solution Manager contains tools that monitor systems and core business processes giving a clear overview of the customer’s entire solution landscape.

• Proactive remote services – to prevent technical problems before they occur

• SAP GoingLive Check The SAP GoingLive Check helps customers manage technical risk to ensure optimal performance, availability and maintainability of their SAP solution. It is best used during a new implementation or when customers experience a significant increase of data and user volume. It proactively analyzes core business processes within the solution landscape to guide customers to a smooth start of production and technically robust operations afterwards. The SAP GoingLive Check consists of three service sessions – Analysis, Optimization and Verification – that are delivered by certified consultants through a remote connection. The delivery of the individual sessions takes place at key phases in the implementation project.

• SAP GoingLive Functional Upgrade Check - supports upgrades to a new software release through a set of service sessions that analyze compatibility with the target release, identify resource bottlenecks, and check system performance on the target release. SAP GoingLive Functional Upgrade Check consists of two to three service sessions: a planning session for when customers are upgrading to SAP ERP or upgrading SAP Business Warehouse. For all upgrade projects there is an analysis session and a verification session. Certified consultants perform them through a remote connection. Productive operations will not be affected during service delivery.

• SAP OS/DB Migration Check - supports the migration of a database or operating system of an SAP system. These sessions help to stay aligned with the migration. The SAP OS/DB Migration Check consists of three service sessions – Remote Project Audit, Analysis and Verification session – that are delivered by certified consultants through a remote connection. The delivery of the individual sessions takes place at key phases in the migration project. The Remote Project Audit session lasts not more than half a day, while the Analysis and Verification sessions have a normal duration of one day. The actual SAP OS/DB migration is not performed as part of this service.

• SAP EarlyWatch Check - proactively analyzes the performance and reliability of the operating system, database, and entire SAP system and show potential room for improvement. The delivery of the SAP EarlyWatch Check lasts one day and is delivered by experienced service engineers over a remote connection. Two weeks before service delivery, programs run in the background of the SAP component to collect data. This data is the basis for the analysis performed by the check. The collection of data and the delivery of this service do not affect productive operations. When the analysis is complete, SAP service engineers telephone the customer’s designated contact person to discuss the actions necessary to optimize your SAP solution. All results are collected in a final report that is delivered to the customer.

• SAP Solution Manager Preparation Service - The SAP Solution Manager Preparation Service (SMPS) verifies the basic configuration of the SAP Solution Manager and then either adjusts or recommends administrative actions if they are needed, in order to enable the SAP Solution Manager for onsite or remote service delivery. The service is can only be performed on productive SAP Solution Manager installations on release 3.2 or higher. A maximum number of 3 satellite systems per service session can be covered. The service does not cover customer-individual or enhanced configuration. The recommendations or changes described in the SMPS report must be implemented by the customer. Note: some changes might not be possible remotely and customer involvement is required. The SMPS can be delivered once per year. The service is scheduled automatically in advance of an upcoming SAP service (onsite, remote). Customers can also request the SMPS via a customer message (component XX-SER-TCC) or via the Global Support Customer Interaction center (see SAP Note 560499 for contact information). The SMPS must be ordered at least 10 working days before a planned onsite or remote service.

• Administrative integration of distributed systems through SAP Solution Manager

• Content and supplementary tools to increase efficiency, such as

• Implementation methodologies and tools – best practices, Implementation Guide (IMG), Business Configuration (BC) Sets and Customizing Monitoring.

• Test administration and automation tools based on core business processes documented in SAP Solution Manager.

Knowledge transfer and access to SAP’s Community through suitable channels, such as:

• SAP Service Marketplace to get information and access to a variety of services and to participate in SAP’s community.

• Access to best practices, implementation, operations and upgrade content – via SAP Solution Manager and SAP Service Marketplace

Global Message Handling

When malfunctions are reported, SAP provides support to the customer during normal business hours by providing information on how to remedy, avoid and bypass errors. The main channel for support will be the support infrastructure provided by SAP for the cooperation in problem resolution. Customers can send an error message at any time of day or night, every day of the week. All persons involved in the message solving process can call up the status at any time.

Customers enter their problem message directly into the SAP Service Marketplace or the SAP Solution Manager where it is replicated real-time into SAP’s internal call tracking system. Problem messages are dispatched automatically to the correct GSC based on:

• Priority (the customer always sets the priority of their problem)

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• Component Area

• Originating Country

• Resource Availability

In exceptional cases, customers can also contact SAP by telephone. SAP requires that customers have a remote data transmission unit, which meets SAP’s technical specification. Support is provided exclusively to the customer’s Customer Competence Center.

Customers classify each error or defect in the Software or related Documentation and report such error or defect to SAP for correction based on the following criteria:

Priority 1 (Very High) – very serious consequences for normal business transactions and urgent, business critical work cannot be performed. This is generally caused by the following circumstances: absolute loss of a system, malfunctions of central SAP system functions in the production system, or delays to the planned production start-up or upgrade within the next 3 workdays.

Priority 2 (High) – normal business transactions are seriously affected and necessary tasks cannot be performed. This is caused by incorrect or inoperable functions in the SAP system that are required to perform such transactions and/or tasks.

Priority 3 (Medium) – normal business transactions are affected. This is caused by incorrect or inoperable functions in the SAP system.

Priority 4 (Low) – Design or documentation problem that has few or no effects on normal business transactions. The problem is caused by incorrect or inoperable functions in the SAP system that are not required daily, or are rarely used.

If a customer message is not country-specific, and does not need to be translated, it is forwarded directly to the GSC which has the expertise and available resources to provide the quickest resolution.

AGS consultants proactively communicate with customers, partners, 3^rd party consultants and the internal escalations team to gather supporting information about their problem. Consultants follow through to resolution and document all problems, customer complaints and escalations.

If the customer problem is occurring as a result of a software bug, SAP Development consultants will work to resolve software bugs identified either by external customers or internal consultants. They triage the issues to the appropriate developers and provide code recommendations to resolve the issue.

Escalation Procedures

An AGS Duty Manager and a representative from the Executive Management team are available to assist in the escalation of sensitive issues. A specific team of individuals is dedicated to working with SAP’s customers so that they receive the service they need and the proper attention during critical phases of the product lifecycle.

Customer escalations can be reported directly by the customer, by SAP partners, or by SAP employees.

Prerequisites for customer escalations are:

• The customer has reported the problem via the support system

• The problems have to exist currently (no coming to terms with the past)

• The customer and the SAP employee have involved the competent authorities already and exploited the “usual” channels

If a customer escalation is concerned, the AGS Escalation Manager takes on the project managers for the time of the de-escalation project and assembles a team of experts.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

PROFESSIONAL SERVICES SCHEDULE effective September 30, 2007 (“Schedule”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

The parties agree that this Schedule is hereby annexed to and made a part of the Agreement specified above. In each instance in which provisions of this Schedule contradict or are inconsistent with the provisions of the Agreement, the provisions of this Schedule shall prevail and govern.

1. Services. Upon request by Licensee, SAP will provide one or more employee(s) or agent(s) (“Consultant(s)”) to perform, at Licensee’s direction, consulting and professional services including support of installation and implementation of the applicable SAP Software (“Services”). Any Statement(s) of Work (“SOW”) more fully describing the project assumptions, scope, duration and fees for the Services shall reference this Schedule. All Services of the SAP Consultant(s) will be coordinated with the designated Licensee representative. Licensee is responsible for making the necessary internal arrangements to allow SAP to carry out the Services without disruption of Licensee’s internal operations.

2. Satisfaction with Performance. If at any time Licensee or SAP is dissatisfied with the material performance of an assigned Consultant or a Licensee project team member, the dissatisfied party shall immediately report such dissatisfaction to the other party in writing and may request a replacement. The other party shall use its reasonable discretion in accomplishing any such change. The parties acknowledge and agree that it may be necessary for SAP to contract with certain subcontractors for the performance of certain of its duties hereunder. [ *108 ]

3. Compensation of SAP. All Services will be provided by SAP on a time and expense basis at SAP’s then current rates, unless otherwise agreed by the parties in a SOW.

4. Taxes. The fees listed in the applicable SOW do not include Taxes. If SAP is required to pay Taxes based on the Services provided under this Schedule, then such Taxes shall be billed to and paid by Licensee. This section shall not apply to Taxes based on SAP’s income or upon its property. Licensee also agrees to pay SAP for additional tax amounts if any, created by the taxability of Consultants reimbursed travel and living expenses resulting from long term assignments at Licensee’s location. [ *109 ]

5. Work Product. Unless otherwise agreed to in writing by the parties in a SOW, SAP shall have the sole and exclusive right, title and ownership to any and all ideas, concepts, or other intellectual property rights related to the techniques, knowledge or processes of the SAP Services and deliverables, whether or not developed for Licensee. [ *110 ]

6. Warranty. SAP warrants that its Services shall be performed consistent with generally accepted industry standards.

[ *111 ] SAP MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NOR ANY OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, IN CONNECTION WITH THIS SCHEDULE AND THE SERVICES PROVIDED HEREUNDER. [ *112 ]

7. INSURANCE. SAP shall, at its sole expense, provide and maintain insurance during the Term of this Agreement consistent with the types and amounts shown below:

Workers’ Compensation	Statutory
Employer’s Liability	[ *113 ]
Comprehensive General Liability	[ *114 ]
Errors & Omissions	[ *115 ]

SAP shall provide Licensee with certificates of insurance evidencing such coverage and naming Licensee as an additional insured thereunder. Insurance evidenced by such certificates shall be considered primary over any and all other collectible insurance, and such certificates must indicate the following: “Pacer International, Inc. is an additional insured, and the insurance evidenced by this certificate shall be considered primary over any and all other collectible insurance.” The certificate holder portion must indicate the following: “Pacer International, Inc., 2300 Clayton Road, Suite 1200, Concord, CA 94520.” Nothing in this Agreement, including the fact that Licensee requires or does not require or SAP fails to maintain certain classes or types of insurance, nor the naming of Licensee as an “additional insured” shall be construed to modify SAP’s obligations hereunder nor establish a limitation of SAP’s liability (except as otherwise expressly set forth herein).

8. Termination. The terms of this Schedule shall be effective as of the Effective Date of the Agreement and shall remain in effect until terminated by either party upon thirty (30) days prior written notice or otherwise in accordance with a particular SOW. Licensee shall be liable for payment to SAP for all Services provided prior to the effective date of any such termination, including any expenses incurred pursuant to the provision of such Services, in accord with the applicable SOW.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

9. General Provisions.

9.1 SAP may subcontract all or part of the Services to be performed to a qualified third party unless otherwise provided in the SOW. Except as otherwise provided in Section 4 herein, SAP shall be solely responsible for withholding or paying any federal, state or local taxes or other amounts withheld from its employees’ compensation, including, but not limited to, income taxes, FICA, worker’s compensation and unemployment insurance. [ *116 ]

9.2 With respect to the Services provided by SAP under this Schedule and any SOW hereto, the relationship of SAP and Licensee is that of an independent contractor.

9.3 This Schedule, including any applicable SOWs, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties, whether written or oral, relating to the same subject matter. In the event of any inconsistencies between this Schedule and a SOW, the SOW shall take precedence over the Schedule. Any purchase order or other document issued by Licensee is for administrative convenience only.

10. Survival. Sections 5, 6, 7, 9.1, and 11 shall survive any termination of the Schedule.

11. Limitations of Liability and Remedies.

11.1 ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, EXCEPT FOR (I) DAMAGES RESULTING FROM UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION (II) SAP’s RIGHT TO COLLECT UNPAID FEES AND (III) THE PROVISIONS OF SECTION 11.3 BELOW, UNDER NO CIRCUMSTANCES SHALL SAP, ITS CONSULTANTS OR LICENSEE BE LIABLE TO EACH OTHER OR ANY OTHER PERSON OR ENTITY FOR ANY CLAIM ARISING OUT OF AND RELATING TO THE PERFORMANCE OF SERVICES UNDER A STATEMENT OF WORK FOR AN AMOUNT OF DAMAGES IN EXCESS OF [ *117 ] HEREUNDER OR BE LIABLE IN ANY AMOUNT FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES, LOSS OF GOOD WILL OR BUSINESS PROFITS, WORK STOPPAGE, DATA LOSS, COMPUTER FAILURE OR MALFUNCTION, ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSS, OR EXEMPLARY OR PUNITIVE DAMAGES.

11.2 Licensee’s Remedies. In the event of a breach of the warranty set forth in Section 6 of this Schedule, SAP shall, (i) re-perform the Services, at no additional cost to Licensee, within a time frame reasonable and prompt under the circumstances; or (ii) in the event re-performance of Services is not practicable, refund the fees paid to SAP for the such Services.

11.3 The foregoing limitation of liability on direct damages only does not apply to damages arising out of personal injury or death caused by the negligence or willful misconduct of SAP. In addition, the foregoing limitation of liability on direct damages only does not apply to damages arising out of tangible property damage caused by the negligence or willful misconduct of SAP up to [ *118 ].

11.4 Severability of Actions. SUBJECT TO THE TERMS OF THIS SCHEDULE, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF THIS SCHEDULE WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES, OR EXCLUSION OF DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE ENFORCED AS SUCH.

11.5 Coordination of Provisions. The limitation of liability and remedies provisions contained in Section 9 of the Agreement shall not apply to Services provided pursuant to this Professional Services Schedule to the Agreement (“PSS”) or a statement of work issued pursuant to the PSS; the limitation of liability and available remedies for such Services shall be as set forth in the PSS. Furthermore, in each instance in which provisions of the PSS contradict or are inconsistent with the provisions of the Agreement, the provisions of the PSS shall prevail and govern. Additionally, in each instance in which provisions of a statement of work contradict or are inconsistent with the provisions of the PSS, the provisions of the statement of work shall prevail and govern.

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Appendix 1

effective September 30, 2007 (“Appendix”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Appendix is hereby annexed to and made a part of the Agreement specified above. In each instance in which provisions of this Appendix contradict or are inconsistent with the provisions of the Agreement, the provisions of this Appendix shall prevail and govern.

1. NAMED USER DEFINITIONS:

1.1 “SAP Application Professional User” is a Named User who performs operational related roles supported by the Software and includes the rights granted under the Employee User.

1.2 “SAP Application Limited Professional User” is a Named User who is an individual who accesses the Software on behalf of Business Partners performing limited operational roles supported by the Software.

1.3 “SAP Application Employee User” is a Named User who is authorized to access read-only analytics, and provided the ERP Package is licensed, is also authorized to access the licensed Software solely for the purpose of executing the following transactions: [ *119 ] Each Employee User includes the rights granted under the ESS User and shall access the Software solely for such individual’s own purposes and not for or on behalf of other individuals.

1.4 “SAP Application Employee Self Service (ESS) User” is a Named User, and provided such is licensed to Use the SAP ERP Package, authorized to access the licensed Software solely for the purpose of executing the following HR self-services transactions: (1) employee records maintenance, (2) employee time and attendance entry, (3) employee directory. Each Employee Self Service (ESS) User shall access the Software solely for such individual’s own purposes and not for or on behalf of other individuals.

1.5 “SAP Application Developer User” is a Named User who uses development and administration tools provided with the Software for the purpose of modifying, deploying and managing SAP Software. The Developer User (1) does include the rights granted under the Employee User and (2) does not include the rights granted under the (a) Professional User and/or (b) Limited Professional User.

[ *120 ]

2. LICENSED SOFTWARE: The Software licensed to Licensee pursuant to this Appendix consists of the components identified below and specified as being licensed (“Software”). Unless otherwise provided in this or another Appendix, only individuals licensed as Named Users hereunder are permitted to Use the SAP Software and third party Software licensed herein (including optional Software). Unless otherwise specified for a Software product licensed herein, such Use shall be in accordance with their respective Named User type and in accordance with identified licensed Level. In accordance with Section 3 of the Agreement, at SAP’s reasonable request, Licensee shall deliver to SAP a report, as defined by SAP, evidencing Licensee’s usage of the Software. SAP agrees that the initial request for such report will occur [ *121 ] following the effective date of the Agreement or [ *122 ] following the effective date of this Appendix, whichever occurs later, and will continue [ *123 ] thereafter.

Licensed SAP Software may utilize limited functionality of other SAP Software products (“SAP Runtime Software”). Unless Licensee has expressly licensed the SAP Runtime Software (under this or a separate Appendix), Licensee’s Use of such SAP Runtime Software is limited to access by and through the licensed SAP Software for the sole purpose of enabling performance of the licensed SAP Software.

There are no applicable country/language specific versions licensed by Licensee from SAP hereunder. In the event Licensee Uses the SAP Software to build and/or operate a custom developed or third party application external to the SAP environment, additional license fees may be required.

SAP CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

2.1 SAP APPLICATION

2.1.1 SAP APPLICATION NAMED USERS:

	Total Number of Named Users Licensed:
	SAP Application Professional	SAP Application Limited Professional	SAP Application Employee	SAP Application Employee Self Service (ESS)	SAP Application Developer	SAP Application Limited Professional – Mobile Asset Management
SAP Named Users	[ *124 ]	[ *125 ]	[ *126 ]	[ *127 ]	[ *128 ]	[ *129 ]

2.1.2 ERP OPTIONS:

“X” if Licensed	Software	License Metric	Licensed Level
X	Sales/Service Order Processing	[ *130 ]	[ *131 ]
X	Purchase Order Processing	[ *132 ]	[ *133 ]
X	Payroll Processing(2)	[ *134 ]	[ *135 ]
X	e-Recruiting	[ *136 ]	[ *137 ]
X	Financial Supply Chain Mgmt. (FSCM) Licensed FSCM Component(s): X      Biller Direct X      Dispute Management X      Collections Management	[ *138 ]	[ *139 ]
X	Financial Supply Chain Mgmt (FSCM) – Bank Relationship Mgmt	[ *140 ]	[ *141 ]
	Financial Supply Chain Mgmt – Treasury Management and In-House Cash Licensed Component(s): X      SAP Treasury and Risk Management X      SAP In-House Cash	[ *142 ]	[ *143 ]
X	Environmental Health & Safety(5)	[ *144 ]	[ *145 ]
X	Learning Solution	[ *146 ]	[ *147 ]
X	Duet	[ *148 ]	[ *149 ]

(1) Notwithstanding the requirement set forth in Section 2.1(b) of the Agreement for all individuals accessing the Software to be licensed as Named User, individuals that access the Software on behalf of Business Partners are not required to be licensed as Named Users in order to access the Sales/Service Order Processing engine solely to enter Sales/Service Orders (including the creation and update of Sales/Service Orders and status review of location of shipped goods), solely for the purpose of running Licensee’s internal business. A Named User license is required in the event Sales/Service Orders (including the creation and update of Sales/Service Orders and status review of location of shipped

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

goods) are entered into the Software by individuals who are employees of Licensee or its Affiliates. Each individual order against a master order shall be considered a separate order; includes both zero value and non-zero value orders.

(2) Excludes U.S. Payroll Tax Processing which, if licensed from SAP, must be licensed via a separate Appendix and must equal or exceed the Licensed Level for US Payroll Processing.

(3) [ *150 ]

(4) [ *151 ]

(5) The Environmental Health & Safety Software does not support dangerous goods / hazardous material checks (particularly with regard to classes 1 and 7) and therefore does not deliver any such checks with its Software. The Licensee is responsible for reviewing any dangerous goods / hazardous material checks made by Using SAP Software.

(6) [ *152 ]

(7) [ *153 ]

2.1.2 SAP GENERIC APPLICATION PACKAGES LICENSED:

	Yes	No
ERP (8)	X	__

(8) Required to be licensed for all Software listed below except Software identified with an “*”. Attached to this Appendix 1 as Exhibit A is the SAP ERP bill of materials which is effective as of the Effective date of this Appendix 1.

2.2 OPTIONAL CROSS INDUSTRY SOFTWARE LICENSED:

“X” if Licensed	Software	License Metric	Licensed Level
X	SAP GRC Access Control Package	[ *154 ]	[ *155 ]

(9) [ *156 ]

3

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

2.3 OPTIONAL INDUSTRY SOFTWARE LICENSED:

2.3.1 Logistic Service Providers Packages:

“X” if Licensed	Industry Software	License Metric	Licensed Level
X	SAP Transportation Operations for Logistic Service Providers	[ *157 ]	[ *158 ]
		[ *159 ]
		[ *160 ]
X	SAP Extended Warehousing and Logistics for Logistic Service Providers	[ *161 ]	[ *162 ]
		[ *163 ]
		[ *164 ]
X	SAP Customer Management for Logistic Service Providers *	[ *165 ]	[ *166 ]
		[ *167 ]
X	SAP Customer Service for Logistic Service Providers *	[ *168 ] [ *170 ]	[ *169 ]

* denotes an Industry Package that does not require the ERP Package

4

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

2.3.2 Railway Packages:

“X” if Licensed	Industry Software	License Metric	Licensed Level
X	SAP Railcar Management (10)	[ *171 ]
		[ *172 ] [ * ]	[ *173 ]
		[ *174 ]	[ *175 ]
		[ *176 ]	[ *177 ]

(10) SAP Railcar Management software is currently available in English language version only.

(11) [ *178 ]

(12) [ *179 ]

(13) [ *180 ]

2.3.3 SAP xApps:

“X” if Licensed	Industry Software	License Metric	Licensed Level
X	SAP Global Trade Services – Export	[ *181 ] [ *183 ]	[ *182 ]
X	SAP Global Trade Services – Import	[ *184 ] [ *186 ]	[ *185 ]

2.3.4 SAP NetWeaver:

“X” if Licensed	Software	License Metric	Licensed Level
X	Exchange Infrastructure (XI) Base Engine (14)	[ *187 ]	[ *188 ]
X	Master Data Management (15)	[ *189 ] [ *191 ]	[ *190 ] [ *192 ]
X	BeX Broadcaster	[ *193 ]	[ *194 ]
X	External Community Members (16)	[ *195 ]	[ *196 ]

(14) Exchange Infrastructure Base Engine includes use of the following Standard Technical Protocol Adapters: SAP NetWeaver Adapter for IDOCs, RFCs, File/FTP, Http(s), SOAP, JMS, JDBC, Mail Protocols (pop,imap,smtp), SAP BC Protocol to connect Software, and to non-SAP applications. Additional types of adapters are available for additional license fees.

(15) [ *197 ]

(16) External Community Members are either non-employees of organizations such as schools, universities, charities or governmental entities or business third parties including, but not limited to, customers, employees of distributors and suppliers solely licensed to access the Enterprise Portal software. External Community Members are not allowed to access other SAP software and their respective components. Unless otherwise specified herein, Business Partners employees participating in collaborative business scenarios that require access beyond the SAP Enterprise Portal software must be licensed as a Named User.

5

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

2.4 OPTIONAL SUPPLEMENTARY SOFTWARE LICENSED:

“X” if Licensed	Supplementary Products	License Metric	Licensed Level
X	RFID Integrated for SAP ERP	[ *198 ]	[ *199 ]
X	Interactive Forms based on Adobe – Enable the Enterprise	[ *200 ]	[ *201 ]
X	Technical Adapters (III)	[ *202 ]	[ *203 ]
X	EDI Adapters Including Industry Specific Mappings (IV)	[ *204 ]	[ *205 ]

(17) [ *206 ]

2.5 Database: MS SQL

3. LICENSE FEE AND PAYMENT:

3.1 SOFTWARE: The total Net License Fee due and payable by Licensee for the Software specified above (excluding third party database) in the amount of [ *207 ], which amount shall be invoiced upon execution of this Appendix and is payable [ *208 ] from date of invoice.

3.2 DATABASE: The Net Fee to Licensee for the MS SQL Database specified in item 2.5 above is [ *209 ], which shall be invoiced on execution of this Appendix and is payable [ *210 ] from date of invoice.

4. INSTALLATION: For Software to be installed on a specific Licensee or Affiliate Designated Unit within the Territory, Licensee shall provide SAP with written notice of the type/model and serial number and location of each Designated Unit and the number of Users allocated to each such Designated Unit prior to such installation. Such notice shall be in a form materially similar to Schedule 1 attached hereto and is to be sent to: SAP Contracts Department, Attention: Director of Contracts, 3410 Hillview Avenue, Palo Alto, CA 94304.

5. DELIVERY: Delivery of the above-specified Software and Documentation is estimated to take place in September 2007. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver SAP Software [ *211 ] by making it available for download or other electronic transmission to Licensee location in: 2300 Clayton Road, Concord, CA 94520.

SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the MS SQL licensed under this Appendix by load and leave installation directly by SAP personnel on Licensee’s hardware at its location in: Concord, CA. SAP will retain possession of all tangible storage media and, upon completion of the installation process, SAP will remove the storage media from Licensee’s premises.

6. MAINTENANCE FEE AND PAYMENT: Maintenance service offered by SAP is set forth in the Premium Support Schedule to the Agreement. Maintenance shall commence as of the first day of the month following initial delivery of the Software.

The Maintenance Fee for the Software licensed under this Appendix is priced at the then current factor in effect [ *212 ] multiplied by the then current Net License Fee for the licensed Software. The current annual Maintenance Fee for the Software licensed under this Appendix is [ *213 ].

PREMIUM SUPPORT SERVICE AND PAYMENT: Premium Support Service offered by SAP is set forth in the Premium Support Schedule to the Agreement. In addition to the Maintenance Fees described above, the annual Premium Support Service Fee is [ *214 ]. Premium Support Service Fees are subject to change [ *215 ] upon [ *216 ] notice to Licensee.

6

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BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Maintenance fees and Premium Support Fees as set forth above do not include Taxes. Maintenance Fees and Premium Support Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days from date of invoice. Any Maintenance Fees and Premium Support Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

[ *217 ]

[ *218 ] increases in Maintenance Fees and Premium Support Fees per calendar year (if any) for the Software licensed in this Appendix shall not be greater than the increase in the [ *219 ] over the [ *220 ] month period prior to such increase in Maintenance Fees and/or Premium Support Fees, [ *221 ], per [ *222 ].

[ *223 ]

7. THIRD-PARTY DATABASE: Software licensed hereunder currently requires a third-party database, which has been licensed hereunder as a runtime version. Such runtime version shall be limited to Use by Licensee solely in conjunction with Use of the Software licensed hereunder, and cannot be used to run any third party software not licensed hereunder.

In the event Licensee uses the licensed database other than as specified above, a full license, including programming tools provided through such third-party supplier must be licensed directly from a third party database supplier.

Notwithstanding the above, the Duet Software licensed hereunder currently requires MaxDB and MS SQL Server Express Edition (third-party databases), which have been licensed hereunder as runtime versions. Such runtime versions shall be limited to Use by Licensee solely in conjunction with Use of the Duet Software licensed hereunder, and cannot be used to run any other SAP Software or third party software licensed hereunder.

8. EXCHANGE OPTION: For a period of [ *224 ] from the effective date of this Appendix, Licensee shall have the option, once per calendar year, to exchange any number of the licensed Named Users and/or SAP Software for a [ *225 ] credit of the List Price license fees for such licensed Named Users or SAP Software under this Appendix, to be applied towards the licensing of additional Named Users and/or SAP Software that have been delivered and licensed hereunder (excluding non-discountable and third party software and Third Party Database) as set forth in this Appendix based upon the Unit List Price(s) and List Price License Fee(s). [ *226 ] Upon written notice from Licensee regarding its exercising of such exchange option, SAP will issue an Amendment to this Appendix modifying the Named User count or Software metric. [ *227 ]

9. PUBLICITY: In consideration of the additional Software discount, upon Licensee consent which shall not be unreasonably withheld, Licensee agrees to participate in reference activities for the Software including but not limited to reference calls and stories, press testimonials, site visits, SAPPHIRE participation, etc., at times mutually agreeable to the parties. SAP will make reasonable efforts to avoid having the reference services unreasonably interfere with Licensee’s business. All reference calls and services (i) will be at such time as is reasonably convenient to Licensee; (ii) will be subject to the requirement that such references, testimonials, releases and announcements be accurate as of the time published or republished (Licensee will inform SAP if a previously published statement is no longer accurate), (iii) shall be coordinated with and the content will be subject to Licensee’s prior review and approval, which shall not be unreasonably withheld, before SAP makes any use thereof; and (iv) any use of Licensee’s name or any of its trademarks shall be consistent with Licensee’s trademark guidelines provided to SAP from time to time.

10. OPTION TO TERMINATE: Licensee shall have until September 29, 2007, to evaluate the [ *228 ] solution licensed in this Appendix 1. In the event Licensee determines the [ *229 ] solution fails to meet its internal business needs, Licensee shall provide written notice detailing such failure to SAP by no later than September 30, 2007. Notice of such failure must be given by overnight courier service to: SAP Contracts Department, Attention: Director of Contracts, 3410 Hillview Avenue, Palo Alto, CA 94304. [ *230 ] In the event SAP does not receive written notification of termination from Licensee as specified herein by September 30, 2007, this Option to Terminate will automatically lapse and be of no further force and effect.

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BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

11. OPTION #1 FOR ADDITIONAL SOFTWARE: For a period of [ *231 ] from the Effective Date of this Agreement, Licensee shall have the right upon written notice to SAP, and subject to written appendices to be entered into by the parties, to license additional Named Users, additional license metrics, and/or SAP software (excluding third party software, third party database, and non-discountable SAP components) in accordance with SAP’s List of Prices and Conditions in [ *232 ] less [ *233 ] percent. Licensee agrees that such additional License Fees due SAP shall be due SAP net thirty (30) days from the date of SAP invoice. Third-party software, including Third-Party Database, and other non-discountable SAP components are excluded from such discount. This option is contingent upon Licensee not being in material breach of the Agreement, including being current with all required payments, including required maintenance.

12. OPTION #2 FOR ADDITIONAL SOFTWARE: After the expiration of item 11 Option #1 for Additional Software herein until [ *234 ], Licensee shall have the right upon written notice to SAP, and subject to written appendices to be entered into by the parties, to license additional Named Users, additional license metrics, and/or SAP software (excluding third party software, third party database, and non-discountable SAP components) in accordance with SAP’s then-current List of Prices and Conditions, less [ *235 ] percent. Licensee agrees that such additional License Fees due SAP, shall be due SAP [ *236 ] from the date of SAP invoice. Third-party software, including Third-Party Database, and other non-discountable SAP components are excluded from such discount. This option is contingent upon Licensee not being in material breach of the Agreement, including being current with all required payments, including required maintenance.

13. SUCCESSOR PRODUCTS: If Licensee is receiving Premium Support Services or Maintenance Services hereunder [ *237 ], then Licensee will be entitled to license such functionality it previously licensed [ *238 ] excluding third-party software. If such separate product contains additional functionality, Licensee may license such functionality at a fee to be mutually agreed, not to exceed SAP’s then current SAP list price.

14. EXECUTIVE SPONSORS: For a period of [ *239 ] from the Effective Date of this Appendix, SAP agrees to provide [ *240 ] and through the individuals defined in this Section 14, governance and consultative executive support for SAP projects and activities. The primary purpose of SAP’s participation will be for those individuals defined in this Section 14 to assist Licensee’s Executive Management in the oversight of the projects and provide the necessary support to help ensure the projects’ success and the overall success of Licensee’s SAP program. SAP agrees to provide the following individuals (or their successors or agreed upon designates) as the SAP governance team at the appropriate level and frequency as agreed to by Licensee and SAP:

• Bill McDermott, President and CEO, SAP Americas; and

• Chris McClain, Senior Vice President/GM Operations.

15. SOURCE CODE: Currently, source code as updated from time to time for the application components of the Software licensed under this Appendix shall be provided (subject to Section 6.1 of the Agreement) to Licensee at the Designated Sites listed in the Premium Support Schedule.

16. VALIDITY OF OFFER: The validity of this Appendix will expire September 30, 2007, unless sooner executed by Licensee, or extended in writing by SAP.

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Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	10/2/07

9

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Schedule 1 to Appendix 1

Designated Unit Information

1. Name of Licensee or Affiliate where Designated Unit is located: _______________________________

2. Designated Unit(s) to be identified by Licensee to SAP in writing.

Type/Model No.:

Serial No.:

Location of Designated Unit:

Telephone Number:

Software Delivery Contact Person:

3.

Hardware Information		Operating System		Database*
Manufacturer	Model	Manufacturer	Release	Manufacturer	Release

* Note: When Database is licensed from the vendor directly, insert P.O. Number                     , Invoice Number                      and Date                     

Name	Date
Title
(Licensee)

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Exhibit A

SAP ERP Bill of Materials

This bill of materials is being attached for informational purposes only. Nothing in this bill of materials limits SAP’s development of Software enhancements to SAP ERP or new products which may at SAP’s sole discretion be licensed separately for additional license fees and this bill of materials is not a commitment that such functionality, in its current form, will be in future versions or releases of the software. For all Software licensed separately by SAP including but not limited to Optional Packages and Industry Specific Solutions, the parties agree to execute separate Appendices at mutually agreed upon pricing and terms.

SAP ERP, Financials

[ *241 ]

SAP ERP, Human Resources

[ *242 ]

11

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Operations – Customer Relationship Management (CRM) related

[ *243 ]

Operations – Supply Chain Management (SCM) related

[ *244 ]

Operations – Product Lifecycle Management (PLM) related

[ *245 ]

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Appendix 2

effective September 30, 2007 (“Appendix”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Appendix is hereby annexed to and made a part of the Agreement specified above. The following Articles and Provisions of the Agreement are specifically incorporated herein by reference: 1 (Definitions), 2 (License Grant), 4 (Price and Payment), 5 (Term), 6.1 (Protection of Proprietary Information), 7.2 (Express Disclaimer), 9 (Limitation of Liability), 10 (Assignment) and 11 (General Provisions). Unless stated otherwise herein, all other provisions of the Agreement are specifically excluded with respect to this Appendix. In each instance in which provisions of this Appendix contradict or are inconsistent with the incorporated provisions of the Agreement, the provisions of this Appendix shall prevail and govern.

1. LICENSE GRANT:

1.1 Software licensed by Licensee from SAP hereunder (“RWD software”) is as follows:

SAP Productivity Pak by RWD (“PP”) and SAP Productivity Pak Help Launchpad by RWD (”Launchpad”)

	LICENSED:
	NUMBER of [ *246 ]
	[ *247 ]
	[ *248 ]*
SAP Productivity Pak by RWD	[ *249 ]
SAP Productivity Pak Help Launchpad by RWD	[ *250 ]
* [ *251 ]

1.2 DATABASE:

    X         DATABASE INTERFACE for PP

and

    X         DATABASE for Launchpad: MS SQL

2. LICENSE FEE AND PAYMENT:

2.1 RWD SOFTWARE: The Net License Fee to Licensee for the RWD Software specified above (excluding third party database) is [ *252 ], which shall be invoiced on execution of this Appendix, and is payable [ *253 ] from date of invoice.

2.2 DATABASE: The Net License Fee to Licensee for the MS SQL Database specified in item 1.2 above is [ *254 ], which shall be invoiced on execution of this Appendix, and is payable [ *255 ] from date of invoice.

2.3 In the event Licensee exceeds the License Grant specified herein, and/or Licensee desires to expand the License Grant specified herein to include additional Affiliates, divisions or business units not identified herein Licensee agrees to provide written notice to SAP. SAP reserves the right to modify the Agreement to reflect such increase in the License Grant, recalculate the Net License Fee and Maintenance Fee accordingly and invoice Licensee for such increased license and maintenance fees based on SAP’s then current pricing in effect.

In accordance with Section 3 of the Agreement, upon SAP’s reasonable request, Licensee shall deliver to SAP a report, as defined by SAP, evidencing Licensee’s usage of the RWD software licensed under this Agreement.

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HAS BEEN REQUESTED WITH RESPECT TO

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3. INSTALLATION: For the RWD software to be installed at a specific Licensee and/or Affiliate site within the Territory, Licensee shall provide SAP with written notice of the location of each computer and the number of Users, licensed in Section 1, allocated to each such device within [ *256 ] of the use of such device. Such notice shall be sent to: SAP Contract Department, Attention: Contracts Director, 3410 Hillview Avenue, Palo Alto, CA 94304. Licensee shall be responsible for installation of the RWD software.

4. DELIVERY: Delivery of the above-specified RWD software and its documentation is estimated to take place in September 2007. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the RWD software licensed under this Appendix by making it available for download or other electronic transmission to Licensee’s location at: 2300 Clayton Road, Concord, CA 94520.

SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the MS SQL licensed under this Appendix by load and leave installation directly by SAP personnel on Licensee’s hardware at its location in: Concord, CA SAP will retain possession of all tangible storage media and, upon completion of the installation process, SAP will remove the storage media from Licensee’s premises.

5. MAINTENANCE FEE AND PAYMENT:

5.1 To the degree RWD makes such maintenance services generally available to SAP, Licensee may request and SAP shall provide maintenance service (“Maintenance”) with respect to the RWD software, so long as Licensee is subscribing for and paying for Maintenance. Maintenance currently includes the delivery of releases and versions of the RWD software made available to SAP, support via telephone, coordination of defect correction with RWD, and SAP’s support portal. Maintenance, from SAP, for the RWD software licensed hereunder is limited to the United States sites previously identified in the Agreement and related Appendices. Notwithstanding anything to the contrary in the Agreement, Licensee acknowledges RWD's standard hours of maintenance service are Monday through Friday, 8:30 a.m. to 5:30 p.m., eastern standard time, except for holidays as observed by RWD; further, Licensee acknowledges that for each release, RWD will offer maintenance services through SAP only for the most recent version and the version immediately prior thereto. After a new release becomes commercially available, RWD will provide maintenance services through SAP only for [ *257 ]. In order to receive Maintenance hereunder, Licensee must make all required remote support connections to each Designated Unit, at its expense, as requested by SAP.

In the event RWD (i) changes in any material adverse manner the nature of Maintenance available from RWD to SAP or (ii) does not make available to SAP new releases and versions of the Software made available by RWD to its customers under direct maintenance generally, such change or non availability shall be deemed a “Material Maintenance Change”.

Licensee shall appoint no more than 5 individuals who are knowledgeable in the operation of the RWD software to serve as primary contacts in the event that Licensee needs to contact RWD for support. The identification and number of Key Users will be specified in Schedule 1 to this Appendix. All of Licensee’s support inquiries shall be initiated solely through these Key Users. Licensee shall have the right to appoint substitute individuals to serve as Key Users provided the names of the new individuals and the individuals being substituted are communicated to SAP in writing. Licensee shall have the right to appoint additional individuals to serve as Key Users upon mutual agreement of the Licensee and SAP.

5.2 Maintenance at such United States site(s) shall commence upon the [ *258 ] following initial delivery of the RWD software. Maintenance Fees for the software licensed under this Appendix, for the total number of Users specified above, is [ *259 ] per year. Maintenance fees are subject to change upon [ *260 ] written notice to Licensee. Maintenance fees set forth above do not include Taxes. [ *261 ] provided the maintenance fee terms of SAP’s reseller arrangement with RWD remains unchanged, increases in Maintenance Fee per year for the RWD Software licensed under this Appendix shall not exceed the previous year’s maintenance fees adjusted by the change in the [ *262 ] over the [ *263 ] month period prior to such increase in maintenance fees, [ *264 ].

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BEEN OMITTED AND FILED SEPARATELY WITH

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

5.3 In the event Licensee elects not to commence Maintenance upon the [ *265 ] following initial delivery of the RWD software, or Maintenance is otherwise declined for some period of time, and is subsequently requested or reinstated, SAP will invoice Licensee the accrued maintenance service fees associated with such time period [ *266 ]. In the event of a Material Maintenance Change Licensee may, at its option, elect to terminate Maintenance immediately upon [ *267 ] written notice to SAP. In such event, SAP will refund to Licensee a pro rata portion of the prepaid but unearned Maintenance Fee. Nothing herein prohibits Licensee from seeking Maintenance for the Software directly with RWD, and SAP will not enforce any provision in any agreement with RWD to the contrary.

5.4 [ *268 ]

6. LIMITATION OF LIABILITY: In no event shall SAP’s total liability for damages of [ *269 ] licensed hereunder exceed [ *270 ] the Net License Fee identified in Section 2 hereof.

7. THIRD-PARTY DATABASE:

7.1 For PP: The PP software licensed hereunder currently requires a MS SQL database product, which is a third party product, and which has either been integrated or pre-installed as part of the PP software, or which must be installed to Use the PP software. If integrated, the third party database product functionality as integrated in the PP software may differ from a non-integrated third party database product. Any third party database product is subject to its respective third party vendor License Agreement. This Appendix does not contain a license to use any third party database product, even if integrated, to run PP. Licensee has no right to use and is not licensed to use any copy of the third party database with PP until Licensee has executed the Agreement, this Appendix, and a third party database license agreement for the applicable third party database. Upon request, Licensee shall provide to SAP the invoice number and/or license number and corresponding date for the third party database.

SAP makes no representations or warranties as to the terms of any license or the operation of any third-party database licensed or obtained directly from a third party supplier by Licensee. Licensee is responsible for support and maintenance of the third-party database licensed from a third party supplier, and SAP has no responsibility in this regard.

7.2 For Launchpad: The Launchpad software licensed hereunder currently requires a third-party database, which has been licensed hereunder as a runtime version. Such runtime version shall be limited to Use by Licensee for Productive and Non-Productive Use of the Launchpad software licensed hereunder. In the event Licensee uses the licensed database other than as specified above, a full license, including programming tools provided through such third-party supplier must be licensed directly from a third party database supplier.

8. GENERAL PROVISIONS:

8.1 Warranty. Subject to conditions and limitations [ *271 ], SAP warrants that the RWD Software will substantially conform to the functional specifications contained in the RWD Software Documentation [ *272 ] following Delivery (the “Warranty Period”) when Used without material alteration on the Designated Unit(s). SAP’s warranty is subject to Licensee providing SAP necessary access, including remote access, to the RWD Software. Licensee shall provide SAP with sufficient test time and support on Licensee’s Designated Unit(s) to correct the defect.

8.2 Warranty Remedy. Licensee’s [ *273 ] remedies for any damages or loss connected with a breach of the warranty provided in Section 8.1 hereof, whether due to SAP’s negligence or breach of any other duty, shall be, at [ *274 ] option, for SAP: (i) to bring the performance of the RWD Software into substantial compliance with the functional specifications within a reasonable time; or (ii) return an appropriate portion of any payment made by Licensee with respect to the applicable portion of the RWD Software, not to exceed the License Fees paid under this Appendix.

8.3. Indemnification. [ *275 ], SAP shall defend and indemnify Licensee against all costs and damages, including reasonable attorneys’ fees, reasonably incurred by Licensee in the defense of any claim brought against Licensee in the Territory by third parties alleging that Licensee’s Use of the RWD Software and RWD Software Documentation infringes: (i) any United States patent; or (ii) a copyright; or (iii) trade secret rights. Licensee shall promptly notify SAP in writing of any

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HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

such claim and SAP shall be permitted to control fully the defense and any settlement of such claim as long as such settlement shall not include a financial obligation on Licensee. Licensee shall cooperate fully in the defense of such claim and may appear, at its own expense, through counsel reasonably acceptable to SAP. If use of the most current version or release would have avoided the infringement, any indemnification shall be conditioned on the allegedly infringing RWD Software and RWD Documentation being the most recent version or release thereof made available via Maintenance at the time of such alleged infringement.

8.4 Sole and Exclusive Remedy. THE PROVISIONS OF SECTION 8.3 STATE THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF SAP TO LICENSEE, AND IS LICENSEE’S SOLE REMEDY AGAINST SAP, WITH RESPECT TO THE INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS BY THE RWD SOFTWARE

9. OPTION FOR RWD SOFTWARE: For a period of [ *276 ] from the effective date of this Appendix, Licensee shall have the right upon written notice to SAP, and subject to written appendices to be entered into by the parties, to license additional quantities of RWD third party software provided that SAP has the right to license such third party software and that the pricing terms of its reseller agreement with such third party software vendor are the same as they are as of the date of this Appendix. The License Fees for such third party software shall be in accordance with SAP’s list price then currently in effect, discounted by [ *277 ]. This option is additionally contingent upon Licensee not being in material breach of the Agreement, including being current with all required payments, including required maintenance.

10. VALIDITY OF OFFER: The validity of this Appendix will expire September 30, 2007, unless sooner executed by Licensee, or extended in writing by SAP.

4

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	10/2/07

5

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Schedule 1 to Appendix 2

Software and User Allocation

Licensee — please assist with inserting this information

Contact Data

Customer Name:
*Shipping Address:
City/State/Zip:
Contact Name:
Contact Phone Number:	Contact Fax Number:
Contact E-Mail Address:

* Shipping address must be a street address, PO Box is not sufficient.

Products Licensed:

	NUMBER of LICENSED SAP Professional and Limited Professional USERS	NUMBER of LICENSED SAP Employee USERS
SAP Productivity Pak by RWD
SAP Productivity Pak Help Launchpad by RWD

Current SAP Release:	Microsoft Windows Version:
Microsoft Office Version:	SAP GUI Version:

Account Executive Name:		Phone No.: Fax No.:
Date Form Completed:	Contract Start Date:		Maint. Start Date:
			Maint Fee:

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Redwood Appendix

Appendix 3

effective September 30, 2007 (“Appendix”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Appendix is hereby annexed to and made a part of the Agreement specified above. The following Articles and Provisions of the Agreement are specifically incorporated herein by reference: 1 (Definitions), 2 (License Grant), 4 (Price and Payment), 5 (Term), 6.1 (Protection of Proprietary Information), 7.2 (Express Disclaimer), 9 (Limitation of Liability), 10 (Assignment) and 11 (General Provisions). Unless stated otherwise herein, all other provisions of the Agreement are specifically excluded with respect to this Appendix. In each instance in which provisions of this Appendix contradict or are inconsistent with the incorporated provisions of the Agreement, the provisions of this Appendix shall prevail and govern.

1. LICENSE GRANT:

1.1 SAP Central Job Scheduling by Redwood (“Redwood Software”): The software licensed to Licensee pursuant to this Appendix consists of Redwood Software for Use for job scheduling of third party applications. Licensee may not exceed the process server level specified below for the Redwood Software (“Level”). Only Named Users licensed under Appendices to the Agreement are permitted to Use the Redwood Software. Such Use shall be in accordance with their respective Named User types.

NUMBER OF [ *278 ]*: [ *279 ] (“Level”)

* [ *280 ]

1.2 Oracle database interface: X (actual Oracle database must be licensed directly by Licensee from Oracle)

2. LICENSE FEE AND PAYMENT:

2.1 REDWOOD SOFTWARE: The Net License Fee to Licensee for the Redwood Software specified above (excluding third party database) is [ *281 ], which shall be invoiced on execution of this Appendix, and is payable [ *282 ] from date of invoice.

In the event Licensee exceeds the Level of the License Grant specified herein and/or Licensee desires to expand the Level of the License Grant specified herein, Licensee agrees to provide written notice to SAP. SAP reserves the right, subject to SAP’s right to continue to license the Redwood Software, to amend the Agreement to reflect such increase in the Level of the License Grant, to recalculate the Net License Fee and Maintenance Fee accordingly and to invoice Licensee for such increased license and Maintenance Fees based on SAP’s then current pricing in effect.

In accordance with Section 3 of the Agreement, upon SAP’s reasonable request, Licensee shall deliver to SAP a report, as defined by SAP, evidencing Licensee’s usage of the Redwood Software licensed under this Agreement.

3. INSTALLATION: For the Redwood Software to be installed at a specific Licensee and/or Affiliate site within the Territory, Licensee shall provide SAP with written notice of the location of each computer and the number of Named Users allocated to each such device within [ *283 ] of the use of such device. Such notice shall be in a form materially similar to Schedule 1 attached hereto and is to be sent to: SAP Contract Department, Attention: Director of Contracts, 3999 West Chester Pike, Newtown Square PA 19073. Licensee shall be responsible for installation of the Redwood Software.

4. DELIVERY: Delivery of the above-specified Software and Documentation is estimated to take place in September 2007. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver SAP Software and Maintenance by making it available for download or other electronic transmission to Licensee location in:     2300 Clayton Road, Concord, CA 94520.

5. MAINTENANCE FEE AND PAYMENT:

5.1 To the degree Redwood Distribution Services B.V. makes such services generally available to SAP, Licensee may request and SAP shall provide maintenance service (“Maintenance”) with respect to the Redwood Software. Maintenance currently includes the delivery of releases and versions of the Redwood Software made available to SAP, support via telephone, coordination of defect correction with Redwood, and

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

SAP’s support portal. Maintenance, from SAP, for the Redwood Software licensed hereunder is limited to the sites previously identified in the Agreement and related Appendices. In order to receive Maintenance hereunder, Licensee must make all required remote support connections to each Designated Unit, at its expense, as requested by SAP.

In the event Redwood (i) changes in any material adverse manner the nature of Maintenance available from Redwood to SAP or (ii) does not make available to SAP new releases and versions of the Software made available by Redwood to its customers under direct maintenance generally, such change or non availability shall be deemed a “Material Maintenance Change”.

5.2 Maintenance shall commence on the first day of the month following initial delivery of the Redwood Software. The Maintenance Fee for the Redwood Software licensed under this Appendix is priced at the then current factor in effect [ *284 ] multiplied by the then current Net License Fee for the licensed Redwood Software. The current annual Maintenance Fee for the Redwood Software licensed under this Appendix is [ *285 ]. Maintenance Fees are subject to change [ *286 ] upon [ *287 ] prior written notice to Licensee. Maintenance fees set forth above do not include Taxes. Maintenance Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days. Any Maintenance Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

In addition to the Maintenance Fees described above, the annual Premium Support Service Fee is [ *288 ]. Premium Support Service Fees are subject to change once during a calendar year upon [ *288.1 ] prior written to Licensee. Premium Support Service Fees set forth above do not include Taxes. Premium Support Service Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days from date of invoice. Any Premium Support Service Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

[ *289 ] provided the maintenance and support fee terms of SAP’s reseller arrangement with Redwood remains unchanged, increases in Maintenance Fee or Premium Support Service Fee per year for the Redwood Software licensed under this Appendix shall not exceed the previous year’s maintenance fees adjusted by the change in the [ *290 ] over the [ *291 ] month period prior to such increase in maintenance fees, [ *292 ].

Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

5.3 In the event Licensee elects not to commence Maintenance upon the first day of the month following initial delivery of the Redwood Software, or Maintenance is otherwise declined for some period of time, and is subsequently requested or reinstated, SAP will invoice Licensee the accrued Maintenance Fees associated with such time period [ *293 ].

5.4 In the event of a Material Maintenance Change Licensee may, at its option, elect to terminate Maintenance immediately [ *294 ] written notice to SAP. In such event, SAP will refund to Licensee a pro rata portion of the prepaid but unearned Maintenance Fee and Premium Support Service Fee. Nothing herein prohibits Licensee from seeking Maintenance for the Software directly with Redwood, and SAP will not enforce any provision in any agreement with Redwood to the contrary.

5.5 [ *295 ]

6. THIRD-PARTY DATABASE AND OTHER THIRD PARTY SOFTWARE:

6.1 The Redwood Software licensed hereunder requires an Oracle database product, which is a third-party product, and which has either been integrated or pre-installed as part of the Redwood Software, or which must be installed to Use the Redwood Software. The Oracle database product functionality as integrated in the Redwood Software may differ from a non-integrated Oracle database product. The Oracle database product is subject to its respective Oracle license agreement. This Appendix or Agreement does not contain a license to use the integrated Oracle database product. Licensee has no right to use and is not licensed to use the copy of the Oracle database until Licensee has executed the Agreement, this Appendix and execute an Oracle license agreement for the Oracle database. Upon request, Licensee shall provide to SAP the invoice number and/or license number and corresponding date for the Oracle party database.

SAP makes no representations or warranties as to the terms of any license or the operation of any third-party database obtained directly from a third party supplier by Licensee. Licensee is responsible for support and maintenance of the third-party database licensed from a third party supplier, and SAP has no responsibility in this regard.

2

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

7. LIMITATION OF LIABILITY: In no event shall SAP’s or its Licensors’ total liability for damages [ *296 ] arising from or related to the [ *297 ] exceed [ *297.1 ] the Net License Fee identified in Section 2 hereof.

8. GENERAL PROVISIONS:

8.1 Warranty. Subject to conditions and limitations [ *298 ], SAP warrants that the Redwood Software will substantially conform to the functional specifications contained in the Redwood Software Documentation for [ *299 ] following Delivery (the “Warranty Period”) when Used without material alteration on the Designated Unit(s). SAP’s warranty is subject to Licensee providing SAP necessary access, including remote access, to the Redwood Software. Licensee shall provide SAP with sufficient test time and support on Licensee’s Designated Unit(s) to correct the defect.

8.2 Warranty Remedy. Licensee’s [ *300 ] remedies for any damages or loss in any way connected with a breach of the warranty provided in Section 8.1 hereof, whether [ *301 ], shall be, at [ *302 ] option, for SAP to: (i) bring the performance of the Redwood Software into substantial compliance with the functional specifications within a reasonable time; or (ii) return an appropriate portion of any payment made by Licensee with respect to the applicable portion of the Redwood Software, not to exceed the License Fees paid under this Appendix.

8.3. Indemnification. [ *303 ] SAP shall defend and indemnify Licensee against all costs and damages, including reasonable attorneys’ fees, reasonably incurred by Licensee in the defense of any claim brought against Licensee in the Territory by third parties alleging that Licensee’s Use of the Redwood Software and Redwood Software Documentation infringes: (i) any United States patent; or (ii) a copyright; or (iii) trade secret rights. Licensee shall promptly notify SAP in writing of any such claim and SAP is permitted to control fully the defense and any settlement of such claim as long as such settlement shall not include a financial obligation on Licensee. Licensee shall cooperate fully in the defense of such claim and may appear, at its own expense, through counsel reasonably acceptable to SAP. If use of the most current version or release would have avoided the infringement, any indemnification shall be conditioned on the allegedly infringing Redwood Software and Redwood Documentation being the most recent version or release thereof made available via Maintenance at the time of such alleged infringement.

8.4 Sole and Exclusive Remedy. THE PROVISIONS OF SECTION 8.3 STATE THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF SAP TO LICENSEE, AND IS LICENSEE’S SOLE REMEDY AGAINST SAP, WITH RESPECT TO THE INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS BY THE REDWOOD SOFTWARE.

9. OPTION FOR REDWOOD SOFTWARE: For a period of [ *304 ] from the effective date of this Appendix, Licensee shall have the right upon written notice to SAP, and subject to written appendices to be entered into by the parties, to license additional quantities of Redwood third party software provided that SAP has the right to license such third party software and that the pricing terms of its reseller agreement with such third party software vendor are the same as they are as of the date of this Appendix. The License Fees for such third party software shall be in accordance with SAP’s list price then currently in effect, discounted by [ *305 ]. This option is additionally contingent upon Licensee not being in material breach of the Agreement, including being current with all required payments, including required maintenance.

10. VALIDITY OF OFFER: The validity of this Appendix will expire September 30, 2007, unless sooner executed by Licensee, or extended in writing by SAP.

3

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	10/2/07

4

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Redwood Appendix

Schedule 1 to Appendix 3

Designated Unit Information

1. Name of Licensee or Affiliate where Designated Unit is located: _______________________________

2. Designated Unit(s) to be identified by Licensee to SAP in writing.

Type/Model No.:

Serial No.:

Location of Designated Unit:

Telephone Number:

Software Delivery Contact Person:

3.

Hardware Information		Operating System		Database*
Manufacturer	Model	Manufacturer	Release	Manufacturer	Release
				Oracle

* Note: When Database is licensed from the vendor directly, insert P.O. Number                     , Invoice Number                      and Date                     

Name	Date
Title
(Licensee)

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Mercury Appendix

Appendix 4

effective September 30, 2007 (“Appendix”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Appendix is hereby annexed to and made a part of the Agreement specified above. The following Articles and Provisions of the Agreement are specifically incorporated herein by reference: 1 (Definitions), 2 (License Grant), 4 (Price and Payment), 5 (Term), 6.1 (Protection of Proprietary Information), 7.2 (Express Disclaimer), 9 (Limitation of Liability), 10 (Assignment) and 11 (General Provisions). Unless stated otherwise herein, all other provisions of the Agreement are specifically excluded with respect to this Appendix. In each instance in which provisions of this Appendix contradict or are inconsistent with the incorporated provisions of the Agreement, the provisions of this Appendix shall prevail and govern.

1. LICENSE GRANT:

1.1 “Mercury Software” shall mean, if specified below in this Section 1.1 as licensed, Mercury LR Software (as defined below) and/ or Mercury QC Software (as defined below). The Mercury Software licensed by Licensee from SAP hereunder is as follows:

  “X” if

Licensed

X SAP Loadrunner™ by Mercury (“Mercury LR Software”): Notwithstanding anything to the contrary herein or in the Agreement, Licensee’s Use of the Mercury LR Software is limited solely to testing or monitoring pre-production SAP Software for up to the [ *306 ] in quality assurance and similar environments, and may only be used only on a single server. For the purposes of this Appendix, the phrase [ *307 ] means [ *308 ]. Only individuals licensed under the Agreement as Named Users of SAP Software (“SAP Named Users”) are permitted to Use the Mercury LR Software licensed hereunder. SAP Named Users are permitted to Use the Mercury LR Software licensed hereunder solely in conjunction with SAP Software licensed under the Agreement in accordance with such individuals respective User type.

Number of [ *309 ] for Mercury LR Software

[ *310 ] (“Virtual User Limit”)

X SAP Quality Center™ by Mercury (“Mercury QC Software”): Notwithstanding anything to the contrary herein or in the Agreement, Licensee’s Use of the Mercury QC Software is limited solely to having the number [ *311 ] listed below [ *312 ] Use the Mercury QC Software for testing or monitoring pre-production SAP Software only in quality assurance and similar environments. Any individuals that Use the Mercury QC Software must be licensed as a [ *313 ]. [ *314 ] shall not have the right to Use any other SAP or third party software under the Agreement unless they are expressly licensed under a separate Appendix as a Named User of such software.

Number of [ *315 ] for Mercury QC Software

[ *316 ] (“Tester User Limit for Quality Center”)

1.2 RUNTIME DATABASE: MS SQL Server

2. LICENSE FEE AND PAYMENT: The Net License Fee due and payable by Licensee for the Mercury Software licensed in Section 1 above is the amount of [ *317 ], which amount shall be invoiced upon execution of this Appendix and is payable net [ *318 ] of the date of invoice.

In the event Licensee exceeds the License Grant specified herein, and/or Licensee desires to expand the License Grant specified herein, Licensee agrees to provide written notice to SAP. SAP reserves the right, subject to SAP’s right to continue to license the Mercury Software to modify the Agreement to reflect such increase in the License Grant, recalculate the Net License Fee and Maintenance Fee accordingly and invoice Licensee for such increased license and maintenance fees based on SAP’s then current pricing in effect.

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

In accordance with Section 3 of the Agreement, upon SAP’s reasonable request, Licensee shall deliver to SAP a report, as defined by SAP, evidencing Licensee’s usage of the Mercury Software licensed under this Agreement.

3. INSTALLATION: For the Mercury Software to be installed at a specific Licensee and/or Affiliate site within the Territory, Licensee shall provide SAP with written notice of the location of each computer and the number of Named Users allocated to each such device within [ *319 ] of the use of such device. Such notice shall be in a form materially similar to Schedule 1 attached hereto and is to be sent to: SAP Contract Department, Attention: Director of Contracts, 3999 West Chester Pike, Newtown Square PA 19073. Licensee shall be responsible for installation of the Mercury Software.

4. DELIVERY: Delivery of the above-specified Mercury Software and its documentation is estimated to take place in September, 2007. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the Mercury Software and its documentation licensed under this Appendix by making it available for download or other electronic transmission to Licensee or by load and leave installation directly by SAP personnel on Licensee’s computers at its location in Concord, CA.

SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the MS SQL licensed under this Appendix by load and leave installation directly by SAP personnel on Licensee’s hardware at its location in: Concord, CA SAP will retain possession of all tangible storage media and, upon completion of the installation process, SAP will remove the storage media from Licensee’s premises.

5. MAINTENANCE FEE AND PAYMENT:

5.1 To the degree Mercury Systems, Inc. makes such services generally available to SAP, Licensee may request and SAP shall provide maintenance service (“Maintenance”) with respect to the Mercury Software. Maintenance currently includes the delivery of releases and versions of the Mercury Software made available to SAP, support via telephone, coordination of defect correction with Mercury, and SAP’s support portal. Maintenance, from SAP, for the Mercury Software licensed hereunder is limited to the sites previously identified in the Agreement and related Appendices. In order to receive Maintenance hereunder, Licensee must make all required remote support connections to each Designated Unit, at its expense, as requested by SAP.

In the event Mercury (i) changes in any material adverse manner the nature of Maintenance available from Mercury to SAP or (ii) does not make available to SAP new releases and versions of the Software made available by Mercury to its customers under direct maintenance generally, such change or non availability shall be deemed a “Material Maintenance Change”.

5.2 Maintenance shall commence upon the first day of the month following initial delivery of the Mercury Software. The Maintenance Fee for the Mercury Software licensed under this Appendix is priced at the then current factor in effect [ *320 ] multiplied by the then current Net License Fee for the licensed Mercury Software. The current annual Maintenance Fee for the Mercury Software licensed under this Appendix is [ *321 ].

In addition to the Maintenance Fees described above, the annual Premium Support Service Fee is [ *322 ].

[ *323 ] provided the maintenance and support fee terms of SAP’s reseller arrangement with Mercury remains unchanged, increases in Maintenance Fee and Premium Support Fee per year for the Mercury Software licensed under this Appendix shall not exceed the previous year’s maintenance fees adjusted by the change in the [ *324 ] over the [ *325 ] month period prior to such increase in maintenance fees, [ *326 ].

Maintenance Fees and Premium Support Fees are subject to change once during a calendar year upon [ *327 ] prior written notice to Licensee. Maintenance fees and Premium Support Fees set forth above do not include Taxes. Maintenance Fees and Premium Support Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days. Any Maintenance Fees and Premium Support Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

2

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

5.3 In the event Licensee elects not to commence Maintenance upon the first day of the month following initial delivery of the Mercury Software, or Maintenance is otherwise declined for some period of time, and is subsequently requested or reinstated, SAP will invoice Licensee the accrued Maintenance Fees associated with such time period [ *328 ].

5.4 In the event of a Material Maintenance Change Licensee may, at its option, elect to terminate Maintenance immediately upon [ *329 ] written notice to SAP. In such event, SAP will refund to Licensee a pro rata portion of the prepaid but unearned Maintenance Fee and Premium Support Service Fee. Nothing herein prohibits Licensee from seeking Maintenance for the Software directly with Mercury, and SAP will not enforce any provision in any agreement with Mercury to the contrary.

5.5 [ *330 ]

6. THIRD-PARTY DATABASE: Mercury QC Software licensed hereunder currently requires a third-party database, which has been licensed hereunder as a runtime version. Such runtime version shall be limited to Use by Licensee solely in conjunction with Use of the Mercury QC Software licensed hereunder, and cannot be used to run any software not licensed hereunder. In the event Licensee uses the licensed database other than as specified above, a full license, including programming tools provided through such third-party supplier must be licensed directly from a third party database supplier.

7. LIMITATION OF LIABILITY: In no event shall SAP’s total liability for damages [ *331 ] arising from or related to the [ *332 ] exceed an amount equal to [ *333 ] the Net License Fee identified in Item 2 hereof.

8. GENERAL PROVISIONS:

8.1 Warranty. Subject to conditions and limitations [ *334 ], SAP warrants that the Mercury Software will substantially conform to the functional specifications contained in the Mercury Software Documentation for [ *335 ] following Delivery (the “Warranty Period”) when Used without material alteration on the Designated Unit(s). SAP’s warranty is subject to Licensee providing SAP necessary access, including remote access, to the Mercury Software. Licensee shall provide SAP with sufficient test time and support on Licensee’s Designated Unit(s) to correct the defect.

8.2 Warranty Remedy. Licensee’s [ *336 ] remedies for any damages or loss in any way connected with a breach of the warranty provided in Section 8.1 hereof, whether due to [ *337 ], shall be, at [ *338 ] option, for SAP to: (i) bring the performance of the Mercury Software into substantial compliance with the functional specifications; or (ii) return an appropriate portion of any payment made by Licensee with respect to the applicable portion of the Mercury Software, not to exceed the License Fees paid under this Appendix.

8.3. Indemnification. [ *339 ] SAP shall defend and indemnify Licensee against all costs and damages, including reasonable attorneys’ fees, reasonably incurred by Licensee in the defense of any claim brought against Licensee in the Territory by third parties alleging that Licensee’s Use of the Mercury Software and Mercury Software Documentation infringes: (i) any United States patent; or (ii) a copyright; or (iii) trade secret rights. Licensee shall promptly notify SAP in writing of any such claim and SAP is permitted to control fully the defense and any settlement of such claim as long as such settlement shall not include a financial obligation on Licensee. Licensee shall cooperate fully in the defense of such claim and may appear, at its own expense, through counsel reasonably acceptable to SAP. If use of the most current version or release would have avoided the infringement, any indemnification shall be conditioned on the allegedly infringing Mercury Software and Mercury Documentation being the most recent version or release thereof made available via Maintenance at the time of such alleged infringement.

8.4 Sole and Exclusive Remedy. THE PROVISIONS OF SECTION 8.3 STATE THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF SAP TO LICENSEE, AND IS LICENSEE’S SOLE REMEDY, WITH RESPECT TO THE INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS BY THE MERCURY SOFTWARE.

3

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

9. VALIDITY OF OFFER: The validity of this Appendix will expire September 30, 2007, unless sooner executed by Licensee, or extended in writing by SAP.

Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	10/2/07

4

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Schedule 1 to Appendix 4

Server Information

Licensee Name:                                         

Licensee Software Recipient (“LSR”) Name:                                         

LSR Phone Number:                                         

LSR Fax Number:                                         

LSR e-mail Address:                                         

LSR Address/server location:                                          (must match address shown in Delivery Section (4) of this Appendix).

Name	Date
Title
(Licensee)

5

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Open Text Appendix

Appendix 5

effective September 30, 2007 (“Appendix”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Appendix is hereby annexed to and made a part of the Agreement specified above. The following Articles and Provisions of the Agreement are specifically incorporated herein by reference: 1 (Definitions), 2 (License Grant), 4 (Price and Payment), 5 (Term), 6.1 (Protection of Proprietary Information), 7.2 (Express Disclaimer), 9 (Limitation of Liability), 10 (Assignment) and 11 (General Provisions). Unless stated otherwise herein, all other provisions of the Agreement are specifically excluded with respect to this Appendix. In each instance in which provisions of this Appendix contradict or are inconsistent with the incorporated provisions of the Agreement, the provisions of this Appendix shall prevail and govern.

1. LICENSE GRANT:

1.1 SAP Document Access by Open Text (“Open Text Software”): The software licensed to Licensee pursuant to this Appendix consists of the Open Text Software. Subject to the licensed Levels set forth below, only [ *340 ] are permitted to Use the Open Text Software licensed hereunder. Such Use shall be in accordance with their respective [ *341 ].

Number of [ *342 ] licensed to Use Open Text Software:
[ *343 ]	[ *344 ]*
[ *345 ]	[ *346 ]**
*       [ *347 ]
**     [ *348 ]

1.2 DATABASE: MS SQL

2. LICENSE FEE AND PAYMENT: The Net License Fee due and payable by Licensee for the Open Text Software licensed in Section 1 above is the amount of [ *349 ], which amount shall be invoiced upon execution of this Appendix and is payable [ *350 ] of the date of invoice.

In the event Licensee exceeds the License Grant specified herein, and/or Licensee desires to expand the License Grant specified herein, Licensee agrees to provide written notice to SAP. SAP reserves the right, subject to SAP’s right to continue to license the Open Text Software to modify the Agreement to reflect such increase in the License Grant, recalculate the Net License Fee and Maintenance Fee accordingly and invoice Licensee for such increased license and maintenance fees based on SAP’s then current pricing in effect.

In accordance with Section 3 of the Agreement, upon SAP’s reasonable request, Licensee shall deliver to SAP a report, as defined by SAP, evidencing Licensee’s usage of the Open Text Software licensed under this Agreement.

3. INSTALLATION: For the Open Text Software to be installed at a specific Licensee and/or Affiliate site within the Territory, Licensee shall provide SAP with written notice of the location of each computer and the number of Named Users allocated to each such device within [ *351 ] of the use of such device. Such notice shall be in a form materially similar to Schedule 1 attached hereto and is to be sent to: SAP Contract Department, Attention: Director of Contracts, 3999 West Chester Pike, Newtown Square PA 19073. Licensee shall be responsible for installation of the Open Text Software.

4. DELIVERY: Delivery of the above-specified Open Text Software and its documentations is estimated to take place in September 30, 2007. SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the Software, Maintenance, and documentation licensed under this Appendix by making it available for download or other electronic transmission to Licensee’s location at: 2300 Clayton Road, Concord, CA 94520.

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

SAP will use commercially reasonable efforts to cooperate with Licensee’s request to deliver the MS SQL licensed under this Appendix by load and leave installation directly by SAP personnel on Licensee’s hardware at its location in: Concord, CA SAP will retain possession of all tangible storage media and, upon completion of the installation process, SAP will remove the storage media from Licensee’s premises.

5. MAINTENANCE FEE AND PAYMENT:

5.1 To the degree Open Text GmbH makes such services generally available to SAP, Licensee may request and SAP shall provide maintenance service (“Maintenance”) with respect to the Open Text Software. Maintenance currently includes the delivery of releases and versions of the Open Text Software made available to SAP, support via telephone, coordination of defect correction with Open Text, and SAP’s support portal. Maintenance, from SAP, for the Open Text Software licensed hereunder is limited to the sites previously identified in the Agreement and related Appendices. In order to receive Maintenance hereunder, Licensee must make all required remote support connections to each Designated Unit, at its expense, as requested by SAP.

In the event Open Text (i) changes in any material adverse manner the nature of Maintenance available from Open Text to SAP or (ii) does not make available to SAP new releases and versions of the Software made available by Open Text to its customers under direct maintenance generally, such change or non availability shall be deemed a “Material Maintenance Change”.

In the event SAP does not offer to make Maintenance of the Open Text Software available to Licensee, and in such case to the extent SAP has the right to provide the source code for the Open Text Software to Licensee, SAP shall provide such Open Text source code to Licensee. SAP will use all commercially reasonable efforts to obtain the right to provide source code for the Open Text Software to Licensee in such event.

5.2 Maintenance shall commence on the first day of the month following initial delivery of the Open Text Software. The Maintenance Fee for the Open Text Software licensed under this Appendix is priced at the then current factor in effect [ *352 ] multiplied by the then current Net License Fee for the licensed Open Text Software. The current annual Maintenance Fee for the Open Text Software licensed under this Appendix is [ *353 ]. Maintenance Fees are subject to change once during a calendar year upon [ *354 ] prior written notice to Licensee. Maintenance fees set forth above do not include Taxes. Maintenance Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days. Any Maintenance Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

In addition to the Maintenance Fees described above, the annual Premium Support Service Fee is [ *355 ]. Premium Support Service Fees are subject to change once during a calendar year upon [ *356 ] prior written notice to Licensee. Premium Support Service Fees set forth above do not include Taxes. Premium Support Service Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days from date of invoice. Any Premium Support Service Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.

[ *357 ] provided the maintenance and support fee terms of SAP’s reseller arrangement with Open Text remains unchanged, increases in Maintenance Fee and Premium Support Fee per year for the Open Text Software licensed under this Appendix shall not exceed the lesser of either: (a) the previous year’s maintenance fees adjusted by the change in the [ *358 ] over the [ *359 ] month period prior to such increase in maintenance fees, [ *360 ].

5.3 In the event Licensee elects not to commence Maintenance upon the first day of the month following initial delivery of the Open Text Software, or Maintenance is otherwise declined for some period of time, and is subsequently requested or reinstated, SAP will invoice Licensee the accrued Maintenance Fees associated with such time period [ *361 ].

5.4 In the event of a Material Maintenance Change Licensee may, at its option, elect to terminate Maintenance immediately upon [ *362 ] written notice to SAP. In such event, SAP will refund to Licensee a pro rata portion of the prepaid but unearned Maintenance Fee and Premium Support Fee. Nothing herein prohibits Licensee from seeking Maintenance for the Software directly with Open Text, and SAP will not enforce any provision in any agreement with Open Text to the contrary.

5.5 [ *363 ]

2

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

6. THIRD-PARTY DATABASE: Open Text Software licensed hereunder currently requires a third-party database, which has been licensed hereunder as a runtime version. Such runtime version shall be limited to Use by Licensee for Use of the Open Text Software licensed hereunder.

In the event Licensee uses the licensed database other than as specified above, a full license, including programming tools provided through such third-party supplier must be licensed directly from a third party database supplier.

7. LIMITATION OF LIABILITY: In no event shall SAP’s total liability for damages [ *364 ] arising from or related to the [ *365 ] exceed an amount equal to [ *366 ] the Net License Fee identified in Section 2 hereof.

8. GENERAL PROVISIONS:

8.1 Warranty. Subject to conditions and limitations [ *367 ] SAP warrants that the Open Text Software will substantially conform to the functional specifications contained in the Open Text Software Documentation for [ *368 ] following Delivery (the “Warranty Period”) when Used without material alteration on the Designated Unit(s). SAP’s warranty is subject to Licensee providing SAP necessary access, including remote access, to the Open Text Software. Licensee shall provide SAP with sufficient test time and support on Licensee’s Designated Unit(s) to correct the defect.

8.2 Warranty Remedy. Licensee’s sole and exclusive remedies for any damages or loss in any way connected with a breach of the warranty provided in Section 8.1 hereof, whether due to SAP’s negligence or breach of any other duty, shall be, at SAP's option, for SAP to: (i) bring the performance of the Open Text Software into substantial compliance with the functional specifications; or (ii) return an appropriate portion of any payment made by Licensee with respect to the applicable portion of the Open Text Software, not to exceed the License Fees paid under this Appendix.

8.3. Indemnification. [ *369 ] SAP shall defend and indemnify Licensee against all costs and damages, including reasonable attorneys’ fees, reasonably incurred by Licensee in the defense of any claim brought against Licensee in the Territory by third parties alleging that Licensee’s Use of the Open Text Software and Open Text Software Documentation infringes: (i) any United States patent; or (ii) a copyright; or (iii) trade secret rights. Licensee shall promptly notify SAP in writing of any such claim and SAP is permitted to control fully the defense and any settlement of such claim as long as such settlement shall not include a financial obligation on Licensee. Licensee shall cooperate fully in the defense of such claim and may appear, at its own expense, through counsel reasonably acceptable to SAP. If use of the most current version or release would have avoided the infringement, any indemnification shall be conditioned on the allegedly infringing Open Text Software and Open Text Documentation being the most recent version or release thereof made available via Maintenance at the time of such alleged infringement.

8.4 Sole and Exclusive Remedy. THE PROVISIONS OF SECTION 8.3 STATE THE SOLE, EXCLUSIVE, AND ENTIRE LIABILITY OF SAP TO LICENSEE, AND IS LICENSEE'S SOLE REMEDY AGAINST SAP, WITH RESPECT TO THE INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS BY THE OPEN TEXT SOFTWARE.

9. OPTION FOR OPEN TEXT SOFTWARE: For a period of [ *370 ] from the effective date of this Appendix, Licensee shall have the right upon written notice to SAP, and subject to written appendices to be entered into by the parties, to license additional quantities of Open Text third party software provided that SAP has the right to license such third party software and that the pricing terms of its reseller agreement with such third party software vendor are the same as they are as of the date of this Appendix. The License Fees for such third party software shall be in accordance with SAP’s list price then currently in effect, discounted by [ *371 ]. This option is additionally contingent upon Licensee not being in material breach of the Agreement, including being current with all required payments, including required maintenance.

3

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Name:	Charles F. Tisa	Name:	Michael E. Uremovich
Title:	Vice President	Title:	Chairman & CEO
Date:	9/28/07	Date:	10/2/07

4

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

Schedule 1 to Appendix 5

Designated Unit Information

1. Name of Licensee or Affiliate where Designated Unit is located: _______________________________

2. Designated Unit(s) to be identified by Licensee to SAP in writing.

Type/Model No.:

Serial No.:

Location of Designated Unit:

Telephone Number:

OpenText Software Delivery Contact Person:

3.

Hardware Information		Operating System		Database*
Manufacturer	Model	Manufacturer	Release	Manufacturer	Release
				Oracle

* Note: When Database is licensed from the vendor directly, insert P.O. Number                     , Invoice Number                      and Date                     

Name	Date
Title
(Licensee)

5

SAP AND LICENSEE CONFIDENTIAL & SUBJECT TO NON-DISCLOSURE

[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS

BEEN OMITTED AND FILED SEPARATELY WITH

THE COMMISSION. CONFIDENTIAL TREATMENT

HAS BEEN REQUESTED WITH RESPECT TO

THE OMITTED PORTIONS.

Amendment 1

Effective October 1, 2007 (“Amendment 1”)

to

SAP AMERICA, INC. (“SAP”)

SOFTWARE LICENSE AGREEMENT effective September 30, 2007 (“Agreement”)

with

PACER INTERNATIONAL, INC. (“Licensee”)

This Amendment 1 modifies the above-referenced Agreement the parties. In each instance in which the provision of this Amendment 1 contradict or are inconsistent with the provisions of the Agreement, the provisions of this Agreement 1 shall prevail and govern and the contradicted or inconsistent provisions shall be deemed amended accordingly.

SAP and Licensee agree that the Agreement is modified as follows:

1. Appendix 4 effective September 30, 2007, shall be amended as follows:

(a) The first paragraph of Section 5.2 shall be deleted in its entirety and replaced with the following:

“Maintenance shall commence upon the first day of the month following initial delivery of the Mercury Software. The Maintenance Fee for the Mercury Software licensed under this Appendix is priced at the then current factor in effect [ *372 ] multiplied by the then current Net License Fee for the licensed Mercury Software. The current annual Maintenance Fee for the Mercury Software licensed under this Appendix is [ *373 ].”

(b) The second paragraph of Section 5.2 shall be deleted in its entirety and replaced with the following:

“In addition to the Maintenance Fees described above, the annual Premium Support Service Fee is [ *374 ].”

2. The first paragraph of Section 5.2 of Appendix 5 effective September 30, 2007, shall be deleted in its entirety and replaced with the following:

“Maintenance shall commence on the first day of the month following initial delivery of the OpenText Software. The Maintenance Fee for the OpenText Software licensed under this Appendix is priced at the then current factor in effect [ *375 ] multiplied by the then current Net License Fee for the licensed OpenText Software. The current annual Maintenance Fee for the OpenText Software licensed under this Appendix is [ *376 ]. Maintenance Fees are subject to change [ *377 ] upon [ *378 ] prior written notice to Licensee. Maintenance fees set forth above do not include Taxes. Maintenance Fees are invoiced on an annual basis effective January 1 of a calendar year and payable Net 30 days. Any Maintenance Fees due prior to January 1 are invoiced on a pro-rata basis for the given calendar year in effect.”

EXCEPT AS HEREIN PROVIDED, NONE OF THE PROVISIONS OF APPENDIX 4 OR APPENDIX 5 TO THE AGREEMENT SHALL BE AFFECTED BY THIS AMENDMENT 1.

Accepted by:		Accepted by:
SAP America, Inc.		Pacer International, Inc.
(SAP)		(Licensee)
By:	/s/ Charles F. Tisa	By:	/s/ Michael E. Uremovich
Title:	Vice President	Title:	Chairman
Date:	10/29/07	Date:	10/10/07

SAP CONFIDENTIAL

EX-10.28

Exhibit 10.28

PACER INTERNATIONAL, INC.

2008 PERFORMANCE BONUS PLAN

I. BONUS PLAN

The Pacer International, Inc., 2008 Performance Bonus Plan (the “Bonus Plan”) is a variable pay plan providing compensation payments that are contingent upon achieving pre-determined performance objectives or criteria with respect to the 2008 fiscal year periods of Pacer International, Inc. (“Pacer International”), and its subsidiaries (collectively with Pacer International, the “Company”). The Bonus Plan does not include payment or provision for salary increases (whether based on merit or otherwise), profit-sharing, savings or retirement plans, or recognition awards.

The Bonus Plan is broad-based and includes, for eligibility purposes, all levels of employees within the Company: executive officers, management employees, salaried exempt employees, and salary and hourly non-exempt employees.

The Bonus Plan will be communicated by the senior management of the Company’s various organizational units to their respective employees (for purposes of the Bonus Plan, these organizational units are the Company’s various Business Units and the Corporate Unit); among other things these communications will outline the Bonus Plan’s performance objectives for the specific unit as well as for the entire Company on a consolidated basis. The objective of this communication process is to create a “line of sight” link between the Bonus Plan’s performance objectives, the organizational unit’s employees, and the success of the organizational unit and the overall Company.

The Bonus Plan is a “pool-funded” program with periodic accruals for all organizational units booked at the corporate level based on the organizational units’ and the Company’s actual performance against the Bonus Plan’s performance objectives during the relevant period. These accrual decisions are determined by the Chief Executive Officer and Chief Financial Officer of Pacer International, as appropriate.

The Bonus Plan’s objectives are to:

• align individual behavior with stated business goals and objectives;

• encourage achievement of specific business goals and objectives;

• improve business unit, other organizational unit, support department, and overall Company performance; and

• attract and retain critical talent for the Company.

The performance objectives that are required to be satisfied in order for the Company and each organizational unit to award and pay bonuses with respect to the 2008 fiscal year are comprised of Business Unit operating income targets and Company-wide consolidated earnings per share targets; these objectives are established and approved by the Compensation Committee of the Pacer International Board of Directors (the

“Compensation Committee”) based on the Company’s 2008 operating plan and budget approved by the Board of Directors. Individual employees who are eligible to participate in the Bonus Plan are assigned a target bonus opportunity. For purposes of the Bonus Plan, an organizational unit’s target bonus opportunity is the sum, expressed as a dollar amount, of the target bonus opportunities of the individual employees assigned to that organizational unit.

Distribution of bonuses will occur after the determination and funding of the organizational units’ bonus pools, and is expected to take place in February of the following year. If necessary to maintain the deductibility of compensation paid under the Bonus Plan pursuant to Section 162(m) of the Internal Revenue Code, the distribution of bonuses to the Pacer International Chief Executive Officer and four other most highly compensated officers of the Company will not occur until the Compensation Committee has certified that the performance objectives for the payment of such bonuses have been met.

II. INDIVIDUAL BONUS AWARDS

Once the organizational unit bonus pools have been determined, individual bonus awards are determined based on a combination of an individual’s performance and his or her contribution to his or her organizational unit. The Corporate Human Resources Department will provide the various organizational unit management teams with guidelines on grading an individual’s performance and contribution and making bonus distributions once the organizational unit bonus pools have been determined. Individual bonus distributions should be based on performance and contribution, and those individuals who perform or contribute at a higher level should be recognized for their performance ad contribution.

• As noted, actual bonus awards should be determined based on two components, individual performance and contribution to the success of the organizational unit (or support department within the organizational unit). Employees who receive a Fails to Meet (FM) rating on their performance reviews will not be eligible for any portion of their target bonus for the period in which they received the FM rating.

• An employee must be an active employee at the time the bonus distribution occurs to be eligible to receive the bonus. For purposes of the Bonus Plan, any employee who has given notice prior to the distribution date of intent to end employment after the distribution date shall not be considered an active employee and shall not be entitled to receive a bonus. An employee who retires in the year in which bonuses are earned and is currently retired at the time the bonus is paid may be entitled to a partial bonus payment pro-rated through the date of retirement in the sole discretion of the Chief Executive Officer of Pacer International. An employee who is on approved FMLA or PDL leave (or other medical leave with similar legal protections) may also be entitled to a bonus payment upon his or her return from leave as required by law.

• An employee with less than one year of employment may be eligible for a pro-rated bonus. For nonexempt employees, bonus payments will be determined by applying the employee’s target bonus percentage in effect at the end of the fiscal year to the

employee’s compensation earned during the bonus period, including straight time pay, overtime pay, differentials and paid leave. For exempt employees, bonus payments will be determined by applying the target bonus percentage in effect at the end of the fiscal year to the employee’s base salary earned during the bonus period. The Company shall deduct from all cash distributions under the Bonus Plan any taxes required to be withheld by federal, state, local or foreign government or taxing authority.

III. GENERAL TERMS

Nothing in the Bonus Plan shall confer upon any participant any right or expectation to continue in the Company’s employ, or to interfere in any manner with the absolute right of the Company to change or terminate a participant’s employment at any time for any reason. Neither the Bonus Plan nor any bonus award or right to receive any bonus award shall create or be construed to create a trust or separate fund of any kind or any fiduciary relationship between the Company and any participant or other person. Any right to receive payments from the Company under the Bonus Plan shall be no greater than the right of an unsecured general creditor of the Company.

During a participant’s lifetime, each bonus award, and each right under any bonus award, shall be exercisable only by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative. No bonus award, and no right under any bonus award, may be assigned, alienated, pledged, attached, sold or otherwise transferred to, or encumbered by a participant other than by will or by the laws of descent and distribution and any such purported transfer or encumbrance shall be void and unenforceable against the Company.

The Bonus Plan is a discretionary plan provided by the Company, and it may be amended, modified or supplemented at any time and from time to time, and may be canceled or terminated at any time, in the sole discretion of the Compensation Committee. In addition to, or in lieu of, the bonus formulas contained in the Bonus Plan, in the event of special or extraordinary circumstances management may recommend to the Compensation Committee retention, incentive or other bonus grants or awards, but the grant, award or payment thereof, including any terms and conditions relating thereto, shall be in the sole discretion of the Compensation Committee. The Bonus Plan shall be administered by or under the direction and supervision of the Chief Executive Officer of Pacer International, whose determinations shall be final (subject to the approval of the Compensation Committee to the extent required by applicable law or securities exchange listing requirements). Any such amendments, modifications, supplements or determinations shall be made in a manner to maintain the deductibility of compensation paid under the Bonus Plan pursuant to Internal Revenue Code Section 162(m), to the extent such regulation would otherwise impair the deductibility of compensation under the Bonus Plan.

No member of the Board of Directors or any committee of the Board of Directors of Pacer International or any of its subsidiaries, nor any officer of Pacer International or any of its subsidiaries delegated authority under the Bonus Plan, shall be liable for any action, or omission or determination made in good faith by such member, by the Board of

Directors or any committee of the Board of Directors of Pacer International or any of its subsidiaries, or by any such officer with respect to the Bonus Plan or any bonus award.

The Bonus Plan shall be construed under the laws of the State of Tennessee, to the extent not preempted by federal law, without reference to the principles of conflict of laws.

EX-10.38

Exhibit 10.38

PACER INTERNATIONAL, INC.

2300 Clayton Road, Suite 1200

Concord, CA 94520

June 18, 2007

Mr. Alex Munn

6658 Traquair Place

Dublin, OH 43016

Separation and Release Agreement

Dear Alex:

This letter agreement (the “Agreement”) memorializes our mutual agreement and understanding in connection with the termination of your employment with Pacer International, Inc. (“Pacer”) and its subsidiaries, (collectively, the “Company”). Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pacer and you hereby agree as follows:

1. Termination of Employment. This Agreement shall constitute the parties’ acknowledgment of the termination of your employment with Pacer and its Affiliates (as defined in Section 18), including Pacer’s subsidiary, Pacer Global Logistics, Inc. (“PGL”) and including any and all positions held by you as a director or officer of Pacer or any of its Affiliates and any and all positions held by you as administrator or trustee of any employee benefit plan or related trust maintained or created by or on behalf of Pacer or any of its Affiliates, in all cases effective as of June 18, 2007 (the “Termination Effective Date”). Upon the Termination Effective Date, Pacer shall pay to you (1) the lump sum amount of $15,964 for all accrued but unused vacation and person leave time during your employment, reduced by any vacation taken after the date of this letter, (2) any unpaid portion of your Base Salary for service through the Termination Effective Date, and (3) reimbursement for any expenses incurred on or before the Termination Effective Date in accordance with the Company’s travel and entertainment policy for which you have not already been reimbursed.

2. Payments Upon Termination of Employment.

(a) After the Termination Effective Date and eight (8) full days following the execution of this Agreement and provided that you have not revoked this Agreement, the Company will make the following payments to you provided, however, that you are not in breach of any provision of this Agreement and do not engage in any activity or conduct proscribed by 7 or 8 (regardless of the extent to which such Section may be enforced under applicable law):

(i) a lump sum amount of $478,920, which is equal to 18 months of your current base salary;

(ii) a pro rata bonus for the period from December 30, 2006 through the Termination Effective Date (or portion thereof), if any, awarded and payable to you under the Company’s 2007 performance bonus plan as adopted by the Board, to be paid when and as provided in such bonus plan; and

Mr. Alex Munn

June 18, 2007

Page 2 of 10

(iii) premiums due for continued group health insurance coverage through the Company under COBRA, subject to your timely election to continue COBRA coverage.

3. Release.

(a) For and in consideration of the covenants and agreements of the Company in this Agreement, which are greater than those to which you would be entitled under the Employment Agreement between you and Pacer dated as of March 4, 2005 (the “Employment Agreement”), as well as for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and as a material inducement to the Company to enter into this Agreement, you hereby knowingly and voluntarily release, acquit and forever discharge Pacer, PGL and their respective shareholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives and Affiliates, and all Persons (as defined in Section 18) acting by, through, under or in concert with any of them (collectively, the “Releasees”), from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, which, from the beginning of the world up to and including the date of this Agreement, exist, have existed or may hereafter exist or arise, based on facts occurring on or prior to the date hereof, in connection with the letter offering employment, the Employment Agreement, stock options, restricted stock and other equity incentives granted to you, your employment or the termination of your employment with Pacer, PGL or any of their respective Affiliates, which you or any of your heirs, executors, administrators, legal representatives, successors-in-interest and/or assigns ever had, now have or at any time hereafter may have, own or hold against any of the Releasees (collectively, the “Released Claims”).

(b) By executing this Agreement, (i) you hereby represent that you have not filed or permitted to be filed with any court, governmental or administrative agency, or arbitration tribunal, any of the Released Claims; (ii) you hereby waive all Released Claims against the Releasees arising under foreign, federal, state, provincial and local labor, employment, civil rights, anti-discrimination and other laws and any other restrictions on Pacer’s, PGL’s and their Affiliates’ rights with respect to the termination, for whatever reason, of the employment of its employees, including the Age Discrimination in Employment Act, the Americans With Disabilities Act and Title VII of the Civil Rights Act, as well as any right that you may have ever had or may now have to commence a Released Claim against the Releasees involving any matter relating to your employment relationship with Pacer, PGL or any of their respective Affiliates, the letter offering employment to you, the Employment Agreement, any equity incentive agreements or the termination of your employment; and (iii) you further covenant and agree not to bring any Released Claim or to permit any such Released Claim to be filed by any other Person on your behalf. Notwithstanding the foregoing, nothing in this Agreement precludes you from (A) filing a charge, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”) or comparable state or municipal fair employment agency or (B) participating in any investigation or proceeding conducted by the EEOC or such state or municipal agency. Nevertheless, through the execution of this Agreement, you acknowledge and agree that you have waived the right to recover on any claims in any legal proceeding brought by you or on your behalf.

(c) You fully understand that, if any fact with respect to any matter covered by this Agreement is found after the execution of this Agreement to be other than or different from the facts now believed by you to be true, you expressly accept and assume that this Agreement, and all releases and waivers herein shall be and remain effective, notwithstanding such difference in facts.

Mr. Alex Munn

June 18, 2007

Page 3 of 10

(d) Neither this Agreement nor the consideration provided under it nor compliance with it shall be construed as an admission by Pacer, its Affiliates or by you of any liability or violation of any law, statute, duty, contract, covenant or order.

4. ADEA Waiver, Waiting and Revocation Periods.

(a) You expressly acknowledge that you have been advised and instructed that (i) you have the right to consult an attorney and that you should review the terms of this Agreement with counsel of your own selection; (ii) you have been advised that your waiver and release does not apply to any rights or claims for age discrimination that may arise after the execution date of this Agreement; (iii) you have been advised that you have up to twenty-one (21) days within which to consider the terms of this Agreement and seven (7) days thereafter to revoke your signature as set forth below; (iv) you have had ample time to study this Agreement, that you have carefully read the terms of this Agreement and are fully aware of the Agreement’s contents and legal effects, (v) you execute this Agreement voluntarily and of your own free will, and (vi) you understand that this Agreement is final and binding. You expressly acknowledge and agree that this Agreement constitutes a knowing and voluntary waiver of rights under the Older Workers Benefit Protection Act. You understand that by signing this Agreement prior to the expiration of twenty-one (21) days, you waive your right to consider the Agreement for the entire twenty-one (21) day period.

(b) You understand and agree that this Agreement is revocable by you for seven (7) days following the signing of this Agreement by you, and that this Agreement shall not become effective or enforceable until that revocation period has expired. This Agreement automatically becomes enforceable and effective on the eighth (8^th) day after the latest date this Agreement is signed by the parties. This Agreement may be revoked by you by a writing sent to the Company at the address specified in Section 15, by certified mail post-marked no later than the seventh (7^th) day after the Agreement is signed by you (unless that day is a Sunday or a holiday, in which event the period is extended to the next day there is mail service).

5. Company Property. You hereby represent and agree that, on or prior to the Termination Effective Date, you will have surrendered to the Company all computers, cell phones, printers, access cards, credit cards and charge cards of or belonging to or issued in the name of the Company, all membership cards for memberships maintained by or in the name of the Company, and any other personal property in your possession belonging to the Company, unless the Company has expressly agreed to allow you to retain such property.

6. Nondisclosure of Provisions. Except as otherwise required by law or compelled by judicial process, you will maintain the confidentiality of, and you will not disclose to any Person, any of the terms or provisions of this Agreement, except for such disclosures to your attorney, accountant, tax preparer or other professional financial or legal adviser, or other legal representative, in each case who is in a confidential relationship with you and has been advised of your obligations hereunder, on a need-to-know basis in connection with such Person’s services rendered to you or on your behalf.

7. Proprietary Information.

(a) From and after the date hereof, you shall not at any time disclose, divulge, furnish or make accessible to any Person any Confidential Information (as defined in Section 7(b)) heretofore acquired or acquired during your employment by the Company for any reason or purpose whatsoever (provided that nothing contained herein shall be deemed to prohibit or restrict your right or ability to disclose, divulge, furnish or make accessible any Confidential Information (i) to any officer, director,

Mr. Alex Munn

June 18, 2007

Page 4 of 10

employee, Affiliate or representative of the Company, or (ii) as required by law or judicial process), nor shall you make use of any Confidential Information for your own purposes or benefit or for the purposes or benefit of any other Person except Pacer and its Affiliates.

(b) For purposes of this Agreement, the term “Confidential Information” means (i) the Intellectual Property Rights (as defined in Section 7(c)) of Pacer and its Affiliates and (ii) all other information of a proprietary or confidential nature relating to Pacer or any Affiliate thereof, or the business or assets of Pacer or any such Affiliate, including: books and records; agent and independent contractor lists and related information; customer lists and related information; vendor lists and related information; supplier lists and related information; employee and personnel lists, policies and related information; contract terms and conditions (including those with customers, suppliers, vendors, independent contractors and agents, and present and former employees); terms and conditions of permits, orders, judgments and decrees; wholesale, retail and distribution channels; pricing information, cost information, and pricing and cost structures and strategies; marketing, product development and business development plans and strategies; management reports; financial statements, reports, schedules and other information; accounting policies, practices and related information; business plans, strategic plans and initiatives, forecasts, budgets and projections; and shareholder, board of directors and committee meeting minutes and related information; provided, however, that Confidential Information shall not include (A) information that is generally available to the public on the date hereof, or which becomes generally available to the public after the date hereof without action by you in breach or violation of this Agreement, or (B) information that you receive from a third party who does not have any obligation to Pacer or any of its Affiliates to keep such information confidential and which you do not know (or reasonably could not have known) is confidential to Pacer or any of its Affiliates.

(c) As used herein, the term “Intellectual Property Rights” means all industrial and intellectual property rights, including the following (whether patentable or not): patents, patent applications, and patent rights; trademarks, trademark applications, trade names; service marks and service mark applications; trade dress, logos and designs, and the goodwill associated with the foregoing; copyrights and copyright applications; certificates of public convenience and necessity, franchises and licenses; trade secrets, know-how, proprietary processes and formulae, inventions, improvements, devices and discoveries; development tools; marketing materials; instructions; Confidential Information; and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and records.

8. Non-competition Covenant.

(a) You acknowledge and agree that you have received from your employment with the Company significant and substantial benefits, including compensation and other consideration inuring to your benefit, as well as introductions to, personal experience with, training in and knowledge of Pacer and its Affiliates, the industries in which they engage, and third parties with whom they conduct business. Accordingly, in consideration of the foregoing, and the payments made and to be made to you in connection with your employment with the Company and under this Agreement, you agree that you will not during the period beginning on the Termination Effective Date and ending at the close of business on December 18, 2008 (the “Non-Competition Period”) for any reason:

(i) in any city or county in any state or province of the United States, Canada or Mexico where Pacer or any of its Affiliates conducts business during the Non-Competition Period, directly or indirectly engage or participate in any Competing Business (as defined in Section 8(b) below) (whether as an officer, director, employee, partner, consultant, holder of an equity or debt investment, lender or in any other manner, or capacity, including by the rendering of services or advice to any Person), or lend your name (or any part or variant thereof) to, any Competing Business;

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(ii) deal, directly or indirectly, with any customers, vendors, agents or contractors doing business with Pacer or any of its Affiliates, or with any officer, director, employee of Pacer or any of its Affiliates, in each case in any manner that is or could reasonably be expected to be competitive with Pacer or any of its Affiliates;

(iii) take any action to solicit, encourage or induce any customer, vendor, agent or contractor doing business with Pacer or any of its Affiliates, or any officer, director, employee or agent of Pacer or any of its Affiliates:

(A) to terminate or alter in any manner adverse to Pacer and its Affiliates its business, commercial, employment, agency or other relationship with Pacer or such Affiliate (including any action to do business or attempt to do business with, or to hire, retain, engage or employ or attempt to hire, retain, engage or employ, any customer, vendor, agent or contractor, or any officer, director or employee, of Pacer or any of its Affiliates);

(B) to become a customer, vendor, agent or contractor, or an officer, director or employee, of you, your Affiliates or any other Person; or

(C) to engage in any Competing Business; or

(iv) engage in or participate in, directly or indirectly, any business conducted under any name that shall be the same as or similar to the name of Pacer or any of its Affiliates or any trade name used by any of them.

Ownership by you for investment purposes only of less than 2% of the outstanding shares of capital stock or class of debt securities of any Person with one or more classes of its capital stock listed on a national securities exchange or actively traded in the over-the-counter market shall not constitute a breach of the foregoing covenant.

(b) As used herein, the term “Competing Business” means any transportation or other business that Pacer or any of its Affiliates has engaged in at any time during the Employment Period in any city or county in any country, state or province of the United States, Canada or Mexico, including any such business directly or indirectly engaged in providing any of the following:

(i) intermodal marketing or rail or intermodal brokerage services (whether in connection with domestic or international shipments or customers), car fleet management services, and railcar brokerage and management services;

(ii) highway brokerage services, including full trailer load, less than trailer load, trailer fleet management and depot operations services;

(iii) international freight transportation services, including ocean forwarding, custom house brokerage, ocean carrier services (including NVOCC operations), import/export air forwarding services, and special project services;

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(iv) specialized transport and cartage services, including heavy, oversized, and other specialized flatbed trucking services, dry van trucking services, port and rail depot cartage services (whether in connection with domestic or international shipments or customers), and local and regional trucking services (including full truckload and less-than-truckload motor carrier services);

(v) freight consolidation and handling services, including third party warehouse, cross dock, consolidation, deconsolidation and distribution services;

(vi) comprehensive transportation management programs and services to third party customers, including supply chain and traffic management services, carrier rate and contract management services, logistics optimization planning, and vendor bid optimization;

(vii) intermodal rail equipment (including double-stack rail car, container and chassis) supply and management services, including stacktrain transportation services; and

(viii) any other transportation or other business that Pacer or any of its Affiliates has engaged in at any time during the Employment Period in any city or county in any country, state or province of United States, Mexico or Canada.

9. Assistance in Litigation. At the request and expense of the Company upon reasonable notice (including for the time involved after December 17, 2008, a reasonable payment based on your per diem earnings on the Termination Effective Date and to the extent that you can render such assistance without affecting your other business obligations), you shall furnish such information and assistance to Pacer and its Affiliates as the Company may reasonably require in connection with any issue, claim or litigation in which Pacer or any of its Affiliates may be involved.

10. Remedies. You acknowledge and agree that the provisions of this Agreement (including Sections 7, 8 and 9) are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any of these provisions would cause the Company irreparable harm. Accordingly, you agree that in the event of a breach or threatened breach of any of the covenants contained in this Agreement (including Sections 7, 8 and 9), the Company shall be entitled to (1) immediate relief enjoining such breach or threatened breach in any court or before any judicial body having jurisdiction over such a claim, and you waive any requirement that the Company post a bond or other security or prove that monetary damages are inadequate, and (2) a refund of a portion of the lump sum severance pay amount, pro-rated from the date that such breach commenced. All rights and remedies provided for in this Agreement are cumulative, are in addition to any other rights and remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or to preclude the exercise or pursuit of any other right or remedy.

11. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be so modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the legality, binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred on the parties by virtue of this Agreement

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remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions shall not invalidate or render unenforceable such provision in any other jurisdiction.

12. Expenses; Taxes. Each party hereto shall bear his or its own expenses incurred in connection with this Agreement (including legal, accounting and any other third party fees, costs and expenses and all federal, state, local and other taxes and related charges incurred by such party). All references herein to remuneration, compensation and other consideration payable by Pacer or any of its Affiliates hereunder to or for the benefit of you or your heirs, representatives, or estate are to the gross amounts thereof before reductions, set-off, or deduction for taxes and other charges referred to below, and all such remuneration, compensation and other consideration shall be paid net of and after reduction, set-off and deduction for any and all applicable withholding, F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld by Pacer or any such Affiliate.

13. Governing Law. You acknowledge that the place of your employment as of the Termination Effective Date was the State of Ohio. Accordingly, this Agreement shall be governed by, and construed and enforced in accordance with, the domestic laws of the State of Ohio applicable to contracts made and to be wholly performed in such State, without giving effect to any choice or conflict of law provision or rule (whether of the State of Ohio or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Ohio.

14. Binding Effect. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estates, as applicable. This Agreement shall not be assignable by you without the prior written consent of Pacer (acting with approval of its Board of Directors). Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors, permitted assigns, representatives, heirs and estates, as applicable.

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

if to the Company, to:

Pacer International, Inc.

1 Independent Drive, Suite 1250

Jacksonville, FL 32202

Attention: General Counsel

if to you, to:

Mr. Alex Munn

6658 Traquair Place

Dublin, OH 53016

(b) All such notices and other communications shall be deemed to have been given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iii) in the case

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of mailing, on the third business day where sent next following such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location are authorized or required to be closed.

16. Entire Agreement; Amendment and Waiver. This Agreement embodies the entire agreement and understanding by and between the parties hereto with respect to the subject matter hereof and supersedes and preempts any and all prior and contemporaneous understandings, agreements, arrangements, representations or communications (whether written or oral) by or between the parties relating to the subject matter hereof, including the Employment Agreement. You acknowledge that, as provided in the 1999 Stock Option Plan (the “1999 Plan”) and the option agreement issued to you thereunder for an option granted on May 6, 2002, to purchase 60,000 shares of Pacer’s common stock, the portion of such option that is unvested on the Termination Effective Date (36,000 shares) shall become null and void and be of no further force or effect, and the portion of such option that is vested on the Termination Effective Date (24,000 shares) that is not previously exercised by you will automatically terminate and become null and void and be of no further force or effect upon the ninetieth (90^th) day following the Termination Effective Date. You further acknowledge that, as provided in the 2006 Long Term Incentive Plan and the restricted stock agreement issued to you thereunder for an award of 6,000 shares of restricted stock, the 4,500 restricted shares of Pacer’s common stock that have not vested as the Termination Effective Dave shall be forfeited back to Pacer. Other than this Agreement and the stock option and restricted stock agreements referenced above, there are no other understandings, agreements, arrangements, representations or communications continuing in effect relating to the subject matter hereof. Neither party is signing this Agreement in reliance upon any promise, representation or warranty not expressly contained in this Agreement. No waiver, amendment or modification of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. No failure or delay by any party in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof or of any other right, power or remedy. The waiver by any party hereto of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by such other party.

17. Counterparts and Facsimile or Imaged Execution. This Agreement may be executed in two or more counterparts, and each such counterpart shall be an original instrument, but all such counterparts taken together shall be considered one and the same agreement, effective when one or more counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Any signed counterpart delivered by facsimile or imaged document shall be deemed for all purposes to constitute such party’s good and valid execution and delivery of this Agreement.

18. Other Construction and Interpretation Provisions. The use in this Agreement of the term “including” means “including, without limitation.” The words “herein”, “hereof”, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of similar import refer to this Agreement as a whole, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to articles, sections, subsections, clauses, paragraphs, schedules and attachments mean such provisions of this Agreement, except where otherwise stated. The section headings in this Agreement are for convenience only and shall not control or affect the meaning of any provision of this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. If, and wherever, specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Unless otherwise provided herein, the measure of one month or year for

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purposes of this Agreement shall be that date of the following month or year corresponding to the starting date, except that, if no corresponding date exists, the measure shall be the next day of the following month or year (e.g., one month following February 8 is March 8, and one month following March 31 is May 1). The term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The term “Person” shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business, and any other entity, including a governmental entity such as a domestic or foreign government or political subdivision thereof, whether on a federal, state, provincial or local level and whether legislative, executive, judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

19. Jury Trial Waiver. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED TO THE SUBJECT MATTER HEREOF. YOU UNDERSTAND THAT THE WAIVER OF THE RIGHT TO A TRIAL BY JURY IS AN IMPORTANT RIGHT WHICH YOU HEREBY FOREGO.

20. Jurisdiction and Venue; Service of Process. The parties hereto (i) agree that all disputes among them arising out of, connected with, related to, or incidental to this Agreement shall be resolved exclusively by state or federal courts located in Franklin County, Ohio or any appellate court from any thereof, or by an arbitrator located in Franklin County, Ohio in such cases where both parties hereto have expressly agreed to binding arbitration, (ii) irrevocably submit to the jurisdiction of such courts and waive any objection to venue or defense of an inconvenient forum for any proceeding in any such court, and (iii) agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by law.

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If the above terms are satisfactory to you, please acknowledge your acceptance thereof and agreement therewith by signing the enclosed copy of this letter in the space provided below and returning it to the undersigned.

Very truly yours, PACER INTERNATIONAL, INC.
By:	/s/ C. William Smith
	C. William Smith Executive Vice President, Human Resources

Accepted and agreed to:

/s/ Alex M. Munn

Alex M. Munn

EX-10.39

Exhibit 10.39

NONSTATUTORY STOCK OPTION AWARD AGREEMENT

PURSUANT TO THE

PACER INTERNATIONAL, INC. 2006 LONG-TERM INCENTIVE PLAN

This NON-STATUTORY STOCK OPTION AWARD AGREEMENT (the “Agreement”) is made and entered into as of the          day of             , 200  , by and between Pacer International, Inc. (the “Company”), a Tennessee corporation, and              (the “Grantee”).

Background Information

The Compensation Committee and the Board of Directors (the “Board”) have adopted the Pacer International, Inc. 2006 Long-Term Incentive Plan (the “Plan”), and the shareholders have approved the Plan.

The Compensation Committee of the Board has approved the grant of Nonstatutory Stock Option to Grantee, subject to the terms of the Plan.

The Grantee desires to accept this Nonstatutory Stock Option and agrees to be bound by the terms and conditions of the Plan and this Agreement.

Accordingly, upon and subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants as of the Date of Grant to the Grantee the Nonstatutory Stock Option described below (the “Option”) pursuant to Section 6 of the Plan in consideration of the Grantee’s services to the Company. Capitalized terms used herein and not defined herein have the meaning ascribed to them in the Plan.

A. Date of Grant:

B. Option, Exercise, Price and Term: up to              shares of the Company’s common stock (“Option Shares”), par value $0.01 per share, at a per price exercise price equal to $            , the closing price on the Date of Grant. The number of Option Shares and the exercise price are subject to future adjustment upon the occurrence of certain events as provided in the Plan. The Option is not intended to qualify for federal income tax purposes as an Incentive Stock Option within the meaning of Section 422 of the Code. The term of the option (the “Option Term”) shall commence on the Date of Grant and expire on the tenth (10^th) anniversary of the Date of Grant, unless sooner terminated, canceled or forfeited as provided herein or in the Plan.

C. Vesting Schedule: The Option shall vest and become exercisable in annual increments of 25% of the total number of Option Shares on each anniversary of the Date of Grant (but as to whole shares only, with any fractional shares that would otherwise vest being carried forward until the aggregate amount thereof equals a whole share), subject to the terms and conditions of this Agreement and the Plan. Vesting of the Option shall cease as of the date on which Grantee’s Continuous Status as an Employee or Consultant terminates.

D. Effect of Death, Disability and Termination of Service on Awards. The unexercised portion of the Option granted under this Agreement shall automatically terminate and shall become null and void and be of no further force or effect upon the first to occur of the following:

(a) the three-month anniversary of the date on which Grantee’s Continuous Status as an Employee or Consultant terminates for any reason other than the death or Disability

of the Grantee; provided, however, that if such Grantee shall die after the date on which his Continuous Status as an Employee or Consultant terminates but before the three-month anniversary thereof, the unexercised portion of such Option shall automatically terminate and become null and void and be of no further force or effect upon the 12-month anniversary of the date on which Grantee’s Continuous Status as an Employee or Consultant terminated;

(b) the 12-month anniversary of the date on which Grantee’s Continuous Status as an Employee or Consultant terminates due to Grantee’s death or Disability; or

(c) the date on which Grantee’s Continuous Status as an Employee or Consultant terminates for Cause (as defined below).

For purposes of this Agreement, the term “Cause” means the termination of Grantee’s Continuous Status as an Employee or Consultant because of (i) the commission by such Grantee of any act of fraud, theft or financial dishonesty with respect to the Company or any of its Subsidiaries, or such Grantee has been convicted of, or plead guilty to, a felony, (ii) any material breach by such Grantee of any material provision of this Agreement or the Plan or any one or more agreements or understandings between the Company or any Subsidiary thereof on the one hand and such Grantee on the other hand (whether written or oral) regarding the terms of such Grantee’s service as an Employee or Consultant to, the Company or any Subsidiary thereof, including, without limitation, the willful and continued failure or refusal of such Grantee to perform the material duties required of such Grantee as an Employee or Consultant to, the Company or any Subsidiary thereof, other than as a result of such Grantee having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or any Subsidiary thereof on the one hand and such Grantee on the other hand, (iii) such Grantee’s intentional or willful disregard of the policies of the Company or any Subsidiary thereof so as to cause loss, damage or injury to the property, reputation or employees of the Company or any Subsidiary thereof, or (iv) any other misconduct by such Grantee which is otherwise materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Subsidiary thereof.

E. Acceleration of Vesting. In the event of a Change in Control, any portion of the Option that is not yet vested in accordance with the Vesting Schedule on the date such Change in Control is determined to have occurred shall become fully vested and exercisable as of such date.

F. Form of Payment of the Exercise Price. The acceptable form of consideration for payment of the exercise price may consist of any combination of cash, personal check, wire transfer or

(a) by cancellation of indebtedness of the Company to the Grantee;

(b) Mature Shares;

(c) pursuant to rules and procedures approved by the Administrator from time to time, (A) through the sale of the Shares acquired on the exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay the exercise price, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by the Grantee by reason of such exercise, or (B) through simultaneous sale through a broker of Shares acquired upon exercise (but, subject in any case, to the applicable limitations of Rule 16b-3 and Section 13(k) of the Exchange Act (Section 402 of the Sarbanes-Oxley Act of 2002);

(d) by waiver of compensation due or accrued to the Grantee for services rendered to the Company or any of its Subsidiaries;

(e) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Law; or

(f) any combination of any of the foregoing.

G. Exercise of Option. The Option may not be exercised for a fraction of an Option Share. An Option shall be deemed exercised when the Company receives:

(a) written notice of exercise from the person entitled to exercise the Option, and

(b) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized under Section F above.

Shares issued upon exercise of an Option shall be issued in the name of the Grantee or, if requested by the Grantee, in the name of the Grantee and his or her spouse.

H. Governing Laws. This Agreement shall be construed, administered and enforced according to the laws of the State of Tennessee, without regard to its choice or conflict of law rules.

I. Successors. This Agreement shall be binding upon and inure to the benefit of the Company and the Grantee and their heirs, legal representatives, successors, and permitted assigns.

J. Notice. Except as otherwise specified herein, all notices and other communications under this Agreement shall be in writing and shall be deemed to have been given if personally delivered, if sent by overnight delivery or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient. Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein.

K. Severability. In the event that any one or more of the provisions or portion thereof contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Agreement, and this Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

L. Entire Agreement. Subject to the terms and conditions of the Plan, which are incorporated herein by reference, this Agreement expresses the entire understanding and agreement of the parties with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

M. Headings. Section and paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Agreement.

N. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

O. No Right to Continued Service. Neither the establishment of the Plan nor the award of Option hereunder shall be construed as giving Grantee the right to any continued employment, service or consulting relationship with the Company.

By their signatures below, the Grantee and the Company agree that the Option is granted under and governed by the terms and conditions of the Plan and this Agreement. Grantee has reviewed in their entirety the prospectus that summarizes the terms of the Plan and this Agreement, has had an opportunity to request a copy of the Plan in accordance with

the procedure described in the prospectus, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and this Agreement. Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and this Agreement.

IN WITNESS WHEREOF, the Company and the Grantee have signed this Agreement and the Company has affixed its corporate seal as of the Date of Grant set forth above.

PACER INTERNATIONAL, INC.

By:

Name:

Title:

GRANTEE:

Name:

EX-10.40

Exhibit 10.40

PACER INTERNATIONAL, INC.

2300 Clayton Road, Suite 1200

Concord, CA 94520

November 7, 2007

PERSONAL AND CONFIDENTIAL

Mr. C. Thomas Shurstad

14 Drakes View Circle

Greenbrae, CA 94904

Settlement Agreement

Dear Tom:

This letter agreement (the “Agreement”) memorializes our mutual agreement and understanding in connection with the termination of your employment with Pacer International, Inc. (“Pacer”), and its Affiliates (as defined in Section 19 below) (collectively, the “Company”) and settlement and release of potential claims as noted below. This Agreement shall become effective as set forth in Section 4 below. Anything contained in this Agreement to the contrary notwithstanding, at the election of the Company by written notice to you this Agreement shall become null and void in its entirety, and shall have no force or effect whatsoever, if you take any action or make any statement that constitutes, or would constitute, a breach or violation of, or noncompliance with, any provision of this Agreement during the 21-day and 7-day periods referenced in Sections 4(a) and 4(b) below as if this Agreement were in effect at the time of such action or statement. Accordingly, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pacer and you hereby agree as follows:

1. Termination of Employment. This Agreement shall constitute the parties’ acknowledgment of the termination of your employment with Pacer and its Affiliates, including any and all positions held by you as a director or officer of Pacer or any of its Affiliates and any and all positions held by you as administrator or trustee of any employee benefit plan or related trust maintained or created by or on behalf of Pacer or any of its Affiliates, in all cases effective as of November 7, 2007 (the “Termination Effective Date”). Upon the effectiveness of this Agreement, Pacer shall pay to you (a) any unpaid portion of your base salary for service through the Termination Effective Date, (b) a lump sum amount for all accrued but unused vacation and personal leave time during your employment, and (c) reimbursement for any expenses incurred on or before the Termination Effective Date for which you have not already been reimbursed, in accordance with the Company’s travel and entertainment policy.

2. Payments Upon Termination of Employment.

(a) After the Termination Effective Date and eight (8) full days following the execution of this Agreement, and provided that you have not revoked this Agreement, the Company will make the following payments to you so long as you are not in breach or violation of, or noncompliance with, any

PERSONAL AND CONFIDENTIAL

Mr. Tom Shurstad

November 7, 2007

Page 2 of 11

provision of this Agreement and do not engage in any activity or conduct proscribed by Sections 6 through 10 inclusive (regardless of the extent to which such Sections may be enforced under applicable law):

(i) an aggregate amount equal to $780,000 payable in installments over a period of twenty-four (24) months following the Termination Effective Date as is generally the Company’s policy for payment of executive compensation;

(ii) a pro rata bonus for the period from December 30, 2006, through the Termination Effective Date (or portion thereof), if any, awarded and payable to you under the Company’s 2007 performance bonus plan as adopted by the Pacer International Board, to be paid if, when and as provided in such bonus plan; and

(iii) all premiums due for continued group health insurance coverage through the Company under COBRA (including the payment by the Company of the premium contributions that would otherwise be payable by you), subject to your timely election to continue COBRA coverage, for a period of eighteen (18) months following the Termination Effective Date (but subject to the payment by you of all co-payments, deductibles and other fees, charges and costs payable thereunder by participants generally).

(b) Without limiting any other provision of this Agreement, if you die on or after the Termination Effective Date, your heirs, beneficiaries or estate, as their respective interests may appear (but without duplication), shall be entitled to receive or continue to receive those amounts that would otherwise have been due and payable to you pursuant to this Section 2.

3. Release.

(a) For and in consideration of the covenants and agreements of the Company in this Agreement, which are greater than those to which you would be entitled under any offer letter, the Employment Agreement dated as of January 16, 2002, between you and Pacer (the “Employment Agreement”) or Company severance policy, as well as for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and as a material inducement to the Company to enter into this Agreement, you hereby knowingly and voluntarily release, acquit and forever discharge Pacer and its Affiliates and their respective shareholders, predecessors, successors, assigns, agents, directors, officers, employees, attorneys, representatives and Affiliates, and all Persons (as defined in Section 19) acting by, through, under or in concert with any of them (collectively, the “Releasees”), from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, which, from the beginning of time up to and including the date of this Agreement, exist, have existed or may hereafter exist or arise, based on facts occurring on or prior to the date hereof, in connection with the letter offering employment, the Employment Agreement, any stock options, restricted stock and other equity incentives granted to you, your employment or the termination of your employment with Pacer or any of its Affiliates, which you or any of your heirs, executors, administrators, legal representatives, successors-in-interest and/or assigns ever had, now have or at any time hereafter may have, own or hold against any of the Releasees (collectively, the “Released Claims”); provided, however, that the Released Claims do not include rights that cannot by law be released by private agreement.

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(b) By executing this Agreement, (i) you hereby represent that you have not filed or permitted to be filed with any court, governmental or administrative agency, or arbitration tribunal, any of the Released Claims; (ii) you hereby waive all Released Claims against the Releasees arising under foreign, federal, state, provincial and local labor, employment, civil rights, anti-discrimination and other laws and any other restrictions on Pacer’s and its Affiliates’ rights with respect to the termination, for whatever reason, of the employment of its employees, including the Age Discrimination in Employment Act, the Americans With Disabilities Act and Title VII of the Civil Rights Act, as well as any right that you may have ever had or may now have to commence a Released Claim against the Releasees involving any matter relating to your employment relationship with Pacer or any of its Affiliates, the letter offering employment to you, the Employment Agreement, any stock option, restricted stock or other equity incentive agreements or the termination of your employment; (iii) you hereby represent that you have not transferred or assigned to any other person any of the Released Claims; and (iv) you further covenant and agree not to bring or knowingly participate in any Released Claim or to encourage or permit any such Released Claim to be filed by any other Person on your behalf. Notwithstanding the foregoing, nothing in this Agreement precludes you from (A) filing a charge, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”) or comparable state or municipal fair employment agency or the National Labor Relations Board (“NLRB”) or (B) participating in any investigation or proceeding conducted by the EEOC or such state or municipal agency or the NLRB or (C) enforcing this Agreement. Nevertheless, through the execution of this Agreement, you acknowledge and agree that you have waived the right to recover on any claims in any legal proceeding brought by you or on your behalf, other than a claim to enforce this Agreement. You agree further that you will pay Pacer for all costs incurred by Pacer because of a breach of these covenants, including reasonable attorneys’ fees and expenses incurred in defending against any claim brought by you. This provision shall not be enforced to the extent it would be inconsistent with federal regulations regarding the ADEA and Older Workers Benefit Protection Act. In the event of a successful challenge by you to the waiver related to a federal claim of age discrimination in this Agreement, and success on the merits of such a federal age discrimination claim, a federal court may order that the monies paid to you pursuant to this Agreement be repaid or setoff against any recovery but only up to the amount of any recovery by you.

(c) You fully understand that, if any fact with respect to any matter covered by this Agreement is found after the execution of this Agreement to be other than or different from the facts now believed by you to be true, you expressly accept and assume that this Agreement and all releases and waivers herein shall be and remain effective, notwithstanding such difference in facts.

(d) Neither this Agreement nor the consideration provided under it nor compliance with it shall be construed as an admission by Pacer, its Affiliates or by you of any liability or violation of any law, statute, duty, contract, covenant or order.

(e) You hereby expressly waive the benefit of California Civil Code Section 1542, which is set forth below, if and to the extent it may apply, and specifically agree that this release shall extend to claims arising out of transactions prior to the date of this Agreement, which Pacer or you do not know or expect to exist in such party’s respective favor at this time. Civil Code Section 1542 provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

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November 7, 2007

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4. ADEA Waiver, Waiting and Revocation Periods.

(a) You expressly acknowledge that (i) you have been advised and instructed that you have the right to consult an attorney and that you should review the terms of this Agreement with counsel of your own selection; (ii) you have been advised that your waiver and release does not apply to any rights or claims for age discrimination that may arise after the execution date of this Agreement; (iii) you have been advised that you have up to twenty-one (21) days within which to consider the terms of this Agreement and seven (7) days thereafter to revoke your signature as set forth below; (iv) you have had ample time to study this Agreement and to consult with an attorney, (v) you have carefully read and fully understand all of the terms of this Agreement and are fully aware of the Agreement’s contents and legal effects, including the waiver of California Civil Code Section 1542 if and to the extent it may apply; (vi) you execute this Agreement voluntarily, without coercion or duress, and of your own free will, (vii) you understand that you are, through this Agreement, releasing the Releasees (as defined in Section 3(a) above) from any and all claims you may have against the Releasees, and (viii) you understand that this Agreement is final and binding. You expressly acknowledge and agree that this Agreement constitutes a knowing and voluntary waiver of rights under the Older Workers Benefit Protection Act. You understand that by signing this Agreement prior to the expiration of twenty-one (21) days, you waive your right to consider the Agreement for the entire twenty-one (21) day period.

(b) You understand and agree that this Agreement is revocable by you for seven (7) days following the signing of this Agreement by you, and that this Agreement shall not become effective or enforceable until that period has expired without revocation. This Agreement automatically becomes enforceable and effective on the eighth (8^th) day after the latest date this Agreement is signed by the parties. This Agreement may be revoked by you by a writing sent to the Company at the address specified in Section 16, by certified mail post-marked no later than the seventh (7^th) day after the Agreement is signed by you (unless that day is a Sunday or a holiday, in which event the period is extended to the next day there is mail service).

5. Company Property. You hereby represent and agree that, on or prior to the Termination Effective Date or as promptly thereafter as practicable, you will surrender to the Company all handbooks, manuals, keys, badges, computers, cell phones, printers, access cards, credit cards and charge cards of or belonging to or issued in the name of the Company, all membership cards for memberships maintained by or in the name of the Company, all passwords, access codes, all Confidential Information (as defined in Section 7(b)), all documents, records, and files (including all copies thereof, regardless of the form or media in which the same exist or are stored) in your possession and belonging or relating to the Company, and any other personal property in your possession belonging to the Company (provided that the Company will return to you and allow you to keep the laptop computer you were last issued after the Company has secured and removed all data, information and software from such computer, provided further that the Company shall have no liability or responsibility to you for any personal data or information (or the loss thereof) that was stored on such computer at any time). The foregoing requirements shall be in addition to, and not by way of limitation of, any other provision of this Agreement.

6. Nondisclosure of Provisions. Except as otherwise compelled by legal or judicial process, you will maintain the confidentiality of, and you will not disclose to any Person, any of the terms or provisions of this Agreement, except for such disclosures (i) to the Equal Employment Opportunity Commission or comparable state or municipal fair employment agency or (ii) to your attorney,

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accountant, tax preparer or other professional financial or legal adviser, or other legal representative, in each case who is in a confidential relationship with you and has been advised of your obligations hereunder and whom you shall cause to comply with this nondisclosure provision, in each case only on a need-to-know basis in connection with such Person’s services rendered to you or on your behalf.

7. Confidential Information.

(a) From and after the date hereof, you shall not at any time use or disclose, divulge, furnish or make accessible to any Person any Confidential Information (as defined in Section 7(b)) heretofore acquired or acquired during your employment by the Company for any reason or purpose whatsoever (provided that nothing contained herein shall be deemed to prohibit or restrict your right or ability to disclose, divulge, furnish or make accessible any Confidential Information (i) to any officer, director, employee, Affiliate or representative of the Company, or (ii) as required by law or judicial process), nor shall you make use of any Confidential Information for your own purposes or benefit or for the purposes or benefit of any other Person except Pacer and its Affiliates. The foregoing obligations are in addition to, and do not replace or modify your common law duties owed to Pacer, nor do they replace or modify Pacer’s common law and criminal law rights. Further, these rights and obligations, as well as your duty to return Pacer property, are binding whether or not you sign this Agreement.

(b) For purposes of this Agreement, the term “Confidential Information” means (i) the Intellectual Property Rights (as defined in Section 7(c)) of Pacer and its Affiliates and (ii) all other information of a proprietary or confidential nature relating to Pacer or any Affiliate thereof, or the business or assets of Pacer or any such Affiliate, including: books and records; agent and independent contractor lists and related information; customer lists and related information; vendor lists and related information; supplier lists and related information; employee and personnel lists, policies and related information; contract terms and conditions (including those with customers, suppliers, vendors, independent contractors and agents, and present and former employees); terms and conditions of permits, orders, judgments and decrees; wholesale, retail and distribution channels; pricing information, cost information, and pricing and cost structures and strategies; marketing, product development and business development plans and strategies; management reports; financial statements, reports, schedules and other information; accounting policies, practices and related information; business plans, strategic plans and initiatives, forecasts, budgets and projections; and shareholder, board of directors and committee meeting minutes and related information (in each case whether or not any such information is marked or denoted as confidential); provided, however, that Confidential Information shall not include (A) information that is generally available to the public on the date hereof, or which becomes generally available to the public after the date hereof without action by you, or (B) information that you receive from a third party who does not have any independent obligation to Pacer or any of its Affiliates to keep such information confidential.

(c) As used herein, the term “Intellectual Property Rights” means all industrial and intellectual property rights, including the following (whether patentable or not): patents, patent applications, letters patent, patent rights; trademarks, trademark applications, trade names; service marks and service mark applications; trade dress, logos and designs, copyrights and copyright applications; certificates of public convenience and necessity, franchises and licenses; trade secrets, know-how, proprietary processes and formulae, inventions, improvements, discoveries; ideas, development tools; marketing materials; instructions; Confidential Information; and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and records.

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8. Nonsolicitation Covenant.

(a) You acknowledge and agree that you have received significant and substantial benefits from your employment with the Company, including the remuneration, compensation and other consideration inuring to your benefit, as well as introductions to, personal experience with, training in and knowledge of Pacer and its Affiliates, the industries in which they engage, and third parties with whom they conduct business. Accordingly, in consideration of the foregoing, and the payments made and to be made to you in connection with your employment relationship with the Company and under this Agreement, you agree that you will not during from the Termination Effective Date through November 7, 2009 (the “Noncompetition Period”), for any reason:

(i) take any action to solicit, encourage or induce any customer, vendor, agent or contractor doing business with Pacer or any of its Affiliates to terminate or diminish in any manner adverse to Pacer and its Affiliates his, her or its business, commercial, agency or other relationship with Pacer or such Affiliate;

(ii) take any action to solicit, encourage or induce any officer, director or employee, or any exclusive agent or contractor, of Pacer or any of its Affiliates:

(A) to terminate or alter in any manner adverse to Pacer and its Affiliates his, her or its business, commercial, employment, agency or other relationship with Pacer or such Affiliate (including any action to hire, retain, engage or employ or attempt to hire, retain, engage or employ, any officer, director or employee, or any exclusive agent or contractor, of Pacer or any of its Affiliates);

(B) to become an officer, director, employee, agent or contractor of you, your Affiliates or any other Person; or

(C) to engage directly or indirectly in any Competitive Business; or

(iii) engage in or participate in, directly or indirectly, any business conducted under any name that shall be the same as or similar to the name of the Company or any of its Affiliates or any trade name used by any of them.

Your ownership for investment purposes only of less than 2% of the outstanding shares of capital stock or class of debt securities of any Person with one or more classes of its capital stock listed on a national securities exchange or actively traded in the over-the-counter market shall not constitute a breach of the foregoing covenant.

(b) As used herein, the term “Competing Business” means any transportation or other business that the Company or any of its Affiliates has engaged in at any time during the period of your employment in any city or county in any country, state or province of the United States, Canada or Mexico, including any such business directly or indirectly engaged in providing any of the following:

(i) intermodal marketing or rail or intermodal brokerage services (whether in connection with domestic or international shipments or customers), car fleet management services, and railcar brokerage and management services;

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(ii) highway brokerage services, including full trailer load, less than trailer load, trailer fleet management and depot operations services;

(iii) international freight transportation services, including ocean forwarding, custom house brokerage, ocean carrier services (including NVOCC operations), import/export air forwarding services, and special project services;

(iv) specialized transport and cartage services, including heavy, oversized, and other specialized flatbed trucking services, dry van trucking services, port and rail depot cartage services (whether in connection with domestic or international shipments or customers), and local and regional trucking services (including full truckload and less-than-truckload motor carrier services);

(v) freight consolidation and handling services, including third party warehouse, cross dock, consolidation, deconsolidation and distribution services;

(vi) comprehensive transportation management programs and services to third party customers, including supply chain and traffic management services, carrier rate and contract management services, logistics optimization planning, and vendor bid optimization;

(vii) intermodal rail equipment (including double-stack rail car, container and chassis) supply and management services, including Stacktrain transportation services;

(viii) railroad signal project management; and

(ix) any other transportation or other business that Pacer or any of its Affiliates has engaged in at any time during the Employment Period in any city or county in any state or province of the United States, Mexico or Canada.

9. Non-Disparagement. You will not make any public or private statement or take any action that is, or that is intended to be, slanderous, libelous, derogatory, harmful, damaging, detrimental or otherwise adverse to Pacer or its Affiliates or their respective officers, directors or employees, or their respective businesses, operations, prospects, affairs, or reputations among their respective customers, vendors, lenders, investors, analysts, competitors, employees, agents, consultants, contractors and representatives; provided, however, that the foregoing is not intended to limit your ability to answer truthfully any questions of fact (as opposed to questions as to your opinion or belief) that may be put to you under oath in any litigation, arbitration or governmental investigative proceeding.

10. Transition and Litigation Assistance. If requested by Pacer and for a reasonable time after notice of termination, you agree to cooperate with Pacer in connection with the transition of any matters on which you were working to other personnel within Pacer. At the request and expense of the Company upon reasonable notice (including for the time involved after November 6, 2009, a reasonable payment based on your per diem earnings on the Termination Effective Date and to the extent that you can render such assistance without materially adversely affecting your other business obligations), you shall furnish such information and assistance to Pacer and its Affiliates as the Company may reasonably require in connection with any issue, claim or litigation in which Pacer or any of its Affiliates may be involved.

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11. Remedies. You acknowledge and agree that the provisions of this Agreement (including Sections 6 through 10 inclusive) are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any of these provisions would cause the Company irreparable harm. Accordingly, you agree that in the event of a breach or threatened breach of any of the covenants contained in this Agreement (including Sections 6 through 10 inclusive), the Company shall be entitled to (1) immediate relief enjoining such breach or threatened breach in any court or before any judicial body having jurisdiction over such a claim, and you waive any requirement that the Company post a bond or other security or prove that monetary damages are inadequate, and (2) a refund of a portion of the severance pay amounts paid after the date that such breach commenced. All rights and remedies provided for in this Agreement are cumulative, are in addition to any other rights and remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or to preclude the exercise or pursuit of any other right or remedy.

12. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be so modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the legality, binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred on the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions shall not invalidate or render unenforceable such provision in any other jurisdiction.

13. Expenses; Taxes. Each party hereto shall bear his or its own expenses incurred in connection with this Agreement (including legal, accounting and any other third party fees, costs and expenses and all federal, state, local and other taxes and related charges incurred by such party). All references herein to remuneration, compensation and other consideration payable by Pacer or any of its Affiliates hereunder to or for the benefit of you or your heirs, representatives, or estate are to the gross amounts thereof before reductions, set-off, or deduction for taxes and other charges referred to below, and all such remuneration, compensation and other consideration shall be paid net of and after reduction, set-off and deduction for any and all applicable withholding, F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld by Pacer or any such Affiliate.

14. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the domestic laws of the State of California applicable to contracts made and to be wholly performed in such State, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.

15. Binding Effect. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estates, as applicable. This Agreement shall not be assignable by you without the prior written consent of Pacer (acting with approval of its Board of Directors). Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors, permitted assigns, representatives, heirs and estates, as applicable.

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November 7, 2007

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

if to the Company, to:

Pacer International, Inc.

One Independent Drive, Suite 1250

Jacksonville, FL 32202

Attention: General Counsel

if to you, to:

Mr. C. Thomas Shurstad

14 Drakes View Circle

Greenbrae, CA 94904

(b) All such notices and other communications shall be deemed to have been given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iii) in the case of mailing, on the third business day where sent next following such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location are authorized or required to be closed.

17. Entire Agreement; Amendment and Waiver. This Agreement embodies the entire agreement and understanding by and between the parties hereto with respect to the subject matter hereof and supersedes and preempts any and all prior and contemporaneous understandings, agreements, arrangements, representations or communications (whether written or oral) by or between the parties relating to the subject matter hereof. You acknowledge that (i) subject to your execution (without revocation) and compliance with this Agreement, vesting of the option granted to you on January 30, 2003, to purchase 10,000 shares of Pacer’s common stock under the 2002 Stock Option Plan (the “2003 Option”) and the related option agreement will be accelerated under an amendment to such option agreement as consideration for this Agreement such that the unvested portion of such 2003 Option (i.e., 2,000 shares) will become vested effective as of the Termination Effective Date, (ii) the unvested portion (i.e., 57,600 shares) of the option granted to you on January 16, 2002, to purchase 96,000 shares of Pacer’s common stock under the 1999 Stock Option Plan (the “2002 Option”) and the related option agreement are null and void and of no further force or effect on and as of the Termination Effective Date, and (iii) the portion of the outstanding 2002 and 2003 Options that are vested as of the Termination Effective Date (i.e., 18,400 shares under the 2002 Option and 10,000 shares under the 2003 Option after giving effect to the acceleration thereof pursuant to clause (i) above) that you do not timely exercise will automatically terminate and become null and void and be of no further force or effect upon the ninetieth (90^th) day following the Termination Effective Date. You further acknowledge that, as provided in the

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2006 Long Term Incentive Plan and the restricted stock agreement issued to you thereunder for an award of 35,000 shares of restricted stock, the 26,250 restricted shares of Pacer’s common stock that have not vested as the Termination Effective Dave have been forfeited back to Pacer as of the Termination Effective Date. Other than this Agreement and the stock option and restricted stock agreements referenced above, there are no other understandings, agreements, arrangements, representations or communications continuing in effect relating to the subject matter hereof. You are not signing this Agreement in reliance upon any promise, representation or warranty not expressly contained in this Agreement. Any oral representations regarding this Agreement shall have no force or effect. No waiver, amendment or modification of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. No failure or delay by any party in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof or of any other right, power or remedy. The waiver by any party hereto of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by such other party.

18. Counterparts and Facsimile or Imaged Execution. This Agreement may be executed in two or more counterparts, and each such counterpart shall be an original instrument, but all such counterparts taken together shall be considered one and the same agreement, effective when one or more counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Any signed counterpart delivered by facsimile or imaged document shall be deemed for all purposes to constitute such party’s good and valid execution and delivery of this Agreement.

19. Other Construction and Interpretation Provisions. The use in this Agreement of the term “including” means “including, without limitation.” The words “herein”, “hereof”, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of similar import refer to this Agreement as a whole, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to articles, sections, subsections, clauses, paragraphs, schedules and attachments mean such provisions of this Agreement, except where otherwise stated. The section headings in this Agreement are for convenience only and shall not control or affect the meaning of any provision of this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. If, and wherever, specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Unless otherwise provided herein, the measure of one month or year for purposes of this Agreement shall be that date of the following month or year corresponding to the starting date, except that, if no corresponding date exists, the measure shall be the next day of the following month or year (e.g., one month following February 8 is March 8, and one month following March 31 is May 1). The term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The term “Person” shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business, and any other entity, including a governmental entity such as a domestic or foreign government or political subdivision thereof, whether on a federal, state, provincial or local level and whether legislative, executive, judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

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20. Jurisdiction and Venue; Service of Process. The parties hereto (i) agree that all disputes among them arising out of, connected with, related to, or incidental to this Agreement shall be resolved exclusively by state or federal courts located in San Francisco County, California, or any appellate court from any thereof, or by an arbitrator located in San Francisco County, California, in such cases where both parties hereto have expressly agreed to binding arbitration, (ii) irrevocably submit to the jurisdiction of such courts and waive any objection to venue or defense of an inconvenient forum for any proceeding in any such court, and (iii) agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without the necessity for service by any other means provided by law.

Please acknowledge your acceptance of and agreement with the foregoing terms by signing the enclosed counterpart of this letter agreement in the space provided below and returning it to the Company at the address stated in Section 16 above.

Very truly yours,

PACER INTERNATIONAL, INC.

By:	/s/ Michael F. Killea
	Name: Michael F. Killea Title: Executive Vice President

Accepted and agreed to:

/s/ C. Thomas Shurstad

C. Thomas Shurstad

EX-10.41

EXHIBIT 10.41

PERSONAL AND CONFIDENTIAL

February     , 2008

[Employee’s Name]

[Home Street Address]

[Home City, State, Zip Code]

Dear [Name]:

Pacer International, Inc. (together with its successors and assigns, the “Company”), values your continued service as an employee and would like to offer to you the opportunity to participate in a special management retention program on the terms and conditions stated in this letter (the “Program”). The Program would provide you with the enhanced severance benefits described below if, within eighteen (18) months after a “Change in Control,” your employment with the Company or its Subsidiary were terminated either (i) by the Company or such Subsidiary without “Cause” or (ii) by you with “Good Reason” (such terms being defined in Exhibit A).

Accordingly, in consideration of your continued employment with the Company or its Subsidiary, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and you, by your signature and acceptance below, hereby agree as follows:

1. Defined Terms. Certain capitalized terms used in this letter have the meanings given to them in Exhibit A attached to this letter.

2. Enhanced Severance Benefit.

(a) Under the Program, if at any time within eighteen (18) months following a Change in Control your employment with the Company or its Subsidiary is terminated either (i) by the Company or such Subsidiary without Cause or (ii) by you with Good Reason, then you will be entitled to receive from the Company as enhanced severance an amount equal to two times your ordinary severance benefit under your employment agreement with the Company or its Subsidiary as in effect immediately prior to the Change in Control, or, if greater benefits inure to you, at the time of such termination of your employment, in either case assuming and subject to the Company’s determination that all conditions for the payment of your ordinary severance benefit under your employment agreement, the Company’s severance policy and this letter have been met. For example, if you have an employment agreement that provides an ordinary severance benefit of twelve (12) months continued payment of your base salary, then under the Program you would be entitled to an enhanced severance benefit of twenty-four (24) months continued payment of your base salary (and no base salary severance benefit would be payable under your employment agreement).

One Independent Drive, Suite 1250, Jacksonville, FL 32202, Tel. 904-485-1000, Fax 904-485-1019

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[Name]

February ___, 2008

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(b) Anything contained in this letter or the Program to the contrary notwithstanding, in no event will the enhanced severance benefit payable under the Program exceed an aggregate amount equal to two times your annual base salary in effect immediately prior to the Change in Control, or, if greater, at the time of the termination of your employment. For example:

(i) if you have an employment agreement that provides an ordinary severance benefit of eighteen (18) months continued payment of your base salary, then your enhanced severance benefit under the Program would be capped at twenty-four (24) months continued payment of your annual base salary (and no base salary severance benefit would be payable under your employment agreement); and

(ii) if you have an employment agreement that provides ordinary severance of twenty-four (24) months continued payment of your base salary, then your enhanced severance under the Program would be capped at that twenty-four (24) months of continued payment of your annual base salary (and no base salary severance benefit would be payable under your employment agreement).

(c) The amount of enhanced severance payment under the Program will be calculated using your base salary in effect immediately prior to the Change in Control, or, if greater, at the time of the termination of your employment.

(d) The enhanced severance benefit payable under the Program will be in lieu of your ordinary severance under your employment agreement. The Program does not double or otherwise amend or modify in any way any other rights you may have under your employment agreement. For example, the Program does not enhance or otherwise amend or modify in any way any other termination benefit you may have, such as any right to receive a pro-rata bonus payment, or to continued participation in Company sponsored or provided benefit plans or programs, or to Company payment of insurance premiums or payment or provision of continued fringe benefits.

(e) Anything contained in this letter or the Program to the contrary notwithstanding, if a termination of your employment within eighteen (18) months following a Change in Control would trigger ordinary severance and other termination benefits under your employment agreement with the Company or its Subsidiary that are the same as or greater than what you would be entitled to receive under this letter and the Program, then this letter and the Program shall not apply to such termination and your employment agreement will govern the benefits which you will be entitled to receive.

3. Payments Subject to Withholding; Treatment of Potential Excess “Parachute Payments.”

(a) All payments under the Program will be subject to applicable withholding, F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld.

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(b) Anything contained in this letter or the Program to the contrary notwithstanding, if the payment of all or any part of your enhanced severance benefit under the Program (along with any other payment or benefit includible in the calculation of “parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)) would render any payments or other benefits to you subject to the excise tax imposed by Section 4999 of the Code, then the enhanced severance payments under the Program shall be reduced to an amount such that the aggregate of such payments under the Program and any other amounts otherwise payable to or benefits to be received by you that are includible in the computation of “parachute payments” does not exceed 2.99 times the “base amount” as defined in Section 280G of the Code. The Company’s independent accountants or attorneys shall be responsible for making this calculation, which shall be binding on the Company and you absent clear or manifest error.

4. Covenants and Conditions for Payment of Severance. The Company’s obligation to pay an enhanced severance benefit under the Program is conditioned upon your compliance with this letter and any and all conditions applicable to your eligibility to receive the ordinary severance benefit under your employment agreement, which may include execution of a settlement and release agreement, return of Company property, compliance with continuing confidentiality, nonsolicitation, noncompetition or other covenants, or any combination thereof.

5. Events that Trigger the Enhanced Severance Payments.

(a) The enhanced severance benefit under the Program is payable to you only if your employment is terminated within 18 months after a Change in Control either (i) by the Company without Cause or (ii) by you with Good Reason. The enhanced severance benefit under the Program will expire on the eighteen (18) month anniversary of a Change in Control. Accordingly, if your employment is terminated after eighteen (18) months following a Change in Control, the enhanced severance benefit under the Program will have expired and will not be payable to you (regardless of the reasons for or circumstances surrounding such termination), but in such case you may still be entitled to the ordinary severance benefit payable under your employment agreement, depending on the reasons for or circumstances surrounding such termination. Similarly, if your employment is terminated before a Change in Control occurs, the enhanced severance benefit under the Program will not apply and will not be payable to you (regardless of the reasons for or circumstances surrounding such termination), but you may be entitled to the ordinary severance benefit payable under your employment agreement, depending on the reasons for or circumstances surrounding such termination.

(b) If you quit, resign, retire or otherwise terminate your employment without Good Reason at any time (whether before or after a Change in Control), or if your employment is terminated by the Company or its Subsidiary for Cause at any time (whether before or after a Change in Control), you will not be entitled to any enhanced severance benefit or payment under this letter or the Program.

6. Death or Disability.

(a) If your employment is terminated due to your death or disability within eighteen (18) months after a Change in Control, the Company will not be obligated to pay any enhanced

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severance benefit under this letter or the Program. Termination for disability will be determined in accordance with your employment agreement with the Company or its Subsidiary, or, if your employment agreement does not provide for a termination for disability, then your employment will be considered to be terminated due to your disability if the Company or its Subsidiary terminates your employment at any time after you are incapacitated or disabled by accident, sickness or otherwise so as to render you mentally or physically incapable of performing your job responsibilities for any period of ninety (90) consecutive days or for an aggregate of one hundred and eighty (180) days in any period of three hundred and sixty (360) consecutive days.

(b) If you die or become disabled at any time after your employment is terminated while you are receiving or are entitled to receive the enhanced severance benefit under the Program, the Company will pay or continue to pay the enhanced severance benefit to you or your estate or beneficiaries as their interests may appear.

7. Timing of Enhanced Severance Payments. The Company will pay the enhanced severance to which you may be entitled under the Program at the time and in the form as your ordinary severance benefit would have been paid under your employment agreement. For example, if your employment agreement provides that severance benefits be paid in a lump sum, your enhanced severance under the Program will be paid in a lump sum; alternatively, if your employment agreement provides that severance benefits be paid as salary continuation or other installments over time, your enhanced severance under the Program will be paid as salary continuation or other installments over time. Notwithstanding the foregoing provisions of this paragraph 7, if on the date of your termination you are a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and an exception from Section 409A’s requirements is not available, you may not receive a distribution under the Program until six months after the date of your termination. If you are subject to the restriction described in the previous sentence, you will be paid on the first day of the seventh month after your termination an amount equal to the benefit that you would have been paid during such six-month period absent such restriction.

8. Restrictions on Disclosure of this Agreement’s Terms. This letter describes a special arrangement that is not available to all Company employees. The Company expects you to keep the existence and terms of this letter and the Program in the strictest confidence. Accordingly, you agree that you will keep the existence, terms and content of this letter and the Program strictly confidential and that you will not disclose any aspect of the existence, terms or content of this letter or the Program to any other person, including any current or former employees, agents, consultants or contractors employed or retained by the Company or any of its Subsidiaries; provided, however, that you may disclose the existence, terms and content of this letter and the Program (a) to your spouse, attorney, accountant or tax advisor if such person is first advised of, acknowledges, and agrees to keep the existence, terms and content of this letter and the Program strictly confidential, or (b) as may be necessary in any legal proceeding to which the Company is a party in order to enforce the terms of this letter, or (c) to the extent required by law or court order or subpoena after you have first provided reasonable and prompt notice of such requirement to the Company to enable it to seek appropriate confidential treatment. Your compliance with this paragraph is a condition to the Company’s obligation to pay or to continue to pay the enhanced severance benefit to which you may otherwise be entitled under the Program.

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9. Effect on any Existing Employment Agreement. Neither this letter nor the Program shall be deemed to alter, amend, modify, supplement or terminate any employment agreement you may have with the Company or its Subsidiary, except for the payment of enhanced severance under the Program in lieu of the ordinary severance payable under your employment agreement as provided in paragraph 2(d) above.

10. No Change to Status as an “At Will” Employee. Neither this letter nor the Program shall be deemed to alter, amend, modify, or change your “at will” employment status. Both you and the Company or its Subsidiary have an absolute right to terminate your employment at any time (subject to compliance with applicable law). Neither this letter nor the Program shall be deemed give you any right or expectation to continue in the employment of the Company or its Subsidiary, nor will the same interfere with the Company’s or its Subsidiary’s right to change or terminate your employment at any time for any reason (subject to compliance with applicable law).

11. General Terms.

(a) Nothing in this letter or the Program creates or shall be construed to create a trust or separate fund of any kind or any fiduciary relationship between the Company or its Subsidiary and you or any other person. Your right to receive payments from the Company under this letter and the Program will be no greater than the right of an unsecured general creditor of the Company.

(b) During your lifetime, your rights under this letter and the Program will be exercisable only by you or, if permissible under applicable law, by your guardian or legal representative. Neither this letter nor the Program confers or shall be deemed to confer any rights or remedies upon any person or entity other than you, the Company and its Subsidiaries and your and their respective successors, permitted assigns, representatives, heirs and estates, as applicable. No right or benefit under this letter or the Program may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you other than by will or by the laws of descent and distribution. Any purported transfer or encumbrance by you will be void and unenforceable against the Company.

(c) Neither the Company nor any of its Subsidiaries, nor any member of the Board of Directors or any committee of the Board of Directors of the Company or any of its Subsidiaries, nor any officer of the Company or any of its Subsidiaries delegated authority in connection with this letter or the Program will be liable for any action, omission or determination made in good faith by such person or entity with respect to this letter or the Program.

(d) This letter states the entire agreement between you and the Company regarding the Program and supersedes all prior discussions, agreements or understandings on this subject matter. This letter may not be amended or modified except in writing and signed by both the Company and you. Any failure or delay in exercising any right, power or remedy under this

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letter will not operate as a waiver of that right, power or remedy or of any other right, power or remedy. A party’s waiver of a breach of any provision of this letter by the other party will not operate or be construed as a waiver of any other or subsequent breach by the other party.

If you wish to accept this offer and participate in the Program, please sign the last page of this letter in the space indicated below and return your signed copy no later than March 30, 2008, to the Pacer Legal Department in Jacksonville, Florida.

If you have any questions regarding this letter or the Program, please contact Adriene Bailey, Executive Vice President, Strategy and Organizational Development, at (904) 495-1002.

Sincerely,

Adriene Bailey

Executive Vice President, Strategy and

Organizational Development

ACCEPTED AND AGREED TO:

Signature:                                                                               

Print Name:                                                                           

Date:                                                                                         

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February ___, 2008

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EXHIBIT A

Definitions

1. “Cause” means the occurrence or existence of any of the following events or circumstances:

(a) your willful misconduct with respect to the business and affairs of the Company or any of its Subsidiaries;

(b) your willful neglect of your duties or the failure to follow the lawful directions of the Board or more senior officers of the Company or its Subsidiary to whom you report, including the violation of any material policy of the Company or of any of its Subsidiaries that is applicable to you;

(c) your material breach of any provision of your employment agreement or any other written agreement between you and the Company or any of its Subsidiaries and, if the breach is capable of being cured, your failure to cure that breach within thirty (30) days of receipt of written notice of such breach from the Company or any of its Subsidiary;

(d) your commission of a felony;

(e) your commission of an act of fraud or financial dishonesty with respect to the Company or any of its Subsidiaries; or

(f) your conviction of a crime involving moral turpitude or fraud.

2. “Good Reason” means the occurrence or existence of any of the following events or circumstances:

(a) any reduction in the annual base salary, target bonus percentage or opportunity, employee benefits or fringe benefits required to be provided to you under your employment agreement with the Company or its Subsidiary, provided that you notify the Company, in writing, of such reduction and, if such reduction is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of such written notice;

(b) any material reduction in your position, title, duties, reporting responsibilities or authorities; provided that you notify the Company, in writing, of such material reduction and, if such material reduction is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of such written notice;

(c) any material breach by the Company of its obligations to you under any employment or other written agreement between the Company and you and, if such breach is capable of being cured, the Company’s failure to cure the same within 30 days after the Company’s receipt of written notice of such breach from you; or

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(d) the Company’s requirement that you relocate your principal office or place of employment with the Company or its Subsidiary to a location that is more than fifty (50) miles from the present location of your principal office.

3. “Change in Control” means the occurrence or existence of any of the following events or circumstances:

(a) any “person” or any “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), but excluding the Company, any Subsidiary of the Company and any employee benefit plan of the Company or any of its Subsidiaries, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities representing 50% or more of the total combined voting power of the Company’s then outstanding securities eligible to vote for the election of directors (the “Company Voting Securities”);

(b) the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Company, or any such type of transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s shareholders (whether for such transaction or the issuance of securities in the transaction or otherwise), or the sale or other disposition in one transaction or a series of transactions of all or substantially all of the assets of the Company (any of the foregoing events being referred to herein as a “Business Combination”), unless such Business Combination also constitutes a Non-Control Transaction (as defined below);

(c) individuals constituting the Board as of February 5, 2008 (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (or the board of directors or similar governing body of the surviving entity or its ultimate parent company in the case of a merger, consolidation or reorganization of the Company whose principal purpose is to change the Company’s state of incorporation, form a holding company or effect a similar reorganization as to form); provided, however, that any individual whose election to the Board, or whose nomination for election to the Board by the Company’s shareholders, was approved or recommended by at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be deemed to be a member of the Incumbent Board unless such individual’s initial assumption of office occurs as a result of either an actual or threatened proxy contest relating to the election of directors (including by way of consent solicitation); or

(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

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4. “Non-Control Transaction” means any Business Combination immediately following which both of the following conditions are satisfied:

(a) more than 50% of the total combined voting power of the Voting Securities of the corporation or other entity resulting from such Business Combination (including a corporation or other entity that acquires all or substantially all of the assets of the Company or that beneficially owns, directly or indirectly, 100% of the Company’s Voting Securities) or the ultimate parent company thereof is represented by shares that comprised Voting Securities of the Company immediately prior to such Business Combination (either by remaining outstanding or by being converted), and such voting power is in substantially the same proportion as the voting power of such Voting Securities of the Company immediately prior to such Business Combination; and

(b) at least a majority of the members of the board of directors or equivalent governing body of the corporation or other entity resulting from such Business Combination or the ultimate parent company thereof were members of the Incumbent Board at the time of the Board’s approval of the initial agreement providing for such Business Combination.

5. “Subsidiary” of the Company means any entity, domestic or foreign, of which not less than 50% of the outstanding shares or other equity interests normally entitled to vote for the election of directors or equivalent governing body are owned or controlled, directly or indirectly, by the Company, whether or not such entity now exists or is hereafter organized or acquired.

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EX-10.42

Exhibit 10.42

EMPLOYMENT AGREEMENT dated as of December 14, 2007, between Pacer International, Inc., a Tennessee corporation (the “Company”), and Dan M. Beers (the “Executive”).

The Company and the Executive are entering into this Agreement to set forth the terms of the Executive’s employment with the Company. Accordingly, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Company and the Executive, the Company and the Executive hereby agree as follows:

Section 1. Duties. The Executive will be employed by the Company on the terms and subject to the conditions contained in this Agreement. As of the date of this Agreement, the Executive’s title is Executive Vice President, Chief Commercial Officer - Intermodal Segment. The Executive shall perform such duties and services on behalf of the Company and its Affiliates (as defined in Section 24(b) below) consistent with such title and position as may reasonably be assigned to the Executive from time to time by the Company’s Board of Directors (the “Board”) or the Chairman of the Board or other more senior officers of the Company. The Executive’s title and position and related duties and services may be changed during the course of Executive’s employment by the Board or the Chairman of the Board or other more senior officers of the Company.

Section 2. Term. The Executive’s employment hereunder shall be for the period (the “Employment Period”) commencing on the date hereof (the “Commencement Date”) and ending on the effective date of the termination of such employment pursuant to and in accordance with the applicable provisions of this Agreement. Upon such termination of the Executive’s employment hereunder, the Executive (or, if applicable, the Executive’s beneficiaries or estate) shall be only entitled to those rights and benefits provided in Section 8(a) or Section 8(b), as applicable to such termination, subject to compliance with those continuing covenants and agreements set forth herein.

Section 3. Time to be Devoted to Employment. During the Employment Period, the Executive will devote substantially all of the Executive’s working energies, efforts, interest, abilities and time exclusively to the business and affairs of the Company and its Affiliates. The Executive will not engage in any other business or activity which, in the reasonable judgment of the Board, would conflict or interfere in any material respect with the Executive’s performance of his duties as set forth herein, whether or not such activity is pursued for gain, profit or other pecuniary advantage.

Section 4. Base Salary; Bonus; Benefits.

(a) During the Employment Period, the Company (or any of its Affiliates) shall pay the Executive a minimum annual base salary (the “Base Salary”) of $291,891.00, payable in such installments (but not less often than monthly) as is generally the policy of the Company with respect to the payment of regular compensation to its executive officers. The Base Salary may be

increased from time to time in the sole discretion of the Board. The Executive will also be entitled to vacation under the Company’s policy. Such vacation shall accrue and may be taken in accordance with the Company’s policy in effect from time to time with respect to its executive officers generally, subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such vacation policy in any respect. The Executive will also be entitled to such other benefits as may be made available to other executive officers of the Company generally, including participation in such health, life and disability insurance programs and retirement or savings plans, if any, as the Company may from time to time maintain in effect as well as a monthly car allowance of $700.00 in accordance with the Company’s policy from time to time for similarly situated executives, in all cases subject to the Company’s right at any time and from time to time to amend, modify, change or terminate in any respect any of its employee and other benefit plans, policies, or programs.

(b) During the Employment Period, the Executive shall be entitled to participate in the Company’s performance bonus plan or program as adopted by Board and in effect from time to time with respect to similarly situated executives of Pacer International, Inc. (“Pacer International”), and its subsidiaries, including the Company (the “Bonus Plan”), and to receive such performance bonus thereunder (if any) with respect to each fiscal year of the Company occurring during the Employment Period, subject in all cases to the terms and conditions of this Agreement and such Bonus Plan. The amount of such performance bonus, if any, that may be awarded and payable to the Executive hereunder with respect to any such fiscal year shall range up to thirty-five percent (35%) of the Base Salary in effect for such fiscal year as determined by the Board (or committee thereof) in its sole discretion based on and to the extent of the achievement or satisfaction of such targets, goals and conditions as may be provided in such Bonus Plan for such fiscal year, and as the Board (or committee thereof) may otherwise determine. Such targets, goals and conditions may include (i) business, financial, operating and/or other performance measures applicable to (A) Pacer International and its Affiliates taken as a whole and (B) those business segment(s) or unit(s) of Pacer International and its Affiliates for and with respect to which the Executive is responsible or has authority (e.g., Intermodal Segment) and (ii) such personal and individual performance criteria as may be determined by the Board (or committee thereof) taking into account the Executive’s duties and responsibilities to the Company and its Affiliates for the period in question. The performance bonus awarded and payable to the Executive under such Bonus Plan with respect to any such fiscal year (including any pro rated amount payable pursuant to the following provisions of this Section 4(b)) shall be paid at such time or times and in such manner as performance bonuses are paid to the other executive officers of the Company generally. If the Executive’s employment with the Company is terminated without “cause” pursuant to Section 7(b) below, the Executive will be entitled to receive that portion of the bonus payable for the fiscal year of the Company during which such termination occurs pro rated through the date of such termination based on the number of days elapsed through the termination date over 365 days. If the Executive’s employment with the Company is terminated for any reason other than without “cause” pursuant to Section 7(b) below, neither the Company nor any of its Affiliates will be obligated to pay the Executive any bonus with respect to the fiscal year of the Company in which such termination occurred or thereafter. The Executive’s rights to participate in, and to receive a performance bonus under, the Company’s Bonus Plan in effect for any given fiscal year shall be subject to the Company’s right at any time and from time to time to amend, modify, change or terminate such Bonus Plan in any respect. In the event of a conflict between this Agreement and such Bonus Plan, this Agreement shall control.

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Section 5. Reimbursement of Expenses. During the Employment Period, the Company shall reimburse the Executive in accordance with Company policy for all reasonable and necessary traveling expenses and other disbursements incurred by the Executive for or on behalf of the Company in connection with the performance of the Executive’s duties hereunder upon presentation of appropriate receipts or other documentation therefor, in accordance with all applicable policies of the Company.

Section 6. Disability or Death. If, during the Employment Period, the Executive is incapacitated or disabled by accident, sickness or otherwise (a “Disability”) so as to render the Executive mentally or physically incapable of performing the services required to be performed by the Executive under this Agreement for any period of 90 consecutive days or for an aggregate of 180 days in any period of 360 consecutive days, the Company may, at any time thereafter, at its option, terminate the Executive’s employment under this Agreement immediately upon giving the Executive written notice to that effect. In the event of the Executive’s death, the Executive’s employment will be deemed terminated as of the date of death.

Section 7. Termination.

(a) The Company may terminate the Executive’s employment hereunder at any time for “cause” by giving the Executive written notice of such termination, containing reasonable specificity of the grounds therefor. For purposes of this Agreement, “cause” shall mean (i) willful misconduct with respect to the business and affairs of the Company or any of its Affiliates, (ii) willful neglect of the Executive’s duties or the failure to follow the lawful directions of the Board or more senior officers of the Company to whom the Executive reports, including the violation of any material policy of the Company or of any of its Affiliates that is applicable to the Executive, (iii) the material breach of any provision of this Agreement or any other written agreement between the Executive and the Company or any of its Affiliates and, if such breach is capable of being cured, the Executive’s failure to cure such breach within 30 days of receipt of written notice thereof from the Company, (iv) the Executive’s commission of a felony, (v) the Executive’s commission of an act of fraud or financial dishonesty with respect to the Company or any of its Affiliates or (vi) any conviction of the Executive for a crime involving moral turpitude or fraud. A termination pursuant to this Section 7(a) shall take effect immediately upon the giving of the notice contemplated hereby.

(b) The Company may terminate the Executive’s employment hereunder at any time without “cause” by giving the Executive written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be earlier than the day on which such notice is delivered to Executive (determined pursuant to Section 16(b) below).

(c) The Executive may terminate his employment hereunder at any time for any or no reason by giving the Company written notice of such termination, which termination shall be effective as of the date set forth in such notice, provided that such date shall not be earlier than the day on which such notice is delivered to the Company (determined pursuant to Section 16(b) below).

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Section 8. Effect of Termination.

(a) Upon the effective date of a termination of the Executive’s employment under this Agreement for any reason other than a termination by the Company without cause pursuant to Section 7(b), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Company or any of its Affiliates arising out of this Agreement, except the right to receive, within 30 days after the effective date of such termination (or such earlier period as may be required by applicable law):

(i) the unpaid portion of the Base Salary provided for in Section 4, computed on a pro rata basis to the effective date of such termination;

(ii) reimbursement for any expenses incurred by the Executive up to the effective date of such termination of employment and with respect to which the Executive shall not have theretofore been reimbursed, as provided in Section 5; and

(iii) the unpaid portion of any amounts earned by the Executive prior to the effective date of such termination pursuant to any employee benefit plan or program in which the Executive participated during the Employment Period (including any accrued and unused or unpaid vacation benefits that may be earned by or due to the Executive as of the effectiveness of such termination in accordance with the Company’s policy in effect at the effective time of such termination); provided, however, that the Executive shall not be entitled to receive any benefits under any such employee benefit plan or program that have accrued during any period if the terms of such plan or program require that the beneficiary be employed by the Company as of the end of any period ending on or after the effective date of such termination.

(b) Upon termination of the Executive’s employment under this Agreement by the Company without cause pursuant to Section 7(b), neither the Executive nor the Executive’s beneficiaries or estate shall have any further rights under this Agreement or any claims against the Company or any of its Affiliates arising out of this Agreement, except the right to receive the following amounts and benefits within 30 days after the effective date of such termination, in the case of amounts due pursuant to clause (i) below, and at such other times as provided in clauses (ii) and (iii) below in the case of amounts due thereunder (or in each case such earlier period as may be required by applicable law); provided, however, that in the case of clauses (ii) and (iii) below, the Executive is not in breach of any provision of this Agreement surviving such termination and does not engage in any activity or conduct proscribed by Section 9 or Section 10 (regardless of the extent to which such Section may be enforced under applicable law):

(i) the payments, if any, referred to in Section 8(a) above;

(ii) continued payment of an annual amount equal to the Base Salary as in effect immediately prior to the effective date of such termination for twelve (12) months following the effective date of such termination (the “Severance Period”), payable during the Severance Period in such manner as the Base Salary would have been payable pursuant to Section 4(a) but for such termination; and

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(iii) the payment of any pro rata bonus (or portion thereof), if any, awarded and payable to the Executive pursuant to and in accordance with Section 4(b) with respect to the fiscal year in which such termination occurs, to be paid when and as provided in such Section 4(b).

(c) Without limiting any other provision of this Agreement, if the Executive dies on or after the effective date of the termination of the Executive’s employment hereunder, the Executive’s heirs, beneficiaries or estate, as their respective interests may appear (but without duplication), shall be entitled to receive or continue to receive those benefits that would otherwise have been due and payable to the Executive pursuant to Section 8(a) above or Section 8(b) above, as applicable.

(d) In addition to, and not by way of limitation of, any other provision of this Agreement, upon the effective date of the termination of the Executive’s employment hereunder, the Executive shall surrender and deliver to the Company (i) all computers, cell phones, office equipment, credit cards, charge cards and other tangible property of or belonging to or issued in the name of the Company or any of its Affiliates, (ii) all membership cards for memberships maintained by or in the name of the Company or any of its Affiliates, (iii) all passwords, access codes, documents, records, and files (including all copies thereof, regardless of the form or media in which the same exist or are stored) in the Executive’s possession and belonging or relating to the Company or any of its Affiliates (except that the Executive may retain one copy thereof for personal archive purposes, subject to the other terms and conditions of this Agreement, including Section 9), and (iv) any and all other personal property in the Executive’s possession belonging to the Company or any of its Affiliates.

Section 9. Disclosure of Information.

(a) From and after the date hereof, the Executive shall not at any time disclose, divulge, furnish or make accessible to any Person any Confidential Information (as hereinafter defined) heretofore acquired or acquired during the Employment Period for any reason or purpose whatsoever (provided that nothing contained herein shall be deemed to prohibit or restrict the Executive’s right or ability to disclose, divulge, furnish or make accessible any Confidential Information (i) to any officer, director, employee, Affiliate or representative of the Company, or (ii) to any other Person as required in connection with the performance of the Executive’s duties under and in compliance with this Agreement, or as required by law or judicial process), nor shall the Executive make use of any Confidential Information for the Executive’s own purposes or benefit or for the purposes or benefit of any other Person except the Company and its Affiliates. The covenant contained in this Section 9 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

(b) For purposes of this Agreement, the term “Confidential Information” means (i) the Intellectual Property Rights (as hereinafter defined) of the Company and its Affiliates and (ii) all other information of a proprietary or confidential nature relating to the Company or any Affiliate thereof, or the business or assets of the Company or any such Affiliate, including: books and records; agent and independent contractor lists and related information; customer lists and related information; vendor lists and related information; supplier lists and related information; employee and personnel lists, policies and related information; contract terms and conditions

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(including those with customers, suppliers, vendors, independent contractors and agents, and present and former employees); terms and conditions of permits, orders, judgments and decrees; wholesale, retail and distribution channels; pricing information, cost information, and pricing and cost structures and strategies; marketing, product development and business development plans and strategies; management reports; financial statements, reports, schedules and other information; accounting policies, practices and related information; business plans, strategic plans and initiatives, forecasts, budgets and projections; and shareholder, board of directors and committee meeting minutes and related information; provided, however, that Confidential Information shall not include (A) information that is generally available to the public on the date hereof, or which becomes generally available to the public after the date hereof without action by the Executive in breach or violation of this Agreement, or (B) information that the Executive receives from a third party who does not have any obligation to the Company or any of its Affiliates to keep such information confidential and which the Executive does not know (or reasonably could not have known) is confidential to the Company or any of its Affiliates.

(c) As used herein, the term “Intellectual Property Rights” means all industrial and intellectual property rights, including the following (whether patentable or not): patents, patent applications, and patent rights; trademarks, trademark applications, trade names; service marks and service mark applications; trade dress, logos and designs, and the goodwill associated with the foregoing; copyrights and copyright applications; certificates of public convenience and necessity, franchises and licenses; trade secrets, know-how, proprietary processes and formulae, inventions, improvements, devices and discoveries; development tools; marketing materials; instructions; Confidential Information; and all documentation and media constituting, describing or relating to the foregoing, including manuals, memoranda and records.

Section 10. Noncompetition Covenant.

(a) The Executive acknowledges and agrees that he will receive significant and substantial benefits from his employment with the Company under this Agreement, including the remuneration, compensation and other consideration inuring to his benefit hereunder, as well as introductions to, personal experience with, training in and knowledge of the Company and its Affiliates, the industries in which they engage, and third parties with whom they conduct business. Accordingly, in consideration of the foregoing, and to induce the Company to employ and continue to employ the Executive hereunder and provide such benefits to the Executive (in each case subject to the terms and conditions of this Agreement and the applicable employment policies of the Company and its Affiliates), the Executive agrees that he will not during the period beginning on the Commencement Date and ending twelve (12) months after the effective date of the termination of the Executive’s employment with the Company and its Affiliates (the “Non-Competition Period”) for any reason:

(i) in any city or county in any state or province of the United States, Canada or Mexico where the Company or any of its Affiliates conducts business during the Non-Competition Period, directly or indirectly engage or participate in any Competing Business (as defined in Section 10(b) below) (whether as an officer, director, employee, partner, consultant, holder of an equity or debt investment, lender or in any other manner, or capacity, including by the rendering of services or advice to any person), or lend his name (or any part or variant thereof) to, any Competing Business;

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(ii) deal, directly or indirectly, with any customers, vendors, agents or contractors doing business with the Company or any of its Affiliates, or with any officer, director, employee of the Company or any of its Affiliates, in each case in any manner that is or could reasonably be expected to be competitive with the Company or any of its Affiliates;

(iii) take any action to solicit, encourage or induce any customer, vendor, agent or contractor doing business with the Company or any of its Affiliates, or any officer, director, employee or agent of the Company or any of its Affiliates:

(A) to terminate or alter in any manner adverse to the Company and its Affiliates his or its business, commercial, employment, agency or other relationship with the Company or such Affiliate (including any action to do business or attempt to do business with, or to hire, retain, engage or employ or attempt to hire, retain, engage or employ, any customer, vendor, agent or contractor, or any officer, director or employee, of the Company or any of its Affiliates);

(B) to become a customer, vendor, agent or contractor, or an officer, director or employee, of the Executive, the Executive’s Affiliates or any other Person; or

(C) to engage in any Competing Business; or

(iv) engage in or participate in, directly or indirectly, any business conducted under any name that shall be the same as or similar to the name of the Company or any of its Affiliates or any trade name used by any of them.

Ownership by the Executive for investment purposes only of less than 2% of the outstanding shares of capital stock or class of debt securities of any Person with one or more classes of its capital stock listed on a national securities exchange or actively traded in the over-the-counter market shall not constitute a breach of the foregoing covenant. The covenant contained in this Section 10 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

(b) As used herein, the term “Competing Business” means any transportation or other business that the Company or any of its Affiliates has engaged in at any time during the Employment Period in any city or county in any country, state or province of the United States, Canada or Mexico, including any such business directly or indirectly engaged in providing any of the following:

(i) intermodal marketing or rail or intermodal brokerage services (whether in connection with domestic or international shipments or customers), car fleet management services, and railcar brokerage and management services;

(ii) highway brokerage services, including full trailer load, less than trailer load, trailer fleet management and depot operations services;

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(iii) international freight transportation services, including ocean forwarding, custom house brokerage, ocean carrier services (including NVOCC operations), import/export air forwarding services, and special project services;

(iv) specialized transport and cartage services, including heavy, oversized, and other specialized flatbed trucking services, dry van trucking services, port and rail depot cartage services (whether in connection with domestic or international shipments or customers), and local and regional trucking services (including full truckload and less-than-truckload motor carrier services);

(v) freight consolidation and handling services, including third party warehouse, cross dock, consolidation, deconsolidation and distribution services;

(vi) comprehensive transportation management programs and services to third party customers, including supply chain and traffic management services, carrier rate and contract management services , logistics optimization planning, and vendor bid optimization; and

(vii) intermodal rail equipment (including double-stack rail car, container and chassis) supply and management services, including doublestack transportation services.

Section 11. Inventions Assignment.

During the Employment Period, the Executive shall promptly disclose, grant and assign to the Company for its and its Affiliates’ sole use and benefit any and all inventions, improvements, technical information and suggestions reasonably relating to the business of the Company and its Affiliates (collectively, the “Inventions”) that the Executive may develop or acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or with respect to the Inventions. In connection with the previous sentence, the Executive shall, at the expense of the Company, including a reasonable payment based on the Executive’s last per diem earnings with the Company for the time involved if (a) the Executive is not then in the Company’s employ, or (b) if the Executive is not then receiving severance payments pursuant to Section 8(b) above, or (c) if the Executive has not otherwise received one or more severance payments with respect to such period (whether on a lump sum, pre-paid, or accelerated basis or otherwise), (i) promptly execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Company to vest title to the Inventions and any patent applications, patents, copyrights, reissues or other proprietary rights related thereto in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world, and (ii) render such reasonable assistance to the Company as may be required in the prosecution of applications for said patents, copyrights, reissues or other proprietary rights, in the prosecution or defense of interferences or infringements that may be declared involving any said applications, patents, copyrights or other proprietary rights and in any litigation in which the Company may be involved relating to the Inventions. The covenant contained in this Section 11 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

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Section 12. Assistance in Litigation. At the request and expense of the Company (including a reasonable payment, based on the Executive’s last per diem earnings, for the time involved if (a) the Executive is not then in the Company’s employ, or (b) if the Executive is not then receiving severance payments from the Company pursuant to Section 8(b)(ii), or (c) if the Executive has not otherwise received one or more severance payments from the Company with respect to such period (whether on a lump sum, pre-paid or accelerated basis or otherwise)) and upon reasonable notice, the Executive shall, at all times during and after the Employment Period, furnish such information and assistance to each of the Company and its Affiliates as the Company may reasonably require in connection with any issue, claim or litigation in which the Company or any of its Affiliates may be involved. If such a request for assistance occurs after the expiration of the Employment Period, then the Executive will only be required to render such assistance to the Company and its Affiliates to the extent that the Executive can do so without materially adversely affecting the Executive’s other business obligations. The covenant contained in this Section 12 shall survive the termination or expiration of the Employment Period and any termination of this Agreement.

Section 13. Expenses; Taxes. Each party hereto shall bear his or its own expenses incurred in connection with this Agreement (including legal, accounting and any other third party fees, costs and expenses and all federal, state, local and other taxes and related charges incurred by such party). All references herein to remuneration, compensation and other consideration payable by the Company or any of its Affiliates hereunder to or for the benefit of the Executive or his heirs, representatives, or estate are to the gross amounts thereof before reductions, set-off, or deduction for taxes and other charges referred to below, and all such remuneration, compensation and other consideration shall be paid net of and after reduction, set-off and deduction for any and all applicable withholding, F.I.C.A., employment and other similar federal, state and local taxes and contributions required by law to be withheld by the Company or any such Affiliate.

Section 14. Representation. The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive do not breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject, and (b) the Executive is not a party to or bound by any employment agreement, consulting agreement, noncompetition agreement, confidentiality agreement or similar agreement with any other Person.

Section 15. Entire Agreement; Amendment and Waiver. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous agreements and understandings between the Executive and the Company or any predecessor of the Company, or any of their respective Affiliates, with respect to the subject matter hereof. Other than this Agreement, there are no other agreements or understandings continuing in effect relating to the subject matter hereof. No waiver, amendment or modification of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights or remedies arising by virtue of any such prior or subsequent occurrence.

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Section 16. Notices.

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

(i) if to the Company, to it:

c/o Pacer International, Inc.

One Concord Center

2300 Clayton Road, Suite 1200

Concord, California 94520

Attention: Chief Financial Officer

Telephone No.: (925) 887-1400

Facsimile No.: (925) 887-1565

with copy to:

Pacer International, Inc.

One Independent Drive, Suite 1250

Jacksonville, Florida 32202

Attention: General Counsel

Telephone No.: (904) 485-1001

Facsimile No.: (904) 485-1019

(ii) if to the Executive, to him or at his last known address contained in the records of the Company.

(b) All such notices and other communications shall be deemed to have been given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by telecopy, on the date of such delivery (if sent on a business day where sent, or if sent on other than a business day where sent, on the next business day where sent after the date sent), (iii) in the case of delivery by nationally-recognized, overnight courier, on the next business day where sent following dispatch, and (iv) in the case of mailing, on the third business day where sent next following such mailing. In this Agreement, the term “business day” means, as to any location, any day that is not a Saturday, a Sunday or a day on which banking institutions in such location are authorized or required to be closed.

Section 17. Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be so modified or restricted, then such provision shall, as to such jurisdiction, be deemed to

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be excised from this Agreement; provided, however, that the legality, binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provision in such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 18. Remedies. The Executive acknowledges and agrees that the provisions of this Agreement (including Section 9, Section 10, Section 11, and Section 12) are of a special and unique nature, the loss of which cannot be adequately compensated for in damages by an action at law, and that the breach or threatened breach of any provision of this Agreement (including Section 9, Section 10, Section 11, and Section 12) would cause the Company irreparable harm. The Executive further acknowledges and agrees that in the event of a breach or threatened breach of any of the covenants contained in this Agreement (including Section 9, Section 10, Section 11, and Section 12), the Company shall be entitled to immediate relief enjoining the same in any court or before any judicial body having jurisdiction over such a claim. All rights and remedies provided for in this Agreement are cumulative, are in addition to any other rights and remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or to preclude the exercise or pursuit of any other right or remedy.

Section 19. Benefits of Agreement; Assignment. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estates, as applicable. This Agreement shall not be assignable by the Executive without the prior written consent of the Company (acting with approval its Board of Directors). Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors, permitted assigns, representatives, heirs and estates, as applicable.

Section 20. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS TO BE APPLIED.

Section 21. Jury Trial Waiver. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED TO THE SUBJECT MATTER HEREOF. EXECUTIVE UNDERSTANDS THAT THE WAIVER OF THE RIGHT TO A TRIAL BY JURY IS AN IMPORTANT RIGHT WHICH EXECUTIVE HEREBY FOREGOES.

Section 22. Jurisdiction and Venue; Service of Process.

(a) The parties hereto agree that all disputes among them arising out of, connected with, related to, or incidental to the relationship established between them in connection with this

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Agreement shall be resolved exclusively by state or federal courts located in Fort Worth, Texas and any appellate court from any thereof, or by an arbitrator located in Fort Worth, Texas in such cases where both parties hereto have expressly agreed to binding arbitration.

(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for himself or itself and his or its property, to the exclusive jurisdiction of any Texas state court or federal court of the United States of America sitting in Fort Worth, Texas, and any appellate court from any thereof, in any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereunder or thereunder or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such Texas state court or, to the extent permitted by law, in any such federal court. Each of the parties hereto agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

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

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

Section 23. Independence of Covenants and Representations and Warranties. All covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain covenant, the fact that such action or condition is permitted by another covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such initial covenant. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached shall not affect the incorrectness of or a breach of a representation and warranty hereunder.

Section 24. Interpretation and Construction; Defined Terms.

(a) The term “Agreement” means this Employment Agreement and any and all schedules, annexes and exhibits that may be attached hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The use in this Agreement of the word “including” means “including, without limitation.” The words “herein,” “hereof,” “hereunder,” “hereby,” “hereto,” “hereinafter,” and other words of similar import refer

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to this Agreement as a whole, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in, or any schedule, annex or exhibit that may be attached to, this Agreement. All references to articles, sections, subsections, paragraphs, subparagraphs, clauses, schedules, annexes and exhibits mean such provisions of this Agreement and the schedules, annexes and exhibits that may be attached to this Agreement, except where otherwise stated. The title of and the article, section, paragraph, schedule, annex and exhibit headings in this Agreement are for convenience of reference only and shall not govern or affect the interpretation of any of the terms or provisions of this Agreement. The use herein of the masculine, feminine or neuter forms also shall denote the other forms, as in each case the context may require. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Accounting terms used but not otherwise defined herein shall have the meanings given to them under GAAP. Unless otherwise provided herein, the measure of one month or year for purposes of this Agreement shall be that date of the following month or year corresponding to the starting date, except that, if no corresponding date exists, the measure shall be the next day of the following month or year (e.g., one month following February 8 is March 8, and one month following March 31 is May 1).

(b) The term “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

(c) The term “Person” shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a business, and any other entity, including a governmental entity such as a domestic or foreign government or political subdivision thereof, whether on a federal, state, provincial or local level and whether legislative, executive, judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

Section 25. Counterparts and Facsimile Execution. This Agreement may be executed in two or more counterparts, and each such counterpart shall be an original instrument, but all such counterparts taken together shall be considered one and the same agreement, effective when one or more counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Any signed counterpart delivered by facsimile shall be deemed for all purposes to constitute such party’s good and valid execution and delivery of this Agreement.

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Section 26. Further Assurances. Executive hereby agrees, in consideration of the Company’s covenants and agreements set forth herein, that contemporaneous with Executive’s (or his heirs’, beneficiaries’ or estate’s in the event of his death) acceptance of amounts payable under Section 8, Executive shall for himself, his heirs, beneficiaries, estate, successors and assigns, enter into such other documents, agreements and instruments reasonably requested by the Company, including a separate settlement agreement prepared by the Company with those provisions deemed appropriate by the Company, including a release of the Company and its Affiliates from, and a waiver of, all claims (including those related to alleged wrongful discharge or alleged employment discrimination under any federal, state or local statute or regulation) and confirmation of the confidentiality, non-competition and other covenants of this Agreement that survive termination of employment.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement effective as of the date first written above.

THE COMPANY:
PACER INTERNATIONAL, INC.
By:	/s/ Adriene Bailey
Name: Adriene Bailey Title: Executive Vice President, Strategy &     Organizational Development

THE EXECUTIVE:

/s/ Dan M. Beers

Dan M. Beers

EX-21

Exhibit 21

SUBSIDIARIES OF PACER INTERNATIONAL, INC.

	Jurisdiction of Incorporation
Intermodal Container Service, Inc. d/b/a Harbor Rail Transport		California
Manufacturers Consolidation Service of Canada, Inc.		Delaware
Pacer Cartage, Inc.		Delaware
Pacer Transport, Inc. formerly known as Pacific Motor Transport Company		California
Pacer Distribution Services, Inc.		Delaware
PDS Trucking, Inc.		Delaware
RF International, Ltd.		New York
Ocean World Lines, Inc.		Delaware
Pacer Global Logistics, Inc.		Ohio
Pacer Stacktrain S. de R.L. de C.V.		Mexico
Stacktrain Mexico, S. de R.L. de C.V.		Mexico
Pacer Stacktrain, Inc.		Tennessee
S&H Transport, Inc.		Delaware
S&H Leasing, Inc.		Delaware
Rail to Rail Transport, Inc.		Delaware

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-111754) and Form S-8 (Nos. 333-91698 and 333-142766) of Pacer International, Inc. of our report dated February 18, 2008 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Francisco, CA

February 18, 2008

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael E. Uremovich, certify that:

1. I have reviewed this Annual Report on Form 10-K of Pacer International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2008

/s/ Michael E. Uremovich

Michael E. Uremovich

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Lawrence. C. Yarberry, certify that:

1. I have reviewed this Annual Report on Form 10-K of Pacer International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2008

/s/ Lawrence C. Yarberry

Lawrence C. Yarberry

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Pacer International, Inc. (the “Company”), on Form 10-K for the fiscal year ended December 28, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Michael E. Uremovich, Chief Executive Officer of the Company, and Lawrence C. Yarberry, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael E. Uremovich

Michael E. Uremovich

Chief Executive Officer

February 19, 2008

/s/ Lawrence C. Yarberry

Lawrence C. Yarberry

Chief Financial Officer

February 19, 2008

A signed original of this written statement required by Section 906 has been provided to Pacer International, Inc. and will be retained by Pacer International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.