WHEEL SET COMPONENT AND FINISHED WHEEL SET STORAGE AGREEMENT
Exhibit 10.42
WHEEL SET COMPONENT AND FINISHED WHEEL SET
WHEEL SET COMPONENT AND FINISHED WHEEL SET STORAGE AGREEMENT (this “Agreement”) made
this 13th day of November 2006, between American Railcar Industries, Inc., a Delaware corporation
(“ARI”), and ACF Industries LLC, a Delaware limited liability company (“ACF”).
RECITALS
WHEREAS, ARI and ACF are parties to that certain Manufacturing Services Agreement dated as of
October 1, 1994 (the “Manufacturing Agreement”);
WHEREAS, pursuant to the Manufacturing Agreement, ACF is providing ARI certain Jobbing Order
Services (as defined in the Manufacturing Agreement), which include, among other things, the
assembly of railcar wheel sets;
WHEREAS, the Manufacturing Agreement contemplates that ARI may supply the materials for use by
ACF in ACF’s performance of its Jobbing Order Services, and further provides alternative pricing
for the Jobbing Order Services depending upon whether ARI or ACF purchase such materials;
WHEREAS, ARI is in the business of manufacturing railcars and railcar wheel sets are a
critical component of railcars, and ARI and ACF desire that ARI control the procurement of and own
the components for the railcar wheel sets, comprising of wheels, axles and bearings (the “Wheel
Set Components”), for use by ACF in performing its Jobbing Order Services;
WHEREAS, in connection therewith, ACF agrees to provide certain accommodations to ARI, as
provided herein, to ensure the proper care, storage, use and identification of Wheel Set Components
purchased by ARI for use by ACF in performing its Jobbing Order Services and the railcar wheel sets
assembled using such components (the “Finished Wheel Sets”); and
WHEREAS, in order to evidence the terms under which ACF will maintain possession of the Wheel
Set Components owned by ARI and the Finished Wheel Sets, the parties have agreed to enter into this
Wheel Set Component and Finished Wheel Set Storage Agreement;
NOW, THEREFORE, in consideration of these premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, ACF and ARI agree as
follows:
1. Procurement of Wheel Set Components. ARI shall be responsible for purchasing the
Wheel Set Components for use by ACF in its manufacture of railcar wheel sets for ARI pursuant to
the Manufacturing Agreement. ARI shall also be responsible for arranging for and payment of
delivery of the Wheel Set Components to ACF in connection therewith. The parties understand that
ACF has previously purchased Wheel Set Components for the manufacture of Finished Wheel Sets for
ARI that, prior to the date hereof, have not been
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purchased by ARI and are currently owned by ACF. Such Wheel Set Components, including any
Finished Wheel Sets incorporating such Wheel Set Components that have not yet been purchased by
ARI, shall be referred to as the “ACF Wheel Set Inventory.” ACF hereby represents and
warrants that a true and correct list of the ACF Wheel Set Inventory and the cost thereof (as
represented by the purchase price paid or, as of immediately prior to the date hereof, payable by
ACF for the purchase by ACF of the ACF Wheel Set Inventory) has been provided to ARI along with a
schedule showing the vendor, the purchase order number, the amount paid and, as of immediately
prior to the date hereof, the amounts outstanding for the payment by ACF of the purchase price for
the ACF Wheel Set Inventory. ACF agrees to pay vendors in full, on the date hereof, all
outstanding amounts payable as of immediately prior to the date hereof for all ACF Wheel Set
Inventory. ARI hereby agrees to purchase from ACF, and ACF herby agrees to sell to ARI, the ACF
Wheel Set Inventory as of the date hereof for a purchase price equal to said cost of the ACF Wheel
Set Inventory to ACF. The purchase price shall be payable by ARI to ACF (a) on the date hereof as
to amounts previously paid by ACF for such inventory, and (b) promptly upon ARI’s receipt of
evidence reasonably satisfactory to ARI of ACF’s payment in full of all outstanding amounts payable
as of immediately prior to the date hereof. ACF agrees to provide ARI with such information as ARI
reasonably requests to verify the costs and accounts payable outstanding, as of immediately prior
to the date hereof, in respect of the ACF Wheel Set Inventory. Any such ACF Wheel Set Inventory so
purchased by ARI shall be owned by ARI as of the date hereof, shall be treated as supplied by ARI
for purposes of determining amounts owed to ACF for its Jobbing Order Services in manufacturing
Finished Wheel sets for ARI under the Manufacturing Agreement (which shall remain payable as set
forth in the Manufacturing Agreement), and shall constitute Specified Goods as further defined
herein.
2. Identifying Specified Goods; Documentation.
(a) For purposes of this Agreement, the term “Specified Goods” shall mean each of, and
collectively, (i) the Wheel Set Components purchased by ARI and delivered to ACF pursuant to this
Agreement, and (ii) any Finished Wheel Sets manufactured by ACF from such Wheel Set Components
pursuant to the Manufacturing Agreement.
(b) ACF shall cause all Specified Goods to be identified with appropriate markings and/or
stored in designated areas as indicated in clauses (i) through (iv) below, and ACF shall not at any
time identify any goods that are not Specified Goods as Specified Goods. ACF shall maintain such
markings and/or such designated storage areas at all times that the Specified Goods are in ACF’s
possession. With respect to Wheel Set Components, ACF agrees to undertake the identification and
storage procedures set forth in this Agreement as soon as practicable upon delivery to ACF of Wheel
Set Components. ARI and ACF agree to cooperate in good faith to revise the identification and
storage procedures set forth below in a manner reasonably satisfactory to ARI upon either party’s
reasonable written request therefor.
(i) ACF shall store all items of Specified Goods:
1. As to Finished Wheel Sets, on the tracks
identified as “A”, “B”, “C”,
“C-1”, “C-2”, “C-3”,
“C-4”, “C-5” and “C-6” on the plan attached as Exhibit A hereto (the “Designated
Tracks”); and
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2. As to each type of Wheel Set Component (i.e., wheels, axles and bearings), in the
areas identified for each such type of Wheel Set Component,
designated as “D-1” and “D-2” on the plan attached as Exhibit A hereto (the “Designated
Component Storage Areas” and, together with the Designated Tracks, the “Designated
Locations”), in each case at ACF’s premises at 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxx
Xxxxxxxx 00000.
(ii) The Designated Locations shall each be used exclusively for Specified Goods and,
as to areas “A” and “B” of the Designated Tracks, those certain “Specified Goods” as defined
in (i) that certain Inventory Storage Agreement dated July 17, 2006 between ARI and ACF and
(ii) that certain Inventory Storage Agreement dated October 20, 2006 between ARI and ACF.
ACF shall not at any time store any items belonging to ACF or any other person or entity in
or on the Designated Locations or cause any such items ever to be located in or on the
Designated Locations, or remove any Specified Goods from the Designated Locations other than
at ARI’s specific written request or with ARI’s prior specific written approval.
(iii) Finished Wheel Sets. ACF shall install prominent signs (one at each
access point to and end of the Designated Tracks), containing the following language: “All
items located on this track have been purchased by and are owned by American Railcar
Industries, Inc. Do not place items owned by ACF or any other party on this track or remove
items from this track without written approval from ARI.”
(iv) Wheel Set Components.
1. Wheels. ACF shall rope off and/or paint lines on the plant floor to
designate, and install prominent signs at (each in a manner reasonably satisfactory to ARI),
each of the Designated Component Storage Areas where wheels are to be stored in accordance
with this Agreement. Such signs shall contain the following language: “All items located in
this marked area have been purchased by and are owned by American Railcar Industries, Inc.
Do not place items owned by ACF or any other party in this marked area or remove items from
this marked area without written approval from ARI.”
2. Axles. ACF shall rope off and/or paint lines on the plant floor to
designate, and install prominent signs at (each in a manner reasonably satisfactory to ARI),
each of the Designated Component Storage Areas where axles are to be stored in accordance
with this Agreement. Such signs shall contain the following language: “All items located in
this marked area have been purchased by and are owned by American Railcar Industries, Inc.
Do not place items owned by ACF or any other party in this marked area or remove items from
this marked area without written approval from ARI.” In addition, ACF agrees to spray paint
a xxxx (the “Xxxx”) on each axle that is a Specified Good, and shall not apply the
Xxxx to any axles that are not Specified Goods, that shall identify each such axle as
belonging to ARI. The Xxxx shall be applied to each axle in a location and manner such that
the Xxxx shall be visible throughout the manufacturing process and afterwards, once the axle
has, together with other Wheel Set Components, been converted into a Finished Wheel Set.
ACF and ARI shall cooperate to
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choose a color for the Xxxx that is not otherwise applied to any axles stored in or
around ACF’s Huntington facility, including without limitation axles intended for ACF’s
other customers. ACF shall consistently apply the Xxxx to all applicable axles.
3. Bearings. ACF shall rope off and/or paint lines on the plant floor to
designate, and install prominent signs at (each in a manner reasonably satisfactory to ARI),
each of the Designated Component Storage Areas where bearings are to be stored in accordance
with this Agreement. Such signs shall contain the following language: “All items located in
this marked area have been purchased by and are owned by American Railcar Industries, Inc.
Do not place items owned by ACF or any other party in this marked area or remove items from
this marked area without written approval from ARI.”
(c) ACF shall, in a manner satisfactory to ARI, cause all documents evidencing goods
consisting of Specified Goods to be identified with appropriate language or markings that clearly
identify such goods as Specified Goods that are owned by ARI, and which identify the item number,
as well as the Designated Location (A, X, X, X-0, X-0, X-0, X-0, X-0,
X-0, X-0 or D-2) in or on which the specific Specified Goods
are located. In furtherance of the foregoing sentence, ACF shall: (i) maintain invoices and/or
shipping notices for each item of Specified Goods that is placed in or on the Designated Locations
(or moved among them); (ii) send such invoices and shipping notices by facsimile to ARI; (iii)
store copies of such shipping notices at ACF’s Huntington West Virginia facility, separately from
all other shipping notices; and (iv) reflect in such documentation any identifying information that
may be provided by vendors in connection with Section 2(f) of this Agreement.
(d) Specified Goods shall be owned by ARI, whether or not ACF complies with the terms and
provisions of this Agreement, including, without limitation, the provisions requiring segregation
and identification of the Specified Goods.
(e) Notwithstanding anything to the contrary in this Agreement, ACF may and ARI authorizes ACF
to remove any Wheel Set Components from any Designated Locations to another location within the
premises located at ACF’s Huntington, West Virginia facility, in order to enable ACF to perform
work on such Wheel Set Components and to complete them into Finished Wheel Set Components,
provided that (i) such Wheel Set Components shall continue to be identified as provided in
Section 2(b)(iv), and (ii) ACF shall maintain a list available for inspection by ARI of the number
and location of any such Wheel Set Components that are not located in or on a Designated Location.
(f) ARI and ACF agree to cooperate in good faith with each other and with the vendors that
from time to time supply Wheel Set Components subject to this Agreement to attempt to arrange for
such vendors to identify such Wheel Set Components, at the time of their initial shipment from such
vendors, as shipped for ARI’s account (and not for the account of other ACF customers), as
applicable. By way of illustration only and without limitation, the parties intend to request that
such vendors identify Wheel Set Components as shipped for ARI’s account by (i) consistently marking
or tagging such Wheel Set Components with colored tags, grease paint or other means, and/or (ii) by
coordinating vendor serial or other identification numbers with ACF and ARI invoicing and
documentation procedures. ACF agrees to
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incorporate, in a manner reasonably satisfactory to ARI, any such mutually agreed vendor
identification techniques in its day-to-day observation of the segregation and identification of
Wheel Set Components in accordance with this Agreement.
3. Delivery, Inspection and Removal.
(a) ACF shall cause the Specified Goods to be delivered to ARI as and when ARI may request
from time to time, at ARI’s cost and expense, as per any purchase orders therefor. It is
understood that ACF shall bear the cost of loading such Specified Goods for shipment to ARI. ARI
may request delivery of all or any portion of the Specified Goods, as it may determine.
(b) Upon advance notice and during business hours, ACF hereby authorizes ARI or its agents or
designees, at any time, or from time to time, to access ACF’s premises: (a) for the purpose of
inspecting, testing, photographing, video-taping, or measuring the Specified Goods or the markings
on the Specified Goods and the Designated Locations, (b) for the purpose of examining or copying
the shipping notices and invoices relating to the Specified Goods, (c) for the purpose of removing,
repairing, or assembling the Specified Goods, or (d) for any other purpose consistent with this
Agreement and ARI’s ownership of the Specified Goods, or in connection with the enforcement
thereof. Upon advance notice and during business hours, ACF specifically authorizes ARI to bring
onto ACF’s premises any such equipment as ARI may require for the removal of the Specified Goods at
any time or from time to time.
(c) In consideration of ARI’s agreements hereunder, ACF shall not charge ARI any storage fee
or rent for the Specified Goods or the documents relating thereto.
(d) In the event ARI performs a physical inventory count that differs from the shipping
notices delivered to ARI, ACF shall provide a credit or refund (as ARI may elect) to ARI for the
amount of the difference, plus a finance charge of 10% per annum on such amount, such finance
charge to accrue from the date that ARI paid for the missing items until the date such refund is
delivered or credit is applied, as the case may be.
4. Notice. ACF hereby authorizes ARI to file a UCC-1 financing statement naming ACF
as debtor and ARI as secured party and the Specified Goods and their proceeds as collateral, with
such additional language as ARI in its discretion may determine to be appropriate to provide notice
of ARI’s ownership of the Specified Goods. ACF further agrees to execute and deliver any such
notices as ARI may require if ARI determines that any of the Specified Goods consists of “rolling
stock”.
5. Effect of Agreement. This Agreement shall remain in full force and effect until
all Specified Goods have been delivered from ACF’s premises to ARI’s premises. The rights and
obligations of ARI and ACF hereunder shall not be affected by bankruptcy or insolvency.
6. Time of Essence. Time is of the essence of this Agreement.
7. Miscellaneous. This Agreement shall be governed by the laws of the State of
Missouri and shall be binding and inure to the benefit of the successors and assigns of the parties
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hereto. In any action or suit brought by either party to this Agreement arising out of or
relating to this Agreement, each party: (a) consents and submits to the jurisdiction of the courts
of the State of Missouri or the federal courts located in the State of Missouri; (b) agrees that
such court shall be deemed to be a convenient forum; (c) agrees not to assert (by way of motion, as
a defense or otherwise), in any such action or suit commenced in such court, any claim that such
party is not subject personally to the jurisdiction of such court, that such action or suit has
been brought in an inconvenient forum, that the venue of such action or suit is improper or that
this Agreement or the subject matter of this Agreement may not be enforced in or by such court; and
(d) agrees that it will not bring any action or suit arising out of or relating to this Agreement
in any court other than a court of the State of Missouri or a federal court located in the State of
Missouri. This Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original instrument. Any amendments or modifications to this Agreement shall be in
writing signed by an authorized officer of each of ACF and ARI.
8. Existing Inventory Storage Agreements. This Agreement shall be in addition to, and
shall not replace, (i) that certain Inventory Storage Agreement dated as of July 17, 2006 between
ARI and ACF, and (ii) that certain Inventory Storage Agreement dated October 20, 2006 between ARI
and ACF, each of which shall remain in full force and effect pursuant to the terms thereof.
[Signature Page Follows]
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Executed as an instrument as of the date first above written.
| ACF INDUSTRIES LLC |
||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxx | |||
| Title: | Vice President — Treasurer | |||
| AMERICAN RAILCAR INDUSTRIES, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxx X. Xxxxx | |||
| Title: | Sr. V.P., CFO and Treasurer | |||
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EXHIBIT A
See
attached plan.
# 1463674 v7
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[map]
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