Exhibit 4.8
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STACKTRAIN SERVICES AGREEMENT
This Stacktrain Services Agreement (this "Agreement") is made as of this 28th
day of May, 1999 by and among AMERICAN PRESIDENT LINES, LTD ("Lines"), a
Delaware corporation, APL Co. Pte Ltd. ("APL Co"), a Singapore corporation, and
APL LIMITED, a Delaware corporation ("APL LTD") (collectively "APL"), and APL
LAND TRANSPORT SERVICES, INC., a Tennessee corporation ("LTS").
RECITALS
WHEREAS, LTS has been acting as agent for Lines under various rail
contracts, letters of intent and rail circulars for inland intermodal rail
transportation of Lines' International Shipments. The railroad contracts in
effect between LTS, Lines and the rail carriers as of the date of this Agreement
are referred to herein as "Current Agreements" and are identified on Schedule A.
WHEREAS, Lines and LTS desire to continue their relationship subsequent to
LTS' change in ownership and to have LTS arrange and administer inland
intermodal rail transportation for APL's International Shipments and empty
containers. In addition, APL LTD desires to have LTS arrange and administer
inland intermodal rail transportation for the volume of APL Automotive
Logistics, a division of APL LTD ("APL Automotive Logistics").
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
AGREEMENT
SECTION 1. EFFECTIVE DATE, TERM AND RENEWAL.
The term of this Agreement shall commence on the Closing pursuant to the
Stock Purchase Agreement and shall be for a term of twenty (20) years ("Term")
unless terminated earlier pursuant to the provisions of Section 13. In the
event that the Current Agreement with the Union Pacific Railroad Company ("UP")
or any successor railroad to UP ("Successor Railroad") is extended beyond the
Term or a New Agreement is entered into with UP or a Successor Railroad which
extends beyond the Term, the Term of this Agreement shall be extended to be co-
terminous with the term of the UP or Successor Railroad Current or New
Agreement. Upon the parties' mutual consent, the Agreement may be extended for
an additional period. A New Agreement is defined as any new rail contract which
is subsequently executed during the term of this Agreement.
Upon the failure of the parties to agree upon renewal of this Agreement or
upon giving by either party of notice of intent to terminate this Agreement
pursuant to the terms of the Agreement, the parties will use their best efforts
to establish a reasonable schedule and reasonable procedures for cessation of
transportation and related terminal and other activities in a way that will
cause the least disruption reasonably possible to the parties and their
customers. Transportation and related terminal and other activities during this
transition will be governed by the terms of this Agreement.
SECTION 2. DEFINITIONS.
Capitalized terms used in this Agreement which are not defined in the
Agreement itself shall have the meanings set forth in Schedule B to this
Agreement.
SECTION3. OBLIGATIONS OF LTS.
a. Other than as set forth in Section 5 below, LTS shall arrange for
intermodal rail transportation and shall administer the ongoing movement of such
rail transportation from rail origin to rail destination of APL's International
Shipments and its empty containers between points in the United States, between
points in Canada and between points in the United States on the one hand and
Canada on the other hand. APL shall submit shipping instructions to LTS, and LTS
shall submit those shipping instructions to the appropriate carrier. LTS's
management obligations shall include managing the direct interchange of
containers between Eastern rail carriers and Western rail carriers and arranging
for the cross-town drayage of containers between Eastern rail carriers' rail
terminals and Western rail carriers' rail terminals where required. LTS shall
perform the same services for the volume tendered by General Motors to APL
Automotive Logistics for transportation between the United States, Canada and
Mexico ("APL Automotive Shipments") and for any other volume tendered by APL
Automotive Logistics or APL Intermodal Management Services, a division of
American Consolidation Services of North America, Ltd. ("IMS"), pursuant to
Section 4.c. The administrative services provided by LTS to APL for the
implementation of the services described in this Section 3.a during the Term of
this Agreement shall be at no less than the same level which APL received prior
to the execution of this Agreement.
b. In the event that LTS tenders untimely or incorrect movement billing
to the rail carrier or takes any other action such that (a) a container may fail
to meet its scheduled ship departure or (b) a container may not meet its
required delivery time to the ultimate consignee (collectively, the "Service
Failure"), and APL requests LTS to arrange alternative transportation where such
alternative transportation is operationally feasible, LTS shall arrange that
alternative transportation as long as such requests are not unreasonable or are
in response to specific customer requests. "Unreasonable" shall be defined as
being inconsistent with the process used by APL prior to the execution of this
Agreement to make decisions regarding the need for alternative transportation.
APL shall pay the applicable railroad rate for that container to LTS while LTS
shall pay the alternative carrier for the charge actually incurred for the
alternative transportation. However, LTS shall not be responsible for
alternative carrier charges when the Service Failure is due to the failure of
APL to perform its obligations hereunder or the failure of LTS' underlying rail
carrier. In that event, at the request of APL, LTS shall arrange for alternative
service on behalf of APL but APL shall bear the costs of that alternative
service. In the event that APL incurs additional costs due to a rail carrier's
service failure, LTS and APL shall use their best efforts to recover from the
responsible railroad(s) on APL's behalf the difference between the applicable
rail rate and the alternative carrier rate which APL paid.
c. For Current or New Agreements to which APL and LTS are both parties,
LTS and APL both agree that they shall not terminate such agreements without the
prior written consent of the other party.
d. LTS agrees that it shall continue to offer intermodal rail
transportation to IMS on terms and conditions similar to those which LTS offers
to its other intermodal marketing company ("IMC") customers during the term of
this Agreement.
e. LTS shall tender the percentage of LTS and International Shipments to
each rail carrier which is required under Current Agreements or under any New
Agreements.
f. APL shall pay LTS, and LTS shall pay each rail carrier, for the rail
charges incurred by APL under any Current or New Agreement. LTS shall pay each
rail carrier for the rail charges incurred by it under any Current or New
Agreement.
g. LTS shall follow the instructions of APL as to the routing of non-
committed volume, that is, volume that is not committed under any Current or New
Agreement. APL shall be responsible for paying the line haul charges of non-
committed volumes.
h. The parties agree to use their commercially reasonable efforts to co-
mingle all current and new Stacktrain Business as defined in the Non-Competition
Agreement which LTS or any of its affiliates or
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subsidiaries receives in those traffic lanes in which APL tenders International
Shipments in order to achieve the most cost effective economics for both
parties. If LTS would receive any economic or other benefits, and APL would
receive similar benefits, from using any other traffic lane, LTS shall use its
commercially reasonable efforts to move APL International Shipments in such lane
to the extent it would benefit APL.
i. In the event that LTS terminates the Current UP Agreement pursuant to
Section 24 thereof, LTS has the option of negotiating a separate agreement with
UP or transitioning APL's business to a new carrier along with LTS, in each case
on terms which maintain APL in no worse economic position than APL enjoys under
the Current UP Agreement.
SECTION 4. OBLIGATIONS OF APL.
a. Either Lines or APL LTD shall be a party to any Current Agreement or
New Agreement involving the transportation of International Shipments.
b. APL Co and Lines shall tender all of their shipments as described in
Section 3.a to LTS and shall appoint LTS as their agent for the tender and
administration of rail transportation. APL agrees further that it shall tender
to LTS under this Agreement any containerized freight tendered for U.S. or
Canadian rail movement under the name of APL or NOL or tendered by any of their
affiliates or subsidiaries or successors or assigns for rail transportation
except as provided in subsection (e) of this Section 4.
c. APL agrees that, if all other things are equal, including rates,
service and the approval of the beneficial owner, IMS and APL Automotive
Logistics shall use their best efforts to deliver their business to LTS for
handling.
d. APL shall pay LTS a management fee of $6.6 million annually during the
term of the Stacktrain Services Agreement.
e. APL shall use its best efforts to assure maximum stack car slot
utilization.
f. In the event that APL acquires or merges with, or is acquired by, any
other ocean carrier or transportation provider, the parties agree that the
volume of such acquired ocean carrier or transportation provider shall not be
subject to this Agreement unless agreed to by APL. However, in the event that
APL consolidates with or mergers with or into, or conveys, transfers or leases,
in one transaction or a series of transactions all or substantially all of its
assets to another ocean carrier or transportation provider, the acquiring entity
shall be obligated to tender to LTS on an annual basis for the remainder of the
Term at least the actual number of containers which APL tendered to LTS during
the twelve (12) months prior to the acquisition.
SECTION 5. JOINT OBLIGATIONS.
The parties shall jointly be obligated to the following:
a. LTS and APL shall jointly negotiate New Agreements or those
modifications to Current Agreements which apply to both LTS Domestic Shipments
utilizing APL Available Containers and/or APL International Shipments.
b. LTS and APL shall jointly discuss and negotiate with the underlying
rail carriers any ongoing service failures or the failure of a rail carrier to
meet Service Performance Standards which apply to both LTS Domestic Shipments
utilizing APL Available Containers and/or APL International Shipments.
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c. LTS and APL shall jointly discuss with a rail carrier any proposed
change in train schedules which negatively impacts International Shipments.
d. LTS and APL shall jointly negotiate any issues resulting from a change
or changes in operations which could result in a cost increase to APL.
e. LTS and APL shall make a good faith effort to structure a process to
handle billing and payment to minimize administrative expenses for both parties.
f. Each party shall be responsible for any shortfall penalties which arise
out of its failure to meet its volume commitment to the underlying rail
carriers. As an example, if APL tenders only 75% of its shipments for rail
carrier movement in a specific traffic lane when its Volume Commitment under the
applicable rail contract requires 95% of its shipments, and if, at the same
time, LTS tendered 95% of its shipments as required in that traffic lane, then
APL would be obligated to pay any shortfall penalties that may be assessed by
that carrier based on its portion of the combined LTS/APL volume in that traffic
lane. However, when either party has excess volume, the parties agree to
cooperate with each other to determine if that excess can be used to offset the
shortfall incurred by the other party in a manner consistent with the underlying
rail contract. Using the example above, if LTS tendered 100% of its shipments,
then the 5% excess over its 95% commitment could be used by APL as an offset to
its shortfall.
g. Neither party shall take any action regarding tender of volumes of
business to the railroads or payment of charges to the railroads which would
cause termination of any rail agreement.
h. In the event that the parties are unable to reach agreement on
subsections (a)-(g) above, the dispute resolution of Section 6 shall apply.
SECTION 6. DISPUTE RESOLUTION.
In addition to the matters specified in Section 5, the parties recognize
that there may be occasions where they are not in agreement concerning contract
negotiations, contract interpretation, service or train schedule issues, or any
other matter related to this Agreement. In such an event, the parties agree to
abide by the following dispute resolution process:
A. The parties will make a good faith effort to resolve any disputes at
the level of management within each company that would normally handle rail
contract negotiations, rail operating matters or other similar matters involving
any rail carrier. In the event that the parties cannot reach agreement at this
level of management, then the issue(s) will be submitted for senior management
consideration as provided in sub-paragraph (2) of this section. Either party
can submit the issue(s) to senior management at any stage of the negotiations at
which point the other party must similarly submit the issue(s) to its senior
management.
B. The parties agree that any issue that cannot be resolved under the
provisions of sub-section (1) above will first be submitted to the executive or
senior vice president ("SVP") level within each company. Those SVPs shall be the
individuals within each company to whom the persons in sub-section (1) report.
The SVPs for each company will make a good faith effort to resolve the dispute
in an expeditious manner. In the event that they cannot resolve the dispute, and
at any time during the negotiations, either party can submit the issue(s) to
their chief executive officer ("CEO") for resolution at which point the other
party must similarly submit the issue(s) to its CEO.
The CEOs for each company will then make a good faith effort to resolve the
dispute in an expeditious manner. In the event the CEOs cannot resolve the
dispute within ninety (90) days from the time that the dispute first arises,
either party may request that binding mediation be employed.
C. The mediation process shall be as follows: the mediation must be
completed within ninety (90) days after the request for mediation is made
("Ninety Day Mediation Period"). The parties will each select one person
experienced in transportation industry to act as mediators, and the two
mediators shall jointly
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select the third. Each party will pay the expenses of the mediator which that
party selects, and the parties will share equally the expenses of the third
mediator.
The mediators will first meet together with the parties. They shall then
meet separately with each party. The mediators will then conduct a joint
session to see if the issue(s) can be resolved. If there is no resolution, the
mediators shall issue a binding decision within the Ninety Day Mediation Period.
SECTION 7. RATES AND RATE ADJUSTMENTS.
a. APL shall pay to LTS the per container rate assessed against LTS under
the Current or New Agreements by its underlying rail carriers for the movement
of its containers. In addition, APL shall pay LTS the charges assessed against
LTS by those motor carriers performing cross-town drayage of APL's containers.
Any cost, most favored nations or market adjustment which LTS receives under
Current Agreements or any New Agreement or any motor carrier cross-town
agreements with LTS in effect at the date of the Closing shall be passed through
on a dollar for dollar basis to APL. LTS shall not assess any administrative
fee against APL.
b. LTS and APL agree to work together on (1) deciding whether to terminate
the Conrail Current Agreement after expiration of the 180 day period prescribed
by the Surface Transportation Board and (2) finding a satisfactory solution to
the handling of the Northeast business which recognizes APL's investment in and
reliance on the Kearny terminal.
SECTION 8. SERVICE PERFORMANCE.
(a) In the event that LTS receives a monetary service penalty payment under
any Current or New Agreement that involves a failure to provide service for
International Shipments or for a combination of International and LTS Shipments,
LTS shall pay a portion of that payment to APL based on the percentage of APL's
volume as part of the combined APL/ LTS' overall volume of business in the
affected traffic lane(s). Thus, if APL's containers represent thirty percent
(30%) of the combined APL/LTS' volume to a rail carrier in the affected traffic
lane(s) for the last twelve (12) month period, APL shall be entitled to thirty
percent of the service penalty payment.
(b) LTS shall furnish APL with a monthly written report on the rail
carriers' performance under any Current or New Agreements.
SECTION 9. TERMINAL SERVICES AND OFFICE SPACE TO BE PROVIDED BY APL.
a. South Kearny, N.J. APL shall provide terminal services for its own
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International Shipments, Domestic Shipments and Third Party International
Shipments at no cost to LTS at the South Kearny terminal to the extent that the
volumes do not exceed the volumes handled at APL's South Kearny terminal during
calendar year 1998 ("Base Volume") plus a five percent (5%) annual increase of
that Base Volume. To the extent that the volume exceeds the Base Volume plus
the annual five percent (5%) increase, LTS shall be charged at APL's actual
direct cost (excluding corporate overhead or other indirect costs). Such
services shall include loading and unloading of containers, and the storage of
containers and chassis as provided in the Equipment Lease and Chassis Sublet
Agreements.
In the event that CSX Transportation, Inc. or CSX Intermodal, Inc. becomes
the operator of the South Kearny terminal, APL shall refund to LTS a per unit
charge for each LTS Shipment of an amount equal to the amount paid by LTS for
the handling of such shipment. Such refund will be applicable only to the
volumes of LTS that do not exceed the LTS Shipments handled by APL at the South
Kearny terminal during the calendar year 1998 ("LTS Base Volume"), plus five
percent (5%) annual increase in that LTS Base Volume.
In the event that APL loses its lease for the South Kearny terminal, then
APL shall have no further obligation to provide terminal services for
International Shipments or LTS Shipments at South Kearny.
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b. Los Angeles, CA and Seattle, WA. At the request of LTS, APL shall
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offer loading and unloading services to LTS at Los Angeles and Seattle for LTS
shipments which originate or terminate at APL's on-dock facilities at Los
Angeles or Seattle. LTS shall pay $78 per lift at Los Angeles and $75 per lift
at Seattle. These amounts shall be cost adjusted annually for APL's out of
pocket costs, including wage benefits and related employee costs required by any
union agreements.
c. Office Space; Permitted Personnel. APL shall allow a designated number
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of LTS employees as set forth in Schedule C access to the South Kearny, Los
Angeles and Seattle terminals and shall provide office facilities in APL's own
office space for those employees on the terms set forth in the Administrative
Services Agreement. APL shall provide for physical segregation of LTS employees
as long as the costs required to achieve such segregation are reasonable and as
agreed upon in the Administrative Services Agreement executed on this same date.
d. Trains. In order for LTS to utilize the terminal services set forth in
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subsection (b) above, the LTS shipments must be on trains moving to or from
APL's on-dock facilities at Los Angeles and Seattle.
e. On-Dock Shipments. APL will designate certain containers for loading
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or unloading at its on-dock rail facilities at Los Angeles and Seattle ("On-Dock
Facilities"). LTS will arrange for transportation of those designated
containers under rail rates applying from or to such On-Dock Facilities as
provided in the Current or New Agreements. APL shall load or unload the
containers at the Facilities at no cost to LTS. Designated containers shall
include (1) loaded export containers; (2) empty containers and (3) loaded import
containers. Designation of categories (1) and (2) shall be made at the time
that APL tenders the containers to LTS. Designation of category (3) shall be in
advance of arrival at the On-Dock Facilities.
f. On-Dock Shipments from/to Tacoma, WA. In the future, APL may elect to
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route certain International Shipments to an on-dock rail facility at Tacoma, WA.
LTS and APL shall jointly negotiate rail rates for APL from and to the Tacoma
on-dock facility.
g. LTS Personnel. LTS agrees to maintain personnel at those rail
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facilities which LTS had staffed prior to the date of this Agreement at a level
sufficient to ensure timely and efficient handling of APL's shipments consistent
with past practice.
h. To the extent that the Ports of Los Angeles and Long Beach assess a
charge for use of the "Alameda Corridor", the parties agree to pay such charge
to the Ports or to the rail carrier, as the case may be, for their own volumes
moving in the Alameda Corridor.
SECTION 10. EQUIPMENT STORAGE.
Under the Current Agreements and potentially under the New Agreements, LTS
and Lines jointly are entitled to storage of containers and chassis at certain
railroad locations. Except as provided in Exhibit D, LTS and Lines agree to
divide the railroad allocated parking spaces as well as spaces at shared
container yard locations based on the relative proportion of International
Shipments to all other LTS shipments in 1998. The number of parking spaces
initially allocated to LTS and to APL are shown by location on Schedule D; this
number shall be adjusted annually based on the percentage of volume which APL
and LTS had at each location during the prior year, except as otherwise provided
in Exhibit D.
SECTION 11. REPOSITIONING OF AVAILABLE CONTAINERS; CHASSIS SUPPLY.
APL shall make available to LTS all containers carrying Transpacific
International Shipments eastbound to interior U.S. points (a) after they are
made empty at their eastbound destination and (b) which APL does not need for
export loading or for empty repositioning for subsequent export ("Available
Containers"). APL will make such containers available at the points set forth in
Appendix 1 of the Equipment Supply Agreement. LTS shall advise APL within 48
hours whether it can load an Available
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Container. IF LTS advises that it cannot load an Available Container within 48
hours, then APL shall direct LTS as to the disposition of that Available
Container.
APL shall pay LTS the per container rates shown on the first and second
columns of Schedule E for the first 66,000 Available Containers which LTS loads
with Domestic Shipments for West Coast destinations in each calendar year. APL
shall pay LTS the per container rates shown on the third column (designated as
"secondary rates") on Schedule E for each Available Container loaded in excess
of 66,000 in each calendar year.
If LTS cannot load the Available Containers at the location where they are
made available ("Available Location") but can load them at an alternate
intermediate location on the normal transportation route between the Available
Container's original location and the West Coast ("Alternate Location"), APL
shall pay for the empty movement between the Available Location and the
Alternate Location. If, however, LTS desires to move an Available Container
from the Available Location to a location which is not on the normal route of
movement between the original location and the West Coast, LTS shall pay for the
empty movement.
APL and LTS agree that they may make additional agreements to allow LTS to
load Available Containers to points other than West Coast points. Such
agreements may be oral or in writing.
SECTION 12. CLAIMS FOR CARGO LOSS AND DAMAGE; EQUIPMENT DAMAGE.
a. LTS shall be responsible to APL for all freight loss or damage
proximately resulting from LTS' intentional or negligent acts or omissions.
LTS shall not be liable for freight loss or damage proximately resulting from
(i) an act of God, (ii) the act of an enemy, (iii) the acts of governmental
agencies/entities, (iv) negligent or intentional acts of APL or its customers or
(v) the negligent or intentional acts of any motor or rail carrier. In the
absence of LTS's negligence, APL's (and its customers') sole remedy for freight
loss or damage shall be against the underlying rail and/or motor carriers
pursuant to the terms and conditions of the Current or New Agreements, or when
the Current or New Agreements are inapplicable, those carriers' relevant
tariffs, circulars, or other publications relating to liability for loss of or
damage to freight.
Whether or not LTS would otherwise have liability, in any case where LTS
determines that APL or its customer has misdeclared or misdescribed freight, LTS
shall have no liability for any loss or damage to that freight.
With or without fault on its part, LTS will provide reasonable assistance
and cooperation to APL and its customers to investigate and process any freight
loss or damage claims against the underlying rail carriers; provided, however,
that LTS shall not be obligated to mediate resolution of claims between (a) APL
and the underlying rail carrier, (b) APL's customer and the underlying rail
carrier, or (c) between APL and its customer.
Any claim against LTS for freight loss or damage shall be made in writing
within twelve (12) months of the shipment date. Any arbitration action against
LTS for freight loss or damage shall be instituted within two (2) years of the
shipment date. Any claims or actions against underlying carrier(s) shall be made
in accordance with the time requirements set forth in the rail carrier's Current
or New Agreement, its intermodal circulars or other such publications, whichever
is applicable.
In any claim or arbitration action or legal proceeding against LTS under
this section, the value of the lost or damaged freight shall be based on the
invoice price of the lost or damaged freight, freight transportation and customs
charges, and the claimant shall not be entitled to recover special,
consequential or punitive damages, including damages for delay. The claimant
shall be under a duty to take all reasonable steps to mitigate its damages,
including using salvage procedures.
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b. LTS shall be liable to APL for any loss or damage to APL owned, leased
or controlled Equipment or for any injury to any employee, agent or
subcontractor of APL to the extent caused by LTS' intentional or negligent acts
or omissions. If LTS is found liable for such loss, damage or injury, LTS shall
also be liable for any expenses, including attorneys' fees, reasonably incurred
by APL in resolving such claims.
APL shall be liable to LTS for any loss or damage to LTS owned, leased or
controlled Equipment or for any injury to any employee, agent or subcontractor
of LTS to the extent caused by APL's intentional or negligent acts or omissions.
If APL is found liable for such loss, damage or injury, APL shall also be liable
for any expenses, including attorneys' fees, incurred by LTS in resolving such
claims.
c. In the event that a claim is made by any underlying carrier against
either party as the result of loss or damage caused by or arising out of the
negligence of APL or its beneficial owner shipper, APL shall indemnify LTS and
hold LTS harmless against all liability, loss, damage and expense, including
reasonable attorneys' fees, as to that claim. In the event that a claim is made
by any underlying carrier against either party as the result of loss or damage
caused by or arising out of the negligence of LTS or one of its domestic or
third party international customers, LTS shall indemnify APL and hold APL
harmless against all liability, loss, damage and expense, including reasonable
attorneys' fees, as to that claim.
SECTION 13. MATERIAL ADVERSE EFFECT; RENEGOTIATION; TERMINATION.
A. Material Adverse Effect. If any party is or will be adversely and
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materially affected by any of the following events beyond the party's control,
that party may request in writing that any or all of the provisions of this
Agreement be renegotiated:
(1) Serious inequity as a result of the application of, compliance with,
or performance of obligations under the terms and conditions of this
Agreement, change in material circumstances or conditions from those
prevailing on the Effective Date, or other events beyond the control
of a party which are of such a nature as to directly have a material
adverse effect on the operational (as opposed to financial) ability of
that party to perform its obligations under this Agreement; provided
that any renegotiation pursuant to this clause shall be consistent
with the economic arrangements embodied in this Agreement as of the
date hereof;
(2) The acquisition by LTS of an ocean carrier or of LTS by an ocean
carrier which ranks within the top ten carriers based on then current
market share as measured and reported by PIERS or another similar
industry analysis in the United States market ("APL Competitor");
(3) LTS enters into a substantial new joint venture, partnership, or
similar financial arrangement with an APL Competitor where such
arrangement is not limited to providing wholesale stacktrain services
to an APL Competitor and the result of such arrangement is effectively
equivalent to the transaction contemplated by A(2) above; or
(4) The acquisition of APL by a railroad or an intermodal marketing
company which ranks within the top ten based on then current market
share in the United States market.
Competitive transportation proposals, offerings, or services made to APL by
other rail carriers, as well as proposals, offerings or services made by LTS to
other customers and changes in the financial condition or liquidity of a party
shall not be grounds for a request for renegotiation under this Section 13.
Upon receiving written notice of a request to renegotiate, the parties
shall begin good faith negotiations pursuant to Section 6. A and B with the
intent of eliminating the adverse effect.
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Any provision which is renegotiated pursuant to this Section will take
effect upon the execution of an amendment or supplement to this Agreement or
upon execution of a new agreement.
B. Dispute Resolution. If after ninety (90) days of the written notice of
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a valid request for renegotiation pursuant to Section 13.A(1), the parties are
unable to agree upon a renegotiated provision or provisions, then the parties
shall engage in the mediation process set forth in Section 6.C.
C. Termination. If after ninety (90) days of the written notice of a
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valid request for renegotiation pursuant to Section 13.A(2) or 13.A(3), the
parties are unable to agree upon a renegotiated provision or provisions, APL may
terminate this Agreement and all other related agreements upon one hundred
eighty (180) days written notice to LTS. If after ninety (90) days of the
written notice of a valid request for renegotiation pursuant to Section 13.A(4),
the parties are unable to agree upon a renegotiated provision or provisions, LTS
may terminate this Agreement and all other material agreements upon one hundred
eighty (180) days written notice to APL.
Upon termination of this Agreement, all parties shall complete their
performance and fulfill all obligations which accrued prior to the date of
termination, including but not limited to APL's obligation to pay all accrued
charges and LTS' obligation to arrange for Transportation for all containers
previously tendered by APL and to return to APL, at an interchange point or
other location or locations mutually agreed upon, all containers, and chassis
owned or provided by APL.
SECTION 14. CONFIDENTIALITY.
The parties agree that the commercial terms of this Agreement and its
appendices are confidential and proprietary, and that unauthorized disclosure
could be damaging from a commercial or competitive standpoint under many
circumstances. Therefore, except as otherwise provided in this Agreement and
except to the extent required by law, the contents of this Agreement shall not
be disclosed or released by any party to any person other than (a) a party's
employees, agents and legal advisors on a "need to know basis" and (b)
information relating to commodity, number of containers and origin or
destination to LTS' railroad partners on a "need to know" basis. In any
required disclosure of any portion of this Agreement, each party will cooperate
with the other party to minimize the disclosure of any confidential information
and to implement protective procedures relating to any information required to
be disclosed. Any employee having access to any part of this Agreement or to
any information contained within the Agreement or related to this Agreement must
agree to abide by the terms of this Section 14. This Section 14 includes,
without limitation, rate information of any kind, customer identities, traffic
volumes and commodities moving via APL, train schedules and/or performances, and
any other information learned by one party about the other's business during the
course of their dealings hereunder.
SECTION 15. HAZARDOUS MATERIALS; RESTRICTED COMMODITIES; PROHIBITED
COMMODITIES.
A. Except as otherwise stated in this Section 15, for each hazardous
commodity in a container tendered for Transportation, APL will complete and
submit to LTS the hazardous materials section of LTS' intermodal shipping
instructions. For each hazardous commodity in a container, APL will comply with
all applicable international, federal, state, and local regulations, including
but not limited to 49 CFR and the IMDG Code. APL will be required to provide
accurate and complete information for each hazardous load tendered to LTS in the
form of an EDI shipping order. LTS must in turn provide complete accurate
shipping information to the underlying carrier.
B. APL shall have the obligation to advise LTS as to any restricted
commodities which it or its customer wishes to ship. In the event that APL
properly and timely advises LTS of such restricted commodities and the
underlying rail carrier agrees to transport such restricted commodities, LTS
shall have the obligation to make all necessary arrangements with the underlying
rail carriers for the transportation of such restricted commodities.
9
C. APL shall not tender to LTS any commodity that has been prohibited by
the rail carrier to be utilized by LTS or any commodity which LTS has itself
embargoed from movement on its rail network and LTS has given APL written notice
of the embargo. As of the effective date of this Agreement, all shipments of
coiled metal of any type have been embargoed by LTS.
SECTION 16. PAYMENT OF CHARGES.
APL will pay LTS within sufficient time to allow LTS to pay the rail
carriers as required under the Current or New Agreements. LTS will pay within
thirty (30) days all payments arising under this Agreement or the Schedules.
Consistent with Section 5.e, the parties shall work together to develop a
payment process which minimizes administrative expenses and attempts to keep the
parties cash neutral.
APL may elect to pay the rail carriers as required under the Current or New
Agreements so long as LTS is not adversely affected. If APL does not so elect,
in order to secure APL's obligations to LTS for payments made to rail carriers
under Section 3(f) hereof, APL agrees to deliver to LTS (and cause to remain
outstanding) a standby evergreen letter of credit in form and substance, and
issued by a bank, reasonably acceptable to LTS and APL. Such letter of credit
shall be in a face amount equal to 110% of the average of the four highest
monthly accounts receivable balances to LTS from APL and its Affiliates during
the prior fiscal year; provided that in the event that the aggregate amount of
rail charges incurred by APL but not paid under any Current Agreement or New
Agreement exceeds 85% of such face amount, APL shall deliver to LTS an
additional letter of credit (or a replacement therefor) with a face amount equal
to 120% of such excess amount. Conditions to drawings under such letter of
credit shall include (i) APL's failure to pay LTS for any shipment within 45
days of LTS mailing an invoice therefor, (ii) LTS' receipt of notice from the
issuer of the letter of credit that the stated termination date shall not be
extended and (iii) APL's failure to replace the letter of credit within 60 days
of the credit rating of the issuer falling below investment grade.
Records of APL and LTS related to rates, charges, liquidated damages,
payments, and billing will be available for inspection by the other party during
normal business hours at locations agreed upon by the parties, subject to the
limitations of Section 14.
SECTION 17. MUTUAL INDEMNITY.
Except with respect to cargo claims, and except where remedies are
specified in this Agreement, each party to this Agreement shall indemnify and
hold the other party harmless against all liability, loss, damage, and expense,
including attorneys' fees (collectively, "Costs"), reasonably incurred by the
other party to the extent that such liability, loss or damage is caused by the
negligent or intentional act or by any default under this Agreement by the
indemnifying party or any of its employees. In addition, APL shall hold LTS
harmless against all Costs reasonably incurred by LTS as the result of APL's
customer's failure to comply with all federal, state and local regulations
applicable to the shipment of a hazardous commodity.
SECTION 18. FEDERAL CONTRACTOR REQUIREMENTS.
A. To the extent applicable, APL and LTS will comply with and give all
representations and assurances required by any law or regulation applicable to
federal contracts and subcontracts including but not limited to the following:
1. To the extent applicable, the Renegotiation Act of 1951, as amended
(50 U.S.C. (S)(S) 35, 45), and the Contract Work Hours and Safety
Standards Acts, as amended (40 U.S.C. (S)(S) 327, 333);
10
2. To the extent applicable, Executive Order No. 11246, dated September
14, 1965, as amended, concerning equal employment opportunity and
affirmative action in employment of persons without regard to race,
religion, sex, or national origin, Executive Order No. 11701, dated
January 24, 1973, concerning affirmative action in employment of
certain veterans, Executive Order No. 11758, dated January 15, 1974,
concerning affirmative action in employment of handicapped
individuals, Executive Order No. 11625, dated October 13, 1971,
concerning assistance to minority business enterprises, Executive
Order No. 12138, dated May 18, 1979, concerning assistance to women's
business enterprises, the Age Discrimination Act of 1975, all
applicable regulations of the Secretary of Labor, including but not
limited to 41 C.F.R. (S) 60-1.4 et seq., 41 C.F.R. (S) 60-250 et seq.,
and 41 C.F.R. (S) 60-741 et seq., and all applicable Federal
Procurement Regulations, including but not limited to 41 C.F.R. (S) 1-
1.13 et seq.; and
3. To the extent applicable, Defense Acquisition Regulations 7-104.14,
concerning use of small business and minority business concerns, and
7.104.20, concerning use of labor surplus area concerns.
B. To the extent applicable and required, APL and LTS each hereby certify
to the other that it does not and will not maintain any facilities for employees
that are unlawfully segregated or permit employees to perform services at any
location under its control or that of its subcontractors where unlawfully
segregated facilities are maintained and that it will require its nonexempt
subcontractors to furnish a similar certification prior to the award of any
nonexempt subcontract.
SECTION 19. FORCE MAJEURE.
In the event that any party is unable to meet its obligations under this
Agreement as a result of any cause beyond its reasonable control, including but
not limited to, strikes or lockouts, labor shortages or disturbances,
derailments or other casualties, acts of God, severe weather, acts of
governmental authority and acts or omissions of third parties (collectively,
"force majeure conditions"), the performance obligations of the party affected
by a force majeure condition shall be suspended to that extent for the
duration of such event; provided, however, that the parties shall make all
reasonable efforts to continue to meet their obligations during the duration of
the force majeure condition; and provided, further, that the party declaring a
force majeure condition shall notify the other party by facsimile when the force
majeure condition exists, the nature of the force majeure and when the condition
is terminated. The suspension of any obligations owing to a force majeure
condition shall neither cause the term of this Agreement to be extended nor
affect any rights accrued under this Agreement prior to the force majeure
condition. To the extent that LTS ' underlying rail carrier declares a force
majeure condition, LTS' and APL's obligations under this Agreement shall be
suspended for the duration of that force majeure condition. LTS shall use its
best efforts to arrange alternative transportation for APL International
Shipments during the force majeure condition.
SECTION 20. ASSIGNMENT.
Except as expressly allowed by this Section, no party to this Agreement may
assign this Agreement, in whole or in part, or assign any rights granted by this
Agreement, or delegate to any person not a party to this Agreement any of its
obligations under this Agreement without the prior written consent of the other
party. Subject to this Section, this Agreement will be binding upon and inure
to the benefit of the parties hereto and to their permitted successors and
assigns.
SECTION 21. NOTICES.
Except as otherwise stated in this Agreement, all notices required by or
given under this Agreement will be sufficient in all respects if in writing and
delivered personally, by first class, registered,
11
or certified U. S. mail, by telecopier, by electronic transmission, or by
commercial overnight delivery service, postage or delivery fees prepaid,
addressed as follows:
To: APL
0000 Xxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To: APL Land Transport Services, Ltd.:
Xxxxxx Xxxxxx
c/o Apollo Management, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxx Xxxxxxx
c/o Apollo Management, L.P.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECTION 22. NONWAIVER.
Any waiver at any time of a breach of any provision, condition, obligation,
or requirement of this Agreement will extend only to the particular breach so
waived and will not impair or affect the existence of any provision, condition,
obligation, or requirement of this Agreement or the right of any party
thereafter to avail itself of any breach, subject to such waiver.
12
SECTION 23. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
SECTION 24. ENTIRE AGREEMENT.
This Agreement, together with any agreement executed and delivered by the
parties concurrently herewith and the Schedules attached hereto and together
with the Confidentiality Agreement, constitutes the entire agreement between LTS
and APL with respect to the subject matter hereof. There are no
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the subject matter hereof, other than the Confidentiality Agreement.
SECTION 25. NO THIRD PARTY BENEFICIARIES.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 26. NO AMENDMENTS WITHOUT WRITTEN CONSENT.
This Agreement may not be amended or modified except by the express written
consent of the parties hereto.
SECTION 27. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
SECTION 28. REPRESENTATIONS.
APL represents and warrants to LTS that, with regard to revenues associated
with repositioning, had the initial rates in Schedule E been in effect during
the fiscal year ended December 25, 1998, the audited operating results of LTS
for such period would not have been negatively affected. In the event of any
inaccuracy of this representation, the parties agree to make such adjustments in
good faith to amounts payable under this Agreement as are necessary (i) to
correct such inaccuracy and (ii) to compensate the party prejudiced by such
inaccuracy.
13
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first above written, by the duly authorized representatives of the
parties hereto.
APL LIMITED
By:/s/ Xxxxxxx X. Xxxxx
_________________________________
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
AMERICAN PRESIDENT LINES, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
__________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
APL LAND TRANSPORT SERVICES, INC.
By: /s/ Xxx Xxxxxxxxxx Xxxxx
__________________________________
Name: Xxx Xxxxxxxxxx Xxxxx
Title: Assistant Secretary
APL CO. PTE LTD.
By /s/ Xxxxxxxxx X. Xxxxxxx, Xx.
__________________________________
Name: Xxxxxxxxx X. Xxxxxxx, Xx.
Title: Authorized Signature
14
SCHEDULE A
CURRENT AGREEMENTS
Union Pacific Railroad Company, Transportation Service Agreement, dated
September 1, 1985, Memorandum of Understanding, dated December 15, 1995, and
related agreements.
Consolidated Rail Corporation, Transportation Service Agreement, dated June 1,
1988 and related agreements.
Canadian National Railway, Letter of Intent dated June 22, 1998.
Norfork Southern Corporation, Rail Transportation Agreement, dated January 10,
1996.
15
SCHEDULE B
DEFINITIONS
"Affiliate" shall have the meaning set forth in the Stock Purchase Agreement
"Agreement" means this Agreement by and between APL and LTS, as amended or
supplemented together with all Schedules attached hereto.
"APL Automotive Logistics" shall have the meaning set forth in the Recitals to
this Agreement.
"APL Automotive Shipments" shall have the meaning set forth in Section 3.
"APL Competitor" shall have the meaning set forth in Section 13.
"Available Containers" shall have the meaning set forth in Section 11.
"Current Agreements" shall have the meaning set forth in the Recitals of this
Agreement.
"IMC" shall have the meaning set forth in Section 3.
"IMS" shall have the meaning set forth in Section 3.
"International Shipments" shall mean APL's containers with a prior or subsequent
water movement.
"LTS Shipments" shall mean all shipments other than International Shipments.
"On-Dock Facility" shall have the meaning set forth in Section 9.
"New Agreement" shall have the meaning set forth in Section 1.
"Service Failure" shall have the meaning set forth in Section 3.
"Service Performance Standards" shall mean those service standards defined in
the Current Agreements.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement, dated as of
March 15, 1999, between APL and Purchaser.
"Train Schedule" shall mean a train schedule set forth in the Current
Agreements.
"Transpacific International Shipments" shall mean International Shipments
between Asia and the Americas.
"Volume Commitment" shall have the meaning set forth in Section 5.
16
SCHEDULE C
LTS EMPLOYEES AT APL LOCATIONS
Los Angeles
-----------
None
Seattle
-------
Xxxx Xxxx
Xxxx Xxxx
Xxxx Xxxx
South Kearny
------------
Xxxx Xxxxxx
Xxxx Xxxxx
17
SCHEDULE D PART 1
RAIL TERMINAL
ALLOCATION OF PARKING SPACES
POINT SPOTS % APL % LTS # APL # LTS
---------------------- -------------- -------------- -------------- -------------- -------------
Atlanta 400 44 56 176 224
Baltimore 175/(1)/ 43 57 75 100
Boston 100 59 41 59 41
Buffalo 100 44 56 44 56
Charlotte 100/(2)/ 63 37 63 37
Charleston 50 73 27 37 13
Chicago 59th St. 100 51 49 51 49
Chicago Global 1 250/(3)/ - - 20 230
Cincinnati 50/(4)/ 37 63 19 31
Cleveland 25/(5)/ 54 46 14 11
Columbus 50 73 27 37 13
Houston 250/(9)/ 54 46 50 200
Jacksonville 60 69 31 41 19
Kearny (CSXI) 760/(6)/ 63 37 479 281
Memphis (CSXI) 20 87 13 17 3
Norfolk/Portsmouth 20 62 38 12 8
Philadelphia 125/(7)/ 43 57 54 71
Portland 35 24 76 8 27
Savannah 50 79 21 40 10
Springfield 25 33 67 8 17
Syracuse 75/(8)/ 44 56 33 42
Worcester 25 17 83 4 21
/(1)/ Includes chassis and container spots. Also includes 100 chassis/container
spaces for Harrisburg Volumes.
/(2)/ Includes 40 spaces representing Greensboro Volumes.
/(3)/ Exception to the Volume split methodology as stated in Section 10 of the
Stracktrain Services Agreement. Historic use of Global 1 space is for empty high
cube domestic containers.
/(4)/ Includes Georgetown, KY Volumes.
/(5)/ Includes Pittsburgh, PA Volumes.
/(6)/ Includes both chassis and container spots.
/(7)/ Includes both chassis and container spots. Includes current Morrisville
Volumes which will convert to the CSXI Philadelphia Terminal effective 12/1/99.
/(8)/ Include 50 spaces for Albany Volume.
/(9)/ Space allocated based on historical use.
18
SCHEDULE D, PART 2
CY
PARKING ALLOCATION
Western Region
--------------
Location Capacity/(Decking) APL LTS
-------- ------------------ --- ---
Los Angeles
Cal Cartage 80
Container Care 300+
Fastlane 500+
Harbor Rail 100
R.C.C. 50-100
Total Intermodal 500+
Container Works 100
Xxxxxx Container 000
Xxxxxxx Xxxx 000
Xxxxxxxx Xxxx 125
Portland P.C.R. 200-300
Seattle Container Care 000
XXX 00
00
Xxxxxxx Xxxxxx
--------------
Chicago Paulina 450
TLI near G1 750
TLI near Dolton 750
Cincinnati 325
Cleveland 600
Columbus CIC 625
Detroit Tri Modal 000
Xxxxx Xxxxxx 00
Xxxxxxxxxxxx 000
Xxxxxx Xxxx 700
Louisville 250
Minneapolis Trimodal 1500
Milwaukee 40
Omaha 300
Pittsburgh 100
St. Xxxxx XXXXXX 0000
Xx. Xxxxx Xxxx 000
Xxxxxx 50
20
Eastern Region
--------------
Allentown 20
Baltimore 000
Xxxxxx 000
Xxxxxxxxxx 75
Morrisville 260
Norfolk 125
Rochester 60
Worcester 100 Domestic Empty Xxx
00
Xxxxxxxx Xxxxxx
---------------
Xxxxxxx (XXX) 575
Transus 000
Xxxxxxxxx Xxxx Xxxx 300
Xxxxx 150
Charleston 200
Savannah 150
Tampa 200
Orlando 100
Miami 250
Jacksonville --- Use NSRR
Nashville 200
Huntsville 600
Memphis Delta 800
ATS 000 Xxxxx Xxxxxxxxxxx
Xxx Xxxxxxx 000
Xxxxxxx ATS 650
Transporter 400
Sail Marine 200
UPRR 300 5 ac Lease
Laredo 300
San Antonio 450
El Paso 200
Dallas 1200
SCHEDULE E
INITIAL RATES
EQUIPMENT TO CALIF. POINTS TO PNW POINTS SECONDARY RATE
SUPPLY POINT (SEE NOTE 1) (SEE NOTE 2) (SEE NOTE 3)
--------------------- ---------------- ------------- --------------
ATLANTA, GA 250 350 250
BALTIMORE, MD 350 450 250
BOSTON, MA 350 450 250
CHARLESTON, SC 250 350 250
CHARLOTTE, NC 250 350 250
CHICAGO, IL 250 350 250
CINCINNATI, OH 250 350 250
CLEVELAND, OH 250 350 250
COLUMBUS, OH 250 350 250
DALLAS, TX 000 X/X 000
XXXXXX, XX 250 250 250
DETROIT, MI 250 350 250
HARRISBURG, PA 350 450 250
HOUSTON, TX 000 X/X 000
XXXXXXXXXXXX, XX 250 350 250
JACKSONVILLE, FL 250 350 250
KANSAS CITY, MO 250 350 250
LOUISVILLE, KY 250 350 250
MEMPHIS, TN 250 350 250
MIAMI, FL 250 350 250
MINNEAPOLIS, MN 250 350 250
NASHVILLE, TN 250 350 250
NEW ORLEANS, LA 250 350 250
NEW YORK, NY 350 450 250
NEWARK, NJ 250 450 250
NORFORK, VA 350 450 250
OMAHA, NE 250 350 250
ST LOUIS, MO 250 350 250
TAMPA, FL 250 350 250
MONTREAL, CANADA X/X X/X X/X
XXXXXXX, XXXXXX N/A N/A N/A
NOTE 1: APPLIES TO ANY SIZE CONTAINER WHEN LOADED WITH DOMESTIC CARGO TO
POINTS IN CALIFORNIA. APPLIES TO CONTAINERS THAT COMPRISE THE FIRST
66,000 CONTAINERS LOADED TO ALL WEST COAST POINTS ANNUALLY.
NOTE 2: APPLIES TO ANY SIZE CONTAINER WHEN LOADED WITH DOMESTIC CARGO TO
POINTS IN WASHINGTON AND OREGON. APPLIES TO CONTAINERS THAT
COMPRISE THE FIRST 66,000 CONTAINERS LOADED TO ALL WEST COAST
POINTS ANNUALLY.
NOTE 3: APPLIES TO ANY SIZE CONTAINERS WHEN LOADED WITH DOMESTIC CARGO TO
ANY WEST COAST POINT. APPLIES TO CONTAINERS THAT EXCEED 66,000
LOADED ANNUALLY TO WEST COAST POINTS.
23
