Exhibit 4.9
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TPI CHASSIS SUBLET AGREEMENT
THIS CHASSIS SUBLET AGREEMENT (as originally executed and as amended from
time to time in accordance with its terms, "Chassis Sublet") is made as of May
28, 1999, by and among APL Land Transport Services, Inc., a Tennessee
corporation ("LTS"), APL Co. Pte Ltd., a Singapore corporation, APL Limited and
American President Lines, Ltd., a Delaware corporation (collectively, "APL").
RECITALS
WHEREAS, the parties to this Chassis Sublet recognize that there is a need
for twenty foot (C20) chassis, forty foot (C40) and forty-five foot (C45)
chassis to support the business needs of LTS specifically relating to the ocean
containers of LTS' third party international customers ("TPI Containers") which
require chassis for their transportation.
WHEREAS, APL has a supply of chassis which are currently used to fulfill
TPI requirements at various locations, terminals and depots in the United
States.
WHEREAS, LTS and APL are desirous of entering into this Chassis Sublet
whereby APL agrees to provide, on a daily basis, the use of an agreed number of
APL's chassis which provision also includes the maintenance and repair and
licensing of these chassis.
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
As employed in this Chassis Sublet, the term:
1. "Chassis" means a licensed skeletal chassis designed for the carriage of
20', 40' and 45' ISO ocean shipping containers in compliance with
applicable FHWA and DOT regulations.
2. "Day" means any calendar daily twenty-four hour period commencing at 00:01
hours and ending at 24:00.
3. "Force Majeure events" shall include Acts of God (other than ordinary
storms or inclement weather conditions), earthquakes, floods or landslides,
act of governments, riots, insurrections, embargoes, and labor disputes or
strikes or other occurrences which are beyond the reasonable control of the
Parties and which make it impossible for either Party to perform.
4. "Use" means the provision of a Chassis which is available for interchange
in accordance with this Chassis Sublet. It is understood that APL is
providing such Use out of its total fleet of Chassis on a revolving basis
and is not supplying LTS with a specific group of identifiable Chassis.
5. "Per Diem Rate" means the charge assessed by APL for making available to
LTS the number of chassis set forth in Article II below.
6. "User" shall mean the person having responsibility for the Chassis.
7. Interchange[d], "when used with respect to a chassis means an APL supplied
chassis which has been removed from APL's terminal or depot by LTS, LTS'
designee or a motor carrier having a valid interchange with LTS but not
redelivered to APL's terminal or depot or a chassis which had been removed
and redelivered to APL's terminal or depot.
ARTICLE II - NUMBER OF CHASSIS REQUIRED AND
ADJUSTMENT; RETURN PROVISION
During each year of this Agreement, APL agrees to provide to LTS on a daily
basis the chassis requirements set forth in LTS's TPI Market Plan which shall be
supplied to APL on an annual basis no later than September 30/th/ of the prior
year ("TPI Market Plan Requirement"). If LTS fails to supply its TPI Market Plan
Requirement to APL by September 30/th/, APL shall not be obligated to meet the
proposed TPI Market Plan Requirement for the following year but shall only be
required to continue to provide the Chassis requirements set forth in the then
current year's TPI Market Plan Requirement unless otherwise agreed between APL
and LTS.
The "Initial Allocation" of Chassis for the first year of the Agreement is 2,091
C20 Chassis and 3,367 C40 (or equivalent units). The "Current Allocation" shall
be the fleet of C20 Chassis and C40 Chassis for each subsequent year of the
Agreement based on the TPI Market Plan Requirement. In the event that the
Current Allocation is less than the prior year's allocation, and APL incurs
early termination penalties on Chassis which LTS and APL mutually agree were
required to be leased to fulfill previous TPI Market Plan Requirements, LTS
shall bear the cost of those early termination penalties. At APL's sole option,
to the extent that APL can absorb any Chassis into its own fleet, it will do so.
When the Current Allocation results in an increase in the fleet size, and if,
due to market conditions and non-availability of Chassis, APL is unable to
supply all Chassis in excess of the prior year's allocation, APL shall work with
LTS to obtain as many Chassis as practically and economically possible.
In the event that LTS requests more Chassis in an APL accounting period (as
those periods are established in Appendix 5 to the Equipment Supply Agreement)
than are in the Current Allocation as measured by available Chassis Days, APL
shall supply those Chassis as long as such Chassis are available for use by LTS.
Chassis Days are the number of Chassis in the Current Allocation multiplied by
365 averaged over the twelve (12) APL accounting periods. If LTS' use exceeds
the Current Allocation of Chassis during one APL accounting period, APL shall so
advise LTS. If LTS' use exceeds the Current Allocation for a consecutive second
APL accounting period, then the parties shall discuss remedies to address the
excess use within five (5) days after the receipt of data by LTS for that APL
accounting period. If LTS chooses to increase the Chassis fleet, then APL shall
charge LTS for the supplemental Chassis which APL and LTS agree to add to the
Chassis fleet. If APL supplies less than the Current Allocation of Chassis
during one APL accounting period, LTS shall so advise APL. If APL supplies less
than the Current Allocation for a consecutive second APL accounting period, the
parties shall discuss remedies to address the shortage within five (5) days
after the receipt of data by LTS for that APL accounting period.
The number of Chassis provided at each location covered under this Chassis
Sublet shall be managed on a day to day basis by APL and LTS, in accordance with
the Procedures Manual on Equipment Issues (the "Manual") which APL and LTS shall
jointly develop and implement. The Manual shall address procedures for, among
other things, LTS communicating its anticipated Chassis needs at each location
to APL and APL making such equipment available and communicating such
availability to LTS.
LTS shall have the right to periodically audit APL's records, and APL shall have
the right to audit LTS' records, to the extent necessary to determine compliance
by APL with its Chassis supply obligations under this Chassis Sublet. The
parties acknowledge that any such calculation of available Chassis will entail
the extrapolation of certain data from APL's ETC system.
LTS must return a Chassis utilized under this Agreement to the same rail ramp
from which it was taken.
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During each year, LTS may notify APL of its request in writing for additional
Chassis beyond the Current Allocation for that year and APL shall have the
option, but not the obligation, to supply such additional Chassis under this
Chassis Sublet. If APL does not respond to LTS within five (5) working days,
then no additional Chassis will be made available from APL.
All incremental direct costs involved in increasing the fleet, whether pursuant
to the paragraph immediately above or pursuant to an increase in a Future
Allocation, shall be paid by LTS. Such costs are not limited to the pickup and
survey of equipment but also include any increase in daily per diem due to
market conditions which may affect the terms and length of any lease
requirements. APL shall use its best efforts when increasing the fleet pursuant
to LTS' needs to do so in the most economical manner possible consistent with
obtaining equipment of adequate quality.
APL represents and warrants that it has obtained all consents, approvals,
authorizations, waivers and amendments required to be obtained from any third
party under its existing lease agreements and/or other obligations prior to
entering into this Chassis Sublet and the consummation of the transactions
contemplated herein.
ARTICLE III - PER DIEM RENTAL RATE
The per diem rental rate for the provision of maintained and licensed Chassis
under this Agreement shall be according to Schedule 1. APL shall invoice LTS
each APL accounting period for the number of Chassis provided in the Current
Allocation pursuant to Article II by multiplying each unit times the applicable
rate times the number of days that unit is in the TPI chassis fleet in the
accounting period. Payment shall be due within thirty (30) days of receipt of an
invoice.
APL represents and warrants to LTS that the per diem rental rate of $4.85 for
units in the 1999 Plan represents the actual daily chassis cost allocated to LTS
by APL during the fiscal year ended December 25, 1998 and that the number and
mix of chassis contained in the Initial Allocation would allow LTS to
appropriately service TPI volumes of approximately 110,000 shipments in 1999
based on actual 1998 chassis turn times. In the event of any inaccuracy of this
representation, the parties agree to make such adjustments in good faith as are
necessary (i) to correct such inaccuracy and (ii) to compensate the party
prejudiced by such inaccuracy.
ARTICLE IV - INTERCHANGE AND CUSTODY; INSURANCE
APL represents that it is an "Equipment Provider" which is a Party to that
standard Uniform Intermodal Interchange and Facilities Access Agreement
administered by the Intermodal Association of North America ("UIIA Agreement").
In accepting the provision of Chassis under this Chassis Sublet, LTS agrees that
LTS is the User of the Chassis upon interchange of the Chassis to LTS until the
Chassis' return to the custody of APL.
Therefore, simultaneously with the execution of this Chassis Sublet, LTS shall
furnish APL with certificates from insurance companies reasonably acceptable to
APL evidencing liability for bodily injury and property damage with a combined
single limit of not less than $1 million. LTS agrees to defend, hold harmless,
and fully indemnify APL against any and all loss, damage, liability, cost or
expense (including reasonable attorney's fees) suffered or incurred by APL,
arising out of or connected with injuries to or death of any persons or loss of
or damage to any property (including equipment and cargo) arising out of
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the use, operation, maintenance performed by or at the direction of LTS,
possession or control of Chassis provided to LTS under this Chassis Sublet while
it is the User of the Chassis. LTS further agrees to defend, indemnify, and hold
APL harmless against any and all loss, damage, liability, cost or expenses
(including reasonable attorney's fees and trip permit dues) arising out of LTS'
failure to comply with any federal or state law or regulation when that failure
arises out of the use, operation, maintenance performed by or at the direction
of LTS, possession or control of Chassis provided to LTS under this Chassis
Sublet while it is the User of the Chassis.
ARTICLE V - DAMAGE AND REPAIRS; CITATIONS
The costs of damage to Chassis while in the possession of LTS are included in
the daily per diem rate charged pursuant to this Agreement, and LTS shall not be
billed for individual repairs. If a Chassis is a Total Loss LTS shall pay the
Casualty Value computed for the Chassis in question in accordance with Appendix
1. A Chassis shall be considered a "Total Loss" in the event it is lost, stolen,
destroyed, or surveyed and found to be more costly to repair than its Casualty
Value.
The parties agree that the condition of an APL Chassis shall be established at
interchange by the use of an Equipment Interchange Receipt (EIR) setting forth
the physical condition of the equipment. Both APL and LTS shall agree on the use
of a non-standard interchange where an EIR is not prepared; alternatively the
parties shall agree on what constitutes presumptive interchange information when
that is an issue.
In the event that a citation for any kind of traffic violation, including
parking citations, is issued while the Chassis is under LTS' control, it shall
be LTS' obligation to pay for the citation and to seek reimbursement from the
underlying motor carrier.
ARTICLE VI - USE TAX
In the event there is any use tax in any applicable jurisdiction levied as a
result of this Chassis Sublet, LTS agrees that it will pay such use tax in
addition to the per diem rental due under Article III.
ARTICLE VII - REVIEW
This Chassis Sublet shall be reviewed every three (3) months by the Parties in
consultation with one another. Issues such as per diem rental rates, adequacy of
the provision, and condition of the Chassis will automatically be reviewed. In
the event either party proposes any changes in this Chassis Sublet in connection
with such review, the other Party shall consider the proposal in good faith. In
the event the Parties cannot agree, they shall utilize the Dispute Resolution
process set forth in Section 6 of the Stacktrain Services Agreement.
ARTICLE VIII - TERM AND TERMINATION
The term of this Chassis Sublet shall have the same term as the Stacktrain
Services Agreement. If this Agreement is terminated prior to twenty-years from
the date hereof, LTS may request APL to assign the leases for all the Chassis
covered under this agreement to LTS and, in such event, APL shall be obligated
to so assign such leases to LTS.
In the event that, at the end of the term of this Chassis Sublet, Chassis
interchanged by APL to LTS have not been returned to APL and the Casualty Values
thereof have not been paid to APL, LTS shall be
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charged the applicable per diem charge for each such Chassis until the earlier
of either (a) 180 days from the termination of this Chassis Sublet or (b)
written notification by LTS to APL that such Chassis are lost, stolen or
destroyed. If LTS does not return such Chassis to APL within 180 days from the
termination of this Chassis Sublet or LTS notifies APL that such Chassis is or
are lost, stolen or destroyed, then LTS shall be liable for the Casualty Value
of such Chassis in accordance with Article V and Appendix 1 hereof.
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ARTICLE IX - FORCE MAJEURE
If any Party suffers a Force Majeure event, it shall promptly notify all other
Parties of that event, specifying the nature and date of occurrence thereof. The
obligation of each Party to perform hereunder shall be suspended during the
Force Majeure event to the extent such event prevents performance. The Party
suffering the Force Majeure event shall notify the other Parties in writing when
that condition has been eliminated.
If a Force Majeure event has been declared, no per diem rental charges shall be
assessed for the days identified in the written notice of the Force Majeure
event. APL shall inform LTS of the number of Chassis which are per diem rental
free upon either its receipt of the notice of an event of Force Majeure, or its
having given notice to LTS that it is declaring an event of Force Majeure.
ARTICLE X - THIRD PARTY MANAGER
The parties hereby agree that a third party manager or managers may be appointed
by APL at any time within the duration of this Agreement to oversee Chassis
management at any or all locations within North America.
ARTICLE XI - CHASSIS LEASES
LTS may, during the first year of this Agreement, request APL to assign the
leases for all the Chassis covered under this Agreement to LTS and, in such
event, APL shall be obligated to so assign such leases to LTS.
ARTICLE XII - MISCELLANEOUS
A. All notices, demands, requests, and other communications required or
permitted by or provided for in this Chassis Sublet ("Communications") shall be
given in writing to the parties at their respective addressees set forth below,
or at such other address as a party shall designate for itself in writing in
accordance with this Section:
To: APL:
1111 Broadway
Oakland, California 94607
Attn: Timothy J. Windle
Facsimile: (510)272-8932
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Attention: Steven B. Stokdyk, Esq.
Facsimile: (310) 712-8800
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To: APL Land Transport Services, Ltd.
Joshua Harris
c/o Apollo Management, L.P.
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212)261-4102
and
Bruce Spector
c/o Apollo Management, L.P.
1999 Avenue of the Stars, Suite 1910
Los Angeles, California 90067
Facsimile (310)201-4199
With a copy to:
Morton A. Pierce, Esq.
Douglas L. Getter, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 259-6333
B. Communications may be transmitted by (i) personal delivery, (ii) delivery
by messenger, express, or air courier or similar courier, (iii) delivery by
United States first class certified or registered mail, postage prepaid, and
(iv) delivery by facsimile. Except as otherwise provided in this Chassis Sublet,
delivery or service of any Communication shall be deemed effective only upon
receipt; provided, that any Communication received after 5:00 p.m. local time at
place of receipt, or on a day other than a Business Day, shall be deemed
received on the next succeeding Business Day.
C. Except as is otherwise expressly provided in this Chassis Sublet, all
periods of time shall be computed by including Saturdays, Sundays, and holidays.
D. The captions in this Chassis Sublet are for convenience of reference only.
They do not define or limit any of the terms or provisions, or otherwise affect
the construction, of this Chassis Sublet.
E. References in this Chassis Sublet to Articles, Sections, and Appendices are
references to Articles, Sections, and Appendices of this Chassis Sublet, except
as expressly otherwise indicated.
F. This Chassis Sublet shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and permitted
assignees.
G. This Chassis Sublet shall be construed and enforced in accordance with and
be governed by the laws of the State of New York.
H. If either party shall fail to perform any of its obligations under this
Chassis Sublet, the other party may, on twenty-five (25) days' notice to the
party so failing to perform, do all acts and make all expenditures necessary to
remedy such failure, and the party so failing to perform, shall within ten (10)
Business Days after demand therefor by the other party, pay to the other party
an amount which is equal to the costs, expense and liabilities incurred by the
other party in doing any such act or making any such expenditure. No party,
however, shall be under any obligation to do any such act or make any such
expenditures, nor
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shall the making thereof relieve either party from any of the consequences of
any failure to perform any of its obligations under this Chassis Sublet.
I. In the event a dispute between the parties arises concerning any matter
under this Chassis Sublet, the party claiming the existence of a dispute shall
notify the other party in writing. In the event that such notice is given, the
dispute shall be resolved by the Dispute Resolution process set forth in Section
6 of the Stacktrain Services Agreement.
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IN WITNESS WHEREOF, this Chassis Sublet has been executed and delivered as
of the date first above written, by the duly authorized representatives of the
parties hereto.
APL Land Transport Services, Inc.
By: /s/ Ann Fingarette Hasse
________________________________
Title: Assistant Secretary
_____________________________
American President Lines, Ltd.
By: /s/ Timothy J. Windle
________________________________
Title: Assistant Secretary
_____________________________
APL Limited
By: /s/ Timothy J. Rhein
________________________________
Title: President and Chief Executive Officer
_____________________________
APL Co. Pte Ltd.
By: /s/ Frederick M. Sevekow, Jr.
________________________________
Title: Authorized Signature
_____________________________
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CHASSIS SUBLET AGREEMENT
APPENDIX 1
SCHEDULE FOR CASUALTY VALUE CALCULATIONS
A. LEASED CHASSIS
For leased equipment and equipment otherwise obtained from third parties, the
Casualty Value shall be the amount required to be paid under the lease or other
arrangement with third parties upon a Total Loss of the Chassis. The party
required to pay the Casualty Value under this Chassis Sublet will pay it within
fifteen (15) business days after date of demand therefor and, if it fails to do
so, shall pay late charges and penalties in accordance with the lease or other
arrangement with the third party.
B. Owned Chassis Agreed Cost (January 1, 1999)
C20 $8,000
C40 $8,000
C45 $8,000
CHE48 $8,800
To determine the Casualty Value for owned Chassis which is a Total Loss, the
Agreed Cost shall be depreciated at five percent (5%) per year and pro rata for
portions of a year from the date of manufacture of the Chassis down to a minimum
of thirty percent (30%) of the Agreed Cost. For purposes of determining Casualty
Value, the cost of the Chassis shall be adjusted annually as of January 1 of
each year to reflect changes in the cost of new Chassis.
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SCHEDULE 1
TPI CHASSIS ALLOCATION AND
DAILY PER DIEM RENTAL RATE
Current Allocation
(i) C20 C40 C45 CHE Requirements Daily Rate
1,669 1999 Budget $ 4.85
2,469 1999 Budget $ 4.85
422 MSC Shipping $ 5.30
898 MSC Shipping $ 5.30
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2,091 3,367
Incremental Requirements
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(i) C20 C40 C45 CHE Requirements Daily Rate
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Allocation Reduction
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(i) C20 C40 C45 CHE Requirements Daily Rate
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