Page 1
Exhibit 10.21
CONFIDENTIAL
RAIL TRANSPORTATION AGREEMENT
between
UNION PACIFIC RAILROAD COMPANY
and
APL LAND TRANSPORT SERVICES, INC.
and
AMERICAN PRESIDENT LINES, LTD.
and
APL CO. PTE LTD.
Page 2
TABLE OF CONTENTS
Section 1. EFFECTIVE DATE, TERM AND RENEWAL2
Section 2. DEFINITIONS2
Section 3. AUTHORIZED AGENT2
Section 4. RAIL TRANSPORTATION SERVICES TO BE PROVIDED BY UP3
Linehaul Services3
Section 5. TERMINAL SERVICES TO BE PROVIDED BY UP4
A. General Services4
B. Loading Containers5
C. Other Terminal Services5
D. Facilities6
E. Additional Terminal Services Provided by UP for
Stack Car Trains for Which UP Does Not Receive a Linehaul7
Section 6. UP EQUIPMENT OBLIGATIONS8
A. Intermodal Cars Furnished by UP8
B. Stack Car Supply9
C. UP Relief From Obligation9
D. Equipment Use 10
E. Maintenance of Equipment10
1. Responsibility10
2. Cost of Repairs for APL Stack Cars 10
3. Cost of Repairs for Containers and Chassis 11
4. Repairs by Non-Responsible Party 11
5. Permission to Enter11
Section 7. SERVICE COMMITMENTS BY UP12
Section 8. APL'S VOLUME COMMITMENT 12
Section 9. CAR COST COMPONENT AND USE OF APL OWNED
STACK CARS12
A. APL's Payment for Stack Cars12
B. UP Use of and Payment for APL Owned or Leased Stack Cars14
Section 10. OTHER APL OBLIGATIONS15
A. Collection of Charges 15
B. Shipping Orders 15
C. UP Domestic Container Space l6
Section 11. EQUIPMENT STORAGE 16
A. Parking Spaces at Terminals l6
B. Equipment Storage Charges 17
C. Storage of Stack Cars 17
Section 12. PARTICIPANT AND TPI SHIPMENTS 17
A. UP and Participants To Negotiate All Terms Other Than
Rates and Train Schedules17
B. Participants' Volume Commitment 18
C. International Shipments for TPI Customers 18
Section 13. RATES/ADJUSTMENT TO RATES18
Page 3
Section 14. COMPETITIVE PROPOSALS 18
Section 15. FORCE MAJEURE 18
Section 16. ARBITRATION 19
A. Panel 19
B. Arbitrators' Findings and Rules of Evidence20
C. Arbitrators' Duties20
D. Expenses20
E. Confidentiality20
Section 17. RENEGOTIATION21
Section 18. MUTUAL INDEMNITY21
Section 19. CLAIMS FOR CARGO LOSS AND DAMAGE22
A. Domestic Shipments and Third Party Equipment22
B. International Shipments23
1. Duties of Parties23
C. Processing of Cargo Claims24
D. Notification of Damage24
E. Agreement Only for Benefit of Party25
F. Condition Precedent25
Section 20. HAZARDOUS MATERIALS AND RESTRICTED COMMODITIES25
A. Hazardous Materials25
B. Indemnity 26
C. Duty of Cooperation26
Section 21. FEDERAL CONTRACTOR REQUIREMENTS27
A. Applicable Laws27
B. Certification28
Section 22. OTHER AGREEMENTS28
Section 23. WHEN TERMS AND PROVISIONS OF UP'S INTERMODAL
RULES APPLY28
Section 24. ASSIGNMENT28
Section 25. YEAR 2000 COMPLIANCE30
Section 26. NOTICES31
Section 27. CONFIDENTIALITY32
Section 28. VENUE33
Section 29. APPLICABLE LAW33
Page 4
CONFIDENTIAL
RAIL TRANSPORTATION AGREEMENT
THIS AGREEMENT is made and entered into as of the 11th day of
October, 1996, between UNION PACIFIC RAILROAD COMPANY, a Delaware Corporation
("UP"), and APL LAND TRANSPORT SERVICES, INC., a Tennessee corporation
(hereafter "LTS"), and AMERICAN PRESIDENT LINES, LTD., a Delaware corporation
(hereafter "APL International") and APL CO. PTE LTD., a Singapore company
(hereafter "APL Co."). LTS, APL International and APL Co. are sometimes jointly
referred to as "APL".
RECITALS
APL International and APL Co. provide ocean common carrier freight
transportation. LTS provides intermodal management services and acts as agent
for APL International, APL Co., Participants and TPI Customers. UP provides rail
transportation services as a common and exempt intermodal carrier.
APL International, APL Co., LTS and UP wish to enter into an
agreement in which UP will provide rail transportation services to APL for the
movement of foreign and domestic cargo in Containers under the terms and
conditions of this Agreement. APL and UP also desire that this Agreement cover
transportation via the former Southern Pacific Transportation Company and its
affiliated railroads (collectively referred to as "SP") which have been acquired
by and are under common control with UP.
This Agreement is further intended to provide for (i) carriage of
International Shipments in Containers owned or leased by third party ocean
carriers (hereafter "TPI Shipments") as arranged by APL; (ii) carriage of
Domestic Shipments in Containers owned or leased by third party ocean carriers
as arranged by APL; and (iii) carriage of auto parts shipments for foreign
automobile companies in APL or other ocean carrier Containers as arranged by APL
(hereafter "CKD Shipments"). The term
Page 5
"International Shipments" as used in this Agreement includes shipments moving
for the benefit of APL International, APL Co., TPI Shipments and CKD Shipments.
This Agreement is also intended to formalize and consolidate
agreements and understandings, which have been reached over the years between
the parties, in anticipation of a transaction involving a recapitalization of
LTS scheduled to occur in 1999 which will result in a substantial change in
ownership of LTS.
AGREEMENT
NOW THEREFORE, the parties agree as follows:
Section 1. EFFECTIVE DATE. TERM AND RENEWAL
This Agreement shall take effect on October 11, 1996, thirty days
after the Control Date, and shall be in effect until October 10, 2011.
Section 2. DEFINITIONS
Capitalized terms used in this Agreement which are not defined in
the Agreement itself will have the meanings set forth in Exhibit A to this
Agreement.
Section 3. AUTHORIZED AGENT
APL International and APL Co. designate LTS as their authorized
representative for the following purposes under this Agreement, including but
not limited to:
1. Paying transportation charges, as required by this Agreement;
2. Arranging all operational matters connected with APL International's
and APL Co.'s Containers;
3. Giving and receiving all notices under this Agreement; and
4. Performing all other actions and performance required of or permitted
to APL International and APL Co. under this Agreement.
APL International and APL Co. reserve the right, at their sole
discretion and upon prior notice to UP, to take such direct actions and directly
perform such obligations under this Agreement as they deem necessary or
convenient. It is
Page 6
contemplated by the parties that such direct action and performance by APL
International and APL Co. generally will be limited to cargo claims, federal
contractor compliance, and other administrative matters.
Notwithstanding the foregoing the parties agree that in the event
LTS fails to perform any of the duties and responsibilities for APL
International and APL Co. with respect to this Agreement with UP, APL
International and APL Co. shall perform those duties and responsibilities,
particularly payment of transportation charges as required by this Agreement.
Section 4. RAIL TRANSPORTATION SERVICES TO BE PROVIDED BY UP
Linehaul Services
UP shall transport loaded Containers carrying International and
Domestic Shipments, empty Containers or empty APL Stack Cars between the points
and at the divisions, charges and rates (hereafter "Rates") set forth in Exhibit
B, as adjusted from time to time under the terms of this Agreement.
Section 5. TERMINAL SERVICES TO BE PROVIDED BY UP
A. General Services
The Rates set forth in Exhibit B, as adjusted from time to time
under the provisions of this Agreement, include the following additional
services to be performed by UP or its authorized agents or independent
contractors:
(a) Lifting Equipment onto Intermodal Cars and securing Equipment
onto Intermodal Cars and unsecuring Equipment and lifting or
driving Equipment from Intermodal Cars except at On-Dock
facilities.
(b) Preparing Equipment receipt and interchange inspection reports
evidencing the apparent condition of the Equipment at times of
interchange providing copies of those reports to APL;
(c) Providing timely notification of Arrival and Availability of
Shipments
Page 7
to APL or Participant as identified on the bill of lading;
(d) Assessing and collecting any Equipment storage charges against
Participants for Domestic Service shipments held at any UP
terminal beyond the free time as may be provided in UP's
Intermodal Rules except as otherwise provided herein. The
Parties agree that APL shall not be responsible for payment of
storage charges on Participants' shipments; however, APL shall
cooperate with UP to enable UP to collect storage charges on
Participants' shipments.
(e) Providing APL with a daily inventory report of all APL owned
or leased Stack Cars, Containers and chassis on hand at UP's
Global One facilities. Such report will be by unit number and
will be furnished once daily by 10:00 AM Chicago time for each
calendar day.
(f) Such other transferring, marshaling and repositioning of
Equipment within rail terminals as may be necessary or
convenient to carry the purposes of this Agreement into
effect.
B. Loading Containers
Except at On-Dock Facilities, UP shall load the Containers tendered
under this Agreement on to Intermodal Cars in a timely manner. UP shall load
Intermodal Cars properly in accordance with any safe operating parameters given
by connecting rail carriers to UP and/or established by UP, the AAR or the FRA.
When Stack Cars are received from connecting rail carriers at
interchange points, UP shall accept the connecting rail carriers loading of top
and bottom Containers on each platform as being in accordance with the loading
capabilities of the Stack Cars and normal railroad operating parameters.
C. Other Terminal Services
Page 8
APL will pay the Rates set forth in Exhibit B for the following
additional terminal services:
(a) Transferring Containers at Global One between Railcars,
including Stack Cars and Standard Railroad Flatcars. Such
service includes the attachment or detachment of a chassis.
(b) Unloading or loading empty Containers, when directed by APL,
from or to Stack Cars or Flatcars when such empty Containers
are received or delivered in interchange from or to connecting
rail carriers at Chicago, Illinois and on which UP does not
receive a linehaul movement.
(c) Lifting Containers when directed by APL, between chassis; or
from the ground to chassis or from chassis to ground, when
directed by APL or required due to APL's shortage of chassis,
and the charge for such lifting is not covered in the linehaul
rates shown in Exhibit B to this Agreement or in (a) or (b)
above.
D. Facilities
(a) UP agrees to maintain its Chicago, IL area Stack Car Train
terminal facility at a size and capacity such as will
accommodate APL's requirements for Stack Car Train traffic and
terminal services.
(b) UP agrees to provide APL with use of no less than one set of
three ramp tracks and two cranes or lifting devices during the
scheduled loading or unloading of any APL Stack Car Train of
ten (10) or more cars.
(c) UP shall lease to APL for the term of this Agreement and any
extensions thereof 1,800 square feet of office space at its
Global One facility to APL for APL's use in the administration
of its Stack Car Train operations. The lease shall contain
normal and
Page 9
customary terms and conditions concerning tenant and landlord
obligations and responsibilities, and the rent required shall
not exceed the fair rental value of the leased premises.
E. Additional Terminal Services Provided by UP in Chicago, IL for Stack
Car Trains for Which UP Does Not Receive a Linehaul.
In addition to providing terminal service in connection with APL
Stack Car Trains for which UP receives a linehaul movement, UP shall also
provide additional terminal services as defined in this Section 5 for APL Stack
Car Trains which UP does not handle in linehaul service.
(1) Such additional terminal services will not be provided for
Stack Car Trains originating or terminating in the States of
Washington, Oregon or California for which UP does not receive
a linehaul.
(2) Such additional terminal services shall be limited to apply to
a reasonable number of weekly Stack Car Trains but in no case
less than two such Stack Car Trains per week.
(3) UP shall have no obligations hereunder to provide Intermodal
Cars used in transferring Containers from such Stack Car
Trains for movement beyond the Chicago, IL area. However, upon
notice from APL, UP will use reasonable efforts to furnish any
excess Intermodal Cars that may be in UP's possession at
Chicago, IL.
(4) Such terminal services shall not include payment by UP of any
other rail carriers switching charges.
(5) APL shall reimburse UP for any transportation expense incurred
by UP for the movement of traffic which UP did not handle in
linehaul service.
(6) At UP's option, such terminal service will be provided at
either UP's Global One or Global Two facilities.
Page 10
(7) UP shall assess and APL shall pay a per Container fee as set
forth in Exhibit B for such additional terminal services,
provided however, such per Container fee shall only be
assessed when UP does not receive a linehaul movement. Also UP
shall assess and APL shall pay an additional fee for each
Container transferred between Stack Cars and Flatcars as set
forth in Exhibit B. This charge includes attachment to or
detachment from a chassis. When UP does not receive a
linehaul, such additional terminal services shall be performed
under operating Schedules as mutually agreed upon by UP, APL
and, where necessary, the connecting rail carrier providing
linehaul transportation service.
Section 6. UP EQUIPMENT OBLIGATIONS
A. Intermodal Cars Furnished by UP
1. At each intermodal terminal where APL tenders volumes to UP, UP
shall furnish APL with a sufficient number of Stack Cars to transport loaded and
empty Containers tendered by APL on any given day for movement under the
applicable Train Schedule, provided that APL shall provide verbal advance notice
of its estimated Stack Car needs to UP as provided in Section 6.A.2. below.
2. Other than for shipments originating at On-Dock rail terminals at
San Pedro, CA, Tacoma, WA and Seattle, WA ("On Dock Terminals"), APL will
provide UP with twelve (12) hours verbal advance notice of its estimated Stack
Car needs. For shipments originating at the On Dock Terminals, APL will provide
UP with five (5) days advance verbal notice of its anticipated Stack Car needs
based upon inbound ocean vessel loadings. Further, APL will provide UP with
twenty-four (24) hours advance verbal notice of its actual Stack Car needs so as
to allow sufficient time for UP to position the required empty Stack Cars to the
On Dock Terminal.
3. The parties recognize that the day-to-day volume of domestic and
Page 11
international export loaded containers cannot be predicted with certainty.
Further, the parties recognize that the available supply of Stack Cars for
outbound loading at any given rail intermodal terminal and at On Dock Terminals
is also dependent upon timely arrival and unloading of inbound trains.
Considering these factors, the parties also recognize that APL cannot provide UP
with precise advance notice of its daily Stack Car needs. However, APL will use
its best efforts to provide the most accurate advance notice as possible. So
long as APL provides the advance notice as required in sub-paragraph A.2. of
this Section 6, APL's failure to provide the exact number of Stack Cars required
will not relieve UP of its obligation as stated in sub-paragraph A.1. of this
Section 6. To the extent APL's actual daily volume exceeds the estimated volume
provided by APL in its 12 hour advance notice by a factor of 125%, UP will not
be obligated to provide Stack Cars for the volume in excess of 125%.
B. Stack Car Supply
The conditions under which UP will provide Stack Cars to APL are set
forth in Appendix 6.B.
C. UP Relief From Obligation
In the event APL incurs a shortage of chassis at any given UP
intermodal terminal, and such shortage results in a situation where inbound APL
Containers are held on Stack Cars, then UP will be relieved of its obligation to
provide APL with priority and preference as described in paragraph B. of this
Section 6 until such time as all inbound APL Containers are placed on chassis.
D. Equipment Use
The rules covering the use of a Container while the Container is in
UP's possession or while UP may otherwise be responsible for the Container shall
be governed by the AAR Rules.
E. Maintenance of Equipment
1. Responsibility
Page 12
Except as otherwise stated in this Agreement, responsibility for
loss, damage, maintenance, and repair of Equipment and Intermodal Cars will be
governed as follows:
(a) Intermodal Cars shall be governed by the then current
Field Manual of the A.A.R. Interchange Rules, sometimes referred to as the Car
Interchange Rules of the Association of American Railroads ("Car Rules") in
effect on the effective date of this Agreement and as may be amended from time
to time, and
(b) Containers and Chassis shall be governed by the Container
Rules.
2. Cost of Repairs for APL Stack Cars
The cost of repairs to APL Stack Cars shall be allocated as follows:
(a) APL shall pay for or perform owners responsibility repairs
under the Car Rules.
(b) UP shall pay for or perform those handling carrier
responsibility repairs under the Car Rules that become necessary while an APL
Stack Car is in the possession of UP.
(c) APL shall be responsible for all repairs while an APL
Stack Car is in the possession of a third party, including but not limited to
another rail carrier.
3. Cost of Repairs for Containers and Chassis
The cost of repairs to Containers and Chassis will be allocated as
follows:
(a) APL shall pay for or perform owners responsibility repairs
under the Container Rules.
(b) UP shall pay for or perform those handling carrier
responsibility repairs under the Container Rules that become necessary while a
Container or Chassis is in the possession of UP. If after joint investigation by
APL and UP, the responsible party cannot be determined, the cost of handling
carrier
Page 13
responsibility repairs shall be shared equally by APL and UP.
(c) As between APL and UP, APL shall be responsible for all
repairs while a Container or Chassis is in the possession of a third party,
including but not limited to a motor carrier and other rail carriers.
4. Repairs By Non-Responsible Party
If either party performs repairs to Containers or Chassis for which
the other party is responsible under this Section, the responsible party shall
pay the performing party as set forth in the Container Rules.
5. Permission To Enter.
Only upon written request by APL, and after execution of a signed
Right of Entry Agreement, UP may permit APL or its contractor to enter onto UP
property at UP origins and UP destinations to bring personnel, material and
equipment onto that property, and to perform repairs to Containers, Chassis, and
Stack Cars on that property. This permission, if granted, shall be in writing
and shall not be unreasonably withheld.
Section 7. SERVICE COMMITMENTS BY UP
Appendix A sets out the standards for UP's service performance and
the remedies if UP fails to meet those standards.
Section 8. APL'S VOLUME COMMITMENT
Appendix B sets forth APL's volume commitment to UP and remedies if
APL fails to meet those commitments.
Section 9. CAR COST COMPONENT AND USE OF APL OWNED STACK CARS
A. APL's Payment for Stack Cars.
Other than the domestic 20' and 40' rates applying from Chicago, IL,
Kansas City, MO and St. Louis, MO on the one hand, to Seattle, WA, Portland,
OR, Oakland, CA and Los Angeles, CA, on the other hand, the domestic rates shown
in
Page 14
Exhibit B include a car cost component equal to the average per diem and mileage
paid by UP to TTX and other rail carriers. The car cost component is derived by
the following process;
1. The system average per diem and mileage rates are determined for
Stack Cars moving over the UP system. This will be a weighted average of all
articulated TTX and foreign line railroad owned Stack Cars moving over the UP
rail system. As example, if the TTX per diem rate is $65 per day and the foreign
line railroad owned per diem rate is $80 per day, and if 90% of the Stack Cars
used by UP are TTX cars and 10% are foreign line cars, then the weighted average
per diem rate would be $66.50 per day. If the TTX mileage rate is 6.5 cents per
mile and the foreign line railroad mileage rate is 4.5 cents per mile, then the
UP system average would be 6.10 cents per mile. UP will calculate and provide
the system average per diem and mileage rates to APL In the event that APL
disputes any of the numbers provided by UP, then APL can audit UP's calculations
through use of an independent auditor. In the event that UP's numbers are proven
to be substantially correct, then APL will pay all costs of the audit. If UP's
numbers are found to be incorrect, then UP will pay all costs of the audit.
2. The average transit time is calculated for APL volumes moving by
direction for each origin and destination pair shown for APL Train Schedules.
The transit time will be stated in whole days and will be calculated using the
scheduled transit time as provided in train schedules used to move APL volumes.
To the extent that multiple train schedules are used from one origin to one
destination, the transit time will be calculated using a weighted average based
on APL's volumes moved on the different train schedules. One-half day of origin
and one-half day of destination dwell time will be included in the transit time.
Dwell time is the time that Stack Cars sit idle at a terminal waiting to be
loaded or unloaded. The transit time and dwell time together will be considered
as the one way "turn time" for each origin/destination pair. The turn
Page 15
times will be agreed upon by the Parties for each origin/destination pair.
3. The UP rail mileage will be determined for each
origin/destination pair shown in Exhibit B, Part III.
4. The average per diem rate determined in Sub-paragraph 9.A.1. will
be multiplied by the turn time derived under Sub-paragraph 9.A.2. The average
mileage rate determined under Sub-paragraph 9.A.1. will be multiplied by the
mileage determined under Sub-paragraph 9.A.3. The resulting per diem and mileage
charges will be added together and rounded to the nearest whole dollar to form
the average Stack Car cost. This total will then be divided by ten (10) to
derive the car cost component for 40', 45', 48' and 53' domestic container
rates. The total will be divided by twenty (20) to derive the car cost component
for 20' domestic container rates.
5. Effective February 1, 2000, the car cost component will be
adjusted every two years utilizing the weighted system average of TTX and
foreign line railroad Stack Cars moving on UP and the transit times for APL
volumes moving from and to each specific origin/destination pair shown in
Exhibit B during the calendar year prior to the adjustment. As example, the
February 1, 2000 adjustment will be based on data from calendar year 1999.
B. UP Use of and Payment for APL Owned or Leased Stack Cars.
1. APL owned Stack Cars are those cars bearing marks of "APLX".
2. UP may use APL owned Stack Cars for the movement of APL volumes
or the volumes of other UP customers. Provided, however, UP's use of APL owned
Stack Cars for non-APL volumes will be restricted to those points on UP or
connecting carriers of UP from and to which APL provides service. UP shall not
interchange APL owned Stack Cars to any carrier for which APL does not maintain
a bilateral car interchange agreement.
3. In the event UP moves an APL owned Stack Car from or to a point
for which APL does not provide service, or if UP interchanges an APL owned Stack
Car
Page 16
to a rail carrier for which APL has no bilateral agreement, such movement will
be construed as "mis-use". Should UP's mis-use be construed as excessive in the
sole determination of APL, APL can implement assessment of penalties against UP
for any further mis-use and UP agrees to pay those penalties plus any applicable
use charges as contained in sub-paragraph 4 of this section. Applicable
penalties are $100 per car for each incident of mis-use. However, the penalty
will be $500 for APL owned Stack Car that UP interchanges to any carrier for
which APL has no bilateral car interchange agreement in Service Lanes identified
in Section 7.A.1. as Lanes 9 through 14.
4. When UP uses an APL owned Stack Car for the movement of APL
volumes or non-APL volumes, UP shall pay to APL a per diem and mileage rate
equal to the then current TTX per diem and mileage rates for a comparable type
TTX owned/leased Stack Car.
Section 10. OTHER APL OBLIGATIONS
A. Collection of Charges
APL shall pay UP the Rates set forth in Exhibit B, adjusted in
accordance with Section 13, as compensation for the transportation services
described in this Agreement. Payment shall be made within thirty (30) days of
receipt of an invoice from UP. However, if APL demonstrates that it received any
UP invoice more than six calendar days after the date of the invoice, the
payment period shall be extended, day for day, by the number of days beyond six
days. If APL does not pay UP within the specified time period at UP's request,
APL shall pay a late charge of 1.5% per month or the maximum rate then
permissible by law, whichever is less.
B. Shipping Orders
APL shall prepare shipping orders which will specify the rail route
of movement for the Containers listed on each shipping order.
C. UP Domestic Container Space
APL agrees to make available to UP's retail subsidiary, Union
Pacific
Page 17
Distribution Services ("UPDS") or its successors, a minimum of 25% of the
available domestic Container space on any given APL Train (hereinafter "25%
Allocation").
In the event UPDS does not fully utilize its 25% Allocation during
any calendar month for a particular traffic corridor, the total number of
Containers tendered by UPDS for Stack Car Train service in that corridor and
direction of movement in the following calendar month shall not exceed 200% of
the average per train tender for the month in which UPDS did not utilize its 25%
Allocation, not to exceed a 10-unit increase per Stack Car Train. For example,
if UPDS's current 25% Allocation for the Stack Car Train moving eastbound from
Oakland, California, is 50 Containers per train, and during a given calendar
month, UPDS tenders an average of 20 Containers per train, then UPDS's maximum
25% Allocation for the next month for that train will be 20 x 200% or a total of
10 additional Containers per train, whichever is less. In this example, UPDS's
new 25% Allocation on the eastbound Stack Car Train from Oakland, California,
would be 30 Containers per train.
Section 11. EQUIPMENT STORAGE
A. Parking Spaces at Terminals
UP will provide parking spaces and spaces for empty chassis to APL
at UP's Global One facility pursuant to the terms and conditions specified in
Appendix G.
B. Equipment Storage Charges
UP will allow APL Equipment to be stored at points set forth in
Exhibit G, subject to the free time and charges set forth in that Exhibit.
C. Storage of Stack Cars
1. At UP's Global One facility, UP shall provide temporary track
space to store Stack Cars as specified in Appendix G. UP will make reasonable
efforts to accommodate the storage of additional Stack Cars, that is, Stack Cars
above and beyond those Stack Cars specified in Appendix G. Such storage may be
at Global One
Page 18
or elsewhere on UP controlled property. If UP is unable to store additional
Stack Cars, it will verbally notify APL. Within twenty-four (24) hours of such
notification, APL will verbally notify UP of APL's desired disposition of these
Stack Cars. All APL controlled Stack Cars will remain in the APL account until
delivered off-line.
2. UP shall provide temporary storage of APL Stack Cars without
charge when cargo volumes or other factors do not allow for continued use of APL
Stack Cars. When APL Stack Cars are stored by UP, UP shall be relieved of paying
the per diem charges as set forth in Section 9.B.4 from the time the APL Stack
Car is placed in storage until it is removed from storage.
Section 12. PARTICIPANT AND TPI SHIPMENTS
A. UP and Participants To Negotiate All Terms Other Than Rates and Train
Schedules
UP and APL agree that APL arranges for the transportation of
Participants' Containers with UP, as well as with other rail carriers. UP and
APL acknowledge that the terms and conditions of the transportation by rail
shall be agreed upon by UP and the Participants other than the Rates and Train
Schedules applicable to Participants for movement of their Containers.
Unless otherwise specifically advised in writing by APL, UP
acknowledges that APL has no authority as agent for the Participants to enter
into any agreement with UP exculpating or in any way limiting UP's liability for
cargo loss, damage, delay or misdelivery, if any. UP shall issue bills of lading
either directly or through APL as agent of UP which advises Participants of the
terms and conditions of the rail transportation.
B. Participants' Volume Commitment
UP shall allow any Domestic Shipments tendered by a Participant
under this Agreement to count toward any annual volume commitment which that
Participant has with UP.
C. International Shipments for TPI Customers
Page 19
Provisions for TPI Customer shipments are set forth in Appendix F.
Section 13. RATES/ADJUSTMENT TO RATES
Appendix C sets forth UP's rates and charges to APL and the
adjustment mechanisms applicable to those rates and charges.
Section 14. COMPETITIVE PROPOSALS
Appendix D sets forth provisions for the adjustment of UP's rates
and charges to APL as a result of specified market conditions and competitive
circumstances.
Section 15. FORCE MAJEURE
In the event that either party is unable to meet its obligations
under this Agreement as a result of Acts of God, war, insurrection, strikes,
high winds, derailments which result in the normal route being impassable, heat
and cold weather speed restrictions, or any like causes beyond its control, the
performance obligations of the party or parties affected by the force majeure
condition shall be suspended to that extent for the duration of such event;
PROVIDED, HOWEVER, that the parties shall make all best faith efforts to
continue to meet their obligations during the duration of the force majeure
condition; and PROVIDED, FURTHER, that the party declaring force majeure shall
notify the other parties in writing when (a) the force majeure commences, (b)
the nature of the force majeure, and (c) when the force majeure condition is
terminated.
The suspension of any obligation owing to force majeure 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.
If the parties are unable to agree on whether an operating condition
constitutes a force majeure condition, the matter shall be brought to the
attention of the APL Vice President-Transportation Purchasing and the UP Vice
President-Intermodal within ten (10) days of the occurrence of the disputed
event for resolution by them.
Page 20
Section 16. ARBITRATION
A. Panel
If during the term of this Agreement any dispute between the
parties, except concerning loss and damage, should arise regarding the
interpretation, application or enforcement of any of the terms of this
Agreement, and such dispute cannot be resolved by the parties within sixty (60)
days after either of the parties notified the other of its desire to arbitrate
the dispute, then the dispute shall be settled by arbitration in accordance with
the rules then in effect of the American Arbitration Association. For
arbitration, a panel of three arbitrators shall be named, one to be selected by
UP, one to be selected by APL, and one to be selected by the other two
arbitrators. If the two arbitrators previously appointed by UP and APL cannot
agree upon the third arbitrator within fifteen (15) days, then either party may
apply to the presiding judge of any court of competent jurisdiction for
appointment of a neutral third arbitrator. In the alternative, the parties may
agree on a sole arbitrator.
B. Arbitrators' Findings and Rules of Evidence
The finding of the arbitrator shall be binding on the parties,
subject to provisions of the Federal Arbitration Act. No change in the rules of
arbitration which would deprive a party of the right to be represented by
counsel, to present evidence or to cross-examine witnesses presented by the
other party shall be effective in any arbitration proceeding arising out of this
Agreement.
C. Arbitrators' Duties
The arbitrators shall have no power to modify any of the contract
provisions without the parties' consent, and their jurisdiction is limited
accordingly. The decision of the arbitrators shall be rendered within ninety
(90) days after the matter has been submitted.
D. Expenses
Each of the parties shall be responsible for the expenses incurred
by the
Page 21
arbitrator appointed by said party, and the expenses, fees and cost of the third
arbitrator, or sole arbitrator shall be borne equally between the parties.
E. Confidentiality
Any terms and conditions of this Agreement as well as any
confidential cost information which must be disclosed by any party during the
course of arbitration shall only be disclosed pursuant to the arbitrators'
execution of a non-disclosure agreement acceptable to all parties.
Section 17. RENEGOTIATION
A. If performance of the terms of this Agreement, as currently written or
as subsequently modified by the parties or by order, law, rule, regulation of a
competent governmental or regulatory authority would have a material adverse
effect on any party due to causes beyond the control of the materially adversely
affected party, then that party may request in writing that any or all terms of
this Agreement be renegotiated; PROVIDED, HOWEVER, that competitive
transportation proposals or offerings shall not be grounds for such
renegotiation. New terms so renegotiated shall become effective at the time a
renegotiated agreement is executed. If, after renegotiation in good faith, the
parties are unable to agree upon new terms within 90 days of the written request
for renegotiation, any party may terminate this Agreement by giving written
notice of termination to all other parties.
B. The mechanism for any party to this Agreement to request renegotiation
of Rates is set forth in Appendix 17.B.
Section 18. MUTUAL INDEMNITY
Each party to this Agreement shall indemnify and hold the other
party harmless against all liability, loss, damage, and expense, including
attorneys' fees, 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 any employee, agent or subcontractor of the
indemnifying party. More specifically, UP
Page 22
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
caused by the negligent or intentional act or failure to act by UP, its agents
and subcontractors to the extent provided by applicable law. If UP is found
liable for such loss, damage or injury, UP shall also be liable for any
expenses, including attorneys' fees, reasonably incurred by APL in resolving
such claims.
APL shall be liable to UP for any loss or damage to UP owned, leased
or controlled Equipment or for any injury to any employee, agent or
subcontractor of UP caused by the negligent or intentional act or failure to act
by APL, its agents and subcontractors to the extent provided by applicable law.
If APL is found liable for such loss, damage or injury, APL shall also be liable
for any expenses, including attorneys' fees, incurred by UP in resolving such
claims.
Section 19. CLAIMS FOR CARGO LOSS AND DAMAGE
A. Domestic Shipments and Third Party Equipment
Liability for loss or damage to any Equipment owned by persons other
than the parties to this Agreement shall be governed by the terms and provisions
of UP's Intermodal Rules and the AAR Container Rules.
Claims for loss or damage to Domestic Shipments shall be handled by
UP with the individual Participant, and UP's liability to the Participant shall
be as set forth in UP's Intermodal Rules. APL agrees to cooperate with UP in
settling any claims for loss or damage to Domestic Shipments or to Equipment
owned by persons other than the parties to this Agreement.
B. International Shipments
This section shall govern claims arising out of International
Shipments only.
1. Duties of Parties
UP and APL each undertake, with respect to the other,
Page 23
(a) to cooperate with each other to settle International cargo and
Equipment damage claims, and to do nothing to increase the liability or exposure
of the other party to increased cargo or equipment damage claims.
(b) to accept liability for actual cargo shortage when a seal is
breached while the cargo is in its possession, unless that party can produce an
executed interchange receipt or other documentation showing that the seal was
broken when the cargo was first received by the party;
(c) to accept liability for cargo and Equipment damage when carrying
Equipment is damaged while in its custody or that of its agents, unless such
party can produce duly executed interchange receipt documentation or other
documentation evidencing that the Equipment was damaged when first received by
such party or that cargo damage was caused by other than such party's handling.
APL will provide all pertinent documentation including any communications from
the individual cargo interest relating to the shipment and all APL
correspondence with the individual cargo interest relating to the shipment as
well as any reports or communications made or ordered by APL while the shipment
was in the possession of APL, including, but not limited to, bills of lading,
dock receipts, trailer interchange records, and surveys made of the cargo or
equipment.
(d) Nothing in this Agreement shall be defined or construed to make
the package or liability limitations of C.O.G.S.A. unavailable to UP.
C. Processing of Cargo Claims
When APL refers a cargo claim either for Domestic or International
Shipments, to UP, UP shall:
(a) acknowledge receipt of the referred claim to APL within 30 days
of such receipt; and,
(b) within 120 days after receipt of the completed referred claim,
(1) pay the claim;
Page 24
(2) decline to pay the claim and furnish an explanation of
denial together with any supporting documentation for the denial; or
(3) advise APL as to the status of the claim as required by
Part 1005 of Title 49, Code of Federal Regulations.
D. Notification of Damage
Whenever substantial cargo or Equipment damage is brought to the
attention of UP's Damage Prevention Services while the cargo or Equipment is in
the possession of UP, UP shall promptly notify APL concerning the extent of
damage as well as the location and availability of the cargo and Equipment for
inspection, APL shall thereafter notify the cargo interest of any damaged cargo
and obtain the instructions of the cargo interests, if any, and furnish advice
of disposition to UP. UP shall not dispose of any cargo and/or Equipment without
APL's written authorization to do so. Whenever substantial damage is brought to
the attention of APL while the cargo is in the possession of APL, APL shall
promptly notify UP's Damage Prevention Services as to the nature of the damage
and location of the Equipment.
E. Agreement Only for Benefit of Party
Except as otherwise provided herein, this Agreement shall not be
interpreted as intended for the benefit of, or as providing any legal remedy
for, any person not a party hereto.
F. Condition Precedent
As a condition precedent to recovery on claims for loss or damage,
the liability of UP shall be limited to those cargo claims which are filed with
UP by cargo interests, or by APL when the claim rights of cargo interests have
been subrogated to APL, in writing within nine months (9) from the date that UP
has completed performance under the through bill of lading for such shipment;
PROVIDED, HOWEVER, that for shipments moving via UP direct or where UP is solely
responsible for said loss or damage, said filing period shall be extended to
twelve (12) months from
Page 25
the date UP has completed performance under the through bill of lading when said
claim is filed with UP by cargo interests directly, and said filing period shall
be extended to fourteen (14) months from the date UP has completed performance
under the through bill of lading when said claim is filed with UP by APL on
behalf of cargo.
Section 20. HAZARDOUS MATERIALS AND RESTRICTED COMMODITIES
A. Hazardous Materials
In the event that any International or Domestic Shipment contains
hazardous material, APL International or APL shall obtain certification on the
shipping documents received from the consignor that the consignor has complied
with all appropriate federal regulations governing the transportation of such
hazardous materials, including, but not limited to, regulations concerning
loading, blocking, bracing, documentation, placarding, commodity mix, and
packaging. APL shall furnish UP (or the origin carrier) with the hazardous
materials information prior to acceptance for transportation by UP. UP reserves
the right to refuse to accept or restrict hazardous materials. UP shall supply
APL with a list of prohibited hazardous materials not later than 30 days prior
to UP's refusal to accept such hazardous materials under this Agreement.
B. Indemnity
APL shall indemnify UP for all losses, damages, liabilities, fines,
civil penalties and expenses (including attorney's fees) suffered by UP to the
extent caused by the omission of full disclosure required by this Section or by
applicable law or regulation.
Containers discovered leaking hazardous materials at any UP
destination terminal shall not be allowed to leave the premises until (a)
responsibility therefor is determined and/or the leak is repaired, or (b) UP
obtains permission from the involved Government authorities to move the
shipment.
C. Duty of Cooperation
Page 26
The parties recognize that, as to Domestic Shipments, the primary
responsibility for any spill, discharge, or accident resulting from a failure by
the consignor to comply with applicable federal regulations shall be the
responsibility of the Participants; and that, in the event of a spill,
discharge, or accident resulting from the failure of a consignor or one or more
Participants to properly package, block, brace, or load hazardous materials, or
in the event of a claim, lawsuit, judgment, settlement, citation, fine or
penalty arising out of such failure, UP shall assist APL by furnishing all
relevant communications, data, information and reports to APL.
Section 21. FEDERAL CONTRACTOR REQUIREMENTS
A. Applicable Laws
The parties, each for its own part, shall comply with and give all
representations and further assurances required by any law or regulation
applicable to federal contracts and subcontracts including, without limitation,
the following:
(1) the extent applicable, the Renegotiation Act of 1951, as
amended, (50 U.S.C. App. ss.ss. 1211 et seq.,), the Walsh-Healy Public Contracts
Act, as amended (41 U.S.C. ss.ss. 35, 45), and the Contract Work Hours and
Safety Standards Act, as amended (40 U.S.C. ss.ss. 327,333);
(2) to the extent applicable, Executive Order No. 11246 dated
September 24, 1965, as amended, relating to equal employment opportunity and
affirmative action in employment of persons without regard to race, color,
religion, sex or national origin; Executive Order No. 11701 dated January 24,
1973, relating to affirmative action in the employment of certain veterans;
Executive Order No. 11758 dated January 15, 1974, relating to affirmative action
in employment of handicapped individuals; Executive Order No. 11 625 dated
October 13, 1971, relating to the assistance of minority business enterprises;
Executive Order No. 12138 dated May 18, 1979, relating to the assistance of
women's business enterprises; the Age Discrimination Act of 1975; all applicable
Regulations of the Secretary of Labor,
Page 27
including, but not limited to, 41 C.F.R. ss.ss.60-1.4 et seq.; 41 C.F.R. ss.ss.
60-250 et seq.; and 41 C.F.R. ss.ss. 60-741 et seq.; and all applicable Federal
Procurement Regulations including, but not limited to, 41 C.F.R. ss.ss. 1-1.13
et seq.; and,
(3) to the extent applicable, Defense Acquisition
Regulations-104.14, relating to the utilization of small business and minority
business concerns; and 7-104.20, relating to the utilization of labor surplus
area concerns.
B. Certification
Each party hereby certifies to the other that it does not and shall
not maintain any facilities provided for employees which are unlawfully
segregated, that it does not and shall not 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 shall require its non-exempt
subcontractors to furnish a similar certification to the award of any non-exempt
contract.
Section 22. OTHER AGREEMENTS
This Agreement comprises the entire agreement and understanding
between the parties. It hereby supersedes all existing agreements between the
parties; Provided, However, that termination of any and all existing agreements
shall not release any party from any obligation that may have accrued under
those agreements prior to termination.
Section 23. WHEN TERMS AND PROVISIONS OF UP'S INTERMODAL RULES APPLY
The provisions relating to the applicability of UP's Intermodal
Rules are set forth in Appendix Z and Exhibit Z.
Section 24. 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 or under this Agreement, or delegate to any person not a party to
this Agreement any of its
Page 28
obligations under this Agreement without the prior written consent of the other
party. In the event of an acquisition or merger of UP by another Class I
railroad or by UP of another Class I railroad, APL International, APL Co. and/or
LTS have the right (1) to refuse its agreement to allow UP to assign this
Agreement to the acquiring or merging party(ies) and (2) if UP attempts to
assign this Agreement, to terminate this Agreement upon thirty (30) days written
notice at any time subsequent to the consummation of the transaction between UP
and the other party(ies). Similarly, in the event of a major restructuring of
APL International, APL Co. and/or LTS which (a) would result in a significant
change in the volume of Containers tendered by APL International, APL Co. and/or
LTS to UP or (b) would significantly increase the cost of doing business for UP
or (c) would significantly change UP's operational or administrative efficiency
of doing business with APL International, APL Co. and/or LTS, or (d) would
significantly impact UP's position negatively in the intermodal market; UP has
the right to refuse its agreement to allow APL International, APL Co. and/or
LTS to assign this Agreement. However, if the major restructuring of APL
International, APL Co. and/or LTS does not result in any of the changes
described in (a) through (d) of the immediately preceding sentence, APL
International, APL Co. and/or LTS may assign this Agreement without UP's
consent. In the event that UP's consent is required because a major
restructuring of APL International, APL Co. and/or LTS would result in (a), (b),
(c), or (d) above, and UP does not grant its consent to the assignment on that
basis, the parties shall engage in renegotiation of the Agreement in an effort
to obtain UP's consent. In the event the parties cannot successfully renegotiate
this Agreement, LTS shall have the right to terminate this Agreement in its
entirety as to all parties. In the event that LTS terminates this Agreement
pursuant to the above sentence, APL International, APL Co. and LTS will
transition their business to a new carrier as soon as possible, but no longer
than six (6) months after termination of this Agreement. Subject to this
Section, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and to
Page 29
their permitted successors and assigns.
For purposes of this Section, a major restructuring is defined as a
merger, sale of substantially all assets or other change of control. An initial
public offering of shares of APL International, APL Co. and/or LTS shall not be
considered to result in any of the changes described in (a) through (d) above;
and, therefore, shall not be considered to require UP's consent to assignment of
this Agreement.
Section 25. YEAR 2000 COMPLIANCE
UP and APL each represent and warrant (i) it has audited its
computer hardware and software systems which will be utilized in connection with
this Agreement and (ii) that accurate and current information regarding the Year
2000 Compliance status of such hardware and software systems and the party's
plans to address Year 2000 Compliance problems have been supplied or made
available to the other party. UP and APL each further represent and warrant that
they will cooperate with each other in providing or making available updated
information regarding their Year Compliance program upon reasonable request.
Any costs associated with effectuating Year 2000 Compliance shall be
borne by each party and shall not result in any additional charges to the other
under this Agreement.
When data is exchanged between UP and APL as part of this Agreement,
UP and APL each agree to provide to the other, at no additional cost, reasonable
testing assistance and cooperation in order to verify Year 2000 Compliance. Each
party shall designate a Year 2000 Technical Contact person with sufficient
knowledge, experience, and expertise in areas of the Year 2000 problem and the
party's systems environment, who will be available to facilitate answering
questions, coordinate deliverables for testing Year 2000 compliance and provide
other assistance as needed.
For purposes of this Section, "Year 2000 Compliance" means that each
computer hardware and software system or component thereof (including without
Page 30
limitation hardware, firmware, middleware, custom or commercial software,
internal components or subroutines therein, or databases which perform any
date/time data recognition function, calculation, comparing or sequencing) will
(a) accurately record, process, store and display date and time data (including
but not limited to calculating, comparing and sequencing) on dates from, into
and between different centuries, including the years 1999 and 2000 and including
leap year calculations, (b) will respond to two-digit date input in a way that
resolves any ambiguity as to century in a disclosed and defined manner, (c) will
store and provide output of date information in ways that are unambiguous as to
century, and (d) will conform to the foregoing requirements when interfacing
with operating systems and other software, hardware and systems with which it
will interact in performing any obligations under this Agreement.
Section 26. NOTICES
Except as provided otherwise in this Agreement, any and all notices
given by any party under this Agreement shall be in writing and shall be
delivered (postage or other delivery charges prepaid) to the other parties by
USPS Express Mail, UPS, DHL, Federal Express or other established expedited
courier service, telecopy, facsimile or like wire delivery or any other
commercially reasonable and accepted form of delivery, excluding regular U.S.
Postal Service, to the following addressees:
To LTS: APL Land Transport Services, Inc.
1111 Broadway
Oakland, California 94607
ATTN: Vice President-Transportation
Purchasing
To APL Co./ American President Lines, Ltd.
APL International: APL Co. PTE, Ltd.
1111 Broadway
Oakland, California 94607
ATTN: Vice President-Transportation Purchasing
To UP: Union Pacific Railroad Company
1416 Dodge Street
Omaha, NE 68179
ATTN: Vice President-Intermodal
Page 31
Any written notice given under this Agreement shall be deemed effective on the
date the notice is received.
Section 27. 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 anyone other than that party's
employees on a "need to know" basis without the written consent of the other
party during the term of this Agreement and for one (1) year thereafter. Any
employee having access to any part of this Agreement or to any information
contained within the Agreement must agree to abide by the terms of this
provision. This 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 thereunder.
Section 28. VENUE
Any lawsuits filed by either party against the other arising from
any dispute between the parties during the term of this Agreement shall be
brought in the San Francisco, California judicial district, either state or
federal.
Section 29. APPLICABLE LAW
This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of California, without reference to the
laws of any other jurisdiction except to the extent governed by the laws, rules
and regulations of the United States.
Page 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
UNION PACIFIC RAILROAD COMPANY Attest:
By:________________________________ _______________________________________
Title:_____________________________ Secretary
APL LAND TRANSPORT SERVICES, INC. Attest:
By:________________________________ _______________________________________
Title:_____________________________ Secretary
AMERICAN PRESIDENT LINES, LTD. Attest:
By:________________________________ _______________________________________
Title:_____________________________ Secretary
APL CO. PTE LTD. Attest:
By:________________________________ _______________________________________
Title:_____________________________ Secretary