BAILMENT AGREEMENT
This BAILMENT AGREEMENT (this “AGREEMENT”) made and entered into this __ day of ________, 2016 by and between Southland Rubber Co.,Ltd, a corporation duly organized and existing under the laws of Thailand, with its principal office at 55 Rajyindee Road, Hatyai, Songkhla, Thailand (hereinafter called the “BAILOR”), and Unimac Rubber Co.,Ltd, a corporation duly organized and existing under the laws ofThailand,with its principal office at59/11 Plernpitak Road, Muang, Trang, Thailand (hereinafter called the “BAILEE”),
WITNESSETH:
WHEREAS, the BAILOR is in the business, among other things, of producing and selling natural rubber (hereinafter called the “PRODUCT”) and desires to acquire shares of the BAILEE and operate BAILEE’s factories;
WHEREAS, in order to facilitate smooth production of the PRODUCTafter acquisition of shares of the BAILEE, the BAILOR wishes to employ the BAILEE’s services in purchase of the raw materials of natural rubber (hereinafter called the“COMMODITY”) and maintain a stock of inventory of the COMMODITY in the premises of the BAILEE; and
WHEREAS, the BAILEE is willing to provide services to the BAILOR inpurchase of the COMMODITY and keep the COMMODITY in its custody and render certain services with respect thereto for the BAILOR in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE 1.PURCHASE SERVICES
1.1 The BAILOR hereby requests the BAILEE and the BAILEE hereby agrees to provide the following services for the BAILOR during the term of this AGREEMENT:
(a) To contact the supplier of the COMMODITY (the “SUPPLIER”) in accordance with the BAILOR’s instructions;
(b) To submit offers for the COMMODITYto the SUPPLIER for the BAILORin accordance with the BAILOR’s instructions;
(c) To pay the purchase price of the COMMODITY to the SUPPLIER on behalf of the BAILORin accordance with the BAILOR’s instructions, on condition that the BAILOR has providedthe BAILEE with necessary funds for such payment including the remittance fee and any other costs and expenses in relation to the payment (hereinafter called the “PAYMENT FUNDS”) at least three (3) business days before the relevant payment date; and
(d) Generally to liaise between the BAILOR and the SUPPLIER as the BAILEE deems necessary or appropriate.
1.2 With respect to ARTICLE1.1(c), thePAYMENT FUNDSshall be paid by means of telegraphic transfer remittance to the bank account designated by the BAILEE.The remittance fee shall be borne by the BAILOR. The PAYMENT FUNDS shall not bear any interest. If the PAYMENT FUNDS provided by the BAILOR are insufficient to pay all of the purchase price, the BAILEE may, at its option, either (i) pay part of the purchase price at its discretion or (ii) refrain from making any payment. Upon termination of this AGREEMENT, the BAILEE shall return the remaining PAYMENT FUNDS, if any, to the BAILOR by means of telegraphic transfer remittance to the bank account designated by the BAILOR within ten (10) business days from such termination. The remittance fee shall be borne by the BAILOR.
1.3 The BAILOR confirms and agrees that the BAILEE is not a party to any purchase orders, agreements or other arrangements between the BAILOR and the SUPPLIER for the purchase and sale of the COMMODITY and thatthe BAILOR will not hold the BAILEE liable for failure by the SUPPLIER in the performance of the purchase orders, agreements or other arrangements.
1.4 The BAILEE shall not be responsible for the quality or condition of the COMMODITY purchased pursuant to ARTICLE 1 hereof, any off-specification PRODUCTS produced from suchCOMMODITY or any claims with respect to the PRODUCTS produced from suchCOMMODITY.
ARTICLE 2.BAILMENT AND SAFEKEEPING
2.1During the term of this AGREEMENT,the BAILEE agrees to store and safekeep the COMMODITY purchased by the BAILOR pursuant to ARTICLE 1 hereof and to render such services with respect thereto as are more particularly enumerated in ARTICLE2.2 hereof in accordance with the terms and conditions hereinafter set forth.
2.2 The BAILOR hereby requests the BAILEE and the BAILEE hereby agrees to provide the following services for the BAILOR during the term of this AGREEMENT:
(a) To take delivery of the COMMODITY when the COMMODITY purchased by the BAILOR pursuant to ARTICLE 1 hereof is delivered by the SUPPLIER to the BAILEE’s premises;
(b) To perform weight check and estimation of dry rubber contents (hereinafter called the “DRC”) with respect to such COMMODITY; and
(c) To furnish and maintain a suitable place for storing and safekeeping such COMMODITY (hereinafter called the “STORAGE PLACE”) and store and safekeepsuch COMMODITY at the STORAGE PLACE with due care and in a proper manner.
2.3 The BAILEE shall in no event be responsible for any inaccuracy in the weight check or estimation of DRC performed pursuant to ARTICLE 2.2(b) above, and all risk with respect thereto shall be borne by the BAILOR.
2.4 The BAILEE shall in no event be responsible for theft of the COMMODITY.
ARTICLE 3. INSURANCE
3.1 The BAILORshall bear the costs and expenses for the BAILEE to carry insurance,during the term of this AGREEMENT and while any of the COMMODITY is in the possession or under the control of the BAILEE,in accordance with the BAILOR’s instructionsfor the benefit of the BAILOR, against loss, destruction or damage to the COMMODITY from whatsoever cause including, but not limited to, fire, theft or accident. The BAILOR shall provide written instruction to the BAILEE with respect to the insurance to be carried by the BAILEE and provide the BAILEE with the costs and expenses in order to carry such insurance,in a timely manner so as to enable the BAILEE to carry such insurance as stipulated above. Any loss, expense, cost, claim or liability which may be incurred by or asserted against the BAILOR with respect to any loss, destruction or damage to the COMMODITY shall be recovered fromsuch insurance.
ARTICLE 4.RETENTION OF TITLE
4.1 At all times during the term of this AGREEMENT, the absolute title to all of theCOMMODITY shall remain with the BAILOR.
ARTICLE 5. SERVICE FEE
5.1 The BAILOR shall pay the BAILEE a service fee as compensation for the services rendered by the BAILEE hereunder calculated at the rates set forth in EXHIBIT 1, attached hereto and made an integral part hereof by this reference.
5.2 In addition to the above service fee, the BAILOR shall pay the BAILEE the costs and expenses incurred by the BAILEE in relation to any special care with respect to the COMMODITY as the BAILEE deems necessary or appropriate.
5.3 The above service fee and costs and expenses in relation to special care shall be paid by means of telegraphic transfer remittance to the bank account designated by the BAILEE as soon as practicable after receipt by the BAILOR of the invoice therefor from the BAILEE. The remittance fee shall be borne by the BAILOR.
ARTICLE6. TERM
6.1 This AGREEMENT shall become effective on the date first above written and shall, unless earlier terminated pursuant to ARTICLE 7 hereof, continue until (i) the BAILOR’sacquisition of shares of the BAILEE or (ii) March 31, 2016, whichever occurs earlier.
ARTICLE 7.TERMINATION
7.1 Either party (hereinafter called the “Non-Breaching Party”)may forthwith terminate this AGREEMENT upon written notice to such effect to the other partyif the other party commits a breach of any term or condition of this AGREEMENT and fails to remedy the same within ten(10) days after written notice from the Non-Breaching Partysetting out the nature of such breach and demanding that the same be remedied.
7.2 Either party may forthwith terminate this AGREEMENT upon written notice to such effect to the other partyif bankruptcy or insolvency proceedings are instituted by or against the other party, the other party is dissolved or liquidated,whether voluntarily or involuntarily, a receiver or trustee is appointed for all or substantially all of the assets of the other party or the other party makes an assignment for the benefit of creditors.
7.3 The BAILORshall, upon termination of this AGREEMENT for whatever reason, take possession of all of the COMMODITY which is then still in the BAILEE’s possession or under its controlwithin two (2) week from such termination at its own expense, failing which the BAILEE shall be entitled to dispose of the COMMODITY at its discretion at the BAILOR’s expense.
ARTICLE 8.BOOKS AND RECORDS
8.1 During the term of this AGREEMENT, the BAILEE shall keep books and records of the items below in connection with the bailment of the COMMODITY hereunder:
(a) The weight and estimated DRC of the COMMODITY received under the account of the BAILOR each day, calculated pursuant to ARTICLE 2.2(b) hereof; and
(b) The weight and estimated DRC of the COMMODITY subject to bailment each day, calculated pursuant to ARTICLE 2.2(b) hereof.
ARTICLE 9.INSPECTIONS
9.1 If the BAILOR obtains prior consent of the BAILEE,during the normal business hours of the BAILEE and in a manner which does not interfere with the BAILEE’s business activities, the BAILOR may (i) access the books and records described in ARTICLE 8.1hereof or (ii) enter the STORAGE PLACE, take inventory of the COMMODITY, and examine its condition and the manner in which it is being stored. The BAILOR shall abide by any reasonable instructions given by the BAILEE when the BAILOR is in the premises of the BAILEE.
ARTICLE 10. REPORTS
10.1 During the term of this AGREEMENT, the BAILEE shall report to the BAILOR from time to time the information described in ARTICLE8.1 hereof.
ARTICLE 11.NO PROMISE OF ACQUISITION
11.1 This AGREEMENT shall neither constitute nor imply any promise or commitment by either party with respect to the acquisition of the shares of the BAILEE by the BAILOR. The BAILEE shall in no e