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SHIPS USAGE AGREEMENT, JAPAN

 

Source: http://www.sec.gov/

SHIPS USAGE AGREEMENT

SHIPS USAGE AGREEMENT (this “SUA”) is entered into as of         , 2012 (“Effective Date”) by and between Dole Food Company, Inc., a Delaware corporation (“Dole”), and [Dole Asia Holdings Pte Ltd. (together with its affiliated entities “DAL”)] [need to confirm party entering into this Agreement]. Dole and [DAL] are referred to herein individually as a “Party” and collectively as the “Parties.”

A. Dole and ITOCHU Corporation, a Japanese kabushiki kaisha, are parties to the Acquisition Agreement, dated     , 2012 (the “Acquisition Agreement”), which has a Closing Date of             (“Closing Date”).

B. Dole’s subsidiary Ventura Trading Ltd., a Bermuda corporation (“Ventura”), owns the ships M/V “Tropical Star,” M/V “Tropical Sky,” and M/V “Tropical Mist” (collectively the “Ships”).

C. The Ships are currently under bareboat charter to Ventura’s subsidiary Transfrut Express Ltd., a Bermuda corporation (“Transfrut”), pursuant to agreements between Ventura and Transfrut dated January 1, 2010.

D. Ventura has also entered into an ship management agreement, dated January 1, 2011, with Dole subsidiary Reefership Marine Services Ltd., a Bermuda corporation (“RMS”), for the management of the Ships, including crew services.

E. Pursuant to an existing practice whereby Dole’s Asia Fresh Division (“Dole Asia Fresh”) pays specified management fees to RMS and reimburses all costs incurred by Dole or its subsidiaries to operate the Ships, Dole Asia Fresh currently operates and uses the Ships to carry Dole and third party fresh fruit (as well as sugar and nonfood items including but not limited to, resin, kitchen cabinets, tiles, cardboard and certain back haul cargo) between the Philippines, Japan, China, Korea, New Zealand, and the Middle East.

F. As of the Closing Date, [DAL] desires to continue and memorialize existing practices regarding Dole Asia Fresh’s operation and use of the Ships (the “Ship Usage”), and Dole similarly desires to allow continuation of the existing Ship Usage (as well as widening on the current trade under certain circumstances), on the terms and conditions as set forth in this SUA.

AGREEMENT

 

1.	TERMS AND CONDITIONS RELATING TO USAGE OF THE SHIPS

1.1 Continued Ship Usage Under Currently Existing Practice. During the Term as defined below in Section 3.1, Dole shall allow continued Ship Usage under the currently existing practice as follows:

(a) RMS shall continue its management of the Ships under the existing arrangement between RMS and Ventura, in exchange for payment of a Management Fee as described below in Section 2.1.

 

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(b) Transfrut shall continue to maintain the Ships consistent with its current practices in order to facilitate continued Ship Usage, and all costs, whether budgeted or unbudgeted, incurred by Dole or any of Dole’s subsidiaries (Ventura, Transfrut, or RMS) relating to the operation of the Ships (including but not limited to operational expenses, maintenance and repair expenses, insurance premiums, and foreign exchange risks relating to the purchase of services and/or equipment to service the Ships) shall be advanced and paid as described below in Section 2.2.

(c) As under current practice, Transfrut may permit the Ships to carry acceptable third party general cargo as well as back haul cargo (excluding, for avoidance of doubt, any automobiles not containerized) provided that Transfrut gives its advance written consent, which consent may be withheld by Transfrut in its reasonable discretion. No advance written approval is required for the following cargo (or substantially similar items), which have been carried in the past: kitchen cabinets, tile, cardboard, panels, resin, sugar, agrochemicals (but only to the extent that such agrochemicals are properly packaged and contained so that they pose no hazardous risks or contamination to the Ships’ hulls).

(d) [DAL] may only sub-charter the Ships during the Term with Transfrut’s advance written consent, which consent may be withheld by Transfrut in its sole discretion.

(e) While the current trade of the Ships is the Philippines, Japan, China, Korea, New Zealand, and the Middle East, Transfrut will agree to permit worldwide trading so long as such trade is via safe, ice free port(s)/berth(s) and excludes war/war risked countries and excludes countries which may result in blacklisting or sanctions by other countries and/or the United Nations. Any proposed expansion of trade shall require Transfrut’s advance written consent, which shall be provided if Transfrut deems such proposal is in accordance this paragraph (e). No advance written approval is required for the following routes and destinations: Japan, Korea, China, Russia, Taiwan, Hong Kong, Singapore, Malaysia, Indonesia, New Zealand, Sri Lanka, and the Middle East; provided, however, that if there is a change of circumstances such that any of the foregoing countries or geographical regions could be reasonably classified as a “war/war risked country” or a “countries which may result in blacklisting or sanctions by other countries and/or the United Nations,” then Transfrut must be advised of the proposed route in advance in order to provide or withhold consent.

1.2 Time Charter. Effective as of the Closing Date, Transfrut and [DAL] shall enter into a time charter agreements (“Time Charters”) whereby Transfrut shall charter the Ships to [DAL] for the Term described below in Section 3.1, in the forms attached as Appendix 1 for each Ship. Such Time Charters shall be fully consistent with the terms and conditions as provided in this Ships Usage Agreement, including for avoidance of doubt that costs of any kind relating to the Ships during the Term shall be borne by [DAL] and that the availability of Ship Usage, as well as the ongoing condition of the Ships is made without warranties or representations of any kind by Dole or its subsidiaries except as provided herein.

1.3 Consents. Dole and [DAL] will use their respective reasonable commercial efforts to obtain any consents, approvals, permits and other authorizations, if any, that Dole or [DAL] must obtain from any party in connection with the Ship Usage (collectively, “Consents”).

 

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2.	PAYMENT OF MANAGEMENT FEE AND COSTS RELATING TO THE SHIPS

2.1. Management Fee for RMS Management Services. In reimbursement of the management services provided to Ventura by RMS relating to the Ships, [DAL] shall pay Ventura a fixed fee (the “Management Fee”) of three hundred thousand dollars (U.S. $300,000.00) per year, payable in twelve (12) monthly installments of U.S. $25,000 in advance on the first business day of each month, until the SUA is terminated. Ventura shall issue monthly invoices to [DAL] relating to the installment of the fixed fee. Invoices shall be due and payable by [DAL] to Ventura no later than 30 days after receipt of such invoice. Dole will afford [DAL], upon reasonable notice, access to information, records and documents as may be reasonably requested in order to verify any invoiced amount under this SUA, and the Parties will work in good faith to resolve any disagreements or disputed inaccuracies.

2.2. Payments for Reimbursement of All Costs of Any Nature Relating to Usage of the Ships. [DAL] shall be directly responsible for procurement of all fuel necessary for the Ships and for any stevedoring labor necessary for the loading and unloading of the Ships. Dole and its relevant subsidiaries shall continue the existing practice of maintaining the Ships in order to facilitate Ship Usage, but all costs of any nature relating to the maintenance, repair, and operation of the Ships shall be fully passed on to [DAL] and shall be fully borne by [DAL] as provided herein. Such costs shall include Budgeted Costs and may include Unbudgeted Costs, as provided below:

(a) Budgeted Costs. Each year, Transfrut shall establish an annual budget of its anticipated costs to facilitate the Ship Usage. Such costs shall include anticipated costs necessary to facilitate the operation of the Ships, including but not limited to maintenance and repair expenses, insurance premiums, and foreign exchange risks relating to the purchase of services and/or equipment to service the Ships. Such costs shall be provided in as reasonable detail as feasible and by category, with any relevant assumptions described, at least 120 days prior to any Automatic Renewal Date. Transfrut also agrees to provide any additional documentation supporting the budget and budget assumptions, as reasonably requested. Such costs shall be allocated and charged on per cubic feet basis of each of the Ships (the “Budgeted Costs”). During the term, Transfrut shall invoice [DAL] monthly, in advance, for payment of the Budgeted Costs relating to the Ships for the next month. The existing 2012 Budgeted Costs and projected 2013 Budgeted Costs are attached hereto as Appendix 2. Invoices shall be due and payable by [DAL] to Transfrut no later than 30 days after receipt of such invoice. Dole shall ensure that Transfrut provides [DAL] with a full accounting of any excess or deficit relating to the Budgeted Costs pursuant to the quarterly accounting costs process described in Section 2.3.

(b) Unbudgeted Costs. In addition to the Budgeted Costs, [DAL] shall be responsible to pay for any and all costs, actual or anticipated, associated with the maintenance, repair, or continued operation of the Ships that were unbudgeted but become necessary in Dole’s good faith view for the continued operation of the Ships necessary to facilitate the Ship Usage (“Unbudgeted Costs.”) As soon as Transfrut is reasonably certain that Unbudgeted Costs in excess of U.S. $25,000 for any one item or occurrence are likely to be incurred, Transfrut shall provide advance notice as promptly as reasonably feasible to [DAL] so that Transfrut and [DAL] may discuss such costs (together with the supporting documentation for such cost assessment) and any potential way to mitigate such costs. Notwithstanding such good faith

 

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consultation and discussion, if such Unbudgeted Costs are necessary in Transfrut’s reasonable and good faith view in order to keep the Ships in class and operational during the Term, then [DAL] will be promptly invoiced for any Unbudgeted Costs and shall be provided the supporting detail, together with any relevant documentation, for such invoice. [DAL] shall pay the full amount of each invoice relating to Unbudgeted Costs no later than 30 days after receipt of such invoice. Dole shall ensure that Transfrut provides [DAL] with a full accounting of any Unbudgeted Costs and any amounts advanced in excess of the actual costs incurred shall be returned to [DAL] pursuant to the quarterly accounting costs process described in Section 2.3.

2.3. Quarterly Accounting of Costs. Each calendar quarter during the Term, Dole shall ensure Transfrut provides [DAL] with a full accounting of the actual costs incurred in relation to the Budgeted Costs and shall also provide [DAL] with a full accounting of any Unbudgeted Costs. Any amounts paid by [DAL] in excess of the Budgeted Costs for the preceding calendar quarter shall be returned to [DAL], provided no Unbudgeted Costs are foreseen in relation to the Ship Usage. If any Unbudgeted Costs have been incurred, or are expected to be incurred for subsequent calendar quarters during the applicable calendar year, then [DAL] shall advance the amounts specified by Dole or Transfrut within 30 days. Dole will ensure that [DAL] is provided with reasonable access to review all relevant books and records of Transfrut in connection with such accounting.

2.4. Fees and Costs upon Termination. [DAL] shall immediately pay all outstanding Management Fees or Budgeted and Unbudgeted Costs due, if any, upon termination of this SUA.

2.5. Taxes. The amounts payable by [DAL] for Ship Usage do not include state, local, federal or foreign sales, use, service, transfer, excise, tariffs, duties, export or import fees, personal property, business license or other similar taxes which may be levied or assessed in connection with this SUA and the Ship Usage (collectively, “Taxes”). [DAL] will be responsible for and will pay all Taxes (excluding any taxes on RMS’s Management Fee). In the event Dole or its subsidiaries pays any Taxes (such as tonnage tax for the Ships), [DAL] will reimburse such payment within 15 days after [DAL]’s receipt of invoice for the amount of the Tax paid accompanied by a copy.

 

3.	TERM AND TERMINATION

3.1. Term. The term of this SUA begins on the Closing Date and ends on the date that is 12 months after the Closing Date (“Term”), unless terminated earlier pursuant to Section 3.2. Subject to Section 3.2, on each one year anniversary of the Closing Date (each, an “Automatic Annual Renewal Date”), this SUA shall automatically be renewed and extended for an additional Term consisting of a one (1) year period.

3.2. Termination. [DAL] may terminate this SUA by providing Dole with no less than 90 days’ prior written notice prior to each Annual Automatic Renewal Date. Upon termination of the SUA, the Time Charters shall also terminate.

 

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4.	DRY-DOCKING OF SHIPS

4.1 [DAL] agrees and acknowledges that the Ships may require a period of dry-docking for routine maintenance and repair in order to facilitate the Ship Usage. Currently, M/V Tropical Mist is scheduled for a 2-3 week period of dry-docking during 2013, and M/V Tropical Star and M/V Tropical Sky are likely to be scheduled for dry-docking during 2014. To the extent feasible, Transfrut agrees to keep [DAL] fully apprised of any likely drydocking so that the parties may discuss and determine the dates for such drydocking, as well as whether other alternatives exist. Notwithstanding any such good faith discussions, [DAL] accepts the terms and conditions of Ship Usage, which expressly include any dry-docking periods that may be required to maintain the Ships, and acknowledges that any Ship subject to dry-docking will not be available during this period.

4.2 Subject to the terms in this SUA, any portion of the Management Fee and costs (whether Budgeted Costs or Unbudgeted Costs) that accrue during a dry-docking period shall continue to be charged to [DAL], and the costs for the dry-docking, once incurred, shall be amortized and invoiced to [DAL] in monthly pro-rata charges over the Term. Notwithstanding the foregoing, if [DAL] does not terminate this Ships Usage Agreement and it is therefore renewed for an additional Term or Terms, the costs for dry docking shall be spread over the collective Terms and the pro-rata charges re-calculated to a maximum payment period of 30 months.

As an example, drydocking is scheduled for the Tropical Mist during 2013. Should such drydocking occur in August 2013, and [DAL] chooses not to renew this SUA for an additional Term then all costs relating to such drydocking that have not yet been paid by [DAL] must be fully paid pursuant to Section 2.4. If [DAL] chooses to renew this SUA for an additional Term or Term(s), then all costs relating to such drydocking shall be spread over the collective Terms and the pro-rata charges re-calculated to a maximum payment period of 30 months.

Any past payments made by [DAL] in excess of a new pro-rata calculation shall be returned to [DAL] during the quarterly accounting costs process described in Section 2.3.

 

5.	NO PERIODS OF OFF-HIRE FOR REPAIRS OR OTHERWISE

5.1 In addition to any periods of dry-docking, [DAL] agrees and acknowledges that the Ships Usage may be impeded due to unanticipated or unexpected reasons or events. In such instance, [DAL] shall be solely responsible for obtaining substitute vessels to meet its needs, and any costs incurred therewith shall be for [[DAL]’s] sole account. Further, any portion of the Management Fee and costs (whether Budgeted Costs or Unbudgeted Costs) that accrue during such period shall continue to be charged to [DAL].

 

6.	DISCLAIMER; LIMITATION OF LIABILITY

6.1. DISCLAIMER. EXCEPT AS PROVIDED HEREIN, THE SHIPS ARE PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND, DOLE AND ITS SUBSIDIARIES DO NOT GUARANTEE OR MAKE ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONTINUED

 

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OPERATIONAL CONDITION OR SEAWORTHINESS OF THE SHIPS, THE QUALITY, TIMELINESS, COMPLETENESS, AVAILABILITY OR CONTINUED AVAILABILITY OF SHIP USAGE, OR THAT [[DAL]’S] SHIP USAGE WILL BE PROBLEM-FREE AND DOLE AND ITS SUBSIDIARIES FURTHER EXPLICITLY DISCLAIM, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON- INFRINGEMENT, AND ALL WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING AND USAGE OF TRADE OR THEIR EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION.

6.2. Limitation of Liability. The liability of Dole under this SUA, or any of its subsidiaries including Ventura, Transfrut, and RMS, whether arising from contract, tort, warranty, negligence or otherwise with respect to the Ship Usage is limited to the Management Fee, Budgeted Costs, Unbudgeted Costs, and any applicable dry docking costs paid by [DAL]. Subject to the terms herein, under no circumstances will either Party or its subsidiaries be liable for indirect, incidental, special, consequential, punitive or exemplary damages in connection with this SUA, including lost time, lost money, lost profits or goodwill, regardless of the form of the action or the basis of the claim, even if a Party or its subsidiaries have been apprised of the possibilities of such damages, and whether or not such could have been foreseen or prevented.

 

7.	MISCELLANEOUS

7.1. Entire Agreement. This SUA (including the Time Charters referred to herein) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes any prior understandings, agreements or representations by or among the Parties, written or oral.

7.2. Succession and Assignment. This SUA will be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this SUA or any of its rights, interests or obligations hereunder without the prior written approval of [DAL] and Dole, which such consent may not be unreasonably withheld.

7.3. Counterparts. This SUA may be executed in one or more counterparts (including by means of facsimile), each of which will be deemed an original but all of which together will constitute one and the same instrument.

7.4. Headings. The section headings contained in this SUA are inserted for convenience only and will not affect in any way the meaning or interpretation of this SUA.

7.5. Governing Law. This SUA shall be governed by and construed in accordance with the laws of Japan without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

7.6. Arbitration. All disputes, controversies and claims arising out of, relating to or in connection with this SUA or the transactions contemplated hereby (including the construction, existence, validity, enforceability, enforcement, breach or termination of this SUA) that cannot

 

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be resolved amicably by the Parties shall be exclusively, finally and conclusively settled by arbitration administered by the International Chamber of Commerce (the “ICC”) and conducted in accordance with the ICC Rules of Arbitration (the “Rules”), subject to the following: (a) there shall be a panel of three (3) arbitrators (collectively, the “Tribunal”), one appointed by ITOCHU, another by Dole and the third appointed in accordance with the Rules; (b) the seat of arbitration shall be Tokyo, Japan; (c) the arbitration shall be conducted in the English language, and all written and oral submissions and awards shall be prepared in English (or be accompanied by English translations); (d) the Tribunal shall schedule all matters regarding the arbitration so that the arbitration progresses in a timely fashion; (e) at the arbitration hearing, each Party may make written and oral presentations to the Tribunal, present testimony and written and oral evidence and examine witnesses; (f) the Tribunal may not grant any award that is inconsistent with the terms of this SUA and shall not have the authority to use the equitable powers provided by the Rules to modify any terms of this SUA, nor shall the Tribunal have the power to award any punitive or exemplary damages; (g) the Tribunal shall issue a written decision explaining the basis for its rulings and awards; (h) all fees and expenses of the Tribunal and the ICC shall be shared equally between the Parties, provided that the Tribunal shall have the authority to award, as part of its decision, to the prevailing Party its costs and expenses of the arbitral proceedings, including reasonable fees of attorneys and experts; and (i) any monetary award shall be made in US$ and shall be payable free of any Tax, withholding or other deduction (unless otherwise required by legal requirements). Decisions rendered by the arbitral Tribunal shall be final, binding and enforceable in any court of competent jurisdiction. Except as necessary to enforce or effectuate the terms of this Section or an arbitral decision or award, arbitration proceedings hereunder and any decision and award of the Tribunal shall be kept confidential by the Parties. Each Party acknowledges and agrees that the other Party would be damaged irreparably in the event any provision of this SUA is not performed in accordance with its specific terms or otherwise is breached, so that, notwithstanding any other provision herein to the contrary, a Party shall be entitled to injunctive relief to prevent breaches of this SUA and to enforce specifically in any court of competent jurisdiction, this SUA and the terms and provisions hereof in addition to any other remedy to which such Party may be entitled, at law or in equity. Each of the Parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any legal requirement to post security as a prerequisite to obtaining equitable relief.

7.7. Amendments and Waivers. No amendment of any provision of this SUA will be valid unless the same will be in writing and signed by [DAL] and Dole. No waiver by any Party of any provision of this SUA or any default hereunder, whether intentional or not, will be valid unless the same will be in writing and signed by the Party making such waiver nor will such waiver be deemed to extend to any prior or subsequent default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default.

7.8. Severability. Any term or provision of this SUA that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

7.9. Confidentiality. The confidentiality provisions set forth in the Acquisition Agreement apply to this SUA as if fully set forth herein.

 

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7.10. Force Majeure. Dole and its subsidiaries will not be liable for a failure or delay in its performance under this SUA, or under any ancillary agreement such as the Time Charter Agreement, where such failure or delay is the result of fire, flood, earthquake or other natural disaster, general Internet or network outage, act of God, riot, labor dispute, unavailability of raw materials or supplies, war, embargo, armed hostilities or acts of terrorism, any declaration of war by Congress or any other national or international emergency, the intervention of any governmental authority, or any other cause beyond Dole’s reasonable control.

7.11. Relationship of the Parties. Dole, in performance of this SUA, is acting as an independent contractor to [DAL], and not as a partner, joint venturer or agent. The Parties do not intend to create by this SUA an employer-employee relationship. Each Party retains control over its personnel, and the employees of one Party will not be considered employees of the other Party. Neither Party will be bound by any representation, act or omission of the other Party. Neither Party has any right, power or authority to create any obligation, express or implied, on behalf of the other Party.

7.12. Subcontracting. Subject to the terms and conditions of this SUA, Dole may use contractors, subcontractors, vendors or other third parties to provide any services necessary to facilitate the Ship Usage as described herein.

IN WITNESS WHEREOF, the Parties hereto have executed this SUA as of the date first above written.

 

DOLE FOOD COMPANY, INC.						[DOLE ASIA HOLDINGS PTE LIMITED]
By:						By:
By:

 

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