EXCLUSIVE WORLD WIDE
DISTRIBUTION AGREEMENT
BETWEEN
AFINTA MOTOR CORPORATION
AND
CHANCELLOR AFRICA CORPORATION
AND
AFRICA FINANCE CORPORATION
TABLE OF CONTENTS
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Preamble Page 3
Article 1 - Territory and Products Page 3
Article 2 - Good Faith and Fair Dealings Page 3
Article 3 - Indemnification/Hold Harmless Page 3
Article 4 - Distributor's Functions Page 4
Article 5 - Undertaking Not to Compete Page 4
Article 6 - Sales Organization Page 5
Article 7 - Advertising and Fairs Page 5
Article 8 - Conditions of Supply Prices Page 5
Article 9 - Sales Targets - Guaranteed Minimum Targets Page 5
Article 10 - Subdistributors or Agents Page 6
Article 11 - Supplier to be kept Informed Page 6
Article 12 - Resale Prices Page 6
Article 13 - Sales Outside the Territory Page 6
Article 14 - Supplier's Trademarks and Symbols Page 6
Article 15 - Stock of Products and Spare Parts - After-sales Service Page 6
Article 16 - Sole Distributorship Page 6
Article 17 - Direct Sales Page 7
Article 18 - Distributor to be kept Informed Page 7
Article 19 - Term of Contract Page 7
Article 20 - Indemnity in case of Impairment Page 7
Article 21 - Return of Documents and Products in Stock Page 7
Article 22 - Arbitration - Applicable Law Page 8
Article 23 - Risk of Loss/Insurance Page 8
Article 24 - Automatic Inclusion under the Present Contract Page 8
Article 25 - Previous Agreements - Modifications - Nullity - Assignment Page
8
Article 26 - Authentic Text Page 9
ANNEXES
Annex I - Products and Territory Page 10
Annex II - Commissions on Direct Sales Page 11
Annex III - Conditions of Sale - Discounts Page 12
Annex IV - Stock of Products and Spare Parts Page 13
Annex V - After-sales Service, Repairs, Warranty Page 14
Annex VI - Indemnity in case of Impairment Page 15
BETWEEN
Afinta Motor Corporation (hereinafter referred to as "AMC," or the "Supplier")
whose registered office is at 127 van Riebeeck Avenue, Edenvale, 1610,
Johannesburg, Gauteng, Republic of South Africa.
AND
Chancellor Africa Corporation (hereinafter referred to as "CAC," or the
"Distributor") whose registered office is at 210 South Street, Boston,
Massachusetts 02111, United States of America.
PREAMBLE
Whereas AMC and CAC (hereinafter referred to as the "Parties") have been engaged
in a business relationship for approximately sixteen months, they desire to
increase their dealings by extending this relationship. The Parties wish to
further advance this relationship via the following Exclusive Distribution
Agreement. Concurrent with this agreement, consideration has been given from
CAC to AMC and their shareholders for the rights and privileges within this
agreement, including but not limited to: preferential pricing; and import,
purchase, and sell either directly, or non directly any and all AMC products,
parts, and services in a variety of countries, and to receive economic benefit
and/or commission for sale of AMC goods in those listed countries and or
provinces as outlined below. This exclusive distribution agreement includes all
products in Annex I, 1 and territories outlined in Annex I, 2,
IT IS AGREED AS FOLLOWS:
ARTICLE 1 TERRITORY AND PRODUCTS
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1.1. The Supplier grants and the Distributor accepts the exclusive right to
market and sell the products listed in Annex I, 1 (hereinafter called "the
Products") in the territory defined in Annex I, 2 (hereinafter called "the
Territory").
1.2. If the Supplier decides to market any other products in the Territory,
it shall so inform the Distributor in order to discuss the possibility of
including such other products within the Products defined in Article 1.1., and
shall at the very minimum pay the Distributor a commission not less than 3.75 %
of the gross sale price as outline in Section 16 and Annex II.
ARTICLE 2 GOOD FAITH AND FAIR DEALING
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2.1. In carrying out their obligations under this contract, the parties will
act in accordance with good faith and fair dealing.
2.2. The provisions of this contract, as well as any statements made by the
parties in connection with this distributorship relationship, shall be
interpreted in good faith.
ARTICLE 3 INDEMNIFICATION
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3.1. Supplier shall protect, indemnify, defend and save hold harmless
----
Distributor and every assignee of Distributor from and against all liabilities,
losses, damages, costs, expenses (including reasonable attorneys' fees and
expenses), causes of action, suits, claims or demands or judgments of any nature
arising from (I) injury to or death of any person, or damage to or loss of
property, from the ownership, management, control, use, possession, operation,
storage, leasing, subleasing or relocations of, or any defect in, the Equipment
(latent or otherwise, discoverable or otherwise, or asserted under any "strict
liability" theory or otherwise), (ii) any installation, use or removal thereof;
provided, however, the foregoing indemnity shall not apply to matters arising
out of the gross negligence of Distributor or accruing solely prior to the time
when Supplier has possession.
3.2. Survival; Right to Indemnification not affected by knowledge. All
representations, warranties, covenants, and obligations in this Agreement, and
any other certificate or document delivered pursuant to this Agreement will
survive the Execution. The right to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
3.3. Suppler hereby agrees to hold harmless Distributor from any and all
claims that may occur as a result of this agreement, and including but not
limited to Distributors performance herewith. Supplier also agrees, represents,
and acknowledges that as a Supplier, Supplier is also the Manufacturer of the
Product (s), (with the exception of purchase parts) Equipment and that Supplier
hereby agrees to hold harmless Distributor from any and all claims arising and
or caused by said product or product defects either directly or indirectly, as
Suppler represents and acknowledges that Distributor has no basis of liability
and therefore shall be released in any and all liability claims including but
not limited to strict, tort or other liability for said product or products.
ARTICLE 4 DISTRIBUTOR'S FUNCTIONS
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4.1. The Distributor sells in it's own name (or its assignee at the
Distributor's discretion) and for its own account, in the Territory, the
Products supplied by the Supplier.
4.2. The Distributor agrees to use its best efforts to promote the sale of
the Products in the Territory in accordance with the Supplier's policy and shall
protect the Supplier's interests with the diligence of a responsible and
reasonable businessman.
4.3. The Distributor is not entitled to act in the name or on behalf of the
Supplier, unless previously and specifically authorized to do so by the latter.
4.4. The Distributor may, in cases in which it does not want to buy and
resell, refer such business to the Supplier for a direct sale to the customer.
For such activity as intermediary the Distributor will receive a commission as
set out in Annex II, 1. (if completed) or otherwise to be agreed upon case by
case, to be calculated and paid according to Annex II, 3. It is expressly
agreed that such activity as intermediary, to the extent it remains of an
accessory character, does not modify the legal status of the Distributor as a
trader acting in its own name and for its own account.
ARTICLE 5 UNDERTAKING NOT TO COMPETE
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5.1. Without the prior written authorization of the Supplier, the
Distributor shall not represent, manufacture, market or sell in the Territory
any products, which are in competition with the Products.
5.2. The Distributor is entitled to represent, manufacture, market or sell
any products, which are not competitive with the Products, provided it informs
the Supplier in advance of such activity. However, the above obligation to
inform the Supplier does not apply if, in consideration of: (i) the
characteristics of the products which the Distributor wants to act, and (ii) the
field of activity of the Supplier for whom the Distributor wishes to act, it is
unreasonable to expect that the Supplier's interests maybe affected.
5.3. The Distributor declares that it represents (and/or manufactures,
markets or sells, directly or indirectly), as of the date which this contract is
signed, the products listed in Annex III.
ARTICLE 6 SALES ORGANIZATION
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6.1. The Distributor may at its own discretion set up and maintain an
adequate organization for sales and, where appropriate, after-sales service,
with all means and personnel as are reasonably necessary in order to ensure the
fulfillment of its obligations under this contract for all Products and
throughout the Territory.
ARTICLE 7 ADVERTISING AND FAIRS
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7.1. The parties shall discuss in advance the advertising program for each
year. All advertising should be in accordance with the Supplier's image and
marketing policies. Each party will bear the advertising expenses it has
occurred.
7.2. The parties shall agree in their participation in fairs or exhibitions
within the Territory. The costs of the Distributors participation in such fairs
and exhibitions shall be agreed to prior to increase of any expense. If not
agreed prior to, the expense shall be borne by the Distributor.
ARTICLE 8 CONDITIONS OF SUPPLY PRICES
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8.1. The Supplier shall in principle supply all Products ordered, subject to
their availability, and provided payment of the products will be priced in US
dollars and product is adequately warranted as determined by the Supplier. The
Supplier may not unreasonably reject orders received from the Distributor; in
particular, a repeated refusal of orders contrary to good faith (e.g. if made
for the purpose of hindering the Distributor's activity) shall be considered as
a breach of contract by the Supplier.
8.2. The Supplier agrees to make its best efforts to fulfill the orders it
has accepted.
8.3. Sales of the Products to the Distributor shall be governed by the
Supplier's general conditions of sale, the currently applicable version of which
is attached to this Contract (Annex IV, 1), and by the United Nations
Convention on contracts for the international sale of goods (Vienna 1980). In
case of conflict between such general conditions and the terms of this contract,
the latter shall prevail.
8.4. The prices payable by the Distributor shall be those set forth in the
Supplier's price-list in force at the time the order is received by the
SupplierThe Distributor agrees to comply, with the utmost care, with the terms
of payment agreed upon between the parties.
8.6. It is agreed that the Products delivered remain the Supplier's property
until the Supplier has received payment in full.
8.7. The Supplier shall grant to the Distributor - the most-favored-customer
condition and pricing.
ARTICLE 9 SALES TARGETS - GUARANTEED MINIMUM TARGET
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9.1. The parties may agree however, it is not a requirement now or in the
future annually on the sales targets for the forthcoming year.
9.2. The parties shall make their best efforts to attain the targets agreed
upon, but the non-attainment shall not be considered as a breach of the contract
by the party.
ARTICLE 10 SUBDISTRIBUTORS OR AGENTS
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10.1. The Distributor may appoint subdistributors or agents for the sale of
the products in the Territory, provided the Distributor informs the Supplier
before the engagement.
10.2. The Distributor shall be responsible for its subdistributors or
agents.
10.3. In certain circumstances it may be advisable to add a clause providing
that each party agrees not to engage subagents and/or employees of the other
party.
ARTICLE 11 SUPPLIER TO BE KEPT INFORMED
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11.1 The Distributor shall exercise due diligence to keep the Supplier
informed about the Distributor's activities, market conditions and the state of
competition within the Territory. The Distributor shall answer any reasonable
request for information made by the Supplier.
11.2 The Distributor shall exercise due diligence to keep the Supplier
informed about: (i) the laws and regulations which are applicable in the
Territory and relate to the Products (e.g. import regulations, labeling,
technical specifications, safety requirements, etc.), and (ii) as far as they
are relevant for the Supplier, the laws and regulations concerning the
Distributor's activity.
ARTICLE 12 RESALE PRICES
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The Distributor is free to fix the resale prices of the Products. The
Distributor shall avoid such pricing policies as would clearly affect the image
of the Products.
ARTICLE 13 SALES OUTSIDE THE TERRITORY
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The Distributor agrees not to advertise the Products or establish any
branch or maintain any distribution of the Products outside the
Territory without the written consent of the Supplier, whereby such consent
shall not be unreasonably withheld.
ARTICLE 14 SUPPLIER'S TRADEMARKS AND SYMBOLS
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14.1. The Distributor shall use the Supplier's trademarks, trade names or
any other symbols. However, the Distributor may do so only for the purpose of
identifying and advertising the Products within the scope of this contract and
in the Supplier's interest.
14.2. The Distributor agrees neither to register, have registered any
trademarks, trade names or symbols of the Supplier (or which are confusingly
similar to the Supplier's), in the Territory or elsewhere without the written
consent of the Supplier, whereby such consent shall not be unreasonably
withheld.
14.3. The Distributor shall notify the Supplier of any infringement in the
Territory of the Supplier's trademarks, trade names or symbols, or any other
industrial property rights, that comes to the Distributor's attention.
ARTICLE 15 STOCK OF PRODUCTS AND SPARE PARTS - AFTER-SALES SERVICE
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15.1 The Supplier agrees to maintain at its own expense for the benefit of
the Distributor, for the whole term of this contract, a stock of Products and
spare parts sufficient for the normal needs of the Territory, and, in any case,
at least as indicated in Annex V.
15.2 The Supplier agrees to provide after-sales service according to the
terms and conditions set out in Annex VI, provided such Annex has been
completed.
ARTICLE 16 SOLE DISTRIBUTORSHIP
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16.1. The Supplier and/or its assignee shall not, during the life of this
contract, grant any other person or undertaking (including a subsidiary of the
Supplier) within the Territory the right to represent or market the Products.
The Supplier shall furthermore refrain from selling to customers established in
the Territory, except pursuant to the conditions set out under Article 16,
hereunder. If such an event occurs, the Supplier shall pay the Distributor a
commission of 3.75% of the gross sales value.
16.2. The Supplier shall not sell the Products to customers outside the
Territory, when the Supplier knows or ought to know, that such customers intend
to resell the products within the Territory. The Supplier will also impose on
its other distributors an obligation corresponding to that under Article 15.2.
ARTICLE 17 DIRECT SALES
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17.1. The Supplier shall be entitled to deal directly with the special
customers listed in Annex II, 2; in respect of the sales to the customers, in
instances where the Distributor has an adequate network a commission of 2% shall
be paid by the supplier. Annex II, 2.
17.2. Whenever a commission is due to the Distributor, it shall be
calculated and paid according to Annex II, 3.
ARTICLE 18 DISTRIBUTOR TO BE KEPT INFORMED
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18.1. The Supplier shall provide the Distributor free of charge with all
documentation relating to the Products (brochures, etc.) reasonably needed by
the Distributor for carrying out its obligations under this contract. The
Distributor shall return to the Supplier, at the end of this contract, all
documents which have been made available to it by the Supplier and which remain
in its possession.
18.2. The Supplier shall provide the Distributor with all other information
reasonably needed by the Distributor for carrying out its obligations under the
contract, including without limitation any information regarding a material
decrease in its supply capacity.
18.3. The Supplier shall keep the Distributor informed of any relevant
communication with customers in the Territory.
18.4. The Supplier shall at its own expense, and within 30 days of said
request, provide an audit of all sales activity by Territory as requested by
Distributor.
ARTICLE 19 TERM OF CONTRACT
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19.1. This contract is concluded for an indefinite period (but not less than
99 years) and enters into force on June 30, 1999, and expires no sooner than
June 30, 2098.
ARTICLE 20 INDEMNITY IN CASE OF IMPAIRMENT
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20.1. In case of impairment by the Supplier to the Distributor, the latter
shall be entitled to an indemnity according to Annex VII.
20.2. The above provision does not affect the distributor's right to claim
damages for breach of contract insofar as the impairment by the Supplier amounts
to such a breach.
ARTICLE 21 RETURN OF DOCUMENTS AND PRODUCTS IN STOCK
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21.1. Upon expiry of this contract, the distributor shall return to the
Supplier all promotional material and other documents and samples which have
been supplied to it by the Supplier and are in the Distributor's possession.
21.2. At the Distributor's option, the Supplier will buy from the
Distributor all products the latter has in stock, if any, provided that they are
still currently in sold by the Supplier and are in new condition and in original
packaging, at the price originally paid by the Distributor. Products not so
purchased by the Supplier must be sold by the Distributor in accordance with the
contract on usual terms.
ARTICLE 22 ARBITRATION - APPLICABLE LAW
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22.2. Any dispute arising out of or in connection with the present contract
shall be finally settled in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators
appointed in accordance with said Rules.
22.3. This contract is governed by the laws of the United States (name of
the country the law of which is to apply).
22.4. In any event, consideration shall be given to mandatory provisions of
the law of the country where the Distributor is established which would be
applicable even if the contract is governed by a foreign law. Any such
provisions will be taken into account to the extent that they embody principles
which are universally recognized and provided their application appears
reasonable in the context of international trade.
ARTICLE 23 RISK OF LOSS/INSURANCE
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23.1. Supplier shall bear the risk of damage, loss, theft, destruction and
requisition ("Casualty") with respect to the Equipment. Distributor shall
promptly notify supplier in writing of any Casualty and the Equipment affected
("Casualty Item"). Within 30 days after a Casualty, Supplier shall either
repair the Casualty Item or substitute equipment having at least equivalent
value and utility, as reasonably determined by Distributor. Substitutions shall
be accomplished by Supplier providing to Distributor a bill of sale conveying
good and marketable title to the substitute equipment, free and clear of all
liens, and such other documentation as Distributor may reasonable require.
Throughout the term of this Agreement, Supplier will maintain, at Suppliers sole
expense, all risk in at least the amount of the replacement cost of the
Equipment and product (s), public (s), strict liability including but not
limited to product defects and property damage liability insurance in the amount
of $5,000,000 inform and substance acceptable to Distributor, (I) naming
Distributor and its assignees (s) as loss payees and additional insureds and
(ii) requiring 30-day prior written notice to Distributor and its assignee (s)
of cancellation by the insurance company.
ARTICLE 24 AUTOMATIC INCLUSION UNDER THE PRESENT CONTRACT
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24.1. The Annexes attached to this contract form an integral part of the
contract. Annexes or parts of Annexes which have not been completed will be
effective only to the extent and under the conditions indicated in this
contract.
ARTICLE 25 PREVIOUS AGREEMENTS - MODIFICATIONS - NULLITY - ASSIGNMENT
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25.1. This contract replaces any other preceding agreement between the
parties on the subject.
25.2. No addition or modification to this contract shall be valid unless
made in writing. However, a party may be precluded by its conduct from
asserting the invalidity of additions or modifications not made in writing to
the extent that the other party has relied on such conduct.
25.3. f any provision or clause of this contract is found to be null or
unenforceable, the contract will be construed as a whole effect as closely as
practicable the original intent of the parties; however, if for good cause,
either party would not have entered into the contract resulting from the
foregoing, the contract itself shall be null.
25.4. The present contract cannot be assigned without prior written
agreement of the parties.
ARTICLE 26 AUTHENTIC TEXT
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The English text of this contract is the only authentic text.
The Supplier The Distributor
_________________________ _________________________
Made in on the
_________________________ _________________________
Chancellor Africa Corporation Afinta Motor Corporation
______________________ _____________________
Africa Finance Corporation
______________________
Witness Notary
______________________________ _______________________________
ANNEX I
PRODUCTS AND TERRITORY
(Article 1.1.)
1. PRODUCTS__________________________________________________________
All current and future products, parts, and services manufactured and/or sold by
the Supplier.
2. TERRITORY_________________________________________________________
All countries throughout the world with the exceptions of the following
countries:
AFRICA AND ENGLAND, WALES AND SCOTLAND
ANNEX II
COMMISSION ON DIRECT SALES
1. NORMAL COMMISSION (ARTICLE 3.4.)
When acting as an intermediary, according to Article 3.4., the Distributor is
entitled to a commission of 10%.
2. CALCULATION AND PAYMENT OF COMMISSION
2.1. The commission shall be calculated on the gross amount of the invoices,
i.e., on the effective sales price (any discount other than cash discounts being
deducted) clear of any additional charges (such as packing, transportation,
insurance) and clear of all duties or taxes (including value-added tax) of any
kind, provided that such additional charges, duties and taxes are separately
stated in the invoice.
2.2. The Distributor shall acquire the right to commission after full
payment by the customers of the invoiced price not less than 5 business days.
In case of partial payment made in compliance with the sales contract, the
Distributor shall be entitled to a proportional advance payment.
2.3. Should any governmental authorization (e.g.,due to exchange control
regulations in the Supplier's country) be necessary for the Supplier to transfer
abroad the commission (or of another sum the Distributor may be entitled to
receive), then the payment of the amount shall be made after such authorization
has been given. The Supplier shall take in due time all necessary steps for
obtaining the above authorizations.
2.4. Except as otherwise agreed, the commission shall be calculated in the
currency of the sales contract in respect of which the commission is due.
2.5. Any taxes imposed on the Distributor's commission in the Territory are
for the Distributor's account.
ANNEX III
CONDITIONS OF SALE - DISCOUNTS
(Article 8)
1. SUPPLIER'S GENERAL CONDITIONS OF
SALE___________________________________
To be annexed to the contract.
2. DISCOUNTS AND/OR PRICES GRANTED TO THE
DISTRIBUTOR_______________________
The Distributor at all times be treated equally or better than any other
Distributor or dealer as it relates to price. The price to the Distributor will
always be at least 10% less than the official wholesale price as quoted in South
Africa from time to time.
ANNEX IV
STOCK OF PRODUCTS AND SPARE PARTS
(Article 15.1)
The Supplier agrees to maintain adequate stock of products and spare parts for
the benefit of the Distributor:
ANNEX V
AFTER-SALES SERVICE, REPAIRS, WARRANTY
(Article 15.2.)
1. The Supplier shall provide the Distributor with the training necessary to
enable the latter's personnel to provide the above services.
2. The Supplier shall carry out free of charge all repairs and replacements
provided for in the warranty conditions of AMC and shall bear all the expenses
of such service. The Supplier shall supply the Distributor with the items or
parts needed to replace defective items or parts under the warranty conditions.
3. After expiration for whatever reason of this contract the Supplier shall
provide free of charge replacement parts provided for in the warranty conditions
of AMC.
The Supplier The Distributor
___________________________ _____________________________
ANNEX VI
INDEMNITY IN CASE OF IMPAIRMENT
(Article 20 B)
1. In case of contract impairment by the Supplier, the Distributor shall
be entitled to an indemnity equal to the commissions as would have been payable
under this agreement for a period of 5 years.
2. The Distribution undertakes to make its best efforts to have the
existing customers transferred to the Supplier or to the new distributor (or
agent) of the Supplier. In pursuance of the above obligation, the Distributor
agrees to refrain, for a period of 12 months from contract impairment, directly
or indirectly, from selling, distributing or promoting any products which are in
competition with the Products to customers to which it previously sold the
Products or promoted the sale of the Products under this contract.
3. The indemnity shall be paid in three installments of equal amount,
respectively, four, eight and twelve months after contract impairment. The
payment of the indemnity is mad conditional upon the performance, by the
Distributor, of the obligation under 2, hereabove.
4. The Distributor has the option to waive its right to indemnity at any
time. In this case the non-competition clause under 2, above, as well as the
obligation to encourage the transfer of existing customers to the Supplier or
new Distributor (or agent) will Cease to apply. Exercising this opinion shall
not require the Distributor to reimburse any installment which has already been
paid.
The Supplier The Distributor
_____________________ _______________________
The Distributor is therefore free to market competing products in other
territories. In special situations (e.g. where a relationship between the
distributor and a particular competitor of the supplier would substantially
impair the confidence between the parties or negatively affect the protection of
confidential information), the parties may agree to extend the non-competition
obligation beyond the contractual territory.
with the discount indicated in Annex IV, 2.8.5.