SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
TO CURRENT REPORT ON FORM 8-K
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: Date of Earliest Event Reported:
November 15, 1999 November 15, 1999
COMMISSION FILE NUMBER 0-11663
CHANCELLOR CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2626079
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
210 SOUTH STREET
BOSTON, MASSACHUSETTS 02111
(Address of principal executive offices and zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 368-2700
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 30, 1999, Chancellor Africa Corporation (Pty) Ltd. ("Chancellor
Africa" or the "Company"), an indirect wholly owned subsidiary of Chancellor
Corporation ("Chancellor") acquired approximately 15.1% of the issued and
outstanding capital stock of Afinta Motor Corporation (Pty) Ltd., a corporation
organized under the laws of the Republic of South Africa ("AMC") pursuant to a
Stock Purchase Agreement (the "Agreement") dated September 30, 1999.
AMC is one of the largest manufacturers/assemblers of light commercial vehicles
including trucks, tractor trailers, buses, automobiles and sport utility
vehicles in the Republic of South Africa. The Company's investment into AMC
will provide Chancellor with the ability to capitalize on a number of
opportunities available in the fast growing South African market. The Company
will also be performing in an advisory capacity to AMC's captive finance
subsidiary Afinta Financial Services (Pty) Ltd. with respect to the structuring
of vehicle financing packages and the development of a secondary market for
off-lease transportation equipment. The Company views this as an investment and
has accounted for said investment under the equity method of accounting.
Additionally, on September 30, 1999, the Company acquired the exclusive world
wide distribution rights to all of AMC's current and future product lines with
the exception of Africa, England, Scotland and Wales pursuant to an Exclusive
World Wide Distribution Agreement by and between Chancellor Africa, Africa
Finance Corporation (Pty) Ltd., a wholly owned subsidiary of Chancellor Africa,
and AMC dated September 30, 1999.
The consideration paid by the Company in connection with the investment into AMC
and the acquisition of the exclusive world wide distribution rights (within
previously defined territory) consisted of 350,000 shares of a newly created
Series B Convertible Preferred Stock of Chancellor (the "Series B Preferred
Stock") (valued at $1.25 per common share, on an as converted basis, by New
Africa Opportunity Fund). The Series B Preferred Stock has a liquidation
preference of $20.00 per share and is convertible into shares of Chancellor's
Common Stock, $.01 par value, on a ten for one (10:1) basis. The Company has
recently engaged Ernst & Young's local office in South Africa for guidance on
the valuation of this transaction.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Exhibits:
Exhibit 2 Stock Purchase Agreement, dated September 30, 1999, by
and between Africa Finance Corporation (Pty) Ltd.,
Chancellor Corporation, New Africa Opportunity Fund Sub
Two, LLC, Afinta Motor Corporation (Pty) Ltd., Graham Edward
Nicholls, Robert Charles Drake, and Harold Joshua Manne.
Exhibit 10 Exclusive World Wide Distribution Agreement, dated
September 30, 1999, by and between Chancellor Africa
Corporation (Pty) Ltd., Africa Finance Corporation (Pty)
Ltd. and Afinta Motor Corporation (Pty) Ltd.
Exhibit 99 Press Release dated November 17, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHANCELLOR CORPORATION
By: /s/ Franklyn E. Churchill
Franklyn E. Churchill,
President, Chief Operating Officer
and Director
Date: November 15, 1999
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EXHIBIT INDEX
Exhibit No. Description
- ------------ -----------
Exhibit 2 Stock Purchase Agreement, dated September 30, 1999, by and
between Africa Finance Corporation (Pty) Ltd.,
Chancellor Corporation, New Africa Opportunity Fund Sub
Two, LLC, Afinta Motor Corporation (Pty) Ltd., Graham Edward
Nicholls, Robert Charles Drake, and Harold Joshua Manne.
Exhibit 10 Exclusive World Wide Distribution Agreement, dated September
30, 1999, by and between Chancellor Africa Corporation
(Pty) Ltd., Africa Finance Corporation (Pty) Ltd. and
Afinta Motor Corporation (Pty) Ltd.
Exhibit 99 Press Release dated November 17, 1999
A G R E E M E N T
-----------------
entered into between
AFRICA FINANCE CORPORATION
--------------------------
(Registration No. 19441/3602)
and
NEW AFRICA OPPORTUNITY FUND SUB TWO LLC
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and
CHANCELLOR CORPORATION
----------------------
and
AFINTA MOTOR CORPORATION (PROPRIETARY) LIMITED
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(Registration No. 96/06574/07)
and
GRAHAM EDWARD NICHOLLS
----------------------
and
ROBERT CHARLES DRAKE
--------------------
and
HAROLD JOSHUA MANNE
-------------------
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WHEREBY IT IS AGREED AS FOLLOWS :
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1. INTERPRETATION AND PRELIMINARY INTERPRETATION AND PRELIMINARY
-------------------------------- --------------------------------
The headings of the clauses in this agreement are for the purpose of convenience
and reference only and shall not be used in the interpretation of nor modify nor
amplify the terms of this agreement nor any clause hereof. Unless a contrary
intention clearly appears -
1.1. words importing -
1.1.1. any one gender include the other two genders;
1.1.2. the singular include the plural and vice versa; and
1.1.3. natural persons include created entities (corporate or unincorporate)
and the state and vice versa;
1.2. the following terms shall have the meanings assigned to them hereunder
and cognate expressions shall have corresponding meanings, namely -
1.2.1. "AFRICA FINANCE" means AFRICA FINANCE CORPORATION, Registration
Number 19441/3602, a corporation established under the laws of Mauritius, being
a wholly-owned subsidiary company of CAC;
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1.2.2. "AMC" means AFINTA MOTOR CORPORATION (PROPRIETARY) LIMITED,
Registration Number 96/06574/07, a company established under the laws of the
Republic of South Africa;
1.2.3. "AMC group" means AMC and any company which is a subsidiary (as
defined in the Companies Act, 1973) from time to time of AMC;
1.2.4. "'A' preference shares" means "A" convertible preference shares in
the share capital of AMC with the rights, privileges and conditions set forth in
ANNEXURE A;
1.2.5. "business day" means any day other than a Saturday, Sunday or
national public holiday in the Republic of South Africa;
1.2.6. "CAC" means CHANCELLOR AFRICA CORPORATION, Registration Number
1998/013128/10/3602, a corporation established under the laws of Mauritius,
being a wholly-owned subsidiary company of CHANCELLOR CORPORATION;
1.2.7. "CC ordinary stock" means ordinary stock in the share capital of
CHANCELLOR CORPORATION, which stock is traded on NASD bulletin board;
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1.2.8. "CHANCELLOR CORPORATION" means CHANCELLOR CORPORATION Registration
Number 04/2626079, a corporation established under the laws of the Commonwealth
of Massachussets;
1.2.9. "closing date" means Friday, 8 October 1999;
1.2.10. "effective date" means 30 June 1999;
1.2.11. "NAOF" means NEW AFRICA OPPORTUNITY FUND LP, a limited liability
partnership established under the laws of Delaware, USA;
1.2.12. "NAOF-SUB" means NAOF SUB TWO LLC, a limited liability company
established under the laws of Delaware, USA, being a wholly-owned subsidiary of
NAOF;
1.2.13. "the NASD bulletin board" means the NATIONAL ASSOCIATION OF
SECURITIES DEALERS, being a recognised investment exchange system operating in
the United States of America as an over-the-counter market;
1.2.14. "series 'B' stock" means series "B" preferred stock in the share
capital of CHANCELLOR CORPORATION with the rights, privileges and conditions set
forth in ANNEXURE B;
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1.3. any reference in this agreement to "date of signature hereof" shall be
read as meaning a reference to the date of the last signature of this agreement;
1.4. any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time;
1.5. if any provision in a definition is a substantive provision conferring
rights or imposing obligations on any party, notwithstanding that it is only in
the definition clause, effect shall be given to it as if it were a substantive
provision in the body of the agreement;
1.6. when any number of days is prescribed in this agreement, same shall be
reckoned exclusively of the first and inclusively of the last day unless the
last day falls on a day which is not a business day, in which case the last day
shall be the next succeeding business day;
1.7. where figures are referred to in numerals and in words, if there is any
conflict between the two, the words shall prevail;
1.8. expressions defined in this agreement shall bear the same meanings in
schedules or annexures to this agreement which do not themselves contain their
own definitions;
1.9. reference to day/s, month/s or year/s shall be construed as Gregorian
calendar day/s, month/s or year/s;
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1.10. the use of any expression in this agreement covering a process
available under South African law such as a winding-up or liquidation (without
limitation eiusdem generis) shall, if any of the parties to this agreement is
subject to the law of any other jurisdiction, be construed as including any
equivalent or analogous proceedings under the law of such defined jurisdiction;
1.11. where any term is defined within the context of any particular clause
in this agreement, the term so defined, unless it is clear from the clause in
question that the term so defined has limited application to the relevant
clause, shall bear the meaning ascribed to it for all purposes in terms of this
agreement, notwithstanding that that term has not been defined in this
interpretation clause;
1.12. the expiration or termination of this agreement shall not affect such
of the provisions of this agreement as expressly provide that they will operate
after any such expiration or termination or which of necessity must continue to
have effect after such expiration or termination, notwithstanding that the
clauses themselves do not expressly provide for this;
1.13. the rule of construction that the contract shall be interpreted
against the party responsible for the drafting or preparation of the agreement,
shall not apply;
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1.14. this agreement shall be governed by and interpreted in accordance with
the laws of the Republic of South Africa.
2. RECORDAL RECORDAL
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CHANCELLOR CORPORATION intends to invest in AMC by way of equity investments so
that it will, on the closing date, hold 15,1% (fifteen comma one per cent) of
the entire issued share capital of AMC, upon the terms and conditions set out in
this agreement.
3. REPAYMENT OF LOAN ACCOUNT REPAYMENT OF LOAN ACCOUNT
---------------------------- ----------------------------
On the effective date AMC shall repay to AFRICA FINANCE R8 200 000 (eight
million two hundred thousand rand) of AFRICA FINANCE's loan account against AMC
together with any and all accrued interest thereon.
4. DEBT/EQUITY CONVERSION DEBT/EQUITY CONVERSION
----------------------- -----------------------
4.1. On the effective date AFRICA FINANCE shall subscribe for 9 213 (nine
thousand two hundred and thirteen) "A" preference shares at a subscription price
inclusive of premium equal to the sum of R8 200 000 (eight million two hundred
thousand rand) plus an amount equal to the accrued interest referred to in
clause 3. AFRICA FINANCE shall pay the aforementioned subscription price to AMC
on the effective date.
4.2. On the closing date, and against discharge of AFRICA FINANCE's
obligation to pay the subscription price contemplated in clause 4.1, AMC shall
allot and issue 9 213 (nine thousand two hundred and thirteen) "A" preference
shares to AFRICA FINANCE.
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4.3. As a result of the implementation of the transactions contemplated in
clause 3 and this clause 4 -
4.3.1. AFRICA FINANCE's loan account against AMC shall be reduced on the
effective date by R8 200 000 (eight million two hundred thousand rand) plus the
aforementioned accrued interest thereon; and
4.3.2. AFRICA FINANCE shall become the holder of 9 213 (nine thousand two
hundred and thirteen) "A" preference shares, representing 5,1% (five comma one
per cent) of the entire issued share capital of AMC.
4.4. AMC, management and NAOF-SUB warrant jointly and severally in favour of
AFRICA FINANCE that AMC shall have sufficient authorised share capital to allot
and issue the aforementioned 9 213 (nine thousand two hundred and thirteen) "A"
preference shares to AFRICA FINANCE, as contemplated in this agreement.
5. SHARE SWOP SHARE SWOP
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5.1. With effect on the closing date and against discharge by AFRICA FINANCE
of its obligations contemplated in clause 5.2, NAOF-SUB sells, transfers, cedes
and delivers to AFRICA FINANCE 18 064 (eighteen thousand and sixty four) "A"
preference shares (representing 10% (ten per cent) of the entire issued share
capital of AMC). NAOF-SUB shall do all things and deliver all documents
required to ensure that the 18 064 (eighteen thousand and sixty four) "A"
preference shares are transferred to and registered in the name of AFRICA
FINANCE with effect from the closing date.
5.2. With effect on the closing date and against discharge by NAOF-SUB of
its obligations under clause 5.1 above, AFRICA FINANCE shall discharge its
obligation to pay for the 18 064 (eighteen thousand and sixty four) "A"
preference shares transferred in terms of clause 5.1 above, by transferring,
ceding and delivering to NAOF-SUB 250 000 (two hundred and fifty thousand)
series "B" stock. AFRICA FINANCE shall do all things and deliver all documents
required to ensure that the 250 000 (two hundred and fifty thousand) series "B"
stock is transferred to and registered in the name of NAOF-SUB with effect from
the closing date in terms of this clause 5.2.
5.3. Management hereby waives any rights of pre-emption against NAOF in
respect of the 18 064 (eighteen thousand and sixty four) "A" preference shares
contemplated in clause 5.1 and hereby consents to the transfer contemplated
herein.
5.4. The sale contemplated in this clause 5 shall be effected on the basis
that, except as expressly provided for elsewhere in this agreement, neither
AFRICA FINANCE nor NAOF-SUB gives any warranties whatsoever, whether express,
implied or tacit, in respect of the 250 000 (two hundred and fifty thousand)
series "B" stock and the 18 064 (eighteen thousand and sixty four) "A"
preference shares, respectively.
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5.5. Accordingly, as a result of the implementation of the transaction
contemplated in clause 4 and the sale contemplated in this clause 5, AFRICA
FINANCE shall initially hold 27 277 (twenty seven thousand two hundred and
seventy seven) "A" preference shares, representing 15,1% (fifteen comma one per
cent) of the entire issued share capital of AMC.
6. WORLDWIDE DISTRIBUTION RIGHTS WORLDWIDE DISTRIBUTION RIGHTS
------------------------------- -------------------------------
6.1. GRAHAM E NICHOLLS (or his nominee) and NAOF-SUB each undertakes to
procure that AMC grants to AFRICA FINANCE as soon as reasonably possible after
the date of signature hereof, certain worldwide rights of distribution
substantially on the basis set forth in the exclusive distribution agreement
attached hereto as ANNEXURE C.
6.2. On the closing date or on the date of execution of the written
exclusive distribution agreement referred to in clause 6.1, whichever is the
later, in consideration for the undertakings contemplated in clause 6.1, AFRICA
FINANCE shall transfer, cede and deliver 100 000 (one hundred thousand) series
"B" stock as follows -
6.2.1. 71 429 (seventy one thousand four hundred and twenty nine) shares to
GRAHAM E NICHOLLS (or his nominee); and
6.2.2. 28 571 (twenty eight thousand five hundred and seventy one) shares to
NAOF-SUB.
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7. RIGHTS OF FIRST REFUSAL AND TRANSFERS OF SHARES RIGHTS OF FIRST
----------------------------------------------------- ---------------
REFUSAL AND TRANSFERS OF SHARES
------------------------------
7.1. AFRICA FINANCE may not sell or otherwise dispose of or transfer
(including but not limited to by way of donation or dividend) any shares held by
it in AMC -
7.1.1. except in terms of this clause 7 and clause 8 and any other provision
of this agreement specifically providing for disposal, and
7.1.2. only if, in one and the same transaction, it likewise sells, disposes
of or alienates a proportionate share of its claim against AMC on loan account
("loan account"), if any.
7.2. The provisions of this clause 7 and clause 8 shall also apply to the
extent applicable to any future rights offers or allotments made to any
shareholders of AMC. Accordingly, all references in this clause 7 and clause 8
and in the lien, transmission and forfeiture provisions of the articles of
association of AMC to the offer, sale, disposal, alienation, transfer or
transmission of a share in AMC shall, unless the context otherwise requires, be
deemed to apply also to the proportionate share of the loan account of the
holder of such share and to any rights offers or allotments.
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7.3. When it is intended to dispose of some or all of the AMC shares held by
AFRICA FINANCE (other than in terms of clause 7.2 or clause 8.2 or any other
permitted provision in the agreement) AFRICA FINANCE shall offer the shares in
writing to NAOF-SUB, stating the price (which shall sound in money in South
African currency or in United States dollars) and the terms of payment required
by it and no other terms shall be stipulated save for that contemplated in
clause 7.10 and if it intends selling or otherwise disposing or transferring to
a particular third party if the offer is not accepted by NAOF-SUB, it shall
disclose the name of such third party.
7.4. If, within 5 (five) days after the receipt of the offer (during which
period the offer shall be irrevocable), it is not accepted in writing in respect
of all the shares offered to NAOF-SUB then, only if a third party was named in
the offer contemplated in clause 7.3, AFRICA FINANCE may, within a further 30
(thirty) days, but not thereafter without again making an offer to NAOF-SUB in
terms of clause 7.3 dispose of all the shares offered (but not fewer) to the
third party only, at a price not lower and on terms not more favourable to such
person than the price at and terms on which NAOF-SUB was entitled to purchase
them.
7.5. The fact that AFRICA FINANCE gives any third party normal warranties
shall not constitute terms more favourable than those given to NAOF-SUB who will
not be given any warranties.
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7.6. If whilst an offer in terms of this clause 7 is pending, the provisions
of clause 8.2 become operative in respect of those shares so offered, then at
the election of NAOF-SUB (which election shall be made in writing delivered to
AFRICA FINANCE within 48 (forty-eight) hours after the provisions of clause 8.2
become operative) the offer in terms of this clause 7 shall be deemed to be
withdrawn and substituted with the deemed offer in terms of clause 8.2.
7.7. Any disposal of shares to any non-shareholder of AMC shall be subject
to the condition that the transferee shall undertake in writing not to operate
in competition to the business of any company in the AMC group whilst it is a
shareholder of AMC.
7.8. Subject to clause 7.9, transfer of any shares acquired in terms of this
clause 7 shall be given to the person so acquiring them.
7.9. Notwithstanding anything to the contrary herein contained, no share in
AMC shall be disposed of, pledged or transferred by AFRICA FINANCE to a
non-shareholder including the heirs or beneficiaries of any shareholder unless
that non-shareholder agrees to be bound by any written agreement in force
between AMC and its shareholders and/or between the shareholders of AMC
governing their relationship as shareholders in AMC and nominates a chosen
address for the purposes of clause 15.
7.10. IF AFRICA FINANCE disposes of its shares as contemplated in this
clause 7, it shall be entitled to stipulate as a condition of such sale that -
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7.10.1. AFRICA FINANCE shall be released pro rata to the number of shares
sold, as a surety or guarantor or indemnitor on behalf of AMC, subject to the
purchaser(s) of the shares in question binding himself as surety or guarantor or
indemnitor in his stead; or
7.10.2. if the release contemplated in clause 7.10.1 cannot be achieved, or
pending such release being implemented, the disposing shareholder shall be
indemnified by the purchaser of the shares pro rata to the number of shares sold
against any claims made against the disposing shareholder by reason of such
suretyship, guarantee or indemnity. Such purchaser shall be liable for any
amount payable in terms hereof together with value-added tax thereon.
7.11. The transferee of any shares and loan accounts acquired pursuant to
this clause 7, shall pay the stamp duty and any other similar duties payable
thereon.
7.12. Notwithstanding anything to the contrary herein contained, the
provisions of this clause 7 will cease to be of any force and effect in the
event that AMC becomes listed on any recognised stock exchange.
8. FORCED SALES FORCED SALES
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8.1. If AFRICA FINANCE or CAC or CHANCELLOR CORPORATION is wound up or
liquidated, whether provisionally or finally, or if the CC ordinary stock ceases
to be or is suspended from trading on the NASD bulletin board for whatever
reason (provided that the provisions of this clause 8 shall not apply in the
event of a sale of the entire issued share capital of CHANCELLOR CORPORATION),
then the provisions of this clause 8 shall apply. Reference hereinafter in this
clause 8 to AFRICA FINANCE or to CAC or to CHANCELLOR CORPORATION shall include
the provisional or final liquidator of AFRICA FINANCE or CAC or CHANCELLOR
CORPORATION, as the case may be.
8.2.
8.2.1. As soon as an event contemplated in clause 8.1 occurs, AFRICA FINANCE
shall notify NAOF-SUB in writing.
8.2.2. Within 60 (sixty) days after learning of the occurrence of any event
contemplated in clause 8.1, NAOF-SUB may, by notice in writing to AFRICA
FINANCE, compel AFRICA FINANCE to offer its shares in AMC to NAOF-SUB at a price
sounding in money in South African currency being the fair value of the shares
to be agreed between AFRICA FINANCE and NAOF-SUB or, failing agreement, to be
determined by the auditors of AMC, who shall act as experts and not as
arbitrators.
8.2.3. The auditors' decision as to the fair value of the shares shall be
final and binding on the parties. The auditors' charges shall be paid by
NAOF-SUB and AFRICA FINANCE pro rata to their respective shareholdings in AMC.
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8.2.4. In determining the value of such shares, no deduction shall be made
for the fact that the shares in question constitute a minority interest in AMC
nor for the fact that new management shall or may be managing AMC nor shall any
premium be added for the fact that the shares in question constitute a majority
or controlling interest in AMC nor, if the purchaser is an existing shareholder,
for the fact that by purchasing the shares in question, such shareholder would
be in a position to control AMC's affairs.
8.2.5. As soon as the price has been agreed or determined as aforesaid and
notified in writing to AFRICA FINANCE and NAOF-SUB, AFRICA FINANCE shall be
deemed to have offered the shares to NAOF-SUB at the price as agreed or
determined. Such offer shall be open for acceptance thereafter for a period of
20 (twenty) days and failing acceptance thereof in respect of all such shares
within such period shall lapse. Such lapsing of the offer shall not affect the
continued application of the pre-emptive provisions of this agreement. If the
offer is accepted, the effective date of the sale shall be the day prior to the
date upon which the event contemplated in clause 8.1, which triggered the offer,
occurs.
8.2.6. The purchase price so agreed or determined, if NAOF-SUB accepts the
offer, shall be payable in cash by NAOF-SUB within 30 (thirty) days of such
agreement or determination.
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8.2.7. The shares shall be delivered in transferable form to NAOF-SUB
against payment of the purchase price. If AFRICA FINANCE does not deliver the
shares in transferable form on due date, NAOF-SUB is irrevocably and in rem suam
appointed as the attorney and agent of AFRICA FINANCE to sign the necessary
transfer forms.
8.2.8. If the offer is not accepted by NAOF-SUB in respect of such shares,
AFRICA FINANCE shall be entitled to retain such shares subject to the remaining
provisions of this agreement.
8.3. The provisions of clauses 7.8, 7.10 and 7.11 shall apply mutatis
mutandis to this clause 8.
9. SALE OF SERIES "B" STOCK BY NAOF-SUB SALE OF SERIES B STOCK BY
------------------------------------------ --------------------------
NAOF-SUB
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9.1. If GRAHAM EDWARD NICHOLLS or NAOF-SUB wish to dispose of any series "B"
stock held by them, they shall not be entitled to do so unless they first offer
the relevant series "B" stock for sale to CHANCELLOR CORPORATION or its nominee.
Such offer shall be made in writing by telefax to CHANCELLOR CORPORATION's
telefax number specified in clause 15.1.3, and marked for the attention of "the
Chairman of CHANCELLOR CORPORATION". Such offer shall be irrevocable for a
period of 5 (five) days from the time of despatch of the telefax notice to
CHANCELLOR CORPORATION. The series "B" stock specified in the notice as
aforesaid shall be deemed to have been offered during the aforementioned 5
(five) day period at the most favourable price to NAOF-SUB quoted on the NASD
bulletin board.
9.2. CHANCELLOR CORPORATION shall be entitled to accept the offer before the
expiry of the 5 (five) day period referred to in clause 9.1 by telefax notice to
NAOF-SUB's telefax number specified in clause 15.1.2, to be received by NAOF-SUB
before the expiry of the aforementioned 5 (five) day period. If such acceptance
is received within the time period specified in this clause 9, then a sale of
the series "B" stock offered by NAOF-SUB in terms hereof shall be deemed to have
been concluded with effect at the time of the receipt by NAOF-SUB of such
acceptance. AFRICA FINANCE shall forthwith pay the purchase price in respect of
the series "B" stock sold to it in full in cash without set-off or deduction
whatsoever, to NAOF-SUB at the address of NAOF-SUB set forth in clause 15.
9.3. If payment in full is not received as aforementioned by NAOF-SUB before
the expiry of 5 (five) days from the date of receipt of the acceptance notice
referred to in clause 9.2 then the sale contemplated herein shall lapse and the
provisions of this clause 9 shall cease forthwith to have any further force or
effect as between the parties.
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9.4. If within 5 (five) days after the receipt of the offer, it is not
accepted in writing in respect of all the shares offered to CHANCELLOR
CORPORATION or its nominee, then, GRAHAM EDWARD NICHOLLS or NAOF-SUB may within
a further 30 (thirty) days, but not thereafter, without again making an offer to
CHANCELLOR CORPORATION in terms of clause 9, dispose of all the shares offered.
10. APPOINTMENT OF DIRECTORS APPOINTMENT OF DIRECTORS
-------------------------- --------------------------
10.1. If AFRICA FINANCE disposes of all of its shares or the requisite part
which entitles it to appoint a director it shall remove any director of the
company appointed by it without any claims for compensation -
10.1.1. if such shares are acquired by other existing shareholders in AMC,
on payment in full of the purchase price by those purchasing shareholders; or
10.1.2. if such shares are to be acquired by a third party, on conclusion of
the sale agreement with the third party,
and AFRICA FINANCE, which appointed or nominated such director, indemnifies the
company if the directors fail or refuse to resign.
11. WARRANTIES BY CHANCELLOR CORPORATION WARRANTIES BY CHANCELLOR
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CORPORATION
-----
CHANCELLOR CORPORATION warrants in favour of AMC and NAOF-SUB that -
11.1. CHANCELLOR CORPORATION is duly incorporated, in good standing under
the laws of the Commonwealth of Massachussets, has all requisite corporate
powers and authority to own and operate its properties and assets and to carry
on its business as now conducted and as presently proposed to be conducted and
to execute and deliver this agreement;
<PAGE>
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11.2. CHANCELLOR CORPORATION has all requisite corporate power and authority
to issue and sell the series "B" stock and the CC ordinary stock, issuable upon
conversion thereof;
11.3. CHANCELLOR CORPORATION has all requisite corporate power and authority
to carry out the provisions of this agreement;
11.4. CHANCELLOR CORPORATION is duly qualified and authorised to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which failure to so qualify would have a material adverse effect on its
business, properties, prospects or financial conditions;
11.5. all corporate action on the part of CHANCELLOR CORPORATION, its
officers, directors and stockholders, necessary for the authorisation, execution
and delivery of this agreement and delivery of the series "B" stock being sold
and transferred hereunder and the CC ordinary stock issuable upon conversion
thereof, has been taken or will be taken prior to the closing date;
11.6. the sale and transfer of the series "B" stock is not and the
subsequent conversion of the series "B" stock into CC ordinary stock will not be
subject to any pre-emptive rights or rights of first refusal that have not been
properly waived or complied with;
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11.7. the series "B" stock sold and transferred in terms hereof shall, when
issued, sold, transferred and delivered in terms hereof, be duly and validly
issued, fully paid and will be free of any restrictions in respect of transfer
save for restrictions on transfer contemplated in terms of this agreement. The
CC ordinary stock issuable upon conversion of the series "B" stock being sold
and transferred hereunder has been duly and validly reserved for issuance and,
upon issuance in accordance with the terms of the Restated Certificate, shall be
duly and validly issued, fully paid-up and will be free of restrictions on
transfer other than restrictions contemplated in terms of this agreement;
11.8. no consent, approval, qualification, order or authorisation of, or
filing with any local, state or federal governmental authority is required on
the part of CHANCELLOR CORPORATION in connection with it's valid execution,
delivery or performance of this agreement, the sale and transfer of the series
"B" stock by it or the issuance of the CC ordinary stock upon conversion of the
series "B" stock, save for -
11.8.1. the filing of the Restated Certificate with the Secretary of State
of the Commonwealth of Massachussets; and
11.8.2. such filings as have been made prior to the closing date (except any
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended), or such
post-closing date filings as may be required under the applicable state
securities laws, which shall be timely filed within the applicable periods
therefor;
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11.9. all authorisations, approvals, or permits, if any, of any governmental
authority or regulatory body of the United States of America or of any states
that are required in connection with the lawful issuance and sale and transfer
of the series "B" stock sold and transferred in terms of this agreement, shall
be duly obtained and effective as of the closing date.
12. FURTHER WARRANTIES BY AFRICA FINANCE AND CHANCELLOR CORPORATION
----------------------------------------------------------------------
FURTHER WARRANTIES BY AFRICA FINANCE AND CHANCELLOR CORPORATION
------------------------------------------------------------------
AFRICA FINANCE and CHANCELLOR CORPORATION jointly and severally warrant in
favour of AMC that, on the effective date and the closing date -
12.1. both AFRICA FINANCE and CHANCELLOR CORPORATION are and will be
regularly incorporated and established according to the laws of Mauritius and
the Commonwealth of Massachussets, respectively;
12.2. no steps have been will have been taken to liquidate, whether finally
or provisionally, or to deregister AFRICA FINANCE or CHANCELLOR CORPORATION;
12.3. AFRICA FINANCE and CHANCELLOR CORPORATION have or will have sufficient
share capital and are and will be entitled and able to give free and
unencumbered title of the series "B" stock and the CC ordinary stock, as
contemplated in this agreement, to the relevant parties as contemplated in this
agreement;
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12.4. each of AFRICA FINANCE and CHANCELLOR CORPORATION is and shall be
authorised and competent to transfer and deliver the CC ordinary stock and the
series "B" stock to the relevant parties, as contemplated in this agreement;
12.5. the rights, terms and conditions of the series "B" stock, as
determined and set forth in ANNEXURE B hereto, are a complete and accurate
description, in all respects, of all the rights, terms and conditions attaching
to the series "B" stock.
13. SUBMISSION TO JURISDICTION SUBMISSION TO JURISDICTION
---------------------------- ----------------------------
The parties agree that any legal action or proceedings arising out of or in
connection with this agreement may be brought in the High Court of South Africa
(Witwatersrand Local Division) (or any successor to that court) and irrevocably
submit to the non-exclusive jurisdiction of such court. Each appoints any
person (at the address chosen in terms of clause 15) to receive for and on its
behalf service of process in such jurisdiction in any legal action or
proceedings with respect to this agreement. The parties irrevocably waive any
objection they may now or hereafter have that such action or proceeding has been
brought in an inconvenient forum. Nothing herein shall affect the right to
serve process in any manner permitted by law. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the right of
any of the parties to take proceedings against any other party in whatever other
jurisdiction the relevant party shall consider appropriate nor shall the taking
of proceedings in any one or more jurisdictions automatically preclude the
taking of proceedings in any other jurisdiction whether concurrently or not.
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The parties hereto irrevocably agree not to claim for itself or its assets
immunity from suit, execution, attachment or otherwise, to the full extent
permitted by the laws of such jurisdiction.
140 BREACH BREACH
------ ------
If any party breaches any material provision or term of this agreement (other
than those which contain their own remedies or limit the remedies in the event
of a breach thereof) and fails to remedy such breach within 5 (five) days of
receipt of written notice requiring it to do so (or if it is not reasonably
possible to remedy the breach within 5 (five) days, within such further period
as may be reasonable in the circumstances provided that the party in breach
furnishes evidence within the period of 5 (five) days, reasonably satisfactory
to the other party, that it has taken whatever steps are available to it, to
commence remedying the breach)) then the aggrieved party shall be entitled
without notice, in addition to any other remedy available to it at law or under
this agreement, including obtaining an interdict, to cancel this agreement or to
claim specific performance of any obligation whether or not the due date for
performance has arrived, in either event without prejudice to the aggrieved
party's right to claim damages.
150 ADDRESSES ADDRESSES
--------- ---------
15.1. The parties choose as their addresses for all purposes under this
agreement, whether in respect of court process, notices or other documents or
communications of whatsoever nature (including the exercise of any option), the
following addresses -
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15.1.1. AFRICA FINANCE:
Physical: c/o International Management Mauritius Limited
Les Cascades Building
Edith Cavell Street
Port Louis
Republic of Mauritius
Postal: c/o International Management Mauritius Limited
Les Cascades Building
Edith Cavell Street
Port Louis
Republic of Mauritius
Telefax: 230 212 9833
15.1.2. NAOF-SUB:
Physical: 9th Floor
Ten Sixty Six
35 Pritchard Street
Johannesburg
2001
Postal: PO Box 9431
Johannesburg
2000
Telefax: 011 836 0029
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15.1.3. CHANCELLOR CORPORATION:
Physical: 210 South Street
Boston
Massachussets
02111
USA
Postal: 210 South Street
Boston
Massachussets
02111
USA
Telefax: 617 422 5851
15.1.4. AMC:
Physical: 127 Van Riebeeck Avenue
Edenvale
1610
Postal: 127 Van Riebeeck Avenue
Edenvale
1610
Telefax: 011 452 6161
15.1.5. MANAGEMENT:
Physical: 127 Van Riebeeck Avenue
Edenvale
1610
Postal: 127 Van Riebeeck Avenue
Edenvale
1610
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Telefax: 011 452 6161
15.1.6. GRAHAM EDWARD NICHOLLS:
Physical: 127 Van Riebeeck Avenue
Edenvale
1610
Postal: 127 Van Riebeeck Avenue
Edenvale
1610
Telefax: 011 452 6161
15.1.7. ROBERT CHARLES DRAKE:
Physical: 127 Van Riebeeck Avenue
Edenvale
1610
Postal: 127 Van Riebeeck Avenue
Edenvale
1610
Telefax: 011 452 06161
15.1.8. HAROLD JOSHUA MANNE:
Physical: 127 Van Riebeeck Avenue
Edenvale
1610
Postal: 127 Van Riebeeck Avenue
Edenvale
1610
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Telefax: 011 452 6161
15.2. Any notice or communication required or permitted to be given in terms
of this agreement shall be valid and effective only if in writing but it shall
be competent to give notice by telefax.
15.3. Any party may by notice to any other party change the physical address
chosen by that party to another physical address where postal delivery occurs or
its postal address or its telefax number, provided that the change shall become
effective vis- -vis that addressee on the 10th (tenth) day from the receipt of
the notice by the addressee.
15.4. Any notice to a party -
15.4.1. delivered by hand to a responsible person during ordinary business
hours at the physical address chosen in terms hereof shall be deemed to have
been received on the day of delivery; or
15.4.2. sent by telefax to its chosen telefax number stipulated in clause
15.1, shall be deemed to have been received on the date of despatch (unless the
contrary is proved).
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15.5. Notwithstanding anything to the contrary herein contained a written
notice or communication actually received by a party shall be an adequate
written notice or communication to it notwithstanding that it was not sent to or
delivered at its chosen address.
160 WHOLE AGREEMENT, NO AMENDMENT WHOLE AGREEMENT, NO AMENDMENT
-------------------------------- --------------------------------
16.1. This agreement constitutes the whole agreement between the parties
relating to the subject matter hereof.
16.2. No amendment or consensual cancellation of this agreement or any
provision or term hereof or of any agreement, bill of exchange or other document
issued or executed pursuant to or in terms of this agreement and no settlement
of any disputes arising under this agreement and no extension of time, waiver or
relaxation or suspension of any of the provisions or terms of this agreement or
of any agreement, bill of exchange or other document issued pursuant to or in
terms of this agreement shall be binding unless recorded in a written document
signed by the parties (or in the case of an extension of time, waiver or
relaxation or suspension, signed by the party granting such extension, waiver or
relaxation). Any such extension, waiver or relaxation or suspension which is so
given or made shall be strictly construed as relating strictly to the matter in
respect whereof it was made or given.
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16.3. No extension of time or waiver or relaxation of any of the provisions
or terms of this agreement or any agreement, bill of exchange or other document
issued or executed pursuant to or in terms of this agreement, shall operate as
an estoppel against any party in respect of its rights under this agreement, nor
shall it operate so as to preclude such party thereafter from exercising its
rights strictly in accordance with this agreement.
16.4. To the extent permissible by law no party shall be bound by any
express or implied term, representation, warranty, promise or the like not
recorded herein, whether it induced the contract and/or whether it was negligent
or not.
SIGNED by the parties and witnessed on the following dates and at the following
places respectively:
DATE PLACE WITNESS SIGNATURE
- ---- ----- ------- ---------
For: AFRICA FINANCE CORPORATION
1.
2.
For: NEW AFRICA OPPORTUNITY FUND SUB TWO LLC
1.
2.
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DATE PLACE WITNESS SIGNATURE
- ---- ----- ------- ---------
For: CHANCELLOR CORPORATION
1.
2.
For: AFINTA MOTOR CORPORATION (PROPRIETARY) LIMITED
1.
2.
1.
GRAHAM EDWARD NICHOLLS
2.
1.
ROBERT CHARLES DRAKE
2.
1.
HAROLD JOSHUA MANNE
2.
<PAGE>
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ANNEXURE AANNEXURE A
----------------------
<PAGE>
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ANNEXURE B ANNEXURE B
----------- -----------
<PAGE>
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ANNEXURE C ANNEXURE C
----------- -----------
[see clause 6.1]
<PAGE>
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TABLE OF CONTENTS
CLAUSE NO. DESCRIPTION PAGE
1. INTERPRETATION AND PRELIMINARY 2
2. RECORDAL 7
3. REPAYMENT OF LOAN ACCOUNT 7
4. DEBT/EQUITY CONVERSION 7
5. SHARE SWOP 8
6. WORLDWIDE DISTRIBUTION RIGHTS 10
7. RIGHTS OF FIRST REFUSAL AND TRANSFERS OF SHARES 11
8. FORCED SALES 14
9. SALE OF SERIES "B" STOCK BY NAOF-SUB 17
10. APPOINTMENT OF DIRECTORS 19
11. WARRANTIES BY CHANCELLOR CORPORATION 19
12. FURTHER WARRANTIES BY AFRICA FINANCE AND CHANCELLOR CORPORATION 22
13. SUBMISSION TO JURISDICTION 23
14. BREACH 24
15. ADDRESSES 24
16. WHOLE AGREEMENT, NO AMENDMENT 29
ANNEXURE A 1
ANNEXURE B 1
ANNEXURE C 1
EXCLUSIVE WORLD WIDE
DISTRIBUTION AGREEMENT
BETWEEN
AFINTA MOTOR CORPORATION
AND
CHANCELLOR AFRICA CORPORATION
AND
AFRICA FINANCE CORPORATION
<PAGE>
TABLE OF CONTENTS
-----------------
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
<PAGE>
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
- ---------- ------------------------
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
- ---------- -------------------------------
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
- ---------- ---------------
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
- ---------- ------------------------
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
- ---------- -----------------------------
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
- ---------- -------------------
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
- ---------- -----------------------
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
- ---------- ------------------------------
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
- ---------- ----------------------------------------------
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
- ----------- ---------------------------
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
- ----------- --------------------------------
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
- ----------- --------------
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
- ----------- ------------------------------
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
- ----------- ------------------------------------
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
- ----------- ---------------------------------------------------------------
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
- ----------- ---------------------
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
- ----------- -------------
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
- ----------- -----------------------------------
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
- ----------- ------------------
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
- ----------- -----------------------------------
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
- ----------- -----------------------------------------------
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
- ----------- -------------------------------
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
- ----------- ------------------------
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
- ----------- ---------------------------------------------------
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
- ----------- ----------------------------------------------------------------
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
- ----------- ---------------
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
______________________________ _______________________________
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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:
<PAGE>
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
___________________________ _____________________________
<PAGE>
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.
Contact: Chancellor Corporation
(617) 368-2700
[email protected]
http://www.chancellorcorp.com
FOR IMMEDIATE RELEASE
CHANCELLOR ACQUIRES INTEREST IN AFINTA MOTOR CORPORATION
NOVEMBER 17, 1999. BOSTON, MA. Chancellor Corporation (OTC: CHLR) announces
today that it has made an investment in Afinta Motor Corporation (Pty.) Ltd.
("AMC"). AMC is the one of the largest manufacturers/assemblers of light
commercial vehicles including trucks, tractor trailers, buses, automobiles and
sport utility vehicles in the Republic of South Africa. In addition to an
approximate 15% equity stake in AMC, Chancellor has also acquired the exclusive
worldwide distribution rights for AMC's products outside of Africa, England,
Scotland and Wales. Chancellor will also receive a seat on AMC's board of
directors. Terms of the investment were not disclosed.
As a result of this investment, Chancellor will benefit from increasing its
exposure into a key high growth international market. AMC will also benefit
from Chancellor's more than two decades of equipment financing and remarketing
experience. Chancellor will provide advisory services to AMC and its captive
finance subsidiary Afinta Financial Services, especially with respect to
structuring vehicle financing packages and developing the secondary market for
transportation equipment.
Chancellor Chairman and CEO, Brian M. Adley, commented on the Company's
investment in AMC: "We view this investment as an important step in developing
an international presence in our key target markets. Chancellor shareholders
will benefit substantially from the Company's investment in AMC and the access
to new markets and opportunities that this investment is anticipated provide.
The South African market is a high growth area and we believe that our
investment in AMC will enable us to further capitalize on the significant market
opportunities overseas.
"Chancellor recently reported substantial growth in its operating results
through the nine months ended September 30, 1999," Adley continued. "As a
result of our continued growth, the management is seeking to maximize the
Company's growth opportunities, which are expected to contribute to its
continued growth. After much research and analysis over the past two years, we
have decided that this investment made the most sense to capitalize on these
opportunities while preserving our focus on continuing the exponential growth we
have been experiencing in our domestic market. We also believe that the
acquisition of the worldwide distribution rights will make it possible to bring
AMC's vehicles to the US and other countries, providing the Company with another
potential revenue stream."
Chancellor has been investigating opportunities in South Africa as early as
August 1997 as part of its long-term growth strategy. The Company is making
this investment in AMC with a number of large institutional investment firms led
by a $120 million OPIC backed investment fund that include SunAmerica, Citibank
and Northwestern Mutual Life as some of its limited partners. Aside from
Chancellor's investment into AMC, this fund has committed over $10,000,000.00 of
capital to fund the future growth of AMC.
About Chancellor Corporation
Chancellor Corporation is spearheading an evolution in transportation equipment
finance through innovative financing and fleet management programs. The Company
seeks to reduce a customer's total holding cost through its "Wholesale-Plus"
lease pricing strategy and through other value-added services, including asset
management, equipment maintenance, fuel management and data management
strategies. Since its founding in 1977, Chancellor has completed a total of
approximately $1.5 billion in equipment lease transactions for its Fortune 500
and middle market customers in the U.S. and select international markets.
Chancellor is a transportation equipment finance and fleet management solutions
provider headquartered in Boston. The Company's Internet address is
http://www.chancellorcorp.com. The Company is publicly traded under the symbol
"CHLR".
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
The statements contained in this release which are not historical facts may be
deemed to contain forward-looking statements with respect to events, the
occurrence of which involve risks and uncertainties, including, without
limitation, demand and competition for the Company's lease financing services
and the products to be leased by the Company, the continued availability to the
Company of adequate financing the ability of the Company to recover its
investment in equipment through remarketing, and other risks and uncertainties
detailed in the Company's Securities and Exchange Commission filings.
- -END-
