DATE

2016

UCHUMI SUPERMARKETS LIMITED

-ANDTHE GOVERNMENT OF THE REPUBLIC OF KENYA
(THROUGH THE MINISTRY OF INDUSTRY, INVESTMENT &TRADE)
-WITH-

.
(Representative of the Suppliers)

_______________________________________________

AGREEMENT FOR RESTRUCTURING OF DEBT AND THE SUPPLY

OF GOODS
__________________________________________________
DRAWN BY: MURIU, MUNGAI & CO.
ADVOCATES
MMC Arches
Spring Valley Crescent
Spring Valley Road
Westlands
P. O. Box 75362-00200,
NAIROBI - KENYA
Tel: 254-020-2167301/2/0720 585 785

(Our Ref: D2/UBA/002/16)

THIS AGREEMENT (this Agreement) is made theday of
May 2016
BETWEEN:
(1)

UCHUMI SUPERMARKETS LIMITED whose address is care of

P.O. Box Number , Nairobi in the Republic of Kenya
(hereinafter referred to as the Company which shall where
the context so admits include its successors and assigns) of the
one part;

(2)

THE

GOVERNMENT

THROUGH

OF
THE

THE

REPUBLIC

OF

MINISTRY

KENYA

OF

INDUSTRY,INVESTMENT&TRADE, Teleposta Building ,Nairobi

(hereinafter called the Government)
(3)

THE SUPPLIER REPRESENTATIVE having authority and duly

authorised by Suppliers appearing in Schedule 1 to enter into
this Agreement (Hereinafter referred to as the Supplier which
expression shall where the context so admits include its
successors and assigns) of the other part.

WHEREAS:
(1)

The Company is indebted to various suppliers and service

providers arising from supplies delivered and services done to
the Company.

(2)

The Suppliers Representative has been duly authorised by the

Suppliers listed in schedule one hereto who are suppliers of
Goods/Services (The Goods) to Uchumi Supermarkets Limited;

(3)

The said Suppliers have made claims for the supply of Goods and
delivery of services to the Company on diverse dates to the tune
more particularly set out in schedule two herein and which
claims shall be subject to reconciliation for each individual claim;

(4)

Proposals have been put forward by various Creditors and

Shareholders of the Company with a view to restructuring and
financing the revival of the Company as a going concern; and

(5)

The Suppliers have at the request of the Company and as part of

the proposal to revive the Company agreed to restructure its
existing debt with the Company and to continue to supply
goods/services to the Company on the terms and conditions set
out in this Agreement.

NOW IT IS AGREED AS FOLLOWS:

1.

Definitions and Interpretation

1.1

The following terms shall have the following meanings for the
purposes of this Agreement:
1.1.1 Conditions means the terms and conditions of sale set
out in this Agreement and any special terms and conditions
agreed in writing by the Supplier;
1.1.2 Delivery Date means the date specified by the Supplier
when the goods are to be delivered or the actual date on
which goods are delivered to the Company;
1.1.3 Goods means the goods, articles and/or services which
had been sold and delivered and/or rendered to the

Company or that the Company agrees to buy from the

Suppliers;
1.1.4 Price means the price for the Goods including, carriage,
packing, insurance and includes Value Added Tax (VAT) or
any other Taxes as may in law apply to the Goods in
question;
1.1.5 Supplier Council shall mean the persons appointed
under Clause 9.5 of this Agreement
1.1.6 Perishable

Goods

shall

mean

fresh

fruits

and

vegetables and foodstuffs with an ordinary shelf life of less

than seven days.
1.1.7 The Company means Uchumi Supermarkets Limited.
1.1.8 Non-Perishable Goods shall mean all other goods
other than Perishable goods.
1.1.9 Down-payment means the amount payable by the
Company to the Supplier at the commencement of the
term to retain the services of the Suppliers.
1.1.10

Suppliers means all the persons set out in

Schedule One herein either jointly and/or severally as the

context may permit.
1.1.11

Commencement Date means the date of this

agreement.
1.1.12

Old Debt shall mean all unsecured amounts due

and owing to the Supplier from Uchumi Supermarkets

Limited as at the date of execution of this agreement and

as set out in Schedule Two herein.
1.1.13

the Term means the period specified in Schedule

Three hereto.
1.1.14
1.2

month means calendar month.

The clause paragraph and schedule headings contained in

this Agreement do not form part of this Agreement and shall not
be taken into account in its construction or interpretation.
1.3

Words importing one gender include all other genders and

words importing the singular include the plural and vice-versa.

1.4

Where any party to this Agreement for the time being

comprises two or more persons obligations expressed or implied

to be made by or with that party are deemed to be made by or
with the persons comprising that party jointly or severally.
1.5

Unless expressly stated to the contrary any reference to a

specific statute includes any statutory extension or modification

amendment or re-enactment of that statute and any regulations
or orders made under it and any general reference to statute
includes any regulations or orders made under that statute.
1.6

The schedules to this Agreement and any covenants and

obligations contained therein shall form part of this Agreement in

their entirety and shall be construed accordingly.
2.

Appointment
The Company appoints the Suppliers to supply and deliver the
Goods for the Term subject to the terms and conditions set out in

this Agreement in return for the payments herein reserved and

the Suppliers hereby agrees to do so.
3.

Conditions Precedent and of Purchase

3.1

The Conditions shall apply to all contracts for the purchase of

Goods by the Company from the Suppliers to the exclusion of all
other terms and conditions including any terms or conditions
which the Suppliers may purport to apply under any sales offer
or similar document unless the said later terms are expressly
agreed to by the Company in writing.

3.2

Receipt of the Goods by the Company by way of a Goods

Received Note (GRN) shall be deemed conclusive evidence of
the Companys acceptance of these Conditions.

3.3

Any variation of these Conditions (including any special terms

and conditions agreed between the parties) shall be inapplicable
unless agreed in writing by the parties hereto.

3.4

The respective parties will ensure that they obtain the consents,
authorisations and approvals necessary from the persons they
represent to give effect to this agreement as a condition
precedent to this agreement.

4.

Price and Payment

4.1

The Price shall be determined as between each supplier and the

Company and shall be exclusive of VAT which shall be due at the
rate applicable on the date of the Suppliers invoice unless the
law otherwise demands.

4.2

Payment of the Price and VAT for goods shall be due within a
period of Thirty [30] days of the date of supply of the goods and
all such payment shall be based on the sales report from the
Company for the product supplied and subsequently sold.

5.

Restructuring of Old Debt

5.1

The Suppliers have hereby agreed to the restructure of the Old

Debt as follows;
i)

to convert such portion of the Old Debt as more

particularly indicated in Schedule 2 into shares, or
such other debt/or equity instrument as may be
deemed appropriate by all the parties in the
Company.

ii)

80% of the net proceeds to the Company from sale

of land by the Company shall be used to pay the Old
Debt.

iii)

100% of the sum injected from the Government in

form of a Loan to the Company shall be used to pay
any outstanding balance of the Old Debt.

iv)

The balance of the Old Debt, if any, as at

1s

t August

2016 shall be paid out of any surplus funds from the

business in equal monthly instalments with effect
from

1s

t August 2016 over a period that shall be

agreed between the Company and each individual

Supplier.

5.2

Provided that if the amount due from the Company to any of the
Suppliers, in respect to the old debt, is less than Kenya Shillings
Two Hundred Thousand (Kshs. 200,000.00) any such Supplier
shall be paid in full immediately upon injection of the loan from
the Government or upon receipt of balance of the net proceeds
from the sale of the property known as Land Reference Number
209/399/3, whichever is earlier.

5.3

Where the Supplier was the operator of a Speciality Shop in the

Companys premises the terms of this agreement will apply to
them to the extent of restructuring of the Old Debt but the said
Suppliers will continue to operate the Speciality Shops in
accordance with the respective agreements in place with the
Company or such new terms as may be agreed.

6.

The Goods

6.1

The quantity and description of the Goods shall be as set out in

the Purchase Order from the Company and/or the Suppliers
quotation.

6.2

The Suppliers will retain title of the goods supplied to the

Company until payment of the purchase price in full.

6.3

The

Suppliers

shall

ensure

that

all

the

Goods

shall

be

manufactured, stored, tested and packed in accordance with all

international and Kenyan Standards applicable to them under
Kenyan Law and that all the Goods are of merchantable quality

and fit for the purposes for which the Company intends to use
such Goods.
6.4

All representations, statements or warranties made or given by

the Supplier, its servants or agents in writing or in any of the
Suppliers brochures catalogues and advertisements regarding
the quality and fitness for purpose of the Goods or any of the
Goods shall be deemed to be express conditions of this
Agreement.

7.

Warranties and liability

7.1

The Suppliers warrant that the Goods will at the time of delivery
correspond to the description given by the Suppliers and all other
warranties conditions or terms relating to fitness for purpose
merchantability or condition of the Goods and whether implied
by statute or common law or otherwise are hereby included.

8.

Delivery of the Goods

Delivery of the Goods shall resume immediately upon execution
of this agreement and shall be made to such designated
collection point as the Company may from time to time decide.

9.

Miscellaneous

9.1

Warranty

Each of the parties hereto warrants its power to enter into this
Agreement and has obtained all necessary approvals to do so.
9.2

Receipt
The receipt of any money by either of the parties shall not
prevent either of them from questioning the correctness of any
statement in respect of such money.

9.3

Force majeure
All parties shall be released from their respective obligations in
the event of national emergency, war, prohibitive governmental
regulation or any other cause beyond the reasonable control of
the parties which renders the performance of this Agreement
impossible including but without limiting the generality of the
foregoing;
9.3.1 strikes, lock-outs, labour disputes of any kind, partial or
general stoppages of labour, or refusals to perform any
kind of work, whether or not any of the foregoing are
lawful, or relate to that partys own employees or others;
9.3.2 war, hostilities, terrorist activity, or any local or national
emergency;
9.3.3 any regulation, order or request of, or interference by any
international, national, port or other public authority or any
person purporting to act for such authority;
whereupon this Agreement shall be determined and PROVIDED
ALWAYS

that

the

party

prevented

from

performing

its

obligations under this Agreement as provided in this Clause 9

10

shall notify the other party in writing of its inability at the earliest
practicable time.
9.4

Government Loan
The Company has requested for a loan from Government of
Kenya Shillings One Billion Two Hundred Thousand (Kshs.
1,200,000,000.00) and has applied that the said amount, once
injected into the Company, be treated as a loan to the Company
repayable over such period as shall be approved by Cabinet
and/or agreed between the Company and the Government.

9.5

Management and Control of Old Debt

9.5.1.

The parties agree that during the currency of this

agreement
and as long as the amount due to the Suppliers in respect
to the old debt is outstanding the management and control
of the payment of the old debt by the Company shall be
vested in a Suppliers Council which shall have all the
powers ordinarily vested in the Management of the
Company, but only in so far as it relates to the payment of
old debts.

9.5.2. The Suppliers Council shall consist of representatives from

the
following;
9.5.2.1. the Government;

11

9.5.2.2. the Company;

9.5.2.3. the Shareholders;
9.5.2.4. the Suppliers, and
9.5.2.5. the Landlords.
9.5.3.

The suppliers who have agreed to convert their old

debt or any part thereof as equity, as set out in Schedule 2

herein, shall as a condition to conversion of their said debt
into equity and on continued supply of Goods to the
Company on the terms herein and as long as the said
shares remain unsold be entitled to representation in the
said Suppliers Council by at least Two (2) Members
selected from the group of such Suppliers.
9.6

Thresh hold
The parties herein will be at liberty to terminate this agreement if
in the considered view of the Company the number of Suppliers
who sign up to this agreement is not sufficient to make the
proposed restructuring viable.

9.7

Accounts and Statement of Sales

9.7.1.

The Company shall open an escrow Account, so long as the

old debt remains outstanding, in a Bank to be agreed with
the Suppliers Council and the signatories of the said
Account shall be representatives of the management of the
Company and those of the Suppliers Council.

12

9.7.2.

All costs of goods sold for the new supplies shall be

deposited in the escrow account and the same shall be
used to settle the current debt based on sales reports in
the manner determined by the Supplier Council.

9.7.3. The Company shall give the Suppliers Council a full

account and statement of the Goods in the Companys
possession at the time of signing this Agreement and
thereafter submit to the said Council a monthly schedule of
all goods sold by the Company from the new supplies
delivered by the Suppliers after the date of execution of
this agreement and the proceeds therefrom on a monthly
basis until the old debt is paid in full.
9.8

Further Agreements
The restructuring of the Company may require the participation
and consent of various other parties including the Secured
Creditors,

Shareholders

and

Regulatory

Authorities,

where

necessary. The parties herein agree to give all approvals, consents

and sign all documents necessary to the restructuring as proposed
herein.
9.9

Resumption of supplies to the Company

The parties agree that the Suppliers will commence delivery of
supplies to the Company immediately upon execution of this
agreement but in any event not later that 23 rd May 2016 on the
terms set out in this agreement.

9.10

Severance

13

Each of the provisions hereof is severable and distinct and if any

provision in this Agreement is declared by any judicial or other
competent authority to be void, voidable, illegal or otherwise
unenforceable the remaining provisions of this Agreement shall
remain in full force and effect.
9.11 Alteration of agreement
The terms and conditions of this Agreement may only be altered
in writing and any such alteration shall only become effective
after it has been signed by the parties hereto.
9.12 Supersedes prior agreements
This Agreement supersedes any prior offers or agreement(s)
between the parties on payment of old debts whether written or
oral and any such prior agreements are cancelled as at the
Commencement Date but without prejudice to any rights which
have already accrued to either of the parties provided that the
terms of any existing joint business plans executed between the
Company and any of the Suppliers shall remain in force unless
expressly varied by this Agreement.
9.13 Change of address
Each of the parties shall give notice to the other of the change or
acquisition of any address or telephone number at the earliest
possible opportunity but in any event within forty-eight [48]
hours of such change or acquisition.
9.14 Notices

14

Any notice or demand required to be given under this Agreement

shall be in writing and shall be deemed to have been properly
served on the party concerned if delivered by hand or sent by
registered post at the address set out in this Agreement or to
such other address as that party shall have previously notified to
the sender. In the absence of earlier receipt any notice or
demand shall be deemed to have been received if delivered by
hand at the time of delivery or if sent by registered post [5] days
after the date of posting notwithstanding that it be undelivered
or returned undelivered. Where a notice or demand is sent by
registered post it will be sufficient to prove that the notice or
demand was properly addressed and posted.
9.15 Rights and remedies cumulative
All rights and remedies granted to either of the parties are
cumulative and not exclusive of any rights and remedies
provided by law and no exercise by either of the parties of any
right or remedy under this Agreement shall restrict or prejudice
the exercise of any other right granted by this Agreement or
otherwise available to it.
9.16 Waiver
No failure or delay by either party to enforce at any time or for
any period any one or more of the terms or conditions of this
Agreement shall operate as a waiver of them or of the right at
any time subsequently to enforce all terms and conditions of this
Agreement.
9.17 Costs

15

Each of the parties shall pay any costs and expenses incurred by
it in connection with the preparation of this Agreement.
9.18 Proper law
This Agreement shall be governed by the law of the Republic of
Kenya in every particular including formation and interpretation
and shall be deemed to have been made in the said Republic.
10.

Dispute Resolution
10.1. All disputes or differences which at any time arise between
the parties whether during the Term or afterwards touching
or concerning this Agreement or its construction or effect
or the rights duties or liabilities of the parties under or by
virtue of it or otherwise or any other matter in any way
connected with or arising out of the subject matter of this
Agreement shall first be resolved through mediation. The
parties may agree on a Mediator and in the event there is
no settlement through mediation within a period of
Fourteen (14) day from the date of the notice of the
dispute shall be referred to arbitration.
10.2. The reference to arbitration shall be to a single Arbitrator
who shall be agreed upon by the parties or in default of
agreement by the Chairman for the time being of the
Chartered Institute of Arbitrators in accordance with the
provisions of the Arbitration Act No. 4 of 1995 or any
statutory modification or re-enactment of it for the time
being in force whose decision in relation to any such

16

dispute or difference shall be final and binding on the

parties hereto.

17

IN WITNESS WHEREOF the parties hereto have executed this

Agreement the day and year first hereinbefore written.
SEALED by the COMMON SEAL

of UCHUMI SUPERMARKETS LIMITED )

In the presence of :Director

)
)
)

Director/Secretary

SIGNED for and on behalf of

The Government

)
)
)

PERMANENT SECRETARY

MINISTRY OF TRADE & INDUSTRIALISATION )

)
SIGNED by the duly appointed

Representatives of the Suppliers

)
)
)
)
)

18

THE FIRST SCHEDULE HEREINBEFORE REFERRED TO

List of the Suppliers

THE SECOND SCHEDULE HEREINBEFORE REFERRED TO

Breakdown of the Goods and Amounts due from the Suppliers

THE THIRD SCHEDULE HEREINBEFORE REFERRED TO

The Commencement Date the Down-payment and the Term
Commencement

: 20th May 2016

The Term

: This Agreement shall remain in force for as long as

the amount due to the Suppliers in respect to the
old debt is outstanding.

19