SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
_________________________________________________________________
____
Date of Report (Date of earliest event reported) June 11, 1996
First South Africa Corp.,
Ltd.
(Exact name of registrant as specified in its charter)
Bermuda
0-27494 N/A
(State or other jurisdiction (Commission (IRS
Employer
or incorporation) File Number)
Identification No.)
Clarendon House, Church Street, Hamilton
HM CX, Bermuda
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (809) 295-1422
Not
Applicable
(Former name or former address, if
changed since last report)
Item 2. Acquisition or Disposition of Assets.
On June 3, 1996 First South Africa Corp., Ltd., through
its wholly owned subsidiary corporation, First South
African Holdings (Pty) Ltd., acquired all of the
outstanding stock and assets of Piemans Pantry Proprietary Ltd.,
and Surfs- Up Proprietary Ltd. ( collectively referred
to as Piemans Pantry) from John Welch, Heinz Andres and
Michael Morgan. Piemans Pantry is engaged in the
business of manufacturing, processing and distributing fine
quality meat, vegetarian and fruit pies for sale to the
South African market. First South Africa Corp., Ltd.,
intends to continue to operate the existing business of Piemans
Pantry.
The consideration for all of the stock and assets of
Piemans Pantry was 40 million South African Rand (
approximately $9.2 million). This price was calculated
based on a multiple of Piemans Pantrys audited net earnings
for fiscal year ended February 28, 1996. Such payment will
be made as follows:
1. On closing an amount equal to 18,345,000
million South African Rand (approximately
$4,215,000) in cash. An additional 331,579 First South
African Holdings, Class B shares. Such shares are valued at
$1,657,895 at a price of $5.00 a share.
2. A second payment will be made based on the
results for the year ended February 28, 1997. The
amount payable will be 4 (four) times the pre-tax
profits for the year ended February 28, 1997 multiplied by a
factor of 20% (the second installment). The second installment
will be payable 62.5% in cash and 37.5% in First
South African Holdings Class B Shares. The price of
the First South African Holdings shares, for the
purpose of the second installment, will be as follows:
2.1 If profits before taxation for the year
ended February 28, 1997 are in excess of 10
million South African Rand then the First
South African Holdings shares will be allotted at the lower of
the Rand Share Price per share and a price
equal to the February 28,1996 exchange rate
multiplied by the closing price of the shares of
Common Stock of First South Africa Corp., Ltd, a
Bermuda registered company quoted on NASDAQ, on February 28,
1997.
2.2 If profits before taxation for the year
ended February 28, 1997 are less than 10 million
South African Rand, then the shares will be
allotted at a price equal to the greater of the Rand Share
Price per First South African Holdings shares and a price equal
to the exchange rate on February 28, 1997 multiplied by
the closing price of First South Africa
Corp., Ltd., shares of Common Stock on February
28, 1997. The exchange rate used for purposes of
calculating the rand value of the First South
African Holdings shares will be the average between the buy and
sell exchange rates at the close of trading of the South
African Rand to the United States Dollar
exchange rate as quoted by the Standard Bank
of South Africa (the exchange rate). The second
installment will be paid on or before May 31,
1997.
3. A third payment will be made based on the
results for the year ended February 28, 1998. The
amount payable will be 4 (four) times the pre-tax
profits for the year ended February 28, 1998 multiplied by a
factor of 20% (the third installment). The third installment
will be payable 62.5% in cash and 37.5% in First
South African Holdings shares. The price of the
First South African Holdings Class B shares, for the
purpose of the third installment, will be as follows:
3.1 If profits before taxation increase by
at least 20% over the profit before taxation
for the year ended February 28, 1997 then the
First South African Holdings shares will be allotted at the lower
of the Rand Share Price per share and a price equal to the
February 1996 exchange rate multiplied by the closing price of
the shares of Common Stock of First South Africa Corp., Ltd.,
on February 28, 1998.
3.2 If profits before taxation shows growth
of less than 10% , then the First South African
Holdings shares will be allotted at a price
equal to the greater of the Rand Share Price per First South
African Holdings shares and a price equal to the exchange rate on
February 28, 1998 mmultipliedby the closing
price of First South Africa Corp., Ltd.,
shares of Common Stock on February 28, 1998. The
third installment will be settled on or before May 31, 1998.
First South Africa Corp., Ltd., paid the initial cash
component through a combination of its own cash
resources and local South African bank borrowings
through NedCor.
Item 7. Financial Statement and Exhibits.
(a) Financial Statements of Businesses Acquired.
Pursuant to Instruction (b) (2) of Item 7, Form K, the
registrant shall file the required financial statements of
Piemans Pantry (Pty) Limited within sixty days after June 15,
1996.
(b) Pro Forma Financial Information. Pursuant to
Instruction ( b) (2) of Item 7, Form K, the registrant
shall file the required financial statements of Piemans
Pantry (Pty) Limited within sixty days after June 15, 1996.
(c) Exhibits. The following exhibits are attached
hereto:
1. Sale of Shares Agreement dated March
11, 1996 among John Welch, Heinz Andres and Michael
Morgan, (collectively the sellers) and First South
African Holdings (Pty) Ltd., a South African Corporation and
First South Africa Corp., Ltd., a Bermuda
Corporation (collectively the buyers).
2. Form of Escrow Agreement among the American
Stock Transfer and Trust Company, a New York
Corporation and the sellers and the buyers.
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 hereunto duly authorized.
FIRST SOUTH AFRICA CORP., LTD.
By: /s/ Clive Kabatznik
President
DATED: June 11, 1996
ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 Heinz Andreas
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30
000 000 A class ordinary shares of R0,0001 each
and 10 000 000 B class ordinary shares of
R0,0001 each (FSAH B class shares).
2.2 All of the issued A class ordinary shares in FSAH
are owned by the Parent.
2.3 The rights and obligations attached to the FSAH B
class shares are recorded in the quotation from
the articles of association of FSAH recorded on
Schedule 1 hereto.
2.4 The Parent has an authorised share capital
comprising of Common Stock, registered with the
Securities and Exchange Commission and listed for
trading on NASDAQ in compliance with all
applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and
listed.
2.5 FSAH has agreed to allot and issue and the
Subscriber has agreed to subscribe for 149 210
FSAH B class shares (subscription shares) and
the Parent has agreed to simultaneously allot and
issue to the Escrow agent which has agreed to
subscribe for 149 210 Parent B class stock
(Escrow stock).
2.6 Insofar as prevailing circumstances and laws allow
and subject to the restrictions recorded herein
the Parent and FSAH wish, by the conclusion and
implementation of this agreement, to enable the
Subscriber to trade in the subscription shares for
value and in circumstances which are pari passu
with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and
promises herein contained and other good and
valuable consideration the adequacy of which is
hereby acknowledged, the parties have reached the
agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to
receive, hold and dispose of the Escrow stock in
accordance with the provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of
this agreement accepts its appointment as Escrow
agent upon and subject to the terms and conditions
of this agreement.
3.3 The appointment of the Escrow agent will become
effective against delivery of the Escrow stock to
the Escrow agent and will continue in effect until
the Escrow stock, all dividends or other benefits
accruing thereto and all proceeds derived from the
sale or other disposition thereof has been
distributed in accordance with this agreement
(Escrow period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber
of the subscription shares the Parent will allot
and issue the Escrow stock to the Escrow agent for
a consideration of US$.01 per share payable to the
parent on behalf of the Escrow agent by Michael
Levy who will thereby acquire no claim against the
Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow
agent will confirm in writing delivered to the
Subscriber that the Escrow stock has been
delivered to it unconditionally, in negotiable
form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow
agent will retain possession of and control over
the Escrow shares and will at the request of the
Subscriber inform the remaining parties of the
physical location of all documents and records
evidencing the Escrow stock and requisite to
trading therein.
4.4 Insofar as circumstances and the law allow the
Escrow agent will retain the Escrow stock in
negotiable and freely tradeable form throughout
the Escrow period, subject only to the
restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will receive
all money, securities, rights or property distributed
in respect of the Escrow stock including any such
property distributed as dividends or pursuant to any
stock split, merger, recapitalisation, dissolution,
total or partial liquidation of the Parent (excluding
only dividends paid to the Escrow agent by the Parent
to the extent that the Subscriber has in relation to the
same period been paid dividends on the Subscription
shares): all such property to be held and distributed
as herein provided and hereinafter referred to
collectively as "Escrow property". Reference herein to
Escrow stock will be deemed to include the Escrow
property deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as
defined in Section 1(p) of the bye-laws of the
Parent) if any of the Escrow stock is sold by the
Escrow agent pursuant to this agreement it will
automatically convert into a share of common stock
in the parent.
6.2 None of the Escrow stock may be sold in
contravention of the restrictions set out in
clause 12 of the sale of shares agreement entered
into among John Welch, Heinz Andreas, Michael
Morgan, Parent and FSAH, (the sale agreement) on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold
and transferred in compliance with this agreement
and the Securities Act of 1933 as amended and the
rules and regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy
will have the sole power to vote the Escrow stock
and any securities held in escrow as part of the
Escrow property to which end the Escrow agent
hereby irrevocably appoints Michael Levy as its
proxy to vote the Escrow stock on its behalf at
any meeting of the shareholders of the Parent and
at any adjournment thereof which shall take place
during the Escrow period. The Escrow agent
undertakes that it will execute and deliver to
Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock
and any securities comprising the Escrow property
against demand by Levy following delivery of the
Escrow stock or other securities as the case may
be.
6.5 Each certificate evidencing the Escrow stock will
bear the following legends in addition to any
others required by law:
The sale, transfer, hypothecation,
negotiation, pledge, assignment, encumbrance
or other disposition of the shares evidenced
by this certificate are restricted by and are
subject to all of the terms, conditions and
provisions of an escrow agreement entered
into amongst First South Africa Corp., Ltd,
First South African Holdings (Proprietary)
Limited, American Stock Transfer & Trust
Company and Heinz Andreas, a copy of which
may be obtained from the secretary of First
South Africa Corp., Ltd. No transfer, sale
or other disposition of these shares may be
made unless the specific conditions of such
agreement are satisfied.
The shares evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended. No transfer, sale
or other disposition of these shares may be
made unless a registration statement with
respect to these shares has become effective
under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of
Counsel satisfactory in form and substance to
it that such registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided
that the Escrow stock is capable of being sold in
accordance with the provisions of this agreement
and the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder,
the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of
South Africa, Webber Wentzel Bowens or its
principal successor-in-practice, of written notice
accompanied by the original share certificate/s
evidencing the put shares together with securities
transfer form/s relating thereto signed and
completed in negotiable form according to law
(put notice) to require and oblige the Escrow
agent to purchase the subscription shares or any
part thereof but no fewer than 100 subscription
shares (or such lesser number as constitutes all
of the remaining subscription shares held by the
Subscriber) in relation to any single put notice,
for the consideration and upon the terms and
conditions hereinafter recorded.
7.2 Against delivery of the put notice the Escrow
agent will, in compliance with applicable
securities laws, use every reasonable effort to
sell as expeditiously as possible, at the best
possible price and on the best available terms so
much of the Escrow stock as is equal to the
subscription shares put to the Escrow agent in
terms of the put notice and to implement and
enforce its rights and obligations arising from
such sale.
7.3 The put notice will be unconditional and
unqualified save only that the Subscriber will be
entitled to stipulate a minimum price (prescribed
price) expressed in US dollars per share at which
he is willing to sell the relevant subscription
shares put to the Escrow agent in terms of the put
notice (put shares). If the put notice contains
a prescribed price:
7.3.1 the Escrow agent will not be entitled to sell
the equivalent number of Escrow stock
pursuant to 7.2 above for a price less than
the prescribed price;
7.3.2 if the Escrow agent is unable to sell the
equivalent number of Escrow stock for a price
at least equal to the prescribed price within
thirty days from delivery of the relevant put
notice then the put notice will automatically
lapse and be of no further force or effect;
7.3.3 the Escrow agent will, notwithstanding the
prescribed price, seek to achieve the best
possible price for the Escrow stock as
expeditiously as possible pursuant to 7.2
above;
7.3.4 if the Escrow agent cannot achieve the sale
of the relevant Escrow stock for a price equal to or
more than the prescribed price it will inform the
Subscriber of its inability and of the best price at which
it is able to sell the relevant Escrow stock.
7.4 Against the sale by the Escrow agent of the
relevant number of Escrow stock the Escrow agent
will be deemed to have purchased the subscription
shares recorded in the relevant put notice (put
shares) upon and subject to the following terms
and conditions:
7.4.1 the price payable for the put shares will be
equal to the price payable for the equivalent
Escrow stock sold less any applicable
brokerage fees, securities tax, duty or
charge properly incurred;
7.4.2 the price for the put shares will be payable
by the Escrow agent to the Subscriber against
receipt by the Escrow agent of the price
payable for the relevant Escrow stock sold;
7.4.3 as security for the payment of the price for
the put shares the Escrow agent will be
deemed to have ceded, assigned and made over
unto and in favour of the Subscriber all of
the Escrow agent's right, title and interest
in and to its claims for payment of the price
payable for the relevant Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver
more than four put notices.
7.6 Payment of any amount due to the Subscriber upon
the sale of subscription shares pursuant hereto
will be made to the subscriber at the
domicilium chosen in terms of paragraph 12 below
provided that such place will be in the Republic
of South Africa unless the Subscriber is entitled,
according to South African law, to receive such
payment outside the Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer
or dispose of the subscription shares during the
Escrow period except by the delivery of put
notices in accordance with the provisions of this
agreement.
7.8 Unless a put notice has been delivered the Escrow
agent will not be entitled to sell, offer to sell
or otherwise dispose of the Escrow stock or any
part thereof.
7.9 The Escrow agent will not be entitled to encumber
the Escrow stock nor expose it to any risk of
attachment, forced sale, realisation or other
threat, direct or indirect in relation to the
obligations of the Escrow agent or any other
person or by virtue of any judicial, quasi
judicial, bankruptcy or similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to
be a trustee for any party for any purpose and is
merely acting hereunder with the limited duties
herein prescribed.
8.2 The Escrow agent does not have and will not be
deemed to have any responsibility in respect of
any instruction, certificate or notice delivered
to it or in respect of the Escrow stock or any
Escrow property other than faithfully to carry out
the obligations undertaken in this agreement and
to follow the directions or instructions recorded
in any notice delivered pursuant to this
agreement.
8.3 The Escrow agent is not and will not be deemed to
be liable for any action taken or omitted by it in
good faith and may rely upon and act in accordance
with the advice of its counsel without liability
on its part for any action taken or omitted in
accordance with such advice. In any event the
Escrow agent's liability hereunder will be limited
to liability for gross negligence, wilful
misconduct or bad faith on its part,
8.4 The Escrow agent may conclusively rely upon and
act in accordance with any certificate,
instruction, notice, letter, telegram, cablegram
or other written instrument believed by it to be
genuine and to have been signed by the proper
party or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable fees and
to reimburse it for its reasonable expenses
including attorneys fees incurred in
connection with its duties hereunder
expeditiously so as not to impair or delay
the timeous implementation of this agreement
and put notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend the
Escrow agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever,
including reasonable counsel fees, suffered or incurred by
it by reason of or on account of any
misrepresentation made to it or its status or
actions as Escrow agent under this agreement except for any
loss, damage, liability, judgment, cost or expense
resulting from gross negligence, wilful misconduct
or bad faith on the part of the Escrow agent. The
obligation of the Escrow agent to sell or deliver the Escrow
stock pursuant to this agreement will be subject
to the prior satisfaction upon written demand from
the Escrow agent of the Parents obligations to
save harmless, indemnify and defend the Escrow agent and to
reimburse the Escrow agent or otherwise pay its
reasonable fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend
any legal proceedings which may be instituted
against it in respect of the subject matter of
this agreement unless requested to do so by the
Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost
and expense of such defence by the party
requesting such defence. If any such legal
proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such
proceedings to the remaining parties. The Escrow
agent will not be obliged to institute legal
proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission
or otherwise be deemed to have waived any right or
remedy it may have under this agreement or
generally, unless such waiver be in writing, and
no waiver will be valid unless it is in writing,
signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the
Escrow agent under the terms of this agreement
will not be construed as a bar to or waiver of the
same or any other right or remedy which it would
otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by
giving thirty days written notice thereof to the
remaining parties. Within twenty days after
receipt of such notice the remaining parties will
deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow
property to a substitute Escrow agent which
whether designated by written instructions from
the remaining parties or in the absence thereof by
instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank
or trust company organised and doing business
under the laws of the United States or any state
thereof. Such substitute Escrow agent will
thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of
this agreement and otherwise act hereunder as if
it were the Escrow agent originally named herein.
The Escrow agent's duties and responsibilities
hereunder will terminate upon the release of all
Escrow stock and Escrow property then held in
escrow according to such written instruction or
upon such delivery as herein provided. This
agreement will not otherwise be assignable by the
Escrow agent without the prior written consent of
the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the
parties may afford to the other/s shall in any way
prejudice or be deemed to be a waiver of the rights
of the indulgent party and shall not preclude or stop
the indulgent party from exercising all or any of its
rights hereunder and in particular but without
limiting or derogating from the aforegoing, any
cancellation hereof or accrued right of cancellation
hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.2 No consensual termination of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.3 No waiver or abandonment of any partys rights
arising from this agreement, accrued or otherwise,
will be of any force or effect as against such
party unless such such waiver or abandonment is
reduced to writing and signed by the party waiving
and abandoning such rights.
10.4 No oral statements and no conduct by a party
relating to any purported variation, amendment,
cancellation, waiver or abandonment will estop a
party from relying upon the formalities prescribed
in the preceding sub-paragraphs of this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement
between the parties with regard to the subject
matter hereof and no representations, or
warranties, by commission or omission which are
not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been
induced or coerced to enter into this contract by
virtue of any representations, statements,
understandings, omissions or warranties made by
the other party hereto or any persons acting on
their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this
agreement may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer
& Trust Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr
Herb Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no : 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl,
LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of
the Subscriber
12.2 Any notice or payment sent to a partys
domicilium citandi et executandi as selected
above by prepaid registered post shall be
presumed, subject to proof to the contrary, to
have been received by such party on the 7th
(seventh) day after the posting of same, or if
delivered by hand, on the day of such delivery by
hand, or it transmitted by telex or telefax, on
the day of such delivery by hand, or if
transmitted by telex or telefax, on the day of
transmitting same unless it is not a business day
in which event such telex or telefax shall be
deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his
domicilium citandi et executandi in terms hereof
by furnishing to the others of them written
notice of such alteration provided that such
alteration shall only be effective 7 (seven) days
after receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed in
accordance with the laws of New York and will be
binding upon and enure to the benefit of all the
parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several
counterparts which taken together will constitute a
single instrument.
Signed at on
1996.
As witness: for American Stock Transfer and
Trust Company
...............................................................................
Signed at on
1996.
As witness: for First South Africa Corp., Ltd
...............................................................................
......
Signed at on
1996.
As witness: for First South African Holdings
...............................................................................
Signed at on
1996.
As witness: for First South African Holdings
...............................................................................
Heinz Andreas
ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 John Welch
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30
000 000 A class ordinary shares of R0,0001 each
and 10 000 000 B class ordinary shares of
R0,0001 each (FSAH B class shares).
2.2 All of the issued A class ordinary shares in FSAH
are owned by the Parent.
2.3 The rights and obligations attached to the FSAH B
class shares are recorded in the quotation from
the articles of association of FSAH recorded on
Schedule 1 hereto.
2.4 The Parent has an authorised share capital
comprising of Common Stock, registered with the
Securities and Exchange Commission and listed for
trading on NASDAQ in compliance with all
applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and
listed.
2.5 FSAH has agreed to allot and issue and the
Subscriber has agreed to subscribe for 149 210
FSAH B class shares (subscription shares) and
the Parent has agreed to simultaneously allot and
issue to the Escrow agent which has agreed to
subscribe for 149 210 Parent B class stock
(Escrow stock).
2.6 Insofar as prevailing circumstances and laws allow
and subject to the restrictions recorded herein
the Parent and FSAH wish, by the conclusion and
implementation of this agreement, to enable the
Subscriber to trade in the subscription shares for
value and in circumstances which are pari passu
with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and
promises herein contained and other good and
valuable consideration the adequacy of which is
hereby acknowledged, the parties have reached the
agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to
receive, hold and dispose of the Escrow stock in
accordance with the provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of
this agreement accepts its appointment as Escrow
agent upon and subject to the terms and conditions
of this agreement.
3.3 The appointment of the Escrow agent will become
effective against delivery of the Escrow stock to
the Escrow agent and will continue in effect until
the Escrow stock, all dividends or other benefits
accruing thereto and all proceeds derived from the
sale or other disposition thereof has been
distributed in accordance with this agreement
(Escrow period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber
of the subscription shares the Parent will allot
and issue the Escrow stock to the Escrow agent for
a consideration of US$.01 per share payable to the
parent on behalf of the Escrow agent by Michael
Levy who will thereby acquire no claim against the
Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow
agent will confirm in writing delivered to the
Subscriber that the Escrow stock has been
delivered to it unconditionally, in negotiable
form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow
agent will retain possession of and control over
the Escrow shares and will at the request of the
Subscriber inform the remaining parties of the
physical location of all documents and records
evidencing the Escrow stock and requisite to
trading therein.
4.4 Insofar as circumstances and the law allow the
Escrow agent will retain the Escrow stock in
negotiable and freely tradeable form throughout
the Escrow period, subject only to the
restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will
receive all money, securities, rights or property
distributed in respect of the Escrow stock including
any such property distributed as dividends or pursuant
to any stock split, merger, recapitalisation,
dissolution, total or partial liquidation of
the Parent (excluding only dividends paid to the Escrow
agent by the Parent to the extent that the
Subscriber has in relation to the same period been
paid dividends on the Subscription shares): all such
property to be held and distributed as herein provided
and hereinafter referred to collectively as
Escrow property. Reference herein to Escrow
stock will be deemed to include the Escrow property
deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as
defined in Section 1(p) of the bye-laws of the
Parent) if any of the Escrow stock is sold by the
Escrow agent pursuant to this agreement it will
automatically convert into a share of common stock
in the parent.
6.2 None of the Escrow stock may be sold in
contravention of the restrictions set out in
clause 12 of the sale of shares agreement entered
into among John Welch, Heinz Andreas, Michael
Morgan, Parent and FSAH, (the sale agreement) on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold
and transferred in compliance with this agreement
and the Securities Act of 1933 as amended and the
rules and regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy
will have the sole power to vote the Escrow stock
and any securities held in escrow as part of the
Escrow property to which end the Escrow agent
hereby irrevocably appoints Michael Levy as its
proxy to vote the Escrow stock on its behalf at
any meeting of the shareholders of the Parent and
at any adjournment thereof which shall take place
during the Escrow period. The Escrow agent
undertakes that it will execute and deliver to
Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock
and any securities comprising the Escrow property
against demand by Levy following delivery of the
Escrow stock or other securities as the case may
be.
6.5 Each certificate evidencing the Escrow stock will
bear the following legends in addition to any
others required by law:
The sale, transfer, hypothecation,
negotiation, pledge, assignment, encumbrance
or other disposition of the shares evidenced
by this certificate are restricted by and are
subject to all of the terms, conditions and
provisions of an escrow agreement entered
into amongst First South Africa Corp., Ltd,
First South African Holdings (Proprietary)
Limited, American Stock Transfer & Trust
Company and John Welch, a copy of which may
be obtained from the secretary of First South
Africa Corp., Ltd. No transfer, sale or
other disposition of these shares may be made
unless the specific conditions of such
agreement are satisfied.
The shares evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended. No transfer, sale
or other disposition of these shares may be
made unless a registration statement with
respect to these shares has become effective
under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of
Counsel satisfactory in form and substance to
it that such registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided
that the Escrow stock is capable of being sold in
accordance with the provisions of this agreement
and the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder,
the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of
South Africa, Webber Wentzel Bowens or its
principal successor-in-practice, of written notice
accompanied by the original share certificate/s
evidencing the put shares together with securities
transfer form/s relating thereto signed and
completed in negotiable form according to law
(put notice) to require and oblige the Escrow
agent to purchase the subscription shares or any
part thereof but no fewer than 100 subscription
shares (or such lesser number as constitutes all
of the remaining subscription shares held by the
Subscriber) in relation to any single put notice,
for the consideration and upon the terms and
conditions hereinafter recorded.
7.2 Against delivery of the put notice the Escrow
agent will, in compliance with applicable
securities laws, use every reasonable effort to
sell as expeditiously as possible, at the best
possible price and on the best available terms so
much of the Escrow stock as is equal to the
subscription shares put to the Escrow agent in
terms of the put notice and to implement and
enforce its rights and obligations arising from
such sale.
7.3 The put notice will be unconditional and
unqualified save only that the Subscriber will be
entitled to stipulate a minimum price (prescribed
price) expressed in US dollars per share at which
he is willing to sell the relevant subscription
shares put to the Escrow agent in terms of the put
notice (put shares). If the put notice contains
a prescribed price:
7.3.1 the Escrow agent will not be entitled to sell
the equivalent number of Escrow stock
pursuant to 7.2 above for a price less than
the prescribed price;
7.3.2 if the Escrow agent is unable to sell the
equivalent number of Escrow stock for a price
at least equal to the prescribed price within
thirty days from delivery of the relevant put
notice then the put notice will automatically
lapse and be of no further force or effect;
7.3.3 the Escrow agent will, notwithstanding the
prescribed price, seek to achieve the best
possible price for the Escrow stock as
expeditiously as possible pursuant to 7.2
above;
7.3.4 if the Escrow agent cannot achieve the sale
of the relevant Escrow stock for a price equal to or
more than the prescribed price it will inform the
Subscriber of its inability and of the best price at which
it is able to sell the relevant Escrow stock.
7.4 Against the sale by the Escrow agent of the
relevant number of Escrow stock the Escrow agent
will be deemed to have purchased the subscription
shares recorded in the relevant put notice (put
shares) upon and subject to the following terms
and conditions:
7.4.1 the price payable for the put shares will be
equal to the price payable for the equivalent
Escrow stock sold less any applicable
brokerage fees, securities tax, duty or
charge properly incurred;
7.4.2 the price for the put shares will be payable
by the Escrow agent to the Subscriber against
receipt by the Escrow agent of the price
payable for the relevant Escrow stock sold;
7.4.3 as security for the payment of the price for
the put shares the Escrow agent will be
deemed to have ceded, assigned and made over
unto and in favour of the Subscriber all of
the Escrow agents right, title and interest
in and to its claims for payment of the price
payable for the relevant Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver
more than four put notices.
7.6 Payment of any amount due to the Subscriber upon
the sale of subscription shares pursuant hereto
will be made to the subscriber at the domicilium
chosen in terms of paragraph 12 below provided
that such place will be in the Republic of South
Africa unless the Subscriber is entitled,
according to South African law, to receive such
payment outside the Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer
or dispose of the subscription shares during the
Escrow period except by the delivery of put
notices in accordance with the provisions of this
agreement.
7.8 Unless a put notice has been delivered the Escrow
agent will not be entitled to sell, offer to sell
or otherwise dispose of the Escrow stock or any
part thereof.
7.9 The Escrow agent will not be entitled to encumber
the Escrow stock nor expose it to any risk of
attachment, forced sale, realisation or other
threat, direct or indirect in relation to the
obligations of the Escrow agent or any other
person or by virtue of any judicial, quasi
judicial, bankruptcy or similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to
be a trustee for any party for any purpose and is
merely acting hereunder with the limited duties
herein prescribed.
8.2 The Escrow agent does not have and will not be
deemed to have any responsibility in respect of
any instruction, certificate or notice delivered
to it or in respect of the Escrow stock or any
Escrow property other than faithfully to carry out
the obligations undertaken in this agreement and
to follow the directions or instructions recorded
in any notice delivered pursuant to this
agreement.
8.3 The Escrow agent is not and will not be deemed to
be liable for any action taken or omitted by it in
good faith and may rely upon and act in accordance
with the advice of its counsel without liability
on its part for any action taken or omitted in
accordance with such advice. In any event the
Escrow agents liability hereunder will be limited
to liability for gross negligence, wilful
misconduct or bad faith on its part,
8.4 The Escrow agent may conclusively rely upon and
act in accordance with any certificate,
instruction, notice, letter, telegram, cablegram
or other written instrument believed by it to be
genuine and to have been signed by the proper
party or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable fees and
to reimburse it for its reasonable expenses
including attorneys fees incurred in
connection with its duties hereunder
expeditiously so as not to impair or delay
the timeous implementation of this agreement
and put notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend the
Escrow agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever,
including reasonable counsel fees, suffered or incurred by
it by reason of or on account of any
misrepresentation made to it or its status or
actions as Escrow agent under this agreement except for any
loss, damage, liability, judgment, cost or expense
resulting from gross negligence, wilful misconduct
or bad faith on the part of the Escrow agent. The
obligation of the Escrow agent to sell or deliver the Escrow
stock pursuant to this agreement will be subject
to the prior satisfaction upon written demand from
the Escrow agent of the Parents obligations to
save harmless, indemnify and defend the Escrow agent and to
reimburse the Escrow agent or otherwise pay its
reasonable fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend
any legal proceedings which may be instituted
against it in respect of the subject matter of
this agreement unless requested to do so by the
Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost
and expense of such defence by the party
requesting such defence. If any such legal
proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such
proceedings to the remaining parties. The Escrow
agent will not be obliged to institute legal
proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission
or otherwise be deemed to have waived any right or
remedy it may have under this agreement or
generally, unless such waiver be in writing, and
no waiver will be valid unless it is in writing,
signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the
Escrow agent under the terms of this agreement
will not be construed as a bar to or waiver of the
same or any other right or remedy which it would
otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by
giving thirty days written notice thereof to the
remaining parties. Within twenty days after
receipt of such notice the remaining parties will
deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow
property to a substitute Escrow agent which
whether designated by written instructions from
the remaining parties or in the absence thereof by
instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank
or trust company organised and doing business
under the laws of the United States or any state
thereof. Such substitute Escrow agent will
thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of
this agreement and otherwise act hereunder as if
it were the Escrow agent originally named herein.
The Escrow agent's duties and responsibilities
hereunder will terminate upon the release of all
Escrow stock and Escrow property then held in
escrow according to such written instruction or
upon such delivery as herein provided. This
agreement will not otherwise be assignable by the
Escrow agent without the prior written consent of
the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the
parties may afford to the other/s shall in any way
prejudice or be deemed to be a waiver of the rights
of the indulgent party and shall not preclude or stop
the indulgent party from exercising all or any of its
rights hereunder and in particular but without
limiting or derogating from the aforegoing, any
cancellation hereof or accrued right of cancellation
hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.2 No consensual termination of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.3 No waiver or abandonment of any partys rights
arising from this agreement, accrued or otherwise,
will be of any force or effect as against such
party unless such such waiver or abandonment is
reduced to writing and signed by the party waiving
and abandoning such rights.
10.4 No oral statements and no conduct by a party
relating to any purported variation, amendment,
cancellation, waiver or abandonment will estop a
party from relying upon the formalities prescribed
in the preceding sub-paragraphs of this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement
between the parties with regard to the subject
matter hereof and no representations, or
warranties, by commission or omission which are
not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been
induced or coerced to enter into this contract by
virtue of any representations, statements,
understandings, omissions or warranties made by
the other party hereto or any persons acting on
their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this
agreement may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer
& Trust Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr
Herb Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no : 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl,
LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of
the Subscriber
12.2 Any notice or payment sent to a partys
domicilium citandi et executandi as selected
above by prepaid registered post shall be
presumed, subject to proof to the contrary, to
have been received by such party on the 7th
(seventh) day after the posting of same, or if
delivered by hand, on the day of such delivery by
hand, or it transmitted by telex or telefax, on
the day of such delivery by hand, or if
transmitted by telex or telefax, on the day of
transmitting same unless it is not a business day
in which event such telex or telefax shall be
deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his
domicilium citandi et executandi in terms hereof
by furnishing to the others of them written
notice of such alteration provided that such
alteration shall only be effective 7 (seven) days
after receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed
in accordance with the laws of New York and will
be binding upon and enure to the benefit of all the
parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several
counterparts which taken together will constitute a
single instrument.
Signed at on
1996.
As witness: For American Stock Transfer
and Trust Company
...............................................................................
Signed at on
1996.
As witness: First South Africa Corp Ltd
...............................................................................
Signed at on
1996.
As witness:
...............................................................................
John Welch
AGREEMENT
between
JOHN WELCH
(Welch)
and
MICHAEL MORGAN
(Morgan)
(collectively the Managers)
and
FIRST SOUTH AFRICAN HOLDINGS (PROPRIETARY) LIMITED
(Registration No. 95/03959/07)
(FSAH)
and
PIEMANS PANTRY (PROPRIETARY) LIMITED
(Registration No. 95/02034/07)
(the Company)
1. Introduction
1.1 An agreement (the sale agreement) has been
entered into among the Managers, Heinz Andreas,
FSAH, the Company, Surf's-Up Investments (Pty) Ltd
and First South Africa Corp., Ltd pursuant to
which FSAH has agreed to purchase from the
Managers and Andreas the entire issued share
capital of the Company and Surf's-Up Investments
(Pty) Ltd.
1.2 The sale agreement is subject to certain
suspensive conditions, one of which is the
conclusion by the Managers and the Company of a
management agreement dealing with issues set out
in the heads of agreement signed by the parties to
the sale agreement.
1.3 The parties accordingly wish to enter into an
agreement on the terms and conditions set out
below.
2. Suspensive condition
The rights and obligations of the parties imposed
by this agreement, other than those contained in this
clause, are subject to the suspensive condition that
all conditions to which the sale agreement is subject
(other than any condition relating to this
agreement), are timeously fulfilled or waived as
provided for in that agreement. The parties undertake
to use their best endeavours to procure the fulfilment
of this condition.
3. Period
3.1 Subject to 2, and notwithstanding its date of
signature, this agreement shall be effective from
1 March 1996 and, save for the provisions of
clause 10, which shall endure for the period
specified therein and for clauses 11, 12 and 13,
which shall endure until all matters and disputes
arising from this agreement have been resolved,
shall be for an initial period of 2 years
terminating on 28 February 1998, (the initial
period).
3.2 Notwithstanding 3.1, FSAH shall be entitled, in
its sole discretion, and by written notice given
not later than 3 months prior to the end of the
initial period, to extend the initial period in
respect of either or both of the Managers for a
further period of 1 year. FSAH acknowledges that
the Managers are reluctant to extend this
agreement beyond the initial period and
accordingly undertakes:-
3.2.1 to work with the Managers during the initial
period to develop suitable individuals to
take over the management of the Company at
the end of the initial period; and
3.2.2 not to exercise its right to extend the
initial period unless it is of the opinion
that the management of the Company at the end
of the initial period is inadequate to
properly manage the affairs and business of
the Company in substantially the same manner
as the business has been managed and run
during the initial period.
3.3 Notwithstanding 3.1, either of the Managers shall
be entitled, in their sole discretion, to extend
(in respect only of the Manager giving the notice)
the initial period for a further period of 1 year
by written notice to the purchaser given not less
than 3 months prior to the end of the initial
period. In addition, each Manager may discuss
with the Company extending his employment contract
with the Company (which runs concurrently with
this agreement) beyond its term.
4. Recruitment and employment of a managing director
designate
4.1 The Managers undertake to recruit and employ a
suitable person as managing director designate to
be trained to replace the skills of John Welch and
Heinz Andreas in the Company.
4.2 All curricula vitae received by the Managers or
the Company from applicants for the position of
managing director designate shall forthwith be
submitted to FSAH for consideration and a
short-list of candidates shall be compiled jointly
by FSAH and the Managers. Short-listed candidates
will be interviewed. FSAH shall be entitled, but
not obliged, to attend these interviews.
4.3 No candidate shall be appointed to the position
without the prior approval of FSAH as to the
identity of the person and the remuneration
package offered to him or her.
4.4 The parties will use all reasonable endeavours to
appoint the managing director designate by 1 March
1997, to enable him or her to gain at least 12
months on-the-job experience under the guidance
and supervision of the Managers.
4.5 It is recorded that if the managing director
designate has not been in the full time employment
of the Company for the 12 month period ended 28
February 1998 the profit on which the third
instalment of the purchase price of the Company is
based, as provided for in clause 11 of the sale
agreement, shall be reduced as if the managing
director designate had been so employed, by
deeming the additional costs that the Company
would have incurred in remunerating the managing
director for the full 12 month period to have been
incurred.
5. Management of the business
5.1 The overall responsibility for the management of
the affairs of the Company will vest in its board
of directors, who will be responsible, inter alia,
for setting the policy direction of the Company,
for setting business plans and budgets and for
monitoring the performance of the Company against
targets and budgets.
5.2 The Managers will have the immediate
responsibility and shall be accountable to the
board of directors, for managing the day-to-day
business of the Company within the budgets, plans,
policies and other parameters set by the board of
directors.
5.3 The parties wish to record that it is their
intention and the spirit of their relationship
that the expertise of the Managers in running the
business, and their understanding of the market
should be relied upon, exploited for the benefit
of the Company and transferred to other members of
management. Accordingly, the Managers undertake to
train the managing director designate and to groom
other members of management with a view to handing
over the running of the Company at the end of the
initial period or any extension thereof to
properly qualified successors. To this end the
Managers shall actively transfer their knowledge
concerning the Companys business to the managing
director designate and other members of
management.
5.4 The provisions of this clause 5 shall not
supersede the provisions of the Managers'
contracts of employment with the Company, which
shall remain of full force and effect.
6. Right of the Managers to appoint and remove directors
6.1 For the initial period and any extension of the
initial period, the Managers will jointly be
entitled to appoint and remove 1 director of FSAH
who will not be subject to rotation or retirement.
Such director shall be one of the Managers unless
both Managers are prohibited by law from holding
office as a director.
6.2 The director appointed by the Managers may appoint
an alternate director.
6.3 The seller who is not appointed as a director may
attend and speak at all board meetings of FSAH and
shall be given notice of all such meetings as if
he were a director, but shall not be entitled to
vote.
6.4 For the initial period and any extension of the
initial period, the Managers and Heinz Andreas
will (unless disqualified at law from holding
office as a director) be appointed as directors of
the Company and shall not be subject to retirement
or rotation. It is also envisaged that other key
executives of the Company may be appointed to its
board.
7. Access to information
There shall be made available to the Managers (who
shall be bound by a duty of confidentiality) full and
free access to all information for investigating
and verifying the affairs of the Company and its assets,
liabilities and financial position including,
without prejudice to the generality of the
foregoing, full and free access to all trading records,
accounts, books, bank statements and other
financial records of the Company.
8. Matters requiring consent of the Managers
Decisions in respect of the following fundamental
matters affecting the Company shall require the prior
written consent of the Managers, which shall not be
withheld unless the Managers reasonably consider that
there will be an impact on the profitability of the
business of the Company leading to a reduction in
the value of the second or third instalment of the
purchase price and the parties have not been able to
reach agreement as to alternatives:-
8.1 the voluntary liquidation of the Company;
8.2 any capital investment or expenditure, however
financed, by the Company, outside that approved in
the annual budget, or any disposal of any of the
capital assets of the Company, the sale proceeds
or book value of which is in excess of R100 000;
8.3 any sale, assignment, transfer or other
disposition by the Company of any intangible
assets such as goodwill, logos, names, trademarks,
copyright, patents or licences, or trademark,
patent or licence agreements;
8.4 the acquisition by the Company of any shares or
interest in any company, other form of legal
entity, business, partnership or other undertaking
of whatever nature for a purchase price in excess
of R100 000;
8.5 the termination or non-renewal of any material
contract by the Company;
8.6 the disposal by the Company of its business or any
part or branch of its business; and
8.7 any material change to the core nature of the
business or in the way the business is conducted.
9. Restraints and competing businesses
9.1 Each of the Managers undertakes to FSAH and the
Company that for a period of 5 years commencing on
the effective date and terminating on 28 February
2001 neither of them will, without the prior
written consent of FSAH and the Company, and
whether directly or indirectly as shareholder,
employee, financier, director, agent, officer,
consultant, adviser or otherwise-
9.1.1 compete with the Company in the fields of
activity referred to in 9.2 within the areas
of restraint set out in 9.3;
9.1.2 persuade, induce, encourage or procure any
employee of the Company, or any person who
was an employee of the Company during the
previous twelve months, to become employed by
or interested in any manner whatever in any
field of activity referred to in 9.2, or to
terminate his employment with the Company.
9.2 The fields of activity in respect of which the
restraint applies will be -
9.2.1 the business of the manufacture,
distribution and retailing of frozen and
chilled food;
9.2.2 (as a separate restraint) any new
business actively carried on or which
the Company can demonstrate in writing
is actively contemplated by the Company
at the date of termination of the
initial period or any extension thereof
pursuant to this agreement.
9.3 The areas of restraint referred to in this 9 shall
be each of the provinces of the Republic of South
Africa, and any of the following countries in
which the Company does business at the termination
of the initial period or any extension thereof:
9.3.1 Swaziland;
9.3.2 Namibia; and
9.3.3 Botswana.
9.4 Each of the Managers acknowledges-
9.4.1 that the customers of the Company are or
could be drawn from all of the areas in
which the restraint is to be operative;
9.4.2 that the Company and FSAH would suffer
substantial damage if any person
restrained by this clause were to
operate a business similar to that
carried on by the Company within the
area to which, and during the time in
which, the restraint is to apply;
9.4.3 that FSAH would not have agreed to
purchase the shares of the Company
unless the Managers had agreed to the
restraints contained in this clause 9
and, furthermore, that each of the
persons restrained has derived
considerable benefit from the sale of
his shares of the Company;
9.4.4 that the restraint is the minimum
restraint required by the Company to
provide protection against unfair
competition upon termination of
employment and, moreover, that the
restraint will not prevent any of the
persons restrained from obtaining a
comparable position elsewhere should his
employment terminate and that in the
circumstances it is fair and reasonable,
and necessary for the protection of the
interests of the Company and FSAH that
the persons restrained should be
restrained in the manner set out in this
clause. Should the reasonableness of any
provision contained in this clause be
disputed, the onus of proving that the
provision is unreasonable will rest on
the respective persons restrained.
9.5 Each and every restraint contained in this clause
is separate and divisible from every other
restraint in this clause and from any other
restraint so that if any one of the restraints is
or becomes unenforceable for any reason, that
restraint will be severable and will not affect
the validity of any other restraint contained in
this 9 or otherwise.
9.6 Insofar as the restraints are considered by the
parties to be reasonable in all the circumstances,
they agree that if the restraints, taken together,
are adjudged to go beyond what is reasonable in
all the circumstances but would be adjudged
reasonable if part or parts of the wording of the
restraints were deleted or modified, the
restraints shall apply with such words deleted or
modified.
9.7 The restraints contained in this clause will be
capable of being enforced by FSAH or the Company,
individually or collectively by either of them.
However they will cease to be enforceable should
the Company be placed in final liquidation.
9.8 The Company and FSAH acknowledge that this
restraint will not preclude the Managers from
carrying out any of the activities referred to in
9.2 in any areas other than those set out in 9.3.
10. Default
10.1 If a party:-
10.1.1 commits a material breach of any provision
going to the root of this agreement and fails
to remedy the breach within 10 days of
written notice to do so, provided that:
10.1.1.1 if the breach can reasonably be remedied
within a shorter period, the party giving the
notice may specify that shorter period in the
notice and the party in default shall remedy
the breach within that period;
10.1.1.2 if the breach cannot reasonably be remedied
within 10 days, the party in default shall be
entitled to an extension, not exceeding a
further 90 days, to remedy the breach, on
condition that the party in default provides
evidence to the reasonable satisfaction of
the other party within the 10 days that
effective steps to remedy the breach have
been initiated and continues to provide such
evidence on an ongoing basis that the steps
are being expeditiously pursued;
10.1.2 commits a second or subsequent breach of this
agreement after having remedied an earlier
similar breach during the preceding 12 months
after written notice to do so;
10.1.3 takes steps to place itself, or is placed, in
liquidation, whether voluntary or compulsory,
or in judicial management, in either case
whether provisionally or finally;
the party shall be in default.
10.2 If a party is in default the other parties (the
aggrieved parties) shall be not be entitled to
cancel this agreement and the remedies of the
aggrieved parties shall be limited to claiming
specific performance, with or without damages.
11. Mediation and arbitration
11.1 Should any disputes or differences arise at any
time between the parties concerning this agreement
or its construction or effect or as to the rights,
duties and/or liabilities of the parties or either
of them under or by virtue of this agreement or
otherwise or as to any other matter in any way
arising out of the subject matter of this
agreement then either party:
11.1.1 may declare a dispute by delivering the
details of the dispute to the other party,
and
11.1.2 request that the dispute be referred by the
parties, without legal representation, to
mediation by a single mediator at a place and
time to be determined by him.
11.2 If, within 30 days of the delivery of the
declaration of a dispute, the parties have not
agreed to accept mediation then the dispute shall
be determined by arbitration as prescribed below.
11.3 If the parties agree to mediation then the
mediator shall be:
11.3.1 selected by agreement between the parties,
or, failing agreement,
11.3.2 nominated on the application of either party
by the president for the time being of
Independent Mediation Service of South
Africa.
11.4 The mediator shall, at his entire discretion,
determine whether the reference to him shall be
made in the form of written and/or oral
representations provided that, in making this
determination, he shall consult the disputing
parties and be guided by their desires of the form
in which the representations are to be made.
11.5 The mediator shall, within a reasonable period
after receiving the representations, express in
writing an opinion on the matter and shall include
his detailed reasons leading to the opinion.
11.6 The mediator shall deliver a copy of his opinion
to each party.
11.7 The opinion so expressed by the mediator shall be
final and binding on the parties unless either
party within 30 days of the delivery of the
opinion, notifies the other party of the first
party's unwillingness to accept the opinion.
11.8 The costs of mediation shall be determined by the
mediator and shall comprise:
11.8.1 the mediators expenses, and
11.8.2 a fee which shall have been previously agreed
by the parties.
The costs shall be borne equally by the parties to
the dispute and shall be due and payable to the
mediator on presentation to them of his written
account.
11.9 Each party shall bear the costs of any legal
advice that party may have obtained in connection
with the mediation.
11.10 The expressed opinion of the mediator shall
not prejudice the rights of the parties in
any manner whatsoever in the event of their
proceeding to arbitration.
11.11 Any decision given by any representative of
the parties in accordance with any provision
of this agreement prior to or during the
mediation shall not disqualify him from being
called as a witness and giving evidence
before the arbitrator on any matter
whatsoever relevant to the dispute or
difference so referred to the arbitrator as
provided in this clause.
11.12 If either party to this agreement be
unwilling to accept mediation or be unwilling
to accept the opinion expressed by the
mediator then either party may, by written
notice delivered to the other, within 30 days
of the declaration of the dispute if there be
no mediation or within 30 days of the issue
of the mediators opinion if mediation takes
place, require that the dispute be referred
to arbitration.
11.13 Such arbitration shall be by a single
arbitrator who shall be an advocate of not
less than 10 years standing if the dispute is
primarily a legal matter and a practising
auditor of not less than 10 years standing if
the matter is primarily an accounting matter:
11.13.1 selected by agreement between the parties or,
failing such agreement;
11.13.2 nominated on the application of either party
by the chairman for the time being of the
Association of Arbitrators.
11.14 The arbitrator shall have power to open up,
review and revise any certificate, opinion,
decision, requisition or notice relating to
all matters in dispute submitted to him and
to determine all such matters in the same
manner as if no such certificate, opinion,
decision, requisition or notice had been
issued.
11.15 Upon every or any such reference, the costs
of and incidental to the reference and award
shall be in the discretion of the arbitrator,
who may determine the amount of the costs, or
direct them to be taxed as between attorney
and client or as between party and party and
shall direct by whom and to whom and in what
manner they shall be borne and paid.
11.16 The award of the arbitrator shall be final
and binding on the parties.
11.17 In all respects the arbitration shall be
conducted in accordance with the Rules for
the Conduct of Arbitrations published by the
Association of Arbitrators and current at the
date the arbitrator is appointed or
nominated.
12. Miscellaneous matters
12.1 postal address
12.1.1 Any written notice in connection with this
agreement may be addressed:
12.1.1.1 in the case of Welch to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
John Welch
12.1.1.2 in the case of Morgan to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
Michael Morgan
12.1.1.3 in the case of FSAH to:
address : c/o Price Waterhouse
PO Box 783027
Sandton
2146
telefax no : 780 2095
and shall be marked for the attention of
Charles Boles;
12.1.1.4 in the case of the Company to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
John Welch;
12.1.2 The notice shall be deemed to have been duly
given:
12.1.2.1 14 days after posting, if posted by
registered post to the partys address
in terms of this sub-clause;
12.1.2.2 on delivery, if delivered to the partys
physical address in terms of either this
sub-clause or the next sub-clause
dealing with service of legal documents;
12.1.2.3 on dispatch, if sent to the partys then
telefax or telex number and confirmed by
registered letter posted no later than
the next business day.
12.1.3 A party may change that partys address for
this purpose, by notice in writing to the
other party.
12.2 address for service of legal documents
12.2.1 The parties choose the following physical
addresses at which documents in legal
proceedings in connection with this agreement
may be served (ie their domicilia citandi et
executandi):
12.2.1.1 Welch: 401 Anne Road
Ruimsig
Roodepoort
1724
12.2.1.2 Morgan: 3 Harebell Street
Randpark Ridge
2194
12.2.1.3 FSAH: 90 Rivonia Rd
Sandton
2146
12.2.1.4 the Company: Cnr Anvil and Screw
Streets
Boltonia
12.2.2 A party may change that partys address
for this purpose to another physical
address by notice in writing to the
other party.
12.3 entire contract
This agreement contains all the express provisions
agreed on by the parties with regard to the
subject matter of the agreement and the parties
waive the right to rely on any alleged express
provision not contained in the agreement.
12.4 no representations
No party may rely on any representation which
allegedly induced that party to enter into this
agreement, unless the representation is recorded
in this agreement.
12.5 variation, cancellation and waiver
No contract varying, adding to, deleting from or
cancelling this agreement, and no waiver of any
right under this agreement, shall be effective
unless reduced to writing and signed by or on
behalf of the parties.
12.6 cession
No party may cede that partys rights nor delegate
that partys obligations without the prior written
consent of the other parties.
12.7 applicable law
This agreement shall be interpreted and
implemented in accordance with the law of the
Republic of South Africa.
12.8 jurisdiction
Each of the parties submits itself to and consents
to the non-exclusive jurisdiction of the
Witwatersrand Local Division of the Supreme Court
of South Africa.
12.9 costs
12.9.1 Each party shall bear that partys own legal
costs of and incidental to the negotiation,
preparation, settling, signing and
implementation of this agreement. The stamp
duty, if any, on this agreement shall be
borne by the parties in equal shares. The
stamp duty payable in respect of the
registration of the transfer of the shares
into the name of the purchaser shall be borne
by the purchaser.
12.9.2 Any costs, including attorney and own client
costs, incurred by a party arising out of the
breach by any other party of any of the
provisions of this agreement shall be borne
by the party in breach.
12.10 indulgences
If a party at any time breaches any of that
partys obligations under this agreement, any of
the other parties:
12.10.1 may at any time after that breach exercise
any right that became exercisable directly or
indirectly as a result of the breach, unless
the aggrieved party has expressly elected in
writing not to exercise the right;
12.10.2 shall not be estopped (ie precluded) from
exercising the aggrieved partys rights
arising out of that breach, despite the fact
that the aggrieved party may have elected or
agreed on one or more previous occasions not
to exercise the rights arising out of any
similar breach or breaches.
12.11 good faith
The parties shall act towards each other in the
utmost good faith in giving effect to this
agreement.
Signed at on
1996.
As witness:
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J Welch
Signed at on
1996.
As witness:
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M Morgan
Signed at on
1996.
As witness: for First South African
Holdings (Pty) Ltd
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Signed at on
1996.
As witness: for Piemans Pantry (Pty)
Ltd
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ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 Michael Morgan
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30 000 000 A
class ordinary shares of R0,0001 each and 10 000 000 B
class ordinary shares of R0,0001 each (FSAH B class
shares).
2.2 All of the issued A class ordinary shares in FSAH are owned
by the Parent.
2.3 The rights and obligations attached to the FSAH B class
shares are recorded in the quotation from the articles of
association of FSAH recorded on Schedule 1 hereto.
2.4 The Parent has an authorised share capital comprising of
Common Stock, registered with the Securities and Exchange
Commission and listed for trading on NASDAQ in compliance
with all applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and listed.
2.5 FSAH has agreed to allot and issue and the Subscriber has
agreed to subscribe for 33 159 FSAH B class shares
(subscription shares) and the Parent has agreed to
simultaneously allot and issue to the Escrow agent which has
agreed to subscribe for 33 159 Parent B class stock (Escrow
stock).
2.6 Insofar as prevailing circumstances and laws allow and
subject to the restrictions recorded herein the Parent and
FSAH wish, by the conclusion and implementation of this
agreement, to enable the Subscriber to trade in the
subscription shares for value and in circumstances which are
pari passu with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and promises herein
contained and other good and valuable consideration the
adequacy of which is hereby acknowledged, the parties have
reached the agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to receive, hold
and dispose of the Escrow stock in accordance with the
provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of this
agreement accepts its appointment as Escrow agent upon and
subject to the terms and conditions of this agreement.
3.3 The appointment of the Escrow agent will become effective
against delivery of the Escrow stock to the Escrow agent and
will continue in effect until the Escrow stock, all dividends
or other benefits accruing thereto and all proceeds derived
from the sale or other disposition thereof has been
distributed in accordance with this agreement (Escrow
period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber of the
subscription shares the Parent will allot and issue the
Escrow stock to the Escrow agent for a consideration of
US$.01 per share payable to the parent on behalf of the
Escrow agent by Michael Levy who will thereby acquire no
claim against the Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow agent will
confirm in writing delivered to the Subscriber that the
Escrow stock has been delivered to it unconditionally, in
negotiable form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow agent will
retain possession of and control over the Escrow shares and
will at the request of the Subscriber inform the remaining
parties of the physical location of all documents and records
evidencing the Escrow stock and requisite to trading therein.
4.4 Insofar as circumstances and the law allow the Escrow agent
will retain the Escrow stock in negotiable and freely
tradeable form throughout the Escrow period, subject only to
the restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will receive all money,
securities, rights or property distributed in respect of the
Escrow stock including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalisation,
dissolution, total or partial liquidation of the Parent (excluding
only dividends paid to the Escrow agent by the Parent to the
extent that the Subscriber has in relation to the same period been
paid dividends on the Subscription shares): all such property to
be held and distributed as herein provided and hereinafter
referred to collectively as Escrow property. Reference herein
to Escrow stock will be deemed to include the Escrow property
deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as defined in
Section 1(p) of the bye-laws of the Parent) if any of the
Escrow stock is sold by the Escrow agent pursuant to this
agreement it will automatically convert into a share of
common stock in the parent.
6.2 None of the Escrow stock may be sold in contravention of the
restrictions set out in clause 12 of the sale of shares
agreement entered into among John Welch, Heinz Andreas,
Michael Morgan, Parent and FSAH, (the sale agreement) on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold and
transferred in compliance with this agreement and the
Securities Act of 1933 as amended and the rules and
regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy will have
the sole power to vote the Escrow stock and any securities
held in escrow as part of the Escrow property to which end
the Escrow agent hereby irrevocably appoints Michael Levy as
its proxy to vote the Escrow stock on its behalf at any
meeting of the shareholders of the Parent and at any
adjournment thereof which shall take place during the Escrow
period. The Escrow agent undertakes that it will execute and
deliver to Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock and any
securities comprising the Escrow property against demand by
Levy following delivery of the Escrow stock or other
securities as the case may be.
6.5 Each certificate evidencing the Escrow stock will bear the
following legends in addition to any others required by law:
The sale, transfer, hypothecation, negotiation,
pledge, assignment, encumbrance or other disposition of
the shares evidenced by this certificate are restricted
by and are subject to all of the terms, conditions and
provisions of an escrow agreement entered into amongst
First South Africa Corp., Ltd, First South African
Holdings (Proprietary) Limited, American Stock Transfer
& Trust Company and Michael Morgan a copy of which may
be obtained from the secretary of First South Africa
Corp., Ltd. No transfer, sale or other disposition of
these shares may be made unless the specific conditions
of such agreement are satisfied.
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as
amended. No transfer, sale or other disposition of
these shares may be made unless a registration
statement with respect to these shares has become
effective under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of Counsel
satisfactory in form and substance to it that such
registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided that the
Escrow stock is capable of being sold in accordance with the
provisions of this agreement and the Securities Act of 1933,
as amended, and the rules and regulations promulgated
thereunder, the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of South
Africa, Webber Wentzel Bowens or its principal
successor-in-practice, of written notice accompanied by the
original share certificate/s evidencing the put shares
together with securities transfer form/s relating thereto
signed and completed in negotiable form according to law
(put notice) to require and oblige the Escrow agent to
purchase the subscription shares or any part thereof but no
fewer than 100 subscription shares (or such lesser number as
constitutes all of the remaining subscription shares held by
the Subscriber) in relation to any single put notice, for the
consideration and upon the terms and conditions hereinafter
recorded.
7.2 Against delivery of the put notice the Escrow agent will, in
compliance with applicable securities laws, use every
reasonable effort to sell as expeditiously as possible, at
the best possible price and on the best available terms so
much of the Escrow stock as is equal to the subscription
shares put to the Escrow agent in terms of the put notice and
to implement and enforce its rights and obligations arising
from such sale.
7.3 The put notice will be unconditional and unqualified save
only that the Subscriber will be entitled to stipulate a
minimum price (prescribed price) expressed in US dollars
per share at which he is willing to sell the relevant
subscription shares put to the Escrow agent in terms of the
put notice (put shares). If the put notice contains a
prescribed price:
7.3.1 the Escrow agent will not be entitled to sell the
equivalent number of Escrow stock pursuant to 7.2
above for a price less than the prescribed price;
7.3.2 if the Escrow agent is unable to sell the
equivalent number of Escrow stock for a price at
least equal to the prescribed price within thirty
days from delivery of the relevant put notice then
the put notice will automatically lapse and be of
no further force or effect;
7.3.3 the Escrow agent will, notwithstanding the
prescribed price, seek to achieve the best
possible price for the Escrow stock as
expeditiously as possible pursuant to 7.2 above;
7.3.4 if the Escrow agent cannot achieve the sale of the
relevant Escrow stock for a price equal to or more
than the prescribed price it will inform the
Subscriber of its inability and of the best price
at which it is able to sell the relevant Escrow
stock.
7.4 Against the sale by the Escrow agent of the relevant number
of Escrow stock the Escrow agent will be deemed to have
purchased the subscription shares recorded in the relevant
put notice (put shares) upon and subject to the following
terms and conditions:
7.4.1 the price payable for the put shares will be equal
to the price payable for the equivalent Escrow
stock sold less any applicable brokerage fees,
securities tax, duty or charge properly incurred;
7.4.2 the price for the put shares will be payable by
the Escrow agent to the Subscriber against receipt
by the Escrow agent of the price payable for the
relevant Escrow stock sold;
7.4.3 as security for the payment of the price for the
put shares the Escrow agent will be deemed to have
ceded, assigned and made over unto and in favour
of the Subscriber all of the Escrow agents right,
title and interest in and to its claims for
payment of the price payable for the relevant
Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver more than four
put notices.
7.6 Payment of any amount due to the Subscriber upon the sale of
subscription shares pursuant hereto will be made to the
subscriber at the domicilium chosen in terms of paragraph 12
below provided that such place will be in the Republic of
South Africa unless the Subscriber is entitled, according to
South African law, to receive such payment outside the
Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer or dispose
of the subscription shares during the Escrow period except
by the delivery of put notices in accordance with the
provisions of this agreement.
7.8 Unless a put notice has been delivered the Escrow agent will
not be entitled to sell, offer to sell or otherwise dispose
of the Escrow stock or any part thereof.
7.9 The Escrow agent will not be entitled to encumber the Escrow
stock nor expose it to any risk of attachment, forced sale,
realisation or other threat, direct or indirect in relation
to the obligations of the Escrow agent or any other person
or by virtue of any judicial, quasi judicial, bankruptcy or
similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to be a
trustee for any party for any purpose and is merely acting
hereunder with the limited duties herein prescribed.
8.2 The Escrow agent does not have and will not be deemed to have
any responsibility in respect of any instruction, certificate
or notice delivered to it or in respect of the Escrow stock
or any Escrow property other than faithfully to carry out the
obligations undertaken in this agreement and to follow the
directions or instructions recorded in any notice delivered
pursuant to this agreement.
8.3 The Escrow agent is not and will not be deemed to be liable
for any action taken or omitted by it in good faith and may
rely upon and act in accordance with the advice of its
counsel without liability on its part for any action taken
or omitted in accordance with such advice. In any event the
Escrow agents liability hereunder will be limited to
liability for gross negligence, wilful misconduct or bad
faith on its part,
8.4 The Escrow agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter,
telegram, cablegram or other written instrument believed by
it to be genuine and to have been signed by the proper party
or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable fees and to
reimburse it for its reasonable expenses including
attorneys fees incurred in connection with its
duties hereunder expeditiously so as not to impair
or delay the timeous implementation of this
agreement and put notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend the Escrow
agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever,
including reasonable counsel fees, suffered or
incurred by it by reason of or on account of any
misrepresentation made to it or its status or
actions as Escrow agent under this agreement
except for any loss, damage, liability, judgment,
cost or expense resulting from gross negligence,
wilful misconduct or bad faith on the part of the
Escrow agent. The obligation of the Escrow agent
to sell or deliver the Escrow stock pursuant to
this agreement will be subject to the prior
satisfaction upon written demand from the Escrow
agent of the Parents obligations to save
harmless, indemnify and defend the Escrow agent
and to reimburse the Escrow agent or otherwise pay
its reasonable fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend any legal
proceedings which may be instituted against it in respect of
the subject matter of this agreement unless requested to do
so by the Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost and expense
of such defence by the party requesting such defence. If any
such legal proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such proceedings to
the remaining parties. The Escrow agent will not be obliged
to institute legal proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission or
otherwise be deemed to have waived any right or remedy it may
have under this agreement or generally, unless such waiver
be in writing, and no waiver will be valid unless it is in
writing, signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the Escrow agent
under the terms of this agreement will not be construed as
a bar to or waiver of the same or any other right or remedy
which it would otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by giving
thirty days written notice thereof to the remaining parties.
Within twenty days after receipt of such notice the remaining
parties will deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow property
to a substitute Escrow agent which whether designated by
written instructions from the remaining parties or in the
absence thereof by instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank or trust
company organised and doing business under the laws of the
United States or any state thereof. Such substitute Escrow
agent will thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of this
agreement and otherwise act hereunder as if it were the
Escrow agent originally named herein. The Escrow agents
duties and responsibilities hereunder will terminate upon the
release of all Escrow stock and Escrow property then held in
escrow according to such written instruction or upon such
delivery as herein provided. This agreement will not
otherwise be assignable by the Escrow agent without the prior
written consent of the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the parties may afford
to the other/s shall in any way prejudice or be deemed to be a
waiver of the rights of the indulgent party and shall not preclude
or stop the indulgent party from exercising all or any of its
rights hereunder and in particular but without limiting or
derogating from the aforegoing, any cancellation hereof or accrued
right of cancellation hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will be of any
force or effect unless reduced to writing and signed by all
the parties hereto.
10.2 No consensual termination of this agreement will be of any
force or effect unless reduced to writing and signed by all
the parties hereto.
10.3 No waiver or abandonment of any partys rights arising from
this agreement, accrued or otherwise, will be of any force
or effect as against such party unless such such waiver or
abandonment is reduced to writing and signed by the party
waiving and abandoning such rights.
10.4 No oral statements and no conduct by a party relating to any
purported variation, amendment, cancellation, waiver or
abandonment will estop a party from relying upon the
formalities prescribed in the preceding sub-paragraphs of
this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement between the
parties with regard to the subject matter hereof and no
representations, or warranties, by commission or omission
which are not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been induced or
coerced to enter into this contract by virtue of any
representations, statements, understandings, omissions or
warranties made by the other party hereto or any persons
acting on their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this agreement
may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer & Trust
Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr Herb
Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no: 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of the
Subscriber
12.2 Any notice or payment sent to a partys domicilium citandi
et executandi as selected above by prepaid registered post
shall be presumed, subject to proof to the contrary, to have
been received by such party on the 7th (seventh) day after
the posting of same, or if delivered by hand, on the day of
such delivery by hand, or it transmitted by telex or telefax,
on the day of such delivery by hand, or if transmitted by
telex or telefax, on the day of transmitting same unless it
is not a business day in which event such telex or telefax
shall be deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his domicilium citandi
et executandi in terms hereof by furnishing to the others of
them written notice of such alteration provided that such
alteration shall only be effective 7 (seven) days after
receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed in accordance
with the laws of New York and will be binding upon and enure to
the benefit of all the parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several counterparts which taken
together will constitute a single instrument.
Signed at on
1996.
Witness: for American Stock Transfer and Trust
Company
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Signed at on
1996.
Witness: for First South Africa Corp., Ltd
................................................... .............
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Signed at on
1996.
Witness: for First South African Holdings (Pty)
Ltd
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Signed at on
1996.
Witness: for Michael Morgan
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SALE OF SHARES AGREEMENT
among
JOHN WELCH
(Welch)
and
HEINZ ANDREAS
(Andreas)
and
MICHAEL MORGAN
(Morgan)
(collectively the sellers)
and
FIRST SOUTH AFRICAN HOLDINGS (PROPRIETARY) LIMITED
(Registration No. 95/03959/07)
(the purchaser)
and
FIRST SOUTH AFRICA CORP., LTD
(FSAC)
in respect of the entire issued share capital of
PIEMANS PANTRY (PROPRIETARY) LIMITED
(Registration No. 95/02034/07)
(the Company)
and
SURFS-UP INVESTMENTS (PROPRIETARY) LIMITED
(Registration No. 95/02046/07)
(Propco)
<PAGE>
Table of Contents
1. Introduction
2. Status of this agreement
3. Suspensive conditions
4. Preparation of the February 1996 accounts
5. Sale of the shares
6. Risk in the shares
7. Purchase price
8. Adjustments to and manner of payment of the first
instalment
9. Delivery of the shares and other documents
10. Calculation, time and manner of payment of the second
instalment
11. Calculation, time and manner of payment of the third
instalment
12. Restrictions on disposal of FSAH B shares
13. Put option
14. Warranty by the purchaser
15. Escrow of sale shares
16. Confidentiality
17. Warranties
17.1 warranty regarding registration
17.2 warranties regarding capital structure and the
shares
17.3 warranties regarding financial position, assets and
liabilities
17.3.1 auditing and returns
17.3.2 change in financial position
17.3.3 capital expenditure
17.3.4 dividends
17.3.5 liabilities
17.3.6 assets
17.3.7 debtors
17.4 warranty regarding suretyships
17.5 warranties regarding the business of the Company
17.5.1 manner of carrying on business
17.5.2 goodwill and scope of business
17.5.3 contracts
17.5.4 intellectual property rights
17.5.5 laws, regulations, consents, licences and
permits
17.5.6 labour laws, regulations, determinations,
agreements and disputes
17.5.7 insurance
17.5.8 employment, leave, remuneration and pension
17.5.9 restraint of trade
17.5.10 resolutions
17.6 warranty regarding litigation
17.7 warranties regarding statutory requirements
17.8 warranties regarding books of account and minutes
17.9 warranties regarding taxation
17.9.1 definition
17.9.2 administration
17.9.3 balance sheet
17.9.4 deductible payments
17.9.5 stamp duty
17.9.6 tax avoidance and donations
17.10 environmental warranties
17.11 disclosure
18. Sale of business
19. Breach
20. Miscellaneous matters
20.1 postal address
20.2 address for service of legal documents
20.3 entire contract
20.4 no representations
20.5 variation, cancellation and waiver
20.6 cession
20.7 applicable law
20.8 jurisdiction
20.9 costs
20.10 indulgences
Schedule 1 - Heads of Agreement
Schedule 2 - Management agreement
Schedule 3 - Disclosure Schedule
<PAGE>
1. Introduction
1.1 The Company and Propco are private companies
registered and incorporated according to the laws
of the Republic of South Africa.
1.2 The sellers own all of the issued shares of the
Company and Propco and have claims on loan account
against the Company and Propco. The Company
carries on business as a manufacturer, distributor
and retailer of frozen and chilled food. Propco
is the registered owner of Erven 160 and 161
Boltonia Ext 1 Krugersdorp, from which the
business of the Company is conducted.
1.3 The purchaser is a South African company and is a
subsidiary of FSAC, a Bermuda company the shares
of which are listed on NASDAQ.
1.4 The parties entered into binding heads of
agreement on 22 February 1996, a copy of which is
annexed as Schedule 1, (the heads), pursuant to
which the sellers have agreed to sell and the
purchaser has agreed to purchase the entire issued
share capital of the Company and Propco.
1.5 The heads provide that they shall be amplified
into a full legal agreement on terms and
conditions normal in the context of a sale of
shares, and the parties accordingly wish to expand
the heads into a full legal agreement on the terms
and conditions set out below.
2. Status of this agreement
This agreement supersedes the heads with effect from its
date of signature by the last-signing of the parties,
(the signature date).
3. Suspensive conditions
3.1 This rights and obligations of the parties, (other
than those contained in this clause and in clauses
4, 16, 20 and 21) are subject to the fulfilment of
the following suspensive conditions (the
conditions) by no later than 31 May 1996 or such
other date as may be determined pursuant to 3.3,
(the fulfilment date):
3.1.1 a due diligence investigation to be
conducted by the purchaser into the
affairs of the Company and Propco
yielding results reasonably satisfactory
to the purchaser. Without limitation the
purchaser shall not be obliged to
declare itself satisfied with the
results of the due diligence
investigation if it is dissatisfied with
the nature and extent of encumbrances on
assets of the Company or Propco or with
the accrued leave entitlements of
employees of the Company;
3.1.2 completion of the audit and the
preparation of the audited financial
statements of the Company for the year
ended 29 February 1996 (the February
1996 accounts) in accordance with
clause4;
3.1.3 the consent of the Industrial
Development Corporation to the
transactions contemplated in this
agreement, in a form and substance
reasonably satisfactory to the purchaser
and
3.1.4 the conclusion of a management agreement
between Messrs. Welch, Morgan, the
purchaser and the Company substantially
in the form of the draft attached as
Schedule 2.
3.2 Each of the parties shall use its reasonable
endeavours to procure fulfilment of the
conditions.
3.3 The conditions are for the benefit of the
purchaser. The purchaser may, by written notice to
the sellers given no later than 31 May 1996, be
entitled to waive, or extend the period for, the
fulfilment of any of the conditions, provided that
the period shall not, save by agreement, be
extended beyond 30June 1996.
3.4 If any of the conditions fail (and fulfilment
thereof is not waived in terms of 3.3), the rights
and obligations of the parties, save for those
contained in this clause and in clauses 4, 16, 20
and 21, shall cease to be of any further force and
effect and the parties shall be restored as nearly
as may be possible to the positions in which they
would have been had this agreement not been
entered into. No party shall have any claim
against any other as a result of the failure of
the conditions, except for such claims, if any, as
may result from a breach of the provisions of this
clause.
3.5 The condition set out in 3.1.1 shall be deemed to
be fulfilled unless the due diligence
investigation reveals factors or circumstances not
disclosed to the purchaser in writing as at the
signature date, and which in the purchasers
reasonable opinion materially affect the value of
the Company.
4. Preparation of the February 1996 accounts
The sellers warrant that:-
4.1 the February 1996 accounts shall be prepared and
audited by Price Waterhouse:-
4.1.1 on a basis consistent with all prior
years;
4.1.2 in accordance with generally accepted
accounting practice and the Companies
Act 61 of 1973, as amended;
4.1.3 in such a way as to fairly and
accurately present the results of
operations of the business of the
Company for the period 1 March 1995 to
29 February 1996; and
4.2 the February 1996 accounts shall not be qualified
in any way by Price Waterhouse.
5. Sale of the shares
5.1 The sellers sell and assign and the purchaser
purchases and takes assignment, with effect from
1 March 1996, (the effective date), of:-
5.1.1 the entire issued share capital of the
Company, comprising 100 ordinary par
value shares of R1,00 each, (the
Pieman's sale shares);
5.1.2 the claims of the sellers on loan
account against the Company, (the
Piemans claims);
broken down by seller as follows:-
Seller No. of Piemans
sale shares
Welch 45
Andreas 45
Morgan 10
5.1.3 the entire issued share capital of
Propco, comprising 100 ordinary par
value shares of R1,00 each, (the Propco
sale shares); and
5.1.4 the claims of the sellers on loan
account against Propco;
broken down by seller as follows: -
Seller No. of Propco
sale shares
Welch 45
Andreas 45
Morgan 10
5.2 Notwithstanding the date on which this agreement
is signed, the sale will be deemed to have taken
effect on, and to have been with effect from, the
effective date.
5.3 All monies payable to the sellers pursuant to this
agreement shall be paid to the sellers in the
ratio that the numbers of their sale shares bear
to each other, as set out above. All loan accounts
shall be purchased at their face value plus
accumulated unpaid interest. The balance of the
purchase price shall be allocated to the Piemans
sale shares and the Propco sale shares in the
discretion of the purchaser.
5.4 The sellers shall not, from the signature date,
withdraw any amounts from their loan accounts with
either the Company or Propco unless they
simultaneously notify the purchaser in writing of
the amount so withdrawn. Any amount so withdrawn
and not repaid together with interest at 14% per
annum, shall be deducted from the cash portion of
the first instalment of the purchase price.
6. Risk in the shares
The risk in and benefit of the Piemans sale shares, the
Propco sale shares, the Propco claims and the Piemans
claims will be deemed to have passed to the purchaser
on the effective date.
7. Purchase price
7.1 The purchase price of the Piemans sale shares,
the Propco sale shares, the Propco claims and the
Piemans claims shall be the aggregate of the
following instalments, as adjusted pursuant to 8,
10 and 11-
7.1.1 an initial instalment of R24645000,
payable on the closing date (as defined
in 9) in accordance with 8, (the first
instalment);
7.1.2 a second instalment, payable in
accordance with 10, determined in
accordance with the formula
P2 = (4 x PTZ97 x 20%) x 1,01875
where
P2 is the value of the second instalment;
PTZ97 is the pre-tax profit of the Company
for its financial year ended 28 February 1997
as specified in the audited financial
statements of the Company for that financial
year, (the February 1997 accounts);
(the second instalment);
7.1.3 a third instalment, payable in
accordance with 11, determined in
accordance with the formula
P3 = (4 x PTZ98 x 20%) x 1,01875
where
P3 is the value of the third instalment;
PTZ98 is the pre-tax profit of the Company
for its financial year ended 28 February 1998
as specified in the audited financial
statements of the Company for that financial
year, (the February 1998 accounts), as
adjusted pursuant to 11.4;
(the third instalment).
8. Adjustments to and manner of payment of the first
instalment
8.1 The sellers warrant to the purchaser that:-
8.1.1 the February 1996 accounts will reflect
a pre-tax profit for that financial year
of not less than R8000000; and
8.1.2 the net asset value of the Company
derived from the February 1996 accounts
will exceed the net asset value of the
Company as at 28 February 1995, derived
from the audited financial statements of
the Company for the year ended 28
February 1995, (the February 1995
accounts) by not less than R4940000.
8.2 For the purposes of this agreement net asset
value shall mean total tangible assets (excluding
revaluations) less total liabilities.
8.3 In the event that the February 1996 accounts
reflect a pre-tax profit for that financial year
of less than R7600000 the value of the Company on
which the first instalment is calculated will be
reduced by R4,15 for every R1,00 by which the
actual pre-tax profit of the Company, as derived
from the February 1996 accounts, falls short of
R8000000. There shall be no reduction if the
pre-tax profit falls between R7600000 and
R8000000.
8.4 In the event of a breach of the warranty set out
in 8.1.2, the positive difference between R4940000
and the actual increase in the net asset value of
the Company between 28 February 1995 and 29
February 1996, as derived from the February 1995
accounts and the February 1996 accounts, shall be
deducted on a Rand for Rand basis from the value
of the first instalment, as reduced, (if at all)
pursuant to 8.3, and shall be set off against the
cash portion of that instalment referred to in
8.5.
8.5 The first instalment shall be paid on the closing
date, (as defined in 9) as follows:-
8.5.1 the purchaser will issue to the sellers
331579 B ordinary shares (FSAH B
shares) valued at $5,00 per share,
converted into Rand for the purposes of
this agreement at a fixed exchange rate
of R3,80 per US Dollar, giving a Rand
value of R6300001;
8.5.2 the balance of the first instalment,
reduced as contemplated in this clause8,
in cash, provided that if the value of
the first instalment after reductions
effected pursuant to 8.3 and 8.4 is less
than R6300001 the number of FSAH B
shares to be issued to the seller will
be reduced by one for every R19,00 or
part thereof by which the value of the
first instalment falls short of
R6300001.
9. Delivery of the shares and other documents
9.1 On the 3 June 1996, (the closing date)
representatives of each of the sellers and the
purchaser will meet at the offices of Price
Waterhouse, 90 Rivonia Road, Sandton, and:
9.1.1 the sellers will deliver to the purchaser:
9.1.1.1 share certificates in respect of the
Piemans sale shares and the Propco sale
shares, accompanied by share transfer
forms signed and dated that day by the
registered shareholders and blank as to
transferee;
9.1.1.2 certified copies of such shareholders
and/or directors resolutions, and such
other documents, as may be necessary -
9.1.1.2.1 to sanction the sale and transfer
of the Piemans sale shares and the
Propco sale shares to the
purchaser;
9.1.1.2.2 to appoint Mr Clive Kabatznik as a
director of the Company;
9.1.1.2.3 to waive any pre-emptive or other
rights which any person may have in
relation to the Piemans sale shares
and the Propco sale shares;
9.1.1.2.4 to amend the articles of
association of the Company to allow
Mr Kabatznik and other directors of
the Company appointed by the
purchaser from time to time as many
votes, at each directors meeting,
as all of the other directors of
the Company together, plus one
vote; and
9.1.2 the purchaser will pay the first
instalment of the purchase price to the
seller in accordance with 8.
9.2 In the event that the purchaser fails to pay the
cash portion of the first instalment on the
closing date, the cash portion of the first
instalment shall bear interest from 4 June 1996 to
date of payment, (which shall be no later than 3
July 1996), both days inclusive.
9.3 On the closing date and at the premises the
sellers shall also place the purchaser in
possession of all books and records of the
Company, including, without limitation, the
memorandum and articles of association of the
Company, its certificate of incorporation, its
certificate to commence business and all
contracts, documents, books, tax records and any
other relevant records of the Company.
10. Calculation, time and manner of payment of the second
instalment
10.1 The second instalment will be paid as to 62,5% in
cash and as to 37,5% by the issue by the purchaser
to the sellers of FSAH B shares.
10.2 The aggregate number of FSAH B shares to be
issued by the purchaser to the sellers pursuant to
10.1 shall be determined by dividing 37,5% of the
value of the second instalment by the price of the
FSAH B shares which shall be determined as
follows:-
10.2.1 if profit before taxation of the Company for
the year ended 28 February 1997, as
determined by reference to the February 1997
accounts (the February 1997 profit) exceeds
R10000000 the FSAH "B" shares will be
allotted and issued at the lower of:-
10.2.1.1 R19,00 per share; and
10.2.1.2 a Rand price determined by multiplying
the US Dollar-denominated quoted price
of the NASDAQ listed shares of FSAC at
close of business on 28 February 1997 by
an exchange rate of US$1,00 = R3,80;
10.2.2 if the February 1997 profit is less than
R10000000 the number of FSAH B shares to be
issued by the purchaser to the sellers shall
be determined by reference to the price of
the FSAH B shares which for the purposes of
this sub-clause shall be the greater of:-
10.2.2.1 R19,00 per share; and
10.2.2.2 a Rand price determined by multiplying
the US Dollar denominated price of the
NASDAQ listed shares of FSAC at close of
business on 28 February 1997 by the
average between the spot buy and sell
rates of Rand for US Dollars quoted by
the Standard Bank of South Africa on 28
February 1997. In the event of any
dispute about these rates a certificate
of any branch or more senior manager of
The Standard Bank, whose designation it
shall not be necessary to prove shall be
proof of the rates until the contrary is
proved.
10.3 For purposes of determining the price at which the
FSAH B shares are to be issued pursuant to 10.2,
the February 1997 profit shall be augmented by up
to R400000 by any profit for the financial year
ended 29 February 1996, in excess of R8000000.
10.4 Payment of the second instalment shall be made on
31 May 1997 or within 14 days of the finalisation
of the February 1997 accounts and their signature
by the directors of the Company, (whichever date
is the later), by paying the cash portion in cash
and delivering to the sellers share certificates
evidencing the B shares to be issued to them.
The parties shall use all reasonable endeavours to
ensure that such accounts are finalised and signed
by the directors of the Company by no later than
17 May 1997.
10.5 Should payment of the second instalment of the
purchase price be delayed beyond 31 May 1997, the
cash portion of the second instalment shall bear
interest from 1 June 1997 to date of payment, both
days inclusive, at the call rate quoted by The
Standard Bank of South Africa Limited on amounts
equal to the cash portion of the purchase price,
as certified by any manager of that bank whose
designation it shall not be necessary to prove and
whose determination of the rate shall be proof
thereof until the contrary is proved.
11. Calculation, time and manner of payment of the third
instalment
11.1 The third instalment will be paid as to 62,5% in
cash and as to 37,5% by the issue by the purchaser
to the sellers of FSAH B ordinary shares.
11.2 The number of FSAH B ordinary shares to be
issued by the purchaser to the sellers pursuant to
11.1 shall be determined by dividing 37,5% of the
value of the third instalment by the price of the
FSAH B shares which shall be determined as
follows:-
11.2.1 if profit before taxation of the Company for
the year ended 28 February 1998, as
determined by reference to the February 1998
accounts, (the February 1998 profit),
exceeds the February 1997 profit by at least
20%, the FSAH B shares will be allotted and
issued at the lower of:-
11.2.1.1 R19,00 per share; and
11.2.1.2 a Rand price determined by multiplying
the US Dollar denominated quoted price
of the NASDAQ listed shares of FSAC at
close of business on 28 February 1998 by
an exchange rate of US$1,00 = R3,80;
11.2.2 if the February 1998 profits exceed the
February 1997 profits by more than 10% but
less than 20%, the FSAH B shares will be
allotted and issued at a price equal to the
greater of:-
11.2.2.1 R19,00 per share; and
11.2.2.2 a Rand price determined by multiplying
the US Dollar denominated price of the
NASDAQ listed shares of FSAC at close of
business on 28 February 1998 by the
average between the spot buy and sell
rates of Rand for US Dollars quoted by
the Standard Bank of South Africa on 28
February 1998, less a discount equal to
the percentage growth in the February
1998 profits over the February 1997
profits. In the event of any dispute
about the exchange rates a certificate
of any branch or more senior manager of
The Standard Bank, whose designation it
shall not be necessary to prove shall be
proof of the rates until the contrary is
proved;
11.2.3 if the February 1998 profits exceed the
February 1997 profits by 10% or less, the
FSAH B shares will be allotted and issued
at a price equal to the greater of:
11.2.3.1 R19,00 per share; and
11.2.3.2 a Rand price determined by multiplying
the US Dollar denominated price of the
NASDAQ listed shares of FSAC at close of
business on 28 February 1998 by the
average between the spot buy and sell
rates of Rand for US Dollars quoted by
the Standard Bank of South Africa on 28
February 1998. In the event of any
dispute about the exchange rates a
certificate of any branch or more senior
manager of The Standard Bank, whose
designation it shall not be necessary to
prove, shall be proof of the rates until
the contrary is proved.
11.3 Payment of the third instalment shall be made on
31 May 1998, or within 14 days of the finalisation
of the February 1998 accounts and their signature
by the directors of the Company, (whichever is the
later), by paying the cash portion in cash and
delivering to the sellers share certificates
evidencing the FSAH B shares to be issued. The
parties shall use all reasonable endeavours to
ensure that such accounts are finalised and signed
by the directors of the Company by no later than
17 May 1998.
11.4 Notwithstanding the provisions of this clause 11,
the pre-tax profit on which the third instalment
is based shall be reduced if the managing director
designate to be employed by the Company pursuant
to clause 4 of the management agreement is not
employed prior to 1 March 1997. The reduction
shall be an amount equal to the additional costs
that the Company would have incurred in
remunerating the managing director designate had
he been employed for the full 12 month period
ending on 28 February 1998. In addition, and for
the purposes of determining the price at which the
FSAH B shares are to be issued pursuant to 11.2,
the February 1998 profit shall be augmented by any
profit for the financial year ended 28February1997
in excess of R10000000.
11.5 Should payment of the third instalment of the
purchase price be delayed beyond 31 May 1998, the
cash portion of the third instalment shall bear
interest from 1 June 1998 to date of payment, both
days inclusive, at the call rate quoted by The
Standard Bank of South Africa Limited on amounts
equal to the cash portion of the purchase price,
as certified by any manager of that bank whose
designation it shall not be necessary to prove and
whose determination of the rate shall be proof
thereof until the contrary is proved.
12. Restrictions on disposal of FSAH B shares
12.1 The sellers undertake that they shall not dispose
of or attempt to dispose of, or cede, pledge,
assign or otherwise encumber any of the FSAH B
shares forming part of the purchase price prior to
30 June 1998, provided that, with the prior
written consent of the purchaser (which shall not
be unreasonably withheld) the sellers may
transfer, at cost price, certain of their shares
to other senior managers of the Company. Any such
transferee shall also be bound by the restrictions
in the first sentence of this 12.1 and in the
balance of this clause 12.
12.2 In addition, the sellers undertake that they shall
not dispose of or attempt to dispose of, or cede,
pledge, assign or otherwise encumber any of the
FSAH B shares allotted and issued to them at a
discount to market value, within 1 year from their
date of issue. For the purposes of this sub-clause
market value shall mean the the US Dollar
denominated price of the NASDAQ listed shares of
FSAC at close of business on the last day in
February of the year in which the shares were
allotted and issued, converted into Rand by
multiplying the dollar price by the average
between the spot buy and sell rates of Rand for US
Dollars quoted by the Standard Bank of South
Africa on the applicable last day of February. In
the event of any dispute about the exchange rates
a certificate of any branch or more senior manager
of The Standard Bank, whose designation it shall
not be necessary to prove shall be proof of the
rates until the contrary is proved.
12.3 Any sale in contravention of this clause shall be
void and the directors of the purchaser shall not
enter the name of the transferee in the share
register of the purchaser or otherwise recognise
any title of the purported purchaser of the
shares. In addition FSAC shall be entitled to
purchase the affected FSAH B shares from the
defaulting seller at par. The rights conferred on
FSAC and the obligations imposed on the sellers
shall not prejudice any other rights available to
the Company, FSAC, or the purchaser arising from
such breach.
13. Put option
13.1 FSAC undertakes to procure that a non-resident
third party, (the option grantor), will
undertake to purchase from the sellers all of the
FSAH B shares to be issued by the purchaser to
the sellers pursuant to this agreement, (the put
option).
13.2 The material terms of the put option will be the
following:-
13.2.1 it will only be exercisable when the sellers
become entitled to sell the FSAH B shares,
determined in accordance with 12;
13.2.2 the price at which the put option may be
exercised shall be the net price received by
the option grantor from the sale on the open
market in the United States of an equivalent
number of shares of FSAC. For this purpose
net price shall mean the price for which
the FSAC shares are sold less all costs
associated with the sale, including any
brokers commission;
13.2.3 although the put option may be exercised in
tranches each tranche shall comprise a
minimum of 100 shares;
13.2.4 for so long as South African exchange control
regulations prescribe that South African
residents shall repatriate foreign currency
to South Africa, the proceeds from any sale
of the option shares shall be payable to the
sellers in South Africa.
14. Warranty by the purchaser
14.1 The purchaser warrants to the sellers that should
the sellers validly exercise the put option prior
to 30 September 1998 in respect of any FSAH B
shares issued by the purchaser to the seller in
part payment of the first instalment, the gross
Rand value of each FSAH B share so sold shall be
not less than R19,00. For this purpose gross Rand
value shall mean the actual US Dollar denominated
price received by the option grantor from the sale
of the equivalent number of FSAC shares pursuant
to 13.2.2, converted into Rand by multiplying it
by the average between the spot buy and sell rates
of Rand for US Dollars quoted by The Standard Bank
of South Africa on that date. In the event of any
dispute about the exchange rates a certificate of
any branch or more senior manager of The Standard
Bank, whose designation it shall not be necessary
to prove, shall be proof of the rates until the
contrary is proved.
14.2 Should the gross Rand value per share of each FSAH
B share sold in the circumstances prescribed in
14.1 be less than R19,00 the cash portion of the
first instalment of the purchase price shall be
deemed to have been increased by the difference
between R19,00 and the gross Rand value per share
actually received, multiplied by the number of
FSAH B shares sold pursuant to the put option.
FSAH shall pay this amount to the sellers in cash
in Rand on demand.
15. Escrow of sale shares
15.1 As security only for the payment of the second and
third instalments, the purchaser shall deliver to
Webber Wentzel Bowens, to hold in escrow, the
share certificates to be issued by the Company to
the purchaser pursuant to registration of transfer
of the Piemans sale shares and the Propco sale
shares into the name of the purchaser, accompanied
by share transfer forms signed by the purchaser,
and blank as to date and transferee, (the escrow
shares).
15.2 The sellers and the purchaser shall procure that
they and Webber Wentzel Bowens shall enter into an
escrow agreement in respect of the escrow shares,
the material terms of which will be the
following:-
15.2.1 Webber Wentzel Bowens shall hold the escrow
shares in accordance with the escrow
agreement until it receives written notice
signed by the sellers and the purchaser
specifying how the escrow shares are to be
dealt with, and shall deal with the escrow
shares in accordance with such notice;
15.2.2 such notice shall be given by no later than
31 July 1998 if the purchaser pays the second
and third instalments. In these circumstances
the notice shall specify that the escrow
shares shall be delivered to the purchaser;
15.2.3 if the purchaser fails to pay the second
instalment or the third instalment, the
notice shall instruct Webber Wentzel Bowens
to deliver the escrow shares to the sellers
and the escrow shares shall be forfeited to
the sellers;
15.2.4 in the event of either party refusing to sign
a notice because of a dispute the dispute
shall be referred to arbitration pursuant to
20 and the decision of the arbitrator shall
be final and binding on the parties and the
notice shall be prepared and signed in
accordance with such decision;
15.2.5 dividends declared in respect of the escrow
shares shall not be subject to the escrow
agreement but shall be paid directly to the
purchaser, but any further shares issued by
the Company to the purchaser shall be subject
to the escrow agreement, as will any shares
arising on a sub-division, consolidation or
other restructure of the share capital of the
Company;
15.2.6 upon delivery of the escrow shares to the
sellers pursuant to a notice in accordance
with 15.2.3 the sellers shall become the
owners of the escrow shares and shall be
entitled to procure the re-registration of
the escrow shares into their names; and
15.2.7 the escrow agreement shall contain customary
protections for the escrow agent.
15.3 Should the escrow shares be forfeited to the
sellers pursuant to the provisions of the escrow
agreement encompassing the matters referred to in
15.2.3, this agreement shall be deemed to have
been terminated due to a material unremedied
breach by the purchaser and the sellers shall (in
addition to the forfeiture referred to in 15.2.3),
be entitled to retain, as a genuine pre-estimate
of liquidated damages, all cash and FSAH B
shares paid to the sellers on account of the
purchase price, but shall have no other claim
against the purchaser arising from such breach or
termination. For the avoidance of doubt it is
recorded that the forfeiture of the escrow shares
shall apply only if the second or third instalment
is not paid.
15.4 The provisions of this clause 15 shall not
preclude the Company from borrowing against the
assets of the Company, or from selling,
refinancing or otherwise restructuring its
business, or preclude the purchaser from disposing
of its investment in the Company.
16. Confidentiality
16.1 The parties to this agreement acknowledge that
each of them wishes to retain strict
confidentiality regarding the negotiations and the
subject matter and contents of this agreement.
16.2 Each party therefore undertakes to the other party
to treat all negotiations, the content and subject
of this agreement and any other matters relating
to this agreement in strict confidence and not to
disclose any provisions of this agreement to any
third party without the prior consent of the other
parties, (which shall not be unreasonably
withheld), except where it is necessary to do so
to enforce the provisions of this agreement.
17. Warranties
The following warranties are, unless otherwise stated
in respect of any warranty, (in which case the specified
period shall apply), given as at the signature date, as
at the fulfilment date and for the period between those
dates. The sellers accordingly warrant to the purchaser,
that except as disclosed to the purchaser in Schedule
3 to this agreement:-
17.1 warranty regarding registration
17.1.1 Each of the Company and Propco is a private
company, duly registered in accordance with
the provisions of the Companies Act, 1973.
17.1.2 No steps have been taken or are contemplated
in respect of the Company or Propco in terms
of section73 of the Companies Act 1973 or any
corresponding provision of any legislation in
any other territory.
17.2 warranties regarding capital structure and the
shares
17.2.1 The authorised share capital of each of the
Company and Propco is R1000 divided into 1000
ordinary shares of R1,00 each.
17.2.2 The issued share capital of each of the
Company and Propco is R100 divided into 100
ordinary shares of R1,00 each and all such
shares of the Company and Propco are fully
paid and rank pari passu in every respect
with all the other shares of the relevant
company , and the sellers are the sole
registered and beneficial owners of all such
shares in the numbers set out in clause5 and
are reflected in the register of members of
the Company and Propco as the sole owners of
such shares.
17.2.3 Neither the Company nor its directors nor
Propco or its directors have issued or agreed
to issue any further shares (including bonus
and capitalisation shares) in the capital of
the Company or Propco, nor have they passed
or agreed to pass any resolution for the
increase or reduction of the Companys or
Propcos capital, or for the creation or
issue of any debentures or securities, or for
the alteration of the memorandum or articles
of association of the Company or Propco.
17.2.4 The Companys and Propcos share premium
accounts, if any, have not been reduced in
any manner and neither the Company nor Propco
has transferred any amount from their
reserves (including their share premium
accounts) or undistributed profits to their
share capital or their share premium
accounts.
17.2.5 No person has any right or option or right of
first refusal to acquire any shares in the
Company or Propco, nor to subscribe for or
take up any of the unissued shares in the
Company or Propco, nor are any of the shares
of the Company or Propco subject to any lien
or other preferential right. In particular,
the sellers warrant that they are entitled to
sell the Piemans sale shares and the Propco
sale shares to the purchaser and that upon
such sale the purchaser will be the
beneficial owner of those shares to the
exclusion of all others.
17.2.6 No person has any right to obtain an order
for the rectification of the register of
members of the Company or Propco.
17.3 warranties regarding financial position, assets and
liabilities
17.3.1 auditing and returns
No work remains to be performed, and no
expense remains to be incurred in connection
with-
17.3.1.1 the completion and auditing of the
Companys or Propcos financial
statements (other than the accounts for
the year ended 29February 1996) in
respect of any of their financial years
ended prior to the fulfilment date;
17.3.1.2 the submission of the Companys and
Propcos income tax returns in respect
of any of their financial years ended
prior to the fulfilment date; and
17.3.1.3 the submission of any other return
required by law to have been submitted
by the Company or Propco to any
competent authority prior to the
fulfilment date.
17.3.2 change in financial position
Between the signature date and the fulfilment
date there will be no material adverse change
in the financial position of the Company or
Propco from that prevailing on the signature
date and such change as there may be will
have arisen in the ordinary, normal and
regular course of the Companys or Propcos
business, as the case may be.
17.3.3 capital expenditure
neither the Company nor Propco has authorised
or incurred any capital expenditure otherwise
than in the ordinary, normal and regular
course of its business;
17.3.4 dividends
17.3.4.1 Neither the Company nor Propco has
declared or paid any dividends in
respect of any period of trading prior
to the signature date which have not
been paid in full and neither company
will declare or pay any dividends prior
to the fulfilment date.
17.3.4.2 No person will be entitled to
participate in or to receive a
commission on the profits or dividends
of the Company or Propco except as a
shareholder thereof.
17.3.5 liabilities
At the fulfilment date the Company and Propco
will not have any liabilities of any nature
whatsoever, actual or contingent, other than
those incurred in the normal and regular
course of their businesses.
17.3.6 assets
17.3.6.1 The Company and Propco own the assets
necessary for the conduct of their
businesses and have good and marketable
title thereto, and that except for
agreements entered into in the ordinary
course of business no other person has
any rights to or in respect of such
assets.
17.3.6.2 The Companys and Propcos assets are in
good order and condition and fully
operational apart from breakdowns (in
the ordinary course) and any loss or
damage to or destruction of such assets
beyond the control of the Company and
Propco; provided that any such loss,
damage or destruction will have been
fully insured for the benefit of the
Company or Propco, as the case may be.
17.3.6.3 None of the assets of the Company or
Propco is subject to any option or right
of first refusal in favour of any
person.
17.3.7 debtors
17.3.7.1 All amounts owing to the Company by its
debtors at the fulfilment date (save for
debtors totalling in aggregate R90000,
being the amount of the Companys normal
bad debt provision will be recovered by
the Company from those debtors in full
by no later than 31 August 1996; and, in
the event of any amounts owing by those
debtors not being recovered by such
date, those amounts shall be recoverable
from the sellers by the Company,
provided that the purchaser shall
procure that the Company shall cede to
the sellers or their nominees the claims
against the debtors in question. If bad
debts are less than R90 000 the balance
shall contribute to profit.
17.3.7.2 Propco has no debtors other than the
Company.
17.4 warranty regarding suretyships
Neither the Company nor Propco is bound by any
suretyship for the obligations of any person, or
by any other guarantee or indemnity;
17.5 warranties regarding the business of the Company
and Propco
17.5.1 manner of carrying on business
Between the signature date and the fulfilment
date-
17.5.1.1 the Company and Propco have continued to
operate in the normal and regular course
of their businesses, and such businesses
have been carried on in a proper and
regular manner;
17.5.1.2 neither the Company nor Propco has
changed its normal manner and method of
carrying on business;
17.5.1.3 no assets have been acquired or sold
otherwise than in the ordinary, normal
and regular course of the Companys or
Propcos business and without the
written consent of the purchaser.
17.5.2 goodwill and scope of business
At the fulfilment date the Company and Propco
will not have done or omitted to do anything
which has or will-
17.5.2.1 materially prejudice the continued
goodwill of the Company or Propco;
17.5.2.2 reduce the scope of the Companys or
Propcos business;
17.5.2.3 result in any business associate or
customer of the Company or Propco
ceasing to transact business with the
Company or Propco or vary the terms upon
which it transacts business with the
Company or Propco.
17.5.3 contracts
17.5.3.1 All contracts entered into by the
Company and Propco have been entered
into under normal credit terms and are
subject to payment in accordance with
those terms.
17.5.3.2 There is no single material contract
with a customer or supplier which is of
longer duration than 6months, and the
Company and Propco are not party to any
unusual agreement.
17.5.3.3 Neither the Company nor Propco is party
to any contract with any of its
directors or employees requiring more
than one months notice of termination,
or entitling any of them to compensation
on termination of employment, or to
participation in or entitlement to a
commission on profit.
17.5.3.4 Neither the Company nor Propco are party
to any agreement which has not been
entered into on an arms-length basis and
on terms which are normal having regard
to the nature of its business.
17.5.3.5 Copies of all contracts and other
documents submitted to the purchaser in
connection with this agreement, (whether
during the course of the due diligence
investigation or otherwise) fully and
correctly reflect all the terms and
conditions thereof, are not subject to
any claim for rectification, and have
not been amended in any respect.
17.5.3.6 Neither the Company nor Propco is in
breach of any agreement entered into
between it and any other person and each
of them has complied in all material
respects with its obligations under such
agreements.
17.5.3.7 Neither the Company nor Propco is party
to any agreement requiring the payment
of royalties, or any agreement which in
any way restricts the trading or other
activities of the Company or Propco
within the Republic of South Africa.
17.5.3.8 The sellers are not aware of any facts,
matters or circumstances which may give
rise to the cancellation of any of the
contracts to which the Company or Propco
is bound as a result of any breach
thereof by the Company or Propco.
17.5.3.9 The transaction provided for in this
agreement does not constitute a breach
of any of the Companys or Propcos
contractual obligations nor will it
entitle any person to terminate any
contract to which the Company or Propco
is a party.
17.5.4 intellectual property rights
17.5.4.1 The businesses conducted by the Company
and Propco do not infringe any patent,
copyright, trade mark or other
industrial property rights and no person
is entitled to an order requiring the
Company or Propco to change its name or
its trading style, or any of the marks
and designs applied by it to its
products.
17.5.4.2 The trading methods and style used by
the Company and Propco, including any
designs, marks and the like applied in
connection with their businesses, do not
constitute an infringement of the rights
of any other person.
17.5.4.3 No person is entitled to an order
requiring the Company or Propco to
change its name, its trading style or
any of the marks and designs used by
them in their business.
17.5.4.4 The Company and Propco are the owners of
the registered trademarks Piemans
Pantry and Surfs-Up used by them in
their businesses and have paid all
renewals for such trademarks when due
and have not done or omitted to do
anything which may entitle any third
party to bring proceedings for the
expungement of such marks.
17.5.5 laws, regulations, consents, licences and
permits
17.5.5.1 The Company and Propco have complied
with all laws and regulations affecting
their affairs and businesses, except
only to the extent that any infringement
of those laws and regulations can
readily be rectified.
17.5.5.2 The Company and Propco are in possession
of all consents, permits and licences
necessary for the conduct of their
businesses and affairs, and the sellers
are not aware of any facts which may
give rise to the cancellation of, or
failure to renew, any such licences,
permits or consents or to their only
being renewed subject to the imposition
of onerous conditions not presently
applicable thereto.
17.5.6 labour laws, regulations, determinations,
agreements and disputes
17.5.6.1 The Company and Propco have complied
with all wage determinations and
industrial conciliation agreements which
apply to them, their businesses and
their employees.
17.5.6.2 The Company and Propco have complied
with the grievance procedures agreed to
by them with regard to grievances of and
relations with their employees.
17.5.6.3 Neither the Company nor Propco has
entered into any recognition agreement
with any labour union.
17.5.6.4 Neither the Company nor Propco is party
to any labour disputes and neither is
not obliged by law, agreement, judgment
or order of court, to reinstate
employees that have been dismissed or
will be dismissed.
17.5.7 insurance
17.5.7.1 The Company carries insurance cover
against loss arising from accident,
fire, earthquake, flood, burglary,
theft, employer's liability, workmen's
compensation, public liability, storm
damage, civil commotion, riot or
political risk and loss of profits, and
such insurance will continue to be
effective after the effective date; all
premiums due in respect of such
insurance have been paid and the Company
has complied with all of the conditions
to which the liability of the insurers
under the policies of insurance will be
subject.
17.5.7.2 Propco carries insurance against fire,
earthquake, flood and storm and such
insurance will continue to be effective
after the effective date; all premiums
due in respect of such insurance have
been paid and Propco has complied with
all of the conditions to which the
liability of the issuers under the
policy of insurance will be subject.
17.5.7.3 The sellers are not aware of any facts,
matters or circumstances which may give
rise to the cancellation of the policies
of insurance referred to in clause
17.5.7.1 and 17.5.7.2 or the repudiation
of any claims thereunder or to such
policies not being renewed in the future
or only being renewed subject to the
imposition of onerous conditions not
presently applicable.
17.5.8 employment, leave, remuneration and pension
17.5.8.1 No employee or official of the Company
or Propco is entitled to any exceptional
leave privileges, accumulated leave,
pension or the like.
17.5.8.2 On the fulfilment date neither the
Company nor Propco will in any material
respect have improved the terms of
employment of or remuneration payable to
any of their employees from that
prevailing at the signature date.
17.5.8.4 There is no unfunded deficit in respect
of any future liability of any pension
fund of which any of the Companys or
Propcos employees are members; provided
that if there is any such deficit in
respect of services of any such
employees, as certified by any actuary
for the time being of the pension fund,
whether the Company or Propco has any
liability in respect thereof or not,
then without prejudice to the
purchasers right as a result of the
breach of this warranty the purchaser
will be entitled to claim payment from
the sellers of an amount equal to the
amount of such unfunded deficit.
17.5.9 restraint of trade
Neither the Company nor Propco is bound by
any restraint of trade agreement.
17.5.10 resolutions
No resolutions have been passed by the
members or directors of the Company or
Propco, save for:
17.5.10.1 such resolutions as may be necessary to
give effect to this agreement;
17.5.10.2 such resolutions as have been passed in
the ordinary course of business or as
shall be approved by the purchaser in
writing, which approval may not be
unreasonably withheld;
17.6 warranty regarding litigation
Neither the Company nor Propco is party to any
legal proceedings, or labour disputes, including
wage disputes, or statutory enquiries or
investigations, other than normal debt
collections, and the sellers are not aware of any
legal proceedings threatened or instituted against
the Company or Propco or of any facts which are
likely to give rise to those proceedings.
17.7 warranties regarding statutory requirements
17.7.1 The Company and Propco have complied with all
the provisions of the Companies Act, the laws
relating to taxation and all other laws and
bylaws which affect them and their property.
17.7.2 All statutory requirements of the Receiver of
Revenue, the Registrar of Companies and all
other authorities, governmental, municipal or
otherwise have been complied with, and there
are no matters outstanding in connection with
the rendering of returns and the payment of
dues and levies.
17.8 warranties regarding books of account and minutes
17.8.1 The books and records of the Company and
Propco are up-to-date and have been properly
kept according to law and will be capable of
being written up within a reasonable time so
as to record all of the transactions of the
Company or Propco, as the case may be.
17.8.2 The minute books of the Company and Propco
contain all of the resolutions passed by the
directors and the members of the Company and
Propco.
17.9 warranties regarding taxation
17.9.1 definition
For the purpose of the warranties set out
below, the word tax shall, unless the
context indicates the contrary, mean any tax
including, but not limited to, income tax,
general sales tax, Regional Service Council
levies, value-added tax (VAT) and any duty
or levy (including any penalty or interest)
imposed by any law administered by the
Commissioner for Inland Revenue or his lawful
representative or any other authority
entitled to administer taxes in the Republic
of South Africa.
17.9.2 administration
17.9.2.1 The records of the Company and Propco
include all of the resolutions passed by
their directors and shareholders;
17.9.2.2 neither the Company nor Propco is party
to any tax objection or appeal nor are
any such proceedings threatened against
or likely to be instituted by or against
the Company or Propco, nor are the
sellers aware of any circumstances which
may give rise to the institution of any
such proceedings;
17.9.2.3 no queries have been addressed to the
Company or Propco or to any of their
representatives by any official
administering any tax nor have any
objections with regard to any tax been
lodged by the Company or Propco which
have not been fully disposed of;
17.9.2.4 each of the Company and Propco has paid
or will, prior to the fulfilment date,
pay all tax where the due date for
payment of the tax arises on or before
the fulfilment date; in respect of any
tax which is due for payment after the
fulfilment date, adequate provision or
reserves for the payment of that tax
will have been made;
17.9.2.5 neither the Company nor Propco is liable
to pay any penalty or interest in
connection with any claim for tax;
17.9.2.6 neither the Company nor Propco is
subject to any liability as a result of
the re-opening of any tax assessment;
17.9.2.7 all necessary information, notices and
returns (all of which are true and
accurate and none of which is disputed
by the Commissioner for Inland Revenue
or other appropriate authority) have
been properly and timeously submitted by
the Company and Propco and there is no
reason to suppose that any such
information or return will not in due
course be accepted as true and accurate
by the Commissioner for Inland Revenue
or other appropriate authorities;
17.9.2.8 the Company has properly operated the
PAYE system, has deducted tax as
required from all payments made to or
treated as made to employees or former
employees of the Company, or any other
payment from which tax is required to be
deducted in terms of the fourth schedule
of the Income Tax Act and has accounted
to the Commissioner for Inland Revenue
or other appropriate authority for all
tax so deducted;
17.9.2.9 each of the Company and Propco has
withheld all taxes which it is liable to
withhold and has paid such taxes to the
Commissioner for Inland Revenue or other
appropriate authorities;
17.9.2.10 no notice has been served on the Company
or Propco in terms of which the Company
or Propco has been appointed as a
representative taxpayer;
17.9.2.11 each of the Company and Propco has
timeously lodged a claim for any refund
of tax to which it is or may be
entitled;
17.9.2.12 neither the sellers nor the Company nor
Propco is a party to any agreement with
the Commissioner for Inland Revenue
bearing upon or relating to the manner
or circumstances in which tax will or
might be levied on the Company or Propco
nor has the Commissioner granted the
Company or Propco any allowance in terms
of sections24 or 24C of the Income Tax
Act;
17.9.2.13 each of the Company and Propco is
registered as a VAT vendor in terms of
the Value-Added Tax Act, 1991, and has
fully and completely complied with all
of its obligations in terms of the VAT
Act, and has paid all VAT that it is
obliged to pay.
17.9.3 balance sheet
17.9.3.1 neither the Company nor Propco has
acquired from any other companies under
any scheme of arrangement or
reconstruction of any companies or its
affairs (including any scheme for the
amalgamation of two or more companies
and any other scheme) which is
sanctioned by any order of court on or
after 1April 1971, any asset which is,
in terms of section 22A of the Income
Tax Act, deemed to be trading stock of
the Company or Propco;
17.9.3.2 neither the Company nor Propco is party
to any agreement with the Commissioner
for Inland Revenue of the nature
referred to in section24A of the Income
Tax Act;
17.9.4 deductible payments
no rents, interest, annual payments or other
similar expenditure incurred by the Company
will be disallowed as a deduction wholly or
in part from the income of the Company or
Propco.
17.9.5 stamp duty
each of the Company and Propco has paid all
stamp duty for which it is or may be liable
and there is no liability for any penalty in
respect of such duty nor are there any
circumstances or transactions to which the
Company or Propco is or has been a party
which may result in the Company or Propco
becoming liable for any such duty or penalty.
17.9.6 tax avoidance and donations
17.9.6.1 neither the Company nor Propco is party
to any transaction, operation or scheme
of the nature referred to in section
103(1) of the Income Tax Act or
section73 of the VAT Act;
17.9.6.2 there are no circumstances affecting the
Company or Propco under which the
provisions of section7(7) of the Income
Tax Act can operate;
17.9.6.3 neither the Company nor Propco has made
or received any donation on which
donations tax can be levied nor has it
made any donation at the instance of a
third party;
17.10 environmental warranties
17.10.1 each of the Company and Propco complies
with all conditions, limitations,
obligations, prohibitions and
requirements contained in any
environmental legislation or
regulations, by-laws, or ordinances
(environmental legislation) and the
sellers are not aware of any facts or
circumstances which may lead to any
breach of any environmental legislation
including without limitation the
Environmental Conservation Act and the
Water Act;
17.10.2 no poisonous, noxious, hazardous,
polluting, dangerous or environmentally
harmful substances or articles have been
produced, treated, kept at or deposited
at the premises where the Company or
Propco carries on business, or have been
released or discharged from such
premises and in particular no matter or
thing been discharged into any public
sewer or into any drain or sewer
connecting the public sewer and has not
contaminated the land surrounding the
premises or any water;
17.10.3 there are no deficiencies in the waste
disposal arrangements carried on at or
in respect of the premises which may
lead to a failure by the Company or
Propco to comply with any existing
environmental legislation, including
without limitation, the Environmental
Conservation Act and the Water Act or
which will harm the environment;
17.10.4 there have been no disputes claims or
investigations or other proceedings
pending or threatened regarding the use
of the Companys or Propcos premises,
or the release of any substances from
such premises;
17.10.5 there are no environmental claims,
investigations or other proceedings
pending or threatened against the
sellers or the Company or Propco in
respect of the business of the Company
or Propco and there is no actual or
contingent liability of either the
sellers or the Company or Propco to make
good, repair, reinstate or clean up any
property;
17.10.6 no water, whether surface or ground
water, has been contaminated, polluted
or the quality thereof altered in such
a way that the provisions of any water
law whether common law or statutory law
will have been breached.
17.11 disclosure
All facts and circumstances material to this
transaction and not known to the purchaser, or
which would be material or would be reasonably
likely to be material to a purchaser of the sale
shares and to the purchase price thereof have been
disclosed to the purchaser.
17.12 The liability of the sellers under the
warranties is joint and several.
17.13 Each of the warranties set out above is
without prejudice to any other warranty and
shall not be limited by any other clause of
this agreement.
17.14 Each warranty shall be deemed to be material
and to be a material representation inducing
the purchaser to enter into this agreement.
17.15 The fact that the sellers have given the
purchaser the express warranties listed above
shall not in any way be construed as
relieving the sellers from any liability
which they may have at common law arising out
of a failure to disclose any fact in relation
to the Company or Propco or their businesses
or affecting this agreement.
17.16 The sellers jointly and severally indemnify
and hold the purchaser harmless from and
against any loss, damages, claims, actions or
expenses of any nature whatsoever and
howsoever incurred, which are suffered or
sustained by the purchaser pursuant to any
breach by the sellers of any of the
warranties contained in this agreement.
18. Sale of business
18.1 At the election of the purchaser the transaction
contemplated in this agreement shall be converted
into a purchase by the purchaser or a wholly-owned
subsidiary of the purchaser, of the businesses of
the Company and Propco as going concerns. Such
election shall be exercised on or before the
fulfilment date.
18.2 Should the purchaser elect to convert this
transaction into a sale of business the material
commercial terms of this agreement (including
without limitation the quantum of the purchase
price and the manner of payment of the purchase
price) shall not be affected and the purchaser
shall gross up the purchase price to compensate
the sellers for any STC payable on liquidation or
deregistration of the Company and Propco, and pay
the costs of liquidation or deregistration of the
Company and Propco.
18.3 This agreement will terminate with effect from the
date of signature of any agreement giving effect
to a sale of the Companys and Propcos businesses
as contemplated in this clause.
19. Breach
19.1 If the sellers (which for the purposes of this
clause shall be deemed to be one party and shall
exercise the remedies conferred on them by this
clause jointly) or the purchaser, as the case may
be, breach any provision of this agreement and
remain in breach for 30days after receipt of
written notice from the aggrieved party requiring
it to rectify the breach, the aggrieved party
shall be entitled at its option (and without
prejudice to any other rights that it may have at
law) -
19.1.1 to sue for specific performance of the
defaulting partys obligations under this
agreement; or
19.1.2 (either as an alternative to a claim in terms
of 19.1.1 or upon the abandonment of such a
claim) to cancel the sale by notice in
writing to the defaulting party and the other
parties to this agreement and to sue for such
damages as that party may have suffered as a
result of the cancellation;
provided that if the breach is covered by 15.3 the
remedy of the sellers shall be limited to the
remedy prescribed by that clause.
19.2 Neither the seller nor the purchaser shall be
entitled to cancel this agreement on the grounds
of a breach of a term or warranty contained in
this agreement unless it is a material breach of
a material term or warranty which has not been
remedied by the party in breach after being given
notice to remedy in terms of 19.1.
20. Arbitration
20.1 disputes subject to arbitration
Any dispute arising out of or in connection with
this agreement or the subject matter of this
agreement shall be decided by arbitration in terms
of this clause, notwithstanding that the rest of
the agreement may be void or voidable or may have
terminated or been cancelled, this clause being a
separate, divisible agreement. Claims in delict or
based on unjust enrichment or for rectification of
the agreement are included.
20.2 notice to state whether claim is disputed
A party may call on the other party in writing to
state in writing whether a claim is disputed or
not. If the other party fails to do so within 7
days the first party may proceed by way of
litigation, and if the other party then defends
such litigation the first party may elect to
continue with the litigation or to refer the
matter to arbitration. In the latter event the
other party shall immediately pay the costs
incurred by the first party in the litigation on
an attorney and own client basis and shall not be
entitled to recover that partys own costs from
the first party.
20.3 appointment of arbitrator
The arbitrator shall be an attorney or advocate
nominated at the request of either party by the
president for the time being of the Law Society of
the Transvaal.
20.4 venue and period for completion of arbitration
The arbitration shall be held in Johannesburg and
the parties shall endeavour to ensure that it is
completed within 90 days after notice requiring
the claim to be referred to arbitration is given.
20.5 Arbitration Act
The arbitration shall be governed by the
Arbitration Act 1965 or any replacement Act.
20.6 procedure
The procedure to be followed in the arbitration
shall be determined by the arbitrator, with due
regard to 20.4=REF1, at the request of either
party.
20.7 procedure
The procedure to be followed in the arbitration
shall be that laid down in the Rules for the
Conduct of Arbitrations published by the
Association of Arbitrators, current at the date
the arbitrator is nominated, provided that the
arbitrator may vary the procedure, or substitute
a different procedure, in his discretion.
20.8 arbitrators powers
The arbitrator shall have full and unrestricted
powers in relation to the arbitration. In
particular, but without limitation, the
arbitrator:
20.8.1 shall have the powers set out in section
21(1) of the Arbitration Act 1965;
20.8.2 need not strictly observe the rules of
evidence;
20.9 need not strictly observe the principles of
law and may decide the matters submitted to
him according to what he considers equitable
in the circumstances;
20.9.1 may have regard to his personal
knowledge of the facts, and any expert
knowledge he may have, relating to the
issues in dispute, but is to afford the
parties an opportunity of challenging
the knowledge he claims to have;
20.9.2 may make such award or awards, whether
interim, provisional or final, as he may
consider appropriate, including without
limitation ex parte awards, declaratory
orders, interdicts, and awards for
specific performance, restitution,
damages, penalties, interest and
security for costs or restitution.
20.10 reasons for award
The arbitrator shall give his reasons for his
award, if so requested by either party.
20.11 costs
20.11.1 If the arbitrators charges and any
other costs have to be paid before the
arbitrator has made his award in respect
of costs, the parties shall pay the
costs in equal shares, and if a party
fails to pay that partys share the
arbitrator may make his award in respect
of the claim and costs in the absence of
that party.
20.11.2 It is recorded that the parties intend
that the substantially successful party
should be awarded a full indemnity for
all the costs reasonably incurred by
that party and not merely the costs on
the supreme court or any other scale.
21. Miscellaneous matters
21.1 postal address
21.1.1 Any written notice in connection with this
agreement may be addressed:
21.1.1.1 in the case of Welch to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
John Welch
21.1.1.2 in the case of Andreas to:
address : 6 Third Street
Krugersdorp North
1741
telefax no : 953 1283
and shall be marked for the attention of
Heinz Andreas
21.1.1.3 in the case of Morgan to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
Michael Morgan
21.1.1.4 in the case of FSAC and the purchaser to:
address : c/o Price
Waterhouse
PO Box 783027
Sandton
2146
telefax no : 780 2095
and shall be marked for the attention of
Charles Boles;
21.1.1.5 in the case of the Company and Propco to:
address : PO Box 2835
Krugersdorp
1740
telefax no : 953 1283
and shall be marked for the attention of
John Welch;
21.1.2 The notice shall be deemed to have been duly
given:
21.1.2.1 14 days after posting, if posted by
registered post to the partys address
in terms of this sub-clause;
21.1.2.2 on delivery, if delivered to the partys
physical address in terms of either this
sub-clause or the next sub-clause
dealing with service of legal documents;
21.1.2.3 on dispatch, if sent to the partys then
telefax or telex number and confirmed by
registered letter posted no later than
the next business day.
21.1.3 A party may change that partys address for
this purpose, by notice in writing to the
other party.
21.2 address for service of legal documents
21.2.1 The parties choose the following physical
addresses at which documents in legal
proceedings in connection with this agreement
may be served (ie their domicilia citandi et
executandi):
21.2.1.1 Welch:
401 Anne Road
Ruimsig
Roodepoort
1724
21.2.1.2 Andreas:
6 Third Street
Krugersdorp North
1740
21.2.1.3 Morgan:
3 Harebell Street
Randpark Ridge
2194
21.2.1.4 the purchaser and FSAC:
90 Rivonia Rd
Sandton
2146
21.2.1.5 the Company and Propco:
Cnr Anvil and Screw Streets
Boltonia
21.2.2 A party may change that partys address for
this purpose to another physical address by
notice in writing to the other party.
21.3 entire contract
This agreement contains all the express provisions
agreed on by the parties with regard to the
subject matter of the agreement and the parties
waive the right to rely on any alleged express
provision not contained in the agreement.
21.4 no representations
No party may rely on any representation which
allegedly induced that party to enter into this
agreement, unless the representation is recorded
in this agreement.
21.5 variation, cancellation and waiver
No contract varying, adding to, deleting from or
cancelling this agreement, and no waiver of any
right under this agreement, shall be effective
unless reduced to writing and signed by or on
behalf of the parties.
21.6 cession
No party may cede that partys rights nor delegate
that partys obligations without the prior written
consent of the other parties.
21.7 applicable law
This agreement shall be interpreted and
implemented in accordance with the law of the
Republic of South Africa.
21.8 jurisdiction
Each of the parties submits itself to and consents
to the non-exclusive jurisdiction of the
Witwatersrand Local Division of the Supreme Court
of South Africa.
21.9 costs
21.9.1 Each party shall bear that partys own legal
costs of and incidental to the negotiation,
preparation, settling, signing and
implementation of this agreement. The stamp
duty, if any, on this agreement shall be
borne by the parties in equal shares. The
stamp duty payable in respect of the
registration of the transfer of the shares
into the name of the the purchaser shall be
borne by the purchaser.
21.9.2 Any costs, including attorney and own client
costs, incurred by a party arising out of the
breach by any other party of any of the
provisions of this agreement shall be borne
by the party in breach.
21.10 indulgences
If a party at any time breaches any of that
partys obligations under this agreement, any of
the other parties:
21.10.1 may at any time after that breach exercise
any right that became exercisable directly or
indirectly as a result of the breach, unless
the aggrieved party has expressly elected in
writing not to exercise the right;
21.10.2 shall not be estopped (ie precluded) from
exercising the aggrieved partys rights
arising out of that breach, despite the fact
that the aggrieved party may have elected or
agreed on one or more previous occasions not
to exercise the rights arising out of any
similar breach or breaches.
Signed at on
1996.
As witness:
.............................................
.............................................
John Welch
Signed at on
1996.
As witness:
.............................................
.............................................
H Andreas
Signed at on
1996.
As witness:
.............................................
.............................................
M Morgan
Signed at on
1996.
As witness:
.............................................
.............................................
For First South African
Holdings (Proprietary)
Limited
Signed at on
1996.
As witness:
...............................................................................
For Piemans Pantry
(Proprietary) Limited
Signed at on
1996.
As witness:
.............................................
.............................................
For Surfs-Up Investments
(Proprietary) Limited
ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 John Welch
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30
000 000 A class ordinary shares of R0,0001 each
and 10 000 000 B class ordinary shares of
R0,0001 each (FSAH B class shares).
2.2 All of the issued A class ordinary shares in FSAH
are owned by the Parent.
2.3 The rights and obligations attached to the FSAH B
class shares are recorded in the quotation from
the articles of association of FSAH recorded on
Schedule 1 hereto.
2.4 The Parent has an authorised share capital
comprising of Common Stock, registered with the
Securities and Exchange Commission and listed for
trading on NASDAQ in compliance with all
applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and
listed.
2.5 FSAH has agreed to allot and issue and the
Subscriber has agreed to subscribe for 149 210
FSAH B class shares (subscription shares) and
the Parent has agreed to simultaneously allot and
issue to the Escrow agent which has agreed to
subscribe for 149 210 Parent B class stock
(Escrow stock).
2.6 Insofar as prevailing circumstances and laws allow
and subject to the restrictions recorded herein
the Parent and FSAH wish, by the conclusion and
implementation of this agreement, to enable the
Subscriber to trade in the subscription shares for
value and in circumstances which are pari passu
with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and
promises herein contained and other good and
valuable consideration the adequacy of which is
hereby acknowledged, the parties have reached the
agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to
receive, hold and dispose of the Escrow stock in
accordance with the provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of
this agreement accepts its appointment as Escrow
agent upon and subject to the terms and conditions
of this agreement.
3.3 The appointment of the Escrow agent will become
effective against delivery of the Escrow stock to
the Escrow agent and will continue in effect until
the Escrow stock, all dividends or other benefits
accruing thereto and all proceeds derived from the
sale or other disposition thereof has been
distributed in accordance with this agreement
(Escrow period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber
of the subscription shares the Parent will allot
and issue the Escrow stock to the Escrow agent for
a consideration of US$.01 per share payable to the
parent on behalf of the Escrow agent by Michael
Levy who will thereby acquire no claim against the
Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow
agent will confirm in writing delivered to the
Subscriber that the Escrow stock has been
delivered to it unconditionally, in negotiable
form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow
agent will retain possession of and control over
the Escrow shares and will at the request of the
Subscriber inform the remaining parties of the
physical location of all documents and records
evidencing the Escrow stock and requisite to
trading therein.
4.4 Insofar as circumstances and the law allow the
Escrow agent will retain the Escrow stock in
negotiable and freely tradeable form throughout
the Escrow period, subject only to the
restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will receive
all money, securities, rights or property distributed
in respect of the Escrow stock including any such
property distributed as dividends or pursuant to any
stock split, merger, recapitalisation, dissolution,
total or partial liquidation of the Parent (excluding
only dividends paid to the Escrow agent by the Parent
to the extent that the Subscriber has in relation to the
same period been paid dividends on the Subscription
shares): all such property to be held and distributed
as herein provided and hereinafter referred to
collectively as Escrow property. Reference herein to
Escrow stock will be deemed to include the Escrow
property deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as
defined in Section 1(p) of the bye-laws of the
Parent) if any of the Escrow stock is sold by the
Escrow agent pursuant to this agreement it will
automatically convert into a share of common stock
in the parent.
6.2 None of the Escrow stock may be sold in
contravention of the restrictions set out in
clause 12 of the sale of shares agreement entered
into among John Welch, Heinz Andreas, Michael
Morgan, Parent and FSAH, ("the sale agreement") on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold
and transferred in compliance with this agreement
and the Securities Act of 1933 as amended and the
rules and regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy
will have the sole power to vote the Escrow stock
and any securities held in escrow as part of the
Escrow property to which end the Escrow agent
hereby irrevocably appoints Michael Levy as its
proxy to vote the Escrow stock on its behalf at
any meeting of the shareholders of the Parent and
at any adjournment thereof which shall take place
during the Escrow period. The Escrow agent
undertakes that it will execute and deliver to
Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock
and any securities comprising the Escrow property
against demand by Levy following delivery of the
Escrow stock or other securities as the case may
be.
6.5 Each certificate evidencing the Escrow stock will
bear the following legends in addition to any
others required by law:
The sale, transfer, hypothecation,
negotiation, pledge, assignment, encumbrance
or other disposition of the shares evidenced
by this certificate are restricted by and are
subject to all of the terms, conditions and
provisions of an escrow agreement entered
into amongst First South Africa Corp., Ltd,
First South African Holdings (Proprietary)
Limited, American Stock Transfer & Trust
Company and John Welch, a copy of which may
be obtained from the secretary of First South
Africa Corp., Ltd. No transfer, sale or
other disposition of these shares may be made
unless the specific conditions of such
agreement are satisfied.
The shares evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended. No transfer, sale
or other disposition of these shares may be
made unless a registration statement with
respect to these shares has become effective
under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of
Counsel satisfactory in form and substance to
it that such registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided
that the Escrow stock is capable of being sold in
accordance with the provisions of this agreement
and the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder,
the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of
South Africa, Webber Wentzel Bowens or its
principal successor-in-practice, of written notice
accompanied by the original share certificate/s
evidencing the put shares together with securities
transfer form/s relating thereto signed and
completed in negotiable form according to law
(put notice) to require and oblige the Escrow
agent to purchase the subscription shares or any
part thereof but no fewer than 100 subscription
shares (or such lesser number as constitutes all
of the remaining subscription shares held by the
Subscriber) in relation to any single put notice,
for the consideration and upon the terms and
conditions hereinafter recorded.
7.2 Against delivery of the put notice the Escrow
agent will, in compliance with applicable
securities laws, use every reasonable effort to
sell as expeditiously as possible, at the best
possible price and on the best available terms so
much of the Escrow stock as is equal to the
subscription shares put to the Escrow agent in
terms of the put notice and to implement and
enforce its rights and obligations arising from
such sale.
7.3 The put notice will be unconditional and
unqualified save only that the Subscriber will be
entitled to stipulate a minimum price (prescribed
price) expressed in US dollars per share at which
he is willing to sell the relevant subscription
shares put to the Escrow agent in terms of the put
notice (put shares). If the put notice contains
a prescribed price:
7.3.1 the Escrow agent will not be entitled to
sell the equivalent number of Escrow
stock pursuant to 7.2 above for a price
less than the prescribed price;
7.3.2 if the Escrow agent is unable to sell
the equivalent number of Escrow stock
for a price at least equal to the
prescribed price within thirty days from
delivery of the relevant put notice then
the put notice will automatically lapse
and be of no further force or effect;
7.3.3 the Escrow agent will, notwithstanding
the prescribed price, seek to achieve
the best possible price for the Escrow
stock as expeditiously as possible
pursuant to 7.2 above;
7.3.4 if the Escrow agent cannot achieve the
sale of the relevant Escrow stock for a
price equal to or more than the
prescribed price it will inform the
Subscriber of its inability and of the
best price at which it is able to sell
the relevant Escrow stock.
7.4 Against the sale by the Escrow agent of the
relevant number of Escrow stock the Escrow agent
will be deemed to have purchased the subscription
shares recorded in the relevant put notice (put
shares) upon and subject to the following terms
and conditions:
7.4.1 the price payable for the put shares
will be equal to the price payable for
the equivalent Escrow stock sold less
any applicable brokerage fees,
securities tax, duty or charge properly
incurred;
7.4.2 the price for the put shares will be
payable by the Escrow agent to the
Subscriber against receipt by the Escrow
agent of the price payable for the
relevant Escrow stock sold;
7.4.3 as security for the payment of the price
for the put shares the Escrow agent will
be deemed to have ceded, assigned and
made over unto and in favour of the
Subscriber all of the Escrow agents
right, title and interest in and to its
claims for payment of the price payable
for the relevant Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver
more than four put notices.
7.6 Payment of any amount due to the Subscriber upon
the sale of subscription shares pursuant hereto
will be made to the subscriber at the domicilium
chosen in terms of paragraph 12 below provided
that such place will be in the Republic of South
Africa unless the Subscriber is entitled,
according to South African law, to receive such
payment outside the Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer
or dispose of the subscription shares during the
Escrow period except by the delivery of put
notices in accordance with the provisions of this
agreement.
7.8 Unless a put notice has been delivered the Escrow
agent will not be entitled to sell, offer to sell
or otherwise dispose of the Escrow stock or any
part thereof.
7.9 The Escrow agent will not be entitled to encumber
the Escrow stock nor expose it to any risk of
attachment, forced sale, realisation or other
threat, direct or indirect in relation to the
obligations of the Escrow agent or any other
person or by virtue of any judicial, quasi
judicial, bankruptcy or similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to
be a trustee for any party for any purpose and is
merely acting hereunder with the limited duties
herein prescribed.
8.2 The Escrow agent does not have and will not be
deemed to have any responsibility in respect of
any instruction, certificate or notice delivered
to it or in respect of the Escrow stock or any
Escrow property other than faithfully to carry out
the obligations undertaken in this agreement and
to follow the directions or instructions recorded
in any notice delivered pursuant to this
agreement.
8.3 The Escrow agent is not and will not be deemed to
be liable for any action taken or omitted by it in
good faith and may rely upon and act in accordance
with the advice of its counsel without liability
on its part for any action taken or omitted in
accordance with such advice. In any event the
Escrow agents liability hereunder will be limited
to liability for gross negligence, wilful
misconduct or bad faith on its part,
8.4 The Escrow agent may conclusively rely upon and
act in accordance with any certificate,
instruction, notice, letter, telegram, cablegram
or other written instrument believed by it to be
genuine and to have been signed by the proper
party or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable
fees and to reimburse it for its
reasonable expenses including attorneys
fees incurred in connection with its
duties hereunder expeditiously so as not
to impair or delay the timeous
implementation of this agreement and put
notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend
the Escrow agent for, from and against
any loss, damage, liability, judgment,
cost and expense whatsoever, including
reasonable counsel fees, suffered or
incurred by it by reason of or on
account of any misrepresentation made to
it or its status or actions as Escrow
agent under this agreement except for
any loss, damage, liability, judgment,
cost or expense resulting from gross
negligence, wilful misconduct or bad
faith on the part of the Escrow agent.
The obligation of the Escrow agent to
sell or deliver the Escrow stock
pursuant to this agreement will be
subject to the prior satisfaction upon
written demand from the Escrow agent of
the Parents obligations to save
harmless, indemnify and defend the
Escrow agent and to reimburse the Escrow
agent or otherwise pay its reasonable
fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend
any legal proceedings which may be instituted
against it in respect of the subject matter of
this agreement unless requested to do so by the
Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost
and expense of such defence by the party
requesting such defence. If any such legal
proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such
proceedings to the remaining parties. The Escrow
agent will not be obliged to institute legal
proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission
or otherwise be deemed to have waived any right or
remedy it may have under this agreement or
generally, unless such waiver be in writing, and
no waiver will be valid unless it is in writing,
signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the
Escrow agent under the terms of this agreement
will not be construed as a bar to or waiver of the
same or any other right or remedy which it would
otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by
giving thirty days written notice thereof to the
remaining parties. Within twenty days after
receipt of such notice the remaining parties will
deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow
property to a substitute Escrow agent which
whether designated by written instructions from
the remaining parties or in the absence thereof by
instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank
or trust company organised and doing business
under the laws of the United States or any state
thereof. Such substitute Escrow agent will
thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of
this agreement and otherwise act hereunder as if
it were the Escrow agent originally named herein.
The Escrow agents duties and responsibilities
hereunder will terminate upon the release of all
Escrow stock and Escrow property then held in
escrow according to such written instruction or
upon such delivery as herein provided. This
agreement will not otherwise be assignable by the
Escrow agent without the prior written consent of
the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the parties may
afford to the other/s shall in any way prejudice or be
deemed to be a waiver of the rights of the indulgent
party and shall not preclude or stop the indulgent party
from exercising all or any of its rights hereunder and
in particular but without limiting or derogating from
the aforegoing, any cancellation hereof or accrued right
of cancellation hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.2 No consensual termination of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.3 No waiver or abandonment of any partys rights
arising from this agreement, accrued or otherwise,
will be of any force or effect as against such
party unless such such waiver or abandonment is
reduced to writing and signed by the party waiving
and abandoning such rights.
10.4 No oral statements and no conduct by a party
relating to any purported variation, amendment,
cancellation, waiver or abandonment will estop a
party from relying upon the formalities prescribed
in the preceding sub-paragraphs of this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement
between the parties with regard to the subject
matter hereof and no representations, or
warranties, by commission or omission which are
not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been
induced or coerced to enter into this contract by
virtue of any representations, statements,
understandings, omissions or warranties made by
the other party hereto or any persons acting on
their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this
agreement may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer
& Trust Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr
Herb Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no : 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl,
LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of
the Subscriber
12.2 Any notice or payment sent to a partys
domicilium citandi et executandi as selected
above by prepaid registered post shall be
presumed, subject to proof to the contrary, to
have been received by such party on the 7th
(seventh) day after the posting of same, or if
delivered by hand, on the day of such delivery by
hand, or it transmitted by telex or telefax, on
the day of such delivery by hand, or if
transmitted by telex or telefax, on the day of
transmitting same unless it is not a business day
in which event such telex or telefax shall be
deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his
domicilium citandi et executandi in terms hereof
by furnishing to the others of them written
notice of such alteration provided that such
alteration shall only be effective 7 (seven) days
after receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed in
accordance with the laws of New York and will be
binding upon and enure to the benefit of all the
parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several
counterparts which taken together will constitute a
single instrument.
Signed at on
1996.
As witness: For American Stock Transfer
and Trust Company
...............................................................................
Signed at on
1996.
As witness: First South Africa Corp Ltd
...............................................................................
Signed at on
1996.
As witness:
...............................................................................
John Welch
