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")
- --------------------------------------------------------------------------------
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
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 purchaser's 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 PIEMAN'S CLAIMS");
broken down by seller as follows:-
Seller No. of Pieman's 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 Pieman's 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 Pieman's sale shares, the Propco sale
shares, the Propco claims and the Pieman's claims will be deemed to
have passed to the purchaser on the effective date.
7. PURCHASE PRICE
7.1 The purchase price of the Pieman's sale shares, the Propco
sale shares, the Propco claims and the Pieman's 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 broker's 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 Pieman's 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 Company's or
Propco's 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 Company's and Propco's 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
Pieman's 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 Company's
or Propco's 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 Company's and Propco's
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 Company's or Propco's
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 Company's and Propco's 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 Company's 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 Company's or Propco's
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 Company's or
Propco's 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 month's
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 Company's or Propco's 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 Company's or Propco's
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 purchaser's
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
Company's or Propco's 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
Company's and Propco's 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
party's 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
party's 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 ARBITRATOR'S 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 arbitrator's 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 party's
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 party's address in
terms of this sub-clause;
21.1.2.2 on delivery, if delivered to the party's
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 party's 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 party's 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 party's 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 party's rights nor delegate that
party's 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 party's 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 party's
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 party's 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