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 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 agent's 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 Parent's
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 agent's 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 party's 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 party's 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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