EXHIBIT 10.1
AGREEMENT
between
METALLURG EUROPE LIMITED
and
CORVEST 2 (PTY) LIMITED
and
METALLURG (SOUTH AFRICA) (PTY) LIMITED
BLUMENTHAL ATTORNEYS
65 - 5th Avenue
Cnr Louis Botha Avenue
HIGHLANDS NORTH
2192, Johannesburg
box: 11245, Jhb, 2000
dx: 5, Highlands North
tel: (011) 887-2660
fax: (011) 887-2699
ref: Mr Blumenthal\sh
TABLE OF CONTENTS
1 Interpretation 3
2 Sale of Shares and Claims 7
3 Price 7
4 Payment 8
5 Closing 9
6 Conditions 10
7 Warranties 11
8 Indemnities 12
9 Domicile 13
10 Applicable Law and Jurisdiction 14
11 General 14
12 Breach 15
13 Due Diligence Investigation 16
14 Release of Guarantees 17
15 Arbitration 17
16 Costs 19
Page 3
AGREEMENT
between
METALLURG EUROPE LIMITED
Registration number 4057100
("the seller")
and
CORVEST 2 (PTY) LIMITED
("Corvest")
and
METALLURG (SOUTH AFRICA) (PTY) LIMITED
("the Company")
1. Interpretation
1.1. The clause headings in this agreement are for reference purposes only
and shall not be used in the interpretation thereof.
1.2. Unless the context clearly indicates a contrary intention:
1.2.1. expressions which denote:
1.2.1.1. any gender shall include the other genders;
1.2.1.2. a natural person shall include an artificial person and vice
versa;
1.2.1.3. the singular shall include the plural and vice versa.
1.2.2. The following expressions shall have the meanings set opposite
them below and cognate expressions shall bear corresponding
meanings:
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1.2.2.1. "acquisition agreement" shall mean the agreement of sale to
be concluded by, inter alia, the company and Zelpy, and the
shareholders in Zelpy, simultaneously herewith in terms of
which Zelpy shall have acquired the business and assets of
the company and the property business as going concerns with
effect from 30 December 2003, upon the terms and conditions
set out therein;
1.2.2.2. "agreement accounts" shall mean the unaudited financial
statements of the company for the period to end on 30
November 2003 , a true copy of which are annexed hereto
marked "C";
1.2.2.3. "auditors" shall mean the auditors of the company as at the
closing date and being PriceWaterhouseCoopers;
1.2.2.4. "business day" shall mean any day which is not a Saturday,
Sunday or recognised statutory public holiday in the
Republic of South Africa;
1.2.2.5. "claims" shall mean the claims by way of loan account(if
any) which the seller may have against the company on the
effective date and shall exclude any claims on the trading
account which the seller may have against the company as at
that date;
1.2.2.6. "closing date" shall mean the third business day after the
date on which the conditions precedent shall have been
fulfilled or waived;
1.2.2.7. "company" shall mean Metallurg (South Africa) (Proprietary)
Limited a company duly registered and incorporated according
to the laws in force in the Republic of South Africa under
company registration number 1970/01059/07;
1.2.2.8. "conditions precedent" shall mean the conditions precedent
set out in clause 6;
1.2.2.9. "Corvest" shall mean Corvest 2 (Pty) Limited a company duly
registered and incorporated according to the laws in force
in the Republic of South Africa under company number
1993/001997/07;
1.2.2.10. "Dollars" shall mean United States Dollars;
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1.2.2.11. "effective date" shall, subject to fulfilment of the
conditions precedent, mean 00:01hrs on 31 December 2003,
notwithstanding date of signature hereof;
1.2.2.12. "financial statements" shall mean the audited annual
financial statements of the company as at and for the period
ended on 31 December 2002;
1.2.2.13. "Metallurg Inc" shall mean Metallurg Inc, a company duly
registered and incorporated according to the laws in force
in Delaware, United States of America, and which is the
holding company of the seller;
1.2.2.14. "Libor rate" shall mean:
1.2.2.14.1 the arithmetic mean (rounded upward to four decimal
places) of the relevant offered rates which appear on
page LIBOR 01 on the Reuters Screen); or
1.2.2.14.2 if no such rate appears, the average British Bankers
Association interest settlement rate for Dollars (being
current page 3750 on the Telerate Screen); or
1.2.2.14.3 if no such rate appears on the Telerate Screen and no
offered rate appears on the relevant page of the
Reuters Screen, or there is no relevant page of the
Reuters Screen, the arithmetic mean (rounded upward to
four decimal places) of the rates, as supplied to the
Lender at its request, quoted by the such banks in
London, England as may from time to time be agreed
between the Lender and the Borrower, to lending on the
London Interbank market, at or about 11h00 on the
applicable date for the offering of deposits in dollars
for a period comparable to the relevant Payment Period;
1.2.2.15. "Purchasers' attorneys" shall mean Blumenthal Attorneys, 65
- 5th Avenue, corner Louis Botha Avenue, Highlands North,
Johannesburg;
1.2.2.16. "Rand or Rands" shall mean South African Rands;
1.2.2.17. "shares" shall mean the entire issued share capital of the
company comprising 4 000 (Four Thousand) ordinary shares of
R1,00 (One Rand) each held by the seller in the company;
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1.2.2.18. "the FEC" shall mean the Forward Exchange Contract in terms
of which Corvest shall, at the earliest possible date at
which it has the necessary documentation to obtain
regulatory approval to do so, purchase cover for the full
amount of the purchase price namely the sum of $9 100 000,00
(Nine Million One Hundred Thousand Dollars") to be paid by
Corvest to the seller for the period calculated from the
signature date up to and including the commencement of
business on the closing date, provided that the spot price
of purchasing Dollars at the time of entering into such FEC,
is R7.04 (seven rand and four cents) per dollar or less;
1.2.2.19. "the Metallurg Inc claim" shall mean the claim in the amount
of R234 000,00 which Metallurg Inc has against the company;
1.2.2.20. "the property business" shall mean the business of owning
the immovable property together with all improvements
thereon carried on by a subsidiary of the company, namely,
Stand 359 Wadeville Extension 4 (Pty) Limited and which
business is to be purchased by Zelpy 1735 (Pty) Limited as a
going concern pursuant as an integral part of the
acquisition agreement;
1.2.2.21. "the License Agreement" shall mean the License Agreement to
be concluded between Metallurg Inc and Zelpy in the form
annexed hereto marked Appendix "D";
1.2.2.22. "the loan agreement" shall mean the loan agreement to be
entered into simultaneously herewith between the seller and
Zelpy pursuant to which the seller shall lend and advance to
Zelpy the balance of the purchase price namely the sum of $1
370 000,00 (One Million Three Hundred and Seventy Thousand
Dollars) payable by Corvest to the seller for the shares and
claims in terms hereof;
1.2.2.23. "the Restraint Undertaking" shall mean the Restraint
Undertaking in the form annexed hereto as appendix "E" to be
signed by the seller and by Metallurg Inc;
1.2.2.24. "the signature date" shall mean the date of last signature
of this agreement by the parties hereto;
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1.2.2.25. "VAT Act" shall mean the Value-Added Tax Act, 89 of 1991, as
amended;
1.2.2.26. "Zelpy" shall mean Zelpy 1734 (Pty) Limited, a company duly
registered and incorporated according to the laws in force
in the Republic of South Africa under company number
2002/029821/07.
1.3. Any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time.
1.4. If any provision in a definition is a substantive provision conferring
rights or imposing obligations on any party, notwithstanding that it
is only in the definition clause, effect shall be given to it as if it
were a substantive provision in the body of the agreement.
1.5. Where figures are referred to in numerals and in words, if there is
any conflict between the two, the words shall prevail.
1.6. Schedules or annexures to this agreement shall be deemed to be
incorporated in and form part of this agreement.
2. Sale of Shares and Claims
2.1. Subject to fulfilment of the conditions precedent, the seller sells to
Corvest which purchases the shares and claims with effect from the
effective date, on which date all risk in and benefits attaching to
the shares and claims shall pass to Corvest. Notwithstanding the
foregoing ownership in the shares and claims shall only pass to
Corvest upon payment of the purchase price having been made to the
seller.
2.2. In addition to the sale of shares and claims the seller shall procure
that Metallurg Inc shall assign the Metallurg Inc claim to Corvest for
no consideration.
2.3. This transaction constitutes an indivisible sale of all of the shares
and the claims.
3. Price
The price payable by Corvest to the seller for the shares and claims is $9
100 000,00 (Nine Million One Hundred Thousand Dollars). The price shall be
apportioned between the shares
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and claims as to an amount equal to the book value of the claims in respect
thereof and the balance shall be for the shares.
4. Payment
4.1. Corvest shall pay the purchase price of $9 100 000,00 (Nine Million
One Hundred Thousand Dollars) to the seller in cash on the closing
date against compliance by the seller with clause 6, together with
interest thereon at the Libor rate calculated from the effective date
to the date of actual payment, both days included.
4.2. The seller undertakes simultaneously with payment to it of the amount
of $9 100 000,00 (Nine Million One Hundred Thousand Dollars) as
referred to in 4.1 above, to lend and advance to Zelpy the sum of $1
370 000,00 (One Million Three Hundred and Seventy Thousand Dollars).
Such loan shall be repaid by Zelpy to the seller on the basis as
provided for under and in terms of the loan agreement.
4.3. The loan referred to in 4.2 shall be secured by way of Zelpy pledging
the shares and claims held by it in Zelpy 1735 (Pty) Limited to the
seller as provided for under and in terms of the loan agreement.
4.4. The purchase price and the interest thereon shall be paid free of
exchange, or any other deduction, to the seller at such place or
account as may be advised by the seller to Corvest in writing prior to
the closing date.
4.5. The seller acknowledges that Corvest intends purchasing the FEC so as
to cover any possible foreign exchange losses arising between the
signature date and the closing date between the value of the Rand as
against the United States Dollar at those dates. The company agrees
that in the event that the conditions precedent as set out in this
agreement (or the acquisition agreement) are not fulfilled for
whatever reason, then the costs incurred by Corvest in purchasing the
FEC shall be borne and paid for by the company which shall refund same
to Corvest on demand. Against payment of such costs the company shall
be entitled to any profits arising from the FEC and Corvest hereby
cedes, assigns and transfers to the company all its right, title and
interest in and to the FEC. The company hereby indemnifies and holds
Corvest harmless against all and any claims, liability and/or costs
incurred or to be incurred in connection with the FEC. Corvest shall,
if so required, and prior to the effective date, furnish
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the company with a true copy of the FEC as soon as same has been
purchased by it.
5. Closing
On the closing date, representatives of the parties shall meet at a
mutually convenient time and place in Johannesburg. At that meeting,
against compliance by Corvest with clause 4.1, the seller shall procure
that the current directors:
5.1. deliver to Corvest:
5.1.1. the share certificates in respect of the shares together with
duly signed and currently dated share transfer forms in respect
thereof, which shall be blank as to transferee;
5.1.2. a written cession of the claims in favour of Corvest (or such
person as may have been nominated in writing by Corvest);
5.1.3. the written resignations, if so required, of the company's
directors, secretary, public officer and auditors, all of whose
resignations shall be accompanied by such documents duly
completed as are required by law to be lodged with the Registrar
of Companies in connection with or as a result of such
resignations; and
5.1.4. a resolution of the directors of the company:
5.1.4.1. approving the transfer of the shares pursuant to this
agreement;
5.1.4.2. noting the cession of the claims in terms hereof;
5.1.4.3. appointing any persons nominated by Corvest as directors of
the company; and
5.1.4.4. accepting the resignation of the persons referred to in
5.1.3;
5.2. The seller acknowledges that Corvest shall be entitled on the closing
date and against payment of the purchase price to be placed in
possession or in control of all of the company's books, records,
documents and assets including, the company's certificate of
incorporation and memorandum and articles of association, minute books
and copies of all returns from time to time submitted by
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the company to the Registrar of Companies and the Receiver of Revenue.
6. Conditions Precedent
6.1. The whole of this agreement (other than the provisions of 1, this 6
and 11 to 16) is subject to the conditions precedent that:
6.1.1. the loan agreement, the License Agreement and the acquisition
agreement are executed, in writing, by the parties thereto and
that all the conditions precedent to which the loan agreement,
the License Agreement and the acquisition agreement are subject
(other than signature of this agreement) are fulfilled (other
than the condition precedent that the suspensive condition to
which this agreement is subject be fulfilled);
6.1.2. the approvals of the South African reserve bank or any other
authorities for exchange control approval or any other permission
as may be required to be given so as to enable payment of the
purchase price and the amount payable under the loan agreement to
be made are granted, and that Corvest secures the FEC based on a
spot rate for buying dollars not exceeding R7.04 (seven rand and
four cents) per dollar;
6.1.3. the Competition Commission unconditionally approves the sale of
the shares and claims as well as the sale of the business upon
and in accordance with the terms of the acquisition agreement by
the issue of a Merger Clearance Certificate under the provisions
of the Competition Act, No 89 of 1998, and if such approval is
conditional, that the parties confirm to each other that they
accept such conditions.
6.2. Each of the parties shall use reasonable endeavours where it is within
their power to do so, to procure the fulfilment of the condition
precedent. Corvest undertakes to advise and keep the seller informed
of all progress made with regard to the fulfilment of the conditions
precedent in the acquisition agreement so as to enable the seller to
timeously comply with its obligations under this agreement;
6.3. If the conditions precedent fail this agreement shall cease to be of
any further force and effect and the parties shall be restored as near
as may be to the
Page 11
position in which they would have been had this agreement not been
entered into. Neither party shall have any claim against the other as
a result of the failure of the condition precedent, except for such
claims, if any, as arise from the provisions of clause 4.4 above or,
as may result from a breach of the provisions of this clause.
7. Warranties
7.1. The seller gives Corvest the warranties set out in annex "A". This
agreement is entered into by Corvest relying on such warranties, each
of which is deemed to be material and to be a material representation
inducing Corvest to enter into this agreement provided that Corvest
shall not be entitled to cancel this agreement as a consequence of any
breach by the seller of any of such warranties unless the breach is
incapable of being remedied by payment of compensation or, if it is
capable of being remedied by a payment of compensation, the seller
fails to pay Corvest the compensation concerned within 14 (Fourteen)
days of the amount thereof being determined.
7.2. Notwithstanding any other provisions of this agreement and save as
otherwise specifically provided in clause 7.1 and Annexure A hereto:
7.2.1. liability shall only attach to the seller under the warranties if
and when the aggregate of all claims from the first Rand thereof
exceeds R50 000,00 (fifty thousand rand) and in such event,
Corvest shall be entitled, subject to 7.2.2 and 7.2.3 below, to
recover from the seller the full amount (ie from the first Rand
thereof) of all claims arising from or pursuant to the warranties
or this agreement;
7.2.2. the aggregate amount which may in any event be recovered by
Corvest from the seller shall be limited to the amount of the
purchase price; and
7.2.3. the seller shall not be liable and Corvest shall not have any
claim or be entitled to institute any action in respect of the
warranties or any of the provisions of this agreement later than
12 (twelve) months after the closing date and more than once in
respect of each cause of action even if such cause of action
would give rise to a claim under more than one of the aforesaid
warranties or provisions or this agreement.
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8. Indemnities
8.1. Without prejudice to any of the rights of Corvest arising from any of
the other provisions of this agreement, the seller indemnifies Corvest
against all loss, liability (whether actual contingent or otherwise),
damage and expense of every nature whatever which Corvest may suffer
as a result of or which may be attributable to any act or omission by
the seller which gives rise to:
8.1.1. any liability of the company whether actual or contingent,
arising prior to the effective date not reflected in the
agreement account and/or in the financial statements;
8.1.2. any liability of the company incurred between the signature date
and the closing date, otherwise than in the ordinary and regular
course of conduct of the company's business.
8.2. Corvest shall be deemed to have suffered a loss equivalent to:
8.2.1. the amount of the liabilities of and claims made against the
company in respect of which it is indemnified in terms of
8.1.1.1; and
8.2.2. the amount of the liabilities of and claims made against the
company in respect of which it is indemnified in terms of 8.1.2.
8.3. Corvest shall notify the seller of any claims which may be made
against the company in respect of any of the matters referred to in
8.2 within 2 (two) business days of Corvest becoming aware thereof, to
enable the seller to take steps to contest any such claims.
8.4. The seller shall be entitled to contest the claims concerned in the
name of the company and shall be entitled to control the proceeding in
regard thereto; provided that:
8.4.1. the seller hereby indemnifies Corvest and the company against all
and any costs which may be incurred as a consequence of such
steps and Corvest shall be entitled to require the seller to give
reasonable security against such costs. If the parties are unable
to agree upon the amount of such security, the amount shall be
determined by the Registrar or Clerk, as the case may be, of any
Page 13
relevant Court, failing which, by any third party agreed upon
between the parties and in the absence of agreement, by a third
party appointed by the President for the time being of The Law
Society of the Northern Provinces;
8.4.2. the seller shall, if the claim is not disputed by it as provided
for in 8.4.1, pay Corvest the amount of the claim to which the
indemnity applies once the amount of such claim has been finally
determined unless the creditor concerned consents to an extension
of time for payment. In that event, the seller shall make the
payment concerned to Corvest when that extension of time expires
or once the dispute has been finally resolved; and
8.4.3. Corvest shall procure that the company renders reasonable
assistance to the seller (at the expense of the seller) in regard
to the steps taken by the seller.
9. Domicile
9.1. For all purposes of this agreement including, but not by way of
limitation, the giving of any notice, the making of any communication,
the payment of any sum and the serving of any process, the parties
respectively choose domicilium citandi et executandi ("domicile") as
follows:
9.1.1. the seller: Fullerton Road
Rotherham
Yorkshire
S60 1DL
United Kingdom
Fax: +44 1709 833712
9.1.2. Corvest: 25 Rudd Road
Illovo
Fax: +27 (11) 268 0536
9.1.3 Corvest: as per clause 9.1.2
9.1.4 the company: Stand 359 Crocker Road
Wadeville
Johannesburg
Fax: +27 11 902 8910
Page 14
9.2. Each party, by written notice to the others, shall be entitled from
time to time to vary its domicile to any other address, provided that
such address may not be a post office box or poste restante.
9.3. Any notice given and any communication or payment made by any party to
any other ("the addressee") which:
9.3.1. is delivered by hand during the normal business hours of the
addressee at the addressee's domicile for the time being, shall
be presumed, until the contrary is proved, to have been received
by the addressee at the time of delivery; and
9.3.2. any notice given by any party to the addressee which is
transmitted by telefacsimile to the addressee's telefacsimile
address or any new telefacsimile address which may be notified,
in writing, by the relevant party to the others of them, shall be
presumed, until the contrary is proved by the addressee, to have
been received by the addressee on the first business day after
the date of transmission.
10. Applicable Law and Jurisdiction
10.1. This agreement (including its validity, existence and implementation,
the interpretation and application of its provisions, the respective
rights and obligations of the parties in terms of and arising out of
the conclusion, breach and termination of the provisions of this
agreement), shall be interpreted and governed in all respects by the
laws of the Republic of South Africa.
10.2. Save as otherwise provided herein, the parties hereby consent to the
non-exclusive jurisdiction of the Witwatersrand Local Division of the
High Court of South Africa in respect of any action or legal
proceedings which may arise out of or in connection with this
agreement, its interpretation, validity or determination hereof.
11. General
11.1. This agreement (as read with the acquisition agreement) supersedes and
replaces entirely any prior agreement or any other arrangement between
the parties in relation to the subject matter hereof. Accordingly,
none of the parties shall be bound by any undertakings,
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representations, warranties, promises or the like not recorded herein.
11.2. No alteration, variation or cancellation by agreement of, addition or
amendment to, or deletion from this agreement shall be of any force or
effect unless in writing and signed by or on behalf of the parties.
11.3. No indulgence, extension of time, relaxation or latitude which the
seller on the one hand or Corvest on the other ("the grantor") may
show, grant or allow to the other ("the grantee") shall constitute a
waiver by the grantor of any of the grantor's rights in terms hereof
and the grantor shall not thereby be prejudiced or estopped from
exercising any of its rights against the grantee in the future.
12. Breach
12.1. Should either the Seller on the one hand or Corvest on the other hand
("the defaulting party") commit a breach of any of the provisions
hereof, then any of the parties aggrieved thereby ("the aggrieved
party") shall, if it wishes to enforce its rights hereunder, be
obliged to give the defaulting party 14 (fourteen) days written notice
to remedy the breach. If the defaulting party fails to comply with
such notice, the aggrieved party shall be entitled to cancel this
agreement, claim immediate payment and/or performance by the
defaulting party of all of the defaulting party's obligations whether
or not the due date for payment and/or performance shall have arrived.
The parties agree that once the conditions precedent have been
fulfilled and the shares and claims have been delivered and the full
purchase price has been paid, the aggrieved party shall not be
entitled to cancel this transaction as a result of a breach by any
defaulting party of its obligations in terms hereof and the aggrieved
party shall only be entitled to claim payment or performance from the
defaulting party concerned. Any claim by an aggrieved party shall be
without prejudice to such party's rights to claim damages.
12.2. Should the acquisition agreement be cancelled, in circumstances
entitling either the company or Corvest, as the case may be, to cancel
same as a result of any breach of the provisions thereof by:
12.2.1. the company, then Corvest shall be entitled to cancel this
agreement by written notice to the seller in which event the
agreement shall be deemed
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to have been cancelled as a result of material breach of the
provisions hereof by the seller; and
12.2.2. Corvest, then the seller shall be entitled to cancel this
agreement by written notice to Corvest in which event this
agreement shall be deemed to have been cancelled as a result of a
material breach of the provisions hereof by Corvest.
13. Due Diligence Investigation
13.1. It is recorded that Corvest have, prior to signature hereof, conducted
a due diligence investigation into the financial position, activities
and affairs of the company.
13.2. It is further recorded that the current management of the company will
become employed by Zelpy as Purchasers of the business in terms of the
acquisition agreement. Corvest acknowledges that management have been
conducting the business of the company and are accordingly aware of
all facets thereof.
13.3. The due diligence investigation has been conducted for Corvest'
benefit and the Seller makes no warranties or representations as to
the outcome of the due diligence investigation.
13.4. The fact that the due diligence investigation was carried out shall
not be construed as depriving Corvest of any rights or remedies which
it would have had in the absence of carrying out the due diligence
investigation.
13.5. In the event of the sale recorded in this agreement failing to be
implemented for any reason, and pending such implementation, Corvest
shall hold as confidential and shall not disclose to any person other
than is strictly necessary in pursuance of the objective of
implementing this agreement, any information, documentation, books,
records and the like pertaining to the Seller and/or the company as
has or may become known or available to Corvest and it shall, in the
event of such failure, restore the seller to possession of any
document or copy of any document which may be in its possession or
under its control and it shall procure that its employees, agents,
advisers, representatives and the like likewise agree to be bound by
this confidentiality undertaking and to the undertaking recorded
herein.
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14. Release of Guarantees
14.1 Corvest shall use reasonable endeavours to procure the release of the
Seller from any liability which the seller may have beyond the
effective date under any guarantees, suretyships, indemnities or the
like given by the seller for any of the company's obligations
disclosed to Corvest in writing prior to signature of this agreement
provided that Corvest shall:
14.1.1 not be obliged to effect any payment or to procure any variation
of the terms of any of the company's obligations to procure any
such release;
14.1.2 tender its own guarantees if that is necessary to procure the
release of the seller.
14.2 Corvest indemnifies the seller, against any claims in respect of the
liabilities referred to in clause 14.1. Corvest shall be obliged to
make payment under this indemnity as soon as the seller becomes
obliged to make any payment in respect of such liabilities provided
that:
14.2.1 the seller shall give written notice to Corvest of any such claim
without delay to enable Corvest to take steps to resist the
claim. Without the written approval of Corvest, the seller shall
not make any payment of or take any steps to settle the claim;
and
14.2.2 Corvest shall be entitled to resist such claim in the name of the
seller and to control the proceedings in regard thereto.
15 Arbitration
15.1 Save as otherwise provided herein any dispute between the parties in
regard to:
15.1.1 the interpretation of;
15.1.2 the effect of;
15.1.3 the parties' respective rights and obligations under;
15.1.4 a breach of;
15.1.5 any matter arising out of; and/or
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15.1.6 this agreement shall be decided by arbitration in the manner set
out in this clause 15.
15.2 The said arbitration shall be held subject to the provisions of this
clause:
15.2.1 at Johannesburg;
15.2.2 informally; and
15.2.3 otherwise in accordance with the provisions of the Arbitration
Act, No. 42 of 1965, as amended,
it being the intention that if possible it shall be held and concluded
within 21 (twenty one) business days after it has been demanded.
15.3 The arbitrator shall be if the question in issue is:
15.3.1 primarily an accounting matter, an independent accountant with no
less than 10 (ten) years standing agreed upon between the
parties;
15.3.2 primarily a legal matter, a practicing Senior Counsel with no
less than 10 (ten) years standing agreed upon between the
parties;
15.3.3 any other matter, an independent person agreed upon between the
parties.
15.4 If the parties cannot agree upon a particular arbitrator in terms of
15.3 above within 7 (seven) business days after the arbitration has
been demanded, the nomination in terms of 15.4.1, 15.4.2, 15.4.3, as
the case may be, shall be made by the President of the Law Society of
the Northern Provinces within 7 days after the parties have so failed
to agree.
15.5 The parties irrevocably agree that the decision in these arbitration
proceedings:
15.5.1 shall be binding on them;
15.5.2 shall be carried into effect; and
15.5.3 may be made an order of any court of competent jurisdiction.
15.6 Nothing contained in this 15 shall prevent or preclude either party
from approaching any court having competent jurisdiction for urgent or
interlocutory relief in respect
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of any matter arising herefrom.
16 Costs
All costs of Blumenthal Attorneys incidental to this agreement shall be
paid by Corvest. Any stamp duty and other costs payable in respect of the
transfer of the shares shall be borne and paid for by Corvest.
THUS DONE and SIGNED at on this the day of
2003.
For and on behalf of
METALLURG (SOUTH AFRICA) (PTY) LIMITED
by
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who warrants his authority hereto
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who warrants his authority hereto
THUS DONE and SIGNED at on this the day of 2003.
For and on behalf of
METALLURG EUROPE LIMITED
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who warrants his authority hereto
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who warrants his authority hereto
THUS DONE and SIGNED at on this the day of 2003.
For and on behalf of
CORVEST 2 (PTY) LIMITED
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who warrants his authority hereto
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who warrants his authority hereto
ANNEX "A"
WARRANTIES
The following are the warranties referred to in clause 7 of the sale of shares
agreement between Metallurg Europe Limited and Corvest 2 (Pty) Limited and
Metallurg (South Africa) (Pty) Limited ("the agreement") to which these are the
warranties. The terms defined in the agreement shall, save to the extent which
is contrary to, or otherwise indicated by the context, bear the same meanings in
this annexure.
1. On the effective date and the closing date:
1.1. the company will be regularly incorporated as a private company with
limited liability according to the laws of the Republic of South
Africa;
1.2. no steps will have been taken in respect of the company in terms of
Section 73 of the Companies Act, No 61 of 73 ("the Companies Act");
1.3. the authorised share capital of the company will be R4000,00 (four
thousand Rand) divided into 4 000 (four thousand) shares of R1,OO (One
Rand) each and all of such shares will be issued and fully paid up.
1.4. all of the issued shares in the capital of the company will be of one
class and the issued shares will rank pari passu with each other;
1.5. the company will not be under any obligation (whether contingently
upon the exercise of any right or otherwise) to increase or to reduce
its authorised or issued share capital;
1.6. the seller will be entitled and able to give free and unencumbered
title to the shares and the claims to Corvest;
1.7. no person will have any right (including any option or right of first
refusal) to acquire the assets or any of the shares in, or claims
against the company, present or future;
1.8. save for the provisions set out in the agreement, no resolution will
have been passed (since the signature hereof), nor will the company be
obliged to alter any of the rights attaching to any of the shares in
the capital of the company or to alter the memorandum or articles of
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association of the company or to create or to issue any debentures;
1.9. the seller shall be the sole registered beneficial owner of the shares
and will be reflected in the register of members of the company as the
sole owner thereof;
1.10. no person shall have any right to obtain an order for the
rectification of the register of members of the company;
the only assets of the company will be the claim which the company has
against Zelpy for payment of the purchase price payable by the company to Zelpy
under and in terms of the acquisition agreement;
1.11. to the best of the sellers knowledge and belief, the company will not
be in material breach of any law and without limiting the generality
of the aforegoing, it will not be in material breach of any laws
relating to taxation and companies
1.12. to the best of the sellers knowledge and belief, having made all
reasonable enquiries, the company will not, as a result of any act or
omission on the part of the seller, be liable, whether contingently or
otherwise and whether as surety, co-principal debtor, guarantor or
indemnitor for the liabilities of any third party;
1.13. to the best of the seller's knowledge and belief, having made all
reasonable enquiries, the sole liabilities of the company as at the
date of the financial statements will be in respect of the claims (if
any) and those liabilities which appear as such on the financial
statements.
2. Between the signature date and the closing date:
2.1 no dividends will be declared or paid by the company;
2.2 the company will not incur or become committed to incur any capital
expenditure without the prior written consent of Corvest;
2.3 none of the claims will have been reduced.
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3 To the best of its knowledge and belief, having made all reasonable
enquiries, the company is not engaged in any litigation, arbitration or
criminal proceedings (other than proceedings for the collection of debts
from trade debtors in the ordinary course of business).
4 The financial statements and agreement accounts have been prepared:
4.1 in accordance with generally accepted and sound accounting practises;
4.2 to fairly present the state of affairs, operations and results of the
company as at the date thereof and for the period to which they
relate; and
4.3 in accordance with the Companies Act;
Purchasers
5 Until the closing date, no resolutions will be passed by the members or
directors of the company, save for:
5.1 such resolutions as may be necessary to give effect to this agreement;
5.2 such resolutions as shall be approved by Corvest in writing, which
approval may not be unreasonably withheld.
6 All transfer duty and acquisition duty has been paid in respect of the
shares in terms of the Stamp Duties Act 1976, as amended.
7 Between the incorporation of the company and the closing date:
7.1 there will not have been any partial reduction in the share capital or
share premium of the company;
7.2 the company will not have made an award of capitalisation or bonus
shares.
8
9 The seller has to the best of its knowledge and belief, disclosed to
Corvest all facts and circumstances material to this transaction and which
would be material to a Purchasers of the shares and the claims and the
purchase price payable in respect thereof.
ANNEX "B"
FINANCIAL STATEMENT
RESTRAINT AGREEMENT
between
Metallurg Inc
and
Metallurg Europe Limited
("the restrained parties")
and
ZELPY 1734 (PROPRIETARY) LIMITED and/or Corvest 2 (Pty) Limited
("Zelpy." or "Corvest" as the context requires)
WHEREBY THE PARTIES AGREE AS FOLLOWS:
1. PREAMBLE
1.1. Zelpy has entered into an Agreement with Metallurg (South
Africa)(Proprietary) Limited (hereinafter referred to as "the
Seller") whereby the Company will, subject to the fulfilment of
certain conditions precedent purchase the business of the Seller
with effect from 31 December 2003.
1.2. Corvest has entered into an agreement with Metallurg Europe
Limited ("Metallurg Europe") in terms of which Corvest shall
purchase all the shares in and claims by way of loan account held
by Metallurg Europe in the seller;
1.3 Metallurg Inc are shareholders in Metallurg Europe Limited which
in turn is the sole shareholder of all the shares in the Seller
and, as such, they are possessed of certain secrets and
confidential information pertaining to the business and company
being acquired respectively by Zelpy and Corvest from the Seller
and Metallurg Europe including information relating to the
methods of business, contractual arrangements, financial
structure and general information which should not be made
available to a competitor in the ordinary course of business.
1.4 The restrained parties acknowledge that the restraints imposed
upon them in terms of this agreement are reasonable as to subject
matter, area and duration and are reasonably required by Zelpy
and Corvest in order to protect its business interests.
2. FULFILMENT OF CONDITIONS PRECEDENT
The operation of the restraint recorded in this agreement is subject
to the fulfilment or waiver of the conditions precedent contemplated
in each of the sale of business agreement between the Seller and Zelpy
and the sale of shares agreement between Metallurg Europe and Corvest,
and the restraint recorded herein shall become effective immediately
upon such fulfilment or waiver.
3. RESTRAINT AGAINST COMPETITION
3.1. Each of the restrained parties separately undertakes to Zelpy and
Corvest that for a period of 84 (eighty four) months after the
restraint contained herein becomes effective in terms of clause
2, none of them will, without the prior written consent of each
of Zelpy and Corvest, and whether directly or indirectly:
3.1.1. compete with Corvest in the fields of activity referred to
in 3.2 within the areas of restraint set out in 3.3;
3.1.2. persuade, induce, encourage or procure any person who is an
employee of Zelpy at any time within the period of the
restraint, or any person who was an employee of the Seller
during the previous twelve months, to become employed by or
interested in any manner whatsoever in any field of
activity referred to in 3.2, or to terminate his employment
with Zelpy.
3.2. The fields of activity in respect of which the restraint applies
will be -
3.2.1. the business of trading and distributing a wide range of
refractory material and base metals carried on by the
seller; and
3.2.2. (as a separate restraint) the business carried on by Zelpy
and the Seller at the date of signature of this Agreement.
3.3. The area of restraint referred to in clause 3.4 shall be the
whole of Sub Saharan Africa.
3.4. For purposes of this clause 3.4, any of the restrained parties
will be deemed to be competing with the Company if it becomes
engaged or interested, whether directly or indirectly, and
whether as proprieter, partner, shareholder, director, employee,
agent, consultant, representative, adviser, financier,
administrator or in any other like capacity, in any Company,
firm, business or undertaking which carries on business in any of
the fields referred to in 3.2 and in any of the areas referred to
in 3.3. There will however, be no prohibition against acquiring
or holding, by way of bona fide investments, not more than 5% of
the shares of any company, the shares of which are listed on the
Johannesburg Stock Exchange or the Namibian Stock Exchange.
3.5. The restrained parties acknowledge -
3.5.1. that the customers of Zelpy are or could be drawn from all
of the areas in which the restraint is operative;
3.5.2. that their relationship with many of the customers is a
personal one, and that Zelpy and Corvest would suffer
substantial damage if any of the restrained parties was to
compete with Zelpy and Corvest within the area to which,
and during the time in which, the restraint is to apply;
3.5.3. that Zelpy and Corvest would not have entered into the
purchase of the business of the Seller and the shares of
Metallurg Europe in the seller unless the restrained
parties had agreed to the restraint contained in the
clause;
3.5.4. that the restraint is the minimum restraint required by
Zelpy and Corvest to provide protection against unfair
competition and that in the
circumstances it is fair and reasonable, and necessary for
the protection of the interests of Zelpy and Corvest that
the restrained parties 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
relevant restrained party.
3.6. Each and every restraint contained in this clause 3 is separate
and divisible from every other restraint in the 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 effect the validity of any other restraint
contained in this clause or otherwise.
3.7. 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, the restraints shall apply with such words deleted.
3.8. The restraints contained in this clause will be capable of being
enforced by Zelpy and/or Corvest or its assigns or any of its
shareholders from time to time. However, they will cease to be
enforceable should Zelpy be placed in final liquidation unless
such liquidation results from a restructuring of Zelpy.
4. DOMICILIUM CITANDI ET EXECUTANDI
4.1. The parties hereto select as their respective domicilia citandi
et executandi the following physical addresses, and for the
purposes of giving or sending any notice provided for or required
hereunder, the following:
Physical address Postal address Telefax
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Corvest and 25 Rudd Rd PO Box 0000 (011) 268 0536
Zelpy Illovo Suburb
Johannesburg 0000
The Restrained +1 212 687 9621
Parties 6 East 43rd Street,
12th Floor, New York, NY
1. Metallurg Inc. 10017, USA
2. Metallurg Fullerton Road, +44 1709 833712
Europe Rotherham, Yorkshire,
Limited S60 1DL
or such other address or telefax number as may be substituted by
notice given as herein required. Each of the parties shall be
entitled from time to time by written notice to the others, to
vary its domicilium to any other address within the Republic of
South Africa which is not a post office box or poste restante.
4.2. Any notice addressed to a party at its physical or postal address
shall be sent by prepaid registered post, or delivered by hand,
or sent by telefax.
4.3. Any notice shall be deemed to have been given:-
4.3.1. if posted by prepaid registered post, 5 (five) days after
the date of posting thereof;
4.3.2. if hand delivered during business hours on a business day,
on the day of delivery;
4.3.3. if sent by telefax, on the date of sending of such telefax,
provided that such notice shall be confirmed by prepaid
registered post on the date of despatch of such telefax or,
should no postal facilities be available on that date, on
the next business day.
5. COSTS
Each party shall bear its own costs of and in connection with this
Agreement.
SIGNED at _________________________
on the ____________________________ day of ____________________________ 2003
WITNESSES:-
1.
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For and on behalf of Metallurg Europe Limited
2.
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SIGNED at _______________________________
on the ______________________________ day of ________________________ 2003
WITNESSES:-
For and on behalf of Metallurg Inc
1.
2.
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