ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 John Welch
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30
000 000 A class ordinary shares of R0,0001 each
and 10 000 000 B class ordinary shares of
R0,0001 each (FSAH B class shares).
2.2 All of the issued A class ordinary shares in FSAH
are owned by the Parent.
2.3 The rights and obligations attached to the FSAH B
class shares are recorded in the quotation from
the articles of association of FSAH recorded on
Schedule 1 hereto.
2.4 The Parent has an authorised share capital
comprising of Common Stock, registered with the
Securities and Exchange Commission and listed for
trading on NASDAQ in compliance with all
applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and
listed.
2.5 FSAH has agreed to allot and issue and the
Subscriber has agreed to subscribe for 149 210
FSAH B class shares (subscription shares) and
the Parent has agreed to simultaneously allot and
issue to the Escrow agent which has agreed to
subscribe for 149 210 Parent B class stock
(Escrow stock).
2.6 Insofar as prevailing circumstances and laws allow
and subject to the restrictions recorded herein
the Parent and FSAH wish, by the conclusion and
implementation of this agreement, to enable the
Subscriber to trade in the subscription shares for
value and in circumstances which are pari passu
with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and
promises herein contained and other good and
valuable consideration the adequacy of which is
hereby acknowledged, the parties have reached the
agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to
receive, hold and dispose of the Escrow stock in
accordance with the provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of
this agreement accepts its appointment as Escrow
agent upon and subject to the terms and conditions
of this agreement.
3.3 The appointment of the Escrow agent will become
effective against delivery of the Escrow stock to
the Escrow agent and will continue in effect until
the Escrow stock, all dividends or other benefits
accruing thereto and all proceeds derived from the
sale or other disposition thereof has been
distributed in accordance with this agreement
(Escrow period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber
of the subscription shares the Parent will allot
and issue the Escrow stock to the Escrow agent for
a consideration of US$.01 per share payable to the
parent on behalf of the Escrow agent by Michael
Levy who will thereby acquire no claim against the
Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow
agent will confirm in writing delivered to the
Subscriber that the Escrow stock has been
delivered to it unconditionally, in negotiable
form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow
agent will retain possession of and control over
the Escrow shares and will at the request of the
Subscriber inform the remaining parties of the
physical location of all documents and records
evidencing the Escrow stock and requisite to
trading therein.
4.4 Insofar as circumstances and the law allow the
Escrow agent will retain the Escrow stock in
negotiable and freely tradeable form throughout
the Escrow period, subject only to the
restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will
receive all money, securities, rights or property
distributed in respect of the Escrow stock including
any such property distributed as dividends or pursuant
to any stock split, merger, recapitalisation,
dissolution, total or partial liquidation of
the Parent (excluding only dividends paid to the Escrow
agent by the Parent to the extent that the
Subscriber has in relation to the same period been
paid dividends on the Subscription shares): all such
property to be held and distributed as herein provided
and hereinafter referred to collectively as
Escrow property. Reference herein to Escrow
stock will be deemed to include the Escrow property
deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as
defined in Section 1(p) of the bye-laws of the
Parent) if any of the Escrow stock is sold by the
Escrow agent pursuant to this agreement it will
automatically convert into a share of common stock
in the parent.
6.2 None of the Escrow stock may be sold in
contravention of the restrictions set out in
clause 12 of the sale of shares agreement entered
into among John Welch, Heinz Andreas, Michael
Morgan, Parent and FSAH, (the sale agreement) on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold
and transferred in compliance with this agreement
and the Securities Act of 1933 as amended and the
rules and regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy
will have the sole power to vote the Escrow stock
and any securities held in escrow as part of the
Escrow property to which end the Escrow agent
hereby irrevocably appoints Michael Levy as its
proxy to vote the Escrow stock on its behalf at
any meeting of the shareholders of the Parent and
at any adjournment thereof which shall take place
during the Escrow period. The Escrow agent
undertakes that it will execute and deliver to
Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock
and any securities comprising the Escrow property
against demand by Levy following delivery of the
Escrow stock or other securities as the case may
be.
6.5 Each certificate evidencing the Escrow stock will
bear the following legends in addition to any
others required by law:
The sale, transfer, hypothecation,
negotiation, pledge, assignment, encumbrance
or other disposition of the shares evidenced
by this certificate are restricted by and are
subject to all of the terms, conditions and
provisions of an escrow agreement entered
into amongst First South Africa Corp., Ltd,
First South African Holdings (Proprietary)
Limited, American Stock Transfer & Trust
Company and John Welch, a copy of which may
be obtained from the secretary of First South
Africa Corp., Ltd. No transfer, sale or
other disposition of these shares may be made
unless the specific conditions of such
agreement are satisfied.
The shares evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended. No transfer, sale
or other disposition of these shares may be
made unless a registration statement with
respect to these shares has become effective
under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of
Counsel satisfactory in form and substance to
it that such registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided
that the Escrow stock is capable of being sold in
accordance with the provisions of this agreement
and the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder,
the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of
South Africa, Webber Wentzel Bowens or its
principal successor-in-practice, of written notice
accompanied by the original share certificate/s
evidencing the put shares together with securities
transfer form/s relating thereto signed and
completed in negotiable form according to law
(put notice) to require and oblige the Escrow
agent to purchase the subscription shares or any
part thereof but no fewer than 100 subscription
shares (or such lesser number as constitutes all
of the remaining subscription shares held by the
Subscriber) in relation to any single put notice,
for the consideration and upon the terms and
conditions hereinafter recorded.
7.2 Against delivery of the put notice the Escrow
agent will, in compliance with applicable
securities laws, use every reasonable effort to
sell as expeditiously as possible, at the best
possible price and on the best available terms so
much of the Escrow stock as is equal to the
subscription shares put to the Escrow agent in
terms of the put notice and to implement and
enforce its rights and obligations arising from
such sale.
7.3 The put notice will be unconditional and
unqualified save only that the Subscriber will be
entitled to stipulate a minimum price (prescribed
price) expressed in US dollars per share at which
he is willing to sell the relevant subscription
shares put to the Escrow agent in terms of the put
notice (put shares). If the put notice contains
a prescribed price:
7.3.1 the Escrow agent will not be entitled to sell
the equivalent number of Escrow stock
pursuant to 7.2 above for a price less than
the prescribed price;
7.3.2 if the Escrow agent is unable to sell the
equivalent number of Escrow stock for a price
at least equal to the prescribed price within
thirty days from delivery of the relevant put
notice then the put notice will automatically
lapse and be of no further force or effect;
7.3.3 the Escrow agent will, notwithstanding the
prescribed price, seek to achieve the best
possible price for the Escrow stock as
expeditiously as possible pursuant to 7.2
above;
7.3.4 if the Escrow agent cannot achieve the sale
of the relevant Escrow stock for a price equal to or
more than the prescribed price it will inform the
Subscriber of its inability and of the best price at which
it is able to sell the relevant Escrow stock.
7.4 Against the sale by the Escrow agent of the
relevant number of Escrow stock the Escrow agent
will be deemed to have purchased the subscription
shares recorded in the relevant put notice (put
shares) upon and subject to the following terms
and conditions:
7.4.1 the price payable for the put shares will be
equal to the price payable for the equivalent
Escrow stock sold less any applicable
brokerage fees, securities tax, duty or
charge properly incurred;
7.4.2 the price for the put shares will be payable
by the Escrow agent to the Subscriber against
receipt by the Escrow agent of the price
payable for the relevant Escrow stock sold;
7.4.3 as security for the payment of the price for
the put shares the Escrow agent will be
deemed to have ceded, assigned and made over
unto and in favour of the Subscriber all of
the Escrow agents right, title and interest
in and to its claims for payment of the price
payable for the relevant Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver
more than four put notices.
7.6 Payment of any amount due to the Subscriber upon
the sale of subscription shares pursuant hereto
will be made to the subscriber at the domicilium
chosen in terms of paragraph 12 below provided
that such place will be in the Republic of South
Africa unless the Subscriber is entitled,
according to South African law, to receive such
payment outside the Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer
or dispose of the subscription shares during the
Escrow period except by the delivery of put
notices in accordance with the provisions of this
agreement.
7.8 Unless a put notice has been delivered the Escrow
agent will not be entitled to sell, offer to sell
or otherwise dispose of the Escrow stock or any
part thereof.
7.9 The Escrow agent will not be entitled to encumber
the Escrow stock nor expose it to any risk of
attachment, forced sale, realisation or other
threat, direct or indirect in relation to the
obligations of the Escrow agent or any other
person or by virtue of any judicial, quasi
judicial, bankruptcy or similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to
be a trustee for any party for any purpose and is
merely acting hereunder with the limited duties
herein prescribed.
8.2 The Escrow agent does not have and will not be
deemed to have any responsibility in respect of
any instruction, certificate or notice delivered
to it or in respect of the Escrow stock or any
Escrow property other than faithfully to carry out
the obligations undertaken in this agreement and
to follow the directions or instructions recorded
in any notice delivered pursuant to this
agreement.
8.3 The Escrow agent is not and will not be deemed to
be liable for any action taken or omitted by it in
good faith and may rely upon and act in accordance
with the advice of its counsel without liability
on its part for any action taken or omitted in
accordance with such advice. In any event the
Escrow agents liability hereunder will be limited
to liability for gross negligence, wilful
misconduct or bad faith on its part,
8.4 The Escrow agent may conclusively rely upon and
act in accordance with any certificate,
instruction, notice, letter, telegram, cablegram
or other written instrument believed by it to be
genuine and to have been signed by the proper
party or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable fees and
to reimburse it for its reasonable expenses
including attorneys fees incurred in
connection with its duties hereunder
expeditiously so as not to impair or delay
the timeous implementation of this agreement
and put notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend the
Escrow agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever,
including reasonable counsel fees, suffered or incurred by
it by reason of or on account of any
misrepresentation made to it or its status or
actions as Escrow agent under this agreement except for any
loss, damage, liability, judgment, cost or expense
resulting from gross negligence, wilful misconduct
or bad faith on the part of the Escrow agent. The
obligation of the Escrow agent to sell or deliver the Escrow
stock pursuant to this agreement will be subject
to the prior satisfaction upon written demand from
the Escrow agent of the Parents obligations to
save harmless, indemnify and defend the Escrow agent and to
reimburse the Escrow agent or otherwise pay its
reasonable fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend
any legal proceedings which may be instituted
against it in respect of the subject matter of
this agreement unless requested to do so by the
Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost
and expense of such defence by the party
requesting such defence. If any such legal
proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such
proceedings to the remaining parties. The Escrow
agent will not be obliged to institute legal
proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission
or otherwise be deemed to have waived any right or
remedy it may have under this agreement or
generally, unless such waiver be in writing, and
no waiver will be valid unless it is in writing,
signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the
Escrow agent under the terms of this agreement
will not be construed as a bar to or waiver of the
same or any other right or remedy which it would
otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by
giving thirty days written notice thereof to the
remaining parties. Within twenty days after
receipt of such notice the remaining parties will
deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow
property to a substitute Escrow agent which
whether designated by written instructions from
the remaining parties or in the absence thereof by
instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank
or trust company organised and doing business
under the laws of the United States or any state
thereof. Such substitute Escrow agent will
thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of
this agreement and otherwise act hereunder as if
it were the Escrow agent originally named herein.
The Escrow agent's duties and responsibilities
hereunder will terminate upon the release of all
Escrow stock and Escrow property then held in
escrow according to such written instruction or
upon such delivery as herein provided. This
agreement will not otherwise be assignable by the
Escrow agent without the prior written consent of
the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the
parties may afford to the other/s shall in any way
prejudice or be deemed to be a waiver of the rights
of the indulgent party and shall not preclude or stop
the indulgent party from exercising all or any of its
rights hereunder and in particular but without
limiting or derogating from the aforegoing, any
cancellation hereof or accrued right of cancellation
hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.2 No consensual termination of this agreement will
be of any force or effect unless reduced to
writing and signed by all the parties hereto.
10.3 No waiver or abandonment of any partys rights
arising from this agreement, accrued or otherwise,
will be of any force or effect as against such
party unless such such waiver or abandonment is
reduced to writing and signed by the party waiving
and abandoning such rights.
10.4 No oral statements and no conduct by a party
relating to any purported variation, amendment,
cancellation, waiver or abandonment will estop a
party from relying upon the formalities prescribed
in the preceding sub-paragraphs of this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement
between the parties with regard to the subject
matter hereof and no representations, or
warranties, by commission or omission which are
not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been
induced or coerced to enter into this contract by
virtue of any representations, statements,
understandings, omissions or warranties made by
the other party hereto or any persons acting on
their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this
agreement may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer
& Trust Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr
Herb Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no : 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl,
LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of
the Subscriber
12.2 Any notice or payment sent to a partys
domicilium citandi et executandi as selected
above by prepaid registered post shall be
presumed, subject to proof to the contrary, to
have been received by such party on the 7th
(seventh) day after the posting of same, or if
delivered by hand, on the day of such delivery by
hand, or it transmitted by telex or telefax, on
the day of such delivery by hand, or if
transmitted by telex or telefax, on the day of
transmitting same unless it is not a business day
in which event such telex or telefax shall be
deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his
domicilium citandi et executandi in terms hereof
by furnishing to the others of them written
notice of such alteration provided that such
alteration shall only be effective 7 (seven) days
after receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed
in accordance with the laws of New York and will
be binding upon and enure to the benefit of all the
parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several
counterparts which taken together will constitute a
single instrument.
Signed at on
1996.
As witness: For American Stock Transfer
and Trust Company
...............................................................................
Signed at on
1996.
As witness: First South Africa Corp Ltd
...............................................................................
Signed at on
1996.
As witness:
...............................................................................
John Welch