ESCROW AGREEMENT
1. Parties
The parties to this agreement are:
1.1 American Stock Transfer and Trust Company
a New York corporation
(Escrow agent)
1.2 First South Africa Corp., Ltd
a Bermuda company
(Parent)
1.3 First South African Holdings (Pty) Limited
a South African company
(FSAH)
1.4 Michael Morgan
(Subscriber)
(hereinafter referred to as the parties).
2. Recital
2.1 The authorised share capital of FSAH comprises 30 000 000 A
class ordinary shares of R0,0001 each and 10 000 000 B
class ordinary shares of R0,0001 each (FSAH B class
shares).
2.2 All of the issued A class ordinary shares in FSAH are owned
by the Parent.
2.3 The rights and obligations attached to the FSAH B class
shares are recorded in the quotation from the articles of
association of FSAH recorded on Schedule 1 hereto.
2.4 The Parent has an authorised share capital comprising of
Common Stock, registered with the Securities and Exchange
Commission and listed for trading on NASDAQ in compliance
with all applicable laws, and Class B Common Stock (Parent
class B stock) which is not so registered and listed.
2.5 FSAH has agreed to allot and issue and the Subscriber has
agreed to subscribe for 33 159 FSAH B class shares
(subscription shares) and the Parent has agreed to
simultaneously allot and issue to the Escrow agent which has
agreed to subscribe for 33 159 Parent B class stock (Escrow
stock).
2.6 Insofar as prevailing circumstances and laws allow and
subject to the restrictions recorded herein the Parent and
FSAH wish, by the conclusion and implementation of this
agreement, to enable the Subscriber to trade in the
subscription shares for value and in circumstances which are
pari passu with the trading of the Parent class B stock.
2.7 In consideration of the mutual covenants and promises herein
contained and other good and valuable consideration the
adequacy of which is hereby acknowledged, the parties have
reached the agreement recorded herein.
3. Appointment of Escrow agent
3.1 The Parent hereby appoints the Escrow agent to receive, hold
and dispose of the Escrow stock in accordance with the
provisions of this agreement.
3.2 The Escrow agent by its execution and delivery of this
agreement accepts its appointment as Escrow agent upon and
subject to the terms and conditions of this agreement.
3.3 The appointment of the Escrow agent will become effective
against delivery of the Escrow stock to the Escrow agent and
will continue in effect until the Escrow stock, all dividends
or other benefits accruing thereto and all proceeds derived
from the sale or other disposition thereof has been
distributed in accordance with this agreement (Escrow
period).
4. Issue of shares and stock
4.1 Against the allotment and issue to the Subscriber of the
subscription shares the Parent will allot and issue the
Escrow stock to the Escrow agent for a consideration of
US$.01 per share payable to the parent on behalf of the
Escrow agent by Michael Levy who will thereby acquire no
claim against the Escrow agent.
4.2 Against receipt of the Escrow stock the Escrow agent will
confirm in writing delivered to the Subscriber that the
Escrow stock has been delivered to it unconditionally, in
negotiable form subject only to the restrictions contemplated
by this agreement.
4.3 For the duration of the Escrow period the Escrow agent will
retain possession of and control over the Escrow shares and
will at the request of the Subscriber inform the remaining
parties of the physical location of all documents and records
evidencing the Escrow stock and requisite to trading therein.
4.4 Insofar as circumstances and the law allow the Escrow agent
will retain the Escrow stock in negotiable and freely
tradeable form throughout the Escrow period, subject only to
the restrictions recorded in this agreement.
5. Escrow property
During the Escrow period the Escrow agent will receive all money,
securities, rights or property distributed in respect of the
Escrow stock including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalisation,
dissolution, total or partial liquidation of the Parent (excluding
only dividends paid to the Escrow agent by the Parent to the
extent that the Subscriber has in relation to the same period been
paid dividends on the Subscription shares): all such property to
be held and distributed as herein provided and hereinafter
referred to collectively as Escrow property. Reference herein
to Escrow stock will be deemed to include the Escrow property
deposited in escrow pursuant thereto.
6. Escrow stock - rights, obligations and restrictions
6.1 Except for transfers to permitted transferees (as defined in
Section 1(p) of the bye-laws of the Parent) if any of the
Escrow stock is sold by the Escrow agent pursuant to this
agreement it will automatically convert into a share of
common stock in the parent.
6.2 None of the Escrow stock may be sold in contravention of the
restrictions set out in clause 12 of the sale of shares
agreement entered into among John Welch, Heinz Andreas,
Michael Morgan, Parent and FSAH, (the sale agreement) on
11 March 1996.
6.3 Subject to 6.2, the Escrow stock may only be sold and
transferred in compliance with this agreement and the
Securities Act of 1933 as amended and the rules and
regulations promulgated thereunder.
6.4 For the duration of the Escrow period Michael Levy will have
the sole power to vote the Escrow stock and any securities
held in escrow as part of the Escrow property to which end
the Escrow agent hereby irrevocably appoints Michael Levy as
its proxy to vote the Escrow stock on its behalf at any
meeting of the shareholders of the Parent and at any
adjournment thereof which shall take place during the Escrow
period. The Escrow agent undertakes that it will execute and
deliver to Levy a separate voting proxy in the aforegoing
terms referring specifically to the Escrow stock and any
securities comprising the Escrow property against demand by
Levy following delivery of the Escrow stock or other
securities as the case may be.
6.5 Each certificate evidencing the Escrow stock will bear the
following legends in addition to any others required by law:
The sale, transfer, hypothecation, negotiation,
pledge, assignment, encumbrance or other disposition of
the shares evidenced by this certificate are restricted
by and are subject to all of the terms, conditions and
provisions of an escrow agreement entered into amongst
First South Africa Corp., Ltd, First South African
Holdings (Proprietary) Limited, American Stock Transfer
& Trust Company and Michael Morgan a copy of which may
be obtained from the secretary of First South Africa
Corp., Ltd. No transfer, sale or other disposition of
these shares may be made unless the specific conditions
of such agreement are satisfied.
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as
amended. No transfer, sale or other disposition of
these shares may be made unless a registration
statement with respect to these shares has become
effective under the said Act or First South Africa
Corp., Ltd is furnished with an opinion of Counsel
satisfactory in form and substance to it that such
registration is not required.
7. Put option and related transactions
7.1 At any time during the Escrow period and provided that the
Escrow stock is capable of being sold in accordance with the
provisions of this agreement and the Securities Act of 1933,
as amended, and the rules and regulations promulgated
thereunder, the Subscriber will be entitled, on delivery to
the Escrow agent or its agent in the Republic of South
Africa, Webber Wentzel Bowens or its principal
successor-in-practice, of written notice accompanied by the
original share certificate/s evidencing the put shares
together with securities transfer form/s relating thereto
signed and completed in negotiable form according to law
(put notice) to require and oblige the Escrow agent to
purchase the subscription shares or any part thereof but no
fewer than 100 subscription shares (or such lesser number as
constitutes all of the remaining subscription shares held by
the Subscriber) in relation to any single put notice, for the
consideration and upon the terms and conditions hereinafter
recorded.
7.2 Against delivery of the put notice the Escrow agent will, in
compliance with applicable securities laws, use every
reasonable effort to sell as expeditiously as possible, at
the best possible price and on the best available terms so
much of the Escrow stock as is equal to the subscription
shares put to the Escrow agent in terms of the put notice and
to implement and enforce its rights and obligations arising
from such sale.
7.3 The put notice will be unconditional and unqualified save
only that the Subscriber will be entitled to stipulate a
minimum price (prescribed price) expressed in US dollars
per share at which he is willing to sell the relevant
subscription shares put to the Escrow agent in terms of the
put notice (put shares). If the put notice contains a
prescribed price:
7.3.1 the Escrow agent will not be entitled to sell the
equivalent number of Escrow stock pursuant to 7.2
above for a price less than the prescribed price;
7.3.2 if the Escrow agent is unable to sell the
equivalent number of Escrow stock for a price at
least equal to the prescribed price within thirty
days from delivery of the relevant put notice then
the put notice will automatically lapse and be of
no further force or effect;
7.3.3 the Escrow agent will, notwithstanding the
prescribed price, seek to achieve the best
possible price for the Escrow stock as
expeditiously as possible pursuant to 7.2 above;
7.3.4 if the Escrow agent cannot achieve the sale of the
relevant Escrow stock for a price equal to or more
than the prescribed price it will inform the
Subscriber of its inability and of the best price
at which it is able to sell the relevant Escrow
stock.
7.4 Against the sale by the Escrow agent of the relevant number
of Escrow stock the Escrow agent will be deemed to have
purchased the subscription shares recorded in the relevant
put notice (put shares) upon and subject to the following
terms and conditions:
7.4.1 the price payable for the put shares will be equal
to the price payable for the equivalent Escrow
stock sold less any applicable brokerage fees,
securities tax, duty or charge properly incurred;
7.4.2 the price for the put shares will be payable by
the Escrow agent to the Subscriber against receipt
by the Escrow agent of the price payable for the
relevant Escrow stock sold;
7.4.3 as security for the payment of the price for the
put shares the Escrow agent will be deemed to have
ceded, assigned and made over unto and in favour
of the Subscriber all of the Escrow agents right,
title and interest in and to its claims for
payment of the price payable for the relevant
Escrow stock sold.
7.5 The Subscriber will not be entitled to deliver more than four
put notices.
7.6 Payment of any amount due to the Subscriber upon the sale of
subscription shares pursuant hereto will be made to the
subscriber at the domicilium chosen in terms of paragraph 12
below provided that such place will be in the Republic of
South Africa unless the Subscriber is entitled, according to
South African law, to receive such payment outside the
Republic of South Africa.
7.7 The Subscriber will not sell or otherwise transfer or dispose
of the subscription shares during the Escrow period except
by the delivery of put notices in accordance with the
provisions of this agreement.
7.8 Unless a put notice has been delivered the Escrow agent will
not be entitled to sell, offer to sell or otherwise dispose
of the Escrow stock or any part thereof.
7.9 The Escrow agent will not be entitled to encumber the Escrow
stock nor expose it to any risk of attachment, forced sale,
realisation or other threat, direct or indirect in relation
to the obligations of the Escrow agent or any other person
or by virtue of any judicial, quasi judicial, bankruptcy or
similar legal process.
8. rights and obligations of Escrow agent
8.1 The Escrow agent is not and will not be deemed to be a
trustee for any party for any purpose and is merely acting
hereunder with the limited duties herein prescribed.
8.2 The Escrow agent does not have and will not be deemed to have
any responsibility in respect of any instruction, certificate
or notice delivered to it or in respect of the Escrow stock
or any Escrow property other than faithfully to carry out the
obligations undertaken in this agreement and to follow the
directions or instructions recorded in any notice delivered
pursuant to this agreement.
8.3 The Escrow agent is not and will not be deemed to be liable
for any action taken or omitted by it in good faith and may
rely upon and act in accordance with the advice of its
counsel without liability on its part for any action taken
or omitted in accordance with such advice. In any event the
Escrow agents liability hereunder will be limited to
liability for gross negligence, wilful misconduct or bad
faith on its part,
8.4 The Escrow agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter,
telegram, cablegram or other written instrument believed by
it to be genuine and to have been signed by the proper party
or parties.
8.5 The Parent agrees:
8.5.1 to pay the Escrow agents reasonable fees and to
reimburse it for its reasonable expenses including
attorneys fees incurred in connection with its
duties hereunder expeditiously so as not to impair
or delay the timeous implementation of this
agreement and put notice delivered pursuant hereto;
8.5.2 to save harmless, indemnify and defend the Escrow
agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever,
including reasonable counsel fees, suffered or
incurred by it by reason of or on account of any
misrepresentation made to it or its status or
actions as Escrow agent under this agreement
except for any loss, damage, liability, judgment,
cost or expense resulting from gross negligence,
wilful misconduct or bad faith on the part of the
Escrow agent. The obligation of the Escrow agent
to sell or deliver the Escrow stock pursuant to
this agreement will be subject to the prior
satisfaction upon written demand from the Escrow
agent of the Parents obligations to save
harmless, indemnify and defend the Escrow agent
and to reimburse the Escrow agent or otherwise pay
its reasonable fees and expenses hereunder.
8.6 The Escrow agent will not be required to defend any legal
proceedings which may be instituted against it in respect of
the subject matter of this agreement unless requested to do
so by the Subscriber, the Parent or FSAH and indemnified to
the Escrow agents satisfaction against the cost and expense
of such defence by the party requesting such defence. If any
such legal proceeding is instituted against it the Escrow
agent agrees promptly to give notice of such proceedings to
the remaining parties. The Escrow agent will not be obliged
to institute legal proceedings of any kind.
8.7 The Escrow agent will not by act, delay, omission or
otherwise be deemed to have waived any right or remedy it may
have under this agreement or generally, unless such waiver
be in writing, and no waiver will be valid unless it is in
writing, signed by the Escrow agent and only to the extent
expressly therein set forth. A waiver by the Escrow agent
under the terms of this agreement will not be construed as
a bar to or waiver of the same or any other right or remedy
which it would otherwise have on other occasions.
8.8 The Escrow agent may resign as such hereunder by giving
thirty days written notice thereof to the remaining parties.
Within twenty days after receipt of such notice the remaining
parties will deliver to the Escrow agent written instructions
for the release of the Escrow stock and any Escrow property
to a substitute Escrow agent which whether designated by
written instructions from the remaining parties or in the
absence thereof by instructions from a court of competent
jurisdiction to the Escrow agent, will be a bank or trust
company organised and doing business under the laws of the
United States or any state thereof. Such substitute Escrow
agent will thereafter hold any Escrow stock and any Escrow
property received by it pursuant to the terms of this
agreement and otherwise act hereunder as if it were the
Escrow agent originally named herein. The Escrow agents
duties and responsibilities hereunder will terminate upon the
release of all Escrow stock and Escrow property then held in
escrow according to such written instruction or upon such
delivery as herein provided. This agreement will not
otherwise be assignable by the Escrow agent without the prior
written consent of the remaining parties.
9. Non-waiver
No relaxation or indulgence which any of the parties may afford
to the other/s shall in any way prejudice or be deemed to be a
waiver of the rights of the indulgent party and shall not preclude
or stop the indulgent party from exercising all or any of its
rights hereunder and in particular but without limiting or
derogating from the aforegoing, any cancellation hereof or accrued
right of cancellation hereof.
10. Non-variation
10.1 No variation or amendment of this agreement will be of any
force or effect unless reduced to writing and signed by all
the parties hereto.
10.2 No consensual termination of this agreement will be of any
force or effect unless reduced to writing and signed by all
the parties hereto.
10.3 No waiver or abandonment of any partys rights arising from
this agreement, accrued or otherwise, will be of any force
or effect as against such party unless such such waiver or
abandonment is reduced to writing and signed by the party
waiving and abandoning such rights.
10.4 No oral statements and no conduct by a party relating to any
purported variation, amendment, cancellation, waiver or
abandonment will estop a party from relying upon the
formalities prescribed in the preceding sub-paragraphs of
this paragraph.
11. Whole agreement
11.1 This agreement constitutes the whole agreement between the
parties with regard to the subject matter hereof and no
representations, or warranties, by commission or omission
which are not recorded herein shall be of any force or
effect.
11.2 The parties acknowledge that they have not been induced or
coerced to enter into this contract by virtue of any
representations, statements, understandings, omissions or
warranties made by the other party hereto or any persons
acting on their behalf which are not included herein.
12. Miscellaneous matters
12.1 address
12.1.1 Any written notice in connection with this agreement
may be addressed :
12.1.1.1 Escrow agent :
address : c/o American Stock Transfer & Trust
Company
40 Wall Street
New York NY 10005
and shall be marked for the attention of Mr Herb
Lemmer.
12.1.1.2 Parent/FSAH :
address : 2665 South Bayshore
Suite 606
Coconut Grove
Florida 33133
telefax no: 091 305 856 4057;
and shall be marked for the attention of Clive
Kabatznik;
copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036-8735
Attention: Henry L Rothman.
12.1.1.3 Subscriber :
address :
and shall be marked for the attention of the
Subscriber
12.2 Any notice or payment sent to a partys domicilium citandi
et executandi as selected above by prepaid registered post
shall be presumed, subject to proof to the contrary, to have
been received by such party on the 7th (seventh) day after
the posting of same, or if delivered by hand, on the day of
such delivery by hand, or it transmitted by telex or telefax,
on the day of such delivery by hand, or if transmitted by
telex or telefax, on the day of transmitting same unless it
is not a business day in which event such telex or telefax
shall be deemed to have been received on the following
business day.
12.3 Any party shall be entitled to alter his domicilium citandi
et executandi in terms hereof by furnishing to the others of
them written notice of such alteration provided that such
alteration shall only be effective 7 (seven) days after
receipt by the other party of such notice.
13. Governing law
This agreement will be governed by and construed in accordance
with the laws of New York and will be binding upon and enure to
the benefit of all the parties hereto and their respective
successors-in-interest and assigns.
14. Signature in counterpart
This agreement may be executed in several counterparts which taken
together will constitute a single instrument.
Signed at on
1996.
Witness: for American Stock Transfer and Trust
Company
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Signed at on
1996.
Witness: for First South Africa Corp., Ltd
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Signed at on
1996.
Witness: for First South African Holdings (Pty)
Ltd
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Signed at on
1996.
Witness: for Michael Morgan
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