AGREEMENT
between
▇▇▇▇ ▇▇▇▇▇
(▇▇▇▇▇)
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇▇▇▇)
(collectively the Managers)
and
FIRST SOUTH AFRICAN HOLDINGS (PROPRIETARY) LIMITED
(Registration No. 95/03959/07)
(FSAH)
and
PIEMANS PANTRY (PROPRIETARY) LIMITED
(Registration No. 95/02034/07)
(the Company)
1. Introduction
1.1 An agreement (the sale agreement) has been
entered into among the Managers, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
FSAH, the Company, Surf's-Up Investments (Pty) Ltd
and First South Africa Corp., Ltd pursuant to
which FSAH has agreed to purchase from the
Managers and Andreas the entire issued share
capital of the Company and Surf's-Up Investments
(Pty) Ltd.
1.2 The sale agreement is subject to certain
suspensive conditions, one of which is the
conclusion by the Managers and the Company of a
management agreement dealing with issues set out
in the heads of agreement signed by the parties to
the sale agreement.
1.3 The parties accordingly wish to enter into an
agreement on the terms and conditions set out
below.
2. Suspensive condition
The rights and obligations of the parties imposed
by this agreement, other than those contained in this
clause, are subject to the suspensive condition that
all conditions to which the sale agreement is subject
(other than any condition relating to this
agreement), are timeously fulfilled or waived as
provided for in that agreement. The parties undertake
to use their best endeavours to procure the fulfilment
of this condition.
3. Period
3.1 Subject to 2, and notwithstanding its date of
signature, this agreement shall be effective from
1 March 1996 and, save for the provisions of
clause 10, which shall endure for the period
specified therein and for clauses 11, 12 and 13,
which shall endure until all matters and disputes
arising from this agreement have been resolved,
shall be for an initial period of 2 years
terminating on 28 February 1998, (the initial
period).
3.2 Notwithstanding 3.1, FSAH shall be entitled, in
its sole discretion, and by written notice given
not later than 3 months prior to the end of the
initial period, to extend the initial period in
respect of either or both of the Managers for a
further period of 1 year. FSAH acknowledges that
the Managers are reluctant to extend this
agreement beyond the initial period and
accordingly undertakes:-
3.2.1 to work with the Managers during the initial
period to develop suitable individuals to
take over the management of the Company at
the end of the initial period; and
3.2.2 not to exercise its right to extend the
initial period unless it is of the opinion
that the management of the Company at the end
of the initial period is inadequate to
properly manage the affairs and business of
the Company in substantially the same manner
as the business has been managed and run
during the initial period.
3.3 Notwithstanding 3.1, either of the Managers shall
be entitled, in their sole discretion, to extend
(in respect only of the Manager giving the notice)
the initial period for a further period of 1 year
by written notice to the purchaser given not less
than 3 months prior to the end of the initial
period. In addition, each Manager may discuss
with the Company extending his employment contract
with the Company (which runs concurrently with
this agreement) beyond its term.
4. Recruitment and employment of a managing director
designate
4.1 The Managers undertake to recruit and employ a
suitable person as managing director designate to
be trained to replace the skills of ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇ in the Company.
4.2 All curricula vitae received by the Managers or
the Company from applicants for the position of
managing director designate shall forthwith be
submitted to FSAH for consideration and a
short-list of candidates shall be compiled jointly
by FSAH and the Managers. Short-listed candidates
will be interviewed. FSAH shall be entitled, but
not obliged, to attend these interviews.
4.3 No candidate shall be appointed to the position
without the prior approval of FSAH as to the
identity of the person and the remuneration
package offered to him or her.
4.4 The parties will use all reasonable endeavours to
appoint the managing director designate by 1 March
1997, to enable him or her to gain at least 12
months on-the-job experience under the guidance
and supervision of the Managers.
4.5 It is recorded that if the managing director
designate has not been in the full time employment
of the Company for the 12 month period ended 28
February 1998 the profit on which the third
instalment of the purchase price of the Company is
based, as provided for in clause 11 of the sale
agreement, shall be reduced as if the managing
director designate had been so employed, by
deeming the additional costs that the Company
would have incurred in remunerating the managing
director for the full 12 month period to have been
incurred.
5. Management of the business
5.1 The overall responsibility for the management of
the affairs of the Company will vest in its board
of directors, who will be responsible, inter alia,
for setting the policy direction of the Company,
for setting business plans and budgets and for
monitoring the performance of the Company against
targets and budgets.
5.2 The Managers will have the immediate
responsibility and shall be accountable to the
board of directors, for managing the day-to-day
business of the Company within the budgets, plans,
policies and other parameters set by the board of
directors.
5.3 The parties wish to record that it is their
intention and the spirit of their relationship
that the expertise of the Managers in running the
business, and their understanding of the market
should be relied upon, exploited for the benefit
of the Company and transferred to other members of
management. Accordingly, the Managers undertake to
train the managing director designate and to groom
other members of management with a view to handing
over the running of the Company at the end of the
initial period or any extension thereof to
properly qualified successors. To this end the
Managers shall actively transfer their knowledge
concerning the Companys business to the managing
director designate and other members of
management.
5.4 The provisions of this clause 5 shall not
supersede the provisions of the Managers'
contracts of employment with the Company, which
shall remain of full force and effect.
6. Right of the Managers to appoint and remove directors
6.1 For the initial period and any extension of the
initial period, the Managers will jointly be
entitled to appoint and remove 1 director of FSAH
who will not be subject to rotation or retirement.
Such director shall be one of the Managers unless
both Managers are prohibited by law from holding
office as a director.
6.2 The director appointed by the Managers may appoint
an alternate director.
6.3 The seller who is not appointed as a director may
attend and speak at all board meetings of FSAH and
shall be given notice of all such meetings as if
he were a director, but shall not be entitled to
vote.
6.4 For the initial period and any extension of the
initial period, the Managers and ▇▇▇▇▇ ▇▇▇▇▇▇▇
will (unless disqualified at law from holding
office as a director) be appointed as directors of
the Company and shall not be subject to retirement
or rotation. It is also envisaged that other key
executives of the Company may be appointed to its
board.
7. Access to information
There shall be made available to the Managers (who
shall be bound by a duty of confidentiality) full and
free access to all information for investigating
and verifying the affairs of the Company and its assets,
liabilities and financial position including,
without prejudice to the generality of the
foregoing, full and free access to all trading records,
accounts, books, bank statements and other
financial records of the Company.
8. Matters requiring consent of the Managers
Decisions in respect of the following fundamental
matters affecting the Company shall require the prior
written consent of the Managers, which shall not be
withheld unless the Managers reasonably consider that
there will be an impact on the profitability of the
business of the Company leading to a reduction in
the value of the second or third instalment of the
purchase price and the parties have not been able to
reach agreement as to alternatives:-
8.1 the voluntary liquidation of the Company;
8.2 any capital investment or expenditure, however
financed, by the Company, outside that approved in
the annual budget, or any disposal of any of the
capital assets of the Company, the sale proceeds
or book value of which is in excess of R100 000;
8.3 any sale, assignment, transfer or other
disposition by the Company of any intangible
assets such as goodwill, logos, names, trademarks,
copyright, patents or licences, or trademark,
patent or licence agreements;
8.4 the acquisition by the Company of any shares or
interest in any company, other form of legal
entity, business, partnership or other undertaking
of whatever nature for a purchase price in excess
of R100 000;
8.5 the termination or non-renewal of any material
contract by the Company;
8.6 the disposal by the Company of its business or any
part or branch of its business; and
8.7 any material change to the core nature of the
business or in the way the business is conducted.
9. Restraints and competing businesses
9.1 Each of the Managers undertakes to FSAH and the
Company that for a period of 5 years commencing on
the effective date and terminating on 28 February
2001 neither of them will, without the prior
written consent of FSAH and the Company, and
whether directly or indirectly as shareholder,
employee, financier, director, agent, officer,
consultant, adviser or otherwise-
9.1.1 compete with the Company in the fields of
activity referred to in 9.2 within the areas
of restraint set out in 9.3;
9.1.2 persuade, induce, encourage or procure any
employee of the Company, or any person who
was an employee of the Company during the
previous twelve months, to become employed by
or interested in any manner whatever in any
field of activity referred to in 9.2, or to
terminate his employment with the Company.
9.2 The fields of activity in respect of which the
restraint applies will be -
9.2.1 the business of the manufacture,
distribution and retailing of frozen and
chilled food;
9.2.2 (as a separate restraint) any new
business actively carried on or which
the Company can demonstrate in writing
is actively contemplated by the Company
at the date of termination of the
initial period or any extension thereof
pursuant to this agreement.
9.3 The areas of restraint referred to in this 9 shall
be each of the provinces of the Republic of South
Africa, and any of the following countries in
which the Company does business at the termination
of the initial period or any extension thereof:
9.3.1 Swaziland;
9.3.2 Namibia; and
9.3.3 Botswana.
9.4 Each of the Managers acknowledges-
9.4.1 that the customers of the Company are or
could be drawn from all of the areas in
which the restraint is to be operative;
9.4.2 that the Company and FSAH would suffer
substantial damage if any person
restrained by this clause were to
operate a business similar to that
carried on by the Company within the
area to which, and during the time in
which, the restraint is to apply;
9.4.3 that FSAH would not have agreed to
purchase the shares of the Company
unless the Managers had agreed to the
restraints contained in this clause 9
and, furthermore, that each of the
persons restrained has derived
considerable benefit from the sale of
his shares of the Company;
9.4.4 that the restraint is the minimum
restraint required by the Company to
provide protection against unfair
competition upon termination of
employment and, moreover, that the
restraint will not prevent any of the
persons restrained from obtaining a
comparable position elsewhere should his
employment terminate and that in the
circumstances it is fair and reasonable,
and necessary for the protection of the
interests of the Company and FSAH that
the persons restrained 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 respective persons restrained.
9.5 Each and every restraint contained in this clause
is separate and divisible from every other
restraint in this 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 affect
the validity of any other restraint contained in
this 9 or otherwise.
9.6 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 or modified, the
restraints shall apply with such words deleted or
modified.
9.7 The restraints contained in this clause will be
capable of being enforced by FSAH or the Company,
individually or collectively by either of them.
However they will cease to be enforceable should
the Company be placed in final liquidation.
9.8 The Company and FSAH acknowledge that this
restraint will not preclude the Managers from
carrying out any of the activities referred to in
9.2 in any areas other than those set out in 9.3.
10. Default
10.1 If a party:-
10.1.1 commits a material breach of any provision
going to the root of this agreement and fails
to remedy the breach within 10 days of
written notice to do so, provided that:
10.1.1.1 if the breach can reasonably be remedied
within a shorter period, the party giving the
notice may specify that shorter period in the
notice and the party in default shall remedy
the breach within that period;
10.1.1.2 if the breach cannot reasonably be remedied
within 10 days, the party in default shall be
entitled to an extension, not exceeding a
further 90 days, to remedy the breach, on
condition that the party in default provides
evidence to the reasonable satisfaction of
the other party within the 10 days that
effective steps to remedy the breach have
been initiated and continues to provide such
evidence on an ongoing basis that the steps
are being expeditiously pursued;
10.1.2 commits a second or subsequent breach of this
agreement after having remedied an earlier
similar breach during the preceding 12 months
after written notice to do so;
10.1.3 takes steps to place itself, or is placed, in
liquidation, whether voluntary or compulsory,
or in judicial management, in either case
whether provisionally or finally;
the party shall be in default.
10.2 If a party is in default the other parties (the
aggrieved parties) shall be not be entitled to
cancel this agreement and the remedies of the
aggrieved parties shall be limited to claiming
specific performance, with or without damages.
11. Mediation and arbitration
11.1 Should any disputes or differences arise at any
time between the parties concerning this agreement
or its construction or effect or as to the rights,
duties and/or liabilities of the parties or either
of them under or by virtue of this agreement or
otherwise or as to any other matter in any way
arising out of the subject matter of this
agreement then either party:
11.1.1 may declare a dispute by delivering the
details of the dispute to the other party,
and
11.1.2 request that the dispute be referred by the
parties, without legal representation, to
mediation by a single mediator at a place and
time to be determined by him.
11.2 If, within 30 days of the delivery of the
declaration of a dispute, the parties have not
agreed to accept mediation then the dispute shall
be determined by arbitration as prescribed below.
11.3 If the parties agree to mediation then the
mediator shall be:
11.3.1 selected by agreement between the parties,
or, failing agreement,
11.3.2 nominated on the application of either party
by the president for the time being of
Independent Mediation Service of South
Africa.
11.4 The mediator shall, at his entire discretion,
determine whether the reference to him shall be
made in the form of written and/or oral
representations provided that, in making this
determination, he shall consult the disputing
parties and be guided by their desires of the form
in which the representations are to be made.
11.5 The mediator shall, within a reasonable period
after receiving the representations, express in
writing an opinion on the matter and shall include
his detailed reasons leading to the opinion.
11.6 The mediator shall deliver a copy of his opinion
to each party.
11.7 The opinion so expressed by the mediator shall be
final and binding on the parties unless either
party within 30 days of the delivery of the
opinion, notifies the other party of the first
party's unwillingness to accept the opinion.
11.8 The costs of mediation shall be determined by the
mediator and shall comprise:
11.8.1 the mediators expenses, and
11.8.2 a fee which shall have been previously agreed
by the parties.
The costs shall be borne equally by the parties to
the dispute and shall be due and payable to the
mediator on presentation to them of his written
account.
11.9 Each party shall bear the costs of any legal
advice that party may have obtained in connection
with the mediation.
11.10 The expressed opinion of the mediator shall
not prejudice the rights of the parties in
any manner whatsoever in the event of their
proceeding to arbitration.
11.11 Any decision given by any representative of
the parties in accordance with any provision
of this agreement prior to or during the
mediation shall not disqualify him from being
called as a witness and giving evidence
before the arbitrator on any matter
whatsoever relevant to the dispute or
difference so referred to the arbitrator as
provided in this clause.
11.12 If either party to this agreement be
unwilling to accept mediation or be unwilling
to accept the opinion expressed by the
mediator then either party may, by written
notice delivered to the other, within 30 days
of the declaration of the dispute if there be
no mediation or within 30 days of the issue
of the mediators opinion if mediation takes
place, require that the dispute be referred
to arbitration.
11.13 Such arbitration shall be by a single
arbitrator who shall be an advocate of not
less than 10 years standing if the dispute is
primarily a legal matter and a practising
auditor of not less than 10 years standing if
the matter is primarily an accounting matter:
11.13.1 selected by agreement between the parties or,
failing such agreement;
11.13.2 nominated on the application of either party
by the chairman for the time being of the
Association of Arbitrators.
11.14 The arbitrator shall have power to open up,
review and revise any certificate, opinion,
decision, requisition or notice relating to
all matters in dispute submitted to him and
to determine all such matters in the same
manner as if no such certificate, opinion,
decision, requisition or notice had been
issued.
11.15 Upon every or any such reference, the costs
of and incidental to the reference and award
shall be in the discretion of the arbitrator,
who may determine the amount of the costs, or
direct them to be taxed as between attorney
and client or as between party and party and
shall direct by whom and to whom and in what
manner they shall be borne and paid.
11.16 The award of the arbitrator shall be final
and binding on the parties.
11.17 In all respects the arbitration shall be
conducted in accordance with the Rules for
the Conduct of Arbitrations published by the
Association of Arbitrators and current at the
date the arbitrator is appointed or
nominated.
12. Miscellaneous matters
12.1 postal address
12.1.1 Any written notice in connection with this
agreement may be addressed:
12.1.1.1 in the case of ▇▇▇▇▇ to:
address : ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
telefax no : 953 1283
and shall be marked for the attention of
▇▇▇▇ ▇▇▇▇▇
12.1.1.2 in the case of ▇▇▇▇▇▇ to:
address : ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
telefax no : 953 1283
and shall be marked for the attention of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
12.1.1.3 in the case of FSAH to:
address : ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇
telefax no : 780 2095
and shall be marked for the attention of
▇▇▇▇▇▇▇ ▇▇▇▇▇;
12.1.1.4 in the case of the Company to:
address : ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
telefax no : 953 1283
and shall be marked for the attention of
▇▇▇▇ ▇▇▇▇▇;
12.1.2 The notice shall be deemed to have been duly
given:
12.1.2.1 14 days after posting, if posted by
registered post to the partys address
in terms of this sub-clause;
12.1.2.2 on delivery, if delivered to the partys
physical address in terms of either this
sub-clause or the next sub-clause
dealing with service of legal documents;
12.1.2.3 on dispatch, if sent to the partys then
telefax or telex number and confirmed by
registered letter posted no later than
the next business day.
12.1.3 A party may change that partys address for
this purpose, by notice in writing to the
other party.
12.2 address for service of legal documents
12.2.1 The parties choose the following physical
addresses at which documents in legal
proceedings in connection with this agreement
may be served (ie their domicilia citandi et
executandi):
12.2.1.1 ▇▇▇▇▇: ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
12.2.1.2 ▇▇▇▇▇▇: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
12.2.1.3 FSAH: ▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇
12.2.1.4 the Company: Cnr Anvil and Screw
Streets
Boltonia
12.2.2 A party may change that partys address
for this purpose to another physical
address by notice in writing to the
other party.
12.3 entire contract
This agreement contains all the express provisions
agreed on by the parties with regard to the
subject matter of the agreement and the parties
waive the right to rely on any alleged express
provision not contained in the agreement.
12.4 no representations
No party may rely on any representation which
allegedly induced that party to enter into this
agreement, unless the representation is recorded
in this agreement.
12.5 variation, cancellation and waiver
No contract varying, adding to, deleting from or
cancelling this agreement, and no waiver of any
right under this agreement, shall be effective
unless reduced to writing and signed by or on
behalf of the parties.
12.6 cession
No party may cede that partys rights nor delegate
that partys obligations without the prior written
consent of the other parties.
12.7 applicable law
This agreement shall be interpreted and
implemented in accordance with the law of the
Republic of South Africa.
12.8 jurisdiction
Each of the parties submits itself to and consents
to the non-exclusive jurisdiction of the
Witwatersrand Local Division of the Supreme Court
of South Africa.
12.9 costs
12.9.1 Each party shall bear that partys own legal
costs of and incidental to the negotiation,
preparation, settling, signing and
implementation of this agreement. The stamp
duty, if any, on this agreement shall be
borne by the parties in equal shares. The
stamp duty payable in respect of the
registration of the transfer of the shares
into the name of the purchaser shall be borne
by the purchaser.
12.9.2 Any costs, including attorney and own client
costs, incurred by a party arising out of the
breach by any other party of any of the
provisions of this agreement shall be borne
by the party in breach.
12.10 indulgences
If a party at any time breaches any of that
partys obligations under this agreement, any of
the other parties:
12.10.1 may at any time after that breach exercise
any right that became exercisable directly or
indirectly as a result of the breach, unless
the aggrieved party has expressly elected in
writing not to exercise the right;
12.10.2 shall not be estopped (ie precluded) from
exercising the aggrieved partys rights
arising out of that breach, despite the fact
that the aggrieved party may have elected or
agreed on one or more previous occasions not
to exercise the rights arising out of any
similar breach or breaches.
12.11 good faith
The parties shall act towards each other in the
utmost good faith in giving effect to this
agreement.
Signed at on
1996.
As witness:
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Signed at on
1996.
As witness:
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Signed at on
1996.
As witness: for First South African
Holdings (Pty) Ltd
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Signed at on
1996.
As witness: for Piemans Pantry (Pty)
Ltd
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