SHAREHOLDERS' AGREEMENT
--------------------------------------This Shareholders' Agreement was created using free resources available on Skylaw.co.
Skylaw’s goal is to provide entrepreneurs with the resources required to prepare excellent
quality legal documents, themselves, for free. In addition, we provide market leading
advisory and drafting services at a fraction of the price of conventional law firms.
IMPORTANT NOTE: You really should not be bothering with a Shareholders' Agreement
until you have a good MOI (Memorandum of Incorporation) in place. We will also assume
that you have used the Skylaw.co's excellent MOI (available for free!). That MOI is
comprehensive, meaning that you won't even need a shareholders agreement unless you
want to address the issues we've described in the table on the following pages.
HOW THIS DOCUMENT WORKS: The first few pages below contain a questionnaire table
that will, once answered, create your Shareholders' Agreement. Along with each question is
a guidance note that explains the relevance of the question and suggests responses. Once
you have completed the questions, the answers will be incorporated by reference into the
remaining part of the Shareholders' Agreement. The questions deal with the issues that
clients typically consider to be most significant. You really will need to read and understand
the body of the Shareholders' Agreement (which follows the questions). The document and
its contents will ultimately be your responsibility only.
However, you are encouraged to view our guidance resources on Skylaw.co which will
take you through the questions and assumptions (we hope that the Shareholders'
Agreement guidance video will be live in the course of July 2015). As always, we are
available to assist you in any and every step of the way, just reach out to us on
support@skylaw.co (note, we may need to charge you for that service, but we will advise
you before you incur any charge).
Skylaw makes this document available on the express basis that users of these
documents take full responsibility and waive and indemnify Skylaw for any losses,
damages, consequences, etc. (!) of use. Please don’t use this document if you don’t
agree to that.
Notes:
- This document is intended to be completed by you electronically. So, we have created this
document as a simple Microsoft word ".doc".
- Each question has suggested options for you to use as answers, and in places it allows
you to add text. Where there are options that are not applicable, merely delete the
inapplicable sections.
- To tidy this document up, we suggest you delete the text above before you present it to
your shareholders!
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Table of Essentials: the essentials of this
Shareholders' Agreement are determined by
the table below.
1.
2.
Essential
Point
Effective Date
of this
Agreement
Answer
Choose one and delete the other:


3.
Company
name:
4.
Company
Registration
Number:
5.
Number of
authorized
shares
The date of signature of the
last party to sign the
agreement
The following date:[INSERT]
[INSERT] Proprietary Limited
[INSERT]
Number: [INSERT]
In words: [INSERT]
Guidance Notes. These are
simple tips, for further free
guidance resources, please visit
skylaw.co (We suggest you delete
this column when you are finished
completing the questions, the
document will look more
professional!)
Please choose and option to
describe the date on which the
agreement is intended to take
effect.
We have assumed that there are
no "conditions precedent"
(i.e. things that have to happen
before the agreement will be
binding). If you want to included
conditions, please contact us and
we'll insert them for you:
support@skylaw.co.
Pretty much self explanatory
You will get this from your
company incorporation docs,
eg. Incorporation Certificate. An
example of this number is
2015/123456/07 (don’t use that
number as your own!)
Remember: “authorized shares”
are the number of shares which the
company has been authorized to
potentially issue. It is not the same
as “issued shares” which are the
number of shares actually issued
and held by shareholders.
The number of authorized shares is
so important we ask you to say it
twice! Seriously. Under no
circumstances must you issue
more shares than you have
authorized.
For this reason, we have repeated
the question which exists in your
MOI.
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6.
7.
Number of
issued
shares
Number: [INSERT]
Shareholding
Shareholder A:
In words: [INSERT]
Name: [INSERT]
Email: [INSERT]
Address: [INSERT]
Shareholding (percentage of total
shares in the Company): [INSERT]
Shareholding (number of shares
held): [INSERT]
Shareholder B:
Name: [INSERT]
Email: [INSERT]
Address: [INSERT]
This describes the total amount of
shares which the Company has
issued. You can also think of this
as the total amount of shares held
by shareholders in the company.
So if you have 5 shareholders with
10 shares each, the number of
issued shares is 50.
Please describe each shareholder
fully:




full name
physical and email address
percentage of shares held
number of shares held
We have created the option for five
shareholders – if this is too many,
just delete the extra options. If it is
too little, just duplicate (copy and
paste) the questions for each
shareholder and create
"Shareholder F", "Shareholder G"
etc. Remember to duplicate the
signature clause for additional
shareholders!
Make sure the total shares held by
all shareholders does not exceed
the Number of Issued Shares
described in the answer to
question 6.
As usual, for any questions, just
ask us! Support@skylaw.co.
Shareholding (percentage of total
shares in the Company): [INSERT]
Shareholding (number of shares
held): [INSERT]
Shareholder C:
Name: [INSERT]
Email: [INSERT]
Address: [INSERT]
Shareholding (percentage of total
shares in the Company): [INSERT]
Shareholding (number of shares
held): [INSERT]
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Shareholder D:
Name: [INSERT]
Email: [INSERT]
Address: [INSERT]
Shareholding (percentage of total
shares in the Company): [INSERT]
Shareholding (number of shares
held): [INSERT]
Shareholder E:
Name: [INSERT]
Email: [INSERT]
Address: [INSERT]
Shareholding (percentage of total
shares in the Company): [INSERT]
Shareholding (number of shares
held): [INSERT]
8.
Initial
Directors
The initial directors of the Company
are:
Director 1:
Name: [INSERT]
This section records the names of
the directors. NOTE the power to
elect directors must be described in
your MOI, which you would have
done if you used the free
Skylaw.co MOI. In this section,
you merely record the outcome of
that election process.
ID or Passport Number: [INSERT]
Director 2:
Name: [INSERT]
ID or Passport Number: [INSERT]
Director 3:
Name: [INSERT]
ID or Passport Number: [INSERT]
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Director 4:
Name: [INSERT]
ID or Passport Number: [INSERT]
Director 5:
Name: [INSERT]
ID or Passport Number: [INSERT]
9.
Forced Sales
Will there be any circumstances in
which some Shareholders can force
a shareholder to sell their shares?
Choose one and delete the other:


Answer: Yes
Answer: No:
If this question is answered "Yes"
then clause 5 below will apply.
This is the first fundamental
question to consider. It deals with
the issue of "ownership" (one of the
three themes described in our
guidance video: ownership, control
and economics)
A shareholder will never lose
ownership of his/her shares unless
a provision of the shareholders
agreement clearly sets that out.
So, "Forced Sale" provisions need
to be carefully considered. They
are typically relevant when the
Shareholders all agree that each
person's shareholding is
conditional on some continued fact
or service.
A typical example is that
shareholder A needs to continue to
be employed by the Company –
and upon termination of
Shareholder A's employment,
Shareholder A needs to sell his/her
shares to the other shareholders.
Other examples are provided in the
proposed answers to question 10
below.
Note! This agreement explains
that:


If any shareholder is
forced to sell his/her
shares; then
The other shareholders
must pay "Fair Value"–
or the fair market price –
for those shares, as
determined by the
auditor.
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You could actually agree on a
different price, for example, you
could agree on a very low price if
one shareholder was a "bad
leaver". If you think that may be
applicable, let us know and we can
build that in for you.
Support@skylaw.co.
10.
Forced Sale
Events
If the Answer to Question 9 was
"Yes", then what will be the events
that trigger a forced sale:
Choose any that apply and delete the other:
 Death (in which case clause 5.2.1
will apply)
 Liquidation or Insolvency (in which
case clause 5.2.2 will apply)
 Termination of employment (in
which case clause 5.2.3 will apply)
 Breach of the material terms (in
which case clause 5.2.4 will apply)
 Other: [INSERT]
11.
Come Along
Here you have the opportunity to
describe the kind of event that
could lead to one shareholder
being forced to sell his/her shares
to the other shareholders. We have
recorded some of the common
events, but do be careful to
consider whether these are
relevant to your Company and the
relationship between your
shareholders. As always, ask us if
you are in doubt, of if you want
help describing other/new forced
sale events: support@skylaw.co
Will the "Come Along" clause
apply? (In which case clause 6 will
This is an important point, and a bit
complicated.
apply)
A "Come Along" clause allows
some shareholders to decide when
ALL the shareholders must sell
their shares.
Choose one and delete the other:
Answer: Yes
Answer: No:
In summary – if a certain
percentage of shareholders agree
to sell their shares, then ALL
shareholders must sell their
shares.
To understand this clause, we'll
first explain the purpose: a
company is typically much more
valuable to an owner when it is
100% owned. Therefore, a buyer
of a company may pay more (per
share) if the buyer knows that she
will acquire all the shares at that
price. In fact, a buyer may not
bother buying a company at all, if
the buyer can't acquire 100% of the
shares (even a valuable company
which is well priced).
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Therefore, the shareholders will
often agree that:



If a buyer wants to
acquire 100% of the
shares; AND
If a certain percentage of
shareholders agree to
accept the offer, THEN
All the shareholders
(including the
shareholders who
rejected the offer) must
sell their shares to the
buyer on the terms
offered by the buyer.
Importantly, the buyer must be a
genuine third party – this provision
cannot be used by a shareholder to
forcibly buy up all the other
shareholders' shares. (You can
actually agree and add wording
which achieves that, but that's a
different discussion).
Lastly (sorry, we did say it was
complicated) each shareholder will
need to first offer his/her shares to
the other shareholders before the
Come Along clause can apply. So,
as you will remember from the
MOI, no shareholder can sell his
shares until he has first offered
those shares to the other
shareholders. If you think about it,
this is only fair – shareholders
should not be able to force
minorities to sell their shares
unless they are also first given the
opportunity to buy the majority
shareholders' shares.
12.
Come Along
Minimum
Percentage
If the answer to question 11 was
"Yes", then what percentage of
Shareholders must accept the offer
in order to force all shareholders to
sell their shares?
You must complete the following
sentence:

Shareholders holding not less
than [INSERT]% of the issued
Shares of the Company must
Effectively, we are asking what
percentage of shareholders must
accept the offer by the buyer.
However, you "count" shareholders
by adding up the percentage of
shares they each hold. When that
percentage reaches your agreed
minimum, then the Come Along
clause takes effect.
The most common percentage we
see for Come Along clauses is
75% - because by then so many
shareholders would be in favour of
the sale, that it seems unfair that
the minority (less than 25% of
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accept such offer in respect of all
their shares.
13.
Tag Along
shareholders) would be able to
block the sale.
Will the "Tag Along" clause
apply? (In which case clause 7 will
This is the opposite of the Come
Along clause.
apply)
This clause allows any shareholder
to sell his/her shares to the buyer
of another shareholders shares. It
is like saying: if you sell your
shares, then I can also sell my
shares to the same buyer.
Choose one and delete the other:
Answer: Yes
Answer: No:
What this means is that all the
shareholders are entitled to sell
their shares (i.e. exit) to the same
buyer, at the same time, on the
same terms, if they all want to.
To understand this clause –
understand that in many
companies the shareholders agree
that they should each be given an
equal opportunity to sell their
shares. So, if you have all been
together as founders, through a
long and tough journey, you may
think that it is fair to all exit at the
same time. Just because one
shareholder finds a buyer for her
shares, doesn't mean that she
should be able to cash in and leave
the others. This often has the
effect of aligning all the
shareholders with regard to their
exit plan.
One last explanation. If:
 A buyer wants to buy some
(not all) shares in a company,
and
 One or two shareholders (say,
25% of the total shareholding)
agree to sell their shares; then
 the other shareholders can
force the buyer to purchase
their shares for the same price,
and on the same terms.
The difference to the Come Along
clause is that the remaining
shareholders have the choice
whether or not to sell their shares.
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14.
Tag Along
Minimum
Percentage
If the answer to question 13 was
"Yes", then what percentage must
accept the offer in order to force all
shareholders to sell their shares?
You must complete the following
sentence:
 If a third party offers to
purchase Shares in the Company
constituting at least [INSERT]%
of the entire issued Share capital
in the Company.
15.
Corporate
Opportunities
13
Will the Corporate Opportunities
clause apply? (In which case clause
8 will apply)
Choose one and delete the other:
Answer: Yes
Answer: No:
What is the minimum amount of
shares which the buyer must want
to purchase?
This figure can be as low as you
like, though we seldom see this
below 25%. However, there is no
reason why it should not be lower.
A last note - if the buyer makes an
offer for 100% of the company,
then this clause will be irrelevant if
the Come Along clause applies
(forcing the minority shareholders
to sell).
The answer to this question
depends on this principal:

do the shareholders agree
that any opportunities that
relate to the business of the
Company should be referred
to the Company, and NOT
pursued by the shareholders
in their personal capacities or
by other companies owned
by the shareholders?
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SIGNATURE PAGE: Signature of this page will be evidence of your agreement to all
the terms of the table of elements and the body of the shareholders agreement which
follows. For that reason, we recommend (though it is not legally necessary) that each
party sign this page and initial each of the other pages.
Signature for:
Shareholder A
Signature:
_________________________
Full Name:
_________________________
Date of Signature:
_________________________
Place of Signature:
_________________________
Signature of witness to signature:
_________________________
Signature for:
Shareholder B
Signature:
_________________________
Full Name:
_________________________
Date of Signature:
_________________________
Place of Signature:
_________________________
Signature of witness to signature:
_________________________
Signature for:
Shareholder C
Signature:
_________________________
Full Name:
_________________________
Date of Signature:
_________________________
Place of Signature:
_________________________
Signature of witness to signature:
_________________________
Signature for:
Shareholder D
Signature:
_________________________
Full Name:
_________________________
Date of Signature:
_________________________
Place of Signature:
_________________________
Signature of witness to signature:
_________________________
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Signature for:
Shareholder E
Signature:
_________________________
Full Name:
_________________________
Date of Signature:
_________________________
Place of Signature:
_________________________
Signature of witness to signature:
_________________________
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1
INTERPRETATION AND PRELIMINARY
The Table of Essentials which precedes this provision must be interpreted as an
essential element of this Agreement. The Agreement is intended to be created by
non-lawyers, by way of considering and answering Questions contained in the
Table of Essentials. Any person interpreting this Agreement is directed to use the
Table of Essentials as the primary reflection of the Parties' intention, and to the
answers to the Questions in the Table of Essentials into the body of the Agreement
as pro-actively as necessary for that purpose.
The headings of the clauses in this Agreement are for the purpose of convenience
and reference only and shall not be used in the interpretation of, nor modify nor
amplify the terms of this Agreement, nor any clause of this Agreement. Unless a
contrary intention clearly appears 1.1
words importing 1.1.1
any gender includes all others;
1.1.2
the singular include the plural and vice versa; and
1.1.3
natural persons include created entities (corporate or
unincorporate) and the state and vice versa;
1.2
the following terms have the meanings assigned to them in this clause 1.2
and cognate expressions shall have corresponding meanings, namely –
1.2.1
"Agreement" means this agreement and all annexures and
schedules to this agreement;
1.2.2
"Auditors" means the auditors of the Company, or if the Company
does not have auditors, then any firm of auditors appointed at the
request of any Party for any purpose referred to in this Agreement
by the South African Institute of Chartered Accountants (or its
successor body);
1.2.3
"Board" means the board of directors of the Company, as
constituted from time to time;
1.2.4
"Business" means the business of the Company and its
subsidiaries from time to time;
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1.2.5
"Business Day" means any day excluding Saturday, Sunday and
a public holiday in South Africa;
1.2.6
“Company” means the company so described in the answers to
Questions 3 and 4;
1.2.7
"Companies Act" means the Companies Act, No. 71 of 2008;
1.2.8
"Controlling Shareholder" means, in respect of any company
and/or close corporation, which may be or become a Shareholder
in the Company 1.2.8.1 the holders directly or indirectly of the controlling shares in
such company or controlling interest in such close
corporation, as the case may be, as at the date on which
that company and/or close corporation acquires Shares in
the Company; or
1.2.8.2 if control passes to any third party after clause 8.1 has
been triggered and the Remaining Shareholders do not
accept the forced offer, such new holder, directly or
indirectly, of the controlling shares in such company or
controlling interest in such close corporation, as the case
may be; or
1.2.8.3 if control passes to any third party in circumstances where
clause 8.1 is not available to be invoked by the Remaining
Shareholders, such new registered holder of the
controlling shares in such company or controlling interest
in such close corporation, as the case may be;
1.2.9
"Disposing Shareholder" means a Shareholder who intends to
dispose of his Shares in accordance with clause 7;
1.2.10
"Effective Date" means 00:01 on the 1st (first) Business Day
following the Signature Date;
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1.2.11
“Fair Value” means the fair value of any shares which are the
subject of a forced sale, as agreed between Remaining
Shareholders and an Offering Shareholder or, failing agreement,
will be determined by the Auditors, who shall act as experts and
not as arbitrators;
1.2.12
"Forced Sale Event" means any of the following the occurrence
defined in clause 5.1;
1.2.13
"Immediate Relation" of a Shareholder means a person who is –
1.2.13.1 that Shareholder's spouse;
1.2.13.2 a child (including an adopted child) of that Shareholder;
1.2.14
"Intellectual Property" means copyrights, patents, trade marks,
designs or models, trade patterns, trade names and any other
type of intellectual property and any rights to them (including
applications for and rights to obtain or use same) which are used
and/or held, whether or not currently used, by the Company in
connection with the Business and/or any other rights to Intellectual
Property;
1.2.15
"Loan Account" means any claim on a loan account which any
Shareholder may have against the Company from time to time;
1.2.16
"MOI" means the memorandum of incorporation of the Company
from time to time;
1.2.17
"Parties" means the parties to this Agreement, in their capacity as
Parties;
1.2.18
"Question" refers to a numbered question asked in the Table of
Essentials, the answer to which will be crucial to interpreting this
agreement;
1.2.19
"Shares" means the ordinary par value / no par value shares in
the issued share capital of the Company, having the rights and
privileges set out in the MOI;
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1.2.20
"Signature Date" means the date on which the Party that is last to
sign this Agreement, does so;
1.2.21
"Successor-in-Title" means the successor-in-title of a
Shareholder, as the acquirer of any part of the Shares from a
Shareholder;
1.2.22
“Table of Essentials” means the table in the introductory section
of this Agreement in which the shareholders record certain
essential elements in order to create this Agreement;
1.2.23
“Offering Shareholder” means the Shareholder who is the
subject of a Forced Sale Event. For purposes of clarity, this
means any Shareholder who experiences any of the events
described under the definition of Forced Sale Event; and
1.2.24
"Remaining Shareholders" means:
1.2.24.1 with respect to the Forced Sale clause 5, the remaining
Shareholders who have not experienced the Forced Sale
Event in question;
1.2.24.2 with respect to the Come Along clause 6 and Tag Along
clause 7, the shareholders to whom an offer was not made
by the third party buyer described in those clauses, or who
did not accept the offer made by the third party buyer
described in those clauses;
1.3
reference to a "clause" is a reference to a clause of the body of the
Agreement which follows this definition section;
1.4
reference to any legislation is intended to refer to that piece of legislation
and related rules and regulations as existing on the Signature Date and as
updated/amended/replaced from time to time;
1.5
the definitions are intended to be fundamental parts of this Agreement;
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1.6
when periods of "days" are referred to, then you count that period by
excluding the first day and including the last day – always counting business
days only;
1.7
when we described figures in words and numbers, the words will always take
precedence;
1.8
the definitions will also apply to any annexures you attach to this Agreement;
1.9
sometimes we define a word in a particular clause in the Agreement, if we
do so, that defined word or term will apply to its use throughout the
agreement;
1.10
some provisions of this Agreement may expressly say that they survive the
expiration or termination of the Agreement, but they may also survive if the
must out of necessity to achieve the Party's intention;
1.11
sometimes courts use a rule for interpreting a contract which is: the contract
will be interpreted against the Party responsible for the drafting or
preparation of the contract. The Parties agree that this will not apply in the
case of this Agreement;
1.12
any reference in to a Party will include any person who takes on the Party's
rights and/or obligations in future (including assignees, creditors, liquidators,
testamentary heirs, etc.);
1.13
whenever we use words intended to create examples (like "include",
"including" and "in particular"), the use of such words or examples will not
limit the generality of any preceding word(s); and
1.14
if we refer to any other agreement or document in this Agreement, then we
refer to that agreement or document as it exists from time to time (i.e. as
amended, cancelled, replaced, supplemented, etc.).
2
COMMENCEMENT AND DURATION
2.1
This Agreement shall commence on the Effective Date.
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3
SHAREHOLDING
3.1
Ordinary Shares. At the Effective Date, the Company has the number of
authorised Shares, and the number of issued Shares as described in the
answers to Questions 5 and 6 of the Table of Essentials.
3.2
The Company’s Issued Ordinary Shares are held as described in the answer
to Question 7 of the Table of Essentials.
4
INITIAL DIRECTORS
4.1
It is recorded and agreed that, as at the Signature Date, the initial directors
appointed to the Board are as described in the answer to Question 8 of the
Table of Essentials.
5
FORCED SALES
5.1
This clause 5 will only apply if the answer to Question 9 of the Table of
Essentials is "Yes", otherwise it must be regarded as non-existent (or, pro
non scripto in legalese).
5.2
For purposes of this clause, Forced Sale Events will be defined as any one
of the following:
5.2.1
Death. [This clause 5.2.1 will apply only if "Death" is an applicable
event as described in the answer to Question 10 of the Table of
Essentials, otherwise it will be treated as non-existent (or, pro non
scripto, in legalese)] These Forced Sale Events will include:
5.2.1.1 the death of any Shareholder who is a natural person; or
5.2.1.2 if the Shareholder is a company or close corporation, then
if its Controlling Shareholder (who is a natural person)
dies; or
5.2.1.3 if the Shareholder is a trust, then if the beneficiary of the
trust (who is a natural person), by reason of whose
association the trust became a Shareholder in the
Company, dies;
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5.2.1.4 if
a
Shareholder
transfers
his/her
shares
to
a
representative entity (company, trust, etc.) where that
representative entity holds Shares primarily for the benefit
of that employee, and if the original Shareholder dies;
5.2.2
Liquidation or Insolvency. [This clause 5.2.2 will apply only if
"Liquidation or Insolvency" is an applicable event as described in
the answer to Question 10 of the Table of Essentials, otherwise it
will be treated as non-existent (or, pro non scripto in legalese)]
The Forced Sale Events will include:
5.2.2.1 any Shareholder who is provisionally sequestrated or
provisionally liquidated;
5.2.3
Termination of employment. [This clause 5.2.3 will apply only if
"Termination of employment" is an applicable event as described
in the answer to Question 10 of the Table of Essentials, otherwise
it will be treated as non-existent (or, pro non scripto in legalese).]
The Forced Sale Events will include:
5.2.3.1 Termination of employment of:
5.2.3.1.1 any Shareholder who is an employee and who
ceases for any reason to be employed by the
Company or any of its subsidiaries if any; or
5.2.3.1.2 any employee who may benefit from the
shareholding
of
an
representative
entity
(company, trust, etc) where that representative
entity holds Shares primarily for the benefit of that
employee. In such case the actual Shareholder
may be, for example:
5.2.3.1.2.1
its
a company or close corporation, if
Controlling
Shareholder
is
an
employee; or
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5.2.3.1.2.2
a trust, if one of its beneficiaries,
is an employee.
5.2.4
Breach of material terms. [This clause 5.2.4 will apply only if
"Breach of material terms" is an applicable event as described in
the answer to Question 10 of the Table of Essentials, otherwise it
will be treated as non-existent (or, pro non scripto in legalese)]
The Forced Sale Events will include: any Shareholder which
breaches a material provision of this Agreement or the MOI;
5.2.5
Any other event so described in the answer to Question 10 of the
Table of Essentials.
5.3
After learning of any Forced Sale Event, any one or more of the Remaining
Shareholders may, by notice in writing to the Offering Shareholder, compel
the Offering Shareholder to offer his Shares in the Company to the
Remaining Shareholders at a price sounding in money in South African
currency being the Fair Value of the Shares;
5.4
Where the Fair Value for the Shares which are the subject of an offer in
terms of clause 5.3 is to be determined by the Auditors:
5.4.1
the Auditors' determination shall be final and binding on the
Remaining Shareholders and the Offering Shareholder; and
5.4.2
5.5
the Auditors' charges shall be paid by the Company.
As soon as the Fair Value has been determined (whether by agreement or
by Auditors, as applicable) and notified in writing to the Remaining
Shareholders and the Offering Shareholder, the Offering Shareholder shall
be deemed to have offered the Shares to the Remaining Shareholders (if
more than one in proportions agreed among them, in writing or if not so
agreed, proportionately to their shareholding) at the price agreed or
determined.
5.6
The offer referred to in clause 5.3 shall be open for acceptance for a period
30 days and failing acceptance, in respect of all such Shares within such
period shall lapse. Such lapsing of the offer shall not affect the continued
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application of the pre-emptive provisions of this Agreement, set out in the
MOI. If the offer is accepted, the effective date of the sale shall be the day
prior to the date upon which the Forced Sale Event which triggered the offer,
occurs.
5.7
The proportionate share of the purchase price so determined of each
Remaining Shareholder who accepts the offer together with interest at the
Prime Rate, calculated monthly in arrear, shall be payable in cash in equal
instalments over a period of 6 months (provided the Remaining
Shareholders shall be entitled to anticipate (prepay) their respective
purchase prices).
5.8
Each of the Remaining Shareholders who accepts the offer shall use his
best endeavours to procure the release of the Offering Shareholder pro rata
(in the same ratio as the Shares so purchased by him in terms of this
clause 5.3 bear to all the Shares held by the Offering Shareholder) from any
liability which the Offering Shareholder may have under any guarantees,
suretyships and indemnities which may have been given by the Offering
Shareholder for the Company's obligations. Each of the Remaining
Shareholders who accepts the offer shall use his best endeavours to procure
such release, on the same pro rata basis referred to above, only in respect
of any liability arising after the acceptance of the deemed offer. Until the
release is procured, each of the Remaining Shareholders who accepts the
offer indemnifies the Offering Shareholder against any such liability, on the
same pro rata basis referred to above.
5.9
The Shares shall be delivered in transferable form to the Shareholders in
question against full payment of the purchase price.
5.10
If the offer is not accepted in respect of any of such Shares, the Offering
Shareholder shall be entitled to retain such Shares subject to the remaining
provisions of this Agreement.
5.11
Each of the Shareholders irrevocably and in rem suam appoints any of the
Remaining Shareholders at the time as his attorney and agent to do all such
things as may be necessary to comply with the provisions of this clause.
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6
COME-ALONG
6.1
This entire clause 6 will only apply if the answer to Question 11 of the Table
of Essentials is "Yes", otherwise it must be regarded as non-existent (or, pro
non scripto in legalese).
6.2
If:
6.2.1
a third party offers to purchase all of the Shares of all the
Shareholders in the Company on identical pro rata terms; and
6.2.2
if the percentage of Shareholders described in the answer to
Question 12 (at a minimum) accept such offer in respect of all
their Shares, provided that they all first comply with the preemptive provisions of contained in the MOI (or otherwise agreed in
writing between all the Shareholders) and the Remaining
Shareholders do not accept the offer made to them in terms of
such pre-emptive provisions in respect of all the Shares offered,
then the Remaining Shareholders in the Company shall be obliged to
accept and shall be deemed to have accepted the offer of the third party in
respect of all their Shares in the Company.
7
TAG ALONG
7.1
This entire clause 7 will only apply if the answer to Question 13 of the Table
of Essentials is "Yes", otherwise it must be regarded as non-existent (or, pro
non scripto in legalese).
7.2
If:
7.2.1
a third party offers to purchase at least the percentage of Shares
described in the answer to Question 14 of the Table of Essentials;
and
7.2.2
the Shareholders to whom such offer is made wish accept such
offer,
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then such Shareholders may sell such Shares to the offering third party
provided that:
7.2.3
the selling Shareholders must comply with the provisions of any
pre-emptive clauses contained in the MOI (or otherwise agreed in
writing between all the Shareholders); and
7.2.4
if, in response to an offer in terms any pre-emptive clauses
contained in the MOI, any of the Remaining Shareholders indicate
in writing in response that they wish to dispose of their Shares in
the Company,
then the same pro rata offer to acquire the same percentage of Shares
must be made by such third party also to the Remaining Shareholder/s
concerned as a condition to the sale of any Shares to the third party in
terms of clause 7.2.1.
8
CORPORATE OPPORTUNITIES
8.1
This entire clause 8 will only apply if the answer to Question 15 of the Table
of Essentials is "Yes", otherwise it must be regarded as non-existent (or, pro
non scripto in legalese).
8.2
The Shareholders agree that any opportunities in South Africa concerning
the Business, which become available to (or come to the attention of) any
Shareholder shall be offered and/or referred in the first instance to the
Company to undertake. A Shareholder may only pursue such an opportunity
if the Company notifies him in writing that it has chosen not to do so.
9
ADDRESS FOR SERVICE
9.1
The Parties choose as their address for service for all purposes under this
Agreement, whether in respect of court process, notices or other documents
or communications of whatsoever nature, the addresses described for such
Party in the Table of Essentials in answer to Question 7.
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9.2
Any notice or communication required or permitted to be given in terms of
this Agreement shall be valid and effective only if in writing, which shall
include giving notice by e-mail.
9.3
Any Party may by notice to any other Party, change the physical address
chosen as its address for service to another physical address where postal
delivery occurs in South Africa or its postal address or its e-mail address,
provided that the change shall become effective on the 7th (seventh)
Business Day from the receipt of the notice by the addressee.
9.4
Any notice to a Party 9.4.1
sent by prepaid registered post (by airmail if appropriate) in a
correctly addressed envelope to it at an address chosen in clause
9.1 to which post is delivered shall be deemed to have been
received on the 7th (seventh) Business Day after posting (unless
the contrary is proved);
9.4.2
delivered by hand to a responsible person during ordinary
business hours at the physical address chosen in clause 9.1 shall
be deemed to have been received on the day of delivery; or
9.4.3
sent by e-mail to its chosen e-mail address stipulated in
clause 9.1, shall be deemed to have been received on the date of
sending (unless the contrary is proved).
9.5
Notwithstanding anything to the contrary set out in this clause, a written
notice or communication actually received by a Party shall be an adequate
written notice or communication to it notwithstanding that it was not sent to
or delivered at its chosen address.
10
GOOD FAITH
The parties shall in their dealings with each other display good faith.
11
ASSIGNMENT
No Party/ies will be entitled to cede their rights or delegate their obligations in terms
of this Agreement without the express prior written consent of the other Party/ies.
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12
RELATIONSHIP BETWEEN THE PARTIES
The Parties agree that they are not the agents, representatives of each other, or
partners. None of them may represent the other in any legal actions other than as
expressly stated in this Agreement (if appropriate).
13
BREACH
13.1
This Agreement may not be cancelled or terminated by any Party and will
endure with respect to each Shareholder (for so long as that person or
entity is a Shareholder) and the Company indefinitely or until terminated by
the unanimous written consent of all the Parties.
13.2
Subject always to clause 13.1, if any Party breaches any material provision
or term of this Agreement (other than those which contain their own
remedies or limit the remedies in the event of a breach thereof) and fails to
remedy such breach within 14 days of receipt of written notice requiring it
to do so then the aggrieved Party shall be entitled without notice, in
addition to any other remedy available to it at law (except for cancelation or
termination) or under this Agreement, including obtaining an interdict or to
claim specific performance of any obligation whether or not the due date
for performance has arrived, in either event without prejudice to the
aggrieved Party's right to claim damages.
14
GOVERNING LAW AND SUBMISSION TO JURISDICTION
14.1
This Agreement and any matter arising from this Agreement shall be
governed by and interpreted in accordance with the laws of the Republic of
South Africa.
14.2
The Parties hereby consent and submit to the exclusive jurisdiction of the
Western Cape High Court in respect of any litigation arising in terms of this
Agreement, subject to the provisions of clause 14.2.
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15
ARBITRATION
15.1
Other than in respect of those provisions of the Agreement which provide for
their own remedies which would be incompatible with arbitration, a dispute
which arises in regard to –
15.1.1
the interpretation of;
15.1.2
the carrying into effect of;
15.1.3
any of the Parties' rights and obligations arising from;
15.1.4
the termination or purported termination of or arising from the
termination of; or
15.1.5
the rectification or proposed rectification of,
this Agreement, or out of or pursuant to this Agreement, (other than where
an interdict is sought or urgent relief may be obtained from a court of
competent jurisdiction), shall be submitted to and decided by arbitration.
15.2
15.3
That arbitration shall be held –
15.2.1
with only the Parties and their representatives present;
15.2.2
at Cape Town.
It is the intention that the arbitration shall, where possible, be held and
concluded in 21 (twenty one) Business Days after it has been demanded.
The Parties shall use their best endeavours to procure the expeditious
completion of the arbitration.
15.4
The arbitration shall be subject to the arbitration legislation for the time being
in force in South Africa.
15.5
The arbitrator shall be an impartial admitted attorney whether practising or
non-practising of not less than 10 (ten) years standing appointed by the
Parties or, failing agreement by the Parties within 14 (fourteen) days after
the arbitration has been demanded, at the request of either of the Parties
shall be nominated by the President for the time being of the Law Society of
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the Cape of Good Hope (or its successor body in the Western Cape),
following which the Parties shall immediately appoint such person as the
arbitrator. If that person fails or refuses to make the nomination, any Party
may approach the High Court of South Africa to make such an appointment.
To the extent necessary, the court is expressly empowered to do so.
15.6
The Parties shall keep the evidence in the arbitration proceedings and any
order made by any arbitrator confidential.
15.7
The arbitrator shall be obliged to give his award in writing fully supported by
reasons.
15.8
The provisions of this clause are severable from the rest of this Agreement
and shall remain in effect even if this Agreement is terminated for any
reason.
15.9
The arbitrator shall have the power to give default judgment if any Party fails
to make submissions on the due date and/or fails to appear at the arbitration.
15.10
The arbitrator's award shall be final and binding on the Parties.
15.11
The costs of any venue, arbitrator's remuneration, recording, transcription
and other costs and expenses ancillary to the hearing shall be borne by the
Parties in equal shares and shall be recoverable, as costs in the cause under
the provisions of any award. The Parties, together with the arbitrator will
agree form time to time on the arbitrator's remuneration, which will be paid
by the Parties in equal shares, upon receipt of invoices.
16
WHOLE AGREEMENT, NO AMENDMENT
16.1
This Agreement constitutes the whole agreement between the Parties
relating to the subject matter of this Agreement and supersedes any other
discussions, agreements and/or understandings regarding the subject
matter of this Agreement.
16.2
No amendment or consensual cancellation of this Agreement and no
settlement of any disputes arising under this Agreement and no extension of
time, waiver or relaxation or suspension of or agreement not to enforce or to
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suspend or postpone the enforcement of any of the provisions or terms of
this Agreement shall be binding unless recorded in a written document
signed by the Parties (or in the case of an extension of time, waiver or
relaxation or suspension, signed by the Parties granting such extension,
waiver or relaxation).
17
GENERAL
17.1
To the extent permissible by law no Party shall be bound by any express or
implied or tacit term, representation, warranty, promise or the like not
recorded herein, whether it induced the contract and/or whether it was
negligent or not.
17.2
Any provision in this Agreement which is or may become illegal, invalid or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability and shall be severed from the balance of this Agreement,
without invalidating the remaining provisions of this Agreement.
17.3
This Agreement may be executed in several counterparts, each of which
shall together constitute one and the same instrument.
17.4
No part of this Agreement shall constitute a stipulation in favour of any
person who is not a party to the Agreement unless the provision in question
expressly provides that it does constitute such a stipulation.
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