shareholders agr (basic) v1 pn 220906 clean 1694

Memorandum of Understanding

Shareholders Agreement

entered into and between

[Shareholder 1]

and

[Shareholder 2]

and

[Shareholder 3]

and

[Shareholder 4]

and

[Shareholder 5]

and

[Name of the company].

(Company)

DELETE

This Shareholders Agreement template is a basic shareholders agreement framework for a company. Extensive further provisions may be included if necessary for example: provisions regarding decision-making, transfer of shares, pre-emptive rights, drag-along and tag-along, restraints of trade, confidentiality provisions, valuation methods etc.

Care should be taken in deleting or adding clauses to ensure that clause references remain correct and that cross-references are also appropriately deleted/adjusted/amended.

TABLE OF CONTENTS

Page

31.PARTIES

32.RECORDAL

33.DEFINITIONS AND INTERPRETATION

34.SHARE CAPITAL OF THE COMPANY

35.DIRECTORS

36.LOANS AND FUNDING

37.BANK ACCOUNT AND SIGNING POWER

38.FINANCIAL ADMINISTRATION AND FINANCIAL STATEMENTS

39.DIRECTORS REMUNERATION AND DIVIDENDS

310.MANAGEMENT AND MEETINGS

311.BINDING NATURE OF THIS AGREEMENT AND ENDORSEMENT OF SHARE CERTIFICATES

312.INDEMNITY

313.ARTICLES OF ASSOCIATION OF COMPANY

314.COMPULSORY SHAREHOLDER RESIGNATION AND LIQUIDATION

315.VOLUNTARY RESIGNATION

316.DEATH OF A SHAREHOLDER

317.VALUATION OF SHARES AND LOAN ACCOUNTS

318.GENERAL OBLIGATIONS OF SHAREHOLDERS AND DIRECTORS.

319.DISPUTE RESOLUTION

320.JURISDICTION

321.MISCELLANEOUS

1. PARTIES

The parties to this shareholders agreement are -

1.1. [Shareholder 1];




1.5. [Shareholder 5]; and

1.6. [ABC] registration no.[(], a company duly incorporated in accordance with the company laws of the Republic of South Africa, with its registered office at [(](Company).

2. RECORDAL

It is recorded that -

2.1. the Shareholders are the holders of all the issued shares in the Company;

2.2. the Company conducts the Business as its core business, and the Shareholders hereby agree to operate the Company and conduct the Business in accordance with this Agreement;

2.3. the Shareholders in relation to their respective shareholding in and loan accounts against the Company agree as set out herein; and

2.4. [drafting note: further sub-clauses may be included which refer to joint venture/sale agreements, etc].

3. DEFINITIONS AND INTERPRETATION

3.1. In this Agreement, unless inconsistent with or otherwise indicated by the context the following words and expressions shall have the meanings set out opposite them:

Businessthe business of the Company which is to [insert business of the Company] in all facets thereof;

Companythe company referred to in clause 1.6 (Parties);

Companies Actthe Companies Act 61 of 1973, as amended;

Lawthe common law and any applicable Constitution, statute, by-law, proclamation, regulation, rule, notice, treaty, directive, code of practice, charter, judgment or order having force of law in South Africa, and any interpretation of any of them by any court or forum of law;

Partiesthe parties to this Agreement as contemplated in clause 1, and any reference to a Party shall refer to one of the relevant Parties as required by the context;

Shareholdersthe shareholders contemplated in clauses [1.1 to 1.5] (Parties);

Signature Datethe date of signature of this Agreement by the Party signing last; and

the/this Agreementthis shareholders agreement between the Parties.

3.2. This Agreement shall be interpreted according to the following provisions, unless inconsistent with or otherwise indicated by the context

3.2.1. the headings of clauses have been inserted for convenience only and shall not affect the interpretation of this Agreement;

3.2.2. any reference to one gender shall include the other gender and the neuter;

3.2.3. words in the singular number shall include the plural and vice versa;

3.2.4. references to a person shall include where the context so requires, an individual, firm, company, corporation, juristic person, local authority, and any trust, organisation, association or partnership, whether or not having separate legal personality;

3.2.5. words defined in a specific clause have the same meaning in all other clauses of this Agreement;

3.2.6. if any definition in this clause 3 (Definitions and interpretation) contains a substantive provision conferring rights or imposing obligations on any Party, effect shall be given to such provision as if it was a substantive provision in the body of this Agreement; and

3.2.7. the Parties agree that no provision or word used in this Agreement shall be interpreted to the disadvantage of either Party because that Party was responsible for or participated in the preparation or drafting of this Agreement or any part of it.

4. SHARE CAPITAL OF THE COMPANYUnless otherwise agreed between all the Shareholders, neither the authorised, nor the issued share capital of the Company shall be increased, reduced or otherwise changed, nor shall the rights attaching to any shares or class of shares be changed in any manner, except as set out herein.Any new shareholder shall only be admitted to the Company upon the approval of all Shareholders of such admission, which approval shall not be unreasonably withheld.The Parties agree that the Shareholders shall, as soon as possible after the Signature Date, hold the shareholding in the Company, as set out hereunder, which shall be achieved either by means of the transfer of shares already issued at the Signature Date, or by means of the issue of new shares in the Company, as soon as possible after the Signature Date, which transfer or issue of shares, as the case may be, shall be effected against payment of [the share value / nominal value] [adapt as necessary] to either the transferee or the Company, as the case may be:[Shareholder 1 [(%] shareholding].[Shareholder 2 [(%] shareholding].[Shareholder 3 [(%] shareholding].[Shareholder 4 [(%] shareholding].[Shareholder 5 [(%] shareholding].5. DIRECTORSEach of the Shareholders shall be a director of the Company, provided that a director shall be required to resign as director when he is disqualified in terms of the Statutes of the Company or the Companies Act to be a director or when a Party ceases to be a Shareholder.Each of the Shareholders shall be obliged to vote in favour of the appointment of every other Shareholder as director of the Company.The directors of the Company shall elect a chairperson, who shall not have a second or deciding vote on meetings of directors.The remuneration of the directors of the Company in their capacities as such, shall from time to time be determined by the Shareholders.6. LOANS AND FUNDINGThe capital needs of the Company (including both share capital and loan capital) from time to time shall be decided by all the Shareholders of the Company by means of a [unanimous / majority] decision.Any decision of the Shareholders to finance the capital requirements of the Company by means of loans by the Shareholders to the Company or by means of loans procured from financial institutions or other third parties shall be subject to a [unanimous / majority] decision of all Shareholders approving such loans at such terms and conditions as the Shareholders may unanimously approve. Any decision of the Shareholders to finance the capital requirements of the Company by means of loans procured from financial institutions or other third parties which are to be secured by suretyships or guarantees to be given by all the Shareholders for the benefit of such financial institution or other third party, shall be subject to a [unanimous / majority] decision of the Shareholders approving and requiring such suretyships. Such suretyships, guarantees or indemnities granted by the Shareholders, if approved as aforesaid, shall be subject to the provisions of clause 6.4 and 6.5 of this AgreementShould any Shareholder or Shareholders for whatever reason, including failure by the other Shareholders to approve any proposed Shareholders loans or loans from third parties to the Company as contemplated in clause 6.2, while the Company is in need of funds, and notwithstanding the provisions of clause 6.1 and 6.2, contribute more than his pro rata share of any shareholders loans to the Company, the amount of that excess outstanding from time to time shall -bear interest against the Company from the date on which it is advanced by the contributing Shareholder until the date of repayment to that Shareholder, at an annual rate equal the publicly quoted prime overdraft lending rate charged by the Companys bankers from time to time, unless the parties to such loan agree otherwise;be repaid by the Company to the contributing Shareholder before any other Shareholders' loans are repaid, or any dividends are declared to any Shareholder, unless the Shareholder or Shareholders who have contributed more than their pro rata share of loans to the Company, have agreed to a different arrangement in respect of the repayment or part-repayment of any such loans or the declaration of such dividends; andbe repayable on such terms as the contributing Shareholder and the Company have agreed to, and in the absence of any specific agreement to that effect, be repayable on demand.

6.1. If any suretyship, guarantee or indemnity is required of the Shareholders for the purposes of any loan to the Company or for the purpose of any transaction to be entered into by the Company, and provided that the same is also approved by the Shareholders as contemplated in clause 6.1 and 6.2, then the Shareholders shall bind themselves jointly and severally for this purpose on behalf of the Company unless otherwise agreed to by them in writing.

6.2. If any suretyship, guarantee or indemnity (which is approved as contemplated in clauses 6.1 and 6.2 is given on behalf of the Company by any one or more of the Shareholders but not by all the Shareholders, then the Shareholders shall be liable inter se in respect of such suretyship, guarantee or indemnity in proportion to their respective shareholding in the Company at the time of payment under the suretyship, guarantee or indemnity.

6.3. Subject to clause 6.3, none of the Shareholders shall be entitled to demand the repayment of shareholders loans by the Company to any Shareholder, without the consent of the other Shareholders.

6.4. Notwithstanding any other provisions of this Agreement, no Shareholder's shares or any portion thereof shall be ceded or transferred to anybody else without a proportionate share of that Shareholder's loan account against the Company being ceded to such other person and no Shareholder's loan account against the Company or any portion thereof shall be ceded to anybody else without transfer of that Shareholder's shares or proportionate part of such shares being transferred to such other person. The provisions of this clause 6.7 shall not apply to that portion of the loan account which is more than the Shareholders pro rata share of any loan to the Company, as contemplated in clause 6.3.

6.5. The provisions of 6.3 and 6.6 shall apply irrespective of the manner in which, or the reasons for the coming into being of a credit loan account.

6.6. Should any Shareholder have a debit loan account with the Company, such debit loan account shall, subject to any written agreement or [unanimous / majority] resolution by the Shareholders of the Company as contemplated in clauses 6.1 and 6.2, be repayable when such Shareholder ceases to be a Shareholder, and such amount shall at all times bear interest until the date of repayment at the rate contemplated in 6.3.1. Such debit loan account shall furthermore be payable by the Shareholder concerned on demand of the Company, unless the Company has approved any other terms and conditions to be applicable to such debit loan account.

6.7. The Shareholders may agree from time to time to lend and advance amounts to the Company on terms and conditions which may differ in any respect to the terms and conditions set out in this clause 6.

7. BANK ACCOUNT AND SIGNING POWER

7.1. All amounts received by or on behalf of the Company shall be paid into a bank account as determined by the directors and all payments, excluding payments of a petty cash nature shall be made from this account (the Company Bank Account).

7.2. All payments made by or on behalf of the Company, excluding payments of a petty cash nature, shall be made by means of a cheque drawn on the Company Bank Account or electronic transfer.

7.3. All cheques drawn on the Company Bank Account, must be signed by any 2 (TWO) directors, and any electronic transfer must be authorised by at least 2 (TWO) directors, unless the Shareholders decide otherwise, which decision may include an authority matrix in respect of agreements and payment authorisations which only require the signature of one of specifically designated directors.

7.4. Notwithstanding any provision to the contrary, the directors of the Company shall only be entitled to incur liabilities and make payments on behalf of the Company in accordance with the Company's approved budget as determined by the Shareholders from time to time. The Shareholders may also from time to time approve an authority matrix authorising specific directors to act on behalf of and bind the Company in respect of specific categories of transactions.

8. FINANCIAL ADMINISTRATION AND FINANCIAL STATEMENTSThe Company shall keep such books and records of all transactions, dealings and affairs of the Company as the directors may from time to time determine and require, and all transactions of the Company shall be recorded in accordance with generally accepted accounting practice.The books and records contemplated in clause 8.1 -shall be kept by the Companys auditors or on the property where the main business of the Company is conducted;are accessible at all times to each Shareholder; andmay be, upon a Shareholder ceasing from being a shareholder of the Company, insofar as he or she still has an interest thereto, perused under supervision of a Shareholder or representative of the Company, by the former Shareholder, the executor of his estate where applicable, or an attorney or auditor authorised thereto in writing.The directors must ensure, as soon as possible after the end of each financial year, the final statements of the Company are prepared in accordance with generally accepted accounting practice by the auditors of the Company.The financial year of the Company shall commence on [(] of each year and shall end on the last day of [(] of the following year.The auditors shall, as soon as possible after the end of the financial year of the Company, prepare financial statements for the Company and present them to the Shareholders for their approval. A copy of the financial statements must be supplied to each Shareholder as soon as possible after the statements have been finalised, and after it has been approved as contemplated in this clause 8.5, it will be final and binding on all the Shareholders of the Company, unless a Shareholder has given notice of a mistake as contemplated in clause 8.6, in which instance the provisions of clauses 8.6 shall apply.If any Shareholder is of opinion that mistakes have occurred in the financial statements of the Company, such Shareholder shall be entitled to, within 1 (ONE) month after receiving a copy of the financial statements, by means of a written notice which sets out the mistake and the intended amendment, bring the mistake under the attention of the other Shareholders and the auditors of the Company. If such mistake is the subject of a dispute between the Shareholders, such dispute may be referred by any Shareholder for arbitration in terms of clause 19 (Dispute Resolution) within 7 (SEVEN) days from the date such Shareholder has given notice as contemplated in this clause 8.6.The financial statements shall be final and binding on all the Shareholders as soon as they are accepted as correct as contemplated in clause 8.5 or if no notice of a mistake was given in terms of 8.6. If notice was given in terms of clause 8.6, the financial statements will become final after the amended financial statements are approved, for which purpose the provisions of clauses 8.5 and 8.6 shall again mutatis mutandis apply, or in the absence of agreement, after and in accordance with the final settlement of the dispute in terms of clause 19 (Dispute Resolution), provided the dispute was referred for arbitration within the 7 (SEVEN) days period referred to in clause 8.6.9. DIRECTORS REMUNERATION AND DIVIDENDSThe remuneration of directors of the Company (and any criteria used to determine performance and other bonuses payable to directors) shall from time to time be determined by a [normal majority / unanimous] vote of Shareholders.The dividend policy of the Company shall from time to time be determined by a [normal majority / unanimous] vote of Shareholders.

[Optional clauses]

Notwithstanding any provision to the contrary contained in this Agreement, all the Shareholders involved in the Business of the Company, whether in the capacity as employee or director of the Company, are entitled to reasonable compensation for services rendered. The refusal or failure by the Company to reasonably remunerate or compensate a Shareholder may be referred to dispute resolution by the Shareholder so affected in terms of clause 19 (Dispute Resolution), and for which purposes the arbitrator shall be compelled to take into account the amount of such Shareholder's contribution to the Business of the Company, and specifically to take into account the financial and cash flow position of the Company, when making his/her decision.10. MANAGEMENT AND MEETINGSAll resolutions of directors and Shareholders meetings shall be adopted by a normal majority vote unless a unanimous vote of Shareholders or directors (as the case may be) in favour of any such resolution is required in terms of this Agreement, calculated in terms of shareholding of those directors or Shareholders present at a meeting complying with the relevant quorum requirements.10.1. A quorum for a meeting of directors or Shareholders of the Company shall be constituted by directors or Shareholders holding at least [(] % of the issued ordinary shares in the Company and which shareholding accordingly represents [(] % of all voting rights in respect of the Company.Insofar as any of the provisions of this Agreement require that a decision by the Shareholders shall be taken by a prescribed majority of all the Shareholders, or requires the unanimous consent of all Shareholders, as the case may be, this shall be interpreted to mean all Shareholders and not only those Shareholders present at a meeting which complies with the quorum requirements as set out in 10.2. Any other decision of Shareholders referred to in this Agreement, will be taken as set out in 10.1, unless specifically provided otherwise.Unless otherwise provided in terms of this Agreement, the provisions of the Companies Act shall apply in respect of all meetings held by Shareholders or directors of the Company, including but not limited to, the postponement of any meeting to obtain a quorum, notices, agendas and minutes of meetings.The Shareholders shall, subject to any provision to the contrary in the Companies Act, be entitled to meet by means of any form of distant communication, including telephone, fax, electronic communication or otherwise.11. BINDING NATURE OF THIS AGREEMENT AND ENDORSEMENT OF SHARE CERTIFICATESNo transfer of shares in the Company shall be effected before such transferee binds himself in writing to the terms and conditions of this Agreement.

11.1. Notwithstanding any provision to the contrary, this Agreement binds the Shareholders and the Company and shall remain binding, notwithstanding any change in each of the Shareholders respective shareholding in the Company, after Signature Date.

11.2. The Parties agree, if requested by any of the Shareholders, that the share certificates in respect of all shares in the Company shall be endorsed as follows:

"The shares are subject to the provisions of the shareholders agreement of the Company from time to time, and lodged with the Company's auditors."

11.3. In order to ensure compliance with the provisions of this Agreement -

11.3.1. the Shareholders shall be obliged to have their share certificates endorsed by the Company in the manner contemplated in 11.3 if requested by any Shareholder as contemplated in clause 11.3;

11.3.2. each Shareholder shall be obliged to lodge the share certificates in respect of its shares with the auditors of the Company, in trust; and

11.3.3. a copy of this Agreement shall be lodged with the Company's auditors, where it shall be available for inspection by any Shareholder or his/her nominee, during business hours.

12. INDEMNITY

12.1. Should any Shareholder cease to be a shareholder of the Company (the Outgoing Shareholder), then the remaining Shareholders (the Remaining Shareholders) shall be compelled to take all steps that may be required to ensure that the Outgoing Shareholder (or his deceased estate if applicable) is released from all liability with relation to any suretyship, guarantee or any other act whereby security was given on behalf of the Company for the benefit of any person for any liability of the Company, and if such steps do not cause such release, the Remaining Shareholders hereby indemnify the Outgoing Shareholder against such liability, unless the Outgoing Shareholder ceased to be a shareholder as a result of the circumstances contemplated in clause 14.1.3.

12.2. The Outgoing Shareholder hereby indemnifies the Remaining Shareholders and the Company against any claim, loss or damage which may be instituted or claimed against the Remaining Shareholders and/or the Company to the extent that any negligent act performed by the Outgoing Shareholder (or performed in his capacity as director of the Company, [or an act performed by a director who was nominated to the Board of Directors by the Outgoing Shareholder in terms of this Agreement]) has caused such claim, loss or damage, but excluding any act which was performed prior to the Outgoing Shareholder ceasing to be a shareholder of the Company in respect of -

12.2.1. agreements entered into with the approval of the other Shareholders, directors or the Company, or entered into within the scope of and in accordance with the provisions of this Agreement, or any act performed in the normal course of the Business of the Company provided that such act was not performed in a way which is contrary to the provisions of this Agreement; and

12.2.2. claims in respect of which the Company had insurance, up to the amount of compensation paid pursuant to such insurance.

12.3. The Company indemnifies each Shareholder in his/her capacity as employee of the Company in respect of expenses incurred by such Shareholder as employee -

12.3.1. in the proper and normal conducting of the Business of the Company; and

12.3.2. in respect of anything done to preserve the business or property of the Company,

provided that such expenses were not incurred in a manner contrary to the provisions of this Agreement.

12.4. Each Shareholder hereby indemnifies the other Shareholders and the Company against any liability, loss, damage or costs with relation to or as a result of a conscious transgression by such Shareholder (including in his/her capacity as director of the Company, [or in respect of conduct by a director nominated by the indemnifying Shareholder in terms of this Agreement]) of the Companies Act, or resulting from the reckless or negligent management or conducting of the business of the Company by such Shareholder or director, or resulting from a breach of any of the provisions of this Agreement by such Shareholder or director.

13. ARTICLES OF ASSOCIATION OF COMPANY

13.1. The provisions of this Agreement shall, as between the Parties hereto, take precedence over the provisions of the Articles of Association of the Company and shall bind all the Parties' successors in title.

13.2. To the extent that any provisions of the Articles of Association of the Company contradict with the provisions of this Agreement-

13.2.1. any of the Parties may require the Articles of Association of the Company to be amended accordingly; and

13.2.2. the Parties shall vote in favour of all resolutions of the Company necessary to so amend the Articles of Association of the Company.

14. COMPULSORY SHAREHOLDER RESIGNATION AND LIQUIDATIONA Shareholder [(which shall for purposes of this clause 14 include also the director of Shareholder nominated by such Shareholder)] shall be obliged to resign as employee and director of the Company and sell his/her shares in and loan accounts against the Company to the other Shareholders of the Company if -the Shareholder is guilty of misconduct which violates the highest degree of good faith and trust between the Shareholders and/or the Company;

14.1.1. the Shareholder is convicted of a criminal offence of which fraud or dishonesty is an element;

14.1.2. a Shareholder who is a natural person and who is obliged to also be a director of the Company in terms of this Agreement or any applicable legislation, is disqualified from being a director;

14.1.3. the Shareholder being in breach of a material provision of this Agreement and failing to remedy such breach after being notified to that effect by the Company, or being in breach of this Agreement which is of such a nature that the other Shareholders can deduce therefrom that the Shareholder cannot or will not adhere to the provisions of this Agreement;

a Shareholder becomes permanently medically unfit to perform his/her duties as employee and Shareholder of the Company and to make a substantial contribution to the Business of the Company (which condition, upon failure to reach agreement on whether or not such Shareholder is in fact medically unfit, shall be determined by a medical practitioner appointed by the Company, or where such appointment is disputed, appointed in terms of clause 19 (Dispute Resolution), or is declared as such by a competent court), with effect from the first calendar day of the calendar month following the calendar month in which it was agreed or found such Shareholder is medically unfit; ora Shareholder reaches the age of 65 (SIXTY FIVE) in which event he/she shall also cease to be a director of the Company with effect from the last calendar day of the financial year of the Company in which such Shareholder became 65 (SIXTY FIVE); or

[optional]

the majority of all the Shareholders of the Company resolves and approves any other agreement between the Shareholders and/or the Company, that all the shares held by a particular Shareholder or Shareholders in the Company (the Outgoing Shareholder(s)) are to be acquired by the other Shareholders (the Remaining Shareholders) and accordingly requires the resignation of the Outgoing Shareholder(s) as director(s) of the Company, with effect from the first calendar day of the calendar month following the calendar month in which the resolution contemplated in this clause 14.1.3 has been passed.If a Shareholder or Shareholders are obliged to sell their shares and resign as director and employee of the Company (the Outgoing Shareholder), as contemplated in clause 14.1 such Shareholders shall be deemed to have offered their total interest in the Company, including all loan accounts which such Shareholders may have against the Company, for sale to the remaining Shareholders of the Company (the Remaining Shareholders) at a purchase price determined in accordance with and such other terms and conditions as contemplated in clause 17 (Valuation of shares and loan accounts). 15. VOLUNTARY RESIGNATIONAny Shareholder ("the Retiring Shareholder") may at any time retire from the service of the Company with at least [(] calendar months prior written notice to the other Shareholders ("the Remaining Shareholders") or the Company, in which event the Retiring Shareholder shall be deemed to have offered his/her shares in and loan accounts against the Company for sale to the Remaining Shareholders and shall be deemed to have resigned as a director of the Company in accordance with this clause 15 with effect from the first calendar day of the calendar month following the calendar month in which he or she has give notice in terms of this clause 15.1.The Remaining Shareholders are, in the instance contemplated in clause 15.1, obliged to purchase the Retiring Shareholders shares in the Company at a purchase price determined in accordance with and such other terms and conditions contemplated in clause 17 (Valuation of shares and loan accounts), subject to any other agreement between the Shareholders inter se (or only some of them) and/or the Company. The Remaining Shareholders shall be entitled to only acquire the Outgoing Shareholders shares in the Company without acquiring his or her loan accounts against the Company, as they may decide in their discretion, in which event the loan accounts shall be dealt with in accordance with the provisions of clause 17 (Valuation of shares and loan accounts). 16. DEATH OF A SHAREHOLDERUpon the death of any Shareholder ("the Deceased Shareholder"), the Deceased Shareholder shall be deemed to have, simultaneously with his/her death, offered his/her entire shareholding in and loan accounts against the Company for sale to the Remaining Shareholders with effect from the first calendar day of the calendar month following the calendar month in which the Deceased Shareholder passed away. For the purpose of the purchase contemplated in clause 16.1, the provisions of clause 15 (Voluntary resignation) shall apply mutatis mutandis, subject thereto that any reference to the Retiring Shareholder shall be deemed to be a reference to the executor of the Deceased Shareholders estate.17. VALUATION OF SHARES AND LOAN ACCOUNTSThe purchase price of the shares of the Company and Shareholders loan accounts for purposes of clause 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) and 16 (Death of a Shareholder) shall be -in respect of shares, the value which is determined by means of a [unanimous/majority] resolution adopted by all Shareholders, and in the absence whereof the value of the shares of the Company shall be the net asset (market) value thereof [including goodwill]; andin respect of loan accounts, the book value thereof.The purchase price of the shares for purposes of clause 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) and 16 (Death of a Shareholder) shall, unless the Shareholders inter se and/or the Company have agreed otherwise, be payable in 60 (SIXTY) equal monthly instalments (including capital and interest), of which the first instalment shall be payable on or before the last day of the calendar month in which the sale of the relevant shares in the Company takes effect as provided in terms of clauses 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) or 16 (Death of a Shareholder) as the case may be, and thereafter monthly on or before the last day of each consecutive calendar month. The outstanding capital amount from time to time shall bear interest at an annual rate equal to the prime overdraft lending rate from time to time charged by the Company's bankers, minus [(]%, calculated from the first day of the calendar month during which the first instalment is payable until the capital amount has been settled in full.In the event of a Shareholders shares being acquired by the Remaining Shareholders in terms of clauses 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) or 16 (Death of a Shareholder) without the Remaining Shareholders also acquiring such Shareholders credit loan account against the Company as contemplated in clauses 14 (Compulsory Shareholder resignation and liquidation), 15 (Voluntary resignation) or 16 (Death of a Shareholder) as the case may be, then such loan shall be repayable by the Company to such Shareholder on or before expiry of the 60 (SIXTY) month period referred to in clause 17.2 and it shall bear interest as contemplated in clause 6.3.1 (Loans and funding). The interest shall be payable on or before the last day of a calendar month for the duration of the loan.18. GENERAL OBLIGATIONS OF SHAREHOLDERS AND DIRECTORS.

18.1. Each Shareholder/director (as the context requires) shall -

18.1.1. present immediately, if so requested, a full and accurate record of all business, transactions or affairs of the Company or which have bearing on the Company, with which that Shareholder is or was involved;

18.1.2. avoid a conflict of interest with the Company, and shall immediately disclose any conflict of interest with the Business of the Company or the Company itself, to the other directors;

18.1.3. at all times act towards his fellow Shareholders and the Company with the highest degree of good faith and integrity;

18.1.4. regard all aspects and matters in relation to the Companys Business, including any documentation in which the Company may have an interest, and specifically with regard to clients of the Company, as confidential and that the publication thereof to third persons, with the exclusion of the Companys auditors, may substantially harm the Company, with the exclusion of documents and information which is public knowledge or with regard to matters, the publication of which has been authorized by the directors of the Company.

18.2. No Shareholder/director (as the context may require) shall -

18.2.1. bind the Company as surety, issue any guarantee on behalf of the Company or indemnify any person by the Company;

18.2.2. allow anything to happen which results in the Companys property being seized;

18.2.3. cede, pledge or in any way burden or allow any of the assets of the Company to be burdened; and/or

18.2.4. alienate his/her shares in and loan accounts against the Company, otherwise than in accordance with the provisions of this Agreement,

without the prior consent of all Shareholders by means of a decision taken at a Shareholders meeting.

19. DISPUTE RESOLUTION

19.1. In the event of any dispute or difference arising amongst the Parties with regard to the interpretation, implementation or enforcement of this Agreement, or as to whether or not this Agreement has been terminated or is void or voidable and/or any other difference or dispute relating to or arising from this Agreement or the enforcement thereof, then such dispute or difference will be referred to arbitration before an arbitrator appointed by and in accordance with such rules and procedures of arbitration as may be determined by and in accordance with the Arbitration Foundation of Southern Africa ("the Arbitration Foundation"), provided that the arbitrator appointed by the Arbitration Foundation must be permanently residing in [insert city/town].

19.2. Notwithstanding anything to the contrary or stipulated by the Arbitration Foundation, the arbitration will be held in [insert city/town] with a view to achieving an expeditious result and the arbitration will be conducted in camera, the Parties and the participants in the arbitration being obliged to maintain the utmost confidentiality with regard to all matters relating thereto or arising therefrom, save as otherwise expressly and peremptorily required by Law.

19.3. Notwithstanding the provisions of this clause 19 (Dispute Resolution), any Party shall be entitled to approach a competent court of law having jurisdiction to obtain any urgent relief which may be required by such Party

20. JURISDICTIONThe Parties consent to the jurisdiction of the [insert Province] Provincial Division of the High Court with regard to any matter which may be referred to a court of law in terms of this Agreement.21. MISCELLANEOUS

21.1. No Party shall, without the prior written approval of the other Parties assign, cede, delegate, transfer or otherwise dispose of any right or obligation under this Agreement to any other person.

21.2. No provision of this Agreement (including, without limitation, the provisions of this clause) may be amended, substituted or otherwise varied, and no provision may be added to or incorporated in this Agreement, except (in any such case) by an Agreement in writing signed by the duly authorised representatives of the Parties.

21.3. Any relaxation, indulgence or delay (collectively referred to as Indulgence) by either Party in exercising, or any failure by either Party to exercise, any right under this Agreement shall not be construed as a waiver of that right and shall not affect the ability of that Party subsequently to exercise that right or to pursue any remedy, nor shall any Indulgence constitute a waiver of any other right (whether against that Party or any other person).

21.4. The waiver of any right under this Agreement shall be binding on the waiving Party only to the extent that the waiver has been reduced to writing and signed by the duly authorized representative(s) of the waiving Party.

21.5. This Agreement supersedes all prior representations, communications, negotiations and understandings between the Parties concerning the subject matter of this Agreement.

21.6. Whenever possible, each provision of this Agreement shall be interpreted in a manner which makes it effective and valid under applicable Law, but if any provision of this Agreement is held to be illegal, invalid or unenforceable under applicable Law, that illegality, invalidity or unenforceability shall not affect the other provisions of this Agreement, all of which shall remain in full force.

21.7. This Agreement may be executed in any number of identical counterparts, all of which when taken together shall constitute one Agreement. Any single counterpart or a set of counterparts taken together which, in either case, are executed by the Parties shall constitute a full original of this Agreement for all purposes.

21.8. All notices and any other communications whatsoever (including, without limitation, any approval, consent, demand, query or request) by either Party in terms of this Agreement or relating to it shall be given in writing, and shall be sent by registered post, or delivered by hand, or transmitted by facsimile or electronic mail to the recipient Party at its relevant address set out below:

21.8.1. if to [x], at:

Address:

Postal address:

Facsimile number:

Electronic mail address:

Marked for the attention of:

21.8.2. if to [x], at:

Address:

Postal address:

Facsimile number:



21.8.3. if to [x], at:

Address:

Postal address:

Facsimile number:



21.8.4. if to [x], at:

Address:

Postal address:

Facsimile number:



21.8.5. if to [x], at:

Address:

Postal address:

Facsimile number:



21.9. Either Party may, by written notice to the other Party, change any of the addresses at which, or the designated person for whose attention those notices or other communications are to be given.

21.10. Any notice or other communication given by any Party to the other Party which

21.10.1. is sent by registered post to the addressee at its specified address shall be rebuttably presumed to have been received by the addressee on the 7th (SEVENTH) day after the date of posting; or

21.10.2. is delivered by hand during the normal business hours of the addressee at its specified address shall be rebuttably presumed to have been received by the addressee at the time of delivery; or

21.10.3. is transmitted by facsimile copier to the addressee at the addressees specified facsimile number shall be rebuttably presumed to have been received by the addressee on the date of transmission as indicated on the senders facsimile transmission report; or

21.10.4. is transmitted by electronic mail to the addressee at the addressees specified electronic mail address shall be rebuttably presumed to have received by the addressee on the date of transmission as reflected on the senders electronic mail records.

21.11. The Parties choose their respective physical addresses in clause 21.8 as their respective domicilia citandi et executandi at which all documents relating to any legal proceedings to which they are a party may be served. If that address is changed to another address which is not a physical address in the Republic of South Africa, then the original address shall remain the domicilium citandi et executandi of the relevant Party until it nominates a new physical address within the Republic of South Africa in writing, to be its new domicilium citandi et executandi.

21.12. The Parties agree to perform, or procure the performance, of all further things, and execute and deliver (or procure the execution and delivery) of all further documents, as may be required by Law or as may be desirable or necessary to implement or give effect to this Agreement and the transactions contemplated therein.

Thus done and signed at..........................................on this............day of............................20..........

As witnesses:

________________________________For and on behalf of

[SHAREHOLDER 1]

by

________________________________

_____________________________

who warrants his/her authority hereto


As witnesses:


[SHAREHOLDER 2]

by

________________________________

_____________________________



As witnesses:


[COMPANY]

by

________________________________

_____________________________


This section may need to be amended where a Shareholder is another entity, or a different regime is required.

This provides for the adoption of a decision or authority matrix in terms of which decision-making, protective provisions and authorities can be dealt with from time to time.

Insert if applicable.

Insert if applicable.

Insert only if applicable. May need amendments for designated directors who are not Shareholders.

Other more detailed methods of valuation may be included.

Different repayment terms may be included.

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Documents

company laws

companythe company

relevant parties

parties signature dat

core business

businessthe business

valuation of shares

force of law