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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 [email protected] (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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mailto:[email protected]

Table of Essentials: the essentials of this Shareholders' Agreement are determined by the table below.

1. Essential Point Answer

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!)

2. Effective Date of this Agreement

Choose one and delete the other:

The date of signature of the last party to sign the agreement

The following date:[INSERT]

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: [email protected].

3. Company name:

[INSERT] Proprietary Limited Pretty much self explanatory

4. Company Registration Number:

[INSERT] 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!)

5. Number of authorized shares

Number: [INSERT]

In words: [INSERT]

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. Number of issued shares

Number: [INSERT]

In words: [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.

7. Shareholding Shareholder A:

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]



Shareholder C:

Name: [INSERT]

Email: [INSERT]

Address: [INSERT]



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! [email protected].

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Shareholder D:

Name: [INSERT]

Email: [INSERT]

Address: [INSERT]



Shareholder E:

Name: [INSERT]

Email: [INSERT]

Address: [INSERT]



8. Initial Directors

The initial directors of the Company are:

Director 1:

Name: [INSERT]

ID or Passport Number: [INSERT]

Director 2:

Name: [INSERT]


Director 3:

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.

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Director 4:

Name: [INSERT]


Director 5:

Name: [INSERT]


9. Forced Sales Will there be any circumstances in which some Shareholders can force a shareholder to sell their shares?


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. [email protected].

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]

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: [email protected]

11. Come Along Will the "Come Along" clause apply? (In which case clause 6 will apply)


Answer: YesAnswer: No:

This is an important point, and a bit complicated.

A "Come Along" clause allows some shareholders to decide when ALL the shareholders must sell their shares.

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 accept such offer in respect of all their shares.

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 shareholders) would be able to block the sale.

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13. Tag Along Will the "Tag Along" clause apply? (In which case clause 7 will apply)



This is the opposite of the Come Along clause.

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.

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.

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?

What is the minimum amount of shares which the buyer must want to purchase?

This figure can be as low as you

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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.

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).

15. Corporate Opportunities 13

Will the Corporate Opportunities clause apply? (In which case clause 8 will apply)



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: _________________________




Signature for: Shareholder C

Signature: _________________________

Full Name: _________________________




Signature for: Shareholder D

Signature: _________________________

Full Name: _________________________



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Signature for: Shareholder E

Signature: _________________________

Full Name: _________________________




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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 a company or close corporation,

if its 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 the Auditors' charges shall be paid by the Company.

5.5 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 pre-

emptive 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




7.2 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




8.2 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 Error: Reference source not

found.

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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 That arbitration shall be held –

15.2.1 with only the Parties and their representatives present;

15.2.2 at Cape Town.

15.3 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

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of 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.

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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 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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