SALE OF SHARES AGREEMENT
Between / Amongst
[______]
and
[______]
Table of Contents
Error! No table of contents entries found.
Page 2.
[Note: * clause to be used when acting for Seller
** clause to be used when acting for Purchaser]
SALE OF SHARES AGREEMENT
1. PARTIES
1.1 ……………………………………
1.2 ……………………………………
1.3 ……………………………………
2. INTERPRETATION
2.1 The headnotes to the clauses of this Agreement are for reference purposes only and shall in no way govern or affect the interpretation of nor modify nor amplify the terms of this Agreement nor any clause hereof.
2.2 Unless inconsistent with the context, the words and expressions set forth below shall bear the following meanings and cognate expressions shall bear corresponding meanings:
“the Act” / the Companies Act, No. 61 of 1973, as amended“Agreement” / this sale of shares agreement
“Business Day” / any day other than a Saturday, Sunday or official public holiday
“the Claims” / the total amount owing by the Company to the Seller on any account whatsoever at the closing date
“the Company” / ………… (Registration No. ……………)
“the Company’s Pension Fund” / …………………………………….
“the Closing Date” / …………….. Business Days after [the fulfilment of the conditions set out in clause 4]
“the Effective Date” / ………………………..
“the Financial Statements” / the audited consolidated financial statements of the Company as at the Effective Date
“the Net Asset Value” / the total amount of the share capital, distributable and non-distributable reserves of the Company as reflected in the Financial Statements
“Party” or “Parties” / the Seller, the Purchaser and …………., or if the context so requires, one or more of them
“the Prime Rate” / the lowest overdraft rate charged by …………………….. on unsecured overdraft to its first class commercial and industrial customers as certified by any manager of such bank from time to time, whose appointment it shall not be necessary to prove
“the Purchaser” / ……………………..
“the Purchaser’s Auditors” / …………………………..
“the Purchaser’s Pension Fund” / …………………………..
“the Seller” / ………………………….
“the Seller’s Auditors” / ……………………………
“the Seller’s Pension Fund” / ………………………………
“the Shares” / ………………shares of ……..each, fully paid up, in the issued share capital of the Company, comprising …..% of the total issued share capital of the Company
“the Signature Date” / the date of last signature of this Agreement
“the Subsidiaries” / …………………………..
2.3 If any provision in a definition is a substantive provision conferring rights or imposing obligations on either Party, notwithstanding that it is only in the definition clause, effect shall be given to it as if it were a substantive provision of this Agreement.
2.4 Unless inconsistent with the context, an expression which denotes:
2.4.1 any one gender includes the other gender;
2.4.2 a natural person includes an artificial person and vice versa; and
2.4.3 the singular includes the plural and vice versa.
2.5 The schedules to this Agreement form an integral part hereof and words and expressions defined in this Agreement shall bear, unless the context otherwise requires, the same meaning in such schedules.
2.6 When any number of days is prescribed in this Agreement, same shall be reckoned inclusively of the first and exclusively of the last day unless the last day falls on a day which is not a Business Day, in which case the last day shall be the immediately following Business Day.
2.7 In the event that the day for payment of any amount due in terms of this Agreement should fall on a day which is not a Business Day, then the relevant date for payment shall be the following Business Day.
2.8 Where figures are referred to in numerals and in words, if there is any conflict between the two, the words shall prevail.
2.9 Where any term is defined within the context of any particular clause in this Agreement, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear the same meaning as ascribed to it for all purposes in terms of this Agreement, notwithstanding that that term has not been defined in this interpretation clause.
2.10 Any reference to an enactment in this Agreement is to that enactment as at the Signature Date and as amended or re-enacted from time to time.
2.11 The rule of construction that the contract shall be interpreted against the Party responsible for the drafting or preparation of the Agreement, shall not apply.
2.12 The expiration or termination of this Agreement shall not affect such of the provisions of this Agreement as expressly provide that they will operate after any such expiration or termination or which of necessity must continue to have effect after such expiration or termination, notwithstanding that the clauses themselves do not expressly provide for this.
3. INTRODUCTION
3.1 The Seller is the beneficial owner of the Shares and the Claims and is entitled to dispose of same.
3.2 The Seller wishes to sell and the Purchaser wishes to purchase the Shares and the Claims upon the terms and conditions contained in this Agreement.
4. CONDITIONS PRECEDENT
4.1 This entire Agreement, save for clauses 1, 2, 3, 4 and 21 to 29 inclusive, is subject to the fulfilment of the following conditions precedent by not later than ...... , or such later date as the parties may agree in writing:
4.1.1 the consent insofar as it may be necessary, of the relevant exchange control authorities of the Republic of South Africa, for the parties to perform their respective obligations in terms of this Agreement;
4.1.2 the approval, insofar as it may be necessary in law and/or required by any stock exchange on which the Shares of either the Purchaser or the Seller are listed, and of the shareholders of the Purchaser and/or the Seller to enable the terms and conditions of this Agreement to be carried into effect;
4.1.3 the approval of the Competition Commission to the transaction set out in this Agreement by issuing a clearance certificate, as envisaged in terms of Section 14(1)(b)(i) of the Competition Act, 1998 (Act No. 89 of 1998) (“the Competition Act”), or the Competition Commission shall be deemed to have approved the transaction set out in this Agreement in terms of Section 14(2) of the Competition Act;
4.1.4 written confirmation from ...... that it has approved the changes of shareholding in the Company envisaged by this Agreement and that such changes shall not affect in any way any of the terms of any of its arrangements with the Company or its shareholders;
4.1.5 the Purchaser is satisfied, and shall have notified the Seller in writing, that its due diligence investigations of the affairs of the Company provided for in clause 10 shall not have disclosed anything that would lead a reasonable purchaser, finding itself in the position of the Purchaser, to the conclusion that it could no longer conclude the transactions contemplated in this Agreement, whether on terms and conditions, including but not restricted to the amount of the purchase price, set out in this Agreement or at all;
4.1.6 the approval of the shareholders in general meeting to the provisions of this Agreement in terms of Section 228 of the Act;
4.1.7 written confirmation from ...... of the waiver of its pre-emptive rights in respect of the Shares and Claims.
[Note: Amend conditions precedent as required.]
4.2 The Parties shall use reasonable commercial endeavours to procure the fulfilment of these conditions precedent as soon as reasonably possible after the Signature Date. If all of these conditions precedent are not fulfilled by the date specified in clause 4.1 of this Agreement (save for clauses 1, 2, 3, 4 and 21 to 29 inclusive which shall remain of full force and effect) shall be of no force or effect and no Party shall have any claim against any other party for anything done hereunder or arising hereout.
4.3 The conditions contained in clause 4.1 are for the benefit of ...... and may be waived in its discretion by written notice to the other Parties to this effect to be received by no later than the date referred to in 4.1 whereupon such conditions shall be deemed to be fulfilled. [Note: Determine with reference to nature of each condition precedent. Same may only be waived by mutual consent.]
5. PURCHASE OF THE SHARES AND THE CLAIMS
The Seller hereby sells to the Purchaser which hereby purchases the Shares and Claims with effect from the Effective Date.
6. PURCHASE PRICE
6.1 The purchase price payable by the Purchaser to the Seller for the Shares and the Claims shall be a sum equal to ………………..
6.2 The purchase consideration shall be allocated as to an amount equal to the face value of the Claims to the Claims and the balance to the Shares.
7. PAYMENT OF THE PURCHASE PRICE
The purchase price shall be paid by the Seller to the Purchaser on the Closing Date free of transfer costs at [Johannesburg].
Alternatively
[to be used if the price is subject to adjustment.]
7.1 An amount of R...... of the purchase price shall be paid by the Purchaser to the Seller on the Closing Date on the basis that subject to clauses 7.2 and Error! Reference source not found., within 7 days after the preparation, signature and delivery to the Purchaser of the Financial Statements:
7.1.1 if the [net asset value/profit after tax] is more than R…………….., then the purchase price shall be increased by R……………… and the Purchaser shall pay the balance thereof to the Seller together with interest on such balance from the Closing Date to date of payment at the Prime Rate; and
7.1.2 if the [net asset value/profit after tax] is less than R………………, then the purchase price shall be decreased by R………………. and the Seller shall refund the excess to the Purchaser together with interest thereon from the Closing Date to date of payment at the Prime Rate.
The abovementioned payments shall be made free of transfer costs at [Johannesburg].
7.2 If a dispute should arise between the Seller and the Purchaser (or their respective auditors) in regard to the Financial Statements, then an amount equal to the amount in dispute as certified by the Seller’s Auditors in terms of clause 9.5.2 shall be paid by the Purchaser or the Seller (as the case may be) to a firm of attorneys nominated by the Seller for that purpose which firm shall hold such amount in trust in terms of Section 78(2A) of the Attorneys Act:
7.2.1 as a stakeholder for the benefit of the Parties, depending on who becomes entitled thereto, and as agent of neither;
7.2.2 for the release to the Seller or repayment to the Purchaser (as the case may be) in full or in part in accordance with the terms of any competent order made for the determination of the dispute or any settlement agreement between the Parties in that regard.
7.3 The attorney referred to in clause 7.2 is hereby authorised and instructed to invest any amounts paid in terms of this clause 7 in a [call] account with the ...... Bank for the benefit of the Party ultimately entitled to the capital sum so invested in terms of Section 78(2A) of the Attorneys Act.
8. SECURITY
[Clause usually only necessary if payment of price deferred.]
8.1 * All the obligations of the Purchaser hereunder shall be secured in the following manner:
8.1.1 by its signature to this Agreement, ...... hereby binds itself as surety for and co-principal debtor in solidum with the Purchaser for all the obligations of the Purchaser in terms of this Agreement (including claims for damages); and for this purpose hereby renounces the benefits of excussion, division, de duobus vel pluribus reis debendi, non numeratae pecuniae, non causa debiti, revision of accounts and no value received with the meaning and effect of which it is acquainted;
8.1.2 the Purchaser shall, on the Closing Date, be deemed to have executed a pledge of the Shares in the form of Schedule .... hereto.
8.2 ** All the obligations of the Seller hereunder shall be secured by the signature of ……………….to this Agreement, which hereby binds itself as surety for and co-principal debtor in solidum with the Seller for all the obligations of the Seller in terms of this Agreement (including claims for damages); and for this purpose hereby renounces the benefits of excussion, division, de duobus vel pluribus reis debendi, non numeratae pecuniae, non cause debiti, revision of accounts and no value received with the meaning and effect of which it is acquainted.
9. THE FINANCIAL STATEMENTS
9.1 The Seller shall procure that the Financial Statements are prepared and certified by the Seller’s Auditors, and that a signed certified set of the Financial Statements shall be delivered to the Purchaser by no later than ………...... or such later date as may be mutually agreed in writing.
9.2 On ...... stock shall be taken for the Financial Statements to determine the physical quantities of the Company’s stock (including work-in-progress and stock in transit) as at the Effective Date. The procedures to be followed thereat shall be determined by the Seller’s Auditors provided that arrangements shall be made so that representatives of the Seller and the Purchaser and their respective Auditors may be present if they wish to be so present.