This Agreement is
made as of this ………………… day of ……………………,
2005
BETWEEN:
1. [ ]
(Company Number [
]), a private company incorporated with limited liability in the
Republic of Kenya for the purposes hereof of Post Office Box Number [ ], Nairobi, Kenya (hereinafter called
“Shareholder A” which expression shall, where the context so requires, include
Shareholder A’s permitted successors in title and permitted assigns);
2. [ ]
(Company Number [
]), a private company incorporated with limited liability in the
Republic of Kenya for the purposes hereof of Post Office Box Number [ ], Nairobi, Kenya (hereinafter called
“Shareholder B” which expression shall, where the context so requires, include Shareholder
B’s permitted successors in title and permitted assigns);
3. [ ]
(Company Number [
]), a private company incorporated with limited liability in the
Republic of Kenya for the purposes hereof of Post Office Box Number [ ], Nairobi, Kenya (hereinafter called
“Shareholder C” which expression shall, where the context so requires, include
Shareholder C’s permitted successors in title and permitted assigns);
4. [ ]
(Company Number [
]), a private company incorporated with limited liability in the
Republic of Kenya for the purposes hereof of Post Office Box Number [ ], Nairobi, Kenya (hereinafter called
“Shareholder D” which expression shall, where the context so requires, include
Shareholder D’s permitted successors in title and permitted assigns); and
5. xxxxxxxxxxxxxxx LIMITED (Company Number 97635), a
private company incorporated with limited liability in the Republic of Kenya
for the purposes hereof of Post Office Box Number [ ], Nairobi, Kenya (hereinafter called
the “Company” which expression shall, where the context so requires, include
the Company’s successors in title and assigns).
WHEREAS:
(A) As
at the date hereof, Shareholder A, Shareholder B, Shareholder C and Shareholder
D each hold 25% of the shares in the capital of the Company representing the
entire issued share capital of the Company.
(B) The
Shareholders agree to jointly develop the Business through the Company.
(C) The
Shareholders have entered into this Agreement for the purposes of recording and
regulating their relationship, rights and obligations as, inter alia,
Shareholders in the Company with the intention that the terms of this Agreement
will also regulate the relation of all subsequent Shareholders and the Company
has agreed to enter into this Agreement to give and receive the benefit of
undertakings on its part hereinafter contained.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
AND INTERPRETATION
1.1 In
this Agreement (including its recitals and the Schedules), unless the context
otherwise requires, the following terms shall have the following meanings:
1.1.1
“Act” means the Companies Act (Chapter 486, Laws of
Kenya);
1.1.2 “Annual Budget”
means the annual budget of the Company for a particular financial year which
shall include, without limitation, the anticipated amount of the working
capital required to carry on the business of the Company in that financial
year, detailed quarterly revenue forecasts, operating and capital expenditure
projections and proposed financing plans for the Company;
1.1.3 “Approved Transferee” means any of the persons referred to in
sub-clauses 11.3.1 and 11.3.2;
1.1.4 “Articles” means
the articles of association of the Company from time to time;
1.1.5 “Associated Company” means any body
corporate, in respect of the Company or a Shareholder being a corporate entity
(a “Corporate Shareholder”) which from time to time is (a) a holding company of
the Company or a Corporate Shareholder; or (b) any subsidiary of any such
holding company of the Company or a Corporate Shareholder; or (c) a company
over which the Company or a Corporate Shareholder or the holding company of
such Company or a Corporate Shareholder has control; or (d) any company whose
equity share capital is owned as to twenty (20) per cent or more but not more
than fifty (50) per cent by the Company or a Corporate Shareholder or the
holding company of such Company or a Corporate Shareholder;
1.1.6 “Audited Accounts”
means the report and audited accounts of the Company for the financial period
ended on 30th September of any year or such other date as the Board
shall determine;
1.1.7 “Auditors” means
the auditors of the Company from time to time;
1.1.8 “Board” means the
board of directors of the Company from time to time;
1.1.9 “Business” means
the development on the Properties of building complexes comprising of any or
all of offices, shops, restaurants, health, leisure, sports and recreational
facilities, hotel facilities and other establishments for the purpose of
renting the same and for ancillary purposes to the foregoing and includes the
acquisition of properties adjoining any of the Properties for the purpose of
undertaking any of the said activities;
1.1.10 “Business Day” means a day
(other than a Saturday) on which banking institutions are generally open for
the conduct of banking business in Kenya;
1.1.11 “Business Plan”
means the business plan for a particular financial period and may include the
Annual Budget;
1.1.12 “Chairman” shall
have the meaning ascribed to it in clause 7.1;
1.1.13 “Clear Days” in relation to a period of notice means that period
excluding the day when the notice is given or deemed to be given and the day
for which it is given or on which it takes or is deemed to take effect;
1.1.14 “Deed of Adherence”
means the deed the terms of which are set out in Schedule 1;
1.1.15 “Deed of Covenant” means the agreement of even date between the
parties to this Agreement and the shareholders in the corporate Shareholders;
1.1.16 “Deemed Transfer Notice” shall have the meaning ascribed to it
in clause 15.1;
1.1.17 “Director” means
any person duly appointed in the capacity of a director of the Company pursuant
to the provisions of Section 5 and including, where applicable, any alternate
director appointed pursuant to clause 6.1 and “Directors” shall be construed
accordingly;
1.1.18 “Encumbrance”
includes any mortgage, charge (whether legal or equitable), lien, option, security
interest, restrictive covenant, pledge, hypothecation, assignment, title
retention, trust arrangement or other restriction or equity of any kind or
other encumbrance securing or any right conferring a priority of payment in
respect of any obligation of any person;
1.1.19 “Executive
Directors” shall have the meaning ascribed to it in
sub-clause 5.1.2;
1.1.20 “Family Member” means, in relation to any Shareholder
or any shareholder in any one of the corporate Shareholders (as the context may
require), , that person’s
spouse, widow or widower or that person’s parent or any
of that person’s siblings, any lineal descendants of that person and the spouse or widow or widower of any such
lineal descendants and in the case where any of the above persons is below the
age of eighteen (18) years that person’s duly appointed guardian;
1.1.21 “Family Settlement” means, in relation to any Shareholder
or any shareholder in any one of the corporate Shareholders (as the context may
require), a settlement made by such person under which no one other than that person
and/or any Family Member of that person is or may become
entitled to any beneficial interest in the shares of such person
and the unfettered power to exercise the votes attaching to the shares the
subject of such Family Settlement;
1.1.22 “Group Member” shall have the meaning ascribed to it in clause 11.3;
1.1.23 “Limits of
Authority” means the limits of authority prescribed by the Board for itself,
the committees of the Board and other officers of the Company for the time
being and from time to time;
1.1.24 “New Opportunity” means any new opportunity relating
to the Business which shall require additional investment in the Company by the
Shareholders (whether by way of equity or loan);
1.1.25 “Prescribed Price” shall have the meaning ascribed to it in sub-clause 11.2.13
and clause 15.2;
1.1.26
“Properties”
means all those pieces of land details of which are set out in Schedule 2;
1.1.27
“Service
Agreements” means the service agreements entered into from time to time between
the Company and the Executive Directors on terms approved by the Board;
1.1.28 “Shareholder” means
any of Shareholder A, Shareholder B, Shareholder C, and Shareholder D for so
long as they hold Shares or any subsequent holder of Shares from time to time
and “Shareholders” shall be construed accordingly;
1.1.29 “Shares” means the
ordinary shares in the capital of the Company from time to time;
1.1.30 “Third Party” shall
have the meaning ascribed to it in sub-clause 11.2.11; and
1.1.31 “Voting Shares”
shall have the meaning ascribed to it in clause 5.1.
1.2
Unless the context otherwise requires, in
this Agreement (including the recitals and the Schedule):
1.2.1 words and expressions defined in the Act shall have the same meanings
ascribed to them in the Act wherever used herein;
1.2.2 any reference to a statutory provision shall include that
provision as from time to time modified or re-enacted whether before or after
the date of this Agreement so far as such modification or re-enactment applies
or is capable of applying to any transactions entered into in accordance with
this Agreement and (so far as liability thereunder may exist or can arise)
shall include also any past statutory provision (as from time to time modified
or re-enacted) which such provision has directly or indirectly replaced
provided that the liability of any party shall not be increased as a result of
any such modification or re-enactment after the date hereof except as required
by law;
1.2.3 any reference to a statutory provision shall include any
subordinate legislation made from time to time under that provision;
1.2.4 words denoting the
singular number shall include the plural and vice versa and reference to the
masculine gender includes a reference to the feminine gender and neuter and
vice versa;
1.2.5 references to
Sections, clauses, sub-clauses and Schedule, unless otherwise provided, are to
be construed as references to the Sections, clauses and sub-clauses of and the
Schedule to this Agreement;
1.2.6 the expression
“person” includes a natural person, body corporate, unincorporated body, state,
state agency, governmental authority or firm or other legal entity;
1.2.7 costs, charges,
expenses or remuneration shall be deemed to include, in addition, references to
any value added tax or similar tax charged or chargeable in respect thereof;
1.2.8 any reference to “Audited Accounts” shall include the directors’
and auditors’ reports, relevant balance sheets and profit and loss accounts and
related notes together with all documents which are or would be required by law
to be annexed to the accounts of the company concerned to be laid before that
company in general meeting for the accounting reference period in question; and
1.2.9 the expression
“party” shall mean a party to this Agreement and “parties” shall be construed
accordingly.
1.3
Section headings are for convenience only and shall
not affect the construction of this Agreement.
1.4
Any covenant by a Shareholder not to do an act or
thing shall be deemed to include an obligation not to permit or suffer such act
or thing to be done by another person so far as this is within its power or
control.
1.5
A person (“A”) shall be deemed to be controlled by a
Shareholder if:
1.5.1 the Shareholder
holds a majority of the voting rights in A; or
1.5.2 the Shareholder is
a member of A and has the right to appoint or remove a majority of A’s board of
directors; or
1.5.3 the Shareholder has
the right to exercise a dominant influence over A:
1.5.3.1by virtue of
provisions contained in A’s memorandum and articles of association or (as the
case may be) analogous constitutional or incorporation documents; or
1.5.3.2by virtue of a control contract;
1.5.3.2
1.5.4 the Shareholder is
a member of A and controls alone (directly or indirectly), or pursuant to an
agreement with other shareholders or members, a majority of the voting rights
of A.
1.6
For the purposes of clause 1.5 the expression “voting
rights” means rights conferred on shareholders in respect of their shares or,
in the case of a person not having a share capital, on members, to vote at
general meetings on all, or substantially all matters and the expression
“control contract” means a contract in writing conferring such a right which:
1.6.1 is of a kind
authorised by the memorandum and articles of association or (as the case may
be) analogous constitutional or incorporation documents of a person in relation
to which the right is exercisable; and
1.6.2 is permitted by law
under which that person is established.
1.7
For the purposes of clause 1.5 a person shall not be
regarded as having the right to exercise a dominant influence over another
unless it has a right whether direct or indirect to give directions with
respect to the operating and financial policies of that other person which its
directors are obliged to comply with whether or not such directions are for the
benefit of that other person.
2.
BUSINESS OF THE COMPANY
2.1 The Shareholders agree that the business
of the Company shall be the Business.
3. SHAREHOLDER
RELATIONS
3.1 The Shareholders shall procure that the
Company shall bear the travel and related expenses of non-executive Directors
(not being Directors appointed pursuant to sub-clause 5.1.1) reasonably and
properly incurred by such Directors on the affairs of the Company.
3.2
If
a Shareholder or a Director gains actual knowledge of any potential New
Opportunity, that Shareholder or Director shall provide to the Company all
information and documents which it may have obtained in relation to such
potential New Opportunity.
3.3
The
Board shall procure that the Company shall forthwith undertake a detailed
feasibility study with regard to the potential New Opportunity to establish
whether the New Opportunity is or could be a profitable business venture and
the capital and other financing requirements that would be required to fund the
New Opportunity within such period as the Board shall specify.
3.4
After
completion of the feasibility study, the Board shall resolve in accordance with
the terms of this Agreement whether and on what terms to undertake the New
Opportunity.
4. BORROWING
AND GUARANTEES
4.1 Unless otherwise agreed by the
Shareholders in general meeting holding more than fifty percent (50%) of the
Voting Shares the Company’s fixed and working capital
requirements from time to time shall if capable be provided from the following
sources:
4.1.1 firstly from
the Company’s own resources; and
4.1.2 thereafter from bank facilities, leasing or
other similar arrangements from time to time available to the Company and
obtained upon the most favourable terms reasonably obtainable in the
circumstances; and
4.1.3 thereafter from the issue of shares or
securities to Shareholders or by the provision of shareholder advances to the
Company; and
4.1.4 thereafter from the issue of shares or
securities to third parties.
4.2 The amount of funding from
Shareholders required by the Company from time to time whether to fund a New
Opportunity or otherwise shall be determined by the Board in accordance with
the terms of this Agreement. If the
Board determines in accordance with the terms of this Agreement that the
Shareholders should contribute to the funding requirements of the Company by
way of subscription (and whether for cash or in kind) for further equity or by
way of shareholders advances to the Company (whether convertible into equity or
not), each Shareholder shall be entitled to participate in such subscription or
providing such advances on a pro rata
basis to the shareholding of each Shareholder in the Company as at the date of
the determination by the Board of the funding requirements of the Company as
aforesaid (although Shareholders will also be required to state whether they
would wish to subscribe for more or less than their pro rata entitlement). If a
Shareholder fails to make payment within the time determined by the Board, the
other Shareholders (the “Investing Shareholders”) shall be at liberty to make
payment (in full or in part at the discretion of the Investing Shareholders) to
the Company of the relevant amount provided that the shareholding in the
Company of the Shareholder who does not make payment of his required
contribution shall be accordingly reduced in the case of such amount being
provided as subscription for equity or upon such contribution being converted
into equity (as the case may be).
5. CONSTITUTION OF THE
BOARD OF DIRECTORS
5.1
Subject as hereinafter provided, the Board shall be
constituted as follows:
5.1.1 Shareholders
holding the requisite number of Voting Shares shall have the right to appoint
one or more Directors in the Company and shall have the right from time to time
to remove such directors so appointed by it from the Board as it may deem fit
and to appoint replacements. The number of Directors that a Shareholder may
appoint shall depend on the percentage of the issued Shares carrying the right
to vote held by that Shareholder (“Voting Shares”). Where a Shareholder holds:
5.1.1.1under 5% of the Voting Shares it shall not be entitled to
appoint a director;
5.1.1.2between 5% but less than 20% of the Voting Shares it shall be
entitled to appoint one (1) director;
5.1.1.3between 20% but less than 30% of the Voting Shares, it shall be
entitled to appoint two (2) directors;
5.1.1.4between 30% but less than 40% of the Voting Shares, it shall be
entitled to appoint three (3) directors;
5.1.1.5between 40% up to and including 50% of the Voting Shares, it
shall be entitled to appoint four (4) directors;
5.1.1.6above 50% but less than 75% of the Voting Shares, it shall be
entitled to appoint five (5) directors or such number as is necessary to
provide such Shareholder with a majority on the Board;
5.1.1.7above 75% of the Voting Shares, it shall be entitled to appoint
six (6) directors or such number as is necessary to provide such Shareholder
with a majority on the Board.
5.1.2 Up to two (2) executive directors (the
“Executive Directors”) to be nominated by a majority of the Directors appointed
under sub-clause 5.1.1 provided that an Executive Director may also be a
Director appointed by a Shareholder pursuant to sub-clause 5.1.1 but if this is
the case such person will at any Board meeting have only one (1) vote.
5.2
Any proposed
appointment of a Director pursuant to the provisions of sub-clause 5.1.1
(including the appointment of a representative of a corporate Director) shall,
save as hereinafter provided, be subject to the appointing Shareholder
obtaining the prior written consent to such appointment from Shareholders
holding more than fifty percent (50%) of the Voting Shares which consent shall
not be unreasonably withheld or delayed, unless one (1) Shareholder holds more
than fifty percent (50%) of the Voting Shares in which case notwithstanding
that the Shareholder who holds more than fifty percent (50%) of the Voting
Shares may not grant consent, if consent is obtained from all the other
Shareholders, then consent shall be deemed to have been granted provided
that the
Shareholders shall grant consent to a person
possessing the necessary qualifications of a director (being for this purpose
competence and integrity). If a
Shareholder withholds consent it must give to the appointing Shareholder
reasons in writing for its decision. If the other Shareholder(s), having acted reasonably, determine that a person
nominated to be a director is unacceptable, the appointing Shareholder shall
have the right to nominate another person to fill the position in substitution
for the person whom the other Shareholder(s)
did not approve. It is hereby
agreed that if a Shareholder does not confirm whether or not it approves of a
proposed nomination of a director within fourteen (14) days of being requested
so to do that Shareholder’s approval for the proposed nomination shall be
deemed to have been given.
Notwithstanding the foregoing provisions of this clause 5.2, no consent
shall be required if a Shareholder appoints a Family Member to the Board or in
the case of a corporate Shareholder, the beneficial owner of such corporate
Shareholder appoints his Family Member to the Board. A
director shall be deemed to have resigned should the Shareholder that appointed
him pursuant to sub-clause 5.1.1 ceases to hold shares or, as the case may be,
hold Shares of a number less than 5% of the Voting Shares provided that in the case
where a Shareholder has appointed more than one (1) Director to the Board and
that Shareholder’s percentage shareholding in the Company is reduced so that
such Shareholder’s entitlement to appoint Directors to the Board in accordance
with sub-clause 5.1.1 falls below the number of Directors actually appointed by
it one or more (as required to bring the number of Directors appointed by the
Shareholder in conformity with such Shareholder’s rights in sub-clause 5.1.1)
of that Shareholder’s appointed Directors (as selected by that Shareholder and
in default of such selection as nominated by the other Directors on the Board)
shall be deemed to have resigned from the Board with effect from the date upon
which the Shareholder’s shareholding is so reduced. Any
proposed appointment or removal of a Director under sub-clause 5.1.1 shall be
effected by notice in writing to the Board signed by or on behalf of the
Shareholder appointing or removing such Director and shall take effect, subject
to any contrary intention expressed in the notice, when the notice is delivered
to the Board.
5.3
Any proposed appointment or removal of a
Director under clause 5.1 shall be effected by notice in writing to the Board
signed by or on behalf of the Shareholder appointing or removing such Director
and shall take effect, subject to any contrary intention expressed in the
notice and subject to the provisions of clause 5.2, when the notice is
delivered to the Board.
5.4
Unless otherwise unanimously agreed by the
Shareholders and subject to clause 5.5, a quorum for a Board meeting shall be
at least three (3) Directors each of whom must be appointed by different
Shareholders present and in attendance throughout the meeting provided that
if at any meeting a quorum is not present as aforesaid the meeting shall be postponed to the
same venue and time on the first Business Day falling seven (7) days from the
date of the postponed meeting. If at
such postponed meeting a quorum is not available for the same reason but there
are any three (3) Directors in attendance, the meeting shall be deemed quorate. For the purposes of this clause 5.4, a Director shall be deemed
to be present at any Board meeting if he is able to hear and understand all of
the proceedings of the meeting and be heard and understood by all present or
deemed present by way of telephone or other suitable means of communication and
such Director indicates his willingness for the meeting to proceed on that
basis.
5.5
Subject to the provisions of the Act and the Articles
a resolution signed by all the Directors shall be as valid and effectual as if
it had been duly passed at a meeting of the Board and that resolution may
consist of several documents in the same form if each document is signed by one
(1) or more Directors and shall be deemed, unless a statement to the contrary
is made in that resolution, to have been passed on the day on which it is
signed by the last Director who signed it.
5.6
The Shareholders hereby agree and the Company hereby
acknowledges that if an Executive Director is also the beneficial owner of a corporate
Shareholder entitled to appoint a Director under sub-clause 5.1.1 and appoints
as a Director under sub-clause 5.1.1 someone other than the Executive Director
then such person so appointed and the Executive Director shall together only
have one (1) vote at any meeting of the Board and for the purposes of quorum
shall only count as one (1) Director.
5.7
It is recorded that the first Directors appointed by
the Shareholders are [ ] and that the
Executive Directors are Adil Popat and Mansukhlal Premchand Shah.
6. ALTERNATE DIRECTORS
6.1 Each
Director shall, with the prior approval (save as hereinafter provided) of the
Board, have the power to nominate any person, whether a member of the Company
or not, to act as alternate director in his place during his absence or
inability to act as such Director and on such appointment being made, the
alternate director shall, in all respects, be subject to the terms,
qualifications and conditions existing with reference to the other Directors provided
that the approval of the Board will not be required if the person so
appointed as an alternate is a Director.
In deciding whether to grant approval to the appointment of an alternate
director the Board shall be required to grant approval to a person possessing
the necessary qualifications of a director (being for this purpose competence
and integrity). If the Board, having
acted reasonably, determines that a person nominated to be an alternate is
unacceptable, the appointing Director shall have the right to nominate another
person to fill the position in substitution for the person whom the Board did
not approve. Notwithstanding the foregoing provisions of
this clause 6.1, no consent shall be required if a Shareholder appoints a
Family Member as an alternate Director or in the case of a corporate
Shareholder, the beneficial owner of such corporate Shareholder appoints his
Family Member as an alternate Director.
6.2 The
alternate directors, whilst acting in the stead of the Directors who appointed
them, shall exercise and discharge all the powers, duties and functions of the
Directors they represent (except the power to appoint alternates). The
appointment of an alternate director shall be revoked and the alternate
director shall cease to hold office whenever the Director who appointed him
ceases to be a Director or gives notice to the secretary of the Company that
the alternate director representing him has ceased to do so.
7. CHAIRMAN
7.1 There shall be a chairman of the Company
(who shall be elected from one of the Directors) and who shall preside at all
meetings of the Board and at the general meetings of the Shareholders (the
“Chairman”). It is recorded that the first Chairman elected by the Directors is
Mansukhlal
Premchand Shah.
7.2 The Chairman
shall have no second or casting vote at meetings of the Board or at any general
meeting of the Company.
7.3 If
at any Board meeting or general meeting where there is a quorum in accordance
with clauses 5.4 and 8.11 respectively, the Chairman is not present within
thirty (30) minutes after the time appointed for holding the meeting, the
Directors or the Shareholders (as the case may be) present may elect one of
their number to be the chairman for such meeting.
8. MEETINGS
& DECISION-MAKING CONSTRAINTS
8.1 (Except
for the matters set out in clause 8.7) all resolutions of the Board shall be
decided by a majority vote of Directors present at a meeting held in accordance
with the terms of this Agreement. Each Director present, whether in person or
represented by his alternate, shall have one (1) vote.
8.2 Subject
always to the provisions of this Agreement, the Board shall determine the
general policy of the Company and the scope of its activities and operations
and shall reserve to itself all matters involving major or unusual decisions
(it being in the discretion of the Board to determine whether or not a matter
involves a major or unusual decision). Meetings of the Board shall be held in
Kenya (or such other places as the Board may decide) at such times as the Board
may decide but in any event not less than once in every three (3) months.
8.3 Meetings
of the Board may also be called by any two (2) Directors. Unless otherwise
agreed by the Shareholders or except in the case of an emergency (the Chairman
shall in his sole discretion have the right to decide on whether there is an
emergency) and subject to the provisions of the proviso to clause 8.7, there
shall be given to each Director not less than twenty one (21) Clear Days notice
in writing by post, e-mail and telephone (whether in the case of a routine
Board meeting or in the case where a meeting has been requested by a Director)
of a meeting of the Board. In the case of an emergency, and subject to the
provisions of the proviso to clause 8.7, there shall be given to each Director
not less than five (5) days notice in writing.
8.4 Notice
convening a Board meeting shall contain an agenda of the business intended to
be conducted at such meeting. Any Director may by not less than three (3) Clear
Days notice in writing to the other Directors request that further matters be
added to the agenda for discussion at the Board meeting.
8.5 Each
Shareholder undertakes to the other that it shall, to the extent that it is
able, procure that the Directors appointed by it act and vote in relation to
the affairs of the Company so as to ensure that at all times during the
currency of this Agreement:
8.5.1
the business of the Company shall be conducted in a
proper and efficient manner;
8.5.2 the Board’s
decisions are fully and effectively implemented; and
8.5.3 the provisions of
this Agreement are put into effect.
8.6 Each Shareholder undertakes to the other
that it shall use its best endeavours to procure that the Directors appointed
by it attend Board meetings to the intent that a quorum is present at Board
meetings.
8.7 The Shareholders
agree that Board resolutions regarding the following acts require the consent
of at least three fourths (3/4) of the Directors present at a duly convened
meeting of the Board (provided that if such number results in a fraction, then
the next whole number shall be utilized):
8.7.1 the issue of Shares to any person (whether a Shareholder or
otherwise);
8.7.2 any material change in the nature of the Business as carried on
for the time being;
8.7.3 the
entering into of any joint venture or partnership with any other person;
8.7.4 the entering into of any contracts by the Company with a Director
or a Shareholder (or a Shareholder’s Associated Company);
8.7.5 borrowing
by the Company or the obtaining of any advance or credit in any form where the
Company is required to secure any of its assets or rights;
8.7.6 the
giving of any guarantee or indemnity by the Company; and
8.7.7 any variation to the Limits of Authority,
Provided that Board meetings at which resolutions dealing with
the matters referred to in sub-clauses 8.7.1 to 8.7.7 are to be considered must
be called upon the giving of at least twenty one (21) days notice in writing.
8.8 The Shareholders agree that resolutions
of Shareholders in general meeting regarding the following acts require the
consent of the Shareholders holding not less than seventy five percent (75%) of
the Voting Shares:
8.8.1 replacement of the current auditors;
8.8.2 the disposal of the whole or substantially the whole of the
undertaking or all or the greater part of the assets of the Company; and
8.8.3 a merger, de-merger or similar operations with regard to the
Company;
8.8.4 the reduction of the capital of the Company;
8.8.5 the
alteration of the provisions of the memorandum or articles of association of
the Company;
8.8.6 change
to the dividend policy of the Company;
8.8.7 any adjustment or variation to the Shares or the granting of any
option or other rights to subscribe for Shares that in law require shareholder
resolutions;
8.8.8 additions to the Board; and
8.8.9 the winding-up or dissolution of the Company,
Provided that general meetings at which resolutions
dealing with the matters referred to in sub-clauses 8.8.1 to 8.8.9 are to be
considered must be called upon the giving of at least twenty one (21) days
notice in writing.
8.9 General meetings may be called by any
Shareholder (or Shareholders) holding (in aggregate) ten percent (10%) or more
of the entire issued share capital of the Company and may also be called by any
two (2) Directors. Unless otherwise agreed by the Shareholders or except in the
case of an emergency (the Chairman
shall in his sole discretion have the right to decide on whether there is an
emergency) and subject to the proviso to clause 8.8 there shall be given to
each Shareholder not less than twenty one (21) Clear Days notice in writing
(whether in the case of a routine general meeting or in the case where a
meeting has been requested by two (2) Directors) of a general meeting. In the case of an emergency, and subject to
the provisions of the proviso to clause 8.8, there shall be given to each
Shareholder not less than five (5) days notice in writing
8.10 Notice convening
general meetings shall contain an agenda of the business intended to be
conducted at such meeting. Any Shareholder may by not less than three (3) Clear
Days notice in writing to the other Shareholders request that further matters
be added to the agenda for discussion at the general meeting.
8.11 In order for a general meeting to be quorate, Shareholders who
beneficially own at least fifty percent (50%) of the entire issued share
capital of the Company must attend the general meeting. For the purposes of
this clause 8.11, a Shareholder shall be deemed to be present at any general
meeting if he is able to hear and understand all of the proceedings of the
meeting and be heard and understood by all present or deemed present by way of
telephone or other suitable means of communication and Shareholder indicates
his willingness for the meeting to proceed on that basis.
9. AUDITORS, ACCOUNTS ETC .
9.1 Unless otherwise determined at a general
meeting, the Shareholders shall procure at all times during the continuance of
this Agreement that:
9.1.1
the auditors of the Company shall be Raman Patel of
Post Office Box Number [ ], Nairobi.;
9.1.2 the Company
Secretary shall be Ramesh R Vora of Post
Office Box Number [ ], Nairobi; and
9.1.3 the financial year
of the Company shall commence on 1st October and end on 30th
September in each year.
9.2
The Shareholders shall procure that the Company shall
at all times and from time to time keep and maintain true, accurate and up to date
financial records, books of accounts and related statements thereof in
accordance with accounting standards, principles and practices generally
accepted and applied in the Republic of Kenya.
9.3
Each Shareholder shall be entitled to receive the
Audited Accounts.
10. DAY TO DAY MANAGEMENT
10.1
The Executive Directors shall be responsible for the
day-to-day operations and management of the Company, subject to the Limits of
Authority and in accordance with the terms of the Service Agreements.
10.2 The Shareholders and
the Company shall use their best endeavours to ensure that the Executive
Directors:
10.2.1 (if they have not
already done so) enter into a Service Agreement;
10.2.2 comply with the
terms of the Service Agreement and operate in accordance with the Limits of
Authority.
10.3 Without prejudice
to the generality of clause 10.1 and the provisions of the Service Agreement,
the Shareholders and the Company agree that the Executive Directors shall be
responsible for:
10.3.1 preparing the
Annual Budget and Business Plan and submitting the same to the Board at least
one (1) month prior to the commencement of the relevant financial period;
10.3.2 delivering to the
Directors management accounts on a quarterly basis;
10.3.3 presenting the
annual accounts of the Company in respect of any financial period to the
Shareholders not more than four (4) months after the end of the relevant
financial period;
10.3.4 liaising with the
Auditors and providing them with all assistance they may reasonably require in
order to effectively undertake their responsibilities;
10.3.5
liaising with the Company Secretary and providing him
with all assistance he may reasonably require in order to effectively undertake
his responsibilities; and
10.3.6
taking all reasonable steps to protect, expand and
develop the Business and act generally in the best interests of the Company.
10.4
The Board may delegate its authority to such persons
(including committees comprising of some of the Directors) as it may from time
to time decide, subject to the terms of the Limits of Authority.
10.5 Without prejudice
to the generality of the foregoing but subject to the Limits of Authority, the
Board shall appoint three (3) of its Directors to the “Property Management
Committee”. The primary purpose of this committee will be to:
10.5.1 Liaise with contractors and professionals involved in any
developments on the Properties or in connection with the Business;
10.5.2 Enter into service
contracts and management contracts;
10.5.3 negotiate any
proposals for letting part of the Properties
10.5.4 execute documents
in relation to the letting of the Properties;
10.5.5 appoint agents for
letting the Properties.
10.6 It
is recorded that the members of the Property Management Committee shall be the
Executive Directors and one other Director appointed by the Board.
11. PRE -EMPTIVE RIGHTS
11.1
Unless otherwise unanimously agreed by the
Shareholders a Shareholder may dispose of all or any of its Shares in
accordance with the provisions of this Section 11 but not otherwise.
11.2 Subject to clauses 11.1 and 11.3, a Shareholder may dispose of
all (or any) of its Shares only in accordance with the provisions of this
clause 11.2:
11.2.1 Any Shareholder proposing to transfer or dispose of his Shares
(the “Proposing Transferor”) shall give notice in writing (a “Transfer Notice”) to the Board stating
that the Proposing Transferor desires to transfer such Shares (the “Transfer
Shares”).
11.2.2 The Transfer Notice shall constitute the Company (by its Board)
as the agent of the Proposing Transferor empowered to sell the Transfer Shares
(together with all rights attaching thereto at the date of the Transfer Notice
or at any time thereafter) at the Prescribed Price (as defined in sub-clause
11.2.13) during the Offer Period (as defined in sub-clause 11.2.4.3). Once given, a Transfer Notice may not be
revoked except with the consent of the Board.
11.2.3 Within fourteen (14) days after receipt of any Transfer Notice
the Board shall serve a copy of that Transfer Notice on all the other
Shareholders (other than any member who has given a Transfer Notice in respect
of [all or any] of his Shares or who is deemed to have given a Transfer Notice)
(the “Transferee Shareholders”).
11.2.4 The Transfer Notice shall offer the Transfer Shares for purchase
at the Prescribed Price (as defined in sub-clause 11.2.12) and shall specify:
11.2.4.1 the total number of Transfer Shares;
11.2.4.2 the number of Transfer Shares offered to each Transferee
Shareholder (“Pro-Rata Entitlement”)
which shall be such number of shares as nearly as may be in proportion to their
existing holding of Shares, such existing holding being determined as of the
date immediately prior to the date of the Transfer Notice (“Record Date”);
11.2.4.3 a period (being not more than twenty-one (21) Clear Days) (the “Offer Period”) within which the offer
must be accepted or shall lapse, and shall be accompanied by a form of
application for use by each Transferee Shareholder in applying for either:
11.2.4.3.1 his Pro-Rata
Entitlement;
11.2.4.3.2 such number
of Transfer Shares that is less than his Pro-Rata Entitlement; or
11.2.4.3.3 his Pro-Rata
Entitlement and any shares in excess of such entitlement which he wishes to
purchase (“Excess Shares”);
11.2.4.4 the purchase price in respect of the Transfer Shares which shall
be the Prescribed Price; and
11.2.4.5 Whether the Transferor is prepared to accept that only some of
the Transfer Shares may be purchased by the Transferee Shareholders.
11.2.5 Upon the expiry of the Offer Period, the Board shall allocate
Transfer Shares in the following manner:
11.2.5.1 the Pro-Rata Entitlement to each Transferee Shareholder who has
indicated that they would purchase their Pro-Rata Entitlement;
11.2.5.2 if any Transferee Shareholder has applied for less than his
Pro-Rata Entitlement, then in respect of those Shares not applied for by such
Transferee Shareholder (constituting a portion of the Pro-Rata Entitlement of
such Transferee Shareholder), such Shares shall be allocated to the Transferee
Shareholders who have applied for Excess Shares in proportion to the number of
Ordinary Shares held by them at the Record Date and any remaining Shares shall thereafter
be allocated to those Transferee Shareholders willing to take up such remaining
Shares in proportion to the number of Ordinary Shares held by them at the
Record Date.
11.2.6 If any Transfer Shares shall not be capable of being offered to
Shareholders in proportion to their existing holdings without fractions, then
as many of such shares as possible shall be offered to Shareholders in
proportion to their existing holdings and the remainder shall be offered in
such proportions or in such manner as may be determined by lots drawn in regard
thereto and the lots shall be drawn in such manner as the Directors may think
fit.
11.2.7 If, by the foregoing procedure, the Board shall receive
acceptances in respect of all or some of (if sub-clause 11.2.4.5 applies) the
Transfer Shares the Board shall forthwith give notice in writing (“Acceptance Notice”) to the Proposing
Transferor and to each Transferee Shareholder who has agreed to purchase the
same (the “Purchaser” and
“Purchasers” shall be construed accordingly) and the Proposing Transferor shall
thereupon become bound upon payment of the Prescribed Price in full to the
Proposing Transferor (whose receipt shall be a good discharge to the Purchasers,
the Company and the Board none of whom shall be bound to see to the application
thereof) to transfer to the Purchaser those Transfer Shares accepted by the
Purchaser. Every such Acceptance Notice shall state the name and address of the
Purchaser, the number of Transfer Shares agreed to be purchased by the
Purchaser and the place and time appointed by the Board for the completion of
the purchase (being not less than three (3) Clear Days nor more than ten (10)
Clear Days after the date of the Acceptance Notice). Subject to the giving of such Acceptance
Notice the purchase shall be completed at the time and place appointed by the Directors.
11.2.8 If the Proposing Transferor shall fail or refuse to transfer any
Transfer Shares pursuant to sub-clause 11.2.7 to the Purchaser(s) the Board may
authorise some person to execute and deliver on the Proposing Transferor’s
behalf the necessary instrument of transfer of such Transfer Shares and the
Company may receive and hold (without being liable for the loss thereof or to
account for interest in respect thereof) the purchase money for the Proposing
Transferor and cause the Purchaser(s) to be registered as the holder of such
Transfer Shares. The receipt of the
Company for the Prescribed Price in respect thereof shall be a good discharge
to the Purchaser(s) (who shall not be bound to see to the application thereof)
and, after the Purchaser has been registered in the register of members, the
validity of the proceedings shall not be questioned by any person
whatsoever. The Proposing Transferor in
such case shall be bound to deliver up his certificate(s) for the Transfer
Shares (or an appropriate indemnity satisfactory to the Directors in respect
thereof) to the Company whereupon he shall be entitled to receive the
Prescribed Price from the Company. If
such certificate shall comprise any shares that are not required to be
transferred or sold, the Company shall issue to the Proposing Transferor a
certificate for such balance shares.
11.2.9 Completion of the transfer of the Transfer Shares from the Proposing
Transferor to the
Purchaser in accordance with the provisions of this clause 11 is conditional upon:
11.2.9.1 the Proposing Transferor delivering to the Purchaser all
relevant share certificates and other documents of title (including
declarations of trust if applicable) in respect of the Transfer Shares;
11.2.9.2the Proposing Transferor executing, doing and/or providing
(as the case may be) all matters, acts, deeds, documents and things as shall be
reasonably considered by the Purchaser to be necessary to give effect to the
sale and purchase of the Transfer Shares;
11.2.9.3 the Purchaser using its best endeavours to procure the
release of the Proposing Transferor from all guarantees, indemnities and other
securities given by the Proposing Transferor to support the obligations and
liabilities of either the Company, and shall, if such release cannot be procured,
provide to the Proposing Transferor such indemnities and security as the
Proposing Transferor shall reasonably require.
11.2.10
Upon completion of the transfer of the Transfer
Shares from the Proposing Transferor
to the Purchaser, the Purchaser shall procure that any current balance of any advances made by the Proposing Transferor
and/or the Directors appointed by the Proposing Transferor to the Company
(“Shareholder Loans”) be repaid by the Company on such terms acceptable to the
Proposing Transferor or, at the discretion of the Purchaser, that the
Shareholder Loans or a portion thereof (as the case may be) be assigned by the
Proposing Transferor to the Purchaser upon payment in full or in part of the
Shareholder Loans (such payments to be made in the manner acceptable to the
Proposing Transferor and such assignments to correspond to the payments made)
and the Proposing Transferor executing such assignments as the Purchaser may
reasonably require in this regard. The provisions of sub-clause 11.2.8
permitting a person appointed by the Company to execute transfers shall apply,
mutatis mutandis, to the execution of such assignment and the receipt of the
Shareholder Loans.
11.2.11
If the Company shall not by the expiry of
the Offer Period find purchasers willing to purchase all or some of (if
sub-clause 11.2.4.5 applies) the Transfer Shares (the Company shall in this
case give notice in writing to the Proposing Transferor) then the Proposing
Transferor shall be at liberty within a period of ninety (90) days from the
date of receipt by the Proposing Transferor of the Company’s notice to solicit and
obtain a bona fide and arms’ length offer acceptable to it (the "Third
Party Offer") for the Transfer Shares from a third party (the "Third
Party") ready, able and prepared to purchase the Transfer Shares at a
price not being less than the Prescribed Price (after deducting, where
appropriate, the amount of any dividend or other distribution declared or made
after the date of the Transfer Notice and to be retained by the Proposing Transferor).
Upon obtaining the Third Party Offer, the Proposing Transferor shall give
notice in writing (the "Alternative Transfer Notice") to the Company
setting out the identity of the Third Party, the price that the Third Party is
prepared to pay for the Transfer Shares (the "Third Party Price"),
the terms upon which the Third Party is prepared to purchase the Transfer
Shares including, but without limitation, the terms and conditions of payment
(the "Third Party Terms") and the information set out in sub-clauses
11.2.4.1 and 11.2.4.2. Upon the Proposing Transferor serving the Alternative
Transfer Notice, the Proposing Transferor shall offer and shall be deemed to
have irrevocably offered (the "Alternative Offer") to sell to the
Transferee Shareholders the Transfer Shares at the Third Party Price and on the
Third Party Terms and the Alternative Transfer Notice shall constitute the
Company (by its Board) as the agent of the Proposing Transferor empowered to
sell the Transfer Shares (together with all rights attaching thereto at the
date of the Alternative Transfer Notice or at any time thereafter) at the Third
Party Price and on the Third Party Terms.
Within seven (7) days after receipt of the Alternative Transfer Notice
the Board shall serve a copy of such notice on the Transferee
Shareholders. Once given an Alternative
Transfer Notice may not be revoked except with the consent of the Board. If
some or other of the Transferee Shareholders do not confirm in writing that
they are willing to purchase all of the Transfer Shares at the Third Party
Price and on the Third Party Terms within thirty (30) days of receipt by the
Company of the Alternative Transfer Notice, then the Proposing Transferor
shall, subject as hereinafter provided, be at liberty to sell the Transfer
Shares to the Third Party on the Third Party Terms and at the Third Party Price
provided that completion of the purchase of the Transfer Shares by such
Third Party shall take place no later than the date which is thirty (30) days
after the expiry of the aforesaid thirty (30) day period. If some or other of the Transferee
Shareholders confirm within the period stipulated aforesaid that they are
willing to purchase the Transfer Shares on the Third Party Terms and at the
Third Party Price the Proposing Transferor shall be bound to sell the Transfer
Shares to the said Transferee Shareholders in which case the provisions of
sub-clause 11.2.7 shall, mutatis mutandis, apply. References in sub-clause 11.2.9 and this
sub-clause 11.2.10 to the “Transfer Shares” shall include a reference to such
of the Transfer Shares as may not have been purchased following the service of a Transfer Notice, if applicable, by the
Transferee Shareholder.
11.2.12
The Directors may require to be satisfied
that Transfer Shares are being transferred in pursuance of a bona fide sale for
the consideration stated in the transfer without any deduction, rebate or
allowance whatsoever.
11.2.13
Unless otherwise agreed between the
Proposing Transferors and the Transferee Shareholders and subject to the
provisions of clause 15.2 the price at which the Shares comprised in the
Transfer Notice shall be sold at (the “Prescribed Price”) will be the price
claimed by the Proposing Transferor to be the fair value for the Transfer
Shares.
11.3 Subject to the provisions of this clause 11.3, a
Shareholder may dispose of all or some of its Shares to:
11.3.1 a company which is a Group Member as hereinafter
defined (the “Group Transferee”) (in the case of a Shareholder being a
company);
11.3.2 a Family
Member or the trustees of a Family Settlement (in the case of Shareholders
being individuals),
provided that the Shareholder shall give to the other Shareholders not less than
thirty (30) days prior notice in writing of its intention to dispose of all or
some of its Shares as aforesaid the said notice to give the name and address of
the Approved Transferee and (in the case of an Approved Transferee being a
company) details of the directors of and
shareholders in the Approved Transferee
and provided further that a failure to give such notice shall
constitute a material breach for the purposes of sub-clause 15.1.1. In the case
where the Shares are transferred to a Family Settlement the other Shareholders
shall have the right to review the trust deed creating the Family Settlement
and to obtain confirmation from the trustees of that Family Settlement that the
beneficiaries of that Family Settlement are all Family Members. For the
purposes of this Section 11 “Group Member” shall mean in relation to a
Shareholder (being a company) a company which is for the time being a
subsidiary or holding company of such Shareholder or a subsidiary of such
Shareholder’s holding company or in relation to a Shareholder (being a natural
person) a company in which he is the majority shareholder and which is
controlled by him. If, while it holds
Shares, an Approved Transferee ceases to be a Group Member of the Shareholder
from whom it obtained the Shares, it shall be the duty of the Approved
Transferee and the Shareholder in question to notify the Directors in writing
within thirty (30) days of the Approved Transferee ceasing to be a Group Member
as aforesaid that such event has occurred and (unless the Shares are thereupon
transferred to the Shareholder in question or another Group Member of such
Shareholder, any such transfer being deemed to be authorised under the foregoing provisions of this clause
11.3) the Approved Transferee in question shall be deemed to have given a
Transfer Notice (as defined in sub-clause 11.2.1) at the expiry of the
aforesaid thirty (30) days and the provisions of clauses 11.2 and 15.2 shall
thereupon, mutatis mutandis, apply.
11.4 It shall be a
condition precedent to the right of any Shareholder to transfer or dispose of
any Shares to an Approved Transferee or to a Third Party (whether in respect of
the legal or beneficial interest therein), any beneficial holder having
transferred to it legal title in its shareholding or the allotment of any unissued
ordinary Shares that the Approved Transferee or the Third Party transferee or
allottee or legal holder (if not already bound by the terms of this Agreement)
executes a deed substantially in the form of the Deed of Adherence and, upon
the delivery of such deed, each such Approved Transferee or Third Party
transferee or allottee or legal holder shall be treated as a party to, and
(where relevant) as a Shareholder for the purposes of, this Agreement.
11.5 No transfer of
Shares shall be made or registered if the same would result in a person or
persons acting in concert (such person or persons shall hereinafter be referred
to as the “Purchasing Group”) holding or increasing their shareholding in the
Company to fifty percent (50%) or more of the Shares, unless before the sale is
made or the transfer is lodged for registration, the Purchasing Group has made
a written offer to purchase all the ordinary Shares in issue immediately before
such sale or transfer, subject to the provisions of clause 11.8, at the Third
Party Price (as defined in clause 11.6).
The offer made under this clause 11.5 shall be deemed to remain open for
the period being the later of twenty one (21) days from the date the offer at
the Third Party Price is made pursuant to this clause 11.5 or twenty one (21)
days from the date the price is determined in accordance with clause 11.8.
11.6
For the purposes of clauses 11.5 and 11.7
the expression “Third Party Price”
shall mean the price which has been offered for each Share whose proposed
transfer has led to the offer plus a sum equal to any arrears or accruals of
dividend in respect of the same.
11.7
If transfers under clause 11.5 result in
members of the Purchasing Group holding or increasing their shareholding to seventy
five percent (75%) or more of the Shares, the members of the Purchasing Group
may by written notice to the Company served within thirty (30) Business Days
after the last of such transfers require the Company as agent for the
Purchasing Group to serve notices (each a “Compulsory Purchase Notice”) on each of the other Shareholders (“Minority Shareholders”) requiring them
to sell their Shares to one or more persons identified as members of the
Purchasing Group, subject to the provisions of clause 11.8, at the Third Party
Price. Once the Compulsory Purchase
Notices have been served by the Company on the Minority Shareholders the
Minority Shareholders shall not be entitled to transfer their ordinary Shares
to anyone except members of the Purchasing Group.
11.8
The Minority Shareholders may require,
within fourteen (14) days of the date of service
of the Compulsory Purchase Notice, that the price at which they are required to
sell their Shares pursuant to the Compulsory Purchase Notice be the higher of the Third Party Price or a
price determined, on the application and at the cost of one or other of the
relevant Shareholders, mutatis mutandis, in accordance with the provisions of
clause 15.2.
11.9
The Purchasing Group shall complete the
purchase of all the ordinary Shares in respect of which a Compulsory Purchase
Notice has been given no later than twenty-one (21) Clear Days after the date
of the service of such Compulsory
Purchase Notices or (if later) within twenty one (21) days of the determination
of the price pursuant to the provisions of clause 11.8. The consideration shall be payable in full
without any set-off. Any transfer
pursuant to a Compulsory Purchase Notice shall not require the Proposing
Transferor to give a Transfer Notice.
The Directors shall not register any transfer, and no member of the
Purchasing Group shall be entitled to exercise or direct the exercise of any
rights in respect of any ordinary Shares to be transferred pursuant to this
clause 11.9, until in each case the member of the Purchasing Group has
fulfilled all his obligations pursuant to this clause 11.9.
11.10 If within seven (7) days after the expiry of the relevant period
for completion of the purchase following the service of a Compulsory Service
Notice as referred to in clause 11.9 a Minority Shareholder has not transferred
his ordinary Shares to any member of the Purchasing Group against payment of
the price for them, the Directors may authorise some person to execute and
deliver on his behalf any necessary transfer in favour of the relevant
member(s) of the Purchasing Group and the Directors shall receive the
consideration in respect of such Shares and shall (subject to the transfer
being duly stamped) cause the name of the relevant member(s) of the Purchasing
Group to be entered into the register of members of the Company as the holder
of the relevant Shares. The Company
shall hold the consideration in trust for the Minority Shareholder but shall
not be bound to earn or pay interest on it.
The receipt of the Company of the consideration shall be a good receipt
for the price of the relevant shares, but the Purchasing Group shall not be
discharged from procuring that the Company applies the money in payment to the
Minority Shareholder against delivery by the Minority Shareholder of the
certificate in respect of the Shares or an indemnity in respect of the
same. After the name of the member of
the Purchasing Group has been entered in the register of members of the Company
the validity of the proceedings shall not be questioned by any person.
11.11 It is hereby agreed that the provisions of clauses 11.6 to 11.10
shall not apply to a transfer of Shares pursuant to clause 11.3.
11.12 Upon completion of the transfer of any Shares pursuant to the
foregoing provisions of this Section 11 (other than sub-clause 11.3):
11.12.1
the Proposing Transferor or the Minority
Shareholder, as the case may be (the “Selling Party”) shall procure the
resignation of the Directors or the Directors in excess of which the Selling
Party is, in accordance with the terms of this Agreement, entitled to appoint,
appointed by it to the Board or the board of any of the Company’s subsidiaries
without any claim for damages or compensation for losses of any kind
whatsoever; and
11.12.2
the Purchasers or the Purchasing Group, as
the case may be (the “Purchasing Party”) shall procure that any current balance
of any advances made by the Selling Party and the Directors appointed by the
Selling Party to the Company be repaid or repaid in proportion to the resultant
shareholding of the Voting Shares of the Selling Party by the Company or, at
the discretion of the Purchasing Party, that such advances be assigned by the Selling
Party to the Purchasing Party upon payment in full for the advances being
assigned and the Selling Party shall execute such assignments as the Purchasing
Party may reasonably require in this regard.
The provisions of clauses 11.10 and 11.2.8 permitting the Directors to
execute transfers and permitting the Company to take receipt of consideration
shall apply, mutatis mutandis, to the execution of such assignment and the
receipt of such advances.
11.13 Upon completion of the transfer of any Shares
pursuant to the foregoing provisions of this Section 11, all rights (including
dividends, interest and distributions in kind) and obligations attributable to
the Transfer Shares shall pass to the purchaser of the Transfer Shares (being
the Purchaser or the Third Party) with effect from the date of the completion
of the transfer of the Transfer Shares.
11.14 Upon the death of a Shareholder (where the
Shareholder is an individual) or upon the death of the person with a beneficial
interest in a corporate Shareholder, the remaining Shareholders shall procure
that the Board shall approve the transfer of Shares by transmission provided
that the transfer of Shares is made to a
Family Member of or a Family Settlement of the person in question and
provided further that the Family Member or the representatives of the Family
Settlement execute a deed substantially in the form of the Deed of Adherence
and upon delivery of such deed, each such Family Member or Family Settlement
shall be treated as a party to and as a Shareholder for the purposes of this
Agreement.
12. NEGATIVE PLEDGE
12.1 Each Shareholder undertakes to the other not
to create or permit to subsist any Encumbrance over or upon the Shares held by
it, any rights in connection with the Shares held by it from time to time, or
any claims or rights against the Company to any third party without the prior
written consent of the other Shareholders.
13. STATUS OF
SHARES AND DIVIDEND POLICY
13.1 Subject to the other provisions of this
Agreement, and unless otherwise unanimously agreed by the Shareholders, the
Shares shall rank pari passu and without any preference or priority among
themselves.
13.2 The Board will determine the dividend policy
of the Company from time to time [provided that, unless otherwise agreed
by Shareholders holding more than seventy five (75%) of the Voting Shares, not
more than [ ]% of the profits available
for distribution shall be declared as dividends in each financial year].
14. CONFIDENTIALITY
14.1 Each Shareholder
hereby undertakes that it shall, and shall procure that all persons controlled
by it shall, at all time hereafter (save with the prior written consent of the
other Shareholder) treat as strictly confidential and shall not disclose to any
third party any and all technical, economic, financial or other information
acquired from the other Shareholders or from the Company and its subsidiaries provided
that a Shareholder and any person controlled by it may disclose information
which would otherwise be confidential if and to the extent:
14.1.1 required by law;
14.1.2 required by any tax authority, regulatory or
governmental body to which such a party is subject or submits, wherever
situated, whether or not the requirement has the force of law;
14.1.3 the information has come into the public domain
through no fault of the party;
14.1.4 disclosed to its professional advisors,
auditors and bankers;
14.1.5 required to vest the full benefit of this
Agreement in such party; or
14.1.6 provided to any Approved Transferee or a third
party pursuant to a transfer of shares on the terms set out in Section 11.
15. TERMINATION
15.1 Without prejudice to any other right or
remedy of any Shareholder, upon the occurrence of any of the events set out in
sub-clauses 15.1.1 to 15.1.8, the Shareholder in default shall be deemed to
have given a Transfer Notice in accordance with clause 11.2.1 (a “Deemed
Transfer Notice”) and the provisions of clause 11.2 shall, mutatis mutandis,
apply:
15.1.1 any material breach by a Shareholder of any of
its obligations under this Agreement, provided that in respect of such
breach, if capable of remedy, a notice in writing has first been served on that
Shareholder by the Company or by Shareholders holding seventy five percent
(75%) or more of the Shares then in issue complaining of such breach and
setting out the nature of the breach and such Shareholder has failed within
sixty (60) days to remedy such breach to the reasonable satisfaction of the
party serving the notice;
15.1.2 any meeting of creditors of the
Shareholder being held or any arrangement or composition with or for the
benefit of its creditors being proposed or entered into by or in relation to
such Shareholder;
15.1.3 a supervisor, receiver, liquidator, trustee,
conservator, administrator, administrative receiver or other encumbrancer
taking possession of or being appointed over or any distress, execution or
other process being levied or enforced (and not being discharged within
fourteen (14) days) upon the whole or any substantial part of the assets of a
Shareholder;
15.1.4 a Shareholder being or becoming unable to pay
its debts;
15.1.5 if (in the
case of an individual Shareholder) an order is made or analogous steps are
taken for making the Shareholder bankrupt or if the Shareholder becomes of unsound mind or (in the case of a
corporate Shareholder) if a resolution is passed or an order is made or
analogous steps are taken for winding-up or the liquidating of the Shareholder;
15.1.6 a Shareholder or any person controlled by it
engaging in conduct likely to have a material and adverse effect upon the
Company or its subsidiaries; and
15.1.7 Subject to the provisions of the Deed of
Covenant, upon a change of control of a corporate Shareholder.
For the purpose of this sub-clause
15.1.7, a “change of control” shall mean:
15.1.7.1 the transfer of a fifty percent (50%) or more of the voting
rights in that Shareholder or in a holding company (whether immediate or
ultimate) of that Shareholder or an issuance of shares which results in a
person holding or increasing his shareholding to a majority shareholding;
15.1.7.2 the transfer of the right to appoint or
remove a majority of the board of directors of that Shareholder;
15.1.7.3 the transfer of the right to exercise a
dominant influence over that Shareholder;
15.1.7.4 the transmission of shares in a corporate Shareholder
to someone other than a Family Member or a Family Settlement of the ultimate
beneficial shareholder of such Shareholder.
provided that a “change of control” shall not be deemed to have occurred where the
transfer or transmission of shares in a Shareholder is made to a Family Member
or a Family Settlement of the beneficial owner of a corporate Shareholder or
the transfer or transmission of Shares by a Shareholder is made to a Family
Member or a Family Settlement or if a corporate Shareholder transfers Shares to
one or more of its ultimate beneficial shareholders as at the date hereof but
shall be deemed to have occurred where a transfer or transmission of shares in
a Shareholder or the transfer or transmission of Shares by a Shareholder is
made to a person who is not a Family Member (except if the procedures in clause
11.2 have been complied with).
15.1.8 upon the death of a Shareholder (being an
individual) if by transmission of the Shares of such deceased Shareholder the
persons entitled to such Shares will be someone other than a Family Member or a
Family Settlement of such Shareholder.
15.2 The
Prescribed Price in the event of a Deemed Transfer Notice shall be the price
determined by the Auditors to be a fair value of the Shares in question based
on such terms of reference as the Board may reasonably determine but with no
allowance being given for a minority holding or credit being given for a
majority holding. The Company shall be responsible for the costs and expenses
of the Auditors in determining the prescribed price. If a
Shareholder is dissatisfied with such determination of the Auditors the
dissatisfied Shareholder may within thirty (30) days of receiving notice of the
Auditors’ determination of the value of the said Shares of the relevant
Shareholder request the Board in writing to instruct on behalf of the Company
another firm of accountants of international repute and having offices in at
least three (3) continents (the “Second
Valuer”) to determine the value of the said Shares of the relevant Shareholder
and the price of such Shares will be determined on the basis of the mean of the
values determined by the Auditors and the Second Valuer individually. The
dissatisfied Shareholder shall be responsible for the costs and expenses of the
Second Valuer (and the costs and expenses of any property valuer as hereinafter
provided) in determining the Prescribed Price. Subject as aforesaid, the determination of the Auditors and, if applicable,
the Second Valuer shall be final and binding on the parties. In determining the fair value of the Shares,
the Auditors and (if applicable) the Second Valuer shall request a property
valuer of repute to value the Properties comprised within the Business and shall
take such property valuation into account when determining the fair value of
the said Shares.
16. DEALINGS
WITH SHAREHOLDERS
16.1 Each Shareholders acknowledges that all
contracts, agreements or engagements that may be entered into between it, any
Associated Company to it or any person controlled by it on the one hand and the
Company on the other hand shall be conducted on an arms length basis, subject
however to the fact that if any such person wishes to rent any of the Company’s
premises it may do so at such rate of discount not exceeding ten percent (10%)
of the usual open market rent as may be determined by the Board from time to
time.
17. EFFECTIVE DATE
17.1 This Agreement shall come into force on the
date of its signing. It shall have effect as from the date hereof so that all
risk and reward and the burden of all obligations of the Shareholders hereunder
shall be borne by the Shareholders as from the date hereof.
18. REPRESENTATIONS
AND WARRANTIES
18.1 Each Shareholder being a corporate entity
represents and warrants to the other Shareholders that:
18.1.1 it is duly incorporated under the laws of
Kenya;
18.1.2 it has the power to enter into and to exercise
its rights and to perform its obligations hereunder;
18.1.3 it has taken all necessary action to authorise
the execution of and the performance of its obligations under this Agreement;
18.1.4 the obligations expressed to be assumed by it
under this Agreement are legal, valid, binding and enforceable;
18.1.5 neither the execution nor performance of this
Agreement shall contravene any provision of:
18.1.5.1 any existing law, treaty or regulation;
18.1.5.2 its Memorandum or Articles of Association; and
18.1.5.3 any obligation which is binding upon it or upon
any of its assets.
19. COSTS
19.1 Each Shareholder shall be responsible for
its own legal costs and expenses in connection with the negotiation,
preparation and execution of this Agreement.
20. GOVERNING LAW
20.1 This Agreement
shall be governed by and construed in accordance with laws of Kenya.
21. DISPUTE RESOLUTION
21.1 Subject to
clause 21.2, any dispute, controversy or claim arising out of or relating to
this Agreement or a termination hereof (including without prejudice to the
generality of the foregoing, whether in its interpretation, application or
implementation), shall be resolved by way of consultation held in good faith
between the parties. Such consultation
shall begin immediately after one party has delivered to the others written
request for such consultation. If within
forty five (45) Clear Days of the date on which such notice is given the
dispute cannot be resolved, the dispute, controversy or claim shall be
submitted to arbitration in accordance with the provisions of clause 21.2.
21.2 Should any dispute
arise between any of the parties concerning this Agreement or a termination
hereof (including, without prejudice to the generality of the foregoing,
whether in its interpretation, application or implementation) and the
consultation process referred to in clause 21.1 shall have not resolved such
dispute the dispute shall upon application by any party, be referred for
arbitration to a person appointed by the Chairman for the time being of the
Kenya Branch of the Chartered Institute of Arbitrators. The provisions of the
Arbitration Act, 1995 shall apply to all such arbitration proceedings. Such
arbitration proceedings shall, so far as permitted by law, be final and not
subject to appeal.
21.3 The award of the arbitrator shall be final
and binding upon the parties and any party may apply to a court of competent
jurisdiction for enforcement of such award. The award of the arbitrator may
take the form of an order to pay an amount or to perform or to prohibit certain
activities. Notwithstanding the foregoing, a party is entitled to seek preliminary
injunctive relief or interim or conservatory measures from any court of competent
jurisdiction pending the final decision or award of the arbitrator.
22. RELATIONSHIP
OF THE SHAREHOLDERS
22.1 It is expressly agreed that the relationship
of the Shareholders shall be that of shareholders and not that of partners.
Accordingly, this joint venture shall be conducted as the business of the
Company and none of the Shareholders shall represent to any person that that Shareholder
is authorised to act on behalf of the other Shareholders or that any
partnership, agency, employment or joint liability exists between the
Shareholders in respect of any person who is not a party to this Agreement.
22.2 Notwithstanding
the provisions of clause 22.1, the principles of good faith relating to the association
of shareholders shall apply.
23. ASSIGNMENT
23.1 Save as otherwise provided for herein, this
Agreement or any rights or benefits hereunder shall not be assignable,
transferable or divisible in whole or in part by any of the Shareholders
without the prior written consent of the other Shareholders.
24. NOTICES
24.1 Any
notice or other communication given or made under or in connection with the matters contemplated by this Agreement
shall be in writing.
24.2 Any such notice or other communication shall
be addressed as provided in clause 24.3 and, if so addressed, shall be deemed
to have been duly given or made as follows:
24.2.1 if sent by personal
delivery, upon delivery at the address of the relevant party;
24.2.2 if sent by post, ten (10) Clear Days after the
date of posting provided that proof is given that the notice was
properly addressed and duly dispatched by post and, in the case of a notice
sent to a party in another country, that the notice was sent by first class
airmail post; and
24.2.3 if sent by facsimile, when despatched (provided
the sender receives proof of transmission),
provided that if, in accordance
with the above provisions, any such notice or other communication would
otherwise be deemed to be given or made outside normal working hours in the
place of service of the notice or other communication it shall be deemed to be
given or made at the start of normal working hours on the next Business Day.
24.3 The relevant postal address of each party
for the purposes of this Agreement, subject to clause 24.4 are:
Name of Party Postal Address
24.4 A party may notify the other parties to this
Agreement of a change to its postal address for the purposes of clause 24.3 provided
that such notification shall only be effective on:
24.4.1 the date specified in the notification as the
date on which the change is to take place; or
24.4.2 if no date is specified or the date specified
is less than ten (10) Clear Days after the date on which notice is given, the
date falling fifteen (15) Clear Days after notice of any such change has been
given.
25. GENERAL
25.1 No failure to exercise and no delay in
exercising on the part of any Shareholder any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
25.2 If a Shareholder shall waive any breach,
default or omission hereunder, no such waiver shall apply to, or operate as, a
waiver of similar breaches, defaults or omissions or be deemed a waiver of any
such breach, default or omission hereunder.
25.3 The rights and remedies of each of the
parties in connection herewith are cumulative and are not exclusive of any
rights or remedies provided by law.
25.4 Each
Shareholder shall procure the passing of such resolutions, execute such
documents and waivers and generally do anything effectively to comply with its
obligations under this Agreement.
25.5 This Agreement
contains the entire agreement and understanding between the parties and
supersedes all prior discussions and agreements concerning the subject matter
hereof.
25.6 No amendment, change or addition hereto
shall be effective or binding on any party unless in writing and executed by
the parties.
25.7 If any one or more provisions contained in
this Agreement become invalid, illegal or unenforceable, the other provisions
herein contained shall remain in full force and effect and the parties shall
substitute and negotiate in good faith, if necessary, new provisions under
reasonable terms and conditions and in compliance with the intentions of the
parties as contained herein.
25.8 The Shareholders shall procure that the
Articles shall reflect, whenever possible, the terms and conditions of this
Agreement.
25.9 In the case of a conflict between the terms
and conditions of this Agreement and the provisions of the Articles, the terms
and conditions of this Agreement shall prevail as between the Shareholders and
the Shareholders shall procure that the Company alters the Articles accordingly
and shall approve the respective alterations of the Articles in general
meetings. The Shareholders undertake to procure that within seven (7) days of
the execution of this Agreement the company secretary shall dispatch the
relevant notices to call an extraordinary general meeting of the Company in
order to pass a special resolution to amend the Articles in the manner
contemplated in Schedule 3.
IN WITNESS WHEREOF this Agreement has
been duly executed by or on behalf of the parties hereto as of the day and year
first above written.
[Execution]
SCHEDULE 1
This Deed of Adherence is made on [ ] between:
(1) [name of new
shareholders] [of] [whose registered office is at] [address] (the “New Shareholder” [which expression
shall include the successors in title of any such person(s)]);
(2) [ ] LIMITED whose registered office
is at [ ] (the “Company”);
(3) the several
persons named in Part 1 of the Schedule hereto (“Outgoing Shareholders”) which expression shall include the
successors in title of any such persons; and
(4) the several
persons named in Part 2 of the Schedule hereto (the “Continuing Shareholders” which expression shall include the
successors in title of any such person(s)).
Whereas:
(A) By a Shareholders’
Agreement dated [ ] 2004 (the
“Agreement”) the parties thereto
agreed to regulate their relations as shareholders in the manner therein
appearing;
(B) By Deeds of
Adherence dated [ ] and
made in substantially similar form to this Deed, [names of prior New
Shareholders] became parties to the Agreement. The Agreement, as amended by the
said Deeds, is hereinafter referred to as the “Agreement”.
(C) [Name of
transferor] proposes to transfer [number and class of Ordinary Shares] (“Shares”) to the New Shareholder and, in
accordance with the Articles of Association of the Company and the Agreement,
this Deed is required to be executed in connection with the disposal of the
Shares.
Now this Deed witnesseth as follows:
- The New Shareholder covenants with
each of the Outgoing Shareholders and the Continuing Shareholders to
observe and perform and be bound by all the terms and conditions of the
Agreement (save to the extent that any such terms and conditions have been
fully performed prior to the date hereof or are incapable of applying to
the New Shareholder) to the intent and effect that the New Shareholder
shall with effect from the date on which the New Shareholder is registered
as a member of the Company be a party to the Agreement with the benefit
of, but subject to, all the terms and conditions thereof (save as
aforesaid).
- This Deed shall be read together with
the Agreement which shall accordingly be construed as one instrument.
- This Deed shall be governed by and
construed in accordance with the laws of England.
- This Deed may be entered into in any
number of counterparts and by the parties to it on separate counterparts,
each of which when so executed and delivered shall be an original but all
the counterparts shall together constitute one and the same instrument.
IN WITNESS
WHEREOF this Deed has been executed and delivered
by the parties hereto as a deed as of the day and year first before written.
[EXECUTION PROVISIONS]
SCHEDULE 2
THE
PROPERTIES
Property A
Property B
Property C
I cannot thank Mr Benjamin service enough and letting people know how grateful I am for all the assistance that you and your team staff have provided and I look forward to recommending friends and family should they need financial advice or assistance @ 1,9% Rate for Business Loan .Via Contact : . 247officedept@gmail.com. WhatsApp...+ 19893943740. Keep up the great work.
ReplyDeleteThanks, Busarakham.
can i get a copy please
ReplyDeletepossible to kindly get a copy please
ReplyDelete