Document:

Exhibit 4.3

 

STOCKHOLDERS AGREEMENT

 

THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is made and entered into as of [                    ], 2010 by and among Walker & Dunlop, Inc., a Maryland corporation (the “Company”), Column Guaranteed LLC, a Delaware limited liability company (“Column”), William M. Walker (“WW”) and Mallory Walker (“MW” and collectively with Column and WW, the “Stockholders”).

 

WHEREAS, the Company is engaging in various related transactions (the “IPO Transactions”) pursuant to which, among other things, the Company will effect an initial public offering of shares of its common stock, par value $0.01 per share (the “Common Shares”), the closing of which is occurring on the date hereof;

 

WHEREAS, in connection with the IPO Transactions, the Company is engaging in certain formation transactions (the “Formation Transactions”) pursuant to which, among other things, Column and the Walker Stockholders, among others, are receiving Common Shares on the date hereof in exchange for their respective interests in the entities participating in the Formation Transactions, as set forth on Schedule I hereto;

 

WHEREAS, in connection with IPO Transactions, Column has executed and delivered to the Company a Lock-Up Agreement (the “Lock-Up Agreement”) imposing certain restrictions on the transfer and sale of the Common Shares to be issued to Column pursuant to the Formation Transactions; and

 

WHEREAS, in order to induce Column to enter into the Lock-up Agreement and to consummate the Formation Transactions to which it is a party, the parties hereto desire to enter into this Agreement and provide for certain rights and restrictions with respect to the nomination and election of Directors.

 

NOW, THEREFORE, the parties hereto, in consideration of the foregoing, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, hereby agree as follows:

 

SECTION 1.                         DEFINITIONS

 

The following capitalized terms used herein have the following meanings:

 

“2011 Director Election” is defined in Section 2.1(a) hereof.

 

“Affiliate” means, as to any Person, any other Person that controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement” is defined in the preamble hereto.

 

 

“Board of Directors” means the board of directors of the Company.

 

“Column” is defined in the preamble hereto.

 

“Column Nominee” is defined in Section 2.1(a) hereof.

 

“Common Shares” is defined in the recitals hereto.

 

“Company” is defined in the preamble hereto.

 

“Consummation Notice” is defined in Section 4.2(a) hereof.

 

“Director” means a member of the Board of Directors.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exempt Transfer” means (i) a sale, assignment, transfer or other disposition pursuant to a registered offering under the Securities Act or in a broker transaction pursuant to Rule 144 under the Securities Act (including the volume limitations thereunder, if applicable), (ii) a pledge or other hypothecation of Common Shares pursuant to a bona fide financing transaction with a third party, and any foreclosure or transfer in lieu of foreclosure of such Common Shares in connection therewith, or (iii) a transfer in connection with a tender or exchange offer made to all stockholders of the Company.

 

“Fair Market Value” means the closing sales price for Common Shares (or the closing bid, if no sales were reported) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal.

 

“Formation Transactions” is defined in the recitals hereto.

 

“IPO Transactions” is defined in the recitals hereto.

 

“Lock-Up Agreement” is defined in the recitals hereto.

 

“MW Maximum Tag-Along Amount” is defined in Section 4.1(b) hereto.

 

“Named Third Party” is defined in Section 4.1(a) hereof.

 

“Notice Stockholders” means the Stockholders; provided, that any of Column, MW and WW proposing to make a Transfer shall not be considered a Notice Stockholder with respect to such proposed Transfer.

 

“Participation Notice” is defined in Section 4.1(b) hereof.

 

“Participation Period” is defined in Section 4.1(b) hereof.

 

“Permitted Transferee” means (i) with respect to an individual, (a) such individual’s spouse, lineal descendants (in each case, natural or adopted), siblings or parents, (b) any

 

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corporation, limited liability company or partnership in which the direct and beneficial owners of all of the equity interests are the individuals and/or any of the individuals referred to in clause (a) above, (c) any trust the sole beneficiaries of which, or any charitable trust the grantor of which, include the Persons described in clause (a) or clause (b) above or any private foundation organized or controlled by any of the Persons described in clause (a) or clause (b) above, or (d) any charitable entity qualified under Section 501(c)(3) of the Internal Revenue Code, and (ii) with respect to a corporation, partnership or limited liability company, an entity that controls, is controlled by, or is under common control with such entity.

 

“Person” means any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

“Stockholders” is defined in the preamble hereto.

 

“Tag-Along Rights Termination Date” means the date that is twelve (12) months after the date of the expiration, pursuant to the terms of the Lock-Up Agreement, of the “Restricted Period” (as defined in the Lock-Up Agreement).

 

“Tag-Along Stockholders” means Column and MW.

 

“Termination Date” means the date that is six (6) months after the date of the expiration, pursuant to the terms of the Lock-Up Agreement, of the “Restricted Period” (as defined in the Lock-Up Agreement).

 

“Transfer” means a sale, assignment, transfer or other disposition of more than ten percent (10%) of the issued and outstanding Common Shares of the Company in any transaction or series of related transactions; provided, that a “Transfer” shall not include a Transfer to a Permitted Transferee.  For the avoidance of doubt, “Transfer” shall not include (i) any sale, assignment, transfer or other disposition of Common Shares in connection with the Formation Transactions or the IPO Transactions or (ii) any Exempt Transfer.

 

“Transfer Amount” is defined in Section 4.1(b) hereof.

 

“Transfer Notice” is defined in Section 4.1(a) hereof.

 

“Transferring Stockholder” is defined in Section 4.1(a) hereof.

 

“Voting Securities” means at any time shares of any class of capital stock of the Company which are then entitled to vote generally in the election of Directors.

 

“Walker Stockholders” means William M. Walker and Mallory Walker.

 

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SECTION 2.                         BOARD OF DIRECTORS

 

Section 2.1                                    Column Nominee.

 

(a)                                 At the annual meeting of stockholders of the Company to be held during the 2011 calendar year, or at any special meeting of stockholders of the Company held prior to the Termination Date at which Directors are to be elected, or at any taking of action by written consent of stockholders of the Company prior to the Termination Date with respect to which Directors are to be elected (each a “2011 Director Election”), Column shall have the right (but not the obligation) to designate one (1) nominee for election to the Board of Directors (such nominee, the “Column Nominee”) at such 2011 Director Election.

 

(b)                                 Column shall not name any person as a Column Nominee if (i) such person is not reasonably experienced in business, financial or commercial real estate finance matters; (ii) such person has been convicted of, or has pled no lo contendere to, a felony; (iii) the election of such person would violate any law; or (iv) any event required to be disclosed pursuant to Item 401(f) of Regulation S-K of the Exchange Act has occurred with respect to such person.

 

(c)                                  At or prior to any 2011 Director Election: (i) the Company’s nominating committee (or any other committee exercising a similar function) shall recommend to the Board of Directors the nomination of the Column Nominee for election to the Board of Directors, and (ii) the Board of Directors shall recommend to the stockholders of the Company the election of the Column Nominee to the Board of Directors. The Company shall exercise all authority under applicable law to cause the Column Nominee to be elected to the Board of Directors at any 2011 Director Election, including, without limitation, using its reasonable efforts to solicit from the stockholders of the Company eligible to vote in the election of Directors proxies in favor of the Column Nominee.

 

Section 2.2                                    Vacancies.  From and after the date hereof until the Termination Date, in the event that any Director who is a Column Nominee ceases to serve as a Director for any reason other than the fact that Column no longer has a right to nominate a Director as provided in Section 2.1(a), the vacancy resulting thereby shall be filled by a Column Nominee designated by Column and the other Directors shall cause the appointment of such Column Nominee to the Board of Directors; provided, however, that any Column Nominee so designated by Column shall satisfy the qualification requirements set forth in Section 2.1(b).

 

Section 2.3                                    Termination of Nomination Right.  The rights and obligations set forth in this Section 2 shall terminate as of the Termination Date.

 

SECTION 3.                         ELECTION OF DIRECTORS

 

Section 3.1                                    Voting Agreement.  At any 2011 Director Election, each of the Walker Stockholders agrees to vote, at a meeting or by written consent, all of the Voting Securities then owned by such Walker Stockholder (and attend such 2011 Director Election, in person or by proxy, for purposes of obtaining a quorum and execution of written consents in lieu of meetings) in favor of the election to the Board of Directors, to the extent permitted pursuant to the

 

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Company’s Articles of Incorporation and subject to compliance with applicable law, of the Column Nominee.

 

SECTION 4.                         TAG-ALONG RIGHTS

 

Subject to Section 4.3 below, no Stockholder shall be permitted to engage in a Transfer without first offering each of the Tag-Along Stockholders the right to participate in such Transfer in accordance with this Section 4.

 

Section 4.1                                    Transfers by Stockholders.

 

(a)                                 The Stockholder(s) proposing to make a Transfer (collectively, the “Transferring Stockholder”) shall first deliver a written notice (the “Transfer Notice”) to the Notice Stockholders stating (i) the Transferring Stockholder’s desire to Transfer Common Shares to a third party; (ii) the number of Common Shares subject to the proposed Transfer; (iii) the price and the other general terms of the proposed Transfer; and (iv) the identity of the third party transferee (the “Named Third Party”).  Thereafter, the Tag-Along Stockholders may elect to participate in the Transfer subject to the participation rights set forth in this Section 4.

 

(b)                                 The Tag-Along Stockholders may elect to participate in the contemplated Transfer at the same price per Common Share and on the same terms and conditions specified in the Transfer Notice by delivering written notice (the “Participation Notice”) to the Transferring Stockholder within ten (10) days after delivery of the Transfer Notice (the “Participation Period”).  If any such Tag-Along Stockholders elect to participate in such Transfer, the Transferring Stockholder and such Tag-Along Stockholders participating in such sale shall each be entitled to sell in the contemplated Transfer, at the same price and on the same terms, a number of Common Shares equal to the product of (i) the quotient determined by dividing (x) the percentage of all issued and outstanding Common Shares held by such Transferring Stockholder or such Tag-Along Stockholder, as the case may be, as of the applicable date by (y) the aggregate percentage of all issued and outstanding Common Shares owned by the Transferring Stockholder and the Tag-Along Stockholders participating in such sale and (ii) the number of Common Shares to be sold in the contemplated Transfer (such number of shares with respect to each such Transferring Stockholder or Tag-Along Stockholder, as the case may be, the “Transfer Amount”); provided, however, that if such Tag-Along Stockholder is MW, (A) MW shall be entitled to sell no more than a number of Common Shares which has an aggregate Fair Market Value of $10,000,000 on the date the Transfer Notice with respect to such proposed Transfer is delivered (such number of shares, the “MW Maximum Tag-Along Amount”), and (B) Column shall be entitled to sell, in addition to the Transfer Amount applicable to Column with respect to such proposed Transfer, a number of Common Shares that equals the difference between (X) the Transfer Amount applicable to MW with respect to such proposed Transfer minus (Y) the MW Maximum Tag-Along Amount.  If the Tag-Along Stockholders do not send a Participation Notice during the Participation Period or otherwise decline to participate in the proposed Transfer, the Transferring Stockholder shall be permitted to consummate a transaction with the

 

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Named Third Party on substantially the same terms as the terms set forth in the Transfer Notice, provided that the closing of such transaction occurs within ninety (90) days after the delivery of the Transfer Notice.

 

(c)                                  If the Transferring Stockholder receives a Participation Notice from one or more of the Tag-Along Stockholders, the Transferring Stockholder shall use reasonable commercial efforts to obtain the agreement of the Named Third Party to the participation of such Tag-Along Stockholders in any contemplated Transfer, and no Transferring Stockholder shall transfer any Common Shares to the Named Third Party if such Named Third Party declines to allow the participation of the Tag-Along Stockholders.

 

Section 4.2                                    Consummation of Proposed Transfer.

 

(a)                                 At least ten (10) days prior to the consummation of a Transfer by a Transferring Stockholder and not before the earlier of (x) the end of the Participation Period and (y) the receipt by the Transferring Stockholder of a Participation Notice from the Tag-Along Stockholders, the Transferring Stockholder shall provide written notice (a “Consummation Notice”) to each of the Tag-Along Stockholders participating in the Transfer stating (i) the number of Common Shares that such Tag-Along Stockholder will be entitled to sell to the Named Third Party, and (ii) the date the Transfer will be consummated.  At least five (5) days prior to the date of such consummation, each Tag-Along Stockholder participating in the Transfer shall deliver to the Transferring Stockholder (or such other person as may be designated in writing by the Transferring Stockholder) for Transfer to the Named Third Party one or more certificates, properly endorsed for transfer (or evidence of delivery of uncertificated Common Shares by book-entry and/or other evidence of the transfer of Common Shares), which represent the number of Common Shares that such Tag-Along Stockholder is entitled to sell as provided in the Consummation Notice.  The certificate(s) (or evidence of delivery of uncertificated Common Shares) delivered to the Transferring Stockholder (or the Transferring Stockholder’s designee) by the Tag-Along Stockholders shall be transferred to the Named Third Party as part of the consummation of the Transfer of Common Shares pursuant to the terms and conditions specified in the Transfer Notice and the Consummation Notice.  Except to the extent other arrangements are made between the Transferring Stockholder and the Named Third Party for the delivery of proceeds directly to the Tag-Along Stockholders, upon receipt of the proceeds of the Transfer, the Transferring Stockholder shall promptly remit to each Tag-Along Stockholder that portion of such proceeds to which such Tag-Along Stockholder is entitled by reason of such Tag-Along Stockholder’s participation in such Transfer together with any stock certificates for any shares not sold in the Transfer.

 

(b)                                 In connection with a Transfer pursuant to this Section 4, each Stockholder shall be required to make representations and warranties regarding the Common Shares that such Stockholder proposes to Transfer of a type customarily made by similarly situated stockholders, including, but not limited to, such Stockholder’s ownership of and authority to transfer such

 

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Common Shares, the absence of any liens or other encumbrances on such Common Shares, and the compliance of such Transfer with the federal and state securities laws and all other applicable laws and regulations; provided, however, that each Tag-Along Stockholder shall enter into the same agreement or agreements as the Transferring Stockholder with respect to the proposed Transfer.

 

Section 4.3                                    Termination of Rights.  The rights and obligations set forth in this Section 4 shall terminate automatically, without any action by any Stockholder, on the Tag-Along Rights Termination Date.

 

SECTION 5.                         MISCELLANEOUS

 

Section 5.1                                    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one of such counterparts.  All counterparts shall constitute one and the same instrument.  Each party may execute this Agreement via a facsimile (or transmission of a .pdf file) of this Agreement.  In addition, facsimile or .pdf signatures of authorized signatories of the parties shall be valid and binding and delivery of a facsimile or .pdf signature by any party shall constitute due execution and delivery of this Agreement.

 

Section 5.2                                    Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland, without regard to the choice of laws provisions thereof.

 

Section 5.3                                    Amendment; Waiver.  Any amendment hereto shall be in writing and signed by all parties hereto.  No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party against whom enforcement is sought.  The waiver by any party of the performance of any act shall not operate as a waiver of the performance of any other act or an identical act required to be performed at a later time.  Except as otherwise provided herein, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.

 

Section 5.4                                    Entire Agreement. This Agreement constitutes the entire agreement and supersede conflicting provisions set forth in all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

 

Section 5.5                                    Assignability. This Agreement and all of the provisions hereof shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and permitted assigns and any reference to a party shall also be a reference to an heir, legal representative, successor or permitted assign; provided, however, that this Agreement may not be assigned (except by operation of law) by any party hereto without the prior written consent of the other parties hereto, and any attempted assignment without such consent shall be void and of no effect, except that the Company may assign its rights and obligations hereunder to an Affiliate of the Company.  For the avoidance of

 

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doubt, (i) any Person who is a Permitted Transferee shall be subject to the terms of this Agreement, and (ii) any Person who receives Common Shares pursuant to (A) a Transfer in compliance with Section 4 hereof or (B) an Exempt Transfer shall not be subject to the terms of this Agreement.

 

Section 5.6                                    Titles.  The titles and captions of the sections, subsections and paragraphs of this Agreement are included for convenience of reference only and shall have no effect on the construction or meaning of this Agreement.

 

Section 5.7                                    Third Party Beneficiary.  No provision of this Agreement is intended, nor shall it be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any customer, Affiliate, stockholder, partner, member, director, officer or employee of any party hereto or any other Person.  All provisions hereof shall be personal solely among the parties to this Agreement.

 

Section 5.8                                    Severability.  If any provision of this Agreement, or the application thereof, is for any reason held to any extent to be invalid or unenforceable, the remainder of this Agreement and application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision and to execute any amendment, consent or agreement to effect such replacement; provided, however, that such replacement does not defeat the principal purpose of this Agreement.

 

Section 5.9                                    Interpretation. This Agreement shall be read and construed in the English language.  As used in this Agreement, any reference to the masculine, feminine or neuter gender shall include all genders, the plural shall include the singular, and singular shall include the plural.  References herein to a party or other Person include their respective successors and assigns.  The words “include,” “includes” and “including” when used herein shall be deemed to be followed by the phrase “without limitation” unless such phrase otherwise appears. Unless the context otherwise requires, references herein to sections and subsections shall be deemed references to sections and subsections of this Agreement.  Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular section, subsection or provision hereof.  Except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or.”  All references in this Agreement to “dollars” or “$” shall mean United States dollars. With regard to each and every term and condition of this Agreement, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject thereto, no consideration shall be given to the issue of which party actually prepared, drafted or requested any term or condition of this Agreement.

 

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Section 5.10                             Equitable Remedies.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with the specific terms hereof or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any federal or state court located in the State of Maryland (as to which the parties agree to submit to jurisdiction for the purpose of such action), this being in addition to any other remedy to which the parties are entitled under this Agreement; provided, however, that nothing in this Agreement shall be construed to permit Column to enforce the consummation of the Formation Transactions or the IPO Transactions.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf as of the date first written above.

 

	
 
  	
THE COMPANY:
  
	
 
  	
 
  
	
 
  	
Walker & Dunlop, Inc., a Maryland corporation
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
 
  
	
 
  	
Name:
  	
William M. Walker
  
	
 
  	
Title:
  	
Chairman, President and Chief Executive Officer
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
COLUMN:
  
	
 
  	
 
  
	
 
  	
Column Guaranteed LLC
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
 
  
	
 
  	
Name:
  	
 
  
	
 
  	
Title:
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
WALKER STOCKHOLDERS:
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  
	
 
  	
William M. Walker
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
Mallory Walker
  

 

Signature Page to Stockholders Agreement

 

 

Schedule I

 

	
 
  	
 
  	
Common
 Shares
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
William M. Walker  
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
Mallory Walker  
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
Column Guaranteed LLCExhibit 4.1

 

RULES

 

OF

 

THE SAPPI LIMITED SHARE INCENTIVE SCHEME

 

AS APPLICABLE TO ALLOCATIONS FROM 1 JANUARY 2011 ONWARDS

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  PART 1 – THE TRUST

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CONSTITUTION OF TRUST AND TRUSTEES

  	
  9

  
	
   

  	
   

  	
   

  
	
  3.

  	
  POWERS OF TRUSTEES

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.

  	
  SECURITY

  	
  11

  
	
   

  	
   

  	
   

  
	
  5.

  	
  REMUNERATION OF TRUSTEES

  	
  12

  
	
   

  	
   

  	
   

  
	
  6.

  	
  DUTIES OF TRUSTEES

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.

  	
  IMDEMNITY AND PROCEEDINGS

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PURCHASE OF OR SUBSCRIPTION FOR SHARES

  	
  13

  
	
   

  	
   

  	
   

  
	
  9.

  	
  FUNDING OF THE TRUST

  	
  16

  
	
   

  	
   

  	
   

  
	
  PART 2
  – THE CREDIT SALE SCHEME

  	
  16

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ACQUISITION OF SCHEME SHARES

  	
  16

  
	
   

  	
   

  	
   

  
	
  11.

  	
  PAYMENT FOR SCHEME SHARES AND INTEREST

  	
  18

  
	
   

  	
   

  	
   

  
	
  12.

  	
  TRANSFER, LISTING AND PLEDGE OF SHARES

  	
  21

  
	
   

  	
   

  	
   

  
	
  13.

  	
  DIVIDENDS

  	
  24

  
	
   

  	
   

  	
   

  
	
  PART 3 – THE SHARE OPTION SCHEME

  	
  24

  
	
   

  	
   

  	
   

  
	
  14.

  	
  ACQUISITION OF SHARE OPTIONS

  	
  24

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SHARE OPTIONS

  	
  25

  
	
   

  	
   

  	
   

  
	
  16.

  	
  EXERCISE OF SHARE OPTIONS

  	
  25

  
	
   

  	
   

  	
   

  
	
  17.

  	
  ALLOTMENT

  	
  27

  
	
   

  	
   

  	
   

  
	
  PART 4 - GENERAL PROVISIONS RELATING
  TO THE CREDIT SALE SCHEME AND THE SHARE OPTION SCHEME

  	
  27

  
	
   

  	
   

  	
   

  
	
  18.

  	
  TERMINATION OF EMPLOYMENT

  	
  27

  
	
   

  	
   

  	
   

  
	
  19.

  	
  RIGHTS AND CAPITILIZATION ISSUES,
  CONSOLIDATIONS, SUB-DIVISIONS, REORGANISATION AND TAKEOVER AND SCRIP
  DIVIDENDS

  	
  31

  
	
   

  	
   

  	
   

  
	
  PART 5: THE COMBINED OPTION/DEFERRED
  SALE SCHEME

  	
  38

  
	
   

  	
   

  	
   

  
	
  20.

  	
  THE SCHEME

  	
  38

  
	
   

  	
   

  	
   

  
	
  PART 6: SWITCHING MECHANISMS

  	
  44

  
	
   

  	
   

  	
   

  
	
  21.

  	
  SHARE OPTIONS – CREDIT SALE

  	
  44

  
	
   

  	
   

  	
   

  
	
  22.

  	
  CREDIT SALE – SHARE OPTIONS

  	
  45

  
	
   

  	
   

  	
   

  
	
  23.

  	
  CREDIT SALE – COMBINED OPTION/DEFERRED
  SALE

  	
  47

  
	
   

  	
   

  	
   

  
	
  24.

  	
  SHARE OPTION – COMBINED OPTION/DEFERRED
  SALE

  	
  49

  
	
   

  	
   

  	
   

  
	
  25.

  	
  COMBINED OPTION/DEFERRED SALE – CREDIT
  SALE OR SHARE OPTIONS

  	
  51

  
	
   

  	
   

  	
   

  
	
  PART 7: GENERAL

  	
  54

  
	
   

  	
   

  	
   

  
	
  26.

  	
  ASSIGNMENT OF RIGHTS OR OBLIGATIONS

  	
  54

  

 

 

	
  27.

  	
  TRANSFERS FROM THE EXISTING SCHEME

  	
  56

  
	
   

  	
   

  	
   

  
	
  28.

  	
  CERTIFICATES

  	
  56

  
	
   

  	
   

  	
   

  
	
  29.

  	
  AGREEMENTS BINDING ON PARTICIPANTS

  	
  56

  
	
   

  	
   

  	
   

  
	
  30.

  	
  AMENDMENT

  	
  57

  
	
   

  	
   

  	
   

  
	
  31.

  	
  DISPUTES

  	
  58

  
	
   

  	
   

  	
   

  
	
  32.

  	
  ANNUAL FINANCIAL STATEMENTS

  	
  61

  
	
   

  	
   

  	
   

  
	
  33.

  	
  DEALINGS IN SECURITIES

  	
  62

  
	
   

  	
   

  	
   

  
	
  34.

  	
  VOTES AT ANNUAL GENERAL MEETING

  	
  62

  
	
   

  	
   

  	
   

  
	
  35.

  	
  PROFITS AND LOSSES

  	
  62

  
	
   

  	
   

  	
   

  
	
  36.

  	
  TERMINATION

  	
  62

  

 

 

THE SAPPI LIMITED SHARE INCENTIVE SCHEME

 

The purpose of the scheme is to provide employees of
the group with the opportunity to acquire an interest in the equity of the
company, thereby providing such employees with a further incentive to advance
the group’s interests and promoting an identity of interests between such
employees and the shareholders of the company.

 

1.                            INTERPRETATION

 

1.1                                                           In this deed, unless the context clearly indicates a
contrary intention, the following words and expressions shall bear the
following meanings and cognate words and expressions shall bear corresponding
meanings

 

1.1.1                                             “acceptance date” - the date of acceptance by a
participant of an offer for the acquisition of scheme shares, share options or
rights and options in terms of 10, 14 or 20, as the case may be

 

1.1.2                                             “allocated” - for purposes of setting the scheme
limits referred to in clause 8, shall mean:

 

- in respect of offers for the
acquisition of scheme shares, one share allocated per offer made;

 

- in respect of share options, one
share allocated per option granted;

 

- in respect
of rights and options, one share allocated per right and option granted and the
words “allocation” and “allocate” shall be construed accordingly

 

1.1.3                                             “allocation price “ - the price per share payable by a
participant for allocation shares, which price shall be the closing price at
which shares are traded on the JSE on the trading day immediately preceding the

 

 

date upon
which the board will have resolved to offer to grant, or direct the trustees to
offer to grant, the relevant right and option to that participant; provided
that such price shall, if the date on which it is to be determined falls
between the date on which the company declared an interim or final dividend on
such shares and the last day for registration by shareholders to participate in
such dividend, be reduced by the amount of such dividend

 

1.1.4                                             “allocation shares” - shares acquired by a participant
pursuant to the exercise of a right and option in terms of 20;

 

1.1.5                                             “Act” - the Companies Act 1973, as amended or any
other act which may in the future replace the Companies Act of 1973;

 

1.1.6                                             “auditors” – the auditors of the time being of the
company;

 

1.1.7                                             “board” - the board of directors of the company acting
either itself or through any committee constituted from time to time and
appointed by it for the purpose of administering this scheme;

 

1.1.8                                             “Code” – the Securities Regulation Code and the Rules of
the Securities Regulation Panel, promulgated under section 440C of the Act;

 

1.1.9                                             “company” - Sappi Limited (Registration number
1936/008963/06;

 

1.1.10                                      “control” - all circumstances where a party (or
parties acting in concert), directly or indirectly, obtains -

 

1.1.10.1                                                                de facto control of the company; or

 

1.1.10.2                                                                beneficial ownership of the specified percentage or
more of the company’s issued shares; or

 

2

 

1.1.10.3                                                                control of the specified percentage or more of the
voting rights at meetings of the company; or

 

1.1.10.4                                                                the right to control the management of the company or
the composition of the board; or

 

1.1.10.5                                                                the right to appoint or remove directors holding a
majority of voting rights at board meetings; or

 

1.1.10.6                                                                the approval by the company’s shareholders of, or the
consummation of, a merger or consolidation of the company with any other
business or entity, or upon a sale of the whole or a major part of the company’s
assets or undertaking.

 

For the purposes of this 1.1.10
the expression “specified percentage” shall bear the meaning assigned to it
from time to time in the Code read with the Act, presently being 35%;

 

1.1.11                                           “early retirement” - termination of the participant’s
employment by reason of retirement before the participant has reached the age
of 60 (sixty) years. For these purposes the retirement date is determined as
the date on which the participant ceases to be employed in his or her position,
whether or not he or she receives a salary under part-time retirement

 

1.1.12                                           “eligible applicant” - a person eligible for
participation in this scheme, namely an officer or other employee of any
company or other entity or association of persons forming part of the group,
which person shall be determined from time to time by the board in its
discretion;

 

1.1.13                                           “existing scheme” - the Sappi Limited Share Purchase
Scheme adopted at a general meeting of the company on 26 June 1979;

 

3

 

1.1.14                                           “family company” - any company or close corporation,
the entire issued share capital or member’s interests of which is held and
beneficially owned by all or any of an eligible applicant or participant, his
lawful spouse, his lawful issue (including adopted children) and/or his family
trust;

 

1.1.15                                           “family trust” - a trust constituted solely for the
benefit of all or any of an eligible applicant or a participant, his lawful
spouse and/or his lawful issue (including adopted children)

 

1.1.16                                                  “group” -  the
company, the company’s subsidiaries for the time being and any company,
partnership, trust or other entity or association of persons which is
controlled or jointly controlled by the company, whether directly or
indirectly, for which purpose the word “controlled” includes the right to
direct or otherwise control the votes attaching to the majority (or one-half in
the case of joint control) of the voting shares or other voting instruments or
voting rights in that company, partnership, trust or other entity or
association of persons;

 

1.1.17                                                  “JSE” - the JSE Limited (registration number
2005/022939/06), a public company duly registered and incorporated with limited
liability in accordance with the company laws of South Africa, licensed as an
exchange under the Securities Services Act, No. 36 of 2004

 

1.1.18                                                  “maximum period” - the period from the acceptance date
to the eighth anniversary date thereof;

 

1.1.19                                                  “option period” - the period from the acceptance date
to the date of completion of eight subsequent years continuous service in the
group;

 

1.1.20                                                  “option price” - the price per share payable by a
participant upon the exercise of a share option in respect thereof, which price
shall be the closing price at which shares are traded on the JSE on the trading
day immediately preceding the date 

 

4

 

upon which
the board will have resolved to offer to grant, or direct the trustees to offer
to grant, the relevant option to that participant; provided that such price
shall, if the date on which it is to be determined falls between the date on
which the company declared an interim or final dividend on such shares and the
last day for registration by shareholders to participate in such dividend, be
reduced by the amount of such dividend;

 

1.1.21                                                  “option shares” - shares in respect of which options
have been granted in terms of 14, for as long as such options have not been
exercised and have not lapsed;

 

1.1.22                                                  “participant” - an eligible applicant (or his
nominated family trust or family company) who has accepted an offer to acquire
share options, scheme shares or rights and options in terms of 10, 14 or 20 (as
the case may be) including his heirs, executors or administrators;

 

1.1.23                                                  “plan” – the Sappi Limited Performance Share Incentive
Plan, adopted by the company on 7 March 2005, as amended from time to
time;

 

1.1.24                                                  “retirement/normal retirement” – termination of the
participant’s employment by reason of retirement on or after the date on which that
participant has reached the age of 60 (sixty) years. For these purposes, the
retirement date is determined as the date on which the participant ceases to be
employed in his or her position, whether or not he or she receives a salary
under part-time retirement;

 

1.1.25                                                  “right and option” - the right and option granted to a
participant in terms of 20 to enter into an agreement with the company or the
trust to acquire allocation shares;

 

1.1.26                                                  “scheme” - the scheme to enable employees of the group
to acquire and/or fund the acquisition of shares, the terms of which are
embodied in this document;

 

5

 

1.1.27                                                  “scheme capitalization shares” - shares or other
securities in the company allotted and issued to a participant by way of a
capitalization of profits, share premium or reserves in respect of his holding
of scheme shares;

 

1.1.28                                                  “scheme rights shares” - shares or other securities
subscribed for in terms or as a consequence of a rights issue and acquired by or
on behalf of a participant in terms of 19.2;

 

1.1.29                                                  “scheme shares” - shares acquired by a participant in
terms of 10, including –

 

1.1.29.1                                                                       shares acquired by a participant who held share
options and who accepted an offer by the trustees to subscribe for or purchase
on his behalf the shares represented by such options in terms of 21;

 

1.1.29.2                                                                       scheme capitalization shares;

 

1.1.29.3                                                                       scheme rights shares; and

 

1.1.29.4                                                                       shares or other securities in the company or in any
other company allotted, issued or transferred by way of exchange for scheme
shares pursuant to any conversion or redemption of shares in accordance with
the company’s articles of association and/or pursuant to any takeover of the
company or any scheme of arrangement or other proposal having as its object the
passing of control or the reconstruction of the capital of the company and/or
pursuant to a reduction of capital or deregistration of the company

 

for so long as those shares or other
securities remain the subject to the pledge referred to in 12.

 

1.1.30                                                                               “shares” - ordinary shares of a nominal value of R1
each in the capital of the company;

 

6

 

1.1.31                                                                               “share debt”- the amount for the time being owing by a
participant to the trust in respect of scheme shares, which amount may be
increased from time to time in regard to any participant in accordance with the
directions of the board, in its discretion, by such amount/s which may become
payable by the participant in question;

 

1.1.31.1                                                                       in respect of any interest liability incurred from
time to time by a participant on any amount owing to the trust in terms of
this  scheme; and/or

 

1.1.31.2                                                                       pursuant to any provision of the Income Tax Act 1962
as amended (or any amendment or substitution thereof) arising out  of or pursuant to his participation in the
scheme;

 

1.1.32                                                                               “share option” - the right and option granted to a
participant in terms of 14 to acquire option shares;

 

1.1.33                                                                               “share price” - 
the price per share payable by a participant for scheme shares, which
price shall be the closing price at which shares are traded on the JSE on the
trading day immediately preceding the date upon which the board will have
resolved to direct the trustees to offer the relevant scheme shares to that
participant; provided that such price shall, if the date on which it is to be
determined falls between the date on which the company declared an interim or
final dividend on such shares and the last day for registration by shareholders
to participate in such dividend, be reduced by the amount of such dividend;

 

1.1.34                                                                               “trust” - The Sappi Limited Share Incentive Trust constituted in terms of
2.1;

 

7

 

 

 

1.1.35                          “trustees” - the trustees of the trust for the time being, the first
trustees being the persons referred to in 2.3.

 

1.2              In this deed –

 

1.2.1                             clause headings are used for convenience only and shall be ignored in
its interpretation;

 

1.2.2                             unless the context clearly indicates a contrary intention, an expression
which denotes –

 

1.2.2.1                  any one gender includes the other genders;

 

1.2.2.2                  a natural person includes an artificial person (whether corporate or
unincorporate) and vice versa;

 

1.2.2.3                  the singular includes the plural and vice versa;

 

1.2.3                             unless the context clearly indicates a contrary intention, words and
expressions defined in the Act shall bear the meanings therein assigned to
them.

 

1.3                          If any provision in 1.1 is a substantive provision conferring any right
or imposing any obligation on anyone, effect shall be given to it as if it were
a substantive provision in the body of this deed.

 

1.4                          When any number of days is prescribed in this deed, same shall be
reckoned exclusively of the first and inclusively of the last day unless the
last day falls on a Saturday, Sunday or official public holiday, in which case
the last day shall be the next succeeding day which is not a Saturday, Sunday
or official public holiday

 

8

 

PART 1 –
THE TRUST

 

2.         CONSTITUTION OF TRUST AND TRUSTEES

 

2.1                   There is hereby constituted
a trust for the benefit of participants, to be known as the “The Sappi Limited
Share Incentive Trust”, upon the terms and conditions of this deed.

 

2.2                   There shall at all times be
a minimum of two trustees in office.

 

2.3                   An executive director may
not be appointed as a trustee of the scheme. A non-executive director, subject
to any restriction as contained in the Act, may be appointed as a trustee of
the scheme, provided that he or she does not benefit from the scheme.

 

2.4                   David Charles Brink and
Thomas Louw De Beer were appointed to be the first trustees of the trust. The
current trustees are Daniël Christiaan Cronjé and Meyer Feldberg.

 

2.5                   If any trustee shall cease
to hold office for any reason, the board shall appoint a person who is willing
to act as trustee in his place.

 

2.6                   The board shall have the
right to appoint any person qualified for appointment as a trustee as an
additional trustee or as an alternate trustee and shall, if it appoints any
person as an alternate trustee, designate the trustee to whom he shall act as
alternate. An alternate trustee shall be entitled to act as trustee in the
place of and during any temporary absence or incapacity of his principal.

 

2.7                   No trustee or alternate
trustee shall be entitled to participate under this scheme for as long as he
holds office as a trustee or as an alternate trustee.

 

9

 

2.8                    A trustee or alternate trustee shall cease to hold
office as such if he –

 

2.8.1        is removed by resolution of the board; or

 

2.8.2        resigns upon giving the company and his co-trustees not less than one
calendar month’s written notice to that effect; or

 

2.8.3        becomes disqualified from holding an appointment as a director of a
company.

 

2.9                    All decisions of the trustees shall be taken by a
simple majority vote.

 

2.10                 A quorum for any meeting of trustees shall be two
trustees.

 

3.         POWERS OF
TRUSTEES

 

The trustees shall have
plenary powers to enable them to carry out and give effect to the intent,
purposes and provisions of this scheme, including the powers set out in
Schedule 2 of the Act and such powers as may from time to time be expressly
conferred on them by the board. Without derogating from the generality of the
aforegoing, the trustees shall have the power, inter alia, to –

 

3.1                   borrow moneys, with or
without security, either from the group in terms of 9 or from third parties for
the purpose of giving effect to this scheme;

 

3.2                   lend moneys, with or
without security, to participants to enable such participants to acquire shares
pursuant to this scheme;

 

3.3                   open and operate banking
accounts or other accounts appropriate to the business of the trust, to draw
and issue cheques and to receive cheques, promissory notes and/or bills of
exchange, and to endorse any of the 

 

10

 

same for collection by the bank and/or other financial institution at
which the said account was opened;

 

3.4                   invest any surplus moneys
of the trust in shares or other securities of the company or in such other
manner as the board may froth time to time approve;

 

3.5                   employ and act on the
advice of, and pay out of the funds of the trust, the reasonable fees and
disbursements of the company, auditors, attorneys, counsel and other
professional consultants in connection with the affairs of the trust;

 

3.6                   delegate any of their
powers and functions to any one or more of their number;

 

3.7                   subject to 8.2 and 8.3,
repurchase and resell scheme shares and allocation shares; and

 

3.8                   exercise such further
rights, powers and authorities as may from time to time be conferred upon them
under this scheme or by resolution of the board.

 

4.         SECURITY

 

No
trustee, alternate trustee or successor trustee shall be required to furnish
any security of any nature to the Master of the Supreme Court or to any other
official or officer, nor shall any security be required for the due performance
of any duty under the Trust Property Control Act 1988 or under any other
statutory provision of the Republic of South Africa or elsewhere.

 

11

 

5.         REMUNERATION
OF TRUSTEES

 

5.1                   The trustees and alternate
trustees shall be entitled to –

 

5.1.1         such remuneration (if any) as may from time to time be agreed between
them and the board; and

 

5.1.2         reimbursement from the trust of all expenses properly incurred by them
in and about the execution of their duties as trustees.

 

Such remuneration and expenditure
shall be borne and paid by the company if the trust is unable to pay these
amounts from its own resources.

 

5.2                   The holding of office of a
trustee or alternate trustee shall not preclude him or any firm or company of
which he is a member from rendering and recovering reasonable remuneration for
professional services on behalf of the trust.

 

6.         DUTIES OF
TRUSTEES

 

The duties of the trustees
in relation to the trust shall be those prescribed by this deed. In this
regard, the day to day administration of the business of the trust may be
delegated to any person, including any officer of the company, who shall
perform all his duties in accordance with the instructions of the trustees. The
duties of the trustees shall include, without limitation, the duty to -

 

6.1                   subscribe for or purchase
shares in accordance with the provisions of this deed;

 

6.2                   offer eligible applicants
the opportunity to acquire shares purchased or subscribed for by the trustees
in terms of 8.1 or options in respect thereof

 

12

 

6.3                   invest the funds of the
trust in such form as is permitted by the provisions of this deed;

 

6.4                   administer the scheme in
order to achieve and maintain its objectives;

 

6.5                   cause proper records and
books of account to be kept of the affairs of the trust and their
administration thereof and to cause financial statements to be prepared to
accord with the financial year end of the company or such other date as may be
determined by the board; and

 

6.6                   carry out such other duties
as may, consistent with their offices as trustees, be delegated to them from
time to time by resolution of the board.

 

7.         IMDEMNITY
AND PROCEEDINGS

 

7.1                   None of the trustees,
alternate trustees, successor trustees or officers of the trust shall be liable
for, and the company indemnifies each of them against, any loss sustained by
the trust or by any participant out of whatever cause arising, save and except
loss sustained as a result of the gross negligence, willful misconduct or
dishonesty of the trustee, alternate trustee, successor trustee or officer in
question.

 

7.2                   Legal proceedings
instituted by or against the trust may be instituted in its name.

 

8.         PURCHASE
OF OR SUBSCRIPTION FOR SHARES

 

8.1                   Subject to the provisions
of the Act and 8.2, the trustees shall, for the purposes of the scheme, from
time to time –

 

8.1.1     purchase or subscribe; or

 

13

 

8.1.2     be given options to purchase or subscribe; or

 

8.1.3     be given rights and options to purchase or subscribe,

 

for such numbers of shares
at such prices as may be agreed upon by the trustees and the board from time to
time.

 

8.2                   The trustees shall only
purchase or subscribe for shares once a participant or group of participants to
whom they will be allocated, has been formally identified.

 

8.3                   The shares held in the
trust may only be sold by the trust:

 

8.3.1            once the employment of a participant has been terminated or a
participant is deceased; or

 

8.3.2            on behalf of a participant, once the rights of ownership of the
participant has vested in terms of the provisions of the scheme.

 

8.4                   Subject to 8.8, the prior
authority of the shareholders of the company in general meeting shall be
required if the aggregate number of shares which may be acquired by all
participants under this scheme and the plan is to exceed 42,700,870 (forty two
million seven hundred thousand eighth hundred and seventy) shares being 7,95%
of the company’s issued share capital as at 30 September 2009. In the event of
a discrepancy between the number of shares and the percentage of issued shares
it represents, the number of shares shall prevail over the stated percentage.

 

8.5                   Subject to 8.8, the
aggregate number of shares that may be allocated to any one participant in
terms of or pursuant to this scheme and the plan shall not exceed 2,200, 000
(two million two hundred thousand) shares, being 0,05% (nil comma nil five
percent) of the company’s issued share 

 

14

 

capital as at 30 September 2009. In the event of a discrepancy between
the number of shares and the percentage of issued shares it represents, the
number of shares shall prevail over the stated percentage.

 

8.6                   The limit referred to in
clause 8.4 shall include new shares allotted and issued by the company in
settlement of this scheme and the plan.

 

8.7                   The aggregate result of
clauses 8.4 and 8.6 shall exclude the following:

 

8.7.1            shares purchased in the market in settlement of this scheme and the
plan; and

 

8.7.2            shares in respect of grants and offers under this scheme and the plan
which are not subsequently settled to a participant as a result of the
forfeiture thereof.

 

8.8                   Subject to clauses 19.4,
19.5 and 19.6, the limits referred to in clauses 8.4 and 8.5 shall be adjusted
in such manner as the board shall determine (and which the auditors shall
confirm in writing to be in their opinion fair and reasonable) following the
sub-division or consolidation of the shares, reduction of share capital or the
issue of additional shares whether by way of a capitalisation of the company’s
profits and reserves (including the share premium account and the capital
redemption reserve fund), or a rights issue. The objective of such an
adjustment shall be to give a participant entitlement to the same proportion of
the share capital as to which he or she was previously entitled. The auditors
shall further confirm to the JSE in writing that these adjustments are
calculated in accordance with the provisions of this scheme.

 

15

 

9.         FUNDING OF
THE TRUST

 

The purchase or
subscription price of shares acquired by the trust in terms of 8 or otherwise
under this scheme, the costs incurred in the acquisition thereof, any
administration or other expenses or administration fees properly incurred by or
on behalf of the trustees in the performance of their duties in terms of or to
give effect to the scheme, the amounts referred to in 11.1, any duties payable
upon the issue or transfer of shares to participants and any moneys required to
effect loans under this deed or repayment of any previous borrowings by the
trustees shall be funded, as the board from time to time may direct, out of -

 

9.1                   the trust’s own resources,
if any; and/or

 

9.2                   loans to be made to the
trust by companies forming part of the group in accordance with section
38(2)(b) of the Act; and/or

 

9.3                   loans by third parties to
the trust to be procured by the company upon such terms as the company is able
to arrange; and/or

 

9.4                   any other resource which is
available to the trust from time to time

 

The company undertakes to
ensure that the trust shall at all times be in a position to fund the
acquisition of shares under the scheme.

 

PART 2 –
THE CREDIT SALE SCHEME

 

10.       ACQUISITION
OF SCHEME SHARES

 

10.1                 The trustees shall, if the
board so directs and subject to 10.2, offer eligible applicants the opportunity
to acquire scheme shares at the share price, which price may be higher or lower
than the price at which the shares in 

 

16

 

question were or are to be acquired by the trust. When the board directs
to make an offer to an eligible applicant who is a director, then that director
must recuse himself of the decision making by the board for that particular
offer.

 

10.2                 An offer made in terms of 10.1–

 

10.2.1              shall be in writing;

 

10.2.2              may only be accepted by the eligible applicant to whom it is addressed
(or by his family trust or family company in terms of 26);

 

10.2.3              shall specify the maximum number of shares in respect of which the offer
may be accepted;

 

10.2.4            shall be in the form from time to time prescribed by the trustees;

 

10.2.5              may be accepted for the whole or such lesser number of the number of
shares to which the offer relates, as the eligible applicant may elect.

 

10.3                 Acceptance by an eligible applicant of an offer made
to him to acquire scheme shares shall –

 

10.3.1                be communicated to the trustees in writing by not
later than thirty days after the date upon which the offer giving rise thereto
is made;

 

10.3.2                be accompanied by payment of such amount per share (if
any) as may be stipulated by the board from time to time.

 

17

 

 

11.                     PAYMENT FOR SCHEME SHARES AND
INTEREST

 

11.1                                                    Save for the amount per share (if any) referred to in
10.3.2, the trust shall fund the acquisition of scheme shares by a participant
and, to the extent not covered by any dividends accruing to the participant
and, if the board so directs in its discretion, any taxation liability of a
participant.

 

11.2                                                    Subject to 11.5, any amount paid on the acquisition of
scheme shares, the portion of dividends referred to in 13.1.2 and any payment
made in terms of 11.3 shall be applied rateably toward payment of the share
price of all of the scheme shares which such participant holds unless the
participant allocates in writing, at the time that he makes such payment, the
payment to specific scheme shares. The balance of the share debt of a
participant shall be paid by not later than the eighth anniversary of the
acceptance date.

 

11.3                                                    Unless the board otherwise resolves at any time in its
discretion, notwithstanding that any scheme shares are paid for in whole or in part at any time by the participant concerned,
no scheme shares shall be released from the scheme or from the pledge under 12
until a period, calculated from the acceptance date, of -

 

11.3.1                   more than one year shall have elapsed, in which event
not more than 25%;

 

11.3.2                   more than two years shall have elapsed, in which event
not more than 50%, cumulatively;

 

11.3.3                   more than three years shall have elapsed, in which
event not more than 75%, cumulatively;

 

18

 

11.3.4                   more than four years shall have elapsed, in which
event all, of the relevant scheme shares may, if the share debt in respect of
them is fully discharged, be released from pledge under the scheme;

 

11.4                                                    A participant shall, on application to and on subsequent
approval by the trustees, be entitled to pay the whole of his share debt or any
portion thereof prior to the due date for payment thereof; provided that –

 

   11.4.1                                         in the event of such an early payment –

 

11.4.1.1                                        the certificates in respect of the relevant scheme
shares shall nevertheless continue to be held by the trust; and

 

11.4.1.2                                        the relevant scheme shares shall only be released from
the restrictions imposed by this deed on the dates or the remaining date and in
the proportions stipulated in 11.3;

 

11.4.2                                        in the event of the termination of such participant’s
employment –

 

11.4.2.1                                         the participant’s entitlement to scheme shares shall
be determined by reference to the principles set out in 18;

 

11.4.2.2                                         any amounts standing to the credit of any loan by the
participant to the trust in terms of 11.5, and not applied in terms of 11.2,
shall be refunded to the participant.

 

11.5                                                    Notwithstanding 11.2 and 11.4, any payment made by a
participant which would otherwise have the effect of releasing any scheme
shares from the scheme and the pledge referred to in 12 prior to the due dates
for such release under 11.3 shall, to the extent to which such payment would
otherwise result in such release, be deemed to be an interest free loan by the
participant to the trust until such due dates and no reduction of the 

 

19

 

share debt
shall result from such payment until those due dates save to the extent
otherwise provided under this scheme or determined by the board in its
discretion.

 

11.6                                                    The outstanding balance from time to time of a
participant’s share debt shall bear interest at such rate (if any) as the board
determines, in its discretion. The board may determine such rate in its
discretion and may alter such rate from time to time by giving not less than
thirty days’ prior written notice of such alteration to participants; provided
that –

 

11.6.1                                      such rate of interest shall not exceed the lower of
the maximum annual rate which may lawfully be charged from time to time and the
publicly quoted rate of interest (nominal annual compounded monthly) at which
the company’s main commercial bankers in the Republic of South Africa lend on
overdraft to their prime corporate customers in the private sector at the
appropriate time, reckoned from the due date for payment until the date of
actual payment thereof;

 

11.6.2                                      the amount of such interest shall be calculated from a
date which is not less than thirty days after the date of such determination or
alteration (as the case may be) until the last day of the company’s financial
year in which such date falls, and thereafter annually, and shall be paid on
dates coinciding with the dates of payment by the company of dividends payable
on scheme shares for each such annual period in respect of which such interest
is payable;

 

11.6.3                                      any deficit between dividends accruing to any
participant on his scheme shares and the interest payable by him shall, at the
discretion of the board, be accumulated to and form part of the capital amount
of his 

 

20

 

share debt,
and such interest shall be compounded annually on the last day of each of the company’s
financial years.

 

11.7                                                    If the full amount of any share debt is not paid on
the due date for payment thereof, the trustees shall request the participant
(or, in the event of the participant’s death or sequestration, the executor,
administrator or trustee of his estate) in writing to do so. If such request is
not complied with within twenty-one days of the date thereof, the sale of all
of such participant’s scheme shares for which payment has not been made in full
shall be deemed to have been cancelled on the basis that –

 

11.7.1                          subject to 11.7.2, the participant or his estate
shall, in consequence of such cancellation, be refunded the amounts actually
paid by that participant or his estate on account of his scheme shares;

 

11.7.2                          the trust shall not, by reason of any cancellation in
terms of this 11.7, be precluded from recovering from the participant or his
estate all costs, damages and losses sustained by the trust as a result thereof
and shall be entitled to retain any amounts payable to the participant or his
estate at the date of such cancellation and apply them in discharge of such
costs, damages and/or losses.

 

12.                     TRANSFER, LISTING AND PLEDGE OF
SHARES

 

12.1                                                    The issue of share certificates pursuant to the issue
or sale of any scheme shares to a participant shall be subject to the following
conditions –

 

12.1.1                          the scheme shares shall be registered in the name of
the participant and the trust shall be obliged to pay any stamp duty payable on
the allotment and issue or transfer of scheme shares to him;

 

21

 

12.1.2                          the participant shall execute a pledge of his scheme
shares in favour of the trust in such form and upon such terms and conditions
as are determined by the trustees and upon the terms and conditions contained
in 12.2; and

 

12.1.3                          the trust shall be entitled irrevocably and in rem
suam to recover possession, from the company’s transfer secretaries, of the
certificates relating to the relevant scheme shares, including any scheme
capitalization shares and scheme rights shares related thereto, as well as
share certificates in respect of shares in any other company acquired pursuant
to 1.1.24.4.

 

12.2                                                    The pledge of scheme shares by the participant to the
trust shall be upon the terms that –

 

12.2.1                                      such pledge shall include the pledge of any scheme
capitalization shares, scheme rights shares and shares issued to a participant
in lieu of a cash dividend on account of his scheme shares

 

12.2.2                                      those scheme shares shall serve as security for the
due payment by the participant of his share debt (including his liability in
respect of scheme rights shares);

 

12.2.3                                      if a participant’s estate is surrendered or
sequestrated, whether provisionally or finally, the provisions of 18.1.1.2
shall apply, mutatis mutandis; provided that –

 

12.2.3.1                            any amounts due to the participant shall be paid by
the trustees to the participant; and

 

22

 

12.2.3.2                            the board may, in its discretion, include any other
amounts in the net amount due to a participant under 18.1.1.2,

 

thereby releasing the participant from his obligation
to pay the share debt;

 

12.2.4                                      subject to 11.3, 11.4 and 11.5, upon payment in full
being received by the trust for any scheme shares, those scheme shares shall be
released from the operation of that pledge ;

 

12.2.5                                      any of the trustees, nominated by them, shall be
irrevocably and in rem suam empowered to execute any instrument of transfer in
respect of scheme shares to give effect to the implementation by the trust the
powers conferred upon it in terms of this 12.2;

 

12.2.6                                      the trust shall have the power to pledge any scheme
shares pledged to it in terms of this 12.2 for the purpose of raising any
moneys

 

required for the purchase of or subscription for
shares and/or the discharge of any loan owed by the trust, whether to the
company or otherwise.

 

12.3                                                    By not later than sixty days after the date on which
payment in full is received by the trust for any scheme shares which are
capable of being released to a participant in terms of 11.3 and the aforegoing
provisions of this 12, the trustees shall deliver to the relevant participant
the certificate in respect of those scheme shares, registered in the name of
the participant. If such scheme shares are not already listed, the company
shall apply for the listing of those shares on the JSE and any other stock
exchange on which the shares of the company may be listed by not later than
such delivery date.

 

23

 

13.                     Dividends

 

13.1                                                    Dividends declared in respect of scheme shares shall
be paid –

 

13.1.1                                      firstly to the trustees, pro tanto in satisfaction of
interest accrued in terms of 11.6 in respect of the participant’s share debt;

 

13.1.2                                      secondly, as to any amount determined by the board, in
its discretion, not exceeding the balance of the participant’s share debt for
the time being, to the trust by way of reduction pro tanto of the participant’s
share debt; and

 

13.1.3                                      as to the balance (if any), to the relevant
participant.

 

13.2                                                    Simultaneously with his acceptance of an offer for
scheme shares, each participant shall execute a dividend mandate (which shall
be in a form determined by the trustees) in respect of his scheme shares
authorising the payment of dividends accruing in respect thereof to the
trustees, which mandate shall be cancelled in respect of each tranche of scheme
shares referred to in 11.3.1, 11.3.2, 11.3.3 and 11.3.4 respectively when, the
full share debt in respect thereof will have been paid, whereafter such
dividends shall accrue and be paid to the participant.

 

PART 3 – THE SHARE OPTION SCHEME

 

14.                     ACQUISITION OF SHARE OPTIONS

 

14.1                                                    The trustees shall, in respect of share options to be
granted in terms of the scheme, if the board so directs and subject to 14.2,
offer eligible applicants the opportunity to acquire share options, it being
agreed that the option price may be higher or lower than the price at which the
shares 

 

24

 

which are the
subject matter of the share options in question were or are to be acquired by
the trust.

 

14.2                                                    An offer in terms of 14.1 shall be made and accepted
in accordance with 10.2 and 10.3, which shall apply, mutatis mutandis; provided
that the 30 day period for acceptance of offers in 10.3.1 may be extended by
such period as the secretary of the company may from time to time determine is
practicable for administrative purposes.

 

14.3                                                When deciding on the number of options to be granted
to an eligible applicant, the board takes into account the seniority of the
eligible applicant in the organisation.

 

15.                     SHARE OPTIONS

 

15.1                                                    Each share option shall confer the right on the holder
thereof to subscribe for or purchase one share at the option price.

 

15.2                                                    The company shall at all times reserve and keep
available, out of its authorised but unissued share capital, such number of
shares as shall become issuable upon the exercise of all the share options then
outstanding, less the number of shares held by the trust and set aside by the
trustees for the purpose of satisfying the exercise of any share options.

 

16.                     EXERCISE OF SHARE OPTIONS

 

16.1                                                    Share options granted prior to 1 October 2009 may
not be exercised until after a period, calculated from the acceptance date, of
-

 

16.1.1                               more than one year shall have elapsed, in which event
not more than 25%;

 

25

 

16.1.2                               more than two years shall have elapsed, in which event
not more than 50%, cumulatively;

 

16.1.3                               more than three years shall have elapsed, in which
event not more than 75%, cumulatively;

 

16.1.4                               more than four years shall have elapsed, in which event
all

 

or any lesser number of the relevant share options may
be exercised.

 

16.2                                                    The periods after which options granted on or after 1 October 2009
may be exercised shall be specified in the letter in terms of which the options
are granted.

 

16.3                                                    A share option shall lapse -

 

16.3.1                                upon the day following the expiry of the option
period; or

 

16.3.2                                upon the participant making application for the
voluntary surrender of his estate or his estate being otherwise sequestrated or
upon any attachment of any interest of a participant under the scheme, unless
the board passes a resolution to the contrary.

 

16.4                                                    If the company is placed in final liquidation, the
secretary of the company shall notify the participant thereof in writing and he
shall be entitled to exercise all or any share options held by him within
twenty-one days of such notification, failing which the share options concerned
shall lapse.

 

16.5                                                    Every exercise of a share option shall -

 

16.5.1                                 be exercised by written notice given by the
participant and delivered to the secretary of the company at the company’s
registered office;

 

26

 

16.5.2                               specify the number of shares in respect of which the
share option is exercised;

 

16.5.3                               be accompanied by payment of the full amount of the
option price in respect of the share options exercised unless a participant has
accepted an offer in terms of 21 for the trustees to subscribe for or purchase
shares on his behalf; and

 

16.5.4                               be regarded as complete only when payment in terms of
16.5.3 has been received by the trustees.

 

17.                     Allotment

 

The company
shall issue share certificates, where applicable, for the shares allotted and
issued as a result of the exercise of any share options by not later than sixty
days after the exercise thereof and shall apply for a listing of the shares in
question on the JSE (and on any other stock exchange on which shares may be
listed), prior to or as soon as possible after such date. Shares allotted and
issued pursuant to the exercise of share options will rank pari passu with the
then issued shares as from their respective dates of allotment.

 

PART 4 - GENERAL PROVISIONS
RELATING TO THE CREDIT SALE SCHEME AND THE SHARE OPTION SCHEME

 

18.                     TERMINATION OF EMPLOYMENT

 

18.1                                                    If the employment by any company in the group of any
participant who holds scheme shares terminates –

 

18.1.1                               prior to the expiry of the maximum period for any
reason other than any of the reasons referred to in 18.1.2, 18.1.3 and 18.1.4 –

 

27

 

 

18.1.1.1         he shall,
within sixty days after the termination of his employment, make payment of the
liability attributable to the number of scheme shares, if any, which are
capable of being released to him in terms of 11.3 at the date of termination of
his employment;

 

18.1.1.2         the sale of
those scheme shares which are not capable of being released to him in terms of
11.3, at the date of termination of his employment and the sale of any other
shares, the liability of the participant attributable to which is not paid to
the trustees within the period of sixty days referred to in 18.1.1.1, shall be
deemed to have been cancelled on the date of termination of his employment or
upon the expiry of such sixty day period (as the case may be); provided that if
the participant will, prior thereto, have paid any amount on account of his
share debt in respect of such scheme shares, such amount, other than those
payments retained by the trustees and applied in reduction of the participant’s
interest liability in terms of 13.1.1, will be refunded to him; provided
further that the board shall be entitled, in its discretion, to apply other
terms or conditions which are more favourable to the participant than the
aforegoing provisions of this 18.1.1.2 including the payment to the participant
of a maximum amount equal to the share price at the date of termination of his
employment minus his share debt at that date;

 

18.1.2         by reason of
his summary dismissal or on the grounds of his proven  dishonest, fraudulent or grossly negligent
conduct (whether such 

 

28

 

termination
occurs as a result of notice given to or by him or otherwise), the sale of all
such participant’s scheme shares which are not capable of being released in
terms of 11.3 at the date of termination of his employment and all of his
scheme shares for which full payment has not been received by the trustees as
at that date shall be deemed to have been cancelled on the basis that such
participant shall be refunded any amount actually paid by him in reduction of
the liability attributable to his scheme shares other than those amounts
retained by the trustees and applied in reduction of the participant’s interest
liability in terms of 13.1.1;

 

18.1.3         as a result
of his death, retrenchment or retirement, he or the executors of his estate
shall be entitled to make payment of his liability in respect of all of his
scheme shares (whether or not they are capable of being released in terms of
11.3 at the date of termination of his employment) within twelve months after
the date of termination of his
employment, failing which the provisions of 18.1.1.2 shall apply, mutatis
mutandis;

 

18.1.4         as a result
of his early retirement, he shall be entitled to make payment of his liability
in respect of all of his scheme shares within twelve months after the date of
such termination of employment, failing which the provisions of 18.1.1.2 shall
apply, mutatis mutandis; provided that if the date of his early retirement
falls on a date which is more than twelve months prior to the date which would
have been his normal retirement date, then notwithstanding such payment, his
scheme shares shall only be capable of being released to him on the dates on
which they would have been capable of being released in terms of 11.3.3 had his
employment not terminated;

 

29

 

18.2                 If
the employment by any company in the group of any participant who holds share
options terminates –

 

18.2.1          prior to the
expiry of the option period for any reason other than those referred to in
18.2.2, 18.2.3, 18.2.4 and 18.2.5, the participant shall be entitled to
exercise all of that number of his share options which he was entitled to
exercise in terms of 16.1 and 16.2 immediately prior to the termination of his
employment by not later than sixty days after the date of termination of his
employment, failing which the said share options shall automatically lapse.
Those share options which the participant is not entitled to exercise in terms
of 16.1 and 16.2 on the date on which his employment terminates shall
automatically lapse, unless the board otherwise resolves in its discretion;

 

18.2.2          by reason of
his summary dismissal or on the grounds of his proven dishonest, fraudulent or
grossly negligent conduct (whether such 
termination occurs as a result of notice given to or by him or
otherwise), all of his share options shall automatically lapse;

 

18.2.3          as a result
of his death, the executors or administrators of his estate or his heir (as the
case may be) may exercise all of his share options (whether or not they are
capable of being exercised in terms of 16.1 and 16.2 at the date of termination
of his employment) by not later than twelve months after the date on which his
employment terminates, failing which his share options shall automatically
lapse;

 

18.2.4          as a result
of his retirement or retrenchment, he may, by not later than twelve months
after the date of termination of his employment, exercise all of his share
options (whether or not they are capable of being exercised in terms of 16.1
and 16.2 at the date of termination of 

 

30

 

his
employment), failing which his share options shall automatically lapse. If such
participant dies prior to having exercised all or any of his share options in
terms of this 18.2.4, then the provisions of 18.2.3 shall apply with effect
from the date of his death, mutatis mutandis;

 

18.2.5          as a result
of his early retirement, he may, by not later than twelve months after the date
of termination of his employment, exercise all of his share options (whether or
not they are capable of being exercised in terms of 16.1 and 16.2 at the date
of termination of his employment), failing which his share options shall automatically
lapse; provided that if the date
of his early retirement is more than twelve months prior to the date which
would have been his normal retirement date, then notwithstanding such payment,
shares subscribed for or purchased by him as a result of the exercise of such
share options shall only be capable of being released to him on the dates on
which he would have been entitled to exercise such share options in terms of
16.1 and 16.2 had his employment not terminated. If such participant dies prior
to having exercised all or any of his share options in terms of this 18.2.5,
then the provisions of 18.2.3 shall apply with effect from the date of his
death, mutatis mutandis.

 

19.       RIGHTS AND CAPITILIZATION ISSUES, CONSOLIDATIONS, SUB-DIVISIONS,
REORGANISATION AND TAKEOVER AND SCRIP DIVIDENDS

 

19.1                 Share
options shall not entitle the participant concerned (“option holder”) to
participate in rights offers by the company. If, however, the company
undertakes a rights offer, it shall grant to the option holder options to
acquire the same number of shares or other securities to which he would have
been entitled in terms of the rights offer had he been the holder of 

 

31

 

the same
number of shares as the number of share options held by him. The additional
options shall be granted to the option holder on the following terms and
conditions –

 

19.1.1              the board
shall furnish full details of the rights offer to the option holder;

 

19.1.2              the option
holder shall not be entitled to renounce, transfer, cede, pledge, alienate or
encumber the additional options thus granted;

 

19.1.3              the option
holder shall be granted the option to subscribe for all or such lesser number
of the shares or other securities referred to in 19.1 at an option price which
is the same as the subscription price of those shares or other securities, on
the basis that –

 

19.1.3.1             if the
securities concerned are shares, the option price shall be payable by the
option holder, mutatis mutandis, in accordance with 16 and 18, upon the basis
that the acceptance date in relation to those additional share options shall be
deemed to be the acceptance date relating to the share options from which the
opportunity to subscribe for the underlying shares arose;

 

19.1.3.2             if the
securities concerned are not shares, the option price shall be payable on, and
the acceptance date in relation to the additional options shall be, a date or
dates determined by the board in its discretion;

 

provided that in all other respects the provisions of
this scheme relating to share Options shall apply to all options issued in
terms of this sub-clause, mutatis mutandis.

 

32

 

19.2                 Scheme
shares shall rank pan passu with the other issued shares for participation in
all rights offers of shares or other securities by the company. Rights accruing
on scheme shares in respect of rights offers by the company shall, unless the
board in its discretion otherwise directs, be followed by participants. If a
participant is not required to follow his rights, then such rights shall be
renounced in favour of the trust or its nominee/s, in which event the purchase
price per right shall be the closing market price at which the rights are
traded on the JSE on the trading day immediately preceding the date of such
renunciation. Rights followed by a participant shall be subscribed for by the
trust subject to the following terms and conditions:

 

19.2.1          the shares or
other securities subscribed for in this manner shall be scheme rights shares;

 

19.2.2          the relevant
company in the group shall lend to the trust the amount required for the
purpose of subscribing for the appropriate number of that participant’s
entitlement to scheme rights shares, and the trust shall subscribe for those
scheme rights shares on behalf of the participant concerned. The scheme rights
shares shall be allotted and issued by the company to the participant
concerned.

 

19.2.3          certificates
in respect of scheme rights shares shall be delivered to and retained by the
trust pursuant to the pledge thereof in terms of 12.2;

 

19.2.4          the
subscription price of scheme rights shares subscribed for by the trust on
behalf of a participant in terms of 19.2.2 shall be payable by the participant
to the trust, mutatis mutandis, in accordance with the provisions of 11, upon
the basis that the acceptance date in relation to those scheme rights shares
shall be deemed to be the acceptance 

 

33

 

date relating
to the scheme shares from which the entitlement to those scheme rights shares
arose.

 

19.3                 Scheme
shares shall in all other respects rank pari passu with the existing issued
shares, including in respect of participation in capitalization issues;
provided that scheme capitalization shares shall be subject to all the
restrictions and conditions of the scheme.

 

19.4                 In
the event of any capitalisation issue or any sub-division or consolidation of
ordinary shares or any reduction of the ordinary share capital of the company (“adjustment
event”), the number of option shares and/or the option price shall be adjusted
by the board in such manner as it may deem appropriate with the objective that
such adjustment should give a participant an option to the same proportion of
the equity capital as that to which he was entitled prior to the adjustment
event; provided that the auditors of the company, acting as experts and not as
arbitrators, shall have confirmed in writing that in their opinion such
adjustments are fair and reasonable.

 

19.5                 If
the company at any time before the share debt owing on any scheme shares has
been paid in full:

 

19.5.1         is placed in
liquidation for purposes of reorganisation; or

 

19.5.2         is party to a
scheme of arrangement affecting the structuring of its share capital; or

 

19.5.3         reduces its
share capital; or

 

19.5.4         sub-divides
or consolidates its shares,

 

34

 

such adjustments shall be made to the purchase price
in respect of those scheme shares as have not been fully paid as a partner or
director of the company’s auditors for the time being (acting as an expert) in
his discretion may confirm in writing to the board as being fair and reasonable
in the circumstances, subject (where necessary) to the sanction of the Court.

 

19.6                 The
provisions of 19.5 shall apply, mutatis mutandis, to participants holding share
options.

 

19.7                 Subject
to Rules 19.8, in the event of –

 

19.7.1          a change of
control of the company becoming effective; or

 

19.7.2          if, in
concluding the change of control, the board in office at the date immediately
prior to the proposed change of control being communicated to the board ceases
to be able to determine the future employment conditions of the group’s
employees; or

 

19.7.3          the person/s
(or those persons acting in concert) who has/have control of the company as at
the date that offers are made or options are granted in terms of the scheme,
take/s any decision, pass/es any resolution and/or take/s any action the effect
of which is to delist the company from the JSE and the company becomes aware of
such decision, resolution and/or action,

 

before the date that the
participants are entitled to the release of the scheme shares as specified in
11.3 or to exercise their share options as specified 16.1 and 16.2, such participant
shall be entitled to require the release of all scheme shares not yet released
and/or the exercise of all share options which such participant was not yet
entitled to exercise by submitting a written notice to the board within a
period of 90 days after the date upon which such change of control becomes
effective.

 

35

 

19.8                 In
the event that:

 

19.8.1          the change of
control is initiated by the board or the board in office immediately prior to
the proposed change of control being communicated to the board continue to be
able to determine the future employment conditions of the group’s employees; or

 

19.8.2          there is an
internal reconstruction or other event which does not involve any substantial
change in the ultimate control of the company and the shareholders in the
company immediately prior to the transaction hold a majority of shares in the
company immediately after the transaction;

 

the provisions of 19.7 shall not
apply and the participants shall not be entitled to require the release of
scheme shares. The provisions governing scheme shares and share options as set
out in this deed shall continue to apply unless the board determines that
action should be taken to protect the interests of participants. Such action
shall be as the board considers to be appropriate in the circumstances to
protect the participants’ interests and which shall be limited to granting
shares in such other company in exchange for the participants’ scheme shares or
converting share options into equivalent options in respect of shares in one or
more other companies, or to make cash payments to participants equal to the
value of outstanding scheme shares or options at the time.

 

19.9                 Notwithstanding
any other provision of this deed, if any participant and the trustees so agree
in writing and the board passes a resolution approving that agreement –

 

19.9.1          any
transaction under which that participant purchased or otherwise acquired shares
under this scheme may be cancelled;

 

36

 

19.9.2          the trust may
purchase from that participant any shares purchased or otherwise acquired by
him under this scheme at a price not exceeding the selling or acquisition price
of those shares to him, provided that the participant shall not receive or
become entitled, in consequence of such cancellation or acquisition, to receive
any compensation or consideration other than the repayment of any portion of
the purchase or acquisition price actually paid by him.

 

19.10               If,
in declaring a dividend to its members at any time, the company grants to its
members the right to elect to receive either a cash amount or shares in lieu of
a cash dividend, participants holding scheme shares may elect to receive either
cash or shares; provided that the provisions of 13 shall apply, mutatis
mutandis, in respect of such dividend should the participant elect to receive
the cash amount.

 

19.11               Holders
of share options and of allocation shares shall not be entitled to any form of
participation in or to any rights in respect of the issue of shares by the
company in lieu of a cash dividend.

 

19.12               The
issue of equity securities as consideration for an acquisition, the issue of
securities for cash and the issue of equity securities or a vendor
consideration placing will not be regarded as a circumstance requiring
adjustment in terms of the provisions of this 19

 

19.13               When
any adjustments in terms of the provisions of this 19 are finalised, the
auditors shall confirm to the JSE in writing that these are calculated in
accordance with the provisions of this scheme.

 

37

 

 

 

19.14               Any
adjustments made in terms of the provisions of this 19 will be reported on the
company’s annual financial statements in the year during which the adjustment
is made.

 

PART 5: THE COMBINED
OPTION/DEFERRED SALE SCHEME

 

20.       THE SCHEME

 

20.1                 Notwithstanding any other provision of this scheme, the board and the
trustees may give effect to the scheme by the company itself, without the
intervention of the trust or the trustees, offering eligible applicants the
opportunity to acquire rights and options. When the board directs to make an
offer to an eligible applicant who is a director, then that director must
recuse himself of the decision making by the board for that particular offer.
Any such offer and acceptance thereof shall be made in accordance with 10.2 and
10.3, which shall apply, mutatis mutandis, and shall comply with all the
requirements of Schedule 14 of the JSE Listings Requirements.

 

20.2                 Each
right and option shall confer on the holders thereof the right and option to
enter into an agreement with the company to acquire one allocation share, which
agreement shall be upon the following terms and conditions –

 

20.2.1    allocation
shares shall be acquired by participants at the allocation price;

 

20.2.2    subject to
20.2.4 –

 

20.2.2.1         the company
shall allot and issue or transfer the allocation shares and deliver the share
certificates in respect of the allocation shares to the participant; and

 

38

 

20.2.2.2         the
participant shall take delivery of the allocation shares; and

 

20.2.2.3         ownership of
the allocation shares shall vest in the participant and the allocation shares
shall be registered in the name of the participant,

 

at the times and in the numbers
stipulated in 20.2.3. For the sake of clarity, it is recorded that, until such
times, the participant shall not be entitled to exercise any of the votes
attaching to the relevant allocation shares nor to dividends declared on those
allocation shares;

 

20.2.3      unless the
board otherwise resolves in its discretion, no allocation shares shall be paid
for or delivered as contemplated in 20.2.2 until a period, calculated from the
acceptance date, of –

 

20.2.3.1     more than one
year shall have elapsed, in which event not more than 25%;

 

20.2.3.2     more than two
years shall have elapsed, in which event not more than 50% cumulatively;

 

20.2.3.3     more than
three years shall have elapsed, in which event not more than 75% cumulatively;

 

20.2.3.4     more than
four years shall have elapsed, in which event all,

 

of the relevant allocation shares shall be delivered
to the participant in accordance with 20.2.2 against payment by the participant
of the full allocation price in respect thereof;

 

39

 

20.2.4      if the
employment by any company in the group of any participant who has exercised a
right and option terminates prior to the expiry of eight years from the
date of grant of the right and option –

 

20.2.4.1         for any
reason other than those stated in 20.2.4.2, 20.2.4.3 and 20.2.4.4, then –

 

20.2.4.1.1          he shall,
within sixty days after the date of termination of his employment, make payment
of the allocation price attributable to the number of allocation shares, if
any, for which he is entitled to make payment and take delivery in terms of
20.2.3 at the date of termination of his employment;

 

20.2.4.1.2          the agreement
shall be deemed to be automatically cancelled in respect of those allocation
shares in respect of which the payment by and delivery to that participant was
not competent in terms of 20.2.3 at the date of termination of his employment
and in respect of any other allocation shares, the allocation price of which is
not paid to the company within the period of sixty days referred to in
20.2.4.1.1, and the participant shall receive no compensation whatsoever in
consequence of the cancellation of the agreement;

 

20.2.4.2                 by
reason of his summary dismissal or on the grounds of his proven dishonest,
fraudulent or grossly negligent conduct (whether such termination occurs as a
result of notice given to or by him or otherwise), the agreement 

 

40

 

shall be
deemed to be automatically cancelled at the date of termination of his
employment in respect of all of that participant’s allocation shares, and the
participant shall receive no compensation whatsoever in consequence of the
cancellation of the agreement;

 

20.2.4.3                 as
a result of his death, retirement, retrenchment or for any other reason
considered and approved by the board, he or the executors of his estate shall
be entitled to make payment of the purchase price of all of his allocation
shares within a period of twelve months after the date of termination of his
employment, failing which the provisions of 20.2.4.1.2 shall apply, mutatis mutandis;

 

20.2.4.4                 as
a result of his early retirement, he shall be entitled to make payment of the
allocation price of all of his allocation shares within a period of twelve
months after the date of such termination of employment, failing which the
provisions of 20.2.4.1.2 shall apply, mutatis mutandis; provided that if the
date of his early retirement falls on a date which is more than twelve months
prior to the date which would have been his normal retirement date, then
notwithstanding such payment, such allocation shares shall only be delivered to
him on the dates on which they would have been capable of being delivered to
him in terms of 20.2.3 had his employment not terminated;

 

41

 

20.2.5             subject to
the provisions of this 20, the provisions of 19 shall apply to rights and
options and to allocation shares, mutatis mutandis;

 

20.2.6             notwithstanding
any other provision of this 20.2, all allocation shares shall be delivered to
and paid for in full by the participant concerned by not later than the eighth
anniversary of the acceptance date thereof.

 

20.3                 A
right and option shall be exercised by the participant concerned at any time
within twelve months after the date of grant of the right and option, failing
which the right and option shall automatically lapse. If the employment with
the group of any participant who has not exercised a right and option
terminates –

 

20.3.1         for any
reason other than those stated in 20.2.4.3 and 20.2.4.4, then such right and
option shall automatically lapse;

 

20.3.2         for any of
the reasons stated in 20.2.4.3 and 20.2.4.4, then the provisions of 18.2.3,
18.2.4 or 18.2.5 (as the case may be) shall apply, mutatis mutandis, on the
basis that the provisions of 20.2.4.3 or 20.2.4.4 (as the case may be) shall
thereafter apply, mutatis mutandis, in respect of those rights and options
which are exercised.

 

20.4                 Every
exercise of a right and option –

 

20.4.1         shall be
effected by written notice given by the participant and delivered to the secretary
of the company at the company’s registered office;

 

42

 

20.4.2         shall specify
the number of allocation shares (being a multiple of 100) in respect of which
the right and option is exercised;

 

20.4.3         shall be
accompanied by a deposit (“deposit”) of such amount per share (if any) as may
be determined by the board from time to time in its discretion; provided that
such amount shall not exceed 5% of the allocation price. The deposit shall –

 

20.4.4         be held by the
trustees as security for the fulfilment by the participant of his obligations
under this deed and the trustees shall at any time be entitled to appropriate
and apply the deposit or any part thereof to any amount owed by the participant
to the trust;

 

20.4.5         unless the
board otherwise resolves in its discretion, be forfeited by the participant to
the trust should the agreement pursuant to the exercise of a right and option
be cancelled for any reason other than in terms of 25, in which event it shall
be held by the trustees as security for the repayment of the share price or
option price, as the case may be;

 

20.4.6         only be
refunded to the participant by the trustees once he has fulfilled all of his
obligations in terms of this deed.

 

20.5                The
company shall at all times reserve and keep available out of its authorised but
unissued share capital, such number of shares as shall become issuable upon the
date of issue of allocation shares, less the number of shares held by the trust
and set aside by the trustees for the purposes of this 20

 

43

 

20.6                 The
company shall issue share certificates for the shares allotted pursuant to this
20 within sixty days after payment of the allocation price of the allocation
shares in question is made by the participant and shall apply for a listing of
the shares in question as soon as possible after such date on the JSE (and on
any other stock exchange on which shares are listed). The shares so issued
shall rank pari passu with the then issued shares of the same class in the
company as from their respective dates of issue.

 

20.7                 Notwithstanding
any other provision of this 20, the board and trustees may give effect to this
20 –

 

20.7.1     by the
trustees, upon being directed to do so by the board, causing the trust to grant
to participants the right and option to enter into an agreement with the trust
to purchase shares from the trust or causing the trust to enter into an
agreement with participants, mutatis mutandis, in accordance with the
provisions of 20.1 to 20.6 inclusive. If the trustees grant to a participant a
right and option as aforesaid, it shall be so granted on the basis that if such
right and option is exercised by the participant, the~ resultant agreement
shall be in accordance with those provisions; by any variation of the method
referred to in 20.1 to 20.6 inclusive or 20.7.1 or any other method which will
not prejudice any eligible applicant or participant or the company.

 

PART 6: SWITCHING MECHANISMS

 

21.       SHARE OPTIONS – CREDIT SALE

 

21.1                 The
trustees, on the authority of a resolution of the board, may at any time by
written notice offer to subscribe for or purchase, on behalf of a 

 

44

 

participant
who is permitted to exercise his share options under 16, in lieu of such share
options, the shares represented by his share options.

 

21.2                 A
participant to whom an offer has been made in terms of 21.1 may, by written
notice given to the trustees within 30 days of the date of the offer, accept
such offer. Such notice shall –

 

21.2.1     specify the
name of the participant, the number of share options to be exercised and the
option price;

 

21.2.2     be
accompanied by payment of the amount, if any, specified in terms of 10.3.

 

21.3                 The
trustees shall, forthwith on receiving the notice referred to in 21.2 subscribe
for or purchase, on behalf of the participant concerned, the number of shares
specified in 21.2.2. Such subscription shall be made subject to the provisions
of 12 and the participant shall, ipso facto, in respect of the shares
concerned, be bound by the provisions of the scheme relating to scheme shares;
provided that the original acceptance date shall, unless the board otherwise
resolves, remain unaltered.

 

21.4                 Any
taxes and/or duties payable as a result of any transaction in terms of the
provisions of this 21 shall, unless the board otherwise resolves, be borne and
paid by the participant.

 

22.       CREDIT SALE – SHARE OPTIONS

 

22.1                 The
trustees, on the authority of a resolution of the board, may at any time prior
to the expiry of the maximum period, by written notice offer to purchase on
behalf of the trust all or any of a participant’s scheme shares which are not
yet capable of release from the scheme in accordance with 

 

45

 

11.3 at a
price per scheme share equal to the original share price of such scheme shares
on the basis that the trustees shall, simultaneously with such purchase, grant
to such participant the option to purchase or subscribe for the same number of
shares at a price per share (“offer price”) equal to such original share price.

 

22.2                 A
participant to whom an offer has been made in terms of 22.1 may, by written
notice given to the trustees within 30 days of the date of the offer,
accept such offer. Such notice shall specify, inter alia –

 

22.2.1         the name of
the participant;

 

22.2.2         the number of
scheme shares concerned; and

 

22.2.3         the original
share price.

 

22.3                 Forthwith
on receiving the notice referred to in 22.2 –

 

22.3.1     the trustees
shall apply the purchase price payable by the trust to the participant (being
the original share price) in discharge of the outstanding balance of the
participant’s share debt and the balance, if any, shall be paid to the
participant;

 

22.3.2     the
participant shall, ipso facto, in respect of the share options concerned, be
bound by the provisions of the scheme relating to share options; provided that
the original acceptance date of the participant’s application for the relevant
scheme shares shall, unless the board otherwise resolves in its discretion, be
deemed to be the acceptance date of such share options.

 

46

 

22.4                 Any taxes and/or
duties payable as a result of any transaction in terms of the provisions of this 22 shall, unless
the board otherwise resolves, be borne and paid by the participant

 

23.       CREDIT SALE – COMBINED OPTION/DEFERRED SALE

 

23.1                 The
trustees, on the authority of a resolution of the board, may at any time prior
to the expiry of the maximum period, by written notice offer to purchase all of
a participant’s scheme shares on the basis that –

 

23.1.1             if the
closing market price of a share on the JSE on the trading day immediately
preceding the date of such request (“current price”) exceeds the original share
price payable by the participant for the scheme shares, then –

 

23.1.1.1             the purchase
price per scheme share payable by the trust to the participant shall be not
less than the current price;

 

23.1.1.2             the trustees
shall, simultaneously with such purchase, grant such participant the right and
option to enter into an agreement with the trust to acquire the same number of
allocation shares;

 

23.1.1.3             the price
payable by the participant in consideration for the grant of such right and
option to him (“grant price”) shall be an amount equal to the current price
less the original share price payable by him to the trust for the scheme shares
in question;

 

23.1.1.4             the
allocation price per allocation share payable by the participant shall be the
original share price payable by the participant for the scheme shares purchased
by the trust from him;

 

47

 

 

23.1.1.5             if the
current price is equal to or less than the original share price payable by the
participant for the scheme shares in question, then –

 

23.1.1.6             the price per
scheme share payable by the trust shall be the original share price payable by
the participant for those scheme shares;

 

23.1.1.7             the
provisions of 23.1.1.2 and 23.1.1.4 shall apply, mutatis mutandis.

 

23.2                 A
participant to whom an offer has been made in terms of 23.1 may, by written
notice given to the trustees within 30 days of the date of the offer, accept
such offer. Such notice shall specify –

 

23.2.1          the name of
the participant;

 

23.2.2          the number of
scheme shares concerned;

 

23.2.3          the share
price payable by the participant for such scheme shares.

 

23.3                 Forthwith
on receiving the notice referred to in 23.2 –

 

23.3.1          if 23.1.1 is
applicable, the trustees shall apply the current price payable to the
participant in reduction of the participant’s share debt and the grant price;

 

23.3.2          if 23.1.1.5
is applicable, the trustees shall apply the original share price payable to the
participant in reduction of the participant’s share debt;

 

23.3.3          the
provisions of 20 shall apply, mutatis mutandis, to such allocation shares, save
that:

 

48

 

23.3.3.1             the date of
grant of the right and option, unless the board otherwise resolves in its
discretion, be deemed to be the original acceptance date for the relevant
scheme shares;

 

23.3.3.2             if more than
twelve months has elapsed since the original acceptance date of the relevant
scheme shares, then the right and option shall be exercised within sixty days
after the date on which the trustees receive the participant’s notice in terms
of failing which such right and option shall lapse.

 

23.4                 Any
taxes and/or duties payable as a result of any transaction in terms of the
provisions of this 23 shall, unless the board otherwise resolves, be borne and
paid by the participant.

 

24.       SHARE OPTION – COMBINED OPTION/DEFERRED SALE

 

24.1                 The trustees,
on the authority of a resolution of the board may at any time prior to the
exercise of any share option in terms of 16, by written notice offer to cancel all of a participant’s share
options on the basis that, simultaneously with such cancellation –

 

24.1.1          the trustees
shall grant to such participant the right and option to enter into an agreement
with the trust to acquire the same number of allocation shares;

 

24.1.2          the
allocation price payable by such participant for such allocation shares shall
be an amount equal to the original option price of the share options so
cancelled.

 

49

 

24.2                 A
participant to whom an offer has been made in terms of 24.1 may, by written
notice given to the to the trustees within 30 days of the date of the offer,
accept such offer. Such notice shall specify –

 

24.2.1          the name of
the participant;

 

24.2.2          the number of
share options concerned;

 

24.2.3          the option
price payable in respect of such share options.

 

24.3                 Forthwith
on receiving the notice referred to in 24.2, the trustees shall grant to such
participant the right and option to enter into an agreement with the trust to
acquire allocation shares. The provisions of 20 shall apply, mutatis mutandis,
to such allocation shares, save that –

 

24.3.1          The date of
grant of the right and option shall, unless the board otherwise resolves in its
discretion, be deemed to be the original acceptance date by the participant of
the share option in question;

 

24.3.2          if more than
twelve months has elapsed since the original acceptance date of the participant’s
share option, then the right and option shall be exercised within sixty days
after the date on which the trustees received the participant’s notice in terms
of 24.2, failing which such right and option shall lapse.

 

24.4                 Any
taxes and/or duties payable as a result of any transaction in terms of the
provisions of this 24 shall, unless the board otherwise resolves, be borne and
paid by the participant.

 

50

 

25.       COMBINED OPTION/DEFERRED SALE – CREDIT SALE OR SHARE OPTIONS

 

25.1                 The trustees, on the authority of a resolution of
the board, may by written notice offer to a participant who has exercised a
right and option granted to him pursuant to 20, at any time prior to delivery
to and payment by the participant for the allocation shares in question to
either –

 

25.1.1              cancel the agreement referred to in 20 on the basis that, simultaneously
with such cancellation, the trust shall sell to the participant or advance moneys
to the participant to enable the participant to subscribe for the same number
of scheme shares upon the following terms and conditions –

 

25.1.1.1.1             the share or
subscription price of such scheme shares shall be the original allocation price
in respect of the allocation shares forming the subject matter of the agreement
so cancelled;

 

25.1.1.1.2             subject to
the aforegoing, the provisions of this scheme relating to scheme shares shall
apply, mutatis mutandis, in respect of such shares;

 

25.1.1.1.3             the original
date of grant of the right and option shall, unless the board otherwise
resolves, be deemed to be the acceptance date of his application for those
scheme shares; or

 

51

 

25.1.2              purchase all
or any of such participant’s allocation shares in respect of which delivery is
not competent in terms of 20.2.3 at that time on the basis that, the trustees
shall, simultaneously with such purchase, grant such participant the option to
acquire the same number of share options upon the following terms and
conditions –

 

25.1.2.1.1             if the
closing market price of a share on the JSE on the trading day immediately
preceding the date of such request (“current price”) exceeds the original
allocation price in respect of the allocation shares forming the subject matter
of such purchase, then –

 

25.1.2.1.2             the purchase
price per allocation share payable by the trust to the participant shall be not
less than the current price;

 

25.1.2.1.3             the price
payable by the participant in consideration for the grant of such option shall
be an amount equal to the current price less the original allocation price of
the allocation shares forming the subject matter of such purchase;

 

25.1.2.1.4             the option
price per option share payable by the participant shall be the original
allocation price of the allocation shares forming the subject matter of such
purchase;

 

52

 

25.1.2.1.5             the original
date of grant of the right and option shall, unless the board otherwise
resolves, be deemed to be the acceptance date of such share option;

 

25.1.2.1.6             subject to
the aforegoing, the provisions of this scheme relating to the share options
shall apply, mutatis mutandis, in respect of such shares;

 

25.1.2.2            if the current
price is equal to or less than the original allocation price in respect of the
allocation shares forming the subject matter of such purchase –

 

25.1.2.2.1             the price per
allocation share payable by the trust shall be not less than the allocation
price;

 

25.1.2.2.2             the provisions of 25.1.2.1.4, 25.1.2.1.5 and 25.1.2.1.6 shall apply, mutatis mutandis.

 

25.2                 A
participant to whom an offer has been made in terms of 25.1 may, by written
notice given to the trustees within 30 days of the date of the offer, accept
such offer. Such notice shall specify –

 

25.2.1             name of the participant;

 

25.2.2             the number of
allocation shares concerned;

 

25.2.3             the allocation price payable in respect of such allocation shares.

 

53

 

25.3                 The
trustees, on the authority of a resolution of the board, may by written notice
offer to cancel a right and option granted to a participant to acquire
allocation shares pursuant to 20 or 23 at any time prior to the exercise of
such right and option on the basis that, simultaneously with such cancellation,
the trust shall either sell to him the same number of scheme shares or grant
him the same number of share options to acquire the same number of shares, on
the same bases, mutatis mutandis, set out in 25.1 a participant who accepts
such offer shall do so in accordance with 25.2.

 

25.4                 Any
taxes and/or duties payable as a result of any transaction in terms of the
provisions of this 25 shall, unless the board otherwise resolves, be borne and
paid by the participant.

 

PART 7: GENERAL

 

26.       ASSIGNMENT OF RIGHTS OR OBLIGATIONS

 

26.1                 Save
as is provided in 26.3, it shall not be competent for any participant to cede
any of his rights or delegate any of his obligations pursuant to the
acquisition of share options, scheme shares, rights and options or allocation
shares by him except to the trust or, in the case of the participant’s death,
to such participant’s estate.

 

26.2                 Save
as otherwise expressly provided in this deed –

 

26.2.1          share options
and rights and options may not be exercised by any person other than the
participant; and

 

26.2.2          no
participant may alienate or encumber any of his share options, scheme shares,
rights and options or allocation shares.

 

54

 

26.3                 Eligible
applicants and participants shall have the following rights –

 

26.3.1             an eligible
applicant may, with the prior approval of the trustees, nominate a family trust
or a family company to accept an offer in terms of 10.1, 14.1, 20.1 or 20.3 on his
behalf on the basis that such family trust or family company may accept all
(and not part only) of the rights in relation thereto. All obligations in
relation thereto shall be assumed and accepted in writing by the eligible
applicant concerned, failing which acceptance of the rights by such eligible
applicant’s family trust or family company shall be invalid and unenforceable;

 

26.3.2             a participant
who did not avail himself of his rights in terms of 26.3.1 may, with the prior
approval of the trustees, at any later date cede all (and not part only) of his
rights (but not assign any of his obligations) in terms of this scheme to a
family trust or a family company, in which event the provisions of 26.3.1 shall
apply, mutatis mutandis.

 

In either event, the nominee or assignee in question
shall bind itself in writing to abide by the terms of the scheme and the
provisions of the scheme relating to participants shall be construed as
referring to the participant and/or the family trust and/or the family company and/or
all or any of them, as the context may require.

 

26.4                 Notwithstanding
26.3, the trustees may permit a participant to discharge the whole or any
portion of the share price, the option price or the allocation price (as the
case may be) by the allotment and issue of preference shares in the share
capital of a family company to the trustees, which preference shares shall be
subject to such rights, privileges and conditions as may be acceptable to the
trustees, in their discretion.

 

55

 

 

 

27.       TRANSFERS FROM THE EXISTING SCHEME

 

All rights and obligations under the existing scheme
of the Sappi Limited Share Purchase Trust, the trustees thereof, the company
and participants shall be deemed to have been cancelled on the date of
registration of this deed and be substituted by the respective rights and
obligations of the trust, the trustees, the company and participants
respectively under this deed on the basis that –

 

27.1                 shares
held by participants under the existing scheme shall become “scheme shares” and
their indebtedness under the existing scheme shall become their “share debt”;

 

27.2                 the
share price of such scheme shares shall be equal to the share price payable by
the participant under the existing scheme;

 

27.3                 the
date on which an application to acquire shares under the existing scheme was
accepted shall be deemed to be the acceptance date of such scheme shares; and

 

27.4                 such
cancellation and substitution of the rights of participants shall not affect
any of their vested rights under the existing scheme which shall remain of
force and effect.

 

28.       CERTIFICATES

 

Certificates
in respect of shares sold to or subscribed for by participants in terms of this scheme shall be
retained by the trustees until such time as the shares are paid for and are
capable of being released in terms of this scheme.

 

29.       AGREEMENTS BINDING ON PARTICIPANTS

 

No share
options, scheme shares, rights and options or allocation shares which it is
proposed will be granted, sold or issued to any participant will be granted,
sold or issued otherwise than –

 

29.1                 in
writing; and

 

56

 

29.2                 on
the terms set out in this scheme and in terms of which the participant
irrevocably and unconditionally undertakes to adhere to and be bound by all the
terms of this scheme.

 

30.       AMENDMENT

 

It shall be
competent for the board and the trustees to amend any of the provisions of this
scheme subject to the prior approval (if required) of the JSE and of any other
competent authority; provided that –

 

30.1                 no
such amendment shall affect the vested rights of any participant; and

 

30.2                 no
such amendment affecting any of the following matters shall be competent unless
it has first been approved by the JSE and is sanctioned by an ordinary resolution
of the 75% (seventy five percent) of the shareholders of the company in general
meeting (excluding all the votes attaching to all shares owned and controlled
by persons who are existing participants in the scheme and which have been
acquired in terms of the scheme) -

 

30.2.1          the
eligibility of participants under this scheme;

 

30.2.2          the
calculation of the total number of shares which may be utilised for the purpose
of or pursuant to this scheme;

 

30.2.3          the maximum
number of share options, scheme shares, rights and options and allocation
shares which may be allocated to any participant;

 

30.2.4          the option
price;

 

30.2.5          the share
price;

 

57

 

30.2.6          the
allocation price;

 

30.2.7          the voting,
dividend, transfer and other rights (including those arising in the event of
the curatorship of the company, rights and capitalization issues,
consolidations, sub-divisions, reorganizations and takeovers as envisaged in
19) attaching to the shares;

 

30.2.8          the procedure
to be adopted on termination of employment of a participant under the scheme;
and

 

30.2.9          any amendment
of this clause 30.2.

 

31.       DISPUTES

 

31.1                 Save
as otherwise provided in this deed, should any dispute of whatever nature arise
in regard to the interpretation or effect of, or the validity, enforceability
or rectification (whether in whole or in part) of, or the respective rights or
obligations of the parties under, or a breach or termination or cancellation
of, this deed, then the dispute shall, unless the parties thereto otherwise
agree in writing, be referred for determination to an expert (“expert”) in
accordance with the remaining provisions of this 31.

 

31.2                 The
expert shall –

 

31.2.1              if the matter
in issue is primarily an accounting matter, be an independent practising
chartered accountant of not less than fifteen years standing;

 

31.2.2              if the matter
in issue is primarily a legal matter, be a practising senior counsel of not
less than five years’ standing as such and practising at the Johannesburg bar;

 

58

 

31.2.3              if the matter
in issue is any other matter, be an independent accountant or be a senior
counsel as envisaged in 31.2.1 or 31.2.2 or be any other independent person,
agreed upon by the parties to the dispute or, failing agreement within fourteen
days after the dispute arises, appointed by the President for the time being of
the South African Institute of Chartered Accountants or his successor-in-title
at the request of any party to the dispute.

 

31.3                 The
expert selected as aforesaid shall in all respects act as an expert and not as
an arbitrator.

 

31.4                 The
expert shall be vested with entire discretion as to procedure to be followed in
arriving at his decision. It shall not be necessary for the expert to observe
or carry out either the strict rules of evidence or any other legal
formalities or procedures, but the expert shall be bound to follow principles
of law in deciding matters submitted to him.

 

31.5                 The
expert shall have the power, inter alia, to –

 

31.5.1          investigate
or cause to be investigated any matter, fact or thing which he considers
necessary or desirable in connection with the dispute and, for that purpose,
shall have the widest powers of investigating all the books, records, documents
and other things in the possession of any party to the dispute or the company
or under its control, the right to inspect goods and property of the parties
and the company, the right to take copies and/or make extracts there from and
the right to have them produced and/or delivered at any place reasonably
required by him for the aforesaid purposes;

 

59

 

31.5.2          interview and
question under oath any of the parties or other parties to the dispute,
including the right to cross examine such parties;

 

31.5.3          summon
witnesses;

 

31.5.4          record
evidence;

 

31.5.5          make an
interim award;

 

31.5.6          make an award
regarding legal fees/costs and the expert’s remuneration. If he fails or
declines to do so, then each of the parties to the dispute shall bear and pay
its own costs. Until such time as the expert’s decision is given, the parties
to the dispute shall bear and pay such costs in equal shares;

 

31.5.7          call for the
assistance of any other person who he may deem necessary to assist him in
arriving at his decision;

 

31.5.8          exercise any
additional powers which may be exercised by an arbitrator in terms of the
Arbitration Act 1965 as amended.

 

31.6                 Any
hearing by the expert shall be held in Johannesburg or Sandton unless the
expert determines that it is more convenient or equitable that the hearing or
any part thereof (including, but without limitation, the taking of evidence) be
held elsewhere, in which event the hearing (or the relevant part thereof) shall
be held in the place so determined by the expert.

 

31.7                 The
parties shall use their best endeavours to procure that the decision of the
expert shall be given within thirty days or so soon thereafter as is possible
after it has been demanded.

 

60

 

31.8                 The
decision of the expert shall be final and binding on all parties affected
thereby, shall be carried into effect and may be made an order of any competent
court at the instance of any party to the dispute.

 

31.9                 This
clause constitutes an irrevocable consent by the company, the trustees and all
participants and eligible applicants to any proceedings in terms thereof and no
such party shall be entitled to withdraw there from or to claim at any such
proceedings that it is not bound by this clause.

 

31.10               This
clause shall not preclude any party from obtaining relief by way of motion
proceedings on an urgent basis or from instituting any interdict, injunction or
any similar proceedings in any court of competent jurisdiction pending the decision
of the expert.

 

31.11               Subject
to 31.5.8, the provisions of the Arbitration Act 1965 as amended shall not
apply in respect of this clause or any other provision of this agreement.

 

31.12               This
clause is severable from the rest of this agreement and shall remain in effect
even if this deed is terminated for any reason.

 

32.       ANNUAL FINANCIAL STATEMENTS

 

The board shall ensure that a summary appears in the
annual financial statements of the company of the number of scheme shares, the
number of share options and the number of -rights and options or allocation
shares in issue or acquired, any changes in such numbers during the financial
year under review, the number of shares held by the trust which may be acquired
by eligible applicants and the number of shares under the control of the
directors of the company for allotment or issue in terms of this scheme.

 

61

 

33.       DEALINGS IN SECURITIES

 

The company will ensure compliance with paragraphs 3.63 – 3.74 (director
dealings) of the Listings Requirements of the JSE in terms of share dealings by
the company relating to the scheme.

 

34.       VOTES AT ANNUAL GENERAL MEETING

 

The votes of
scheme shares held by the trust will not be taken into account for Listings
Requirements of the JSE resolution approval purposes at general or annual
meetings. Such shares shall also not be taken into account for purposes of
determining categorisations as detailed in section 9 of the JSE Listings
Requirements.

 

35.       PROFITS AND LOSSES

 

The company shall bear any losses sustained, and be
entitled to receive any profits made by the trust in respect of the purchase,
acquisition, sale or disposal of shares.

 

36.       TERMINATION

 

The trust shall terminate as soon as there are no
longer any participants who hold or have acquired scheme shares, share options,
rights and options or allocation shares and the board so resolves. Upon such
termination, the assets (if any) of the trust shall be realised and any surplus
remaining after the discharge of the trust’s liabilities shall be paid over to
the company. Any deficit arising from the winding-up of the trust shall be
borne by the company.

 

62

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