AGREEMENT

for the

ST FRANCIS BAY BEACH RESTORATION

between

KOUGA MUNICIPALITY

a juristic body established in terms of the

Local Government Municipal Structures Act,

No. 117 of 1998,

represented herein by __________

in his/her capacity as Municipal Manager

(hereinafter referred to as "the Municipality")

of the first part;

and

ST FRANCIS BAY BEACH TRUST

No. IT 332/2006

represented herein by James Emlynn Horne

in his capacity as Trustee

(hereinafter referred to as "the Trust")

of the second part

INTRODUCTION

1.         The Trust is a public benefit organisation which has been established for the specific purpose of achieving the rehabilitation of the St Francis Bay beach including the construction of offshore submerged reefs, and the ongoing dredging of the Kromme River estuary, together with other related activities for the benefit of the wider St Francis Bay community.

2.         The Municipality has expressed its support for the above Project via the Trust, and is willing to support the Trust to acquire external finance by providing security in the form of a dedicated revenue stream through the medium of a beach levy to be determined in terms of the relevant legislation.

3.         The parties wish to reach agreement upon, and record, the terms of their agreement, which shall become binding once it has been duly signed on behalf of the parties hereto.

THEREFORE IT IS AGREED AS FOLLOWS

1.                  INTERPRETATION

1.1       The headings to the clauses of this Agreement are for reference purposes only and shall not aid in the interpretation of the clauses to which they relate.

1.2       Unless the context clearly indicates a contrary intention, words importing –

1.2.1          any one gender shall include the other two genders;

1.2.2          the singular shall include the plural and vice versa;

1.2.3          natural persons shall include Bodies Corporate and vice versa.

1.3       The following expressions shall, unless the context clearly otherwise indicates, bear the meanings assigned to them hereunder and cognate expressions shall bear corresponding meanings:

1.3.1    "Agreement" means this Agreement and all annexures hereto;

1.3.2     "Beach Levy" means a special development levy by way of an additional property rate in terms of Section 22 of the Rates Act, on all ratepayers in the village of St Francis Bay, including Santareme, St Francis on Sea, Port St Francis and St Francis Links as depicted on the diagram annexed hereto marked "A";

1.3.3     "Effective Date" means the date on which the requirements of clause 2 are fulfilled;

1.3.4      "the parties" means the parties to this Agreement;

1.3.5      "the Project" means the project for the rehabilitation of the St Francis Bay beach, including the construction of offshore submerged reefs, and the ongoing dredging of the Kromme River estuary, together with other related activities for the benefit of the wider St Francis community;

1.3.6       "the Rates Act" means the Local Government : Municipal Property Rates Act, No. 6 of 2004.

2.                  LEGISLATION

This Agreement is subject to:

2.1        the Trust providing proof to the satisfaction of the Municipality that any legislation that may apply to the Project is complied with; and

2.2        completion of  the public participation process and other requirements of Section 22 (2) of the Rates Act being duly implemented and fulfilled by the Municipality. The Trust shall use its best endeavours to assist the Municipality to obtain the consent of the community affected by the Beach Levy.

3.                  BEACH LEVY

3.1        Subject to the fulfillment of the conditions stated in clause 2 above, the Municipality agrees to impose the Beach Levy to ensure that the first payment due by the community is 1 July 2007 being the commencement of 2007/2008 financial year, and to review the amount of the levy annually in accordance with the Rates Act.

3.2       The Beach Levies which are received by the Municipality shall be paid to the Trust on a monthly basis within fourteen (14) days after the end of each month. Alternatively, where the Beach Levies are paid annually, the payments which are received by the Municipality shall be paid to the Trust within fourteen (14) days after the end of the month in which they are received by the Municipality.

3.3       The Municipality shall within fifteen (15) days after the due date of the payment of the Beach Levies, provide to the Trust details of all unpaid rates, to enable the Trust to endeavour to facilitate the payment thereof to the Municipality.

4.                  BANK LOAN

The Municipality supports the Trust's intention to apply for a loan of R25 000 000.00 (Twenty-Five Million Rand) from a Bank ("Nominee Bank"), to finance the initial capital expenditure for the Project. The Municipality agrees, subject to the fulfillment of the requirements stated in clause 2, to provide reasonable security for the loan in the form of the dedicated revenue stream which will be payable to the Trust in terms of clause 3 above.

5.                  FINANCIAL CONTROL

5.1       The Trust undertakes that it shall implement the following financial controls to the satisfaction of the Municipality:

5.1.1  The Trust shall submit to the Municipality:

5.1.1.1  annual rolling three year budget, commencing on ……

5.1.1.2  quarterly financial reviews of the Trust's performance, commencing …

5.1.1.3   audited annual financial statements to be prepared in accordance with generally accepted accounting practice ("GAAP").

5.1.2     An Oversight Committee, which shall include a Municipal Official to be nominated by the Municipality, shall be created by the Trust to review progress and to approve the monthly and quarterly operating statements and to approve draw-downs from the Nominee Bank.

5.2               The Trust shall:

5.2.1     support the Municipality with the collection of outstanding Beach Levies, as stated in 3 above;

5.2.2     pay for the completion of the environmental impact assessment in order to facilitate the public participation process;

5.2.3     assist the Municipality in the public participation process if so required.

6.                  DURATION

This Agreement shall endure for an initial period of twenty (20) years from the Effective Date, whereafter it shall continue indefinitely subject to the entitlement of either party to terminate the Agreement thereafter upon giving twenty-four (24) months written notice of termination to the other party.

7.                  MEETINGS AND REPORTING

7.1       The Oversight Committee shall hold co-ordination meetings on a monthly or such other basis as may be agreed in writing by the parties, for the duration of the Agreement, to monitor the implementation of the Project.            

7.2        The coordination meetings shall be held at the ……premises.

7.3       The Trust shall provide the Municipality with a quarterly report on the progress of the development of the project in a format to be agreed between  the Municipality and the Trust           

7.4        The Trust's quarterly report shall be delivered to the Municipality as from the _______ date following the Effective Date. 

8.                  BREACH

If either party shall breach any provision of this agreement and fail to remedy such breach within thirty (30) days of receipt of written demand from the other party, the innocent party shall be entitled to cancel this agreement by giving written notice to that effect to the defaulting party.  Such cancellation shall, subject to the provisions of this Agreement, be without prejudice to any other remedies the innocent party may have in terms of common law pursuant to such breach and cancellation.        

9.                  FORCE MAJEURE

9.1       Neither party shall be liable to the other for any failure to perform its obligations under this Agreement if such performance is prevented by any circumstance reasonably beyond its control.        

9.2        If the performance by either party of its obligations in terms of this Agreement is prevented by any occurrence reasonably beyond its control, the party concerned shall give written notice thereof to the other party setting out full details of such occurrence whereupon the operation of this Agreement shall be suspended until the termination of such occurrence.      

10.               INFORMAL ARBITRATION

10.1      Any difference or dispute between the parties in connection with the interpretation or application of the provisions of this Agreement or its breach or termination may be referred to and be determined by informal arbitration in terms of this clause by written agreement between the parties.    

10.2      This clause shall not preclude either party from obtaining interim relief on an urgent basis from a court of competent jurisdiction pending the decision of the arbitrator.     

10.3      The arbitrator shall be agreed upon between the parties.  Should the parties fail to agree on an arbitrator within seven (7) days after agreeing to arbitration in terms of clause 11.1, the arbitrator will be appointed at the written request of any party to the dispute by the chairman for the time being of the East Cape Society of Advocates (Port Elizabeth branch).

10.4      The arbitration shall be held :-             

10.4.1    at St Francis Bay;

10.4.2    in an informal manner without any pleadings and without it being necessary to observe the strict rules of evidence;          

10.4.3   as soon as possible with a view to it being completed within one (1) month from the date on which the dispute is referred to the arbitrator ;     

10.4.4   in accordance with such procedures as the arbitrator may determine in his discretion, provided that such procedures shall be fair to both parties.     

10.5      The arbitrator shall be entitled to investigate or cause to be investigated any matter which he considers necessary or desirable in connection with the dispute and for that purpose shall have the widest powers of investigating all the relevant books and records of the parties to the dispute, including the right to make copies and to have such records and books produced or delivered at any reasonable place required by them for the aforesaid purpose.   

10.6      The arbitrator shall decide the dispute in accordance with South African law.    

10.7      The arbitrator shall be entitled to make such award, including an award in respect of costs, as he may deem fit provided that the arbitrator shall be required to furnish written reasons.