MEMORANDUM OF AGREEMENT ENTERED INTO BY AND BETWEEN · 3 1.12.4 Module 1 and 2 curriculum manuals; 1.12.5 Module 1and 2 auscultation and story files; 1.12.6 Songs manual; 1.12.7 3

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MEMORANDUM OF AGREEMENT

ENTERED INTO BY AND BETWEEN:

THE SOUTH AFRICAN MUSIC APPRECIATION

AND DEVELOPMENT SCHOOL CC

Reg. No.: CK2000/022831/23

(hereinafter called “the franchisor”)

and

Identity Number: ________________________________

(hereinafter called “the franchisee”)

Recitals

WHEREAS:

1. The franchisor has acquired the right to operate a business system as a franchise, together with all intellectual property rights

used in conjunction with the business system whereby children are equipped with skills in musical appreciation and elementary

music principles;

2. The franchisee desires to establish and operate a business whereby children are equipped with skills in musical appreciation and

elementary musical principles, and for this purpose to use the franchisor’s business system and intellectual property rights;

3. The franchisor hereby licenses such use subject to the terms and conditions of this agreement.

NOW AND THEREFOR THE PARTIES HERETO AGREE AS FOLLOWS:

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1. Definitions

Unless otherwise determined by the context, the following words shall bear the following meanings:

1.1 the “business system” means a system whereby children are equipped with skills in music appreciation and

elementary music principles, acquired by the franchisor and recorded in the operating manual, and includes

any improvements or variations made to the business system;

1.2 the “commencement date” means the date of signing of this agreement;

1.3 the “franchised business” means the operation of a business whereby children are equipped with skills in

music appreciation and elementary music principles, conducted in accordance with the business system using

the intellectual property;

1.4 the “copyright” means all rights of copyright whether existing now or in the future in and to:

1.4.1 the operating manual;

1.4.2 the fixation of the know-how, whether incorporated in the operating manual or in any other

documentation or form whatsoever.

1.5 the “goodwill” means the goodwill arising out of the use of the business system and the intellectual property

by the franchisor and all its franchisees, including the franchisee;

1.6 the “intellectual property” includes, but is not limited to:

1.6.1 the know-how;

1.6.2 the copyright;

1.6.3 the goodwill;

1.6.4 the trade marks.

1.7 the “know-how” includes all confidential technical and commercial information relating to the operation of

the business system existing from time to time, including, without limitation, information contained in the

operating manual or other documents together with unrecorded information known to individuals who are

office bearers or employees of the franchisor. Technical information includes all specifications and methods

obtained by the franchisor;

1.8 the “operating manual” means collectively all items referred to in Package A, B, C, D, E and F supplemented

by further written directions and regulations or six monthly circular letter, giving details of the business

system and intellectual property and imparting the know-how;

1.9 the “territory” means ____________________________________________________________________

_____________________________________________________________________________________

______________________________________________________________________________________

_____________________________________________________________________________________

(as demarcated on the map annexed hereto marked Annexure “A”) or such other territory which the franchisor

may from time to time allocate to the franchisee in terms of this agreement;

1.10 the “trade marks” means the registered and unregistered trade marks listed in Annexure “B” annexed hereto,

together with such other registered or unregistered trade marks which the franchisor may adopt and designate

for use in connection with the franchised business from time to time;

1.11 the “trade secrets” include all confidential information of whatever nature relating uniquely and specifically to

the business of the franchisor and its other franchisees, the business system and the intellectual property;

1.12 “Package A” (Module 1 and 2) means and consists of the following:

1.12.1 Training manual;

1.12.2 Administration manual and CD;

1.12.3 Marketing file with demonstration CD;

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1.12.4 Module 1 and 2 curriculum manuals;

1.12.5 Module 1and 2 auscultation and story files;

1.12.6 Songs manual;

1.12.7 3 x CD’s with auscultation material;

1.12.8 1 x CD with orchestral works;

1.12.9 1 x CD with dances;

1.12.10 1 x CD with music scores and music games;

1.12.11 1 x CD with songs;

1.12.12 3 x Colour scores;

1.12.13 26 x Laminated cards with music terms, signs and notes;

1.12.14 10 x Percussion instruments;

1.12.15 The following additional items: 1 long rope and stick; container with trout flies; 10 small sticks

with 10 short ropes; 10 pairs of scissors; homework blackboard; 10 multicolored cloths; 1

hoop; 1 plastic container; 1 bookstand.

1.12.16 Items that must be purchased by parents for children:

1.12.16.1 1 x Workbook.

1.13 “Package B” (Module 3 and 4) means and consists of the following:


1.13.2 Module 3 and 4 curriculum manual;

1.13.3 Module 3 auscultation and story file;

1.13.4 A3 laminated auscultation and story pictures;


1.13.6 1 x CD with module 4 auscultation material, orchestral works, music scores, songs and recorder

accompaniment;

1.13.7 1 x CD with advanced recorder songs accompaniment;



1.13.10 1 x CD with songs and dances;

1.13.11 1 x CD with orchestral works;


1.13.13 16 x Laminated cards with music terms, signs and notes.

1.13.14 A3 recorder workbook;

1.13.15 Presenter’s recorder songs repertoire book;

1.13.16 10 x African instruments;

1.13.17 11 x Recorders;

1.13.18 The following additional items: 11 cardboard notes, 1 plastic container.


1.13.19.1 2 x Recorder workbooks;

1.13.19.2 1 x Recorder;

1.13.19.3 1 x Workbook.

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1.14 “Package C” (Module 1,2, 3 and 4) means and consists of the following:




1.14.4 Module 1, 2, 3 and 4 curriculum manuals;

1.14.5 Module 1, 2 and 3 auscultation and story files;

1.14.6 A3 laminated auscultation and story pictures;


1.14.8 A3 recorder workbook;

1.14.9 Presenter’s recorder songs repertoire book;

1.14.10 1 x CD with module 4 auscultation material, orchestral works, music scores, songs and recorder

accompaniment;

1.14.11 1 x CD with advanced recorder songs accompaniment;


1.14.13 2 x CD’s with orchestral works;

1.14.14 1 x CD with dances;


1.14.16 1 x CD with songs;


1.14.18 42 x Laminated cards with music terms, signs and notes;


1.14.20 10 x African instruments;

1.14.21 11 x Recorders;

1.14.22 The following additional items: 1 long rope and stick; container with trout flies; 10 small sticks

with 10 short ropes; 10 pairs of scissors; homework blackboard; 10 multicolored cloths; 1 hoop;

2 plastic containers; 11 cardboard notes; 1 bookstand.


1.14.23.1 2 x Recorder workbooks;

1.14.23.2 1 x Recorder;

1.14.23.3 1 x Workbook.

1.15 “Package D” (Module 1 and 2) means and consists of the following:





1.15.5 Module 1and 2 graphic illustrations;


1.15.7 4 x CD’s with auscultation material; orchestral works; dances; music games and songs;

1.15.8 1 x Songs CD;


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1.15.10 The following additional items: 11 ropes; homework whiteboard; 10 multicoloured cloths; 2

hoops; 1 plastic container; 1 ball; 4 hand puppets; 11 seashells; 11 thin scarves; 1 Red hood; 1

duster; 1 beanbag; a handful of buttons; 1 finger puppet mouse; 1 Wolf hood; 1 headcloth; 11

soft toys; 1 bookstand.


1 x Workbook.

1.16 “Package E” (Module 1 and 2) means and consists of the following:





1.16.5 Module 1and 2 graphic illustrations;


1.16.7 4 x CD’s with auscultation material; orchestral works; dances; music games and songs

1.16.8 1 x Songs CD;


1.16.10 The following additional items: 10 small dolls; 1 rag doll; 2 meters of yellow fabric; 1 hoop;

30 beads (red, yellow and blue); 10 shoe laces; 10 dogs (soft toys); 10 plastic birds; 1 teaset;

face paint; 10 facecloths; hand puppets: 1 Humpty Dumpty, 1 ginger cat, 1 green-spotted dove, 2

monkeys (1 mother and 1 baby), 1 Pinocchio, 1 boy; 1 Christmas tree made out of felt with bells;

8 round laminated faces; 10 blankets; 10 small pillows; 10 transparent cloths; 3 piggy hats; 1

wolf hat; 3 small cloaks; 1 small tablecloth; finger puppets: 2 bushbucks, 2 steenbok, 2 impalas,

2 kudus, 10 children (5 laughing and 5 crying), 10 black kittens.


1 x Workbook.

1.17 “Package F” (Module 1 and 2) means and consists of the following:





1.17.5 Module 1and 2 graphic illustrations in the form of photographs;


1.17.7 4 x CD’s with auscultation material; orchestral works; dances; music games and songs;

1.17.8 1 x Songs CD


1.17.10 The following additional items:

10 texture books; 10 blankets; selection of silk flowers; 10 large facecloths; 1 beetle hand

puppet; 1 hoop; 20 transparent cloths; 4 cardboard wheels and 6 cardboard windows; 10

feathers; wooden building blocks; 10 wooden spoons; 10 lift and see books; 1 aeroplane; 1

boat; 1 plastic red nose; 10 red laminated triangles; 10 green laminated circles; 10 underwater

outfits; 1 plastic ear; a puzzle of the body; parrot picture; 1 parrot hand puppet; 1 paintbrush; 1

small tablecloth; 10 short sticks/ribbons; 1 zebra hand puppet; 10 laughing faces; 2 plastic

gloves; felt zebra with loose stripes;


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1 x Workbook.

Final list of additional items to be provided once design of program has been completed.

1.18 the “standard quarterly fee” means the recommended quarterly fee which the franchisor determines from time

to time in terms of the operating manual, with the understanding that where the franchisor and franchisee

negotiated a quarterly fee higher than the recommended quarterly fee in terms of the operating manual, the

higher quarterly fee will be seen as the standard quarterly fee;

1.19 the “administration fee” means the administration fee which the franchisor determines from time to time in

terms of the operating manual”;

1.20 words in the singular number include the plural and vice versa;

1.21 words importing any one gender include each of the other two genders; and

1.22 a reference to a natural person includes a legal persona;

1.23 save where reference is made to the first or last day of a month, “day” means every day except Saturdays,

Sundays and public holidays;

1.24 The headings of the clauses are intended for convenience only and shall not affect the interpretation of this

agreement.

2. Grant of franchise

2.1 The franchisor hereby grants to the franchisee a license for the duration of this agreement to operate the

franchised business in the territory and strictly in accordance with the operating manual and subject to the

terms and conditions of this agreement;

2.2 This agreement shall commence on the commencement date and shall endure for a period of _________

(__________________________________) months/years thereafter (hereinafter referred to as the

“termination date”) unless terminated before or after the termination date alternatively renewed in terms of

the provisions of clause 3 hereof.

3. Renewal of agreement

3.1 Subject to the franchisee not being in breach or default in respect of any of the terms of this agreement, the

franchisee shall have the right to renew this agreement upon the terms and subject to the conditions set out

below;

3.1.2 the franchisee shall be liable to upgrade all parts of the package and business system, for which he

holds the license in terms of this agreement, for use in the extended period, by:

3.1.2.1 purchasing all new material in the relevant package and business system, which were extended,

improved and/or adjusted by the franchisor as on date of the extension; and

3.1.2.2 to return to the franchisor all old and extinct material in the relevant package and business system

to ensure that the material is no longer in circulation or use; and

The required purchases shall be offered by the franchisor at upgrading fees as determined by the

franchisor from time to time, provided that the franchisor shall endeavour that the upgrading fees

are not more than R2500-00 (Two thousand five hundred Rand) over a period of 3 (three) years

and that the upgrading fees shall not include any development costs. The franchisee acknowledges

that the required purchases are necessary to successfully conduct the franchise system. The

franchisor shall take all reasonable measures to ensure that the required items are affordable and

that the purchase price thereof is market related. Should there be a dispute about the costs and the

affordability of any new material, the franchisee shall be entitled to refer the dispute to the

Accountant of the franchisor to determine a market related price. Should the Accountant find that

the costs are market related and affordable, the fees and disbursements of the Accountant to make

the finding shall be paid by the franchisee.

3.2 The right of renewal shall be exercised by notice in writing from the franchisee to the franchisor given and

received at least 3 (THREE) calendar months prior to the termination date and shall lapse if not so exercised;

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3.3 The period for which this agreement may be so renewed after the termination date, is 3 (THREE) years,

commencing on the date following immediately after the termination date;

3.4 The franchisee shall, after the expiry of the period referred to in clause 3.3, have the right to renew this

agreement for consecutive periods of 3 (THREE) years by notice in writing in accordance with clause 3.2;

3.5 All the terms of this agreement shall continue to apply during each renewal period, save as provided for in

this agreement;

3.6 Should the right of renewal be duly exercised, this agreement shall be renewed automatically and without the

need for any further act of the parties;

3.7 Should this agreement for any reason not endure for any full term referred to in this clause 3, the right of

renewal shall lapse and any notice or exercise thereof given prior to such lapsing shall be null and void;

4. Payment and royalties

4.1 Payments:

4.1.1 The franchisee shall, on demand, pay to the franchisor the sum of

R____________________________

(______________________________________________________________________________

_______________________________________________________________________________

________________________________________________________________________RAND),

being the cost of the selected Package, alternatively pay to the franchisor the cost of the selected

Package as follows:

4.1.2 In the event of the franchisee during the duration of this agreement, electing to acquire a further

Package, the franchisee shall on demand, pay to the franchisor the cost of such selected Package,

alternatively the franchisee shall pay the cost of such selected Package to the franchisor in

installments as agreed in writing between the parties, from time to time.

4.2 Royalties:

4.2.1 The franchisee shall, for the duration of this agreement, which shall include all renewal periods,

pay the following royalties to the franchisor per package:

4.2.1.1 an amount equal to the standard quarterly fee of three children per package. The

royalty shall be payable quarterly in arrears in accordance with clause 4.2.2; and

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4.2.1.2 an amount equal to the annual administration fee of three children per package. The

royalty shall be payable annually in arrears in accordance with clause 4.2.3.

4.2.2 The royalty with regards to the quarterly fees shall be payable quarterly in arrears as follows:

4.2.2.1 In the event of this agreement having been concluded during the first half of a quarter,

the first payment shall be payable by no later than the last day of the quarter during

which this agreement had been concluded and thereafter on or before the last day of

each and every succeeding quarter;

4.2.2.2 In the event of this agreement having been concluded in the second half of a quarter,

then the first payment shall be payable by no later than the last day of the quarter

following the quarter during which this agreement had been concluded and thereafter

on or before the last day of each and every succeeding quarter;”

4.2.3 The royalty regarding the administration fees shall be payable annually in arrears no later than the

last day of the first quarter of the applicable year or on the last day of the quarter following the

quarter during which this agreement had been concluded.

4.2.4 The standard quarterly fee and the annual administration fee, in accordance with clause 4.2.1.1 and

4.2.1.2 will be determined from time to time by means of a circular letter, and this circular letter

will be regarded as part of this agreement.

4.3 General provisions regarding initial payments and royalties:

4.3.1 All payments due by the franchisee to the franchisor in terms of this agreement, must be paid to

the franchisor at the address referred to in clause 13.1.1 hereof or to such other person, or at such

other place, as the franchisor has designated for the time being by written notice to the franchisee;

4.3.2 The franchisee shall not withhold, defer, or make any deduction from any payment due to the

franchisor, whether or not the franchisor is indebted to the franchisee or in breach of any

obligation to the franchisee;

4.3.3 The initial payments, royalties and all other amounts payable by the franchisee in terms of this

agreement, shall be inclusive of value-added tax, in so far as it is applicable;

4.3.4 The franchisor shall be entitled to charge the following administration fees, interest and penalties

in respect of all payments made after the due date in terms of this agreement:

4.3.4.1 R250-00 administration fee per months or any portion of a month in respect of every

late payment of a royalty; and


late payment of an installment on a package; and


late payment of an invoice delivered by the franchisor for a product purchased.

4.3.4.4 Apart from the administration fee, the franchisor shall be entitled to claim interest in

respect of all outstanding payments in terms of this agreement. Interest shall be charged

at an interest rate of 3% (THREE PERCENT) above the annual prime interest rate of

ABSA Bank as from time to time and shall be calculated from date that a payment was

due until the date that the payment is made in full;

4.3.4.5 Apart from the administration fee and interest, the franchisor shall be entitled to claim a

penalty calculated at 20% (twenty percent) per month in respect of any outstanding

amount on a package or any product purchased, if the outstanding amount is more than

R2 000-00 (Two Thousand Rand) and the franchisee fails to make any payment in

respect thereof timeously as determined in this agreement.

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4.3.5

4.3.5.1 In the event of this agreement, for any reason whatsoever, being terminated, the

franchisor shall, depending on the condition of Package acquired by the franchisee and

after the return thereof to the franchisor, reimburse the franchisee with an amount

which shall not exceed half of the initial cost thereof, which amount shall be in the sole

discretion of the franchisor. The items referred to in this clause pertain to only those

items in respect of which the franchisor does not reserve ownership as set out in clause

7. The franchisor undertakes to retain all invoices, receipts and similar documentation,

as proof of the initial cost of the respective items;

4.3.5.2 The provisions contained in clause 4.3.5.1 shall only apply in the event of the

franchisee not being in breach or default in respect of any of the terms of this

agreement.

5. Obligations of the franchisor

5.1 The franchisor shall, provided that the payments referred to in clause 4.1.1 hereof are made (should the

Franchisee not pay the costs of the selected Package in installments):

5.1.1 Disclose to the franchisee the business system and the intellectual property rights licensed to the

franchisee in terms of this agreement

5.1.2 provide the franchisee with all items included in the selected package acquired by the franchisee in

terms hereof.

5.2 The franchisor shall provide training to the franchisee in respect of the business system, which training shall

commence at a place chosen by the franchisor and the time, duration and extent of such training shall also be

determined by the franchisor. The franchisee shall be liable for payment of all expenses, including travelling

and accommodation, during the training period;

5.3 The franchisor undertakes to continuously develop, extend, improve and adapt the business system, according

to the needs and requirements of children fitting the profile. The franchisor shall disclose such development,

extension, improvement and adaptation in the business system to the franchisee, from time to time;

5.4 The franchisor undertakes to assist the franchisee in resolving problems experienced by the franchisee in

respect of presentation. The franchisee shall be liable for payment of the franchisor’s travelling expenses

from and to the franchisee’s premises from the franchisor’s premises and for the living expenses of the

franchisor for the duration thereof;

5.5 The franchisor shall not operate or license another franchisee to operate the franchised business within the

territory, provided that:

5.5.1 should the franchisee, within the discretion of the franchisor, not exploit and utilise the territory

optimally within a period of 2 (two) years from date of commencement of this agreement through

sufficient and adequate marketing of the business, the franchisor shall be entitled to re-evaluate the

territory in respect of any available capacity in the territory to ensure the optimal operation of the

business in the territory, provided that the following time limitations are adhered to, being:

5.5.1.1 the use of any and each package in the business is limited to a maximum of 40 lessons

per week, and

5.5.1.2 the franchisee and any and each presenter of lessons in the business are limited to the

presentation of a maximum of 20 lessons per week, irrespective thereof if one or more

packages are used;

and to, with in the discretion of the franchisor, offer any unexploited or unused sources, times and

portion/s of a territory to another franchisee; and

5.5.2 should the franchisee, within the discretion of the franchisor, within a period of 2 (two) quarters

of a year from date of commencement of this agreement not have sufficient sources in the territory

to operate the business optimally as defined in clauses 5.5.1.1 and 5.5.1.2, then the franchisor shall

be entitled to, with in the discretion of the franchisor, offer the franchisee further sources,

provided that the franchisee can proof that the existing sources in the territory are optimally

exploited and utilized by the franchisee.

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5.6 The franchisor shall, subject to all payments referred to in sub-clause 4.1.1 having been paid (in the event of

the franchisee having elected to pay the cost of the selected Package in installments):

5.6.1 disclose to the franchisee the business system and intellectual property rights which had in terms

of this agreement been licensed to the franchisee;

5.6.2 supply the franchisee with all outstanding items included in the relevant Package which had been

acquired by the franchisee, in part as and when payment of each installment in respect of the cost

of the Package has been paid. The franchisor shall, in his sole discretion, in each instance

determine which of the items (after payment of each installment by the franchisee), are to be

supplied to the franchisee;

5.6.3 the provisions contained in clauses 5.2 tot 5.5, shall mutatis mutandis apply in these

circumstances.

6. Obligations of the franchisee

6.1 The franchisee shall operate the franchised business strictly in accordance with the business system and shall

adhere strictly to the operating manual, supplemented by any written specifications and directions as may be

laid down or given by the franchisor from time to time;

6.2 The franchisee shall within a period of 2 (two) years from date of commencement of this agreement,

optimally utilize and exploit the allocated area through adequate marketing to all the existing sources in the

area. To ensure the quality of the business system, the franchisee shall at all times during the duration of this

agreement, adhere with the following time limitations, being that:

6.2.1 the use of any and each package in the business is limited to a maximum of 40 lessons per week,

and

6.2.2 the franchisee and any and each presenter of lessons in the business are limited to the presentation

of a maximum of 20 lessons per week, irrespective thereof if one or more packages are used;

6.3 To ensure that the territory of the franchisee is exploited and utilized optimally, the franchisor shall be entitled

to re-evaluate the territory in terms of clause 5.5 of this agreement and after taking in account any available

capacity after adherence with the time limitations in clause 6.2, to offer any unexploited or unused sources,

times and portion/s of a territory to another franchisee, provided that the same time limitation shall apply to

the other franchisee.

6.4 The franchisee shall commence with the presentation of lessons at a time and on a date as determined by the

franchisor from time to time.

6.5 If to the advantage and/or benefit of the business of the franchisee as determined within the discretion of the

franchisor after consultation with the franchisee, the franchisee shall, at his own expense, engage such

administrative staff as determined by the franchisor in the operation of the franchised business;

6.6 The franchisee acknowledges that neither he nor his employees have any prior knowledge of the business

system or any aspect of the know-how or the trade secrets. The franchisee shall not divulge or permit to be

divulged to any person any aspect of the business system, the know-how or the trade secrets otherwise than

for the purposes of this agreement;

6.7 The franchisee shall not do, cause or permit anything to be done which may adversely affect the intellectual

property or the franchisor’s rights in the intellectual property. The franchisee shall bring to the attention of the

franchisor any infringement or threatened infringement of the intellectual property which may come to his

attention;

6.8 The franchisee shall give all reasonable assistance to the franchisor to enable the latter to further or defend its

rights in the intellectual property;

6.9 The franchisee acknowledges that the franchisor is the owner of all rights of whatever nature in the

intellectual property and that he has no claims of any nature to either the business system or to any element of

the intellectual property;

6.10 The franchisee shall not at any time attack or challenge the rights of the franchisor to the intellectual property

or induce or procure any other person to attack or challenge such rights;

6.11 The franchisee shall be entitled, at his own expense, to advertise or conduct promotional or marketing

activities, in accordance with the franchisor’s existing promotional and/or marketing material. The franchisee

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shall not be entitled to advertise or conduct promotional or marketing activities outside of the franchisor’s

existing promotional and/or marketing material, without the prior written approval of the franchisor;

6.12 The franchisee shall at all times endeavour to enroll a minimum of at least 40 (FORTY) children per course,

subject however to a maximum of 10 (TEN) children per any one class for Packages A, B, C, D and F, and a

maximum of 8 (EIGHT) children per any one class for Package E;

6.13 The franchisee shall keep and maintain, in a form approved by the franchisor, full and accurate books of

account and all underlying or supporting records and vouchers relating to the franchised business and shall

permit the franchisor or its duly authorised representative at all reasonable times to carry out such inspections

or investigations which they may consider necessary for the purposes of ascertaining whether the provisions

of this agreement are being complied with. The franchisee shall ensure that he and his employees co-operate

fully in such inspections or investigations;

6.14 The franchisee shall indemnify the franchisor and keep him indemnified against all claims of whatever nature,

whether real or imagined, criminal or civil, together with any legal fees and costs incurred by the franchisor,

arising out of the establishment and operation of the franchised business by the franchisee;

6.15 The franchisee shall give notice in such a manner as the franchisor may from time to time direct, that the

franchised business is operated in terms of a franchise agreement with the franchisor and that the franchisee is

using the intellectual property under license from the franchisor. Such notice shall contain such other

information as the franchisor may deem necessary to inform third parties that the franchisor does not accept

any liability for the acts, omissions, debts or defaults of the franchisee;

6.16 The franchisee shall maintain such policies of insurance as may be stipulated by the franchisor from time to

time and shall ensure that all insurance premiums are paid promptly. The franchisee shall procure that the

interest of the franchisor in such policies is noted thereon. The franchisee shall procure that a note is made on

all policies maintained by it in accordance with the provisions of this agreement that the insurer shall notify

the franchisor in the event of the late payment of any premium by the franchisee. The franchisee shall furnish

the franchisor with all receipts for the payment of premiums on request. The franchisee shall not cause or

permit any breach of any insurance policy maintained under the provisions of this agreement. The franchisee

shall give the franchisor notice of any claim arising or made under a policy of insurance required to be

maintained in terms of this agreement;

6.17 While this agreement remains in force, the franchisee shall not engage directly or indirectly in any capacity in

any other business venture which is in the nature of the franchised business, without the prior written consent

of the franchisor;

6.18 The franchisor, in order to protect the goodwill of the business and the interests of the franchisee in the

goodwill of the business, agrees and undertakes in favour of the franchisee and the franchise business that he

shall not within the territory and for a period of 3 (THREE) years after the date of termination of this

agreement for any reason, either as principal, agent, partner, representative, shareholder, director employee,

consultant, adviser, financier, or in any other like or similar capacity, directly or indirectly be associated or

concerned with, interested or engaged in any firm, business, company or other association of persons which

carries on a business or activity similar to the business carried on by the franchisor. The territory covered by

these restraints is ________________________

6.19 The franchisee agrees that the restraints imposed upon him in terms of this clause are reasonable as to subject

matter, area and duration and are reasonably necessary in order to preserve and to protect the goodwill of the

franchisor;

6.20 The franchisee shall have the right to use and undertakes to use the trade marks in relation to the franchised

business provided that the franchisee conducts the franchised business strictly in accordance with the

provisions of this agreement and the business system;

6.21 The franchisee shall not in any way represent that he has any rights of any nature in the trademarks or in any

registration thereof and all use of the trade marks shall inure to the benefit of the franchisor;

6.22 When using the trade marks, the franchisee shall cause them to be reproduced exactly and accurately and in

accordance with specifications and directions laid down by the franchisor from time to time;

6.23 The franchisee shall protect and promote the goodwill associated with the franchised business and all

goodwill generated by the conduct of the franchised business shall in inure to the benefit of the franchisor;

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6.24 The franchisee shall continuously ensure that all items required in conducting the franchised business, for the

duration of this agreement, are kept in good condition and/or are replaced if necessary, at the franchisee’s own

expense;

6.25 The franchisee shall purchase from the franchisor exclusively all items in respect of which ownership has

been reserved in terms of clause 7 hereof, including all percussion instruments, only from the franchisor. The

franchisee shall however be entitled to purchase any other items from suppliers nominated by him;

6.26 The franchisee shall, in writing and by not later than 30 November of each year, furnish the franchisor with

the names, addresses and telephone numbers of the schools in respect of which the franchisee has been

associated with for the duration of this agreement;

6.27 The franchisee shall, in the event of him at any time during the duration of this agreement electing to acquire a

further Package, be obliged to notify the franchisor in writing at least 1 (ONE) calendar month prior thereto,

of his intention to acquire such further Package;

6.28 The franchisee undertakes to purchase the parts of the business system that the franchisor continuously

develops, extends, improves and adapts, according to the needs and requirements of the children fitting the

profile. The franchisee undertakes to purchase these parts of the business system as soon as the franchisor has

disclosed such development, extension, improvement and adaptation in the business system to the franchisee.

The franchisee acknowledges that purchasing the above mentioned is necessary for the successful running of

the franchise business. All reasonable steps will be taken by the franchisor to ensure that the applicable items

are affordable and that the selling price thereof is market related.

6.29 The franchisee shall at all times ensure, in respect of each of the different courses, that the children’s ages are

as follows:

6.29.1 Package A: Children must turn 5 (FIVE) in the year in which they start with this course.

6.29.2 Package B: Children must turn 6 (SIX) in the year in which they start with this course.

6.29.3 Package C: Children must turn 5 (FIVE) in the year in which they start with module 1 and 2 and 6

(SIX) when they start with module 3 and 4 of this course.

6.29.4 Package D: Children must turn 4 (FOUR) in the year in which they start with this program.

6.29.5 Package E: Children must turn 3 (THREE) in the year in which they start with this program.

6.29.6 Package F: Children must turn 2 (TWO) in the year in which they start with this program.

6.30 The franchisee shall, during the commencement of the courses each year, require from the parents of the

children to purchase the applicable items as referred to in clauses 1.12.16, 1.13.19, 1.14.23, 1.15.11, 1.16.11

and 1.17.11.

7. Ownership

Ownership in all the under mentioned items shall remain vested in the franchisor and shall never pass to the franchisee,

namely;

7.1 Package A:

All the items referred to in clauses 1.12.1 to 1.12.13

7.2 Package B:


7.3 Package C:


7.4 Package D:


7.5 Package E:


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7.6 Package F:


8. Death or incapacity of the franchisee

The franchisor may on death of the franchisee, approve the transfer of the franchised business to any of the beneficiaries

of the deceased franchisee. Such person(s) shall be required to assume the management of the franchised business as

soon as is practicable once they have bound themselves to observe the terms and conditions of this agreement. Pending

such transfer, the franchisor shall be entitled to assume the control and management of the franchised business and to

operate it on behalf of the representative of the deceased estate of the franchisee, and for the benefit and account of the

deceased estate of the franchisee provided that:

8.1 the franchisor shall be entitled to charge its usual fee for the conduct and management of the franchised

business, and the franchisor is hereby authorised to do all things and to sign all documents reasonably

necessary for the purposes of conducting and managing the franchised business;

8.2 if the franchisor does not approve the transfer of the franchised business to a beneficiary in terms of clause 8,

the representative of the deceased estate of the franchisee may dispose of the franchised business to such

person as may be approved of by the franchisor, for such sale price and upon such terms and conditions as

may be agreed upon between the person concerned and the representative of the deceased estate of the

franchisee;

8.3 the purchaser of the franchised business may not take transfer thereof until he has bound himself to the terms

and conditions of this agreement, and pending such sale and transfer, the franchisor shall be entitled to operate

and manage the franchised business on behalf of and for the account of the estate of the deceased franchisee.

The franchisor shall be entitled to charge its usual fee for managing and conducting the franchised business

and shall be authorised to do all things and to sign all documents reasonably necessary to enable it to conduct

and manage the franchised business.

9. Termination of this agreement

9.1 The franchisor shall, without prejudice to any alternative or additional action or remedy available under the

circumstances, and given the provisions of this clause 9, including the right to claim damages from the

franchisee for any default or breach, be entitled to terminate this agreement on written notice to the franchisee

in the event of:

9.1.1 the franchisee failing to pay to the franchisor, by the due date, any sum due and owing to the

franchisor hereunder or in any other way breaching the terms and conditions of this agreement, all

of which are declared to be material, and failing so to pay or to remedy the breach within 7

(SEVEN) days of written notice by or on behalf of the franchisor, calling upon the franchisee to

make payment or remedy the breach complained of;

9.1.2 if the franchisee commits an act of insolvency or is sequestrated or is placed under a provisional or

final winding-up or judicial management order or if the franchisee makes an assignment for the

benefit of his creditors, or fails to satisfy or take steps to have set aside any judgment taken against

the franchisee, within 7 (SEVEN) days after such judgment has come to the notice of the

franchisee;

9.1.3 the franchisee attacks or challenges the rights of the franchisor to the intellectual property or

induces or procures any other person to make such challenge or attack.

9.2 The termination of this agreement, for whatever reason, shall not affect the right of a party which may have

accrued as at the date of termination and shall further not affect any rights and obligations which specifically

or by their nature survive the termination of this agreement.

9.3 Upon the termination of this agreement, for any reason whatsoever:

9.3.1 the franchisee shall immediately cease to operate his business, including but not limited to the use

of the trademarks;

9.3.2 the franchisee shall immediately, at his own expense, return to the franchisor all items in respect of

which the franchisor has reserved ownership in terms of clause 7 hereof, as well as all stamps,

blocks, etiquettes, promotional and advertising material, printing and all related items, containing

and/or displaying the trade mark, to the franchisor’s address referred to in clause 13.1.1, or at any

other address which the franchisor may appoint in writing for this purpose;

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9.4 In the event of this agreement being terminated for any reason whatsoever, the franchisee shall be obliged to

immediately make the following payments to the franchisor:

9.4.1 all outstanding and arrear amounts, of whatsoever nature, due and payable in terms of this

agreement;

9.4.2 the pre-estimated royalties calculated until the last day of the year during which this agreement has

been terminated, whether such amounts are due and payable upon termination or not;

9.4.3 all expenses incurred by the franchisor in respect of training, calculated from the commencement

date to date of termination of this agreement.

9.5 The franchisee shall immediately pay all his creditors.

10. Operating manual

All of the provisions of the operating manual, any new edition of the operating manual, and any amendments to or

revisions of the operating manual form part of this agreement save that in the event of any conflict between the terms of

this agreement and a provision in the operating manual, the provisions of this agreement shall prevail. The franchisee

shall not make any copies of the operating manual without the franchisor’s prior written consent.

11. Nature of this agreement

11.1 The franchisee shall at all times remain an independent contractor;

11.2 The franchisee shall not make any representations or statements or permit such cause of conduct, which may

indicate or be construed to mean that there is any relationship of agency, joint venture, partnership or

employment agreement between the franchisor and franchisee. The franchisor shall not in any manner be

bound to any agreement, warranty, undertaking or representation made by the franchisee in any circumstances

to any third party.

12. Acknowledgement by the franchisee

The franchisee acknowledges that the success of the business venture undertaken by him in terms of this agreement

depends to a large extent upon his own business ability. The franchisee acknowledges that the franchisor has made no

warranty, express or implied, as to the potential success of the franchised business

13. Domicilium citandi et executandi

13.1 The parties choose as their domicilium address for all purposes including the service of court process the

following:

13.1.1 Franchisor at _______________________________________________________________

_______________________________________________________________

_______________________________________________________________

13.1.2 Franchisee at _______________________________________________________________

_______________________________________________________________

_______________________________________________________________

13.2 A party may change its domicilium address by 30 (THIRTY) days’ written notice to the other party.

14. Replacement and expansion of territory

14.1 In the event of the franchisee, during the currency of this agreement, relocating to another area, on a

permanent basis, other than the area in which the territory is situated:

14.1.1 the franchisor shall take all reasonable measures (although the franchisor has no obligation

thereto), to allocate to the franchisee a new territory in the area to which the franchisee has

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relocated, on condition that such new territory has not as yet been allocated to another franchisee,

unless such other franchisee has consented in writing to the franchisee being allowed to operate

within his territory;

14.1.2 the agreement shall remain in full force and effect until a new written agreement with such new

franchisee has been concluded alternatively until all right, title and interest in and to this

agreement has been ceded and made over, in writing, to such new franchisee, subject to the

provisions of clause 17 hereof.

14.2 The franchisor shall be entitled to award an adjacent territory to the franchisee, on a temporary or permanent

basis, on condition that:

14.2.1 such other territory has not as yet been allocated to another franchisee;

14.2.2 the franchisee has proved in writing and to the satisfaction of the franchisor, that his territory does

not offer sufficient opportunities for the conduct of the franchised business.

15. Notices

Every notice, consent or other communication required or permitted hereunder from either party shall be in writing. It

shall be sufficiently given or transmitted if and when:

15.1 hand-delivered to the other party at its domicilium address, or at such other address as the party may have

designated in writing;

15.2 transmitted by means of a telefax to the addressee’s telefax number and in respect of which telefax an

acknowledgement has been received; or

15.3 deposited in the mail, duly registered with postage prepaid for prompt delivery and addressed to the other

party at its domicilium address, or at such other address as the addressee may have designated in writing. A

notice deposited in the mail in terms of this sub-clause shall be deemed to have been delivered on the fourth

business day after the date of posting.

16. Entire agreement and variations

16.1 This agreement constitutes the whole agreement between the parties and supersedes all prior verbal or written

agreements or understandings or representations by or between the parties regarding the subject matter of this

agreement, and the parties shall not be entitled to rely, in any dispute regarding this agreement, on any terms,

conditions or representations not expressly contained in this agreement;

16.2 No variation of or addition to this agreement shall be of any force or effect unless reduced to writing and

signed by or on behalf of the parties;

16.3 Neither party to this agreement has given any warranty or made any representation to the other party, other

than any warranty or representation, which may be expressly set out in this agreement.

17. Assignment, cession and delegation

The franchisee shall not be entitled to assign, cede, delegate or transfer any rights, obligations, share or interest acquired

in terms of this agreement, in whole or in part, to any other party or person without the prior written consent of the

franchisor, which consent shall not unreasonably be withheld or delayed.

18. Relaxation

No indulgence, leniency or extension of a right, which either of the parties may have in terms of this agreement, and

which either party (“the grantor”) may grant or show to the other party, shall in any way prejudice the grantor, or

preclude the grantor from exercising any of the rights that it has derived from this agreement, or be construed as a waiver

by the grantor of that right.

19. Waiver

No waiver on the part of either party to this agreement of any rights arising from a breach of any provision of this

agreement shall constitute a waiver of rights in respect of any subsequent breach of the same or any other provision.

20. Severability

In the event that any of the terms of this agreement are found to be invalid, unlawful or unenforceable, such terms shall

be severable from the remaining terms, which shall continue to be valid and enforceable.

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21. Governing law

The conclusion, validity, interpretation and all litigation in respect of and arising from this agreement shall be governed

by the laws of the Republic of South Africa.

22. Jurisdiction

The parties consent and submit to the jurisdiction of any Court of South Africa (Witwatersrand Local Division) in any

dispute arising from or in connection with this agreement. Notwithstanding such submission, the franchisor shall be

entitled to institute legal proceedings against the franchisee in any magistrate’s court having jurisdiction, notwithstanding

that the amount of the claim may exceed the jurisdiction of the court, to which jurisdiction the parties consent.

23. Costs

23.1 All costs of and incidental to the preparation of this agreement shall be borne by the franchisee and payable

upon demand;

23.2 All costs and expenses, including legal costs on an attorney and own client scale incurred by the franchisor, in

exercising any of his rights in terms of this agreement, shall by payable by the franchisee on demand.

24. Sales and commission

24.1 The franchisee shall be entitled to sell any of the items determined by the franchisor in writing from time to

time, to the parents of children enrolled for the course, at an amount determined by the franchisor in writing

from time to time. The franchisor shall pay commission to the franchisee in respect of such sales, at a rate

determined by the franchisor annually.

24.2

24.2.1 The franchisor shall pay commission to the franchisee in respect of each new written agreement

referred to in clause 24.2.2 below concluded with a new franchisee introduced by the franchisee

and in respect of which the franchisee was the effective cause. The rate of commission payable

shall be determined by the franchisor annually.

24.2.2 The written franchise agreement referred to in clause 24.2.1 above, relates only to agreements with

an initial duration of at least 3 (three) years.

25. Additional Presenters

25.1 Grant of authority to employ and appoint additional presenters:

The franchisor herewith grants the franchisee the authority for the duration of this agreement to employ and

appoint one or more additional presenters to assist the franchisee in his business as employees of the

franchisee exclusively and further subject to the following conditions:

25.1.1 that the use of any and each package in the business is limited to a maximum of 40 lessons per

week; and

25.1.2 that any and each presenter of lessons in the business, including the franchisee, is limited to

presenting a maximum of 20 lessons per week, irrespective thereof if one or more package is used;

and; and

25.1.3 that the franchisor purchase in respect of each additional presenter one or more packages for the

exclusive use in the franchise business of the franchisee by the specific appointed additional

presenter. An exception of this stipulation shall be allowed in that an additional presenter shall be

allowed to use another package purchased by the franchisee for the exclusive use of the franchisee

or another additional presenter, if the specific package is not used by the franchisee or the other

additional presenter, on condition that the time limitations in clauses 25.1.1 and 25.1.2 are at all

times adhered to; and

25.1.4 that the franchisor and franchisee in respect of each additional presenter and the purchase of one or

more package for use by the specific additional presenter, complete and sign an Addendum in the

prescribed format as confirmation of the consent by the franchisor of the appointment of the

additional presenter and their agreement as to the payment of the costs of the additional package/s

for the use by the specific additional presenter and the payment of royalties in respect thereof; and

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25.1.5 notwithstanding the terms and conditions of this agreement, the authority by the franchisor for the

appointment of an additional presenter shall only become effective in respect of a specific

appointed additional presenter once the Addendum has been signed by the franchisor and

franchisee in respect of that additional presenter; and

25.1.6 that all the financial obligations of the franchisee in terms of this franchise agreement are complied

with at the time of signature of the Addendum and during the duration of this franchise agreement;

25.1.7 that a written Presenter Agreement is entered into between the franchisee and each additional

presenter, which Presenter Agreement must contain certain minimum conditions in favour of the

franchisee and be submitted to the franchisor for acceptance. The franchisor shall on request

furnish the franchisee with a draft Presenter Agreement containing the required minimum

conditions in favour of the franchisee.

25.1.8 that each additional presenter shall, prior to the commencement of her services, receive training in

the operation of the business system from the franchisor as determined in the Franchise

Agreement, which training shall be done at a time, place and date and for such duration and to

such extent as the franchisor may determine. The franchisee shall be liable for all the costs,

including all travel and accommodation costs, pertaining to the training.

25.1.9 that each additional presenter shall, prior to the commencement of her services, in writing be

evaluated by the franchisor in respect of her standard of music training in music theory and that

the franchisor gives her written approval that the specific additional presenter complies with the

required standards to present the specific package purchased for her and to be used by her in the

business system. The evaluation and approval shall be within the sole discretion of the franchisor.

25.1.10 Any authority and further agreement granted in terms of clause 25 shall be effective for the

duration of the Franchise Agreement, and any extension thereof, unless terminated prior to the

termination date in the franchise agreement.

25.2 Payments and Royalties

25.2.1 Payment of costs of purchase of additional package:

The franchisee undertakes to pay the costs for the purchase of each additional package for use

exclusively by an additional presenter on the terms and conditions stipulated in the Addendum

pertaining to each additional package for each additional presenter as agreed upon between the

franchisor and franchisee.

25.2.2 Royalties:

25.2.2.1 The franchisee shall, for the duration of this agreement, which shall include all renewal

periods, pay to the franchisor such royalties in respect of each additional package

purchased, which royalties shall be calculated in respect of each additional package

purchased as determined in clause 4.2 of this Franchise Agreement.

25.2.2.2 The franchisee shall notwithstanding the authority for the appointment of additional

presenters, at all time be liable to the payment of the royalties payable in terms of this

Franchise Agreement and any Addendum in respect of an additional presenter and shall

solely be liable to the recovery thereof from the additional presenters.

25.3 Termination of the services of an additional presenter:

Should the employment and services of an additional presenter be terminated for whatever reason, the

franchisee shall be obliged to:

25.3.1 immediately pay all outstanding and arrear royalties in respect of that additional presenter and

additional package purchased, due and payable in terms of this agreement to the franchisor at the

termination of the employment and also monthly thereafter until the Addendum as to that

additional presenter and package has been cancelled by agreement between the franchisor and the

franchisee or a new agreement has been entered into in terms hereof;

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25.3.2 immediately give written notice to the franchisor of the termination of the employment and

services of the additional presenter, upon which the franchisee shall within a period of 30

(THIRTY) days and in respect of the additional package purchased for the specific additional

presenter, be entitled to select between one of the following options:

25.3.2.1 appoint another additional presenter, subject to the same terms and conditions and the

same required consent and approval as stipulated in clause 25.1 hereof; or

25.3.2.2 to use the additional package personally with the prior written consent of the

franchisor, which consent shall also be subject to the time limitations set in terms of

this Franchise Agreement as to the optimal use of the business system, and without

affecting any other rights of obligations on terms of this agreement or the Addendum

pertaining to the additional package.

25.3.2.3 to cancel the addendum pertaining the additional package, in which event the

stipulations in clauses 25.3.3 and 25.3.4 shall be applicable and the franchisee shall

within the 30 (THIRTY) days period notify the franchisor in writing of her decision in

terms of 25.3.2.1, 25. 3.2.2 or 25. 3.2.3.

25.3.3 Should the franchisee select the option in clause 25.3.2.3, the franchisee shall within 14

(FOURTEEN) days from date of such selection, deliver all items being part of the additional

package of which the Addendum is cancelled and in respect of which the franchisor has retained

ownership and/or are referred to in clause 7 of the franchise agreement, including all stamps,

blocks, etiquette and advertising material, printing work, documentation and all other items

reflecting the trade mark of the franchisor or used in the business system of the franchisor, to the

franchisor, at the costs of the franchisee, at the domicilium address of the franchisor as stipulated

in this Franchise Agreement or at such other address as indicated in writing by the franchisor for

this purpose.

25.3.4 Against receipt of the additional package of which the Addendum is cancelled and on condition

that the franchisee complied with all the other conditions in terms of the Addendum of this

Franchise Agreement, the franchisor shall in writing release the franchisee of all further

obligations to pay royalties for use of the additional package of which the use is cancelled. The

franchisor shall not be liable to refund the franchisee any payments made towards the costs of the

additional package in clause 25.2.1 hereof.

25.4 Legal capacity of an Additional Presenter

The parties hereby agree that no part of this Franchise Agreement, any Addendum in respect of an additional

presenter or of any part of the Presenter Agreement between the franchisee and an additional presenter, shall

be open for any interpretation that an additional presenter is an employee, an agent, a representative or a

contractor of the franchisor and also no interpretation shall be made that the franchisor has any obligations

towards any additional presenter.

SIGNED at _____________________________ on this ___________ day of ___________________________ 2_________.

Witnesses:

1 ................................................................................

2 ................................................................................ ...................................................................................

(Signatures of witnesses) Franchisor

SIGNED at _____________________________ on this ___________ day of ___________________________ 2_________.

Witnesses:

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1 ................................................................................

2 ................................................................................ ...................................................................................

(Signatures of witnesses) Franchisee

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Documents

MEMORANDUM OF AGREEMENT ENTERED INTO BY AND BETWEEN · 3 1.12.4 Module 1 and 2 curriculum manuals; 1.12.5 Module 1and 2 auscultation and story files; 1.12.6 Songs manual; 1.12.7 3