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Lease agreement template for FFS

SCHEDULE 5 : Equity Share Scheme

The Monthly Charge of the Member must be sufficient to service % of the Society’s loan repayments relating to the Member’s portfolio, such sum to be reviewed from time to time by the Society acting reasonably, in accordance with Schedule 4.
If an incoming Member cannot afford to acquire all of the outgoing Member’s Equity Shares in the Premises (in accordance with an assignment of this Lease under clause 4.19), the Society can require an existing Member to acquire the remaining Equity Shares of the outgoing Member.
Whilst the value of the Equity Shares of the Member shall increase from the date the Member occupies the Premises, on vacating the Premises the Member shall only be entitled to any increase in value if the Member has lived in the Premises for more than 3 years. The increase in value shall be the same amount as the equivalent increase in the National Average Earnings Index (or any successor index thereto).
The Society will establish the [ ] Equity Fund to accept contributions from Members who meet the criteria set out in the [details of policy] from time to time The [ ] Equity Fund will be utilised for the benefit of Members in accordance with the policy agreed by the Society in general meeting from time to time.
At the Base Valuation Date each Equity Share shall have a value of £1000.
The value of the total number of Equity Shares issued by the Society to Members shall comprise:
the total Development Costs;
the additional Equity Shares issued by the Society acting reasonably to fund capital improvements or repairs to the Development; and
additional Equity Shares issued by the Society acting reasonably to reflect the value of improvements approved by the Society and carried out by the Member to the Premises (or carried out by the Society), such value to be assessed by an independent valuer appointed by the Society (acting as an expert and whose decision shall be final and binding).
Equity Shares are assigned to Members in the following ways:
assignment of any initial allocation on becoming a Member;
assignment of additional Equity Shares under Clause 2 of this Schedule;
assignment of additional Equity Shares under Clause 6.2 or 6.3 of this Schedule; and
assignment of additional Equity Shares in the Premises as determined by the Society in general meeting acting reasonably representing the cost of construction of additional properties beyond those contained in the original Development.
The Member shall acquire the Equity Shares he or she is allocated by means of either:
a cash deposit of a minimum of 10% of the total Equity Shares to be acquired under Clause 6 above, such deposit to be paid on the date of this Lease; and
payment of the Monthly Charge and/or;
a cash lump sum at any other point.
The value of Equity Shares when the Member leaves the Society shall be:
if the Member leaves less than 3 years after taking occupation of the Premises, the value at which the Equity Shares were acquired or less if the National Average Earnings Index has reduced since the acquisition of the Equity Shares; or
if more than 3 years after the Member takes occupation of the Premises, by the following formula:
value of Equity Shares at date of acquisition plus 75% of the increase (or, if decrease, then 100% of the decrease) in the National Average Earnings Index
such increase or decrease in the National Average Earnings Index shall be measured from the date of acquisition of the Equity Shares to the latest quarterly date prior to the sale for which the National Average Earnings Index data for the region is published by the Office of National Statistics. If the Index of Average Earnings ceases to exists, it shall be replaced by such other index as represents the increase/decrease in Average Earnings for the region as the Society may reasonably determine.
The Member may sell his or her Equity Shares at a value less than that calculated under Clause 9 if unable to sell them at full value and this can be demonstrated to the Society.
If a Member occupies the Premises for more than 3 years, he or she shall be entitled to receive the value of Equity Shares on leaving the Society in accordance with Clause 9 together with any increase in value but subject to the following deductions:
the outstanding principal amount on the Society’s corporate mortgage/loans apportioned to that Member’s property, including loans to finance development costs, loans or capital sums to finance payments to other outgoing members; and
depreciation of the value of Equity Shares calculated by reference to the relevant accounting standards of recommended practice and dilapidations in accordance with Clause 4.15.2 of this Lease.
All sales of Equity Shares by an outgoing Member shall be administered by the Society who shall be entitled to charge reasonable administration costs of doing so.
If an outgoing Member serves notice of his or her intention to leave the Premises:
the Society shall have two months to nominate an incoming Member to acquire all the outgoing Member’s Equity Shares or an incoming Member to acquire some of those shares and an existing Member or Members to acquire the remainder;
if the Society is unable to nominate under Clause 13.1, the Member can assign the Lease of the Premises and sell his or her Equity Shares to any person on condition that that person:
is approved as a Member by the Society acting reasonably;
executes a deed of covenant with the Society to comply with the terms of the Lease; or
executes a deed to accept the Member’s obligations under the constitution of the Society.
No Equity Shares can be held or owned by any person who is not a Member of the Society.
In circumstances of financial hardship, the Society may consent to the Member selling some of his or her Equity Shares if:
the Society considers that financial hardship will remain the case for the foreseeable future; and
another Member is willing and able to acquire those Equity Shares,
If the procedure in Clause 15 is not possible for any reason the Society acting reasonably may allow the Member:
to retain his or her Equity Shares but not to be able to deal or dispose of the same, but to surrender the Lease of the Premises and take a monthly contractual tenancy instead; or
provide financial support through the [ ] Equity Fund.
If a Member takes a monthly tenancy pursuant to Clause 16.1, his or her Equity Shares will be frozen from that date until the date the Member vacates the Premises, at which point the Equity Share shall be valued up to the date of surrender of the Lease and commencement of the contractual tenancy.
If:
the Member has acquired all the Equity Shares required and these are fully paid for; and
the Society has no longer any corporate loans or debts attributable to that Member’s Equity Shares;
the Member shall no longer be liable to pay the element of the Monthly Charge which relates to mortgage or loan repayments but will continue to be liable for the element of the Monthly Charge relating to the costs incurred by the Society in managing the Premises and Communal Facilities and providing the services described in clause 5 of this Lease. The Member will also continue to be liable to make contributions to the [ ] Equity Fund as required under the appropriate policy of the Society.
All the provisions of this Schedule shall be subject to amendment by the Society, but only if such amendment is approved by 75% of all the Members for the time being attending and voting in general meeting or 75% of all Member’s of the Society voting by secret ballot.
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