Florida | 7389 | 65-0903895 | ||
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification No.) |
Dr. Serge C.P. Belamant
Net 1 UEPS Technologies, Inc. President Place, 4th Floor Cnr. Jan Smuts Avenue and Bolton Road Rosebank, Johannesburg, South Africa Tel: (2711) 343-2000 Fax: (2711) 880-7080 |
Marjorie Sybul Adams, Esq.
DLA Piper Rudnick Gray Cary US LLP 1251 Avenue of the Americas New York, NY 10020 Tel: (212) 835-6000 Fax: (212) 835-6001 |
Chris Ewing, Esq.
Cliffe Dekker Inc 1 Protea Place Sandown, South Africa Tel: (2711) 290-7120 Fax: (2711) 290-7300 |
Paul Kumleben, Esq.
Davis Polk & Wardwell 99 Gresham Street London, EC2V 7NG England Tel: (4420) 7418-1300 Fax: (4420) 7418-1400 |
Proposed Maximum | ||||||||
Title of Each Class of | Aggregate | Amount of | ||||||
Securities to be Registered | Offering Price(1)(2) | Registration Fee(3) | ||||||
Common stock, par value $0.001 per share
|
$ | 145,000,000 | $ | 17,066.50 | ||||
(1) | Includes shares of common stock that the underwriters may purchase to cover over-allotments, if any. |
(2) | In accordance with Rule 457(o) under the Securities Act, the number of shares being registered and the proposed maximum offering price per share are not included in this table. |
(3) | A $13,535.50 fee has been previously paid in connection with the registration of an initial aggregate amount of $115,000,000 on Form S-1 filed on May 26, 2005. |
The
information in this prospectus is not complete and may be
changed. The selling shareholders and, if the over-allotment is
exercised by the underwriters, we may not sell these securities
until the registration statement filed with the Securities and
Exchange Commission is effective. This preliminary prospectus is
not an offer to sell these securities and the selling
shareholders and, if the over-allotment is exercised by the
underwriters, we are not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
Per Share | Total | |||||||
Public offering price
|
$ | $ | ||||||
Underwriting discounts and commissions
|
$ | $ | ||||||
Proceeds, before expenses, to selling shareholders
|
$ | $ |
Morgan Stanley |
JPMorgan
|
Robert W. Baird & Co.
|
Jefferies & Company, Inc. | Thomas Weisel Partners LLC |
i
1
2
3
4
5
6
7
8
9
10
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27,525,259 shares of common stock issuable upon conversion
of an equal number of outstanding shares of our special
convertible preferred stock; and
2,906,980 shares of common stock issuable upon the exercise
of options and other stock-based awards outstanding as of
March 31, 2005, granted under our 2004 Stock Incentive Plan
at a weighted average exercise price of $1.50 per share.
reflects a one-for-six reverse stock split of our common stock
and special convertible preferred stock which became effective
on June 13, 2005. The effect of this reverse stock split
was to decrease the number of issued and outstanding shares by a
factor of six and correspondingly increase the earnings per
share by a factor of six; and
assumes no exercise of the underwriters over-allotment
option.
Table of Contents
Table of Contents
Nine Months
Ended
March 31,
Year Ended June 30,
2005
2004
2004
2003
2002
(In thousands, except per share data)
$
134,885
$
91,463
$
131,098
$
74,924
$
51,793
41,207
28,206
39,134
25,935
14,170
33,804
25,625
39,677
26,399
21,637
4,897
4,110
5,676
3,323
3,128
3,537
11,133
54,977
29,985
35,478
19,267
12,858
1,497
2,464
3,640
2,600
1,381
56,474
32,449
39,118
21,867
14,239
22,534
13,896
25,927
9,473
5,554
34,420
18,553
13,278
11,942
8,518
34,420
18,553
13,278
13,117
8,518
$
0.63
$
0.58
$
0.40
$
0.37
$
0.27
$
0.62
$
0.58
$
0.38
$
0.37
$
0.27
$
$
$
1.14
$
0.12
$
0.06
(1)
Net income attributable to shareholders for 2003 includes an
extraordinary item of $0.9 million and the results of a
change in accounting policy of $0.3 million as a result of
the adoption and application of
Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible
Assets
.
Table of Contents
(2)
The basic and diluted earnings per share have been restated as a
result of the transaction described in notes 1, 10 and 11
to our consolidated financial statements and the one-for-six
reverse stock split.
(3)
The cash dividend per share has been restated as a result of the
transaction described in notes 1, 10 and 11 to our
consolidated financial statements and the one-for-six reverse
stock split. The cash dividend per share for 2004 was calculated
based on 32,161,190 Aplitec shares and represents the dividend
paid to shareholders of Aplitec as a result of the transaction.
As of March 31, 2005
(In thousands)
$
92,712
141,960
175,318
32,650
128,680
Table of Contents
The provincial governments of South Africa are our largest customers, and any non-renewal or termination of our government social welfare contracts would materially and adversely affect our business and revenues, results of operations and cash flows. |
We may not maintain our current level of profitability or rates of growth. |
| continue to enroll new smart card users in South Africa; | |
| hire and train personnel capable of marketing, installing and integrating our solution, supporting customers and managing operations; | |
| continue to expand the range of applications that use our technology and to market these applications successfully; |
11
| successfully identify and enter other markets for our products; and | |
| manage the costs of our business, including the costs associated with maintaining and developing our technology and expanding our operations internationally. |
Changes in current government regulations relating to social welfare grants could adversely affect our revenues and cash flows. |
We may have difficulty managing our growth which could limit our ability to increase sales and cash flow. |
| implementing appropriate operational and financial systems; | |
| expanding our sales and marketing infrastructure and capabilities; | |
| providing adequate training and supervision to maintain high quality standards; and | |
| preserving our culture and values. |
There are risks relating to operating in South Africa that could adversely affect our business, operating results, cash flows and financial condition. |
12
13
14
There are risks relating to other countries in which we intend to operate that could adversely affect our future business, operating results, cash flows and financial condition. |
| political and economic instability; | |
| loss due to civil strife, acts of war, guerrilla activities and insurrection; | |
| competition from existing market participants that may have a longer history in or greater familiarity with the foreign markets we enter; | |
| government interventions and protectionism; | |
| potential adverse changes in laws and regulatory practices, including import and export license requirements, tariffs, legal structures and tax laws; | |
| cancellation of contractual rights; | |
| trade barriers; | |
| difficulties in staffing and managing operations; | |
| import and export restrictions; | |
| adverse tax consequences; | |
| the lack of well-developed legal systems which could make it difficult for us to enforce our intellectual property and contractual rights; | |
| security and safety of employees; | |
| restrictions on the right to convert or repatriate currency or export assets; | |
| greater risk of uncollectible accounts and longer collection cycles; | |
| currency fluctuations; | |
| indigenization and empowerment programs; | |
| logistical and communications challenges; | |
| changes in labor conditions; | |
| discrimination against U.S. companies; and | |
| exposure to liability under U.S. securities laws, including the Foreign Corrupt Practices Act. |
15
Volatility in the South African Rand to U.S. dollar exchange rate may adversely affect our reported operating results. |
The loss of the services of Dr. Belamant or any of our other executive officers would adversely affect our business. |
We face a highly competitive employment market and may not be successful in attracting and retaining a sufficient number of skilled employees, particularly in the technical and sales areas and senior management. |
16
We pre-fund the payment of social welfare grants on behalf of our South African government customers and any payment defaults by these customers would adversely affect our operations. |
Our ability to operate our wage payment and insurance products businesses may be limited by existing South African banking and financial services laws and regulations. |
We may face competition from the incumbent retail banks in South Africa in the unbanked market segment. |
17
We may face increased competition as our sales and product offerings increase. |
Patent competition may adversely affect our products or processes, and limited patent protection, a lack of proprietary protection and the potential to incur costly litigation could be harmful to our operations. |
18
The copyrights and certain related intellectual property rights in earlier versions of our UEPS software are jointly owned and potentially subject to non-exclusive rights, which may reduce our future revenues. |
Our current license agreement with Visa imposes long-term restrictions on our ability to license rights in our technology and could inhibit our ability to realize additional revenue from these rights in our technology. |
Our license agreement with Visa substantially impacts our ability to defend and enforce our patents licensed to Visa and could substantially inhibit our ability to protect the rights in our technology. |
19
We depend upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business. |
Escalating pricing pressures from our retail customers may adversely affect our business. |
Our strategy of partnering with companies outside South Africa may not be successful. |
System failures, including breaches in the security of our system, could harm our business. |
20
We may not be able to exploit technological advances quickly and successfully, which could impair our competitive position and operations. |
21
We may incur material losses in connection with our distribution of cash to recipients of social welfare grants. |
We may not recover outstanding amounts owed to our micro-finance businesses. |
We may undertake acquisitions that could increase our costs or liabilities or be disruptive to our business. |
We may be subject to privacy laws in South Africa and other jurisdictions in which we operate. |
22
Our international operations require us to comply with a number of U.S. and international regulations. |
We may incur significant costs to ensure compliance with U.S. corporate governance and accounting requirements. |
We may not be able to meet the accelerated filing and internal control reporting requirements imposed by the SEC. |
23
We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our shares of common stock, which could adversely affect the market price of our shares of common stock. |
We may have difficulty raising necessary capital to fund operations as a result of market price volatility for our shares of common stock. |
24
Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our common stock to decline. |
| demand for and acceptance of our new product offerings; | |
| delays in the implementation and delivery of our products and services, which may impact the timing of our recognition of revenue; | |
| variations in product mix and cost during any period; | |
| development of new relationships and maintenance and enhancement of existing relationships with customers and strategic partners; | |
| difficulties with component supplies, manufacturing or distribution; | |
| deferral of customer contracts in anticipation of product or service enhancements; | |
| timing of commencement, implementation or completion of major implementation projects; | |
| the relative mix of net revenues from established markets, including South Africa, and unestablished markets; | |
| fluctuations in currency exchange rates; | |
| the fixed nature of many of our expenses; and | |
| industry and economic conditions, including competitive pressures and inventory obsolescence. |
The period between our initial contact with a potential customer and the sale of our products or services to that customer tends to be long and may be subject to delays which may have an impact on our revenues. |
25
We may become subject to a U.S. tax liability for failing to withhold on certain distributions on instruments issued in connection with the Aplitec transaction. |
Shipments of our electronic payment systems may be delayed by factors outside of our control, which can harm our reputation and our relationships with our customers. |
Force majeure events, such as terrorist attacks, other acts of violence or war, political instability and health epidemics may adversely affect us. |
The price for shares of our common stock quoted on the Over-the-Counter Bulletin Board may not be indicative of their fair value. |
26
We expect that the price of our shares of common stock will fluctuate substantially. |
| the gain or loss of significant orders or customers; | |
| announcements of our participation in a joint venture or partnership; | |
| recruitment or departure of key personnel; | |
| the announcement of new products or service enhancements by us or our competitors; | |
| changes in government regulation that directly or indirectly affect our business; | |
| quarterly variations in our results of operations; | |
| changes in earnings estimates, investors perceptions, recommendations by securities analysts or our failure to achieve analysts earning estimates; | |
| developments in our industry; | |
| events and news related to the regions where we and our subsidiaries conduct our business; and | |
| general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors. |
Future sales of our common stock could reduce our stock price. |
27
One of our shareholders will continue to hold a significant block of shares in our company after completion of this offering and, as a result, will continue to have significant influence over our company. |
We have not paid dividends in the past and it is not our current policy to pay dividends, and any return on investment may be limited to the value of our stock. |
| declaration of the dividend is approved by a majority of the holders of New Aplitec B class preference shares; | |
| all B loan accounts have been paid by New Aplitec; and | |
| the dividend does not exceed 50% of New Aplitecs annual earnings. |
28
You may have difficulties enforcing a U.S. judgment against us, our executive officers and directors and some of the experts named in this prospectus or asserting U.S. securities laws claims in South Africa. |
29
30
Quarter Ended | High | Low | ||||||
Sep. 30, 2002
|
$ | 7.20 | $ | 5.40 | ||||
Dec. 31, 2002
|
$ | 7.80 | $ | 5.40 | ||||
Mar. 31, 2003
|
$ | 7.80 | $ | 5.40 | ||||
June 30, 2003
|
$ | 12.72 | $ | 6.36 | ||||
Sep. 30, 2003
|
$ | 14.40 | $ | 11.40 | ||||
Dec. 31, 2003
|
$ | 40.80 | $ | 13.32 | ||||
Mar. 31, 2004
|
$ | 60.90 | $ | 31.32 | ||||
June 30, 2004
|
$ | 64.20 | $ | 9.00 | ||||
Sep. 30, 2004
|
$ | 14.10 | $ | 6.66 | ||||
Dec. 31, 2004
|
$ | 16.20 | $ | 5.94 | ||||
Mar. 31, 2005
|
$ | 21.30 | $ | 10.56 | ||||
June 30, 2005
|
$ | 18.60 | $ | 13.68 | ||||
Sep. 30, 2005 (through July 14, 2005)
|
$ | 18.20 | $ | 16.40 |
31
| declaration of the dividend is approved by a majority of the holders of New Aplitec B class preference shares; | |
| all B loan accounts have been paid by New Aplitec; and | |
| the dividend does not exceed 50% of New Aplitecs annual earnings. |
32
33
Nine Months Ended | ||||||||||||||||||||||||||||
March 31, | Year Ended June 30, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Consolidated Statements of Operations Data:
|
||||||||||||||||||||||||||||
Revenue
|
$ | 134,885 | $ | 91,463 | $ | 131,098 | $ | 74,924 | $ | 51,793 | $ | 73,243 | $ | 68,355 | ||||||||||||||
Cost of goods sold, IT processing, servicing and support
|
41,207 | 28,206 | 39,134 | 25,935 | 14,170 | 21,983 | 20,568 | |||||||||||||||||||||
General and administrative charges(1)
|
33,804 | 25,625 | 39,677 | 26,399 | 21,637 | 36,779 | 33,754 | |||||||||||||||||||||
Depreciation and amortization(1)
|
4,897 | 4,110 | 5,676 | 3,323 | 3,128 | | | |||||||||||||||||||||
Reorganization costs
|
| 3,537 | 11,133 | | | | | |||||||||||||||||||||
Operating income(2)
|
54,977 | 29,985 | 35,478 | 19,267 | 12,858 | 14,641 | 14,083 | |||||||||||||||||||||
Interest, net
|
1,497 | 2,464 | 3,640 | 2,600 | 1,381 | 1,443 | 1,419 | |||||||||||||||||||||
Income before taxes
|
56,474 | 32,449 | 39,118 | 21,867 | 14,239 | 16,084 | 15,503 | |||||||||||||||||||||
Income tax expense
|
22,534 | 13,896 | 25,927 | 9,473 | 5,554 | 7,100 | 4,337 | |||||||||||||||||||||
Income from continuing operations
|
34,420 | 18,553 | 13,278 | 11,942 | 8,518 | 8,069 | 7,557 | |||||||||||||||||||||
Net income attributable to shareholders(3)
|
$ | 34,420 | $ | 18,553 | $ | 13,278 | $ | 13,117 | $ | 8,518 | $ | 8,069 | $ | 7,557 |
34
Nine Months Ended
March 31,
Year Ended June 30,
2005
2004
2004
2003
2002
2001
2000
(In thousands, except per share data)
$
0.63
$
0.58
$
0.40
$
0.37
$
0.27
$
0.24
$
0.30
$
0.62
$
0.58
$
0.38
$
0.37
$
0.27
$
0.24
$
0.24
$
$
$
1.14
$
0.12
$
0.06
$
$
(1) | Prior to 2002, we recorded depreciation as part of general and administrative charges. For the years ended June 30, 2001 and 2000, general and administrative charges included $3.7 million and $4.8 million, respectively, related to depreciation and amortization. After 2002, we began to present depreciation and amortization as a separate line item. |
(2) | Includes $160,000 and $50,000 of other operating income for the years ended June 30, 2001 and 2000, respectively. |
(3) | Net income attributable to shareholders for 2003 includes an extraordinary item of $0.9 million and the results of a change in accounting policy of $0.3 million as a result of the adoption and application of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets . |
(4) | The basic and diluted earnings per share have been restated as a result of transaction described in notes 1, 10 and 11 to our consolidated financial statements. |
(5) | The cash dividend per share has been restated as a result of the transaction described in notes 1, 10 and 11 to our consolidated financial statements. The cash dividend per share for 2004 was calculated based on 32,161,190 Aplitec shares and represents the dividend paid to shareholders of Aplitec as a result of the transaction. |
Nine Months Ended | ||||||||||||||||||||||||||||
March 31, | Year Ended June 30, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Additional Operating Data:
|
||||||||||||||||||||||||||||
Cash flow from operating activities
|
$ | 15,576 | $ | 35,357 | $ | 41,895 | $ | 17,644 | $ | 11,753 | $ | 19,005 | $ | 12,677 | ||||||||||||||
Operating income margin
|
41% | 33% | 27% | 26% | 25% | 20% | 21% | |||||||||||||||||||||
Capital expenditures
|
2,982 | 2,392 | 2,802 | 6,712 | 1,919 | 3,640 | 3,460 |
As of | ||||||||||||||||||||||||
March 31, | As of June 30, | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data:
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 92,712 | $ | 80,282 | $ | 54,313 | $ | 32,150 | $ | 27,033 | $ | 10,172 | ||||||||||||
Total current assets
|
141,960 | 117,412 | 78,705 | 45,480 | 43,163 | 33,628 | ||||||||||||||||||
Total assets
|
175,318 | 152,632 | 98,359 | 56,496 | 59,575 | 49,776 | ||||||||||||||||||
Total current liabilities
|
32,650 | 47,831 | 19,861 | 10,178 | 9,929 | 14,537 | ||||||||||||||||||
Total debt
|
| 252 | | | | 751 | ||||||||||||||||||
Total shareholders equity
|
$ | 128,680 | $ | 95,588 | $ | 70,504 | $ | 41,724 | $ | 45,033 | $ | 33,490 |
35
36
Transaction-Based Activities |
37
KwaZulu-Natal | Limpopo | North West | Northern Cape | Eastern Cape | ||||||||||||||||
Original year of contract award
|
1992 | 1996 | 1995 | 1997 | 2002 | |||||||||||||||
Date acquired by Net 1
|
October 1998 | October 1998 | October 1998 | October 1998 | n/a | |||||||||||||||
Date of first Net 1 contract
|
January 2000 | December 2003 | July 2000 | January 2000 | November 2003 | |||||||||||||||
UEPS smart card implementation date
|
January 2000 | January 2004 | October 2000 | September 2001 | November 2003 | |||||||||||||||
Merchant acquiring rollout date
|
December 2004 | March 2005 | n/a | July 2004 | October 2004 | |||||||||||||||
Current contract expiration date (including extensions)
|
December 2005 | November 2006 | December 2005 | December 2006 | November 2005 | |||||||||||||||
Further possible extensions
|
1 year | 2 years | Negotiable | Negotiable | 2 years | |||||||||||||||
Number of beneficiaries paid by CPS (in the March 2005 payment
cycle)
|
1,431,119 | 859,874 | 272,352 | 124,816 | 633,207 |
38
Smart Card Accounts |
Financial Services |
Hardware, Software and Related Technology Sales |
| hardware for the back-end switching and settlement system; | |
| customization of the UEPS software to suit local conditions, including UEPS management system, automated teller machine, or ATM, integration and POS device integration; | |
| customization of an applications suite to clients specific requirements, such as banking, retail or wage payments; | |
| ongoing software and hardware support/maintenance; and | |
| license fees. |
39
Cost of Goods Sold, IT Processing, Servicing and Support |
General and Administrative |
Depreciation and Amortization |
Reorganization Charges |
Interest Income |
Income Taxes |
Earnings from Equity-Accounted Investment |
40
Government Decision Making |
Rate of Adoption by System Participants |
41
Total Spent | Total cash withdrawal | Total Spent and Withdrawn | ||||||||||
Jan-04
|
3 | 7 | 10 | |||||||||
Mar-04
|
386 | 599 | 985 | |||||||||
May-04
|
668 | 1351 | 2019 | |||||||||
Jul-04
|
3135 | 9297 | 12432 | |||||||||
Sep-04
|
4942 | 11260 | 16202 | |||||||||
Nov-04
|
16770 | 46741 | 63511 | |||||||||
Jan-05
|
22307 | 61231 | 83538 | |||||||||
Mar-05
|
42266 | 149003 | 191269 |
Implementation of New UEPS Systems |
Deferred Taxation |
42
Accounts Receivable and Provision for Doubtful Debts |
Research and Development |
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
Nine Months
Ended March 31,
Year Ended June 30,
2005
2004
2004
2003
2002
2001
2000
6.1546
6.9971
6.9001
9.0568
10.1477
7.6109
6.3487
6.7635
7.8030
7.8030
12.3300
13.8450
8.1900
9.1950
5.5350
6.0576
6.0576
6.9900
7.9946
6.7300
5.9350
6.3099
6.3525
6.2750
7.4700
10.3700
8.0536
6.8250
Translation Exchange Rates
Nine Months
Ended March 31,
Year Ended June 30,
2005
2004
2004
2003
2002
2001
2000
$1 = ZAR
6.1433
6.9734
6.9183
9.0568
10.1477
7.6109
6.3487
$1 = ZAR
6.3099
6.3525
6.2750
7.4700
10.3700
8.0536
6.8250
Table of Contents
Nine Months Ended March 31, 2005 Compared to Nine Months
Ended March 31, 2004
fluctuations in the exchange rate between the South African
rand, or ZAR, which is our functional currency, and the
U.S. dollar, which is our reporting currency;
commencement during the first quarter of the Nedbank project to
deliver POS devices and the conclusion of the project during the
third quarter; and
higher volumes in transaction-based activities and financial
services.
Table of Contents
Consolidated Overall Results of Operations
In United States Dollars
(US GAAP)
Nine Months Ended March 31,
2005
2004
$ %
$ 000
$ 000
Change
134,885
91,463
47
%
41,207
28,206
46
%
33,804
25,625
32
%
4,897
4,110
19
%
3,537
(100
)%
54,977
29,985
83
%
1,497
2,464
(39
)%
56,474
32,449
74
%
22,534
13,896
62
%
33,940
18,553
83
%
480
34,420
18,553
86
%
In South African Rand
(US GAAP)
Nine Months Ended March 31,
2005
2004
ZAR %
ZAR 000
ZAR 000
Change
830,391
635,992
31
%
254,899
194,876
31
%
207,668
178,693
16
%
30,084
28,661
5
%
24,665
(100
)%
337,740
209,097
62
%
9,197
17,182
(46
)%
346,937
226,279
53
%
138,433
96,902
43
%
208,504
129,377
61
%
2,949
211,453
129,377
63
%
Table of Contents
Table of Contents
In United States Dollars (SA GAAP)
Nine Months Ended March 31,
2005
% of
2004
% of
$ 000
Total
$ 000
Total
% Change
77,538
57
%
59,875
66
%
30
%
26,362
20
%
15,762
17
%
67
%
15,642
12
%
12,384
14
%
26
%
15,343
11
%
3,312
3
%
363
%
134,885
100
%
91,333
100
%
48
%
31,629
55
%
18,626
68
%
70
%
11,983
21
%
7,165
26
%
67
%
7,579
13
%
5,150
19
%
47
%
6,036
11
%
(236
)
(1
)%
(174
)
0
%
(3,442
)
(12
)%
(95
)%
57,053
100
%
27,263
100
%
109
%
In South African Rand (SA GAAP)
Nine Months Ended March 31,
2005
2004
ZAR
% of
ZAR
% of
000
Total
000
Total
% Change
477,346
57
%
416,937
66
%
14
%
162,292
20
%
109,755
17
%
48
%
96,297
12
%
86,238
14
%
12
%
94,456
11
%
23,062
3
%
310
%
830,391
100
%
635,992
100
%
31
%
194,605
55
%
129,661
68
%
50
%
73,728
21
%
49,878
26
%
48
%
46,632
13
%
35,847
19
%
30
%
37,138
11
%
(1,643
)
(1
)%
(1,071
)
0
%
(23,960
)
(12
)%
(96
)%
351,032
100
%
189,783
100
%
85
%
Transaction-Based Activities
Table of Contents
Total Year to
Three Months Ended
Date
Dec. 2004
Mar. 2005
(includes
(includes
(includes
Northern Cape,
Sept. 2004
Northern
Northern Cape,
Eastern Cape
(includes
Cape and
Eastern Cape and
and KwaZulu-
Province
Northern Cape)
Eastern Cape
KwaZulu-Natal)
Natal)
340
926
1,140
2,406
265
435
741
1,441
3,563
10,596
45,529
59,688
22,711
64,518
273,800
361,029
Full operation of Eastern Cape contract:
During the first
two quarters of fiscal 2004, the implementation of our social
welfare grant payment system in the Eastern Cape Province was
not fully operational. We processed 5,480,916 transactions
during the nine months ended March 31, 2005, compared with
3,889,783 transactions during the nine months ended
March 31, 2004.
Higher volumes from our other provincial contracts:
We
have experienced growth in most of the other provinces where we
administer payments of social welfare grants. This growth has
been mainly due to new qualifying criteria announced in 2003 by
the South African government that increased the eligibility for
child support grants, and a significant increase in the number
of disability grants approved by the various provincial
governments. In total, the volume of payments processed during
the nine months ended March 31, 2005 increased 21% to
29,435,978 from the comparable period during 2004.
Annual price increase adjustments:
Under our Service
Level Agreements with provincial governments, we are entitled to
annual price increases based upon factors such as average grant
size, volumes and the South African Consumer Price Index, or
CPI rates.
Table of Contents
(1)
The average price per payment excludes $0.90 (ZAR 5.50) related
to the provision of smart card accounts.
(2)
The average price per payment excludes $0.79 (ZAR 5.50) related
to the provision of smart card accounts.
the increased volumes and the higher average price per payment
as detailed in the table above;
the reduced losses on the Eastern Cape contract, where we
incurred significant expenses during the first half of fiscal
2004 in connection with the process of optimizing the logistics
of the Eastern Cape implementation, such as the number of
vehicles, number of payment points and number of beneficiaries
at each payment point;
the conversion of our operations in the Limpopo province during
November 2003 to February 2004 to a full smart card-based
payment system; and
the increase in the number of social grant beneficiaries paid
through our POS device infrastructure at participating
retailers, instead of payment using more costly automated cash
dispensers.
Smart Card Accounts
Financial Services
Table of Contents
At March 31,
At March 31,
At March 31,
At March 31,
2005
2004
2005
2004
$ %
ZAR %
$ 000
$ 000
Change
ZAR 000
ZAR 000
Change
11,143
12,043
(7
)%
70,313
76,502
(8
)%
(7,059
)
(8,052
)
(12
)%
(44,541
)
(51,148
)
(13
)%
4,084
3,991
2
%
25,772
25,354
2
%
4,746
4,550
4
%
29,944
28,906
4
%
8,830
8,541
55,716
54,260
Nine Months Ended March 31,
2005
2004
% of
% of
Total
Profit
Total
Profit
Revenue
Margin %
Revenue
Margin %
48
%
76
%
18
%
66
%
52
%
22
%
82
%
26
%
100
%
100
%
Hardware, Software and Related Technology Sales
Table of Contents
Table of Contents
reorganization costs associated with the Aplitec
transaction; and
fluctuations in the exchange rate between the ZAR and the
U.S. dollar.
Consolidated Overall Results of Operations
In United States Dollars
(US GAAP)
Year Ended June 30,
2004
2003
$ %
$ 000
$ 000
Change
131,098
74,924
75
%
39,134
25,935
51
%
39,677
26,399
50
%
5,676
3,323
71
%
11,133
35,478
19,267
84
%
3,640
2,600
40
%
39,118
21,867
79
%
25,927
9,473
174
%
13,191
12,394
6
%
452
(100
)%
87
857
(100
)%
318
(100
)%
13,278
13,117
1
%
Table of Contents
In South African Rand
(US GAAP)
Year Ended June 30,
2004
2003
ZAR
ZAR
ZAR
%
000
000
Change
898,768
678,568
32
%
265,003
234,879
13
%
274,497
239,090
15
%
39,268
30,096
30
%
77,021
242,979
174,503
39
%
25,183
23,548
7
%
268,162
198,051
35
%
179,371
85,795
109
%
88,791
112,256
(21
)%
4,094
(100
)%
602
7,762
(100
)%
2,880
(100
)%
89,393
118,804
(25
)%
Table of Contents
In United States Dollars (SA GAAP)
Year Ended June 30,
2004
% of
2003
% of
%
$ 000
Total
$ 000
Total
Change
83,275
64
%
44,058
58
%
89
%
26,584
20
%
13,750
18
%
93
%
16,633
13
%
13,407
18
%
24
%
4,606
3
%
5,135
6
%
(10
)%
131,098
100
%
76,350
100
%
72
%
24,913
63
%
10,196
53
%
144
%
12,055
31
%
5,500
28
%
119
%
6,778
17
%
4,705
24
%
44
%
1,232
3
%
680
4
%
81
%
(5,735
)
(14
)%
(1,663
)
(9
)%
245
%
39,243
100
%
19,418
100
%
102
%
Table of Contents
In South African Rand (SA GAAP)
Year Ended June 30,
2004
2003
ZAR
% of
ZAR
% of
%
000
Total
000
Total
Change
567,910
63
%
399,016
58
%
42
%
183,917
20
%
124,533
18
%
48
%
115,077
13
%
121,426
18
%
(5
)%
31,864
4
%
46,509
6
%
(31
)%
898,768
100
%
691,484
100
%
30
%
172,360
64
%
92,343
53
%
87
%
83,599
31
%
49,813
28
%
68
%
46,696
17
%
42,605
24
%
10
%
8,525
3
%
6,162
4
%
38
%
(40,166
)
(15
)%
(15,055
)
(9
)%
167
%
271,014
100
%
175,868
100
%
54
%
Transaction-Based Activities
Full operation of Eastern Cape contract:
The
implementation of our social welfare grant payment system in the
Eastern Cape province became fully operational in 2004, which
dramatically increased the number of benefits processed during
the year in that province to 5,482,237 transactions, compared
with 1,050,833 in the prior year.
Significantly higher volumes under existing provincial
contracts:
We experienced significant growth in most of the
other provinces where we administer payments of social welfare
grants. This growth is mainly due to new qualifying criteria
announced in 2003 by the South African government that increased
the eligibility for child support grants. In total, the volume
of payments processed during the year ended June 30, 2004
increased by 43% to 33,439,462 compared to the year ended
June 30, 2003.
Annual price increase adjustments:
Under our Service
Level Agreements with provincial governments, we are entitled to
annual price increases based upon factors such as average grant
size, volumes and the South African Consumer Price Index, or
CPI rates.
Table of Contents
(1)
The average price per payment excludes $0.70 (ZAR 5.50) related
to the provision of smart card accounts.
(2)
The average price per payment excludes $0.70 (ZAR 5.00) related
to the provision of smart card accounts.
reduced losses on the Eastern Cape contract, on which we
experienced significant losses during 2003 as a result of the
substantial establishment costs and very low transaction volumes
during the contract implementation period. The increased costs
we incurred during the first half of 2004 in connection with the
process of optimizing the logistics of the Eastern Cape
implementation, such as number of vehicles, number of payment
points and number of beneficiaries at each payment point, also
resulted in reduced losses on the Eastern Cape contract during
the second half of 2004; and
the conversion of our operations in the Limpopo province to a
full smart card-based payment system.
Smart Card Accounts
Table of Contents
Financial Services
Year Ended June 30,
2004
2003
2004
2003
$ %
ZAR
ZAR
ZAR %
$ 000
$ 000
Change
000
000
Change
12,609
10,963
15
%
79,124
81,890
(3
)%
(8,352
)
(6,529
)
28
%
(52,410
)
(48,771
)
8
%
4,257
4,434
(4
)%
26,714
33,119
(19
)%
5,043
3,194
58
%
31,647
23,861
33
%
9,300
7,628
58,361
56,980
Year Ended June 30,
2004
2003
% of
Operating
% of
Operating
Total
Income
Total
Income
Revenue
Margin %
Revenue
Margin %
41
%
66
%
34
%
58
%
59
%
27
%
66
%
31
%
100
%
100
%
Hardware, Software and Related Technology Sales
Table of Contents
Corporate/Eliminations
Table of Contents
Consolidated Overall Results of Operations
In United States Dollars
(US GAAP)
Year Ended June 30,
2003
2002
$ %
$ 000
$ 000
Change
74,924
51,793
45
%
25,935
14,170
83
%
26,399
21,637
22
%
3,323
3,128
6
%
19,267
12,858
50
%
2,600
1,381
88
%
21,867
14,239
54
%
9,473
5,554
71
%
12,394
8,685
43
%
452
167
171
%
857
318
13,117
8,518
54
%
Table of Contents
In South African Rand
(US GAAP)
Year Ended June 30,
2003
2002
ZAR
ZAR
ZAR %
000
000
Change
678,568
525,174
29
%
234,879
143,375
64
%
239,090
219,566
9
%
30,096
31,742
(5
)%
174,503
130,491
34
%
23,548
14,014
68
%
198,051
144,505
37
%
85,795
56,360
52
%
112,256
88,145
27
%
4,094
1,695
142
%
7,762
2,880
118,804
86,450
37
%
Table of Contents
In United States Dollars (SA GAAP)
Year Ended June 30,
2003
% of
2002
% of
%
$ 000
Total
$ 000
Total
Change
44,058
58
%
28,291
55
%
56
%
13,750
18
%
8,318
16
%
65
%
13,407
18
%
10,465
20
%
28
%
5,135
6
%
4,719
9
%
9
%
76,350
100
%
51,793
100
%
47
%
10,196
53
%
7,376
55
%
38
%
5,500
28
%
2,772
21
%
98
%
4,705
24
%
900
7
%
423
%
680
4
%
1,611
12
%
(58
)%
(1,663
)
(9
)%
642
5
%
19,418
100
%
13,301
100
%
46
%
Table of Contents
In South African Rand (SA GAAP)
Year Ended June 30,
2003
2002
ZAR
% of
ZAR
% of
%
000
Total
000
Total
Change
399,016
58
%
287,095
55
%
39
%
124,533
18
%
84,404
16
%
48
%
121,426
18
%
106,196
20
%
14
%
46,509
6
%
47,890
9
%
(3
)%
691,484
100
%
525,585
100
%
32
%
92,343
53
%
74,848
55
%
23
%
49,813
28
%
28,135
21
%
77
%
42,605
24
%
9,131
7
%
367
%
6,162
4
%
16,354
12
%
(62
)%
(15,055
)
(9
)%
6,532
5
%
175,868
100
%
135,000
100
%
30
%
Transaction-Based Activities
New Eastern Cape contract:
In November 2002, we commenced
the implementation of a social welfare grant payment system in
the Eastern Cape province. At year-end, we had processed
benefits for 469,918 beneficiaries. The Eastern Cape contract
generated revenue of $4.6 million
(ZAR 47.1 million) in the last eight months in fiscal
2003.
Significantly higher volumes under existing provincial
contracts:
We experienced significant growth in most of the
other provinces where we administer payments of social welfare
grants. This growth is mainly due to new qualifying criteria
announced by the South African government aimed at increasing
the number of citizens eligible for social welfare grants.
Annual price increase adjustments:
Under our Service
Level Agreements with provincial governments, we are entitled to
annual price increases based upon factors such as average grant
size, volumes and the South African Consumer Price Index, or
CPI rates.
Table of Contents
(1)
The average price per payment excludes $0.70 (ZAR 5.00)
related to the provision of smart card accounts.
(2)
The average price per payment excludes $0.70 (ZAR 4.50)
related to the provision of smart card accounts.
Smart Card Accounts
Table of Contents
Financial Services
Year Ended June 30,
2003
2002
$ %
2003
2002
ZAR %
$ 000
$ 000
Change
ZAR 000
ZAR 000
Change
10,963
7,971
38%
81,890
82,664
(1
)%
(6,529
)
(4,060
)
61%
(48,771
)
(42,102
)
17
%
4,434
3,911
13%
33,119
40,562
(18
)%
3,194
1,945
64%
23,861
20,174
18
%
7,628
5,856
56,980
60,736
Year Ended June 30,
2003
2002
% of
Operating
% of
Operating
Total
Income
Total
Income
Revenue
Margin %
Revenue
Margin %
34%
58%
21%
16%
66%
31%
79%
12%
100%
100%
The UEPS-based lending initiative was profitable, on a monthly
basis, for the entire 2003 year. During the first half of
2002, UEPS-based lending was in the start-up stage and therefore
we
Table of Contents
incurred significant costs in connection with these activities.
Accordingly, the operating income on these activities improved
significantly from the break-even result achieved during 2002.
Traditional microlending activity exhibited significant
improvements in operating income margins following a management
change in the second half of 2002. This new management focused
heavily on cost controls and managing bad debt. We also
established a dedicated collection department, which produced
significant cost savings during 2003 as the amount of doubtful
accounts written off and provisions for doubtful debts
(calculated on the same basis as in previous years) was
significantly reduced, while we made meaningful progress with
the recovery of debts written off in prior years. The cost of
running an internal collection department is also considerably
less than our previous practice of outsourcing this function.
Hardware, Software and Related Technology Sales
Table of Contents
Nine Months Ended
March 31,
2005
2004
62.9
57.7
61.8
57.7
54,700
32,161
54,700
54,700
Year Ended June 30,
2004
2003
2002
39.6
40.8
27.0
24.6
24.0
15.6
33,581
32,161
31,215
54,700
54,700
54,700
Quarterly Results of Operations
In United States Dollars
Three Months Ended (SA GAAP)
June 30,
Mar 31,
Dec 31,
Sept 30,
Total
2003
2003
2002
2002
YTD
(In thousands except per share data)
21,861
20,169
16,204
18,116
76,350
5,676
5,493
3,388
4,861
19,418
4,468
3,463
2,656
3,345
13,932
13.8
10.8
8.4
10.8
43.8
13.8
10.8
8.4
10.8
43.8
Table of Contents
In United States Dollars
Three Months Ended (SA GAAP)
June 30,
Mar 31,
Dec 31,
Sept 30,
Total
2004
2004
2003
2003
YTD
(In thousands except per share data)
39,765
36,144
29,338
25,851
131,098
11,892
12,468
7,501
7,294
39,155
(4,570
)
8,208
5,503
4,866
14,007
(12.0
)
25.8
17.4
15.0
42.0
(12.0
)
25.8
17.4
15.0
40.2
In United States Dollars
Three Months Ended
(SA GAAP)
Mar 31,
Dec 31,
Sept 30,
Total
2005
2004
2004
YTD
(In thousands except per share data)
45,667
45,995
43,223
134,885
20,544
18,343
18,166
57,053
13,951
13,616
12,991
40,558
25.8
24.6
24.0
74.4
25.2
24.6
23.4
72.6
cost of capital;
cost of financing;
Table of Contents
opportunity cost of utilizing surplus cash; and
availability of tax efficient structures to moderate financing
costs.
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Table of Contents
Table of Contents
Payments Due by Period, as of March 31, 2005 (in $ 000s)
Due
Due
Due
Due
Due
More
Within
Within
Within
Within
Within
than
1 Year
2 Years
3 Years
4 Years
5 Years
5 Years
Total
1,642
1,026
809
486
48
4
4,015
98
98
Table of Contents
Table of Contents
Notional Amount
Strike Price
Maturity
ZAR 6.0542
September 30, 2005
Notional Amount
Strike Price
Maturity
ZAR 7.8475
July 12, 2004
ZAR 8.1822
August 2, 2004
ZAR 7.8878
August 10, 2004
ZAR 7.9299
September 10, 2004
ZAR 7.9749
October 12, 2004
ZAR 8.2129
October 29, 2004
ZAR 8.5225
January 7, 2005
ZAR 6.2950
September 22, 2004
Notional Amount
Strike Price
Maturity
ZAR 12.643
January 8, 2003
Table of Contents
74
75
76
77
78
System Components |
79
Our UEPS Platform |
80
UEPS Smart Card Functionality |
81
82
| All ten fingers are captured, with three fingerprint images captured per finger. | |
| The three fingerprint images for each finger are consolidated and filtered to create the best image for that finger. This results in ten-high quality fingerprint images. | |
| The ten fingerprint images are scored and the four highest scoring images are used to generate fingerprint templates. A fingerprint template is a unique geometric representation of one fingerprint. | |
| The card holder is verified against these four templates using the highest fingerprint matching threshold to ensure the best recordation process. This process assists to eliminate the false rejection of genuine card holders due to initial bad fingerprint template recordation. | |
| The four fingerprint templates are signed by an issuing UEPS smart card and stored on the card holders smart card. |
83
| The costs of transporting beneficiaries and payment personnel to and from distribution points; | |
| The time beneficiaries must spend waiting in line at distribution points rather than working or engaging in other activities; | |
| The need to provide adequate staff, water, toilets, medical emergency services, shelters and security at distribution points; | |
| The need to provide personnel to deal with beneficiary communications and inquiries; and | |
| The need to create itineraries and schedules for payment delivery personnel, as well as to establish distribution centers and purchase vehicles to travel to distribution points. |
84
85
86
87
88
| the market introduction date; | |
| the key features of the product; | |
| the features of our UEPS technology which each product uses; | |
| the types of fees we charge or currently plan to charge for the product; and | |
| the target markets for the product: |
Year of | ||||||||||
Market | ||||||||||
Product | Introduction | Features | Types of Fees | Target Markets | ||||||
S2S Pension and Welfare | 2000-2004 |
Ten-Digit Signature Codes Offline and
Online Loading
Automatic Credit Multiple Audit Trail Mutual Authentication Transparent and Automatic Recovery Biometric Identification |
Loading Fee per Beneficiary
Sales of Smartcards Registration and Enrollment |
Government
Social Welfare Grant Beneficiaries |
||||||
S2S Wage Payment | 2005 |
Ten-Digit Signature Codes Offline and
Online Loading
Multiple Wallets Restricted Wallets Multiple Audit Trails Mutual Authentication Transparent and Automatic Recovery Biometric Identification Interest Calculations |
Wage Loading Fee per Employee per Month
Equipment Sales per Payroll Clerk plus POS Terminals for the Payment of Wages in the Field or Factory Sales of Smartcards Mass Registration and Enrollment per Employee if Performed by us Monthly Smart Card Account Fee per Employee per Month |
Employers
Employees |
||||||
S2S Medical Management, Patient Monitoring and Distribution | 2005 |
Multiple Wallets
Restricted Wallets Multiple Audit Trails Mutual Authentication Transparent and Automatic Recovery Biometric Identification |
Technology Processing Fee per Smart Card per Month
(Volume Based)
UEPS Software Fee (Volume Based) Database Capturing Module per Patient Patient License Fee per Hospital/ Clinic/ Health Care Facility Equipment Sales for Hospital/ Clinic and Health Care Facility Sales of Smartcards |
Non-Governmental Organizations
Government Paid Contractors Governments |
||||||
S2S Retail and Wholesale | 2004 |
Ten-Digit Signature Codes Offline and
Online Loading
Automatic Credit Multiple Wallets Restricted Wallets Multiple Audit Trails Mutual Authentication Transparent and Automatic Recovery Biometric Identification Interest Calculations Settlement Offline and Online |
Merchant Transaction Fee
Cash Withdrawal Fee from UEPS Card Holders Excluding Social Grant Recipients Hardware Equipment Sales or Rentals Smart Card Sales Installation & Training Fee Reports and Banking Fees Monthly Card Account Fee per Retailer per Month |
Retailers
Wholesale Retailers UEPS Client Card Holders |
||||||
S2S Insurance System | 2004 |
Multiple Audit Trails
Mutual Authentication Transparent and Automatic Recovery Biometric Identification Settlement Offline and Online |
Insurance Merchant Transaction Fee
Debit Order Collection Fee Hardware Equipment Sales or Rentals Smartcard Sales Installation and Training Fee Reports and Banking Fees |
Insurance Underwriter/ Broker (External Insurance Merchants) | ||||||
89
S2S Pension and Welfare |
90
S2S Wage Payment |
91
S2S Medical Management |
S2S Retail and Wholesale |
92
S2S Insurance |
93
94
95
96
97
98
99
100
101
102
103
| institute proceedings before an equality court under Chapter 4 of the Promotion of Equality and Prevention of Unfair Discrimination Act; or | |
| make a complaint to the National Credit Regulator under Section 138 of the Bill. |
| deny payment to any person entitled to payment by these means or unfairly discriminate in granting priority of payment among persons entitled to payment by these means; | |
| give priority to one credit provider over another in accepting similar means to make payment for processing; or | |
| assign any collection, group, batch or subset of similar means to make payment for priority processing over any other similar means to make payment. |
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105
106
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Name | Age | Position | ||||
Dr. Serge C.P. Belamant
|
51 | Chief Executive Officer, Chairman of the Board and Director | ||||
Antony Charles Ball
|
46 | Director | ||||
Chad Leonard Smart
|
32 | Director | ||||
Herman Gideon Kotze
|
34 | Chief Financial Officer and Director | ||||
Brenda Stewart
|
46 | Senior Vice President Marketing and Sales | ||||
Nitin Soma
|
37 | Senior Vice President Information Technology | ||||
Christopher Stefan Seabrooke
|
52 | Director | ||||
Alasdair Jonathan Kemsley Pein
|
45 | Director | ||||
Paul Edwards
|
51 | Director | ||||
Florian P. Wendelstadt
|
38 | Director (upon appointment after closing of the General Atlantic private placement) |
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Composition of the Board of Directors; Election and Removal of Directors |
Committees of the Board of Directors |
Audit Committee |
| monitors our accounting and financial reporting process and internal control system; | |
| appoints and replaces independent outside auditors from time to time, determines their compensation and other terms of engagement and oversees their independence, qualifications and work; | |
| oversees the performance of our internal audit function; and | |
| oversees our compliance with legal, ethical and regulatory matters. |
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Remuneration Committee |
| development and implementation of our compensation policies, strategies, plans and programs, and disclosure relating to these matters; | |
| compensation-related matters outside the ordinary course, including employment contracts, change-in-control provisions and severance arrangements; | |
| compensation of our chief executive officer and the other executive officers of us and our subsidiaries and the remuneration of our board of directors; and | |
| performance reviews of individual executives and related matters. |
Corporate Governance and Nominating Committee |
| establish criteria for board and committee membership and recommend to our board of directors proposed nominees for election to the board of directors and for membership on each committee of the board of directors; | |
| monitor our procedures for the receipt and consideration of director nominations by shareholders and other persons and for the receipt of shareholder communications directed to our board of directors; | |
| make recommendations regarding proposals submitted by our shareholders; and | |
| make recommendations to our board of directors regarding management succession planning, corporate governance matters and practices. |
Compensation Committee Interlocks and Insider Participation |
Director Compensation |
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Executive Compensation |
Annual Compensation(1) | |||||||||||||||||||||||||||||||||
Salary | Bonus | All Other | |||||||||||||||||||||||||||||||
Fiscal | ZAR | US$ | ZAR | US$ | Options/ | ZAR | US$ | ||||||||||||||||||||||||||
Name and Principal Position | Year | 000 | 000 | 000 | 000 | Securities | 000 | 000 | |||||||||||||||||||||||||
Dr. Serge C.P. Belamant, Chief Executive
|
2004 | 1,725 | 249 | 500 | 72 | A | | | |||||||||||||||||||||||||
Officer, Chairman of the Board and
|
2003 | 1,425 | 157 | 400 | 44 | | | | |||||||||||||||||||||||||
Director
|
2002 | 1,050 | 103 | 0 | 0 | | | | |||||||||||||||||||||||||
Herman Gideon Kotze, Chief Financial
|
2004 | 1,050 | 151 | 250 | 36 | A | | | |||||||||||||||||||||||||
Officer and Director
|
2003 | 855 | 94 | 180 | 20 | | | | |||||||||||||||||||||||||
2002 | 690 | 68 | 50 | 5 | | | | ||||||||||||||||||||||||||
Brenda Stewart, Senior Vice-President
|
2004 | 900 | 130 | 200 | 29 | A | | | |||||||||||||||||||||||||
Sales and Marketing
|
2003 | 725 | 80 | 130 | 14 | | | | |||||||||||||||||||||||||
2002 | 608 | 60 | 50 | 5 | | | | ||||||||||||||||||||||||||
Nitin Soma, Senior Vice-President
|
2004 | 812 | 117 | 160 | 23 | B | | | |||||||||||||||||||||||||
Information Technology
|
2003 | 670 | 74 | 120 | 13 | | | | |||||||||||||||||||||||||
2002 | 552 | 54 | 30 | 3 | | | |
(1) | There has been no other annual or long-term compensation awarded to, earned by, or paid by us to the persons listed in this table. |
(A) | 333,334 other stock-based awards at $0.00 (ZAR 0.00) and 83,334 options at US$3.00 (ZAR 18.84) |
(B) | 250,000 other stock-based awards at $0.00 (ZAR 0.00) and 83,334 options at US$3.00 (ZAR 18.84) |
Potential | ||||||||||||||||||||||||||||||||
Realizable | ||||||||||||||||||||||||||||||||
Value at | ||||||||||||||||||||||||||||||||
Percent of | Assumed | |||||||||||||||||||||||||||||||
Total | Annual Rates | |||||||||||||||||||||||||||||||
Options/ | of Stock Price | |||||||||||||||||||||||||||||||
Number of | Number of | OSBAs | Appreciation | |||||||||||||||||||||||||||||
Securities | Securities | Granted | for Option/ | |||||||||||||||||||||||||||||
Underlying | Exercise or | Underlying | Exercise or | to | OSBAs Term | |||||||||||||||||||||||||||
Options | Base Price | OSBAs | Base Price | Employees | in US$ 000 at | |||||||||||||||||||||||||||
Granted | of Options | Granted | OSBAs | in Fiscal | Expiration | |||||||||||||||||||||||||||
Name | (#) | (US$/Sh) | (#) | (US$/Sh) | Year | Date | 5% | 10% | ||||||||||||||||||||||||
Dr. Serge C.P. Belamant
|
83,334 | 3.00 | 333,334 | 0.00 | 14.33 | % | June 6, 2014 | 2,036 | 3,242 | |||||||||||||||||||||||
Herman Gideon Kotze
|
83,334 | 3.00 | 333,334 | 0.00 | 14.33 | % | June 6, 2014 | 2,036 | 3,242 | |||||||||||||||||||||||
Brenda Stewart
|
83,334 | 3.00 | 333,334 | 0.00 | 14.33 | % | June 6, 2014 | 2,036 | 3,242 | |||||||||||||||||||||||
Nitin Soma
|
83,334 | 3.00 | 250,000 | 0.00 | 11.47 | % | June 6, 2014 | 1,629 | 2,594 |
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Number of Shares | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money | |||||||||||||||||||||||
Shares | Value | Options/OSBAs at June 30, | Options/OSBAs at June 30, | |||||||||||||||||||||
Acquired on | Realized | 2004 (# 000) | 2004 (US$ 000) | |||||||||||||||||||||
Exercise | (US$ | |||||||||||||||||||||||
Name | (#) | 000) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Dr. Serge C.P. Belamant
|
| | 67 | 350 | 768 | 4,032 | ||||||||||||||||||
Herman Gideon Kotze
|
| | 67 | 350 | 768 | 4,032 | ||||||||||||||||||
Brenda Stewart
|
| | 67 | 350 | 768 | 4,032 | ||||||||||||||||||
Nitin Soma
|
| | 50 | 283 | 614 | 3,072 |
Restraint of Trade Agreements |
Employee Benefit Plans |
Administration |
Term |
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Shares Reserved for Awards and Limits on Awards |
Stock Options |
114
Stock Appreciation Rights |
Other Stock-Based Awards |
Performance Standards and Section 162(m) |
Transferability |
Amendment |
115
116
117
| each person or group of affiliated persons which, to our knowledge, owns beneficially more than 5% of our outstanding shares of common stock or more than 5% of our outstanding special convertible preferred stock; | |
| each of our directors and named executive officers; | |
| all of our directors and executive officers as a group; and | |
| each selling shareholder participating in this offering. |
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Shares Beneficially | Shares Beneficially | |||||||||||||||||||||||||||||||
Owned After this | Owned After this | |||||||||||||||||||||||||||||||
Offering and | Offering and | |||||||||||||||||||||||||||||||
Concurrent Private | Concurrent Private | |||||||||||||||||||||||||||||||
Shares Sold | Placement | Placement | ||||||||||||||||||||||||||||||
Shares Beneficially | During this | Assuming No | Assuming Full | |||||||||||||||||||||||||||||
Owned | Offering | Shares Sold to | Exercise of the | Exercise of the | ||||||||||||||||||||||||||||
Immediately Prior | Assuming No | General Atlantic | Over-Allotment | Over-Allotment | ||||||||||||||||||||||||||||
to this Offering | Exercise of the | Affiliate in | Option | Option | ||||||||||||||||||||||||||||
Over-Allotment | Concurrent Private | |||||||||||||||||||||||||||||||
Name of Beneficial Owner | Number | % | Option(1) | Placement(1) | Number | % | Number | % | ||||||||||||||||||||||||
Directors, Officers and 5%
Shareholders: |
||||||||||||||||||||||||||||||||
Dr. Serge C.P. Belamant(2)
|
3,099,411 | 10.6 | % | 190,903 | 561,885 | 2,346,623 | 6.2% | 2,346,623 | 5.9% | |||||||||||||||||||||||
Herman Gideon Kotze(3)
|
150,000 | * | 150,000 | | | | | | ||||||||||||||||||||||||
Antony Charles Ball(4)
|
8,334 | * | | | 8,334 | * | 8,334 | * | ||||||||||||||||||||||||
Chad Leonard Smart(4)
|
8,334 | * | | | 8,334 | * | 8,334 | * | ||||||||||||||||||||||||
Christopher Stefan Seabrooke(4)
|
8,334 | * | | | 8,334 | * | 8,334 | * | ||||||||||||||||||||||||
Alasdair Jonathan Kemsley Pein(4)
|
8,334 | * | | | 8,334 | * | 8,334 | * | ||||||||||||||||||||||||
Paul Edwards(4)
|
8,334 | * | | | 8,334 | * | 8,334 | * | ||||||||||||||||||||||||
Florian P. Wendelstadt(5)
|
| * | | | | * | | | ||||||||||||||||||||||||
Brenda Stewart(3)
|
150,000 | * | 150,000 | | | | | | ||||||||||||||||||||||||
Nitin Soma(6)
|
161,905 | * | 116,666 | | 45,239 | * | 45,239 | * | ||||||||||||||||||||||||
Brenthurst Private Equity II Limited(7)
|
2,008,212 | 7.4 | % | 27,841 | 338,826 | 1,641,545 | 4.5% | 1,641,545 | 4.3% | |||||||||||||||||||||||
Brenthurst Private Equity South Africa I Limited(7)
|
1,013,273 | 3.7 | % | 15,186 | 184,814 | 813,273 | 2.2% | 813,273 | 2.1% | |||||||||||||||||||||||
South African Private Equity Fund III, L.P.(8)
|
14,443,572 | 53.1 | % | 219,338 | 2,669,376 | 11,554,858 | 31.6% | 11,554,858 | 30.4% | |||||||||||||||||||||||
South African Private Equity Trust III(8)
|
208,073 | * | 3,160 | 38,455 | 166,458 | * | 166,458 | * | ||||||||||||||||||||||||
Brait International Limited(8)
|
833,334 | 3.1 | % | 12,655 | 154,012 | 666,667 | 1.8% | 666,667 | 1.8% | |||||||||||||||||||||||
Nedbank Limited(9)
|
8,152,819 | 23.1 | % | 6,652,819 | | 1,500,000 | 3.9% | 1,500,000 | 3.8% | |||||||||||||||||||||||
Nedbank Rainmaker Equity Fund(10)
|
1,787,103 | 6.2 | % | 238,857 | | 1,548,246 | 4.1% | 1,548,246 | 3.9% | |||||||||||||||||||||||
Investment entities affiliated with General Atlantic LLC(5)
|
| * | | | 3,947,368 | 10.8% | 3,947,368 | 10.4% | ||||||||||||||||||||||||
Directors and Executive Officers as a group (9 persons)(11)
|
3,602,983 | 12.2 | % | 610,204 | 561,885 | 2,430,894 | 6.4% | 2,430,894 | 6.1% | |||||||||||||||||||||||
Other Selling Shareholders Converting Special Convertible
Preferred Stock(12):
|
||||||||||||||||||||||||||||||||
Shuttleworth Family Holding
|
452,491 | 1.6 | % | 101,786 | | 350,705 | * | 350,705 | * | |||||||||||||||||||||||
Old Mutual-Symmetric Aggressive
|
331,863 | 1.2 | % | 85,500 | | 246,363 | * | 246,363 | * | |||||||||||||||||||||||
Allan Gray Balanced Fund
|
623,545 | 2.2 | % | 623,545 | | | | | | |||||||||||||||||||||||
Allan Gray Equity Fund
|
492,066 | 1.8 | % | 492,066 | | | | | | |||||||||||||||||||||||
Employees Selling Shares obtained through the Exercise of
Stock Options(13):
|
* | Less than one percent |
(1) | Dr. Belamant, CI Trustees Limited for the San Roque Trust, Brenthurst Private Equity II Limited, Brenthurst Private Equity South Africa I Limited, South African Private Equity Fund III, L.P., South African Private Equity Trust III and Brait International Limited have entered into a stock purchase agreement with investment entities affiliated with General Atlantic LLC and us pursuant to which these shareholders have agreed to sell in a private placement to these investment entities an aggregate of $75.0 million of our common stock at the public offering price. The closing of the private placement is expected to occur simultaneously with the closing of the offering. The number of shares to be sold in the offering and in the private placement assumes that the public offering and private placement price will be $19.00 per share, the midpoint of the range shown on the cover page of this |
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prospectus. Each of these selling shareholders intends to sell an aggregate of 20% of its or his beneficially owned shares in a combination of the offering and the private placement. Thus, to the extent that the public offering and private placement price is greater than $19.00 per share, the number of shares sold by each of the selling shareholders in the private placement will decrease and the number of shares sold by them in the offering will increase. Conversely, if the public offering and private placement price is less than $19.00 per share, the number of shares sold by each of the selling shareholders in the private offering will increase and the number of shares sold by them in offering will decrease. | |
(2) | CI Law Trustees Limited for the San Roque Trust dated 8/18/92 owns 1,017,132 shares of common stock. Dr. Serge C.P. Belamant as proxy of CI Law Trustees can vote all of CI Law Trustees shares. The amount also includes 1,932,279 special convertible preferred shares beneficially owned by Dr. Belamant that are convertible into common stock upon the occurrence of a trigger event. Also included in the amount are 133,334 shares which are exercisable or will become exercisable within the next 60 days under the 333,334 other stock-based awards that are exercisable in five equal installments beginning June 7, 2004. The amount also includes 16,667 shares which are exercisable or will become exercisable within the next 60 days under the 83,334 options that are exercisable in five equal installments beginning June 7, 2005. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding, Dr. Belamants beneficial ownership percentages would be 5.7%, 4.3% and 4.2%, respectively, which also reflects Dr. Belamants applicable voting power percentages. |
(3) | Represents 133,334 shares which are exercisable or will become exercisable within the next 60 days under the 333,334 other stock-based awards that are exercisable in five equal installments beginning June 7, 2004. Also includes 16,667 shares which are exercisable or will become exercisable within the next 60 days under the 83,334 options that are exercisable in five equal installments beginning June 7, 2005. |
(4) | Represents 8,334 shares which are exercisable or will become exercisable within the next 60 days under the 41,667 options that are exercisable in five equal installments beginning June 7, 2005. |
(5) | The investment entities affiliated with General Atlantic are General Atlantic Partners 80, L.P., or GAP LP, GapStar, LLC, or GapStar, GAP Coinvestments III, LLC, or GAPCO III, GAP Coinvestments IV, LLC, or GAPCO IV, and GAPCO GmbH & Co. KG, or GAPCO KG. General Atlantic is the general partner of GAP LP and the sole member of GapStar. The Managing Members of each of GAPCO III and GAPCO IV are Managing Directors of General Atlantic. The general partner of GAPCO KG is GAPCO Management GmbH, and the Managing Directors of General Atlantic make investment decisions with respect to GAPCO KG and GAPCO Management GmbH. GAP LP, GapStar, GAPCO III, GAPCO IV, GAPCO KG, General Atlantic and GAPCO Management GmbH, or GA Group, are a group within meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as amended. Mr. Wendelstadt is a Managing Director of General Atlantic and a Managing Member of each of GAPCO III and GAPCO IV. The address of the GA Group (other than GAPCO KG and GAPCO Management GmbH) is c/o General Atlantic Service Corporation, 3 Pickwick Plaza, Greenwich, Connecticut 06830 USA. The address of GAPCO KG and GAPCO Management GmbH is Koenigsallee 62, 40212 Duesseldorf, Germany. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding, General Atlantics beneficial ownership percentages would be 7.2% and 7.0%, respectively, which also reflects General Atlantics applicable voting power percentages. |
(6) | Represents 100,000 shares which are exercisable or will become exercisable within the next 60 days under the 250,000 other stock-based awards that are exercisable in five equal installments beginning June 7, 2004, as well as 45,239 special convertible preferred shares that are convertible into common stock upon the occurrence of a trigger event. Also includes 16,667 shares which are exercisable or will become exercisable within the next 60 days under the 83,334 options that are exercisable in five equal installments beginning June 7, 2005. |
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(7) | Pursuant to a Schedule 13D, dated June 7, 2004, filed by Brenthurst Private Equity II Limited, Brenthurst Private Equity South Africa I Limited, Brenthurst Limited, Theseus Limited, and Maitland Trustees Limited, Brenthurst Private Equity II Limited beneficially owns 1,833,334 shares of common stock and Brenthurst Private Equity South Africa I Limited beneficially owns 1,000,000 shares of common stock. As the controlling shareholder, Brenthurst Limited may be deemed to be the beneficial owner of securities held by Brenthurst Private Equity II Limited and Brenthurst Private Equity South Africa I Limited. As the parent company of Brenthurst, Theseus Limited may be deemed to be the beneficial owner of securities held by Brenthurst. As the parent company of Theseus, Maitland Trustees Limited may be deemed to the beneficial owner of securities held by Theseus. Brenthurst, Theseus and Maitland disclaim beneficial ownership of the securities, except to the extent of its pecuniary interest. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding, the beneficial ownership percentages of Brenthurst Private Equity II Limited would be 3.7%, 3.0% and 2.9%, respectively, and the beneficial ownership percentages of Brenthurst Private Equity South Africa I Limited would be 1.9%, 1.5% and 1.4%, respectively, which amounts reflect the applicable voting power percentages. |
The registered address of Brenthurst Private Equity II Limited and Brenthurst Private Equity South Africa I Limited is 9 Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands. |
(8) | The securities are held of record by SAPEF. As the general partner of SAPEF, SAPEF III International G.P. Limited may be deemed to be the beneficial owner of the securities held by SAPEF. |
The registered address of SAPEF is Walker House P.O. Box 908, George Town, Grand Cayman, Cayman Islands and the registered address of Brait International is Suite 305, Third Floor, Caudan Waterfront, Port Louis, Mauritius. | |
Pursuant to a Schedule 13D, dated June 7, 2004, filed by SAPEF, Brait International Limited, SAPEF III International G.P. Limited, Capital Partners Group Holdings Limited, and Brait S.A., SAPEF beneficially owns 14,443,572 shares of common stock, and Brait International Limited beneficially owns 833,334 shares of common stock. As a shareholder of SAPEF III International G.P. Limited, and as the parent company of Brait International, Capital Partners Group Holdings Limited may be deemed to be the beneficial owner of securities held by each of SAPEF III International G.P. Limited and Brait International. As the parent company of Capital Partners Group Holdings Limited, Brait S.A. may be deemed to be the beneficial owner of securities held by Capital Partners Group Holdings Limited. SAPEF III International G.P. Limited, Capital Partners Group Holdings Limited and Brait S.A. disclaim beneficial ownership of the securities, except to its pecuniary interest. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding, the beneficial ownership percentages of SAPEF would be 26.4%, 21.0% and 20.5%, respectively, and the beneficial ownership percentages of Brait International Limited would be 1.5%, 1.2% and 1.2%, respectively, which amounts reflect the applicable voting power percentages. | |
As the Trustee of SAPET, Brait Capital Partners Trustee (Pty) Ltd, or BCP Trustees, may be deemed to be the beneficial owner of the securities held by BCP Trustees. As a shareholder of BCP Trustees, Brait South Africa Ltd, or BSA, may be deemed to be a beneficial owner of the shares held by SAPET. As the shareholder of BSA, Brait S.A. may be deemed to be the beneficial owner of securities held by BSA. BCP Trustees and Brait S.A. disclaim beneficial ownership of the securities, except to its pecuniary interest. |
(9) | Pursuant to a Schedule 13G, dated June 30, 2004, filed by Nedbank Limited, Nedbank Limited beneficially owns 8,152,819 special convertible preferred shares. Nedbank Limiteds registered address is 135 Rivonia Road, Sandown, 2196, South Africa. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding, the beneficial ownership percentages of Nedbank Limited would be 14.9%, 2.7% and 2.7%, respectively, which amounts reflect the applicable voting power percentages. |
(10) | Pursuant to a Schedule 13G, dated June 30, 2004, filed by Nedbank Rainmaker Equity Fund, Nedbank Rainmaker Equity Fund beneficially owns 1,787,103 special convertible preferred shares. |
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Nedbank Rainmakers registered address is BoE Clocktower, Clocktower Precinct, V & A Waterfront, Cape Town, 8000, South Africa. If the common stock underlying all outstanding shares of special convertible preferred stock were deemed outstanding the beneficial ownership percentages of Nedbank Rainmaker would be 3.2%, 2.8% and 2.7% respectively, which amounts reflect the applicable voting power percentages. | |
(11) | Represents an aggregate of 500,000 shares which are exercisable or will become exercisable within the next 60 days under the 1,250,002 other stock-based awards that are exercisable in five equal installments beginning June 7, 2004. Also includes 108,334 shares which are exercisable or will become exercisable within the next 60 days under the 541,667 options that are exercisable in five equal installment beginning June 7, 2005. Also includes 1,977,517 special convertible preferred shares. |
(12) | Holders of an aggregate of approximately 1,866,416 shares of special convertible preferred stock, other than holders included under directors, officers and 5% shareholders, will sell shares in this offering. Except as set forth in the table, each of such holders beneficially owns less than 1% of our outstanding common stock. |
(13) | Employees, excluding officers and directors, owning options that are exercisable for an aggregate of approximately 245,000 shares of common stock. None of such employees beneficially owns more than 1% of our outstanding common stock. |
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123
| on parity, without preference and priority, to our common stock with respect to dividend rights (except as described below) or rights upon liquidation, dissolution or winding up; and | |
| junior in preference and priority to each other class or series of preferred stock or other equity security of ours under terms that may be determined by the board of directors to expressly provide that such other security will rank senior in preference or priority to the special convertible preferred stock with respect to dividend rights or rights upon liquidation, dissolution or winding up. |
| any increase (including by way of merger, consolidation or otherwise) in the total number of authorized or issued shares of special convertible preferred stock; or | |
| any amendment, alteration or change to the powers, designations, preferences, rights, qualifications, limitations or restrictions of the special convertible preferred stock in the articles of incorporation in any manner that adversely affects the holders of such stock. |
| 7.368421056 New Aplitec B class preference shares; and | |
| such holders interest in the New Aplitec B loan accounts, which is equal to (1) the aggregate principal amount of New Aplitec B loans, plus any accrued interest, minus any repayment or previous transfer of New Aplitec B loans, divided by (2) the number of the shares of special convertible preferred stock outstanding at such time. |
124
Special Meetings |
Notice of Shareholder Meetings |
125
| Our board of directors currently may issue up to 50,000,000 shares of preferred stock, with such designations, preferences, cumulative, relative, participating, optional or other rights, limitations or restrictions as fixed by our board of directors, which could include the right to approve an acquisition or change in control. | |
| Our articles of incorporation do not provide for cumulative voting for directors. The absence of cumulative voting may make it more difficult for shareholders owning an aggregate of less than a majority of our stock to elect directors to our board. | |
| Our by-laws currently provide that our board of directors can increase or decrease the number of directors by amendment to the by-laws, and vacancies, including vacancies resulting from an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors. | |
| Our by-laws provide that shareholders who desire to bring business before an annual or special meeting of shareholders must comply with certain advance notice provisions. These advance notice provisions also apply to the nomination of any person for election as a director. |
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Approximate | ||||
Number of Shares | Description | |||
33,766,194 | After the date of this prospectus, freely tradeable shares under the Securities Act, of which 3,850,738 shares are subject to lock-up agreements. | |||
21,082,765 | After 180 days from the date of this prospectus, except as otherwise discussed below, the lock-up period will expire, and these additional shares of common stock will be saleable, subject, in some cases, to holding periods and volume limitations. | |||
3,947,368 | After one year from the date of this prospectus, tradeable shares under Rule 144. |
| 1% of the total number of our shares of common stock then outstanding, which is expected to equal approximately 366,065 shares of common stock immediately after the closing of this offering; or | |
| the average weekly trading volume of our shares of common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. |
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128
| the court which pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts; | |
| the judgment is final and conclusive (that is, it cannot be altered by the court which pronounced it); | |
| the judgment has not lapsed; | |
| the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which provide that no award is enforceable unless the defendant was duly served with documents initiating proceedings, that he was given a fair opportunity to be heard and that he enjoyed the right to be legally represented in a free and fair trial before an impartial tribunal; | |
| the judgment was not obtained by fraudulent means; | |
| the judgment does not involve the enforcement of a penal or revenue law; and | |
| the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act, 1978 (as amended), of South Africa. |
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| a citizen or resident of the United States; | |
| a corporation created or organized in, or under the laws of, the United States or any political subdivision of the United States; | |
| an estate, the income of which is subject to U.S. federal income taxation regardless of its source; | |
| a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or | |
| a trust that existed on August 20, 1996, was treated as a U.S. person on August 19, 1996, and elected to be treated as a U.S. person. |
130
131
Name | Number of Shares | |||||
Morgan Stanley & Co. Incorporated
|
||||||
J.P. Morgan Securities Inc.
|
||||||
Robert W. Baird & Co. Incorporated
|
||||||
Jefferies & Company, Inc.
|
||||||
Thomas Weisel Partners LLC
|
||||||
Subtotal
|
||||||
Total
|
||||||
132
| offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for our common stock; or | |
| enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; |
| the sale of shares to the underwriters; | |
| our issuance of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing; | |
| transactions by any person other than us relating to the shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares; or | |
| the sale of shares by a unit investment trust that is required to sell all or a portion of our shares owned by the trust if the manager of the trust changes or if a holder in the trust redeems its interest in the trust. | |
Per share
|
$ | ||||
Total
|
$ | ||||
Per share
|
$ | ||||
Total
|
$ | ||||
133
134
135
136
Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-37 | ||||
F-38 | ||||
F-39 | ||||
F-40 | ||||
F-41 |
F-1
/s/ Deloitte & Touche (South Africa) | |
|
|
Chartered Accountants (SA) | |
Johannesburg, Republic of South Africa |
F-2
/s/ PKF (JHB) Inc. | |
|
|
PKF (JHB) INC | |
Chartered Accountants (SA) | |
Registered Accountants and Auditors |
F-3
F-4
June 30,
June 30,
June 30,
2004
2003
2002
(In thousands, except share data)
$
131,098
$
74,924
$
51,793
39,134
25,935
14,170
39,677
26,399
21,637
5,676
3,323
3,128
11,133
35,478
19,267
12,858
3,640
2,600
1,381
39,118
21,867
14,239
25,927
9,473
5,554
452
167
13,191
11,942
8,518
87
13,278
11,942
8,518
857
318
$
13,278
$
13,117
$
8,518
39.6
37.2
27.0
39.6
38.4
27.0
38.4
39.6
40.8
27.0
39.6
38.4
27.0
38.4
F-5
Special Convertible
B Class
Common Stock
Preferred Stock
Preferred Stock
Accumulated
Other
Number
Additional
Number
Number
Comprehensive
Comprehensive
of
Paid-In
of
of
Retained
Income
Income
Shares
Amount
Capital
Shares
Amount
Shares
Amount
Earnings
(Loss)
Total
(Loss)
(In thousands, except share data)
187,134,139
$
37
$
38,445
$
15,710
$
(9,159
)
$
45,033
(155,945,116
)
(31
)
31
31,189,023
6
38,476
15,710
(9,159
)
45,033
8,518
8,518
$
8,518
(2,531
)
(2,531
)
495,356
528
528
384
384
(10,208
)
(10,208
)
(10,208
)
31,684,379
6
39,388
21,697
(19,367
)
41,724
(1,690
)
13,117
13,117
13,117
(3,925
)
(3,925
)
476,811
570
570
613
613
18,405
18,405
18,405
32,161,190
6
40,571
30,889
(962
)
70,504
31,522
13,278
13,278
13,278
(35,665
)
(35,665
)
(37,002
)
(37,002
)
(31,910,238
)
(6
)
(64
)
31,910,238
$
32
235,128,068
$
38
(250,952
)
847
250,952
1,849,119
847
2,642,143
3
7,931
7,934
17,610,238
18
52,813
52,831
1,453,490
1
4,359
4,360
833,333
1
2,499
2,500
16,001
16,001
16,001
22,539,204
$
23
$
71,954
32,161,190
$
32
236,977,187
$
38
$
8,502
$
15,039
$
95,588
$
29,279
F-6
June 30,
June 30,
June 30,
2004
2003
2002
(In thousands, except share data)
$
123,177
$
70,768
$
72,059
(72,825
)
(49,487
)
(57,501
)
15,362
8,065
3,260
(11,698
)
(5,465
)
(1,879
)
(12,121
)
(6,237
)
(4,186
)
41,895
17,644
11,753
(2,802
)
(6,712
)
(1,919
)
62
314
624
(937
)
(2,052
)
(995
)
415
8
(5,721
)
(7,393
)
(880
)
52,831
570
528
847
17
(37,002
)
(40,753
)
(2,836
)
(24,060
)
(2,266
)
528
13,855
14,178
(6,284
)
25,969
22,163
5,117
54,313
32,150
27,033
$
80,282
$
54,313
$
32,150
F-7
1. | Description of Business and Basis of Presentation |
Description of Business |
| number of common and special convertible stock authorized, issued and outstanding; | |
| stock issued under any of the Companys stock compensation plans, including stock issued pursuant to the Companys 2004 Stock Incentive Plan; | |
| all per share measures, including but not limited to basic and diluted earnings per share; | |
| certain price per share information related to the transaction mentioned above and described more fully below; and | |
| reallocation of amounts from common stock to additional paid in capital as the par value did not change. |
F-8
| On June 7, 2004, Net 1 Applied Technologies South Africa Limited (New Aplitec), a holding company established and existing under the laws of South Africa, completed a transaction whereby it acquired substantially all of the assets and liabilities of Aplitec for $127.53 million (or ZAR825,641,638) (the net purchase price). The net purchase price together with the cash retained in Aplitec was distributed as an advance distribution to Aplitec shareholders. | |
| The New Aplitec Participation Trust (South African Trust) is a South African bewind trust established and existing under the laws of South Africa. | |
| The Aplitec Holdings Participation Trust (the Cayman Trust) is a purpose trust created under Part VIII of the Trust Law (2001 Revision) of the Cayman Islands. | |
| The Aplitec shareholders had the option of either electing to receive 190 South African cents per share and an investment in New Aplitec in the form of a nil paid renounceable letter of allocation representing an interest in a New Aplitec B class preference share (B class preferred stock) and B class loans held by the South African Trust (collectively the reinvestment option) or cash of 500 South African cents per share. Shareholders who elected to receive the reinvestment option are described as reinvesting shareholders. In addition to the liquidation dividend, reinvesting shareholders were granted, units in the South African Trust with the right to receive, for no additional consideration, special convertible preferred stock of the Company, which are held by the Cayman Trust. These shares may be converted, upon the occurrence of a trigger event, to Company common stock on a one-for-one basis. A trigger event can occur when a unit holder gives notice to the South African Trust in writing of its intention to convert some or all of its B class preferred stock and B class loans. A trigger event also includes the abolition or relaxation of Exchange Controls by the South African Reserve Bank to permit reinvesting shareholders to hold Company common stock directly or the winding up or placing under judicial management of New Aplitec or the Company. | |
| Upon receipt of notice of a trigger event, the trustee of the South African Trust will request delivery from the Cayman Trust of the number of shares of the Companys special convertible preferred stock attributable to the units being converted. Upon delivery by the Cayman Trust, the South African Trust will transfer these shares of special convertible preferred stock, along with a proportionate number of B class preferred stock and loan accounts to the Company in exchange for shares of the Companys common stock. | |
| On June 25, 2004, shareholders holding 1,849,119 of Aplitecs issued shares elected the cash option. The remaining shareholders holding 235,128,068 shares elected the reinvestment option. Aplitec entered into an underwriting agreement with South African Private Equity Trust III (SAPET) and South African Private Equity Fund III L.P. (SAPEF and, together with SAPET, the Underwriters). In terms of this arrangement the Underwriters agreed to take up all of the rights in the South African Trust of the reinvestment option not taken up by Aplitecs shareholders, up to the maximum of $70 million (or ZAR437 million), which was equivalent to 64.7% of the reinvestment option, at a price of $0.45 (or ZAR2.85) per Aplitec share not involved in the reinvestment. The Underwriters paid $0.84 million (or ZAR5,269,989) for 1,849,119 units in the South African Trust in terms of the underwriting agreement. | |
| On May 27, 2004, the Company issued the equivalent of 32,161,190 of its special convertible preferred stock to the Cayman Trust, to be held for the benefit of Aplitecs shareholders that elected the reinvestment option and the Underwriters. |
F-9
| The combination of instruments issued to the reinvesting shareholders (B Class preferred stock and B Class loans in New Aplitec as well as rights to receive special convertible preference shares in the Company) are referred to as linked units and the reinvesting shareholders that hold these instruments are referred to as linked unit holders. Both the Net 1 common stock and the linked units have been reflected as equity of the Company. Refer to Note 10 Capital Structure for a detailed explanation of this treatment. |
2. | Significant Accounting Policies |
Basis of Presentation |
Principles of Consolidation |
Use of Estimates |
Property, Plant and Equipment |
Computer equipment
|
3 years | |||
Office equipment
|
3 years | |||
Vehicles
|
4 to 5 years | |||
Furniture and fittings
|
5 to 10 years |
Leasehold Improvement Costs |
F-10
Income Taxes |
Goodwill |
Intangible Assets |
Equity Method Investments |
F-11
Inventory |
Translation of Foreign Currencies |
Revenue Recognition |
Fees and Commissions |
Interest Income |
Systems Implementation Projects |
F-12
Other Income |
Research and Development Expenditure |
Loan Provisions |
Stock-Based Compensation |
2004 | 2003 | 2002 | ||||||||||
Net income
|
$ | 13,278 | $ | 13,117 | $ | 8,518 | ||||||
Add back: stock-based compensation expense included in reported
net income, net of related tax effects
|
4,360 | 613 | 384 | |||||||||
Deduct: total stock-based compensation expense determined under
fair value based method for all awards, net of related tax
effects
|
(6,257 | ) | (100 | ) | (209 | ) | ||||||
Pro-forma net income
|
$ | 11,381 | $ | 13,630 | $ | 8,693 | ||||||
Earnings per share, basic and diluted (in cents):
|
||||||||||||
Basic, as reported
|
39.6 | 40.8 | 27.0 | |||||||||
Basic, pro forma
|
32.4 | 40.8 | 27.0 | |||||||||
Weighted average assumptions(1):
|
||||||||||||
Risk-free interest rate
|
3.50 | % | 14.00 | % | 13.00 | % | ||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Stock volatility
|
72.00 | % | 67.82 | % | 67.82 | % | ||||||
Average expected life (years)
|
7.00 | 2.15 | 2.15 |
(1) | The 2004 assumptions are based on stock issued under the 2004 Stock Incentive Plan and the 2003 and 2002 assumptions are based on the stock compensation plan for the equity listed on the Johannesburg Securities Exchange. |
F-13
3.
Property, Plant and Equipment
2004
2003
$
16,626
$
11,444
4,097
2,407
10,140
7,979
30,863
21,830
14,558
8,247
2,280
1,329
6,387
4,237
23,225
13,813
2,068
3,197
1,817
1,078
3,753
3,742
$
7,638
$
8,017
4. | Goodwill and Intangible Assets |
F-14
2004
2003
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Value
Amortization
Value
Value
Amortization
Value
$
19,302
$
(4,090
)
$
15,212
$
12,085
$
(4,039
)
$
8,046
2,673
(520
)
2,153
114
(2
)
112
4,506
(54
)
4,452
6,106
(2,443
)
3,663
5,129
(1,539
)
3,591
6
6
$
13,405
$
(3,019
)
$
10,386
$
5,129
$
(1,539
)
$
3,591
F-15
June 30, 2004
Net
Accumulated
Carrying
Cost
Amortization
Value
$
3,841
$
(1,133
)
$
2,708
7,857
(2,203
)
5,654
7,604
(754
)
6,850
$
19,302
$
(4,090
)
$
15,212
June 30, 2003
Net
Accumulated
Carrying
Cost
Amortization
Value
$
3,962
$
(1,554
)
$
2,408
6,602
(1,851
)
4,751
1,521
(634
)
887
$
12,085
$
(4,039
)
$
8,046
2004 | 2003 | 2002 | ||||||||||
Reported net profit
|
$ | 13,278 | $ | 13,117 | $ | 8,518 | ||||||
Add back: goodwill amortization
|
| | 865 | |||||||||
Recognition of negative goodwill
|
| | | |||||||||
Adjusted net profit
|
$ | 13,278 | $ | 13,117 | $ | 9,383 | ||||||
2004 | 2003 | |||||||
Extraordinary gain negative goodwill that arose
after July 1, 2002
|
| $ | 857 | |||||
Cumulative effect of an accounting change: write-off of negative
goodwill that arose prior to July 1, 2002
|
| 318 | ||||||
| $ | 1,175 | ||||||
F-16
5.
Income Taxes
2004
2003
2002
$
21,298
$
10,635
$
5,757
4,012
617
(1,162
)
(203
)
$
25,927
$
9,473
$
5,554
37.78
%
37.78
%
37.78
%
9.95
%
5.54
%
1.23
%
8.29
%
10.26
%
66.29
%
43.32
%
39.01
%
54.45
%
48.63
%
40.43
%
10.26
%
1.58
%
(5.31
)%
(1.42
)%
2004 | 2003 | |||||||
Assets:
|
||||||||
Assessed losses
|
$ | 6,667 | $ | 1,431 | ||||
Valuation allowance related to assessed losses
|
(3,245 | ) | | |||||
Prepaid expenses
|
(2,395 | ) | (1,365 | ) | ||||
Provisions and accruals
|
1,191 | 2,833 | ||||||
Other
|
331 | 34 | ||||||
2,549 | 2,933 | |||||||
Liabilities:
|
||||||||
FTS patent
|
1,384 | 1,356 | ||||||
Intangible assets
|
1,633 | (167 | ) | |||||
Property, plant and equipment
|
| (98 | ) | |||||
STC Liability
|
6,025 | 6,756 | ||||||
Other
|
(81 | ) | 147 | |||||
8,961 | 7,994 | |||||||
Net deferred income tax liabilities
|
$ | 6,412 | $ | 5,061 | ||||
F-17
6. | Stock-Based Compensation |
2004 Stock Incentive Plan |
Term |
Shares Reserved for Awards and Limits on Awards |
Stock Options |
Stock Appreciation Rights |
Other Stock-Based Awards |
F-18
2004 | 2003 | 2002 | ||||||||||||||||||||||
No. of | Weighted | No. of | Weighted | No. of | Weighted | |||||||||||||||||||
Shares | Average | Shares | Average | Shares | Average | |||||||||||||||||||
Under | Exercise | Under | Exercise | Under | Exercise | |||||||||||||||||||
Option(2) | Price | Option(1) | Price | Option(1) | Price | |||||||||||||||||||
Outstanding at beginning of year
|
| | 481,787 | $ | 0.96 | 983,929 | $ | 0.90 | ||||||||||||||||
Granted
|
1,453,490 | | | | | | ||||||||||||||||||
Exercised
|
| $ | 3.00 | 476,811 | 0.96 | 495,356 | 0.90 | |||||||||||||||||
Lapsed or otherwise forfeited
|
| | 4,976 | | 6,786 | | ||||||||||||||||||
Outstanding at end of year
|
1,453,490 | | | $ | 0.96 | 481,787 | $ | 0.90 | ||||||||||||||||
Exercisable at end of year
|
| | | | | |
(1) | The number of stock based awards outstanding during 2003 and 2002 has been adjusted using the reinvestment ratio mentioned in Note 1 above, and reflects the one-for-six stock split described in Note 11 below. |
(2) | The number of stock-based awards outstanding during 2004 has been adjusted to reflect the one-for-six reverse stock split described in Note 11 below. |
7. | Trade and Other Receivables |
2004 | 2003 | |||||||
Trade and other receivables, gross
|
$ | 41,914 | $ | 27,411 | ||||
Allowance for doubtful accounts, beginning of year restated at
year end rates
|
8,091 | 5,682 | ||||||
Provisions charged to the income statement
|
723 | 1,122 | ||||||
Amounts utilized
|
(427 | ) | (7 | ) | ||||
Allowance for doubtful accounts, end of year
|
8,387 | 6,797 | ||||||
Trade and other receivables, net
|
$ | 33,527 | $ | 20,614 | ||||
F-19
8.
Trade and Other Payables
2004
2003
$
7,431
$
6,189
9,091
4,404
1,049
661
2,984
2,629
3,138
2,576
$
23,693
$
16,459
9. | Revenue |
2004 | 2003 | 2002 | ||||||||||
Sale of goods
|
$ | 3,321 | $ | 7,979 | $ | 6,216 | ||||||
Services rendered and loan based interest received
|
127,777 | 66,945 | 45,577 | |||||||||
$ | 131,098 | $ | 74,924 | $ | 51,793 | |||||||
10. | Capital Structure and Creditor Rights Attached to the B Class Loans |
| Special convertible preferred stock, | |
| B Class preferred stock in New Aplitec and | |
| B Class loans issued by New Aplitec |
F-20
Common Stock |
Special Convertible Preferred Stock |
F-21
B Class Preferred Stock |
B Class Loans |
F-22
Conversion of Special Convertible Preferred Stock to Common Stock |
| 7.368421056 B class preference shares; and | |
| such holders interest in the New Aplitec B loan accounts. |
11. | Earnings Per Share |
F-23
2004
2003
2002
In U.S. cents
6.6
6.8
4.5
33.0
30.4
22.5
39.6
37.2
27.0
000 shares
201,489
192,967
187,287
(167,908
)
(160,806
)
(156,072
)
33,581
32,161
31,215
2004
2003
2002
In U.S. cents
6.4
6.8
4.5
32.0
30.4
22.5
38.4
37.2
27.0
000 shares
207,939
192,967
187,287
(173,282
)
(160,806
)
(156,072
)
34,657
32,161
31,215
2004 | 2003 | 2002 | |||||||||||
Weighted average number of common shares basic
|
1,420 | 32,161 | 31,215 | ||||||||||
Weighted average effect of dilutive securities:
|
|||||||||||||
Employee stock options
|
46 | | 171 | ||||||||||
Weighted average number of shares diluted
|
1,466 | 32,161 | 31,386 | ||||||||||
F-24
2004
2003
2002
32,161
1,030
33,191
2004
2003
2002
39.60
37.20
27.00
2.40
1.20
39.60
40.80
27.00
12. | Commitments and Contingencies |
Operating Lease Commitments |
Due within a year
|
$ | 2,072 | ||
Due within 2 years
|
1,398 | |||
Due within 3 years
|
840 | |||
Due within 4 years
|
$ | 250 |
Capital Commitments |
Purchase Obligations |
Guarantees |
Contingencies |
F-25
13. | Related Party Transactions |
14. | Reconciliation of Net Income for the Year to Net Cash Provided by Operating Activities |
2004 | 2003 | 2002 | |||||||||||
Net Income for the year
|
$ | 13,278 | $ | 13,117 | $ | 8,518 | |||||||
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|||||||||||||
Depreciation and amortizations
|
5,676 | 3,323 | 3,128 | ||||||||||
Minority interest in net income
|
| 452 | 167 | ||||||||||
Earnings from equity accounted investment
|
(87 | ) | | | |||||||||
(Profit) loss on disposal of property, plant and equipment
|
14 | (22 | ) | (67 | ) | ||||||||
Profit on disposal of business
|
| (300 | ) | (267 | ) | ||||||||
Fair value adjustment related to financial liabilities
|
33 | | | ||||||||||
Fair value of foreign currency exchange contracts
|
483 | | | ||||||||||
Interest received from equity accounted investment
|
(68 | ) | | | |||||||||
Stock compensation charge related to awards of stock/options
|
4,360 | 613 | 385 | ||||||||||
Stock issued related to transaction costs
|
2,500 | | | ||||||||||
Extraordinary item
|
| (857 | ) | | |||||||||
Change in accounting policy
|
| (318 | ) | |
F-26
2004
2003
2002
(7,954
)
(4,156
)
(1,184
)
(44
)
1,003
106
6,770
4,838
(402
)
18,166
(647
)
406
(1,232
)
598
963
28,617
4,527
3,235
$
41,895
$
17,644
$
11,753
15. | Operating Segments |
F-27
June 30,
2004
2003
2002
$
83,275
$
44,058
$
28,291
26,584
13,750
8,318
16,633
13,407
10,465
4,606
5,135
4,719
131,098
76,350
51,793
24,913
10,196
7,376
12,055
5,500
2,772
6,778
4,705
900
1,232
680
1,611
(5,735
)
(1,663
)
642
39,243
19,418
13,301
15,418
8,070
3,261
15,418
8,070
3,261
11,175
4,887
1,617
29
51
15
155
338
247
419
194
11,778
5,470
1,879
F-28
June 30,
2004
2003
2002
4,017
3,287
2,004
572
488
408
4
14
50
299
179
173
4,892
3,968
2,635
4,121
1,593
1,728
3,617
1,650
832
2,024
1,396
265
323
103
409
18,791
2,892
1,031
28,876
7,634
4,265
9,616
3,716
4,031
8,438
3,850
1,940
4,725
3,258
619
754
240
955
(9,614
)
3,321
2,873
13,919
14,385
10,418
142,309
87,252
49,250
2,371
6,043
943
185
106
817
34
15
5
218
548
153
$
2,808
$
6,712
$
1,918
F-29
2004 | 2003 | 2002 | ||||||||||||
Net income after tax in accordance with SA GAAP
|
$ | 14,007 | $ | 14,385 | $ | 10,418 | ||||||||
Intangible amortization adjustment
|
(a) | (300 | ) | (229 | ) | (205 | ) | |||||||
Internally developed intangibles adjustment
|
(b) | | 180 | 54 | ||||||||||
Development expenses adjustment
|
(c) | | 252 | 366 | ||||||||||
Revenue adjustment due to inclusion of the business from the
beginning of the year instead of acquisition date
|
(d) | | (1,427 | ) | | |||||||||
Self insurance adjustment
|
(e) | (2,894 | ) | 873 | 468 | |||||||||
Goodwill amortization adjustment
|
(f) | (484 | ) | 813 | (742 | ) | ||||||||
Stock compensation charge
|
(k) | | (613 | ) | (385 | ) | ||||||||
Secondary Taxation on Companies adjustment
|
(h) | 1,612 | (1,533 | ) | (1,120 | ) | ||||||||
Taxation adjustments due to difference between SA and US GAAP
|
(i) | 1,337 | (307 | ) | (169 | ) | ||||||||
Reclassification of earnings from equity accounted investment
|
(j) | (87 | ) | | | |||||||||
Net income after tax in accordance with US GAAP
|
$ | 13,191 | $ | 12,394 | $ | 8,685 | ||||||||
Segment assets in accordance with SA GAAP
|
$ | 142,309 | $ | 87,252 | $ | 49,250 | ||||||||
Recognition of goodwill, net of amortization
|
(f) | 6,573 | 5,740 | 3,473 | ||||||||||
Recognition of intangible assets, net of amortization
|
(a) | 3,669 | 3,591 | 2,579 | ||||||||||
Recognition of derivative instruments
|
(g) | (20 | ) | (17 | ) | (12 | ) | |||||||
Consolidation of the Self Insurance Captive
|
(e) | (358 | ) | 1,394 | 1,117 | |||||||||
Deferred tax adjustments
|
(h) | 459 | 399 | 89 | ||||||||||
Segment assets in accordance with US GAAP
|
$ | 152,632 | $ | 98,359 | $ | 56,496 | ||||||||
F-30
F-31
F-32
16. | Comprehensive Income (Loss) |
2004 | 2003 | 2002 | ||||||||||
Net income
|
$ | 13,278 | $ | 13,117 | $ | 8,518 | ||||||
Foreign currency translation adjustments
|
16,001 | 18,405 | (10,208 | ) | ||||||||
$ | 29,279 | $ | 31,522 | $ | (1,690 | ) | ||||||
17. | Fair Value of Financial Instruments |
Initial Recognition and Measurement |
Trade and Other Receivables |
Trade and Other Payables |
Risk Management |
F-33
Foreign Exchange Risk
Forward Purchase Contracts
Notional Amount
Strike Price
Maturity
ZAR 7.8475
July 12, 2004
ZAR 8.1822
August 2, 2004
ZAR 7.8878
August 10, 2004
ZAR 7.9299
September 10, 2004
ZAR 7.9749
October 12, 2004
ZAR 8.2129
October 29, 2004
ZAR 8.5225
January 7, 2005
ZAR 6.2950
September 22, 2004
Notional Amount
Strike Price
Maturity
ZAR 12.643
January 8, 2003
Interest Rate Risk |
Credit Risk |
18. | Equity Accounted Investment and Long Term Receivable |
F-34
19. | Acquisitions |
Reverse Acquisition of NUEP |
F-35
$
8
217
4,620
5,794
10,639
960
1,745
2,705
$
7,934
Acquisition of NUEP Holdings S.a.r.l. |
20. | Reorganization Charge |
Accounting fees
|
$ | 1,256 | ||
Regulatory, filing and printing charges
|
520 | |||
Legal fees
|
529 | |||
Secretarial services
|
16 | |||
Other professional fees
|
4,429 | |||
Other
|
4,383 | |||
$ | 11,133 | |||
F-36
F-37
F-38
F-39
F-40
F-41
F-42
F-43
F-44
F-45
F-46
F-47
F-48
F-49
F-50
F-51
F-52
F-53
F-54
F-55
Table of Contents
Nine Months Ended
March 31,
March 31,
2005
2004
(In thousands, except
share data)
$
134,885
$
91,463
41,207
28,206
33,804
25,625
4,897
4,110
3,537
54,977
29,985
1,497
2,464
56,474
32,449
22,534
13,896
33,940
18,553
480
$
34,420
$
18,553
62.94
57.66
61.80
57.66
Table of Contents
Nine Months Ended
March 31,
March 31,
2005
2004
(In thousands)
$
23
$
6
4
27
6
32
(4
)
28
38
(5
)
33
71,954
40,571
15,539
(15,534
)
71,959
40,571
15,039
(962
)
(1,328
)
14,215
13,711
13,253
8,502
30,889
34,420
18,553
42,922
49,442
$
128,680
$
103,272
Table of Contents
Nine Months Ended
March 31,
March 31,
2005
2004
(In thousands)
$
127,910
$
92,969
(81,864
)
(49,580
)
11,645
10,755
(10,131
)
(8,161
)
(31,984
)
(10,626
)
15,576
35,357
(2,982
)
(2,392
)
29
33
(1,329
)
(2,953
)
(3,688
)
(19
)
(5,088
)
(19
)
(5,088
)
(174
)
12,170
12,430
38,751
80,282
54,313
$
92,712
$
93,064
Table of Contents
1.
Basis of Presentation and Summary of Significant Accounting
Policies
Unaudited Interim Financial Information
number of common and special convertible stock authorized,
issued and outstanding;
stock issued pursuant to the Companys 2004 Stock Incentive
Plan;
all per share measures, including but not limited to basic and
diluted earnings per share; and
reallocation of amounts from common stock to additional paid in
capital as the par value did not change.
Stock-Based Compensation
Table of Contents
Nine Months Ended
March 31,
2005
2004
$
34,420
$
18,553
(650
)
$
33,770
$
18,553
62.94
57.66
60.60
57.66
3.50
%
72.00
%
7.00
Translation of Foreign Currencies
Table of Contents
Recent Accounting Pronouncements
2.
Goodwill and Intangible Assets
Table of Contents
As at March 31, 2005
As at June 30, 2004
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Value
Amortization
Value
Value
Amortization
Value
$
18,886
$
(3,953
)
$
14,933
$
19,302
$
(4,090
)
$
15,212
2,658
(1,181
)
1,477
2,673
(520
)
2,153
114
(20
)
94
114
(2
)
112
4,506
(539
)
3,967
4,506
(54
)
4,452
6,072
(2,885
)
3,187
6,106
(2,443
)
3,663
6
6
$
13,350
$
(4,625
)
$
8,725
$
13,405
$
(3,019
)
$
10,386
FTS Patent
Contract Rights
Table of Contents
Customer Contracts and Exclusive Licenses
As at March 31, 2005
Accumulated
Net Carrying
Cost
Amortization
Value
$
3,478
$
(1,011
)
$
2,467
7,813
(2,191
)
5,622
7,595
(751
)
6,844
$
18,886
$
(3,953
)
$
14,933
As at June 30, 2004
Accumulated
Net Carrying
Cost
Amortization
Value
$
3,841
$
(1,133
)
$
2,708
7,857
(2,203
)
5,654
7,604
(754
)
6,850
$
19,302
$
(4,090
)
$
15,212
3.
Capital Structure and Creditor Rights Attached to the
B Class Loans
a right to special convertible preferred stock,
B Class preference shares in Net 1 Applied Technologies
South Africa Limited (New Aplitec) and
B Class loans issued by New Aplitec.
Table of Contents
Common Stock
Table of Contents
Special Convertible Preferred Stock
B Class Preference Shares
Table of Contents
B Class Loans
Conversion of Special Convertible Preferred Stock to
Common Stock
7.368421056 B class preference shares; and
such holders interest in the New Aplitec B loan
accounts.
4.
Earnings Per Share
Table of Contents
Nine Months
Ended
March 31,
2005
2004
In U.S. cents
10.5
9.6
52.4
48.1
62.9
57.7
000 shares
328,202
192,967
(273,502
)
(160,806
)
54,700
32,161
Nine Months
Ended
March 31
2005
2004
In U.S. cents
10.3
9.6
51.5
48.1
61.8
57.7
000 shares
334,243
192,967
(278,536
)
(160,806
)
55,707
32,161
Table of Contents
Nine Months
Ended
March 31,
2005
2004
000
000
27,175
32,161
500
27,675
32,161
Nine Months
Ended
March 31,
2005
2004
000
000
27,525
507
28,032
Nine Months
Ended
March 31,
2005
2004
000
000
54,700
32,161
55,707
32,161
5.
Comprehensive Income
Nine Months Ended
March 31,
2005
2004
$
34,420
$
18,553
(1,328
)
14,215
$
33,092
$
32,768
Table of Contents
6.
Operating Segments
Table of Contents
Nine Months Ended
March 31,
2005
2004
$
77,538
$
59,875
26,362
15,762
15,642
12,384
15,343
3,312
134,885
91,333
31,629
18,626
11,983
7,165
7,579
5,150
6,036
(236
)
(174
)
(3,442
)
57,053
27,263
11,505
10,962
11,505
10,962
9,689
8,020
21
20
298
109
349
$
10,008
$
8,498
Table of Contents
Nine Months Ended
March 31,
2005
2004
$
3,910
$
3,432
377
435
2
716
189
5,003
4,058
6,559
3,359
3,595
2,150
2,268
1,539
1,720
(103
)
3,850
4,205
17,992
11,150
15,379
7,248
8,386
5,015
5,292
3,590
4,014
(242
)
7,487
2,966
40,558
18,577
164,670
131,243
2,313
2,077
669
111
15
189
$
2,982
$
2,392
Table of Contents
Nine Months Ended
March 31,
March 31,
2005
2004
$
40,558
$
18,577
(a)
(251
)
(223
)
(b)
(1,465
)
2,515
(c)
120
430
(d)
(4,740
)
(1,977
)
(e)
198
(769
)
(f)
(480
)
$
33,940
$
18,553
March 31,
2005
$
164,670
(c)
6,882
(a)
3,187
(d)
579
$
175,318
Table of Contents
7.
Deferred Expenditure on Smart Cards
Table of Contents
Morgan Stanley
JPMorgan
Jefferies & Company, Inc.
Thomas Weisel Partners LLC
Table of Contents
II-1
II-2
II-3
Item 13.
Other Expenses of Issuance and Distribution
Amount to be Paid
$
30,602.00
26,500.00
100,000.00
255,000.00
*
1,600,000.00
*
40,000.00
*
10,000.00
37,898.00
$
2,100,000.00
Item 14.
Indemnification of Directors and Officers
Table of Contents
Item 15.
Recent Sales of Unregistered Securities
Table of Contents
Item 16.
Exhibits and Financial Statement Schedules
(a)
Exhibits
Item 17.
Undertakings
Table of Contents
Net 1 UEPS Technologies,
Inc.
By:
/s/
Serge C.P. Belamant
Name: Serge C.P. Belamant
Title:
Chief Executive Officer
II-4
Signature | Title | Date | ||||
*
|
Director | July 19, 2005 | ||||
/s/
Paul Edwards
|
Director | July 19, 2005 | ||||
*By: |
/s/
Serge C.P. Belamant
Attorney-in-Fact |
II-5
1.1**
Form of Underwriting Agreement.
2.1
Sale Agreement, dated October 31, 2003, between Net 1
Applied Technology Holdings Limited, Net 1 Investment
Holdings (Proprietary) Limited, Net 1 Support Services
(Proprietary) Limited and Newshelf 713 (Proprietary)
Limited (incorporated by reference to Exhibit 2.1 to our
Registration Statement on Form S-4, filed on
February 3, 2004 (file no. 333-112463)).
2.2
Subscription Agreement, dated October 31, 2003, between
Net 1 UEPS Technologies, Inc. and Newshelf 713
(Proprietary) Limited (incorporated by reference to
Exhibit 2.2 to our Registration Statement on Form S-4,
filed on February 3, 2004 (file no. 333-112463)).
2.3
Asset Purchase Agreement, dated as of January 30, 2004,
between Net 1 Holdings S.a.r.l. and Net 1 UEPS
Technologies, Inc. (incorporated by reference to
Exhibit 2.3 to our Registration Statement on Form S-4,
filed on February 3, 2004 (file no. 333-112463)).
2.4
Common Stock Purchase Agreement, dated as of January 30,
2004, between Net 1 UEPS Technologies, Inc. and
SAPEF III International G.P. Limited (or its nominees)
(incorporated by reference to Exhibit 2.4 to our
Registration Statement on Form S-4, filed on
February 3, 2004 (file no. 333-112463)).
2.5
Subscription Agreement, dated November 10, 2003, between
the Trustees for the time being of the New Aplitec Participation
Trust and Newshelf 713 (Proprietary) Limited (incorporated
by reference to Exhibit 2.5 to our Registration Statement
on Form S-4, filed on February 3, 2004 (file
no. 333-112463)).
2.6
Trust Deed of the New Aplitec Participation Trust, dated
October 31, 2003, entered into between Newshelf 713
(Proprietary) Limited and Brait Capital Partners Trustees
(Proprietary) Limited (incorporated by reference to
Exhibit 2.6 to our Registration Statement on Form S-4,
filed on February 3, 2004 (file no. 333-112463)).
2.7
Trust Deed for the Aplitec Holdings Participation Trust,
dated January 30, 2004, between Walkers SPV, SAPEF III
International G.P. Limited (in its capacity as original
enforcer), Brait Capital Partners Trustees (Proprietary) Limited
(in its capacity as trustee of the New Aplitec Participation
Trust) and Net 1 UEPS Technologies, Inc. (incorporated by
reference to Exhibit 2.7 to our Registration Statement on
Form S-4, filed on February 3, 2004 (file
no. 333-112463)).
2.8
Umbrella Agreement, dated November 10, 2003, between
SAPEF III International G.P. Limited, The Trustees of the
South African Private Equity Trust III, Net 1 UEPS
Technologies, Inc., The Trustees of the New Aplitec
Participation Trust and Newshelf 713 (Proprietary) Limited
(incorporated by reference to Exhibit 2.8 to our
Registration Statement on Form S-4, filed on
February 3, 2004 (file no. 333-112463)).
2.9
Underwriting Agreement, dated November 5, 2003, South
African Private Equity Trust III and South African Private
Equity Fund III L.P. and Newshelf 713 (Proprietary)
Limited (incorporated by reference to Exhibit 2.9 to our
Registration Statement on Form S-4, filed on
February 3, 2004 (file no. 333-112463)).
3.1
Articles of Incorporation of Net 1 UEPS Technologies, Inc.
(incorporated by reference to Exhibit 1 to our Registration
Statement on Form 10-SB filed on August 1, 2000 (file
no. 000-31203)).
3.2
Articles of Amendment to Articles of Incorporation of Net 1
UEPS Technologies, Inc. (included as Annex A to the proxy
statement/ prospectus included in our Registration Statement on
Form S-4, filed on February 3, 2004 (file no.
333-112463) and incorporated by reference herein).
3.3
Articles of Amendment to Articles of Incorporation of Net 1
UEPS Technologies, Inc. (incorporated by reference to
Exhibit 3.3 to our Form 8-K, filed on June 14,
2005).
3.4
Amended and Restated By-Laws of Net 1 UEPS Technologies, Inc.
(incorporated by reference to Exhibit 3.5 to our
Form 8-K, filed on June 7, 2005).
4.1*
Form of common stock certificate.
Table of Contents
5.1**
Opinion of DLA Piper Rudnick Gray Cary US LLP as to the legality
of the securities being registered.
10.1
Distribution Agreement, dated July 1, 2002, between
Net 1 UEPS Technologies, Inc. and Net 1 Investment Holdings
(Pty) Limited (incorporated by reference to Exhibit 10.1 to
our Registration Statement on Form S-4, filed on
February 3, 2004 (file no. 333-112463)).
10.2
Patent and Technology Agreement, dated June 19, 2000, by
and between Net 1 Holdings S.a.r.l. and Net 1 UEPS
Technologies, Inc. (incorporated by reference to
Exhibit 10.2 to our Registration Statement on
Form S-4, filed on February 3, 2004 (file
no. 333-112463)).
10.3
Service Level Agreement between The Limpopo Provincial
Government in its Department of Health and Welfare and Cash
Paymaster Services (Northern) (Pty) Limited (incorporated by
reference to Exhibit 10.3 to our Registration Statement on
Form S-4, filed on February 3, 2004 (file
no. 333-112463)).
10.4
Service Level Agreement between the Department of Social
Welfare and Population Development, KwaZulu-Natal and Cash
Paymaster Services KwaZulu-Natal (Pty) Ltd. (incorporated by
reference to our Registration Statement on Form S-4, filed
on February 3, 2004 (file no. 333-112463)).
10.5
2004 Stock Incentive Plan (included as Annex B to the proxy
statement/ prospectus included in our Registration Statement on
Form S-4, filed on February 3, 2004 (file no.
333-112463) and incorporated by reference herein).
10.6
Product License Agreement between Net 1 Holdings S.a.r.l. and
Banque De Gestion Et De Financement Burundi (incorporated by
reference to Exhibit 10.6 to Amendment No. 2 to our
Registration Statement on Form S-4/ A, filed on
April 21, 2004 (file no. 333-112463)).
10.7
Product Licence Agreement between Net 1 Holdings S.a.r.l.
and Banque De Commerce, De Development Et DIndustrie
B.C.D.I. S.A. Rwanda (incorporated by reference to
Exhibit 10.7 to Amendment No. 2 to our Registration
Statement on Form S-4/ A, filed by Net 1 UEPS Technologies,
Inc. on April 21, 2004 (file no. 333-112463)).
10.8
Product Licence Agreement between Net 1 Holdings S.a.r.l.
and Net 1 Operations S.a.r.l. (incorporated by reference to
Exhibit 10.8 to Amendment No. 2 to our Registration
Statement on Form S-4/ A, filed on April 21, 2004
(file no. 333-112463)).
10.9
Procurement and Commissioning Agreement between Net 1
Investment Holdings (Proprietary) Limited and Reserve Bank of
Malawi (incorporated by reference to Exhibit 10.9 to
Amendment No. 2 to our Registration Statement on
Form S-4/ A, filed on April 21, 2004 (file no.
333-112463)).
10.10
Non Exclusive UEPS Licence Agreement between Net 1
Investment Holdings (Proprietary) Limited and SIA Netcards
(incorporated by reference to Amendment No. 2 to our
Registration Statement on Form S-4/ A, filed on
April 21, 2004 (file no. 333-112463)).
10.11*
Technology License Agreement between Net 1 Investment
Holdings (Proprietary) Limited and Visa International Service
Association.
10.12*
Service Level Agreement between the Province of the Eastern
Cape Department of Social Development and CPS Eastern Cape
(Proprietary) Limited.
10.13*
Banking Facility between Nedbank Limited and Net 1 Applied
Technology Holdings Limited.
10.14*
Facility between Cash Paymaster Services Eastern Cape and
Nedbank Limited.
10.15*
Addendum to Facility LetterApproval of Increase Bridging
Loan Facilities between Nedbank Limited and Net 1
Applied Technology Holding Limited.
10.16**
Agreement between Nedcor Bank Limited and Net 1 Products
(Proprietary) Limited.
10.17*
Assignment of Copyright and License of Patents and Trade Marks
between MetroLink (Proprietary) Limited and Net 1 Products
(Proprietary) Limited.
10.18*
Patent and Technology Agreement by and between Net 1
Investment Holdings (Proprietary) Limited and Nedcor Bank
Limited.
Table of Contents
10.19**
Patent and Technology Agreement by and between Net 1
Holdings S.a.r.l. and Net 1 Applied Technology Holdings
Limited and Nedcor Bank Limited.
10.20**
Agreement between Nedbank Limited and Net 1 UEPS
Technologies, Inc. and Net 1 Applied Technologies South
Africa Limited.
10.21**
Stock Purchase Agreement dated July 18, 2005, by and among
CI Law Trustees Limited for the San Roque Trust, Dr. Serge C.P.
Belamant, South African Private Equity Fund III, L.P., South
African Private Equity Trust III, Brenthurst Private Equity II
Limited, Brenthurst Private Equity South Africa I Limited,
General Atlantic Partners 80, L.P., GapStar LLC, GAP
Coinvestments III, LLC, GAP Coinvestments IV, LLC,
GAPCO GmbH & Co. KG and Net 1 UEPS Technologies,
Inc.
10.22**
Placement Agent Agreement, dated July 18, 2005, among Morgan
Stanley & Co. Incorporated and J.P. Morgan Securities Inc.,
as Placement Agents, the sellers party thereto, and Net 1
UEPS Technologies, Inc.
21.1**
Subsidiaries of Net 1 UEPS Technologies, Inc.
23.1**
Consent of Deloitte & Touche, Chartered Accountants.
23.2**
Consent of PKF (Jhb) Inc.
23.3**
Consent of DLA Piper Rudnick Gray Cary US LLP (incorporated by
reference to Exhibit 5.1 to this Registration Statement on
Form S-1).
23.4**
Consent of Cliffe Dekker Inc
24.1**
Power of Attorney (included on signature page to the initial
filing of this Registration Statement on Form S-1 and this
Amendment No. 3 to this Registration Statement on
Form S-1).
99.1**
Consent of Florian P. Wendelstadt
*
Filed previously.
**
Filed herewith.
Exhibit 1.1
______________ Shares
NET 1 UEPS TECHNOLOGIES, INC.
COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
August __, 2005
August __, 2005
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co. Incorporated
c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 and J.P. Morgan Securities Inc. 277 Park Avenue New York, New York 10172 |
Dear Sirs and Mesdames:
Certain shareholders of the Company (the "SELLING SHAREHOLDERS") named in Schedule I hereto severally propose to sell to the several Underwriters named in Schedule II hereto (the "UNDERWRITERS"), an aggregate of _______________ shares of the common stock, par value $0.001 per share of Net 1 UEPS Technologies, Inc., a Florida corporation (the "COMPANY") (the "FIRM SHARES"), each Selling Shareholder selling the amount set forth opposite such Selling Shareholder's name in Schedule I hereto. In addition, certain holders of units in The New Aplitec Participation Trust have proposed to sell to the Underwriters an aggregate of _______ shares of common stock of the Company that they beneficially own.
The Company also proposes to issue and sell to the several Underwriters not more than an additional ______________ shares of its common stock, par value $0.001 per share of the Company (the "ADDITIONAL SHARES") if and to the extent that you, as Managers of the offering, shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 4 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the "SHARES." The shares of common stock, par value $0.001 per share of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK." The Company and the Selling Shareholders are hereinafter sometimes collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the "COMMISSION") a registration statement, including a prospectus, relating to the Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first used to confirm
sales of Shares is hereinafter referred to as the "PROSPECTUS." If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462 Registration Statement.
1. Representations and Warranties of the Company. The Company represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and, except as disclosed in the
Prospectus, are owned directly by the Company, free and clear of all liens, encumbrances, equities or claims.
(e) The New Aplitec Participation Trust has been duly created and is validly existing as a bewind trust in good standing under the laws of South Africa.
(f) The Aplitec Holdings Participation Trust has been duly created and is validly existing as a purpose trust in good standing under Part VIII of the Trust Law (2001 Revision) of the Cayman Islands.
(g) This Agreement has been duly authorized, executed and delivered by the Company.
(h) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus.
(i) There are no outstanding securities issued by the Company convertible into or exchangeable for, rights, warrants or options to acquire from the Company, or obligations of the Company to issue, Common Stock or any of the capital stock of the Company, except as described in the Prospectus. There are no outstanding rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or direct interests in the Company or any of its subsidiaries, other than as set forth in the Prospectus.
(j) Except as described in the Prospectus, the Shares are freely transferable by the Company or the Selling Shareholders to or for the account of the several Underwriters and (to the extent described in the Prospectus) the initial holders thereof; and, except as disclosed in the Prospectus, there are no restrictions on subsequent transfers of the Shares under the laws of the United States.
(k) The Shares have been approved for listing on the Nasdaq National Market, subject to official notice of issuance.
(l) The shares of Common Stock (including the Shares to be sold by the Selling Shareholders) outstanding prior to the issuance of the Shares that may be sold by the Company have been duly authorized and are validly issued, fully paid and non-assessable.
(m) The Shares that may be sold by the Company have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights.
(n) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of (i) the certificate of incorporation or by-laws of the Company, or
(ii) any agreement or other instrument binding upon the Company or any of its
subsidiaries or (iii) any applicable law, judgment, order
or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares and except, in the case of clauses (ii) and (iii) above, as would not have a material adverse effect on the Company and its subsidiaries taken as a whole.
(o) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement).
(p) There are no legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required.
(q) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.
(r) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended.
(s) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(t) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(u) Except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement.
(v) Except as disclosed in the Prospectus, no material relationships, direct or indirect, or material transactions exist between the Company and its subsidiaries on the one hand and their respective affiliates, officers and directors or their shareholders, customers or suppliers on the other hand; and the statements in the Prospectus in this regard are true and correct in all material respects and do not omit anything necessary to make such statements, in the light of the circumstances under which they are made, not misleading.
(w) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, (i) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries, except in each case as described in the Prospectus or pursuant to conversions made in accordance with the terms of the Company's Special Convertible Preference Stock.
(x) The consolidated financial statements (and the notes thereto) of the Company included in the Prospectus present fairly, in all material respects, the financial position of the Company on a consolidated basis as of the dates indicated, and the results of operations and the cash flows for the periods specified; and (i) such financial statements have been prepared in conformity with U.S. generally accepted accounting principles and (ii) Deloitte & Touche (South Africa) and PKF (JhB) Inc., who have expressed an opinion on the financial statements of the Company based on their audits, are each independent auditors with respect to the Company within the meaning of the Securities Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the applicable rules and regulations of the Commission thereunder.
(y) Each of the Company and its subsidiaries has filed with all appropriate taxing authorities all income, franchise or other tax returns required to be filed through the date hereof except for those income, franchise or other tax returns the failure of which to file will not have a material adverse effect on the Company and its subsidiaries, taken as a whole, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had (nor does the Company or any of its subsidiaries have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its subsidiaries, might individually or in the aggregate have) a material adverse effect on the Company and its subsidiaries, taken as a whole.
(z) Neither the Company nor any of its subsidiaries owns any real property that is material to the business of the Company and its subsidiaries taken as a whole; each has good and marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries, in each case except as described in the Prospectus.
(aa) The Company and its subsidiaries own or possess, or can acquire on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them, and neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(bb) No material labor dispute with the employees of the Company or any of its subsidiaries exists, except as described in the Prospectus, or, to the knowledge of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that is reasonably likely to have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(cc) Except as otherwise disclosed in the Prospectus, (i) the Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged, (ii) neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for, and (iii) neither the Company nor any of its subsidiaries has any reasonable basis to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(dd) Except as otherwise disclosed in the Prospectus, the Company and its subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(ee) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since June 30, 2004, (i) the Company has been in the process of carrying out evaluations, under the supervision and with the participation of the Company's management, of the effectiveness of the design and operation of the Company's disclosure controls and procedures in accordance with Rule 13a-15 of the Exchange Act and has not identified a material weakness in the Company's internal control over financial reporting (whether or not remediated) and (ii) there has been no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
(ff) There is, and has been, no material failure on the part of the
Company or, to the Company's knowledge, any of the Company's directors or
officers, in their respective capacities as such, to comply with any applicable
provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith, including Section 402 thereof related to
loans and Sections 302 and 906 thereof related to certifications. In addition,
based on its preparations to date including consultation with its independent
public accountants, the Company has no reasonable basis to believe that it will
not be able to comply on a timely basis with the reporting requirements of
Section 404 of the Sarbanes-Oxley Act of 2002 when such requirements become
applicable to the Company.
(gg) Neither the Company nor any of its subsidiaries nor any of their respective officers, directors, managers, agents or employees have, directly or indirectly made or authorized any contribution, payment or gift of funds, or property to any official, employee or agent of any governmental agency, authority or instrumentality in South Africa or any other jurisdiction where either the payment or gift was, or is, prohibited under applicable law, rule or regulation of any relevant locality, including but not limited to, the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the rules and regulations promulgated thereunder.
(hh) The Company has not been advised, and has no reasonable basis to believe, that it and each of its subsidiaries are not conducting business in compliance with all applicable laws,
rules and regulations (including, without limitation, those related to financial services and payment systems) of the jurisdictions in which it is conducting business, except as described in the Prospectus or to the extent that failure to be so in compliance would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(ii) Except as described in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), the Company has not sold, issued or distributed any shares of Common Stock during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.
2. Additional Representations and Warranties of the Company. The Company represents and warrants, on behalf of itself and its subsidiaries, that:
(a) Neither it nor, to the Company's knowledge, any existing agent is an entity or, in the case of an agent, an individual that (i) is the subject of economic sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC"), or (ii) is located or resident in, or organized under the laws of, a country subject to OFAC-administered economic sanctions (a "PROHIBITED COUNTRY");
(b) To the Company's knowledge, none of its shareholders is a government, individual or entity that is the subject of OFAC-administered sanctions or is located or resident in, or organized under the laws of, a Prohibited Country; and
(c) (i) Each subsidiary that is a non-U.S. person does not engage in any business with or in Cuba or with blocked Cuban nationals that would violate OFAC-administered sanctions against Cuba; and (ii) the Company and each such subsidiary that is a U.S. person is in compliance, in all material respects, with OFAC-administered sanctions programs.
3. Representations and Warranties of the Selling Shareholders. Each Selling Shareholder represents and warrants to and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and the performance by such Selling Shareholder of its obligations under, this Agreement, the Custody Agreement signed by such Selling Shareholder and The Bank of New York, as Custodian, relating to the deposit of the Shares to be sold by such Selling Shareholder (the "CUSTODY AGREEMENT") and the Power of Attorney appointing certain individuals as such Selling Shareholder's attorneys-in-fact to the extent set forth therein, relating to the transactions contemplated hereby and by the Registration Statement (the "POWER OF ATTORNEY") will not contravene any provision of (i) the certificate of incorporation, by-laws or similar organizational documents of such Selling
Shareholder, as applicable, (ii) any agreement or other instrument binding upon such Selling Shareholder or (iii) any applicable law, judgment, order or decree of any governmental body, agency or court having jurisdiction over such Selling Shareholder, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by such Selling Shareholder of its obligations under this Agreement or the Custody Agreement or Power of Attorney of such Selling Shareholder, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares and except, in the case of clauses (ii) and (iii) above, as would not have a material adverse effect on such Selling Shareholder.
(c) Such Selling Shareholder has, and on the Closing Date will have, valid title to, or a valid "security entitlement" within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares to be sold by such Selling Shareholder free and clear of all security interests, claims, liens, equities or other encumbrances and the legal right and power, and all authorization and approval required by law, to enter into this Agreement, the Custody Agreement and the Power of Attorney and to sell, transfer and deliver the Shares to be sold by such Selling Shareholder or a security entitlement in respect of such Shares.
(d) The Custody Agreement and the Power of Attorney have been duly authorized, executed and delivered by such Selling Shareholder and are valid and binding agreements of such Selling Shareholder.
(e) Upon payment for the Shares to be sold by such Selling Shareholder
pursuant to this Agreement, delivery of such Shares, as directed by the
Underwriters, to Cede & Co. ("CEDE") or such other nominee as may be designated
by the Depositary Trust Company ("DTC"), registration of such Shares in the name
of Cede or such other nominee and the crediting of such Shares on the books of
DTC to securities accounts of the Underwriters (assuming that neither DTC nor
any such Underwriter has notice of any adverse claim (within the meaning of
Section 8-105 of the New York Uniform Commercial Code (the "UCC")) to such
Shares), (A) DTC shall be a "protected purchaser" of such Shares within the
meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the
Underwriters will acquire a valid security entitlement in respect of such Shares
and (C) no action based on any "adverse claim", within the meaning of Section
8-102 of the UCC, to such Shares may be asserted against the Underwriters with
respect to such security entitlement; for purposes of this representation, such
Selling Shareholder may assume that when such payment, delivery and crediting
occur, (x) such Shares will have been registered in the name of Cede or another
nominee designated by DTC, in each case on the Company's share registry in
accordance with its articles of incorporation, bylaws and applicable law, (y)
DTC will be registered as a "clearing corporation" within the meaning of Section
8-102 of the UCC and (z) appropriate entries to the accounts of the several
Underwriters on the records of DTC will have been made pursuant to the UCC.
(f) Such Selling Shareholder has no reason to believe that the representations and warranties of the Company contained in Section 1 are not true and correct, is familiar with the Registration Statement and Prospectus and has no knowledge of any material fact, condition or
information not disclosed in the Prospectus that has had, or may have, a material adverse effect on the Company and its subsidiaries, taken as a whole. Such Selling Shareholder is not prompted by any information concerning the Company or its subsidiaries which is not set forth in the Prospectus to sell its Shares pursuant to this Agreement.
(g) (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that the representations and warranties set forth in this paragraph 3(g) are limited to statements or omissions made in reliance upon information relating to such Selling Shareholder expressly for use in the Registration Statement, the Prospectus or any amendments or supplements thereto.
4. Agreements to Sell and Purchase. The Selling Shareholders hereby agree to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Selling Shareholders at $ ______ a share (the "PURCHASE PRICE") the number of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the number of Firm Shares to be sold by the Selling Shareholders as the number of Firm Shares set forth in Schedule II hereto opposite the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to _______________ Additional
Shares at the Purchase Price. You may exercise this right, on behalf of the
Underwriters, in whole or from time to time in part by giving written notice not
later than 30 days after the date of this Agreement. Any exercise notice shall
specify the number of Additional Shares to be purchased by the Underwriters and
the date on which such shares are to be purchased. Each purchase date must be at
least one business day after the written notice is given and may not be earlier
than the closing date for the Firm Shares nor later than ten business days after
the date of such notice. Additional Shares may be purchased as provided in
Section 6 hereof solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. On each day, if any, that
Additional Shares are to be purchased (an "OPTION CLOSING DATE"), each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased on such Option Closing Date as the number of
Firm Shares set forth in Schedule II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. on behalf of the Underwriters, it will not, during the period ending 180 days after the date of the Prospectus, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder, (b) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing or has been described in the Registration Statement or upon
the grant of an option and/or issuance by the Company of shares of Common Stock
upon the exercise of an option to be issued from time to time by the Company
under the 2004 Stock Incentive Plan, as may be amended from time to time, or a
successor plan or (c) transactions by a Selling Shareholder relating to shares
of Common Stock or other securities acquired in open market transactions after
the completion of the offering of the Shares, provided that no filing under
Section 16(a) of the Exchange Act, shall be required or shall be voluntarily
made in connection with subsequent sales of Common Stock or other securities
acquired in such open market transactions, (d) transfers by a Selling
Shareholder of shares of Common Stock or any security convertible into Common
Stock as a bona fide gift, (e) transfers by a Selling Shareholder to an
immediate family member or to a trust for the direct or indirect benefit of the
Selling Shareholder or an immediate family member, or (f) distributions by a
Selling Shareholder of shares of Common Stock or any security convertible into
Common Stock to limited partners or shareholders of the Selling Shareholder;
provided that in the case of any transfer or distribution pursuant to clause
(d), (e) or (f), (i) each donee, distributee or transferee shall enter into a
written agreement accepting the restrictions set forth in the preceding
paragraph and this paragraph as if it were a Selling Shareholder and (ii) no
filing under Section 16(a) of the Exchange Act, reporting a reduction in
beneficial ownership of shares of Common Stock, shall be required or shall be
voluntarily made in respect of the transfer or distribution during the 180-day
restricted period. For purposes of this Agreement, "immediate family" shall mean
any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, each Selling Shareholder agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated and J.P. Morgan Securities
Inc. on behalf of the Underwriters, it will not, during the period ending 180
days after the date of the Prospectus, make any demand for, or exercise any
right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock. Each
Selling Shareholder consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of any Shares held
by such Selling Shareholder except in compliance with the foregoing
restrictions. Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restrictions imposed by this agreement shall continue to apply until the expiration of the 18-day period beginning on the date of issuance of the earnings release or the date of occurrence of the material news or material event. The Company shall promptly notify Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. of any earnings release, news or event that may give rise to an extension of the initial 180-day restricted period.
Each of the Company and the Selling Shareholders acknowledges that in connection with the offering of the Shares and the discussions and negotiations relating to the Shares set forth in this Agreement: (a) the Underwriters have acted at arm's length, are not agents of or advisors to, and owe no fiduciary duties to, the Company, the Selling Shareholders or any other person, (b) the Underwriters owe the Company and the Selling Shareholders only those contractual duties and obligations set forth in this Agreement and (c) the Underwriters may have interests that differ from those of the Company and the Selling Shareholders. Each of the Company and the Selling Shareholders waive to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares.
5. Terms of Public Offering. The Sellers are advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable. The Sellers are further advised by you that the Shares are to be offered directly to the public initially at $_____________ a share (the "PUBLIC OFFERING PRICE") and part of the Shares may be offered to certain dealers selected by you at a price that represents a concession not in excess of $______ a share under the Public Offering Price.
6. Payment and Delivery. Payment for the Firm Shares shall be made to the Custodian in Federal or other funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on August __, 2005, or at such other time on the same or at such other time on the same or such other date, not later than August __, 2005, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 4 or on such other date, in any event not later than __________ __, 2005, as shall be designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the
Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to you on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price therefor.
7. Conditions to the Underwriters' Obligations. The obligations of the Sellers to sell the Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that the Registration Statement shall have become effective not later than __ (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the securities of the Company or any of its subsidiaries by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in Section 7(a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of DLA Piper Rudnick Gray Cary US LLP, outside U.S. counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit B.
(d) The Underwriters shall have received on the Closing Date an opinion of Cliffe Dekker, Inc., outside South African counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit C.
(e) The Underwriters shall have received on the Closing Date an opinion of Adams & Adams, outside South African patent counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit D.
(f) The Underwriters shall have received on the Closing Date an opinion of DLA Piper Rudnick Gray Cary US LLP, outside U.S. patent counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit E.
(g) The Underwriters shall have received on the Closing Date an opinion of DLA Piper Rudnick Gray Cary US LLP, counsel for the Selling Shareholders, dated the Closing Date, to the effect set forth in Exhibit F.
(h) The Underwriters shall have received on the Closing Date an opinion of _________, counsel for certain of the Selling Shareholders, dated the Closing Date, to the effect set forth in Exhibit G.
(i) The Underwriters shall have received on the Closing Date an opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the Closing Date, to the effect set forth in Exhibit H.
The opinions of DLA Piper Rudnick Gray Cary US LLP, Cliffe Dekker, Inc. and Adams & Adams described in Sections 7(c), 7(d), 7(e) and 7(f) above (and any opinions of counsel for any Selling Shareholder referred to in the immediately preceding paragraph) shall be rendered to the Underwriters at the request of the Company or one or more of the Selling Shareholders, as the case may be, and shall so state therein.
(j) The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from Deloitte & Touche (South Africa), independent registered public accounting firm, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus; provided that the letter delivered on the Closing Date shall use a "cut-off date" not earlier than the date hereof.
(k) The Underwriters shall have received, on the date hereof, a letter dated the date hereof in form and substance satisfactory to the Underwriters, from PKF (JhB) Inc., independent
auditors, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus.
(l) The "lock-up" agreements, each substantially in the form of Exhibit A hereto, between the Underwriters and certain shareholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to the Underwriters on or before the date hereof, shall be in full force and effect on the Closing Date.
(m) The Underwriters shall have received on, or prior to, the Closing Date a properly completed and executed United States Treasury Department Form W-8IMY or other applicable form or statement specified by Treasury Department regulations from First National Asset Management and Trust Company, as trustee of The New Aplitec Participation Trust.
The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to (i) the delivery to the Underwriters on the applicable Option Closing Date of (i) such documents as the Underwriters may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of the Additional Shares and (ii) the delivery on, or prior to, the applicable Option Closing Date a properly completed and executed United States Treasury Department Form W-9 or other applicable form or statement specified by Treasury Department regulations from the Company.
8. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows:
(a) To furnish to you, without charge, 6 signed copies of the Registration Statement (including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and to furnish to the Underwriters in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement or as soon thereafter as practicable and during the period mentioned in Section 8(c) below, as many copies of the Prospectus and any supplements and amendments thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request.
(e) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
9. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, (a) the Company
agrees to pay or cause to be paid all expenses incident to the performance of
their obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel, the Company's accountants and counsel for
the Selling Shareholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of the
Shares for offer and sale under state securities laws as provided in Section
8(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky memorandum, (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., provided, that the fees and
disbursements of such counsel in clauses (iii) and (iv) shall not exceed
$25,000, (v) all costs and expenses incident to listing the Shares on the Nasdaq
National Market, (vi) the cost of printing certificates representing the Shares,
(vii) the costs and charges of any transfer agent, registrar or depositary,
(viii) the costs and expenses of the Company relating to investor presentations
on any "road show" undertaken in connection with the marketing of the offering
of the Shares, including, without limitation, expenses associated with the
production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this section and (b) except as provided in clause (a) above, each Selling Shareholder will bear its own costs and expenses, including underwriting discounts and commissions applicable to the Shares being sold by such Selling Shareholder and any transfer or other taxes payable on the transfer and delivery of such Shares to the Underwriters. It is understood, however, that except as provided in this section, Section 10 entitled "Indemnity and Contribution" and the last paragraph of Section 12 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.
The provisions of this section shall not supersede or otherwise affect any agreement that the Sellers may otherwise have for the allocation of such expenses among themselves.
10. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
or any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(b) Each Selling Shareholder agrees, severally and not jointly, to indemnify and hold harmless each Underwriter and, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus or any amendment or supplement thereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information
relating to such Selling Shareholder furnished in writing by or on behalf of such Selling Shareholder expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Selling Shareholders, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company or any Selling Shareholder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through you expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 10(a), 10(b) or 10(c), such person (the "INDEMNIFIED PARTY") shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, (ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section and (iii) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons and affiliates of any Underwriters, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. In the case of any such separate firm for the Selling Shareholders and such control persons of any Selling Shareholders, such firm shall be designated in writing by the persons named as attorneys-in-fact for the Selling Shareholders under the Powers of Attorney. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 10(a), 10(b) or 10(c) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 10(e)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 10(e)(i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Sellers on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by each Seller and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the Sellers on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Sellers or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Section 10 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 10 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 10, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 10 and the representations, warranties and other statements of the Company and the Selling Shareholders contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter, any Selling Shareholder or any person controlling any Selling Shareholder, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States or
South Africa shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State or South
African authorities or (v) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets, currency exchange rates
or controls or any calamity or crisis that, in the judgment of Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc., is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the judgment of Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc., impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
Option Closing Date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase the Additional Shares to be
sold on such Option Closing Date or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of any Seller to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason any Seller shall be unable to perform its obligations under this Agreement, such Seller(s) will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.
13. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
16. Notices. All communications hereunder shall be in writing and
effective only upon receipt and if to the Underwriters shall be delivered,
mailed or sent to you at Morgan Stanley & Co. Incorporated, 1585 Broadway, New
York, New York 10036, Attention: Equity Capital Markets Syndicate Desk and J.P.
Morgan Securities Inc., 277 Park Avenue, 9th floor, New York 10172, Attention:
Equity Syndicate Desk; if to the Company shall be delivered, mailed or sent to
Net 1 UEPS Technologies, Inc., President Place, 4th floor, Cnr. Jan Smuts Avenue
and Bolton Road, Rosebank, Johannesburg, South Africa, and if to the Selling
Shareholders shall be delivered, mailed or sent to the address set forth in
Schedule I.
[Remainder of page intentionally left blank]
Very truly yours,
NET 1 UEPS TECHNOLOGIES, INC.
Title:
The Selling Shareholders
named in Schedule I hereto,
acting severally
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co. Incorporated
Acting severally on behalf of themselves and
the several Underwriters named in
Schedule II hereto.
By: Morgan Stanley & Co. Incorporated
SCHEDULE I
Number of Firm Selling Shareholder Address Shares To Be Sold ------------------- ------- ----------------- [NAMES OF SELLING SHAREHOLDERS]............................. ----------- Total.................................................. =========== |
SCHEDULE II
Number of Firm Shares Underwriter To Be Purchased ----------- --------------------- Morgan Stanley & Co. Incorporated................................... J.P. Morgan Securities Inc.......................................... Thomas Weisel Partners, LLC......................................... Jefferies & Company, Inc............................................ Robert W. Baird & Co. Incorporated.................................. ------------- Total.......................................................... ============= |
EXHIBIT A
August _____, 2005
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
and
J.P. Morgan Securities Inc.
277 Park Avenue
New York, NY 10172
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated ("MORGAN STANLEY") and J.P. Morgan Securities Inc. ("JPMORGAN") propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Net 1 UEPS Technologies, Inc., a Florida corporation (the "COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the several Underwriters, including Morgan Stanley and JPMorgan (the "UNDERWRITERS"), of ___ shares (the "SHARES") of the common stock, par value $0.001 per Share of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of Morgan Stanley and JPMorgan on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the final prospectus relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) transactions relating to shares of Common Stock or other securities acquired in open market transactions after the completion of the Public Offering, provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") shall be required or shall be voluntarily made in connection with subsequent sales of Common Stock or other securities acquired in such open market transactions, (b) transfers of shares of Common Stock or any security convertible into Common Stock as a bona fide gift, (c) transfers to an immediate family member or to a trust for the direct or indirect benefit of the undersigned or an immediate family member or (d) distributions of shares of Common Stock or any security convertible into Common Stock to limited partners or shareholders of the undersigned; provided that in the case of any transfer or distribution pursuant to clause (b), (c) or (d), (i) each donee, distributee or transferee shall sign and deliver a lock-up letter substantially in the form of this letter and (ii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the restricted period referred to in the foregoing sentence. For purposes of this Agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. In addition, the undersigned agrees that, without the prior written consent of Morgan Stanley and JPMorgan on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the undersigned's shares of Common Stock except in compliance with the foregoing restrictions.
If:
(1) during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period;
the restrictions imposed by this agreement shall continue to apply until the expiration of the 18-day period beginning on the date of issuance of the earnings release or the date of occurrence of the material news or material event.
The undersigned shall not engage in any transaction that may be restricted by this agreement during the 34-day period beginning on the last day of the initial 180-day restricted period unless the undersigned requests and receives prior written confirmation from the Company or Morgan Stanley and JPMorgan that the restrictions imposed by this agreement have expired.
The undersigned understands that the Company and the Underwriters are relying upon this agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.
The undersigned understands that if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Shares to be sold thereunder, the undersigned shall be released from all obligations under this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.
Very truly yours,
EXHIBIT B
FORM OF OPINION OF DLA PIPER RUDNICK GRAY CARY US LLP
1. The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole;
2. The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus;
3. The shares of Common Stock (including the Shares to be sold by the Selling Shareholders) outstanding prior to the issuance of the Shares that may be sold by the Company have been duly authorized and are validly issued, fully paid and non-assessable;
4. The Shares that may be sold by the Company have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights;
5. The Underwriting Agreement has been duly authorized, executed and delivered by the Company;
6. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of (i) the certificate of incorporation or by-laws of the Company, or,
(ii) to the best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries or, (iii) to the best of
such counsel's knowledge, any applicable law, judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under the Underwriting Agreement,
except such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares and except,
in the case of clauses (ii) and (iii) above, as would not have a material adverse effect on the Company and its subsidiaries taken as a whole;
7. The statements relating to legal matters, documents or proceedings included in (A) the Prospectus under the captions "Description of Capital Stock" and (B) the Registration Statement in Items 14 and 15, in each case fairly summarize in all material respects such matters, documents or proceedings;
8. The statements in the Prospectus under the caption "Material U.S. Federal Tax Consequences for Non-U.S. Holders of Common Stock" accurately summarize in all material respects the United States federal income tax laws referred to therein;
9. After due inquiry we do not know of any legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or of any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required;
10. The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended; and
In our opinion, the Registration Statement and the Prospectus appear on their face to be appropriately responsive in all material respects to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder (other than the financial statements and other financial information contained therein as to which we need express no opinion). Further, based upon our participation in the preparation of the Registration Statement, nothing has come to our attention that causes us to believe that, on the effective date of the Registration Statement or the date the Registration Statement was last deemed amended, the Registration Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of its date and on the Closing Date, included or includes any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, other than the financial statements and other financial information contained therein, as to which we need express no opinion).
In rendering the opinion set forth in paragraphs 1 - 10 above, we may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of Florida, the State of New York or the federal laws of the United States, to the extent we deem proper and as specified in our opinion, upon the opinion of other counsel of good standing whom we believe to be reliable and who are satisfactory to counsel for the Underwriters and (B) as to matters of fact, to the extent we deem proper, on certificates of responsible officers of the Company and public officials.
EXHIBIT C
FORM OF OPINION OF CLIFFE DEKKER, INC
Based upon the information provided by the Company, Cliffe Dekker Inc confirms that:
1. Each subsidiary or related entity of the Company set forth in Schedule A hereto and registered in South Africa (each, a "Subsidiary") has been duly incorporated or, in the case of New Aplitec Participation Trust, established as a bewind trust, validly existing under the laws of South Africa and has all requisite corporate or trust power and authority to own, lease and operate its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.
2. All of the issued shares of each South African Subsidiary have been duly and validly authorised and issued, are fully paid up and based upon the information provided by the Company, Cliffe Dekker Inc confirms that such shares are owned by the Company in the percentages indicated in Schedule A, free and clear of all liens, encumbrances, equities or claims, save as set out in Schedule A.
3. The statements made in the Prospectus under the caption "Enforceability of Civil Liabilities", insofar as they purport to constitute summaries of South African legal matters, constitute accurate summaries of such matters.
4. The statements made in the Prospectus under the caption "Risk Factors -
There are risks relating to operating in South Africa that could adversely
affect our business, operating results, cash flows and financial condition",
"Risk Factors - Our ability to operate our wage payment and insurance products
businesses may be limited by existing South African banking and financial
services laws and regulations", "Risk Factors - We may be subject to privacy
laws in South Africa and other jurisdictions in which we operate", "Risk Factors
- You may have difficulty enforcing a U.S. judgment against us, our executive
officers and directors and some of the experts named in this prospectus or
asserting U.S. securities laws claims in South Africa", "Dividend Policy" and
"Government Regulation" and all others with South African legal content, insofar
as they purport to constitute summaries of certain provisions of provincial or
South African law or rules and regulations thereunder, constitute accurate
summaries of such provisions in all material respects.
SCHEDULE A
Net 1 Applied Technologies South Africa Limited (100% A Ordinary Shares) *
Cash Paymaster Services (Pty) Limited (100%) **
Cash Paymaster Services (Eastern Cape) (Pty) Limited (100%)
Cash Paymaster Services (Northern) (Pty) Limited (100%) *
Cash Paymaster Services (KwaZulu Natal) (Pty) Limited (100%) *
Cash Paymaster Services (Northern Cape) (Pty) Limited (100%) *
Cash Paymaster Services (North West) (Pty) Limited (70%) *
Net 1 Finance Holdings (Pty) Limited (100%)
Net 1 Southern Africa (Pty) Limited (100%)
Country-on-a-Card (Pty) Limited (100%)
Net 1 Solutions (Pty) Limited (100%)
Sinqobile Security Services Gauteng (Pty) Ltd (100%)
Siyeza Security Services (Pty) Limited (100%)
Moneyline Financial Services (Pty) Limited (100%)
Permit Group 2 (Pty) Limited (43.16%) - share certificate not yet issued
New World Finance (Pty) Limited (100%)
*The statutory Return of Allotment of Shares for the issue of certain shares has been lodged with the Registrar. Registration is awaited. This does not affect the issue. The issue of certain shares has been ratified by the board of the companies post issue.
**These shares are pledged to Nedbank Limited as security for the R250 000 000 facility granted to Cash Paymaster Services (KwaZulu Natal) (Pty) Limited.
This list does not include all dormant subsidiaries.
EXHIBIT D
FORM OF OPINION OF ADAMS AND ADAMS
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co.
c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 and J.P. Morgan Securities Inc. 277 Park Avenue New York, New York 10172 |
Ladies and Gentlemen:
We have acted as South African patent counsel to Net 1 UEPS Technologies Inc., a Florida corporation (together with its subsidiaries, referred to as the "COMPANY"), in connection with an assessment of its intellectual property matters, including the patents identified in the schedule attached hereto (the "PATENT SCHEDULE"). This opinion is being furnished to you at the request of the Company pursuant to Section 7(e) of the Underwriting Agreement, dated August __, 2005, between you and the Company, relating to the sale of certain registered shares of common stock of the Company (the "UNDERWRITING AGREEMENT").
We have read the Prospectus prepared by the Company in connection with the transactions contemplated by the Underwriting Agreement (the "Prospectus") and in particular we have read the sections referring to the patents, copyrights and trademarks (the "INTELLECTUAL PROPERTY") that the Company has the right to own or possess ("INTELLECTUAL PROPERTY RIGHTS") or that is licensed or held for use by the Company.
Based upon the foregoing, and subject to the information and documents given to us by the Company, we are of the opinion that:
(a) The statements relating to South African, European, Botswanan, Namibian and Swaziland legal matters, documents or proceedings included in the Offering Memorandum under the captions "Risk Factors - Patent competition may adversely affect our products or processes, and limited patent protection, a lack of proprietary protection and the potential to incur costly litigation could be harmful to our operations", "Risk Factors - The copyrights in earlier versions of our UEPS software are jointly owned which may reduce our future revenues", "Risk Factors - Our current license agreement with Visa imposes long-term restrictions on our ability to license rights in our technology and could inhibit our ability to realize additional revenue from these rights in our technology", "Risk Factors - Our license agreement with Visa substantially impacts our ability to defend and enforce our patents licensed to Visa and could substantially inhibit our ability to protect the rights in our technology", and "Business - Intellectual Property" are accurate and complete and in each case fairly summarize such matters, documents or proceedings.
(b) (i) All patents and patent applications, if any, listed in the Patent Schedule are recorded in the name of the Company in the respective patent office indicated in the Patent Schedule and are owned free and clear of all liens, encumbrances, defects or other restrictions, except for those patents and patent applications, if any, identified in the Patent Schedule as licensed to the Company;
(ii) All license agreements granting licences to the Company for patents and patent applications, if any, listed in the Patent Schedule are, or in due course will be, recorded in the name of the Company in the respective patent office indicated in the Patent Schedule in the customary form and manner; and
(iii) All patents and patent applications, if any, listed in the Patent Schedule have been duly maintained, are in full force and effect in the countries indicated in the Patent Schedule, and none of the patents or patent applications, if any, have been adjudged invalid or unenforceable in whole or in part.
(c) (i) To the best of our knowledge there are no on-going infringements by others of the Intellectual Property Rights of the Company, the Company has not received any notice of, and is not aware of, any possible actionable infringement by others of any Intellectual Property Rights of the Company, and to the extent necessary the Company has complied with any applicable laws and regulations which relate to the enforceability of the Intellectual Property Rights;
(ii) The present operation of the business of the Company, as described in the Prospectus, including the development, use and sale of their products, [together with the use of the Company's Intellectual Property,] does not infringe any valid patent or otherwise conflict with, misappropriate or violate the rights of others with respect to Intellectual Property Rights[, subject to possible infringement of copyright owned by Nedcor Bank Limited and Metrolink (Proprietary) Limited,] and the Company is not aware of, and has not received any notices of, any possible infringement or conflict with the rights of others with respect to any Intellectual Property Rights;
(iii) There are no South African, European, Botswanan, Namibian or Swazi legal or governmental proceedings, other than pending trademark applications, relating to Intellectual Property Rights to which the Company is a party or of which any Intellectual Property of the Company is subject and, to the best of our knowledge, no such proceedings are threatened or contemplated by governmental authorities or others; and
(iv) To the best of our knowledge, and without having conducted any searches or other investigation, the Company has not received any notice of, and is not aware of the granting of any Intellectual Property Rights of third parties [(other than the copyright owned by Nedcor Bank Limited and Metrolink (Proprietary) Limited)], or the filing, of any patent applications by third parties, that would have a material adverse effect on the Company.
The above opinions are subject to the following qualifications:
a. We have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or copies, and the authenticity of the originals of such latter documents.
b. We opine in this letter only as to the effect of South African law. We express no opinion with respect to the applicability to or the effect of any of the laws of any other jurisdiction. All statements are made to the best of our knowledge and refer to the actual knowledge of the pertinent facts possessed by the attorney in this firm who has signed this opinion letter.
c. This opinion and advice speaks only as of the date hereof, and we do not have, nor do we assume, any obligation to advise you of any changes in
any facts or applicable laws after the date hereof which may affect our opinion. We make no other express or implied representations or warranties other than those set forth herein.
This opinion is rendered only to you and is solely for your benefit. Specifically, this opinion is not to be relied upon in support of a defense of patent invalidity, unenforceability or non-infringement. This opinion is not to be quoted in whole or in part, or otherwise referred to (except in the Underwriting Agreement for the Company and its Subsidiaries) nor is it to be filed with any governmental agency (except as required by law), nor to be relied upon by you for any other purpose, or relied upon by any other person, firm or corporation for any purpose, without our prior written consent.
Very truly yours,
EXHIBIT E
FORM OF OPINION OF U.S. PATENT COUNSEL
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co.
c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 and J.P. Morgan Securities Inc. 277 Park Avenue New York, New York 10172 |
Ladies and Gentlemen:
We have acted as United States patent counsel to Net 1 UEPS Technologies
Inc., a Florida corporation (together with its subsidiaries, referred to as the
"COMPANY"), in connection with intellectual property matters, including the
[preparation, filing and prosecution of the patents and patent applications, and
the negotiation and drafting of the patent licenses,] identified in the schedule
attached hereto (the "PATENT SCHEDULE"). This opinion is being furnished to you
at the request of the Company pursuant to Section 7(f) of the Underwriting
Agreement, dated August __, 2005, between you and the Company, relating to the
sale of certain registered shares of common stock of the Company (the
"UNDERWRITING AGREEMENT").
We are familiar with the technology used by the Company in its business that is the subject matter of the Company's Intellectual Property (as defined below) that we handle. We have read the Prospectus prepared by the Company in connection with the transactions contemplated by the Underwriting Agreement (the "PROSPECTUS") and in particular we have read the sections referring to the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems, procedures or materials), trademarks, service marks and trade names (the "INTELLECTUAL PROPERTY") that the Company has the right to own
or possess ("INTELLECTUAL PROPERTY RIGHTS") or that is licensed or held for use by the Company.
Any capitalized term used in this letter and not otherwise defined in this letter shall have the same meaning as that given to such term in the Underwriting Agreement.
Based upon the foregoing, we are of the opinion that:
(a) The statements relating to United States legal matters, documents or
proceedings included in the Offering Memorandum under the captions "Risk Factors
- Patent competition may adversely affect our products or processes, and limited
patent protection and a lack of proprietary protection and the potential to
incur costly litigation could be harmful to our operations", "Risk Factors - The
copyrights in earlier versions of our UEPS software are jointly owned which may
reduce our future revenues", "Risk Factors - Our current license agreement with
Visa imposes long-term restrictions on our ability to license rights in our
technology and could inhibit our ability to realize additional revenue from
these rights in our technology", "Risk Factors - Our license agreement with Visa
substantially impacts our ability to defend and enforce our patents licensed to
Visa and could substantially inhibit our ability to protect the rights in our
technology", "Business - Our Technology - System Components - FTS Patent" and
"Business - Intellectual Property" are, to the best of our knowledge, accurate
and complete in all material respects and in each case fairly summarize such
matters, documents or proceedings.
(b) (i) U.S. Patent No. RE36,788, a reissue of U.S. Patent No. 5,171,416, is recorded in the name of Net 1 Holdings S.a.r.l. in the U.S. Patent and Trademark Office. To the best of our knowledge, U.S. Patent No. RE36,788 is owned free and clear of all liens, encumbrances or defects, except for the rights and restrictions included in the following agreements:
(A) The Technology License Agreement by and between Net 1 Holdings S.a.r.l. and Net 1 Investment Holdings (Pty) Limited and Visa International Service Association, dated July 31, 1997; and
(B) The Patent and Technology Agreement by and between Net 1 Holdings S.a.r.l. and Net 1 Applied Technology Holdings Limited and Nedcor Bank Limited, dated July 29, 1997.
(ii) To the best of our knowledge, U.S. Patent No. RE36,788 has been duly maintained, is in full force and effect, and has not been adjudged invalid or unenforceable in whole or in part.
(c) (i) To the best of our knowledge, and based on a certificate provided to us from a duly authorized officer of the Company, there are no on-going infringements by others of the Intellectual Property Rights of the Company and the Company has not received any written notice of, and is not otherwise aware of, any likely actionable infringement by others of any Intellectual Property Rights of the Company;
(ii) To the best of our knowledge, and based on a certificate provided to us from a duly authorized officer of the Company, the operation and business of the Company, as described in the Prospectus, including the development, use and sale of their products, together with the use of the Company's Intellectual Property, does not infringe any valid patent or otherwise conflict with, misappropriate or violate the rights of others with respect to Intellectual Property Rights and the Company has not received any written notices of, and is not otherwise aware of, any likely infringement or conflict with the rights of others with respect to any Intellectual Property Rights;
(iii) To the best of our knowledge, and based on a certificate provided to us from a duly authorized officer of the Company, there are no United States legal or governmental proceedings relating to Intellectual Property Rights to which the Company is a party or of which any Intellectual Property of the Company is subject and no such proceedings are threatened or contemplated by governmental authorities or others; and
(iv) To the best of our knowledge, and based on a certificate provided to us from a duly authorized officer of the Company, the Company has not received any notice of, and is not aware of, the granting of any Intellectual Property Rights to third parties, or the filing of any patent applications by third parties in each case that would have a material adverse effect on the Company, except as disclosed in the Prospectus with respect to the following agreements:
(A) The Technology License Agreement by and between Net 1 Holdings S.a.r.l. and Net 1 Investment Holdings (Pty)
Limited and Visa International Service Association, dated July 31, 1997;
(B) The Agreement between Nedcor Bank Limited and Net 1 Products (Proprietary) Limited, dated July 29, 1997;
(C) The Patent and Technology Agreement by and between Net 1 Holdings S.a.r.l. and Net 1 Applied Technology Holdings Limited and Nedcor Bank Limited, dated July 11, 2000; and
(D) The Patent and Technology Agreement by and between Net 1 Investment Holdings (Proprietary) Limited and Net 1 Applied Technology Holdings Limited and Nedcor Bank Limited, dated July 11, 2000.
Very truly yours,
EXHIBIT F
FORM OF SELLING SHAREHOLDER OPINION OF
DLA PIPER RUDNICK GRAY CARY US LLP
1. Upon payment for the Shares to be sold (i) by the Selling Shareholders pursuant to this Agreement and (ii) on behalf of certain holders of units in The New Aplitec Participation Trust pursuant to the irrevocable election forms previously executed by such holders, delivery of such Shares, as directed by the Underwriters, to Cede or such other nominee as may be designated by DTC, registration of such Shares in the name of Cede or such other nominee and the crediting of such Shares on the books of DTC to securities accounts of the Underwriters (assuming that neither DTC nor any such Underwriter has notice of any adverse claim within the meaning of Section 8-105 of the UCC to such Shares), (A) DTC shall be a "protected purchaser" of such Shares within the meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid security entitlement in respect of such Shares and (C) no action based on any "adverse claim" (within the meaning of Section 8-102 of the UCC) to such Shares may be asserted against the Underwriters with respect to such security entitlement; in giving this opinion, counsel for the Selling Shareholders may assume that when such payment, delivery and crediting occur, (x) such Shares will have been registered in the name of Cede or another nominee designated by DTC, in each case on the Company's share registry in accordance with its articles of incorporation, bylaws and applicable law, (y) DTC will be registered as a "clearing corporation" within the meaning of Section 8-102 of the UCC and (z) appropriate entries to the accounts of the several Underwriters on the records of DTC will have been made pursuant to the UCC.
EXHIBIT G
FORM OF SELLING SHAREHOLDER OPINION OF COUNSEL OF
JURISDICTION OF INCORPORATION
1. Each of the Selling Shareholders has the legal right and power, and all authorization and approval required by law, to enter into this Agreement and the Custody Agreement and Power of Attorney of such Selling Shareholder and to sell, transfer and deliver the Shares to be sold by such Selling Shareholder or a security entitlement in respect of such shares.
2. The Underwriting Agreement has been duly authorized, executed and delivered by or on behalf of each of the Selling Shareholders.
3. The execution and delivery by each Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, the
Underwriting Agreement and the Custody Agreement and Powers of Attorney of such
Selling Shareholder will not contravene any provision of (i) the certificate of
incorporation, by-laws or similar organizational documents of such Selling
Shareholder, as applicable, or, (ii) to the best of such counsel's knowledge,
any agreement or other instrument binding upon such Selling Shareholder or,
(iii) to the best of such counsel's knowledge, any applicable law, judgment,
order or decree of any governmental body, agency or court having jurisdiction
over such Selling Shareholder, and, to such Counsel's knowledge, no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling Shareholder of
its obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Shareholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with offer and
sale of the Shares and except, in the case of clauses (ii) and (iii) above, as
would not have a material adverse effect of such Selling Shareholder.
4. The Custody Agreement and the Power of Attorney of each Selling Shareholder have been duly authorized, executed and delivered by such Selling Shareholder and are valid and binding agreements of such Selling Shareholder.
EXHIBIT H
FORM OF OPINION OF DAVIS POLK & WARDWELL
______, 2005
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Thomas Weisel Partners, LLC
Jefferies & Company, Inc.
Robert W. Baird & Co. Incorporated
c/o
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
and
J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
We have acted as counsel for you and the other several underwriters (the "Underwriters") named in Schedule II to the Underwriting Agreement dated August _____, 2005 (the "Underwriting Agreement") with Net 1 UEPS Technologies, Inc., a Florida corporation (the "Company"), under which you and such other Underwriters have severally agreed to purchase from certain shareholders of the Company named in Schedule I to the Underwriting Agreement an aggregate of _________ shares (the "Firm Shares") of common stock of the Company, par value $0.001 per share ("Common Stock"). In addition, the Underwriters have an option to purchase an additional _______ shares of Common Stock from the Company, par value $0.001 per share (the "Additional Shares" and together with the Firm Shares, the "Shares").
We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary or advisable for the purpose of rendering this opinion.
We have also participated in the preparation of the Company's registration statement on Form S-1 (File No. 333-125273) and Amendments _______ thereto filed with the Securities and Exchange Commission (the "Commission") pursuant
to the provisions of the Securities Act of 1933, as amended (the "Act"), relating to the Shares. In addition, we have been advised by the staff of the Commission that the registration statement as so amended was declared effective under the Act on August __, 2005. The registration statement as amended at the time it was declared effective, including the information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as the "Registration Statement", and the related prospectus in the form first used to confirm sales of the Shares is hereinafter referred to as the "Prospectus."
We have assumed the conformity of the documents filed with the Commission via the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"), except for required EDGAR formatting changes, to physical copies of the documents delivered to the Underwriters and submitted for our examination.
We have considered the statements included in the Prospectus under the captions "Underwriters" insofar as they purport to summarize certain provisions of the Underwriting Agreement. In our opinion, such statements fairly summarize these provisions in all material respects.
We have not ourselves checked the accuracy, completeness or fairness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or the Prospectus. We have generally reviewed and discussed with your representatives and with certain officers and employees of, and counsel and independent public accountants for, the Company the information furnished, whether or not subject to our check and verification. On the basis of such consideration, review and discussion, but without independent check or verification except as stated above, (i) in our opinion, the Registration Statement and the Prospectus appear on their face to be appropriately responsive in all material respects to the requirements of the Act and the applicable rules and regulations of the Commission thereunder, and (ii) nothing has come to our attention that causes us to believe that (a) the Registration Statement or the prospectus included therein at the time the Registration Statement became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (b) the Prospectus as of its date or as of the date hereof contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In expressing the foregoing opinion and belief, we have not been called to pass upon, and we express no opinion or belief as to, the financial statements or financial schedules or other financial or statistical data included in the Registration Statement or the Prospectus.
We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States of America.
This opinion is rendered solely to you and the other several Underwriters in connection with the Underwriting Agreement. This opinion may not be relied upon by you for any other purpose or relied upon by any other person (including any person acquiring Shares from the several Underwriters) or furnished to any other person without our prior written consent.
Very truly yours,
Exhibit 5.1
DLA PIPER RUDNICK GRAY CARY US LLP
1251 Avenue of the Americas
New York, New York 10020-1104
T 212.835.6000
F 212.835.6001
W www.dlapiper.com
July 18, 2005
Net 1 UEPS Technologies, Inc.
President Place, 4th Floor
Cnr. Jan Smuts Avenue and Bolton Road
Rosebank, Johannesburg, South Africa
Tel: (2711) 343-8000
Fax: (2711) 880-7080
Re: Net 1 UEPS Technologies, Inc. Registration Statement on Form S-1 (Reg. No. 333-125273)
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1, Registration No. 333-125273, as amended (the "Registration Statement"), of Net 1 UEPS Technologies Inc., a Florida Corporation (the "Company"), filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933 (the "Securities Act"), in connection with the public offering by the Company and certain shareholders of the Company (the "Selling Shareholders") of shares (including shares that may be sold upon exercise of the underwriters' over-allotment option) (the "Shares") of the Company's common stock, par value $0.001 per share, under the Registration Statement.
We have examined the originals, or photostatic or certified copies, of such records of the Company and certificates of public officials and such other documents as we have deemed relevant and necessary as the basis for the opinions set forth below. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. In rendering the opinion set forth below, we have relied as to factual matters upon assurances of certain officers of the Company, which factual matters have not been independently verified by us.
Based upon the foregoing examination and in reliance thereon, and subject to the assumptions stated and in reliance on statements of fact contained in the documents that we have examined, we are of the opinion that the Shares to be sold by the Company, when issued against payment therefor, will be and that the Shares to be sold by the Selling Shareholders have been or, when issued upon the exercise of options against payment therefor or the conversion of the
special convertible preferred stock in accordance with the terms thereof, will be validly issued, fully paid and non-assessable.
We render no opinion herein as to matters involving the laws of any jurisdiction other than the Florida Business Corporation Act. This opinion is limited to the effect of the current state of the Florida Business Corporation Act and the facts as they currently exist. In rendering this opinion, we assume no obligation to revise or supplement this opinion should current laws, or the interpretations thereof, be changed.
We consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption "Legal Matters" in the Registration Statement and the prospectus that forms a part thereof, and we further consent to the incorporation of this opinion by reference in a registration statement filed pursuant to Rule 462(b) in connection with the offering covered by the Registration Statement. In giving these consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission.
Yours truly,
/s/ DLA Piper Rudnick Gray Cary US LLP |
Exhibit 10.16
AGREEMENT
between
NEDCOR BANK LIMITED
of 105 West Street, Sandton
and
NET1 PRODUCTS (PROPRIETARY) LIMITED
of 4th Floor North Wing, President Place,
Cnr Jan Smuts Avenue and Bolton Road,
Rosebank, Johannesburg.
WHEREBY THE PARTIES AGREE AS FOLLOWS-
1. INTERPRETATION
1.1. In this agreement, unless otherwise required or indicated by the context, any reference to the singular shall include the plural and vice versa, any reference to a gender shall include the other genders, any reference to a natural person shall include juristic persons and vice versa, and the following terms shall have the meanings assigned to them hereunder, namely-
1.1.1. "ABSA" means ABSA Bank Limited together with all its wholly-owned subsidiaries;
1.1.2. "assignment date" means 8 February 1996, being the date with effect from which Net1 assigned the patent to Messrs SCP Belamant and AP Mansvelt and they in turn assigned the patent to Holdings;
1.1.3. "bank" means a bank as defined in the Banks Act 94 of 1990, as amended;
1.1.4. "copyrighted works" means the UEPS (as it was at the effective date) consisting of programmes and programme modules written for smart cards
and terminals; details of such programmes and programme modules which provide functions as listed in Appendix 1 hereto;
1.1.5. "copyrighted products" means the copyrighted works and the Megalink System and all works embodied therein as at the effective date;
1.1.6. "effective date" means, notwithstanding the date of signature of this agreement, 24 September 1992;
1.1.7. "FTMs" means Funds Transfer Machines which customers will access with personalised smart cards in order to utilise the UEPS and carry out certain transactions thereon;
1.1.8. "FNB" means First National Bank of South Africa Limited together with all its wholly-owned subsidiaries;
1.1.9. "Holdings" means Net1 Investment Holdings (Pty) Limited (Registration No. 95/03030/07);
1.1.10. "licence" means the licence granted to Nedcor under the patent on the effective date;
1.1.11. "licensed bank" means any bank, other than Nedcor, that is granted a licence under the patent to use the UEPS;
1.1.12. "Megalink System", (previously known as the Metrolink System"), means the switching and settlement system (as it was at the effective date) necessary to operate the UEPS;
1.1.13. "Megalink System documentation" means-
1.1.13.1. the set of documents, printout specifications, file specifications and all manuals which collectively contain a complete description and definition of all operating conditions of the Megalink System;
1.1.13.2. all source code listings of the programmes and programme modules making up the Megalink System (including the most current) being, or to be, used by Nedcor, in the language in which they are written and in such detail as to enable Net1 to operate, maintain and modify the Megalink System;
1.1.13.3. operating manuals and user guides;
1.1.14. "Nedcor" means Nedcor Bank Limited (Registration No. 51/00009/06) and all its subsidiaries of which it is the sole or majority shareholder;
1.1.15. "Net1" means Net1 Products (Proprietary) Limited (Registration No. 89/05779/07);
1.1.16. "Patents Act" means the Patents Act 57 of 1978, as amended;
1.1.17. "patent" means Patent No. 90/7106 together with all patents of addition, if any, granted to Net1 prior to the effective date in respect of additions to, improvements in and/or modifications of the UEPS;
1.1.18. "patentable improvement" means any existing or future addition to, improvement in and/or modification of the UEPS in respect of which the patentee is granted or, upon application under the Patents Act, would probably be granted, a patent of addition or an independent patent;
1.1.19. "patentee" means the patentee from time to time in respect of the patent including persons to whom the patent is assigned;
1.1.20. "POS devices" means Point of Sale devices which will be utilised by retail outlets to, allow customers to transact the purchase and sale of goods or services at such outlets by means of the use of smart cards;
1.1.21. "smart card" means the customer card which when utilised in conjunction with the copyrighted works and the terminals will allow the customer access to the UEPS;
1.1.22. "Standard" means Standard Bank of South Africa Limited together with all its wholly-owned subsidiaries;
1.1.23. "subsidiary" means, save where the term is otherwise restricted in terms of this agreement, a subsidiary as defined in section 1(3) of the Companies Act, 1973;
1.1.24. "system documentation" means-
1.1.24.1. the set of documents, printout specifications, file specifications and all manuals which collectively contain a complete description and definition of all operating conditions of the copyrighted works;
1.1.24.2. all source code listings of the copyrighted works (including the most current) being, or to be, used by Nedcor, in the language in which they are written and in such detail as to enable Nedcor to operate, maintain and modify the copyrighted works;
1.1.24.3. operating manuals and user guides;
1.1.25. "terminals" means FTMs, POS devices and all other terminal devices (if any) which when utilised in conjunction with smart cards will enable customers to utilise the UEPS and carry out certain transactions thereon;
1.1.26. "territory" means the Republic of South Africa (as constituted on 31 May 1961), Namibia, Botswana, Lesotho, Swaziland, Mozambique and Zimbabwe;
1.1.27. "the/this agreement" means this agreement together with all schedules and appendices hereto;
1.1.28. "UEPS" means the Universal Electronic Payment System designed by Net1, as described and detailed in the complete specification to Net1's application for Patent No. 90/7106, together with all patentable improvements as at the effective date, and including functions listed in Appendix 1 hereto.
1.2. The clause headings in this agreement have been inserted for convenience only and shall not be taken into account in its interpretation.
1.3. This agreement shall be governed by and construed and interpreted in accordance with the laws of the Republic of South Africa.
2. INTRODUCTION
2.1. The parties record that:
2.1.1. on and with effect from the effective date and subject to the terms and conditions set out in this agreement, Net 1 granted to Nedcor and Nedcor accepted, a non-exclusive licence under the patent to use the UEPS and all patentable improvements, if any, effected prior to the effective date, within the territory for the full term of the patent;
2.1.2. with effect from the assignment date, Net 1 assigned the patent to SCP Belamant and AP Mansvelt who in turn assigned the patent to Holdings, in both instances subject to the licence (still to be recorded in the patent register) and the terms and conditions upon which the licence was granted to Nedcor, as set out in this agreement.
2.2. Pursuant to the assignments of the patent as recorded in 2.1.2 above, Net1 shall forthwith after signature hereof enter into a written agreement with Nedcor, SCP Belamant, AP Mansvelt and Holdings in terms of which inter alia:
2.2.1. with effect from the assignment date, Net1 shall cede and assign to SCP Belamant and AP Mansvelt all its rights and obligations in terms of and pursuant to this agreement and SCP Belamant and AP Mansvelt shall cede and assign all such rights and obligations to Holdings; and
2.2.2. Net1 shall warrant unto and in favour of Nedcor, that SCP Belamant, AP Mansvelt and Holdings have at all times since the assignment date complied fully with the terms of this agreement and will continue to do so for the full term of the patent.
3. NEDCOR LICENCE
3.1. Net 1, with the assistance of Nedcor to the extent necessary, shall procure that the licence is recorded in the patent register as soon as possible after signature hereof and Nedcor will bear the legal costs of such recordal. Save for these legal costs (estimated at R1000,00), no consideration whatsoever is or shall become payable by Nedcor for either the licence or its use of the UEPS pursuant to the licence.
3.2. Net1 declares and warrants unto and in favour of Nedcor that-
3.2.1. as at the effective date and up to the assignment date, Net1 was the sole patentee of the patent, including all patents of addition (if any) granted in respect of patentable improvements, that the patent was of full force and effect and that Net1 was entitled to grant a licence under the patent to Nedcor to use the UEPS within the territory;
3.2.2. save for the licence granted to Nedcor on the effective date and the licence granted to Megalink (Proprietary) Limited prior to the effective date, which latter licence Net1 warrants shall be terminated as soon as Megalink (Proprietary) Limited requests such termination -
3.2.2.1. Net1 to the best of its knowledge but subject to any agreement(s) or arrangement(s) that may have been concluded on or after the effective date between Nedcor and any one or more of ABSA, FNB and Standard, has not granted to any bank any licence or any option or any other right to acquire any licence under the patent or any other rights whatsoever, to use the UEPS within the territory;
3.2.2.2. none of SCP Belamant, AP Mansvelt and Holdings have granted to any bank any licence or any option or any other right to acquire any licence under the patent or any other rights whatsoever, to use the UEPS within the territory;
3.2.3. save for the assignment of the patent to SCP Belamant and AP Mansvelt and the subsequent assignment to Holdings (both of which assignments were expressly subject to the licence and the terms and conditions upon which the licence was granted, as set out in this agreement), none of Net1, SCP Belamant, AP Mansvelt and Holdings have granted any option or any other right to any third party to acquire all or any of the right, title and interest in and to the patent, or any part thereof;
3.2.4. the patent and all rights thereunder are of full force and effect and Net1 shall use all reasonable endeavours to ensure that the patent and all rights under the patent will remain of full force and effect for the full term of the patent;
3.2.5. Net1 shall, as and when requested by Nedcor, join Nedcor in defending any claim by any third party that the UEPS or Nedcor's use thereof,
infringes any patent, copyright or other intellectual property right(s) of such third party.
4. IMPROVEMENTS ETC
4.1. Net1 shall promptly disclose to Nedcor, prior to any disclosure thereof to any other person, full details of all improvements, additions, enhancements, adaptations and modifications to the UEPS from time to time (hereinafter collectively referred to as "improvements"), whether patentable or otherwise, and, subject to the parties agreeing terms, Nedcor shall be entitled to use such improvements in conjunction with the UEPS within the territory. Net1 shall render reasonable assistance to Nedcor in understanding, evaluating and implementing any such improvements, free of charge.
4.2.
4.2.1. Should Net1 and Nedcor not agree terms for Nedcor's use of any improvements in accordance with 4.1 above, Net1 shall not thereafter agree terms with any other person in respect of any one or more of such improvements, without first offering such improvements to Nedcor in writing upon the same terms that Net1 would be willing to agree with such other person and disclosing to Nedcor the identity of such person.
4.2.2. Should any offer by Net 1 to Nedcor in terms of 4.2.1 above not be accepted in full and in writing within 14 (fourteen) days after receipt thereof, the offer will be deemed to have been declined and, subject to 5.5 below, Net1 may then offer such improvements in writing to such other person as referred to in 4.2.1 above upon the same terms as those offered by Net 1 to Nedcor.
4.2.3. Should an offer by Net 1 pursuant to 4.2.2 above not be accepted in full and in writing within 14 (fourteen) days after the expiry of the 14 (fourteen) day period referred to in 4.2.2 above, such offer shall be deemed to have expired and Net1 shall not thereafter agree terms with any person in respect of the improvements without again following the procedure set out in this clause 4.
4.3. If Net1 is granted an independent patent in respect of any improvement on which the parties agreed terms in accordance with 4.1 above, it shall forthwith grant to Nedcor a non-exclusive licence to use such improvement in conjunction with the UEPS within the territory in accordance with the agreed terms and otherwise mutatis mutandis upon the terms and conditions set out in this agreement.
5. BANK LICENCES
5.1. Net1 shall not-
5.1.1. grant any licence or other rights under the patent to any bank or any subsidiary of any bank, unless nominated in writing by Nedcor, nor in any manner whatsoever, whether directly or indirectly and whether by way of any act or omission on its part, permit or enable any licensee under the patent, including any licensed bank or any licensed subsidiary of any bank, to do so;
5.1.2. offer or supply to any bank or any subsidiary of any bank any system(s) that would compete with or replace the UEPS, without the prior written consent of Nedcor.
5.2. If and when requested by Nedcor in writing, Net1 shall grant to each of ABSA, FNB and Standard and to each other bank nominated by Nedcor, a non-exclusive licence under the patent to use the UEPS within the territory for the full term of the patent.
5.3. Unless Nedcor otherwise notifies Net1 in writing-
5.3.1. no consideration whatsoever, other than the legal costs of recording each licence in the patent register, shall be payable by ABSA, FNB or Standard for either its licence pursuant to any request by Nedcor to Net1 in accordance with 5.2 above or the use of the UEPS pursuant to the licence;
5.3.2. save for the terms (if any) upon which ABSA, FNB and Standard would be entitled to use patentable improvements, which terms will be subject to 5.5 below and otherwise as agreed by each of them with Net1, the terms of the licences granted to any or all of ABSA, FNB and Standard shall be the same as those applicable to Nedcor under its licence.
5.4. Subject to 5.5 below, licences granted to banks other than ABSA, FNB and Standard shall be on such terms as may be agreed by Net1 and the bank concerned, provided that no such bank shall be granted a licence upon terms more favourable than those applicable to Nedcor under its licence.
5.5. Save with Nedcor's prior written consent, Net1 shall neither-
5.5.1. permit any bank to use any patentable improvement in conjunction with the UEPS, nor
5.5.2. utilise its expertise and experience in respect of the UEPS for the benefit of any bank to the exclusion of Nedcor, provided that Nedcor shall not unreasonably withhold its consent to such utilisation.
6. FURTHER LICENCES
6.1. Subject to the restrictions imposed on it in terms of this agreement, Net1 shall be entitled to grant licences under the patent to whomsoever it wishes.
6.2. Net1 shall, within 10 (ten) days after granting any licence under the patent, notify Nedcor in writing of the identity of the licensee.
7. INFRINGEMENTS AND BREACH OF LICENCES
7.1. Should any bank infringe the patent or should any licensed bank or licensed subsidiary of any bank, breach the terms of its licence under the patent in any respect other than non-payment of any consideration due to Net1, Nedcor shall be entitled at its cost and in its name, if permissible under the Patents Act, otherwise in the name of Net1, to take whatever action it deems appropriate in respect of such infringement or breach, including court proceedings, and Net1 shall cooperate fully with Nedcor in whatever action it takes. Without limiting the generality thereof, such cooperation shall include Net1-
7.1.1. notifying Nedcor of any such infringement or breach and the details thereof;
7.1.2. furnishing Nedcor with all necessary powers of attorney and resolutions to pursue whatever action it takes; and
7.1.3. affording Nedcor full access to all relevant records and documents for the purpose of whatever action it takes.
7.2. Nedcor hereby indemnifies Net1 against any liability for costs which may be incurred in pursuance of the provisions of 7.1 above.
7.3. Save with the prior written consent of Nedcor, Net1 shall not take any action whatsoever against any licensed bank or licensed subsidiary of any bank, that breaches its licence under the patent, unless such breach is in respect of non-payment of any consideration due to Net1.
7.4. Should any entity, including any bank, infringe the patent, Net1 shall be entitled at its cost to take whatever action it deems appropriate in respect of such infringement, including court proceedings, and, save in respect of any bank in accordance with 7.1 above, Nedcor shall not be entitled to take any action whatsoever in respect of any such infringement without the prior written consent of Net 1.
8. SMART CARDS
Nothing in this agreement shall preclude Net1 from marketing and supplying smart cards and terminals to licensed banks or to their subsidiaries that are licensed under the patent to use the UEPS. In this regard, Net1 records that it is its intention to levy-
8.1. all licensees nominated by Nedcor, other than ABSA, FNB and Standard unless otherwise advised by Nedcor in writing; and
8.2. all licensees nominated by ABSA, FNB and Standard;
with a charge equal to 3,5% (three comma five percent) of the purchase price of each and every smart card purchased by them from suppliers other than Net1.
9. MARKETING
9.1. Net1 acknowledges that Nedcor has made the UEPS available to the South African Breweries Group ("SAB") and intends making it available to PayNet, the medical care industry and buying associations (hereinafter collectively referred to as "the potential UEPS users"), and that, with Nedcor's participation, SAB is currently using the UEPS in its business and, it is anticipated, will continue to do so in the future.
9.2. Net1 undertakes unto and in favour of Nedcor that it will not in any manner whatsoever compete with Nedcor in the marketing and supply of UEPS products and services related thereto, to SAB and the potential UEPS users, nor will Net1 offer or supply to any of SAB and the potential UEPS users any alternative systems that would compete with or replace the UEPS. The aforegoing shall not however preclude Net1 from marketing and supplying smart cards, terminals and other computer hardware to SAB and the potential UEPS users.
9.3. Whenever Net1 markets any system that will require the participation of a bank, eg. any system that provides for or permits settlement through a bank, Net1 shall offer such participation to Nedcor to the exclusion of all other banks, and provided that Nedcor wishes to accept appointment as the participating bank and its proposed response times and pricing in respect of such participation are competitive with those of the other major banks in South Africa, Net1 shall procure that Nedcor is appointed as the participating bank in respect of the system.
9.4. Should Nedcor fail to respond to any offer of participation in respect of any system within a reasonable time after receipt of the offer, the offer shall lapse and Net1 shall be entitled to offer the participation to any other licensed bank.
10. COPYRIGHT
10.1. With effect from the effective date-
10.1.1. Nedcor hereby assigns, transfers and makes over to Net1, which hereby accepts, a 50% (fifty percent) share of the undivided complete copyright in the copyrighted products within the territory; and
10.1.2. Net1 hereby assigns, transfers and makes over to Nedcor, which hereby accepts, a 50% (fifty percent) share of the undivided complete copyright in the copyrighted products in all countries of the world outside the territory;
so that, as from the effective date, Nedcor and Net1 shall jointly own the complete copyright in the copyrighted products in equal undivided shares in all countries of the world.
10.2. Pursuant to 10.1 above and subject to the restrictions stated in this agreement, each of Nedcor and Net1 shall be entitled, at its own cost and without recourse to the other of them in respect of any such costs, and upon such terms and conditions as each of them deems fit and without reference to the other of them-
10.2.1. to reproduce the copyrighted products, or any part thereof, in any manner or form;
10.2.2. to market, sell and generally exploit the copyrighted products, or any part thereof, anywhere in the world as if it was the sole owner thereof, subject however to the express reservation of their joint copyright therein and provided that neither of them shall grant any exclusive rights whatsoever to any third party in respect of the copyrighted products, or any part thereof;
10.2.3. to grant non-exclusive licenses to third parties to use the copyrighted products, or any part thereof, anywhere in the world;
10.2.4. to register (insofar as it is capable of registration) their joint ownership of the copyright in the copyrighted products anywhere in the world, provided that neither of them shall effect any such registration in any manner which adversely affects or otherwise detracts from their joint ownership of the copyright therein;
10.2.5. to effect improvements, modifications, adaptations, enhancements and additions to the copyrighted products; and
10.2.6. to exercise and enforce all rights and claims against third parties arising out of any infringements of the copyright in the copyrighted products as though it were the sole owner of the copyright. For this purpose, each of Nedcor and Net1 shall be entitled to exercise and enforce all such rights and claims in its own name and, where necessary, in the name of the other, provided that notwithstanding anything to the contrary herein contained, each of Nedcor and Net1 hereby indemnifies the other against all and any costs (including attorney and client costs) which may be incurred by or awarded against the other as a consequence of the exercise and enforcement of such rights. If either party sues in the name of the other, the other party shall be entitled to require the party suing in its name to give reasonable security for the payment of such costs prior to it taking any steps to exercise and enforce such rights and claims. Each of Nedcor and Net1 shall render reasonable assistance to the other to enable it to exercise its rights and enforce the claims contemplated by this clause 10.2.6.
10.3. Save with the prior written consent of the other of them, which consent shall not be unreasonably withheld, neither Nedcor nor Net1 shall be entitled to assign its share of the copyright in the copyrighted products, or any portion of its share, to any third party or, save as provided in 10.2 above, to otherwise exploit or deal with the copyrighted products, or the rights of copyright therein, in any manner whatsoever.
10.4. Notwithstanding that the copyright in the copyrighted products will be jointly owned by Nedcor and Net1, each of them shall be entitled to retain as its sole and absolute property, all income and other monies derived by it from the exercise of its rights in terms of 10.2 above.
10.5. Each of Nedcor and Net1 hereby warrants unto and in favour of the other of them, that it has not prior to the signature hereof-
10.5.1. assigned or purported to assign the copyright in the copyrighted products, or any share thereof, to any third party, or
10.5.2. granted or purported to grant any exclusive rights in respect of the copyrighted products, or the rights of copyright therein, to any third party.
10.6. Nedcor and Net1 each hereby indemnifies the other of them against any claims resulting from or arising out of the exercise of their respective rights in terms of this clause 10. and their respective dealings with the copyrighted products and the copyright therein, including, without limiting the generality of the aforegoing-
10.6.1. claims for infringement of any third party's intellectual property rights, including copyright; and
10.6.2. claims for consequential or incidental damages.
10.7. Should either Nedcor or Net1 (hereinafter referred to as "the defaulting party") breach any term or condition of 10.3 above in any manner whatsoever, such breach will be deemed to be an infringement of the other party's rights of copyright in the copyrighted products, and, without prejudice to whatever other rights and remedies it may have against the defaulting party in terms of this agreement and in law, such other party shall be entitled to exercise and enforce against the defaulting party all its rights and claims arising out of or resulting from such infringement, as if such other party were the sole owner of the copyright in the copyrighted products and the defaulting party had no rights of copyright therein.
11. CONFIDENTIAL INFORMATION
11.1. Neither party shall at any time divulge or disclose to any third party any information concerning the affairs of the other party which may be communicated to it or which otherwise comes into its possession, unless such information becomes publicly available through no fault of such party.
11.2. Neither party shall use, exploit or divulge or disclose to any third party any business systems or methods, proprietary systems or application programs of the other party of which it may gain knowledge while working with the other party or in the course of performing its obligations in terms of this agreement, except with the prior written consent of the other party.
11.3. This clause is severable from the rest of this agreement and shall remain valid and binding on the parties notwithstanding any termination of this agreement.
12. BREACH
12.1. Should Net1 at any time in contravention of 5.1 above, grant any licence or other rights under the patent to any bank or any subsidiary of any bank or should any licensee under the patent do so pursuant to any failure of Net1 to comply with its obligations in terms of 5.1.1 above, then and in such event and without prejudice to whatever other claims Nedcor may have against Net1 as a result of or arising out of any such breach, including any claim for damages, Net1 shall, on written demand from Nedcor and free of any consideration, cede and assign to Nedcor in writing all its right, title and interest in and to-
12.1.1. each and every agreement in terms of which Net1 has granted any licence(s) and/or other rights under the patent to any bank or any subsidiary of any bank; and
12.1.2. all claims that Net1 may have from time to time should any licensed bank(s) acquire smart cards from persons other than Net1;
and deliver to Nedcor all the agreements referred to in 12.1, above and Net1 shall not thereafter grant or attempt to grant any licence or other rights under the patent to any bank or any subsidiary of any bank, save with the written consent of Nedcor which consent may be withheld by Nedcor in its absolute discretion.
12.2. Subject to the provisions of 12.1 above, should either party breach any term of this agreement and fail to remedy such breach within 30 (thirty) days, or such longer period as may be reasonable in the circumstances, of receipt of written notice calling upon it to do so, the other party shall be entitled to recover from the party in breach such damages as it may suffer or to claim such other relief as it may in law be entitled to, as a result of or arising out of any such breach, provided that neither party shall be entitled to terminate or cancel this agreement by reason of any breach thereof.
13. ARBITRATION
13.1. Any dispute between the parties relating to any matter arising out of this agreement or the interpretation thereof, including any dispute as to the respective rights and obligations of the parties in terms of this agreement or arising out of any breach of this agreement, and the appropriate relief in the event of any breach of this agreement, shall be submitted to and decided by arbitration, and the arbitrator will be entitled to decide the dispute in accordance with what he considers to be just and equitable in the circumstances.
13.2. Either party to this agreement may demand that a dispute be referred to arbitration by giving written notice to that effect to the other party.
13.3. 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.
13.4. The arbitration referred to in 13.1 above shall be held -
13.4.1. at Johannesburg;
13.4.2. in a summary manner, i.e. on the basis that it shall not be necessary to observe or carry out either-
13.4.2.1. the usual formalities or procedures (e.g. there shall not be any pleadings or discovery); or
13.4.2.2. the strict rules of evidence;
13.4.3. immediately and with a view to its being completed within 21 (twenty-one) days after it is demanded;
13.4.4. otherwise (but subject to 13.5.1 and 13.5.2 below) under the provisions of the Arbitration Act No. 42 of 1965 (as amended from time to time).
13.5. The arbitrator shall be, if the matter in dispute is-
13.5.1. primarily an accounting matter, an independent accountant agreed upon by the parties, or, failing agreement within 14 (fourteen) days after delivery of the notice referred to in 13.2 above, an accountant selected and appointed by the President for the time being of the South African Institute of Chartered Accountants at the request of either party;
13.5.2. any other matter, a practising advocate or attorney of Johannesburg of at least 15 (fifteen) years' standing, agreed upon by the parties, or, failing agreement within 14 (fourteen) days after delivery of the notice referred to in 13.2 above, selected and appointed by the Chairman for the time being of the Johannesburg Bar Council at the request of either party.
13.6. Should the parties fail to agree whether the dispute is primarily an accounting matter or some other matter, within 7 (seven) days after delivery of the notice referred to in 13.2 above, the matter shall be deemed not to be primarily an accounting matter.
13.7. The parties irrevocably agree that the decision in arbitration proceedings-
13.7.1. shall be final and binding upon the parties;
13.7.2. shall be carried into effect;
13.7.3. may be made an order of any court of competent jurisdiction at the instance of either party to the dispute.
13.8. This clause is severable from the rest of this agreement and shall remain valid and binding on the parties notwithstanding any termination of this agreement.
14. DOMICILIUM AND NOTICES
14.1. The parties hereby choose domicilium citandi et executandi for all purposes under this agreement at their respective addresses set out in the heading to this agreement.
14.2. Either party may by written notice to the other, change its domicilium
to any other physical address in the Republic of South Africa and its
telefacsimile number as referred to in 14.3.3 below to any other South
African number, provided that any such change shall only take effect
14 (fourteen) days after delivery of such written notice.
14.3. Any notice to be given by either party to the other shall be clearly marked for the attention of the Managing Director and shall be deemed to have been duly delivered-
14.3.1. if addressed to the addressee at its chosen domicilium and posted by pre-paid registered post, on the seventh day after the date of posting thereof, or,
14.3.2. if delivered to the addressee's chosen domicilium by hand during business hours on a business day, on the date of delivery thereof, or,
14.3.3. if sent by telefacsimile to the addressee at its undermentioned telefacsimile number, on the first business day following the date of sending thereof
Nedcor-telefacsimile (011) 881-4188 Net1-telefacsimile (011) 880-7080
15. WHOLE AGREEMENT
15.1. This agreement constitutes the entire agreement between the parties in respect of the subject matter hereof and neither party shall be bound by any undertakings, representations, warranties or promises not recorded in this agreement.
15.2. No alteration, variation or consensual cancellation of this agreement and no addition to this agreement shall be of any force or effect unless reduced to writing and signed by the parties or their duly authorised representatives.
16. GENERAL
16.1. No failure, delay, relaxation or indulgence on the part of either party in exercising any power or right conferred upon it in terms of this agreement shall operate as a waiver of such power or right nor shall any such failure, delay, relaxation or indulgence be deemed to be a novation of the terms or conditions of this agreement.
16.2. Each party shall bear its own costs (including value-added tax) of and in connection with the negotiation, preparation and execution of this agreement.
16.3. Neither this agreement nor any part thereof nor any share or interest therein, shall be assigned or ceded by either party without the prior written consent of the other.
16.4. This agreement shall inure for the benefit of and be binding upon the successors in title and permitted assigns of the parties.
16.5. Should any of the terms and conditions of this agreement be held to be invalid, unlawful or unenforceable, such terms and conditions will be severable from the remaining terms and conditions which will continue to be valid and enforceable. If any term or condition held to be invalid is capable of amendment to render it valid, the parties agree to negotiate an amendment to remove the invalidity.
SIGNED at ----------------------------------------------------------------------- on 19 --------------------------------- --- WITNESSES: For and on behalf of NEDCOR BANK LIMITED -------------------------------------------- who warrants that he is duly authorised SIGNED at ----------------------------------------------------------------------- on 19 --------------------------------- --- WITNESSES: For and on behalf of NET1 PRODUCTS (PTY) LIMITED -------------------------------------------- who warrants that he is duly authorised |
Exhibit 10.19
Commercial-In-Confidence
PATENT AND TECHNOLOGY AGREEMENT
Made and entered into by and between:
NET 1 HOLDINGS S.a.r.l. (1929)
and
NET 1 APPLIED TECHNOLOGY HOLDINGS LIMITED
and
NEDCOR BANK LIMITED
This Patent and Technology Agreement (the "Agreement"), effective as of _____ June 2000 (the "Effective Date"), is entered by and between:
1) Nedcor Bank Limited located at 100 Main Street, Johannesburg 2000, Republic of South Africa;
2) Net 1 Holdings S.a.r.l (1929) located at 6, rue Jean Monnet, L-2180 Luxembourg;
3) Net 1 Applied Technology Holdings Limited located at Fourth Floor North Wing, President Place, Cnr. Jan Smuts Avenue, Bolton Road, Rosebank, Johannesburg, Republic of South Africa.
The parties agree the following terms and conditions shall apply to the licensing of certain patents and technology rights by Net 1.
1. DEFINITIONS
1.1. The Clause headings of this Agreement are for reference purposes only and shall not be used in the interpretation thereof.
1.2. Unless the context clearly indicates a contrary intention:
1.2.1. expressions which denote
1.2.1.1. any gender shall include the other genders;
1.2.1.2. a natural person shall include an artificial person and vice versa;
1.2.1.3. the singular shall include the plural;
1.2.2. the following expressions shall have the following meanings
1.2.2.1. "Licensee" shall mean any entity in whom Nedcor has an equity interest of more than 5%;
1.2.2.2. "Nedcor" shall mean Nedcor Bank Limited (Registration No. 51/00009/06) and all of its subsidiaries, affiliates and its holding company;
1.2.2.3. "Net 1" shall mean Net 1 shall mean Net 1 S.a.r.l
(1929), a company incorporated in accordance with the
laws of Luxembourg and having its registered office
at 6, rue Jean Monnet, L-2180 Luxembourg, herein
represented by Brenda Stewart in her capacity as a
Director of the Company, she being duly authorised
hereto, and Net 1 Applied Technology Holdings
Limited;
1.2.2.4. "Parties" shall mean the parties to this Agreement;
1.2.2.5. "Patents" shall mean United States No. 5,175,416 and European Patents No. 0-421808 together with all patents of addition, if any, granted to Net 1;
1.2.2.6. "Smart Card" shall mean the customer card which when utilised in conjunction with any point of sale terminals will allow the customer to access the UEPS;
1.2.2.7. "Territory" shall mean any country of the world, except the Republic of South Africa (as constituted on 31 May 1961), Namibia, Botswana, Lesotho, Swaziland, Mozambique and Zimbabwe;
1.2.2.8. "UEPS" means the Universal Electronic Payment System designed by Net 1, as described and detailed in the complete specification to Net 1's application for the Patents;
2. PREAMBLE
2.1. Nedcor and Net I entered into an agreement dated 29 July 1997, (the "Original Agreement") whereby Net 1 granted Nedcor a license to use the Patents within the Republic of South Africa (as constituted on 31 May 1961), Namibia, Botswana, Lesotho, Swaziland, Mozambique and Zimbabwe and whereby Net 1 agreed not to grant any rights under or relating to the Patents to any bank or subsidiary of a bank without Nedcor's prior written consent.
2.2. The Parties have reached agreement as to the terms and conditions upon which Nedcor may call upon Net 1 to grant a non-exclusive licence within the Territory to a Licensee to use the Patents and the UEPS technology.
3. DURATION
This Agreement shall commence on the Effective Date and shall endure for the life of the Patents and any extensions thereto, unless terminated earlier as provided for hereunder.
4. GRANT OF RIGHTS
4.1. This Agreement supplements the Original Agreement which shall remain in full force and effect.
4.2 As of the Effective Date, world-wide title and intellectual property rights in all software relating to the operation of the UEPS (including the Megalink System) and any related user manuals and documentation is jointly owned by Nedcor and Net 1.
4.3 Nedcor shall be entitled in writing to request and Net 1 agrees to grant a non-exclusive licence to any Licensee to use the Patents and all technology and know-how relating to the UEPS in the Territory.
4.4. Net 1 shall within 30 (thirty) days of receipt by it of the request pursuant to Clause 4.3, conclude a written licence Agreement with the Licensee upon the following terms:
4.4.1. Net 1 shall provide all necessary documentation and know-how to
the Licensee in order for the Licensee to be able to use the Patents and the UEPS; 4.4.2 the Licensee shall pay an annual licence fee to Net 1 in the sum of US $ 100,000 (One hundred thousand United States dollars) per country, which licence fee shall be paid annually in advance following the commencement date of the licence agreement. The licence fee may be increased annually after the expiry of the first year of the licence agreement by agreement, or failing which, by an amount not to exceed the percentage increase of the US Consumer Price index during the preceding 12 (twelve) months; |
4.4.3. the Licensee shall grant Net 1 the right to quote for the supply of all of the Licensee's Smart Card requirements provided that Net 1 undertakes to use its best efforts to provide the Licensee with competitive prices for such Smart Cards;
4.4.4. If the Licensee elects not to purchase Smart Cards from Net 1, and provided that Net l's prices were no less competitive than other third party suppliers, the Licensee shall pay to Net 1, an amount equivalent to 3.5% (three point five percent) of the purchase cost to it of such Smart Cards from a third party supplier, and which amount shall be paid to Net 1 quarterly in arrears;
4.4.5. Nedcor agrees that neither it nor any Licensee will use the trade marks or brand names Master Card, Europay, Amex, Discover, Diners, Carte Blanche or JCB in connection with the Patents or the UEPS;
4.4.6. the Licensee shall advise any third party supplier of its said hardware requirements that such third party supplier may be required to procure a licence from Net 1 in respect of the supply of such hardware to the extent that the configuration of such hardware might in itself infringe the Patent.
5. MAINTENANCE OF THE PATENTS
5.1. Net 1 shall during the life of this Agreement pay all renewal fees and do all such acts and things that may be necessary to maintain and keep registered the Patents and shall produce to Nedcor the receipt for renewing the Patents and in default shall permit Nedcor to pay the same and shall credit the Licensee with the cost of such renewal against the licence fees.
5.2. Net 1 shall not during the life of this Agreement, save with the prior written consent of Nedcor, abandon the Patents or allow it to lapse, nor will it amend the specification of the Patents without first notifying Nedcor of its intention to do so.
6. PATENTS INFRINGEMENT
6.1. Upon the occurrence of any infringement or suspected or threatened infringement of the Patents, the Parties shall immediately consult to decide what steps shall be taken to prevent or terminate such infringement.
6.2. Net 1 shall take all steps as may be agreed by the Parties pursuant to Clause 6.1 above including the institution of legal proceedings where necessary.
6.3. If Net 1 fails to take such steps as may be considered necessary or appropriate by Nedcor, Nedcor shall have the right and is hereby authorised by Net 1 to take those steps independently. In taking such steps Nedcor shall not be acting as the agent or in any way on behalf of Net 1 but Net 1 shall give all reasonable assistance to facilitate any such proceedings by Nedcor. Any costs and expenses incurred by Nedcor shall be borne by Net 1 and credited to the Licensee against any licence fees.
7. IMPROVEMENTS
7.1. If Net 1 at any time files an application for any improvement to the Patents, Net 1 shall provide to Nedcor and the Licensee such information and explanations as Nedcor shall reasonably require to be able effectively to utilise such improvements. Net 1 shall grant an irrevocable, non-exclusive, royalty-free license to the Licensee for the use of such improvement throughout the Territory.
8. WARRANTIES AND INDEMNITIES
8.1. Net 1 agrees that Nedcor entered into this Agreement in reliance upon Net l's warranties. Accordingly, Net 1 warrants that;
8.1.1. it is the sole owner of the Patents and the UEPS technology;
8.1.2. it holds the Patents free of any security interests or encumbrances;
8.1.3. it is able to enter auto this Agreement and to grant any Patents license to the Licensee;
8.1.4. there has been no claim that the Patents or any part of UEPS technology infringe the rights of any third party anywhere in the world and that Net 1 is unaware of any pending claims or actions against the Patents or the UEPs technology.
8.2. Net 1 agrees to indemnify and hold harmless Nedcor and any Licensee from any arid all losses, liabilities, damages, claims and all related costs and expenses
(including all legal fees and disbursements) relating to a claim that the Patents infringes the intellectual property rights of a third party or that the use of the UEPS technology in any way infringes any third party rights. The indemnity in this Clause 8.2 shall be unlimited and shall cover all losses, costs, damage and expenses of Nedcor and any Licensee howsoever arising and to the fullest extent permitted by law.
8.3. If the Patents become or is likely to become the subject to an infringement claim, Net 1 shall, in addition to indemnifying Nedcor as provided in Clause 8.2 above, promptly at Net 1's expense use its best efforts to secure the right to continue using the Patents or replace or modify the Patents to make it non-infringing, provided that any such replacement or modification will not degrade the performance or quality of the Patents. If Net 1 is unable to make the Patents non-infringing, then Nedcor may terminate this Agreement without liability and without prejudice to any claims against Net 1 which Nedcor or the Licensee may have, and Net 1 shall refund any licence fees paid by the Licensee.
9. BREACH
Should either party commit a breach of any of the warranties and terms of this Agreement, all of which are material and go to the root of this Agreement, and fail to remedy such breach within a period of thirty (30) days of the date of a written notice from the aggrieved party calling upon the defaulting party to remedy such breach, then the aggrieved party shall have the right in addition to such other rights as are available to it in law or in terms of this Agreement to terminate this Agreement and claim damages, and in the case of Nedcor to terminate any other agreement it has with Net 1.
10. CONFIDENTIALITY
No Party shall any time divulge or disclose to any third party any information concerning the affairs of the other Parties or the existence of this Agreement without the prior written consent of the other Parties.
11. WHOLE AGREEMENT
This Agreement constitutes the sole and exclusive record of the Agreement between the Parties relating to the subject matters thereof, and no variation, modification, consensual cancellation, novation or waiver of any provisions thereof, or any consent to any departure therefrom by any party, shall be of any force and effect or create any estoppel unless the same shall be confirmed in writing, signed by or on behalf of that Party and any other Party affected thereby and in any event the same shall be effective only in the specific instance and for the specific purpose and to the extent for which made or given.
12. SURVIVAL
The provisions of Clauses 8 and 10 shall survive termination of this Agreement.
13. DOMICILIA
For all purposes under this Agreement or any amendment thereof, or with regard to any matter arising thereout or in connection therewith, the Parties hereby choose their domicilia citandi et executandi at their respective addresses specified below provided that the Parties shall be entitled to nominate a substitute address in the Republic of South Africa, as their domicilia citandi et executandi, by written notice to that effect given to the other Party in accordance with Clause 14 and with effect from 7 (seven) days after receipt of such notice:
13.1. Net 1 at 6, rue Jean Monnet, L-2180 Luxembourg;
13.2. Nedcor at 105 West Street, Sandton.
14. NOTICES
Any notice required to be given or permitted to be given by any Party to the other in terms of this Agreement shall be in writing addressed in the name of the latter and shall be delivered to the addressee at the addressee's domicilia citandi et executandi for the time being in terms of Clause 13 supra. Alternatively, such notice may be sent by telefacsimile to the addressee at its undermentioned telefacsimile number, and such notice shall be deemed to have been duly delivered on the first business day following the date of sending thereof:
Nedcor - (011) 881-4811
Net 1 - (011) 880-7080
15. LAW TO APPLY
This Agreement shall in all respects be governed by and construed in accordance with the laws of the Republic of South Africa, and all disputes, actions and other matters in connection therewith shall be determined in accordance with such law.
16. INDULGENCE
No relaxation or indulgence granted by either Party to the other shall be deemed to be a waiver of that Party's rights in terms hereof, nor shall any such relaxation or indulgence be deemed to be a novation or waiver of any of the terms and conditions of this Agreement.
17. ARBITRATION
17.1. Unless otherwise provided for in this Agreement to the contrary, any dispute which arises in regard to:
17.1.1. the interpretation of; or
17.1.2. the carrying into effect of; or
17.1.3. any of the Party's rights and obligations arising from; or
17.1.4. the rectification or proposed rectification of this Agreement
may, at the instance of either Party hereto, be referred for determination by an expert, and in relation to that referral the provisions of this Clause 14 shall apply.
17.2. The expert shall:
17.2.1. if the matter in issue is an accounting matter, be an independent auditor agreed upon between the Parties or failing agreement, appointed by the President for the time being of the Transvaal Society of Chartered Accountants;
17.2.2. if the matter is a legal matter, only, be a Counsel of at least 10 (ten) years' standing as such practising as such at the Johannesburg Bar, agreed upon between the Parties to the dispute or failing agreement, appointed by the Chairman for the time being of the Johannesburg Bar Council;
17.2.3. if the matter in dispute is any other matter, be an independent person agreed upon between the Parties to the dispute or failing agreement, appointed by the President for the time being of the Law Society of the Transvaal;
17.3. The expert appointed or nominated as aforesaid shall in all respects act as an expert and not as an arbitrator, and if the Parties are unable to agree on the nature of the matter in dispute, it shall be deemed to be of a legal nature and subject to Clause 17.2.2 supra.
17.4. The expert shall determine the manner in which the proceedings are conducted and the procedure to be adopted and he shall be entitled to require the Parties to the proceedings to make available to each other and to the expert all information, documentation and records that are necessary for the determination of the dispute submitted to him.
17.5. Any hearing by the expert shall be held in Johannesburg or such other place as the Parties may agree in writing.
17.6. The Parties shall use their best endeavours to procure that the decision of the expert shall be given within 21 (twenty-one) days or so soon thereafter as possible after it has been demanded.
17.7. The decision of the expert shall be final and binding on all parties affected thereby and shall be carried into effect and may be made an order of any competent Court at the instance of any of the Parties.
17.8. This clause constitutes an irrevocable consent by the Parties to any proceedings in terms hereof and neither of the Parties shall be entitled to withdraw therefrom or claim at any such proceedings that it is not bound by the provisions of this clause.
17.9. The expert shall determine the liability for his costs which shall be paid in accordance with his determination.
17.10. Notwithstanding the provisions of Clause 14.8 supra either party may choose to launch proceedings by way of Court action or application, save in regard to any matter already referred by either Party in terms of this paragraph 11.
18. SEVERABILITY
Should any of the terms and conditions of this, Agreement be held to be invalid, unlawful or unenforceable, such terms and conditions shall be severable from the remaining terms and conditions which will continue to be valid and enforceable. If any term or condition held to be invalid is capable of amendment to render it valid, the Parties agree to negotiate in good faith an amendment to remove such invalidity.
DATED AT JOHANNESBURG ON THIS THE _____ DAY OF JUNE 2000.
Net 1 Holdings S.a.r.l (1929)
2
1
Net 1 Applied Technology Holdings Limited
2
1
Nedcor Bank Limited
Exhibit 10.20
AGREEMENT
between
NEDBANK LIMITED
and
NET 1 UEPS TECHNOLOGIES, INC.
and
NET 1 APPLIED TECHNOLOGIES SOUTH AFRICA LIMITED
(CLIFFE DEKKER LOGO)
Attorneys
15 July 2005
TABLE OF CONTENTS
1 INTERPRETATION........................................................3 2 RECITALS..............................................................5 3 sale of the nedbank shares............................................6 4 waiver by nedbank.....................................................7 5 WHOLE AGREEMENT......................................................12 6 WAIVER...............................................................12 7 DISPUTES.............................................................13 8 NOTICES..............................................................14 9 announcements........................................................15 10 APPLICABLE LAW AND JURISDICTION......................................15 11 counterparts.........................................................16 12 costs................................................................16 |
(CLIFFE DEKKER LOGO)
WHEREBY THE PARTIES AGREE AS FOLLOWS - 1 INTERPRETATION 1.1 In this agreement - 1.1.1 clause headings are for convenience only and are not to be used in its interpretation; 1.1.2 an expression which denotes - 1.1.2.1 any gender includes the other genders; 1.1.2.2 a natural person includes a juristic person and vice versa; 1.1.2.3 the singular includes the plural and vice versa; 1.2 In this agreement, unless the context indicates a contrary intention, the following words and expressions bear the meanings assigned to them and cognate expressions bear corresponding meanings - 1.2.1 "THE AGREEMENTS" means : 1.2.1.1 the Heads of Agreement between Nedbank and Net1 Products (Pty) Limited dated 24th September 1992 ("THE HEADS OF AGREEMENT"); 1.2.1.2 the agreement between Nedbank and Net1 Products (Proprietary) Limited, signed by Nedbank on 29 July 1997 ("THE ORIGINAL AGREEMENT"); and 1.2.1.3 the patent and technology agreement between Nedbank, Net 1 Investment Holdings (Proprietary) Limited and Net 1 Applied Technology Holdings Limited, signed by Nedbank on 11 July 2000 relating to the Republic of South Africa, Namibia, Botswana, Lesotho, Swaziland, Mozambique and Zimbabwe ("THE SOUTHERN AFRICAN AGREEMENT"). (CLIFFE DEKKER LOGO) |
PAGE 4 1.2.2 "NEDBANK" means NEDBANK LIMITED, formerly known as Nedcor Bank Limited; 1.2.3 "NEDBANK SHARES" means the 6 652 819 (six million six hundred and fifty two thousand eight hundred and nineteen) common stock in Net 1 which will result from the exercise by Nedbank of the trigger event rights held by it in respect of its units in The New Aplitec Participation Trust; 1.2.4 "NET 1" means NET 1 UEPS TECHNOLOGIES, INC.; 1.2.5 "NEW APLITEC" means NET 1 APPLIED TECHNOLOGIES SOUTH AFRICA LIMITED; 1.2.6 "THE PUBLIC OFFERING" means the public offering of shares of Net 1 pursuant to the listing of Net 1 on the NASDAQ Securities Exchange in respect of which a registration statement (including a prospectus) under the Securities Act of 1933 has been filed by Net 1; 1.2.7 "SIGNATURE DATE" means the date of signature of this agreement by the party signing last. 1.3 Any substantive provision conferring rights or imposing obligations on any party in the interpretation clause shall be given effect to as if it were a substantive provision in the body of the agreement. 1.4 Words and expressions defined in any clause shall, unless the application of any such word or expression is specifically limited to that clause, bear the meaning assigned to such word or expression throughout this agreement. 1.5 The terms "holding company" and "subsidiary" shall bear the meanings assigned to them in the Companies Act. 1.6 No provision herein shall be construed against or interpreted to the disadvantage of any party by reason of such party having or being deemed to have structured, drafted or introduced such provision. (CLIFFE DEKKER LOGO) |
PAGE 5 1.7 Whenever a term is followed by the word "including" which is then followed by specific examples, such examples shall not be construed so as to limit the meaning of that term. 1.8 Unless specifically otherwise provided, any number of days prescribed shall be determined by excluding the first and including the last day or, where the last day falls on a Saturday, Sunday or public holiday, the next succeeding Business Day. 1.9 A reference to any statutory enactment shall be construed as a reference to that enactment as at the Signature Date and as amended or re-enacted from time to time. 1.10 Unless specifically otherwise provided, all amounts in this agreement are exclusive of value-added tax. 1.11 In this agreement the word "AGREEMENT" refers to this agreement and the words "CLAUSE" or "CLAUSES" refer to clauses in this agreement. 2 RECITALS 2.1 The Agreements were entered into between Nedbank and a number of companies, certain of which have since been liquidated, de-registered or otherwise ceased to exist in accordance with the laws of the jurisdictions in which those companies were incorporated. 2.2 Certain of the restrictive rights of Nedbank under the Agreements may be enforceable against Net 1 or New Aplitec. 2.3 Subject to the terms and conditions set out in this agreement, Nedbank has agreed to waive certain of the restrictive rights reflected in the Agreements as against Net 1 and New Aplitec it being recorded that neither none of the parties makes any admission in this agreement with regard to the enforceability or non-enforceability of any such restrictive rights or as to the enforceability or non-enforceability of any of the Agreements. (CLIFFE DEKKER LOGO) |
PAGE 6 2.4 Net 1 has agreed that it will attempt to procure that the Nedbank Shares are disposed of by Nedbank pursuant to the Public Offering. 2.5 The parties wish to record in writing the terms and conditions which have been agreed between them. 3 SALE OF THE NEDBANK SHARES 3.1 Nedbank hereby undertakes to execute an irrevocable exercise form required for the exercise of its trigger event rights in respect of that number of units in The New Aplitec Participation Trust held by it which will result, after conversion of such units into common stock, in the issue of the Nedbank Shares. In terms of the form, Nedbank has indicated its election to sell the Nedbank shares at a minimum price of $18 per share, and within the time frames required to enable the Nedbank Shares to be offered for sale pursuant to the Public Offering. 3.2 Net 1 hereby undertakes to use reasonable endeavours to ensure that the Nedbank Shares are sold pursuant to the Public Offering at the abovementioned price or at such other price as may be agreed between Nedbank and Net 1 from time to time. 3.3 It is recorded, as requested by Nedbank, that - 3.3.1 to the extent that the price at which the Public Offering takes place is greater than $18 per share then Nedbank will enjoy the benefit of that higher price; 3.3.2 the disposal of the common stock will take place in accordance with the provisions of the exercise form signed by Nedbank. 4 WAIVER BY NEDBANK 4.1 Subject to the suspensive condition that Nedbank will, pursuant to the Public Offering, successfully have disposed of the Nedbank Shares by not later than 30 October 2005, Nedbank hereby waives the restrictive rights (CLIFFE DEKKER LOGO) |
PAGE 7 contained in those clauses or portions of clauses which form part of the Agreements and which are quoted below - 4.1.1 HEADS OF AGREEMENT: "5. ....that Net1 will only licence other DTI's (i.e. banks) on Nedcor's request." 6. ".... that Net1 will grant to ABSA, FNB, Standard and each of their individual wholly-owned subsidiaries a licence to use the UEPS free of charge other than the legal costs relating to registration (approximately R1,000 per licence)". 8. "..... that in relation to the UEPS Net1 will not utilize their expertise and experience to the benefit of other DTI's (i.e. banks) without the consent of Nedcor which shall not be unreasonably withheld. This does not prevent Net1 from marketing cards and devices to these DTI's. Net1 shall not compete with Nedcor with regard to the South African Breweries Group, the medical care industry, PayNet and buying associations". 4.1.2 ORIGINAL AGREEMENT "5. Bank Licences "5.1 Net1 shall not- 5.1.1 grant any licence or other rights under the patent to any bank or any subsidiary of any bank, unless nominated in writing by Nedcor, nor in any manner whatsoever, whether directly or indirectly and whether by way of any act or omission on its part, permit or enable any licensee under the patent, including any licensed bank or any licensed subsidiary of any bank, to do so; (CLIFFE DEKKER LOGO) |
PAGE 8 5.1.2 offer or supply to any bank or any subsidiary of any bank any system(s) that would compete with or replace the UEPS, without the prior written consent of Nedcor. 5.2 If and when requested by Nedcor in writing, Net1 shall grant to each of ABSA, FNB, and Standard and to each other bank nominated by Nedcor, a non-exclusive licence under the patent to use the UEPS within the territory for the full term of the patent. 5.3 Unless Nedcor otherwise notifies Net1 in writing: 5.3.1 no consideration whatsoever, other than the legal costs of recording each licence in the patent register, shall be payable by ABSA, FNB or Standard for either its licence pursuant to any request by Nedcor to Net1 in accordance with 5.2 above or the use of the UEPS pursuant to the licence; 5.3.2 save for the terms (if any) upon which ABSA, FNB or Standard would be entitled to use patentable improvements, which terms will be subject to 5.5. below and otherwise as agreed to any or all of ABSA, FNB and Standard shall be the same as those applicable to Nedcor under its licence. 5.4 Subject to 5.5 below, licences granted to banks other than ABSA, FNB or Standard shall be on such terms as may be agreed by Net1 and the bank concerned, provided that no such bank shall be granted licence upon terms more favourable than those applicable to Nedcor under its licence. 5.5 Save with Nedcor's prior written consent, Net1 shall neither - 5.5.1 permit any bank to use any patentable improvement in conjunction with the UEPS, nor (CLIFFE DEKKER LOGO) |
PAGE 9 5.5.2 utilise its experience and experience in respect of the UEPS for the benefit of any bank to the exclusion of Nedcor, provided that Nedcor shall not unreasonably withhold its consent to such utilization". "8. Smart Cards Nothing in this agreement shall preclude Net1 from marketing and supplying smart cards and terminals to licensed banks or to their subsidiaries that are licensed under the patent to use the UEPS. In this regard, Net1 records that it is its intention to levy - 8.1 All licensees nominated by Nedcor, other than ABSA, FNB or Standard unless otherwise advised by Nedcor in writing; and 8.2 All Licensees nominated by ABSA, FNB and Standard; with a charge equal to 3,5% (three comma five percent) of the purchase price of each and every smart card purchased by them from suppliers other than Net1". "9. Marketing 9.1 Net1 acknowledges that Nedcor has made the UEPS available to the South African Breweries Group ("SAB") and intends marking it available to PayNet, the medical care industry and buying associations (hereinafter collectively referred to as "the potential UEPS users") and that, with Nedcor's participation, SAB is currently using the UEPS in its business and, it is anticipated, will continue to do so in the future. 9.2 Net1 undertakes unto and in favour of Nedcor that it will not in any manner whatsoever compete with Nedcor in the marketing and supply of UEPS products and services related thereto, to (CLIFFE DEKKER LOGO) |
PAGE 10 SAB and the potential UEPS users, nor will Net1 offer or supply to any of SAB and the potential UEPS users any alternative systems that would compete with or replace the UEPS. The aforegoing shall not however preclude Net1 from marketing and supplying smart cards, terminals and other computer hardware to SAB and the potential UEPS users.) 9.3 Whenever Net1 markets any system that will require the participation of a bank, eg. any system that provides for or permits settlement through a bank, Net1 shall offer such participation to Nedcor to the exclusion of all other banks, and provided that Nedcor wishes to accept appointment as the participating bank and its proposed response times and pricing in respect of such participation are competitive with those of the other major banks in South Africa, Net1 shall procure that Nedcor is appointed as the participating bank in respect of the system." |
4.1.3 SOUTHERN AFRICAN AGREEMENT
"4. Grant of Rights 4.1 ........ 4.2 Net1 shall not: 4.2.1 grant any licence or other rights under the Patent and the UEPS to any bank or any subsidiary or any bank in the Territory unless nominated in writing by Nedcor, nor in any manner whatsoever, whether directly or indirectly, and whether by way of any act or omission on its part, permit or enable any licensee under the Patent, including any licensed bank or any licensed subsidiary of any bank, to do so; (CLIFFE DEKKER LOGO) |
PAGE 11 4.2.2 offer or supply to any bank or any subsidiary of any bank or any financial institution in the Territory, system(s) that would compete with or replace the UEPS, without the prior written consent of Nedcor". 4.2 Each of the parties will use its best endeavours and the Parties will co-operate in good faith to procure the fulfilment of the suspensive condition as soon as reasonably possible after the Signature Date. 4.3 Unless the suspensive condition has been fulfilled or waived by not later than 30 October 2005 (or such later date as may be agreed in writing by the parties) the provisions of this agreement will fall away and be of no further force or effect and the status quo ante will be restored as near as may be and neither party shall have any claim against the other in terms hereof or arising from the failure of the suspensive condition, save for any claims arising from a breach of the provisions of clause 4.2. 4.4 Notwithstanding anything to the contrary herein contained, the provisions of clauses 7 and 8 will survive the failure of this agreement to become unconditional. 4.5 For the avoidance of doubt, the provisions of clause 4 of the Original Agreement will not be so construed as to restrict Net 1 from marketing and selling the right to use the improvements as defined therein to third parties (subject to any other binding restriction in the Original Agreement) after Nedbank has accepted the offer to use the improvements as contemplated in clauses 4.1 or 4.2 of the Original Agreement upon such terms as the parties may have agreed. 5 WHOLE AGREEMENT 5.1 This agreement constitutes the whole of the agreement between the parties hereto relating to the subject matter hereof and save as otherwise provided herein no amendment, alteration, addition, variation or consensual (CLIFFE DEKKER LOGO) |
PAGE 12 cancellation shall be of any force or effect unless reduced to writing and signed by the parties hereto. 5.2 The parties agree that no other conditions, warranties or representations whether oral or written, and whether express or implied, whether by statute or otherwise, shall apply hereto. 6 WAIVER No waiver of any of the terms and conditions of this agreement shall be binding or effectual for any purpose unless expressed in writing and signed by the party hereto giving the same, and any such waiver shall be effective only in the specific instance and for the purpose given. No failure or delay on the part of either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 7 DISPUTES 7.1 Save where otherwise provided in this agreement, in the event of any dispute or difference arising between the parties hereto relating to or arising out of this agreement, including the validity, implementation, execution, interpretation, rectification, termination or cancellation of this agreement, the parties shall forthwith meet to attempt to settle such dispute or difference, and failing such settlement within a period of 14 (fourteen) days, the said dispute or difference shall on written demand by any party to the dispute be submitted to arbitration in Johannesburg in accordance with the rules of the Arbitration Foundation of Southern Africa ("the Foundation") by an arbitrator or arbitrators appointed by the Foundation. 7.2 The parties irrevocably agree that the submission to arbitration in terms of this clause is subject to the parties' rights of appeal set out hereunder. (CLIFFE DEKKER LOGO) |
PAGE 13 7.3 The decision of the arbitrator shall be final and binding on the parties to the arbitration after the expiry of the period of 21 (twenty-one) days from the date of the arbitrator's ruling if no appeal has been lodged by any party. 7.4 Any party to the arbitration may appeal the decision of the arbitrator within a period of 21 (twenty one) days after the arbitrator's ruling has been handed down by giving written notice to that effect to the other party or parties to the arbitration. 7.5 The appeal shall be dealt with in accordance with the rules of the Foundation by a panel of 3 (three) arbitrators appointed by the Foundation. The decision of the panel of arbitrators shall be final and binding on the parties to the arbitration. 7.6 A decision which becomes final and binding in terms of this clause 7 may be made an order of court at the instance of any party to the arbitration. 7.7 Nothing herein contained shall be deemed to prevent or prohibit either party from applying to the appropriate Court for urgent relief. 7.8 The provisions of this clause will continue to be binding on the parties notwithstanding any termination or cancellation of the agreement. 7.9 Any arbitration in terms of this clause shall be conducted "in camera" and the parties shall treat as confidential and not disclose to any third party details of the dispute submitted to arbitration, the conduct of the arbitration proceedings or the outcome of the arbitration. 8 NOTICES 8.1 The parties hereto select as their respective domicilia citandi et executandi the following physical addresses:- |
NAME PHYSICAL ADDRESS TELEFAX ---- ---------------- ------- Nedbank c/o Head: Legal Department 295-0378 135 Rivonia Road, Sandown, Sandton, 2146 |
NAME PHYSICAL ADDRESS TELEFAX ---- ---------------- ------- Net 1 & 4th Floor, President Place, Corner Jan Smuts Avenue and 442-5908 New Aplitec Bolton Road, Rosebank |
or such other address or telefax number as may be substituted by notice given as herein required. Each of the parties shall be entitled from time to time by written notice to the other, to vary its domicilium to any other address within the Republic of South Africa. 8.2 Any notice addressed to a party at its physical address shall be delivered by hand, or sent by telefax. 8.3 Any notice shall be deemed to have been given:- 8.3.1 if hand delivered during business hours on a business day, on the day of delivery; 8.3.2 if sent by telefax, on the date of sending of such telefax. 9 ANNOUNCEMENTS AND CONSENT TO DISCLOSURE 9.1 No announcements of any nature whatsoever shall be made by or on behalf of any party relating to this agreement unless such party has first consulted with the other parties with regard thereto. For the avoidance of doubt, if Net 1 or any company affiliated with Net 1 intends to make any announcement, which for purposes of this clause 9 shall include any disclosure in any registration statement (including a prospectus) filed by Net 1 with the Securities and Exchange Commission, regarding its or their intended use or plans to develop or otherwise market the UEPS (as such term is defined in the Agreements) in South Africa prior to the suspensive condition of this agreement having been fulfilled or waived by not later than 30 October 2005 (CLIFFE DEKKER LOGO) |
PAGE 15 (or such later date as may be agreed in writing by the parties), no such announcement will be made without the prior consent of Nedbank. 9.2 Nedbank hereby provides its consent to the disclosure of the terms of the Agreements in any registration statement (including a prospectus) filed by Net 1 with the Securities and Exchange Commission. 10 APPLICABLE LAW AND JURISDICTION 10.1 This agreement will in all respects be governed by and construed under the laws of the Republic of South Africa. 10.2 Subject to the provisions of this agreement, the parties hereto hereby consent and submit to the non-exclusive jurisdiction of the Witwatersrand Local Division of the High Court of the Republic of South Africa in any dispute arising from or in connection with this agreement. The parties agree that any costs awarded will be recoverable in accordance with the High Court tariff, determined on an attorney-and-own-client scale. 11 COUNTERPARTS This agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same agreement as at the date of signature of the party last signing one of the counterparts. The Parties undertake to take whatever steps may be necessary to ensure that all counterparts are duly signed by all of them without delay. 12 COSTS Each party will bear its own costs of and incidental to the preparation and negotiation of this agreement. (CLIFFE DEKKER LOGO) |
PAGE 16 SIGNED at .......... on ............................................. 2005 For and on behalf of NEDBANK LIMITED who warrants that he is duly authorised SIGNED at .......... on ............................................. 2005 For and on behalf of NEDBANK LIMITED who warrants that he is duly authorised SIGNED at .......... on ............................................. 2005 For and on behalf of NET 1 UEPS TECHNOLOGIES, INC. who warrants that he is duly authorised SIGNED at .......... on ............................................. 2005 For and on behalf of NET 1 APPLIED TECHNOLOGIES SOUTH AFRICA LIMITED --------------------------------------------- who warrants that he is duly authorised (CLIFFE DEKKER LOGO) |
EXHIBIT 10.21
PWRW&G DRAFT
JULY 16, 2005
STOCK PURCHASE AGREEMENT
by and among
CI LAW TRUSTEES LIMITED FOR THE SAN ROQUE TRUST,
DR. SERGE C.P. BELAMANT,
SOUTH AFRICAN PRIVATE EQUITY FUND III, L.P.,
SOUTH AFRICAN PRIVATE EQUITY TRUST III,
BRENTHURST PRIVATE EQUITY II LIMITED,
BRENTHURST PRIVATE EQUITY SOUTH AFRICA I LIMITED,
GENERAL ATLANTIC PARTNERS 80, L.P.,
GAPSTAR, LLC,
GAP COINVESTMENTS III, LLC,
GAP COINVESTMENTS IV, LLC,
GAPCO GMBH & CO. KG
and
NET 1 UEPS TECHNOLOGIES, INC.
Dated: July 18, 2005
TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS........................................................................ 2 1.1 Definitions........................................................................ 2 ARTICLE II PURCHASE AND SALE OF COMMON STOCK.................................................. 4 2.1 Purchase and Sale of Common Stock.................................................. 4 2.2 Closing............................................................................ 5 2.3 Closing Deliveries................................................................. 5 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS...................................... 5 3.1 Existence and Power................................................................ 5 3.2 Authorization; No Contravention.................................................... 5 3.3 Governmental Authorization; Third Party Consents................................... 6 3.4 Binding Effect..................................................................... 6 3.5 Title.............................................................................. 6 3.6 Litigation......................................................................... 6 3.7 Private Offering................................................................... 6 3.8 Broker's, Finder's or Similar Fees................................................. 6 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................... 7 4.1 Existence and Power................................................................ 7 4.2 Authorization; No Contravention.................................................... 7 4.3 Governmental Authorization; Third Party Consents................................... 7 4.4 Binding Effect..................................................................... 7 4.5 Purchase for Own Account........................................................... 7 4.6 Restricted Securities.............................................................. 8 4.7 Broker's, Finder's or Similar Fees................................................. 8 4.8 Accredited Investor................................................................ 8 4.9 Group.............................................................................. 8 ARTICLE V REPRESENTATION AND WARRANTIES OF THE COMPANY....................................... 8 5.1 Existence and Power................................................................ 8 5.2 Authorization; No Contravention.................................................... 8 5.3 Governmental Authorization; Third Party Consents................................... 9 5.4 Binding Effect..................................................................... 9 5.5 Litigation......................................................................... 9 5.6 Broker's, Finder's or Similar Fees................................................. 9 ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE............................ 9 6.1 Purchased Shares................................................................... 9 |
6.2 IPO............................................................................... 10 6.3 Representations and Warranties.................................................... 10 ARTICLE VII CONDITIONS TO THE OBLIGATION OF THE SELLERS TO CLOSE.............................. 10 7.1 Payment of Purchase Price......................................................... 10 7.2 IPO............................................................................... 10 7.3 Representations and Warranties.................................................... 10 ARTICLE VIII COVENANTS......................................................................... 10 8.1 Obligation to Indemnify........................................................... 10 8.2 Indemnification Procedure......................................................... 11 8.3 Non-Public Information............................................................ 12 8.4 Corporate Governance.............................................................. 12 8.5 Registration Rights............................................................... 13 ARTICLE IX TERMINATION OF AGREEMENT.......................................................... 14 9.1 Termination....................................................................... 14 9.2 Survival.......................................................................... 14 ARTICLE X MISCELLANEOUS..................................................................... 14 10.1 Survival of Representations and Warranties........................................ 14 10.2 Notices........................................................................... 14 10.3 Successors and Assigns; Third Party Beneficiaries................................. 16 10.4 Amendment and Waiver.............................................................. 16 10.5 Headings.......................................................................... 16 10.6 GOVERNING LAW..................................................................... 17 10.7 Consent to Jurisdiction; Service of Process....................................... 17 10.8 WAIVER OF JURY TRIAL.............................................................. 17 10.9 Severability...................................................................... 17 10.10 Rules of Construction............................................................. 18 10.11 Entire Agreement.................................................................. 18 10.12 Public Announcements.............................................................. 18 10.13 Further Assurances................................................................ 18 10.14 Counterparts...................................................................... 18 |
Exhibit A Purchased Shares Exhibit B Registration Rights |
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of July 18, 2005 (this "Agreement"), by and among:
A. CI Law Trustees Limited for the San Roque Trust, a __________ (the "San Roque Trust");
B. Dr. Serge C.P. Belamant ("Belamant");
C. South African Private Equity Fund III, L.P., a __________ limited partnership ("SAPEF");
D. South African Private Equity Trust III, a __________ ("SAPET");
E. Brenthurst Private Equity II Limited, a __________ ("Brenthurst II");
F. Brenthurst Private Equity South Africa I Limited, a __________ ("Brenthurst I" and, collectively with the San Roque Trust, Belamant, SAPEF, SAPET and Brenthurst II, the "Sellers");
G. General Atlantic Partners 80, L.P., a Delaware limited partnership ("GAP LP");
H. GapStar, LLC, a Delaware limited liability company ("GapStar");
I. GAP Coinvestments III, LLC, a Delaware limited liability company ("GAP Coinvestments III");
J. GAP Coinvestments IV, LLC, a Delaware limited liability company ("GAP Coinvestments IV");
K. GAPCO GmbH & Co. KG, a German limited partnership ("GAPCO KG" and, collectively with GAP LP, GapStar, GAP Coinvestments III and GAP Coinvestments IV, the "Purchasers"); and
L. Net 1 UEPS Technologies, Inc., a Florida corporation (the "Company").
WHEREAS, upon the terms and conditions set forth in this Agreement, each of the Sellers proposes to sell to each of the Purchasers the aggregate number of shares of Common Stock, par value $0.001 per share (the "Common Stock"), of the Company calculated in the manner set forth in Section 2.1 for an aggregate purchase price of $75,000,000.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof.
"Belamant" has the meaning set forth in the preamble to this Agreement.
"Brenthurst I" has the meaning set forth in the preamble to this Agreement.
"Brenthurst II" has the meaning set forth in the preamble to this Agreement.
"Board of Directors" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York or South Africa are authorized or required by law or executive order to close.
"Closing" has the meaning set forth in Section 2.2 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.2 of this Agreement.
"Commission" means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this Agreement.
"Company" has the meaning set forth in the recitals to this Agreement.
"Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its assets or properties are bound.
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
"GA Designee" has the meaning set forth in Section 8.4(a) of this Agreement.
"GA LLC" means General Atlantic LLC.
"GAP Coinvestments III" has the meaning set forth in the preamble to this Agreement.
"GAP Coinvestments IV" has the meaning set forth in the preamble to this Agreement.
"GAPCO KG" has the meaning set forth in the preamble to this Agreement.
"GAP LP" has the meaning set forth in the preamble to this Agreement.
"GapStar" has the meaning set forth in the preamble to this Agreement.
"Governmental Authority" means (a) the government of any nation, state, city, locality or other political subdivision thereof, (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and (c) any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
"Indemnified Group" has the meaning set forth in Section 8.1 of this Agreement.
"Indemnified Party" has the meaning set forth in Section 8.2(a) of this Agreement.
"Indemnifying Party" has the meaning set forth in Section 8.2(a) of this Agreement.
"IPO" means the Company's initial public offering of its shares of Common Stock as contemplated by its Registration Statement on Form S-1 (Registration Number 333-125273).
"Legal Action" means any action, suit, proceeding, claim, complaint, demand, dispute or investigation before any Government Authority or arbitrator.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever.
"Losses" means any losses, claims, damages, diminutions in value, expenses (including, without limitation, reasonable fees, disbursements and other charges of counsel) or other liabilities.
"Non-Public Information" has the meaning set forth in Section 8.3(a) of this Agreement.
"Observer" has the meaning set forth in Section 8.4(a) of this Agreement.
"Order" means any order, judgment, injunction, award, decree or writ of any Governmental Authority or arbitrator.
"Person" means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
"Purchased Shares" has the meaning set forth in Section 2.1 of this Agreement.
"Purchase Price" means the "initial public offering price per share" of Common Stock as set forth on the front cover of the final prospectus contained in the Company's Registration Statement on Form S-1 (Registration Number 333-125273).
"Purchasers" has the meaning set forth in the preamble to this Agreement.
"Requirements of Law" means any applicable law, statute, treaty, rule, regulation, qualification, franchise, license or determination of any Governmental Authority.
"San Roque Trust" has the meaning set forth in the preamble to this Agreement.
"SAPEF" has the meaning set forth in the preamble to this Agreement.
"SAPET" has the meaning set forth in the preamble to this Agreement.
"Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
"Sellers" has the meaning set forth in the preamble to this Agreement.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
2.1 Purchase and Sale of Common Stock. Subject to the terms and conditions set forth in this Agreement, each of the Sellers agrees to sell to each of the
Purchasers, and each such Purchaser, jointly and severally, agrees to purchase
from each such Seller, on the Closing Date, the number of shares of Common Stock
determined by taking the aggregate number of Purchased Shares calculated in
accordance with the next sentence of this Section 2.1 and multiplying such
number by the percentage set forth opposite such Purchaser's name on Exhibit A
hereto, in consideration of the aggregate purchase price equal to the product of
(a) such number of shares of Common Stock purchased by such Purchaser from such
Seller multiplied by (b) the Purchase Price. For purposes of this Agreement, the
aggregate number of all Purchased Shares shall be equal to the quotient obtained
by dividing (i) $75,000,000 by (ii) the Purchase Price (rounded to the nearest
whole share). The shares of Common Stock being purchased pursuant to this
Section 2.1 are collectively referred to as the "Purchased Shares." The
Purchased Shares shall be purchased from each Seller in accordance with the
percentages set forth on Exhibit A hereto.
2.2 Closing. Unless this Agreement has been terminated in accordance with Section 9.1, the closing of the sale and purchase of the Purchased Shares (the "Closing") shall take place at the offices of DLA Piper Rudnick Gray Cary US LLP, 1251 Avenue of the Americas, New York, New York at 10:00 a.m., local time, simultaneously with the closing of the IPO, or at such other time, place and date that the parties hereto may agree in writing (the "Closing Date"); provided, however, that in no event shall the Closing Date be later than the closing of the IPO.
2.3 Closing Deliveries. On the Closing Date, (a) each of the Sellers shall deliver to each of the Purchasers a certificate or certificates in definitive form and registered in the name of such Purchaser representing the Purchased Shares and (b) each of the Purchasers shall pay the purchase price for its Purchased Shares by wire transfer of immediately available funds to bank accounts designated by the Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers, severally but not jointly, hereby represents and warrants to each of the Purchasers as follows:
3.1 Existence and Power. Such Seller (a) is a corporation, partnership, limited liability company or trust, as the case may be, duly organized and validly existing under the laws of the jurisdiction of its formation and (b) has the requisite power and authority to execute, deliver and perform its obligations under this Agreement.
3.2 Authorization; No Contravention. The execution, delivery and performance by such Seller of this Agreement or the transactions contemplated hereby (a) have been duly authorized by all necessary action, (b) do not contravene the terms of such Seller's organizational documents, or any amendment thereof, (c) do not violate, conflict with or result in any breach, default or contravention of, or the creation of (or with due notice or lapse of time or both would result in any breach, default or contravention of) any Lien under, any Contractual Obligation of such Seller or a
Requirement of Law applicable to such Seller, and (d) do not violate any Orders of any Governmental Authority against, or binding upon, such Seller.
3.3 Governmental Authorization; Third Party Consents. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Purchased Shares) by, or enforcement against, such Seller of this Agreement or the transactions contemplated hereby.
3.4 Binding Effect. This Agreement has been duly executed and delivered by such Seller, and constitutes the legal, valid and binding obligation of such Seller, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity).
3.5 Title. Such Seller (a) owns all of its Purchased Shares beneficially and of record and free and clear of any Lien and (b) has the full power and authority to convey its Purchased Shares free and clear of any Lien. Upon delivery of and payment for such Purchased Shares, such Seller will transfer to each Purchaser good and valid title to the Purchased Shares being purchased by such Purchaser, free and clear of any Lien (other than any Liens created by actions of the Purchasers).
3.6 Litigation. There are no Legal Actions pending or, to the knowledge of such Seller, threatened against such Seller purporting to enjoin or restrain the execution, delivery or performance by such Seller of this Agreement and the transactions contemplated hereby.
3.7 Private Offering. No registration of the Purchased Shares, pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, will be required by the offer or sale of the Purchased Shares. Such Seller agrees that neither it, nor anyone acting on its behalf, shall offer to sell the Purchased Shares or any other securities of the Company so as to require the registration of the Purchased Shares pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws.
3.8 Broker's, Finder's or Similar Fees. Any brokerage commissions, finder's fees, placement fees, or similar fees or commissions payable in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with such Seller or any of its Affiliates or any action taken by any such Person shall be paid by such Seller on the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants to each of the Sellers as follows:
4.1 Existence and Power. Such Purchaser (a) is a limited partnership or limited liability company, as the case may be, duly organized and validly existing under the laws of the jurisdiction of its formation and (b) has the requisite partnership or limited liability company, as the case may be, power and authority to execute, deliver and perform its obligations under this Agreement.
4.2 Authorization; No Contravention. The execution, delivery and performance by such Purchaser of this Agreement and the transactions contemplated hereby (a) have been duly authorized by all necessary partnership or limited liability company, as the case may be, action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof, (c) do not violate, conflict with or result in any breach, default or contravention of, or the creation of (or with due notice or lapse of time or both would result in any breach, default or contravention of) any Lien under, any Contractual Obligation of such Purchaser or a Requirement of Law applicable to such Purchaser, and (d) do not violate any Orders of any Governmental Authority against, or binding upon, such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Purchased Shares) by, or enforcement against, such Purchaser of this Agreement or the transactions contemplated hereby.
4.4 Binding Effect. This Agreement has been duly executed and delivered by such Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by such Purchaser pursuant to this Agreement are being acquired for its own account for investment only, and not with a view to, or for sale in connection with, any distribution of such Purchased Shares or any part thereof in any transaction that would be in violation of the securities laws of the United States of America. Such Purchaser understands and agrees that such Purchased Shares have not been registered under the Securities Act and are "restricted securities" within the meaning of Rule 144 under the Securities Act and
that the Purchased Shares cannot be sold, transferred or otherwise disposed of except in compliance with the Securities Act. Such Purchaser agrees to the imprinting of a legend on certificates representing all of its Purchased Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
4.6 Restricted Securities. Such Purchaser understands that the Purchased Shares will not be registered at the time of their issuance under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and that the reliance of the Company on such exemption is predicated in part on such Purchaser's representations set forth herein.
4.7 Broker's, Finder's or Similar Fees. There are no brokerage commissions, finder's fees or similar fees or commissions payable by such Purchaser in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with such Purchaser or any action taken by such Purchaser.
4.8 Accredited Investor. Such Purchaser is an "Accredited Investor" within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect.
4.9 Group. The Purchasers are Affiliates of each other and constitute a "group" (as defined in Rule 13d -5 promulgated under the Exchange Act).
ARTICLE V
REPRESENTATION AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows:
5.1 Existence and Power. The Company (a) is a corporation duly organized and validly existing under the laws of Florida and (b) has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.
5.2 Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement or the transactions contemplated hereby (a) have been duly authorized by all necessary corporate action, (b) do not contravene the terms of the Company's articles of incorporation or by-laws, or any amendment thereof,
(c) do not violate, conflict with or result in any breach, default or contravention of, or the creation of (or with due notice or lapse of time or both would result in any breach, default or contravention of) any Lien under, any Contractual Obligation of the Company or a Requirement of Law applicable to the Company, and (d) do not violate any Orders of any Governmental Authority against, or binding upon, the Company.
5.3 Governmental Authorization; Third Party Consents. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Purchased Shares) by, or enforcement against, the Company of this Agreement or the transactions contemplated hereby.
5.4 Binding Effect. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity).
5.5 Litigation. There are no Legal Actions pending or, to the knowledge of the Company, threatened against the Company purporting to enjoin or restrain the execution, delivery or performance by the Company of this Agreement and the transactions contemplated hereby.
5.6 Broker's, Finder's or Similar Fees. Any brokerage commissions, finder's fees, placement fees, or similar fees or commissions payable in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any of its Affiliates or any action taken by any such Person shall be paid by the Company on the Closing Date.
ARTICLE VI
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Purchased Shares, to pay the purchase price therefor at the Closing and to perform their other obligations hereunder shall be subject to the satisfaction of the following conditions on or before the Closing Date:
6.1 Purchased Shares. The Sellers shall have delivered to each of the Purchasers certificates in definitive form representing the number of Purchased Shares calculated in the manner set forth in Section 2.1.
6.2 IPO. The Company's Registration Statement on Form S-1 (Registration Number 333-125273) shall have been declared effective by the Commission, such Registration Statement shall remain effective, no stop order shall have been issued by the Commission against such Registration Statement and the Company shall have, simultaneously with the Closing, consummated the IPO.
6.3 Representations and Warranties. The representations and warranties of the Sellers and the Company contained in this Agreement shall each be true and correct as of the Closing Date. Each of the Sellers and the Company shall have delivered to the Purchasers a certificate, dated as of the Closing Date and signed by a duly authorized officer of such Seller or the Company, as the case may be, certifying as to the foregoing.
ARTICLE VII
CONDITIONS TO THE OBLIGATION
OF THE SELLERS TO CLOSE
The obligation of the Sellers to sell the Purchased Shares and to perform their other obligations hereunder shall be subject to the satisfaction of the following conditions on or before the Closing Date:
7.1 Payment of Purchase Price. Each Purchaser shall be prepared to pay the aggregate purchase price for the Purchased Shares to be purchased by such Purchaser.
7.2 IPO. The Company's Registration Statement on Form S-1 (Registration Number 333-125273) shall have been declared effective by the Commission, such Registration Statement shall remain effective, no stop order shall have been issued by the Commission against such Registration Statement and the Company shall have, simultaneously with the Closing, consummated the IPO.
7.3 Representations and Warranties. The representations and warranties of the Purchasers contained in this Agreement shall each be true and correct as of the Closing Date. Each of the Purchasers shall have delivered to the Sellers a certificate, dated as of the Closing Date and signed by a duly authorized officer of such Purchaser, certifying as to the foregoing.
ARTICLE VIII
COVENANTS
8.1 Obligation to Indemnify. Each of the Sellers shall indemnify, defend and hold harmless each Purchaser and its Affiliates, directors, officers, partners, members, employees, agents and representatives, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, its "Indemnified Group"), from and against any and all Losses incurred or suffered by any Purchaser or any member
of its Indemnified Group to the extent such Losses arise out of or relate to the breach of any representation, warranty, covenant or agreement of such Seller contained in this Agreement.
8.2 Indemnification Procedure.
(a) Any Person seeking indemnification under Section 7.1 (the "Indemnified Party") shall promptly notify the party from whom indemnification is being sought (the "Indemnifying Party") in writing of any claim or demand for which the Indemnified Party is asserting an indemnification claim. Notice shall in all events be considered prompt if given no later than thirty days after the Indemnified Party becomes aware of such claim or demand. Such notice shall be accompanied by a reasonably full description of the basis for such claim or demand and a reference to the provisions of this Agreement under which liability is asserted; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party of any liability hereunder unless (and then solely to the extent) the Indemnifying Party is prejudiced by such delay.
(b) The Indemnifying Party shall have the right to participate jointly in the defense of any third party Legal Action in connection with which the Indemnified Party is seeking indemnification hereunder, and the Indemnifying Party may elect to take over the defense of such Legal Action with counsel satisfactory to the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party within thirty days of its receipt of a claim notice pursuant to this Section 7.2 as to whether or not it will assume the defense against such Legal Action. If the Indemnifying Party elects to take over the defense of such Legal Action, then:
(i) it shall keep the Indemnified Party informed as to the status of such Legal Action and shall promptly send copies of all related pleadings to the Indemnified Party;
(ii) with respect to any claim involved in such Legal Action, the Indemnifying Party shall have the sole right to contest, settle or otherwise dispose of such claim on such terms as the Indemnifying Party shall deem appropriate; provided, however, that the consent of the Indemnified Party to any settlement or disposition shall be required if (A) it results in any liability to or equitable relief against the Indemnified Party, (B) the result would restrict the future activity of the Indemnified Party or any of its Affiliates or (C) the result would result in the admission or finding of a violation of law or violation of the rights of any Person by the Indemnified Party or any of its Affiliates; and
(iii) the Indemnified Party shall have the right to participate jointly in the defense of such Legal Action with another counsel of its own choosing, but shall do so at its own cost unless (A) there are defenses available to the Indemnified Party that are not available to the Indemnifying Party or (B) a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party, in which case the costs of such of other counsel shall be paid by the Indemnifying Party.
If the Indemnifying Party does not elect to take over the defense of such Legal Action, then the Indemnified Party shall have the right, but not the obligation, to contest, settle or otherwise dispose of such Legal Action.
8.3 Non-Public Information.
(a) Each of the Sellers acknowledges that (i) the Purchasers have informed such Seller that the Purchasers may possess certain non-public information concerning the Company and its subsidiaries and/or the Purchased Shares that may or may not be independently known to such Seller (all of such non-public information is referred to as "Non-Public Information") and (ii) the Purchasers have not disclosed the Non-Public Information to such Seller.
(b) Each of the Sellers is executing, delivering and performing this Agreement notwithstanding that it is aware that the Non-Public Information may exist and that the Non-Public Information has not been disclosed to such Seller, and such Seller confirms and acknowledges that neither the existence of the Non-Public Information, the substance of the Non-Public Information nor the fact that the Non-Public Information has not been disclosed to such Seller is material to such Seller or to its decision to execute, deliver and perform this Agreement.
(c) Each of the Sellers does, for itself and its respective officers, directors, stockholders, employees, agents, representatives, successors and/or assigns, hereby: (i) fully and irrevocably waive any and all rights, remedies and claims it would or could have, or may hereafter have, against each Purchaser and its Indemnified Group arising out of or relating to the existence or substance of the Non-Public Information or the fact that the Non-Public Information has not been disclosed to such Seller; and (ii) forever release, discharge and dismiss any and all claims, rights, causes of action, suits, obligations, debts, demands, arrangements, promises, liabilities, controversies, costs, expenses, fees or damages of any kind, whether known or unknown, accrued or not accrued, foreseen or unforeseen or matured or not matured, that it ever had, now has, can have, or shall or may hereafter have (including, but not limited to, any and all claims alleging violations of U.S. federal or state securities laws, common-law fraud or deceit, breach of fiduciary duty, negligence or otherwise), whether directly, derivatively, representatively or in any other capacity, against any of the Purchasers or their respective Indemnified Groups which (x) arise in connection with the execution, delivery and performance of this Agreement and the purchase of the Purchased Shares and (y) are based upon, arise from or in any way relate to, directly or indirectly, the existence or substance of the Non-Public Information or the fact that the Non-Public Information has not been disclosed to such Seller.
8.4 Corporate Governance.
(a) The Company shall cause one vacancy to be created on its Board of Directors and cause to be elected to the Board of Directors, either at a meeting of the Board of Directors or by written resolution in lieu of a meeting of the Board of Directors, within 10 Business Days of the Closing Date, one person designated by GAP
LP, who shall initially be Florian P. Wendelstadt (the "GA Designee"). In the event that the GA Designee shall cease to serve as director for any reason, the Company shall cause the vacancy resulting thereby to be filled by another designee of GAP LP (who shall be deemed the GA Designee). The Company shall also permit one non-voting observer designated by GAP LP (the "Observer") to participate in all meetings of the Board of Directors and committees thereof.
(b) At each annual or special meeting of the stockholders of the Company after the IPO at which directors are elected, GAP LP shall be entitled to designate to the Board of Directors the GA Designee as a nominee to serve as one of the directors of the Company. The Company shall cause the GA Designee to be included in the slate of nominees recommended by the Board of Directors to the Company's stockholders for election as directors, and the Company shall use its reasonable best efforts to cause the election of the GA Designee, including, without limitation, recommending to the stockholders of the Company that the stockholders vote in favor of the election of the GA Designee and voting any proxies the Company holds, and using its reasonable best efforts to cause any officers of the Company who hold proxies to vote such proxies in favor of the election of the GA Designee, except, in either case, as otherwise directed by the stockholder who submitted such proxy.
(c) The Company shall reimburse the GA Designee and the Observer for their travel and accommodation expenses incurred in connection with attending meetings of the Board of Directors and committees thereof, and provide such other expense reimbursement as is consistent with the reimbursement provided to other members of the Board of Directors in their capacities as directors of the Company, upon presentation of receipts or other similar documentation.
(d) Subject to applicable Requirements of Law (including, without limitation, any stock market rules and regulations), the GA Designee shall have the right to serve on each committee of the Board of Directors.
(e) This Section 8.4 shall terminate and be of no further force and effect at such time as the Purchasers, together with their Affiliates, own, in the aggregate, a number of shares of Common Stock that is less than fifty percent (50%) of the total number of Purchased Shares that the Purchasers purchase from the Sellers at the Closing (as adjusted to reflect any stock dividends, splits, combinations or similar changes to the total number of outstanding shares of Common Stock).
8.5 Registration Rights. As soon as practicable after the date of this Agreement, but in any event by no later than September 30, 2005, the Company shall enter into a registration rights agreement with the Purchasers under which the Company grants to the Purchasers the registration rights set forth on Exhibit B hereto. The Purchasers acknowledge that the Company intends to grant registration rights to certain other shareholders of the Company as well in such registration rights agreement.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated prior to the Closing as follows:
(a) at the election of the Sellers or the Purchasers by written notice to the other parties hereto, if an underwriting agreement is entered into in connection with the IPO and then such underwriting agreement is subsequently terminated; or
(b) at the election of the Sellers or the Purchasers by written notice to the other parties hereto after 5:00 p.m., New York time, on August 31, 2005, if the Closing shall not have occurred, unless such date is extended by the mutual written consent of the Sellers and the Purchasers.
If this Agreement so terminates, it shall become null and void and have no further force or effect, except as provided in Section 9.2.
9.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, then (a) this
Agreement shall become void and of no further force and effect, except for the
provisions of this Section 9.2 and Sections 10.2 through 10.12 (inclusive) and
(b) none of the parties hereto shall have any liability in respect of a
termination of this Agreement pursuant to Section 9.1(a) or Section 9.1(b).
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement.
10.2 Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, facsimile, courier service or personal delivery:
if to the Sellers, to:
with a copy to:
if to the Purchasers, to:
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Facsimile: +1 203 622 8818
Attention: Matthew Nimetz, Esq.
David A. Rosenstein, Esq.
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Facsimile: +1 212 757 3990
Attention: Douglas A. Cifu, Esq.
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
Alder Castle, 10 Noble Street
London EC2V 7JU
United Kingdom
Facsimile: +44 207 367 1650
Attention: Tarun M. Stewart, Esq.
if to the Company, to:
Net 1 UEPS Technologies, Inc.
President Place, 4th Floor
Cnr. Jan Smuts Avenue and Bolton Road
Rosebank
Johannesburg
South Africa
Facsimile: +27 11 880 7080
Attention: Dr. Serge C.P. Belamant
with a copy to:
DLA Piper Rudnick Gray Cary US LLP
1251 Avenue of the Americas
New York, NY 10020-1104
Facsimile: +1 212 835 6001
Attention: Marjorie Sybul Adams, Esq.
All such notices, demands and other communications shall be deemed
to have been duly given: (i) when delivered by hand, if personally delivered;
(ii) one Business Day after being sent, if sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery; (iii) five
(5) Business Days after being sent, if sent by registered or certified mail,
return receipt requested, postage prepaid; and (iv) when receipt is mechanically
acknowledged, if sent by facsimile. Any party may by notice given in accordance
with this Section 10.2 designate another address or Person for receipt of
notices hereunder. Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party to whom it is given.
10.3 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the terms and conditions thereof, the Purchasers may assign any of their rights under this Agreement to any of their respective Affiliates, but only after the Closing has occurred. None of the Sellers or the Company may assign any of their rights under this Agreement without the written consent of the Purchasers. Except as provided in Article VIII, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.
10.4 Amendment and Waiver.
(a) No failure or delay on the part of any of the parties hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
(b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by any of the parties hereto from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by all of the parties hereto, and (ii) only in the specific instance and for the specific purpose for which made or given.
10.5 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
10.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
10.7 Consent to Jurisdiction; Service of Process.
(a) Any Legal Action arising out of or relating to this
Agreement or the transactions contemplated hereby may be instituted in any
Federal or State court sitting in New York City, New York. Each party agrees not
to assert, by way of motion, as a defense or otherwise, in any such Legal
Action, that (i) it is not subject personally to the jurisdiction of such court,
(ii) the Legal Action is brought in an inconvenient forum, (iii) the venue is
improper or (iv) this Agreement or the subject matter hereof may not be enforced
in or by such court. Each party further irrevocably submits to the exclusive
jurisdiction of such court in any such Legal Action.
(b) Any and all service of process and any other notice in any such Legal Action shall be effective against any party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party at the address provided in Section 10.2. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law.
10.8 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF ANY SUCH ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.8.
10.9 Severability. If any one or more of the provisions contained in this Agreement, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.
10.10 Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement.
10.11 Entire Agreement. This Agreement, together with the exhibits hereto, are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein. This Agreement, together with the exhibits hereto, supersedes all prior agreements and understandings between the parties with respect to such subject matter.
10.12 Public Announcements. The parties to this Agreement agree not to, and to cause their Affiliates not to, make any public announcement concerning this Agreement or the transactions contemplated hereby prior to the Closing unless (a) such public announcement has been approved in advance by all of the parties hereto or (b) required by any Requirement of Law or the rules and regulations of any stock exchange or quotation system on which securities of the Company are listed or traded. The Company will give the Purchasers a reasonable opportunity to review and comment on any public announcements or filings which make reference to any of the transactions contemplated by this Agreement.
10.13 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.
10.14 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Stock Purchase Agreement on the date first written above.
SELLERS:
CI LAW TRUSTEES LIMITED FOR THE SAN ROQUE TRUST
SOUTH AFRICAN PRIVATE EQUITY FUND III, L.P.
By: ____________________, its General Partner
By: _____________________________________________
Name:
Title:
SOUTH AFRICAN PRIVATE EQUITY TRUST III
By: _____________________________________________
Name:
Title:
BRENTHURST PRIVATE EQUITY II LIMITED
By: _____________________________________________
Name:
Title:
BRENTHURST PRIVATE EQUITY SOUTH AFRICA I LIMITED
By: _____________________________________________
Name:
Title:
PURCHASERS:
GENERAL ATLANTIC PARTNERS 80, L.P.
By: GENERAL ATLANTIC LLC, its General Partner
By: _____________________________________________
Name: Matthew Nimetz
Title: Managing Director
GAPSTAR, LLC
By: GENERAL ATLANTIC LLC, its Sole Member
By: _____________________________________________
Name: Matthew Nimetz
Title: Managing Director
GAP COINVESTMENTS III, LLC
By: _____________________________________________
Name: Matthew Nimetz
Title: Managing Director
GAP COINVESTMENTS IV, LLC
By: _____________________________________________
Name: Matthew Nimetz
Title: Managing Director
GAPCO GMBH & CO. KG
By: GAPCO MANAGEMENT GMBH,
its General Partner
By: _____________________________________________
Name: Matthew Nimetz
Title: Managing Director
COMPANY:
NET 1 UEPS TECHNOLOGIES, INC.
By: _____________________________________________
Name:
Title:
Exhibit A
PURCHASED SHARES
PURCHASER PERCENTAGE ---------------------------------- ---------- General Atlantic Partners 80, L.P. 91.0840% GapStar, LLC 1.8750% GAP Coinvestments III, LLC 0.1563% GAP Coinvestments IV, LLC 5.4572% GAPCO GmbH & Co. KG 1.4275% |
SELLER PERCENTAGE ------------------------------------------------ ---------- CI Law Trustees Limited for the San Roque Trust 4.94% Dr. Serge C.P. Belamant 10.12% South African Private Equity Fund III, L.P. 70.17% South African Private Equity Trust III 1.01% Brenthurst Private Equity II Limited 8.91% Brenthurst Private Equity South Africa I Limited 4.86% |
Exhibit B
REGISTRATION RIGHTS
- The Purchasers will be entitled to two demand registration rights (such demand registration rights to be long form if the Company is not eligible to register its shares of common stock on Form S-3) for an underwritten offering and shall have customary "piggyback" registration rights with respect to any primary or secondary securities offering by the Company or any stockholder of the Company.
- In addition, the Purchasers may at any time require the Company to include its shares of Common Stock in a shelf registration statement and keep such registration statement continuously effective for sales thereunder.
- All registration will be effected at the Company's expense (except for underwriters' discounts and commissions), including one outside counsel for the Purchasers.
Exhibit 10.22
PLACEMENT AGENT AGREEMENT
July 18, 2005
CI Law Trustees Limited for the San Roque Trust
Dr. Serge C.P. Belamant
Net 1 UEPS Technologies, Inc.
c/o Net 1 UEPS Technologies, Inc.
President Place, 4th Floor
Cnr. Jan Smuts Avenue and Bolton Road
Rosebank
Johannesburg
South Africa
Brait International Limited
South African Private Equity Fund III, L.P.
South African Private Equity Trust III
c/o South African Private Equity Fund III, L.P.
Walker House
P.O. Box 908
George Town, Grand Cayman
Cayman Islands
Brenthurst Private Equity II Limited
Brenthurst Private Equity South Africa I Limited
9 Columbus Centre
Pelican Drive
Road Town
Tortola
British Virgin Islands
Dear Sirs:
SECTION 1. APPOINTMENT OF PLACEMENT AGENT. This Agreement confirms our understanding that CI Law Trustees Limited for the San Roque Trust, Dr. Serge C.P. Belamant, Brait International Limited, South African Private Equity Fund III, L.P., South African Private Equity Trust III, Brenthurst Private Equity II Limited and Brenthurst Private Equity South Africa I Limited (collectively, the "Sellers") hereby appoint Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. as their placement agents (collectively, the "Placement Agents") in connection with the proposed private placement referenced in the stock purchase agreement (the "Stock Purchase Agreement") by and among the Sellers, the Purchasers (as defined in the Stock Purchase Agreement) and Net 1 UEPS Technologies, Inc., a Florida corporation (the "Company") and dated July 18, 2005. All
capitalized terms used in this Agreement but not defined herein shall have the same meaning as defined in the Stock Purchase Agreement. On the basis of the representations and warranties contained in the Stock Purchase Agreement, but subject to the terms and conditions set forth herein, the Placement Agents agree to use their reasonable efforts to solicit and receive offers to purchase the Purchased Shares. Notwithstanding anything to the contrary contained in this Agreement, the Placement Agent shall have no obligation to purchase any of the Purchased Shares, or any liability to the Company if any prospective purchaser fails to consummate a purchase of any of the Purchase Shares.
SECTION 2. FEES. (a). Once the sale of the Purchased Shares is consummated, the Placement Agents will charge the Sellers a placement fee (the "Placement Fee") per Purchased Share equivalent to the Public Offering Price (as defined in the underwriting agreement (the "Underwriting Agreement") to be entered into between the Company, certain shareholders of the Company named in Schedule I thereto and the Underwriters (as defined therein)) less the Purchase Price (as defined in the Underwriting Agreement) and each Seller will pay the Placement Fee in respect of the Purchased Shares sold by it on the Closing Date in immediately available funds.
(b) The right of the Placement Agents to receive the fees set forth in this Section 2 shall survive the termination of this Agreement in accordance with Section 6 hereof.
SECTION 3. ADVERTISING. Upon the completion of the Placement, the Placement Agents will be entitled to advertise the transaction in their usual formats, at their expense in periodicals of their choice.
SECTION 4. INDEMNITY AND CONTRIBUTION. The Company and the Placement Agents agree to the indemnification and contribution arrangements set forth in Schedule I hereto.
SECTION 5. INDEMNITY TO SURVIVE. The indemnities set forth herein will remain in full force and effect regardless of any investigation made by or on behalf of the Placement Agents or the Company or any of their respective officers, directors or controlling persons, and will survive delivery of any payment for the Purchased Shares. The provisions of this Section and Sections 2, 4, 6, and 7 hereof shall survive the termination or cancellation of this Agreement.
SECTION 6. TERMINATION. The Placement Agents' services hereunder may be terminated with or without cause by either the Sellers or the Placement Agents at any time and without liability or continuing obligation to the Placement Agents or the Sellers, except for any compensation earned by the Placement Agents to the date of termination.
SECTION 7. GOVERNING LAW. This Agreement (including Schedule I) shall be governed by and construed in accordance with the internal laws of the State of New York.
SECTION 8. COUNTERPARTS; HEADINGS. This Agreement may be signed in counterparts with the same effect as if the signatures thereto were on the same instrument. The headings of the Sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement shall represent a binding agreement between the Placement Agents, the Sellers and the Company.
Very truly yours,
Morgan Stanley & Co. Incorporated
By:___________________________
Name:
Title:
J.P. Morgan Securities Inc.
By:___________________________
Name:
Title:
Accepted as of July 18, 2005
CI Law Trustees Limited for the San Roque Trust Dr. Serge C.P. Belamant
By: /s/ Dr. Serge C.P. Belamant ------------------------------ Name: Dr. Serge C.P. Belamant Title: |
Brait International Limited
By: /s/ Brett Childs ------------------------------ Name: Brett Childs Title: Director |
South African Private Equity Fund III, L.P.
By: /s/ Hans Schibli ------------------------------ Name: Hans Schibli Title: Director |
South African Private Equity Trust III
By: /s/ Anthony Ball ------------------------------ Name: Anthony Ball Title: Manager |
Brenthurst Private Equity II Limited
Brenthurst Private Equity South Africa I Limited
By: /s/ Alasdair J.K. Pein ------------------------------ Name: Alasdair J.K. Pein Title: Managing Partner, Southern Cross Capital LLC |
Net 1 UEPS Technologies, Inc.
By: /s/ ------------------------------ Name: Title: |
SCHEDULE I
This Schedule I is attached to and incorporated by reference into the Placement Agent Agreement dated July 18, 2005 (the "Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement or the Stock Purchase Agreement.
The Company agrees to indemnify and hold harmless the Placement Agents and
their affiliates, and the respective directors, officers, agents and employees
of the Placement Agents and their affiliates and each other entity or person, if
any, controlling the Placement Agents or any of their affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (the Placement Agents and each such entity or person being collectively
referred to as a "Placement Agent Indemnified Party") from and against any
losses, claims, damages or liabilities (or actions in respect thereof) relating
to, arising out of or in connection with (i) the sale of the Purchased Shares or
(ii) the matters contemplated by the Agreement or the transactions contemplated
by the Stock Purchase Agreement caused by any untrue statement or alleged untrue
statement of a material fact contained in the Company's Registration Statement
on Form S-1 (Registration Number 333-125273) or by any omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company will reimburse any Placement Agent Indemnified
Party for all expenses (including, without limitation, fees and disbursements of
counsel) incurred by such Placement Agent Indemnified Party in connection with
investigating, preparing or defending any such action or claim, whether or not
in connection with pending or threatened litigation to which the Placement Agent
Indemnified Party is a party, in each case, as such expenses are incurred or
paid. With respect to clause (i) above, the Company will not, however, be
responsible for any losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the bad
faith or gross negligence of such Placement Agent Indemnified Party. The Company
also agrees that no Placement Agent Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with the sale of the Purchased Shares, except for any such
liability for losses, claims, damages or liabilities with respect to clause (i)
above incurred by the Company that are finally judicially determined to have
resulted from the bad faith or gross negligence of such Placement Agent
Indemnified Party.
In case any proceeding (including any governmental investigation) shall be instituted involving any Placement Agent Indemnified Party, such Placement Agent Indemnified Party shall promptly notify the Company in writing and the Company, upon request of the Placement Agent Indemnified Party, shall retain counsel reasonably satisfactory to the Placement Agent Indemnified Party to represent the Placement Agent Indemnified Party and any others the Company may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, such Placement Agent Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Placement Agent Indemnified Party unless (i) the Company and the Placement Agent
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the Company and the Placement Agent Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
Company shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm (in addition to any local counsel) for all such Placement
Agent Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firms for the
Placement Agent Indemnified Parties, such firms shall be designated in writing
by the Placement Agent Indemnified Parties. The Company shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify each Placement Agent Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time a Placement Agent
Indemnified Party shall have requested the Company to reimburse such Placement
Agent Indemnified Party for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Company agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by the Company
of the aforesaid request and (ii) the Company shall not have reimbursed the
Placement Agent Indemnified Party in accordance with such request prior to the
date of such settlement. The Company shall not, without the prior written
consent of each Placement Agent Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Placement Agent
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Placement Agent Indemnified Party, unless such
settlement includes an unconditional release of such Placement Agent Indemnified
Party from all liability on claims that are the subject matter of such
proceeding.
If the indemnification provided for in the second paragraph of this
Schedule I is unavailable to a Placement Agent Indemnified Party in respect of
any losses, claims, damages or liabilities referred to therein, then the
Company, in lieu of indemnifying such Placement Agent Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Placement
Agent Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and its shareholders, on the one hand, and the
Placement Agents, on the other hand, from the sale of the Purchased Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and of the Placement Agents in connection with the actions,
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and its shareholders and the Placement
Agents shall be deemed to be in the same respective proportions as the net
proceeds that the Sellers will receive from the proposed sale of the Purchased
Shares (after deducting the Placement Fee, but before deducting expenses) and
the total Placement Fee that the Placement Agents will receive from the proposed
sale of the Purchased Shares bear to the aggregate price at which the Purchased
Shares will be sold to Purchasers pursuant to the proposed sale of the Purchased
Shares. The relative fault of the Company, on the one hand, and the Placement
Agents,
on the other hand (i) in the case of any untrue or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact, shall be determined by reference to, among other things, whether such statement or omission relates to information supplied by the Company and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and (ii) in the case of any other action or omission, shall be determined by reference to, among other things, whether such action or omission was taken or omitted to be taken by the Company or by the Placement Agents and the parties' relative intent, knowledge, access to information and opportunity to prevent such action or omission.
The Company and the Placement Agents agree that it would not be just and equitable if contribution pursuant to this Schedule I were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by a Placement Agent Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Placement Agent Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding any of the provisions of this Schedule I, in no event shall the Placement Agents' aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by them under the Agreement.
EXHIBIT 21.1
NUEP Holdings S.a.r.l. - Luxembourg
Net 1 Applied Technologies South Africa Limited - South Africa
Cash Paymaster Service (Pty) Limited - South Africa
Cash Paymaster Services (Eastern Cape) (Pty) Limited - South Africa
Cash Paymaster Services (Northern) (Pty) Limited - South Africa
Cash Paymaster Services (KwaZulu Natal) (Pty) Limited - South Africa
Cash Paymaster Services (Northern Cape) (Pty) Limited - South Africa
Cash Paymaster Services (North West) (Pty) Limited - South Africa
Net 1 Finance Holdings (Pty) Limited - South Africa
Net 1 Southern Africa (Pty) Limited - South Africa
Country-on-a-Card (Pty) Limited - South Africa
Net 1 Solutions (Pty) Limited - South Africa
Singobile Security Services Gauteng (Pty) Ltd - South Africa
Siyeza Security Services (Pty) Limited - South Africa
Moneyline Financial Services (Pty) Limited - South Africa
New World Finance (Pty) Limited - South Africa
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-1/A of our report dated October 8, 2004 (except for Note 15, as to which the date is May 24, 2005, and Note 11, as to which the date is June 17,2005) relating to the financial statements of Net 1 UEPS Technologies, Inc. (which report expresses an unqualified opinion and includes explanatory paragraphs referring to the restatement of the segment information disclosures as well as the restatement of capital stock accounts, share data and earnings per share data), appearing in this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ DELOITTE & TOUCHE (SOUTH AFRICA) ------------------------------------ DELOITTE & TOUCHE Chartered Accountants (SA) Johannesburg Republic of South Africa July 18, 2005 |
Exhibit 23.2
18 July 2005
The Directors
Net 1 UEPS Technologies, Inc.
President Place
4th Floor
Cnr. Jan Smuts Avenue and Bolton Road
ROSEBANK
JOHANNESBURG
SOUTH AFRICA
Dear Sirs
CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1/A of our report dated November 30, 2003, relating to the consolidated financial statements and financial statement schedules of Net 1 Applied Technology Holdings Limited and its subsidiaries as of June 30, 2003 and 2002 and for each of the years in the two year period ended June 30, 2003, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
Yours faithfully
/s/ PKF (JHB) INC ----------------- PKF (JHB) INC |
Exhibit 23.4
Cliffe Dekker Inc
1 Protea Place
Sandown
South Africa
July 15, 2005
Net 1 UEPS Technologies, Inc.
President Place, 4th Floor
Cnr. Jan Smuts Avenue and Bolton Road
Rosebank, Johannesburg
South Africa
Dear Ladies and Gentlemen:
We hereby consent to the use of our name in the Prospectus under the heading "Legal Matters." In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Cliffe Dekker Inc |
Exhibit 99.1
CONSENT
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, the undersigned hereby consents to be named as a person about to become a director of Net 1 UEPS Technologies, Inc., a Florida corporation (the "Company"), in the Registration Statement of the Company on Form S-1 (including any amendments or supplements thereto) to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
/s/ Florian P. Wendelstadt ---------------------------- Florian P. Wendelstadt Date: July 18, 2005 |