Exhibit 10.20
AGREEMENT
between
NEDBANK LIMITED
and
NET 1 UEPS TECHNOLOGIES, INC.
and
NET 1 APPLIED TECHNOLOGIES SOUTH AFRICA LIMITED
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Attorneys
PAGE 2
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
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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").
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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.
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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.
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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
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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;
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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
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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
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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;
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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
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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.
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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
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NAME PHYSICAL ADDRESS TELEFAX
---- ---------------- -------
Net 1 & 4th Floor, President Place, Corner ▇▇▇ ▇▇▇▇▇ Avenue and 442-5908
New Aplitec ▇▇▇▇▇▇ 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
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(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.
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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
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who warrants that he is duly authorised
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