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
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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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇;
2) Net 1 Holdings S.a.r.l (1929) located at ▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇;
3) Net 1 Applied Technology Holdings Limited located at ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇▇▇ Avenue, ▇▇▇▇▇▇ 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 ▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, herein
represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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;
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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 ▇▇▇▇), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, 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.
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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, ▇▇▇▇▇ ▇▇▇▇▇▇▇ 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.
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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
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(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.
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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 ▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇;
13.2. Nedcor at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
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
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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.
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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.
AS WITNESSES:
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1
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For and on behalf of:
Net 1 Holdings S.a.r.l (1929)
2
AS WITNESSES:
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1
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For and on behalf of:
Net 1 Applied Technology Holdings Limited
2
AS WITNESSES:
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1
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For and on behalf of:
Nedcor Bank Limited
2
