Filed pursuant to Rule 424(b)(7)
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A filing Fee of $52.31, based on the average of
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the high and low sales prices of the
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Common Stock on July 10, 2009, calculated in
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accordance with Rules 457(c) and 457(r), has been
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transmitted to the SEC in connection with the
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Common Stock being offered from the registration
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statement (File No. 333-138521) by means of this
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Prospectus Supplement
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PROSPECTUS SUPPLEMENT No. 2
(To Prospectus dated
November 8, 2006)
75,000 Shares
Common Stock
The selling shareholder
identified in this prospectus supplement is transferring 75,000 shares of Net 1
UEPS Technologies, Inc. common stock. We will not receive any proceeds from any
transfer of these shares by the selling shareholder.
Our common stock is currently
listed on the Nasdaq Global Select Market under the symbol UEPS. On July 13,
2009 the last reported sale price of our shares was $12.60 per share.
Investing in our common stock
involves risks. See Risk Factors on page S-2 of this prospectus supplement and
on page 5 of the accompanying prospectus.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful and
complete. Any representation to the contrary is a criminal offense.
___________________________
Prospectus Supplement dated
July 14, 2009
.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts.
The first part is this prospectus supplement, which describes the terms of this
offering of shares of our common stock by the selling shareholder named in this
prospectus supplement. The second part is the accompanying prospectus, dated
November 8, 2006, that is also a part of this document. This prospectus
supplement and the accompanying prospectus are part of a registration statement
that we filed with the Securities and Exchange Commission, or SEC, using the
SECs shelf registration rules. In this prospectus supplement, we provide you
with specific information about the terms of this offering of the shares of
common stock. Generally, when we refer to the prospectus, we are referring to
this prospectus supplement and the accompanying prospectus combined. Both this
prospectus supplement and the accompanying prospectus include important
information about us, the selling shareholder, our common stock and other
information you should know before investing in the shares of common stock. Any
statement in the accompanying prospectus will be deemed to have been modified or
superseded to the extent that a statement contained in this prospectus
supplement modifies or supersedes that statement, and any statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of the accompanying prospectus. Before you invest in shares of
our
S-1
common stock, you should carefully read this prospectus
supplement, along with the accompanying prospectus, in addition to the
information contained in the documents incorporated and deemed to be
incorporated by reference in this prospectus supplement and in the accompanying
prospectus as described under Where You Can Find More Information.
You should
rely only on the information contained in this prospectus supplement, the
accompanying prospectus, the documents incorporated or deemed to be incorporated
by reference in this prospectus supplement and the accompanying prospectus, and
any free writing prospectus that we may prepare in connection with the
disposition of these securities. Neither we nor the selling shareholder has
authorized anyone to provide you with different or additional information. If
anyone provides you with different information, you should not rely on it.
Neither we nor the selling shareholder are making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
Throughout this prospectus, the
terms Net1, Company, we, us and our refer to Net 1 UEPS Technologies,
Inc. and its consolidated subsidiaries
.
RISK FACTORS
You should carefully consider the
risk factors set forth under the caption Risk Factors in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2008 and in our Quarterly Reports
on Form 10-Q, which are incorporated by reference in this prospectus supplement
and under the caption Risk Factors or any similar caption in any of our other
filings with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act incorporated by reference in this prospectus supplement or the
accompanying prospectus, before making an investment decision. For more
information, see Where You Can Find More Information in the accompanying
prospectus.
USE OF PROCEEDS
We will not receive any proceeds
from the transfer of shares of common stock offered by the selling
shareholder.
SELLING SHAREHOLDER
The following table sets forth
information with respect to the number of shares of our common stock owned by
the selling shareholder and the number of shares of our common stock that the
selling shareholder is transferring under this prospectus supplement.
For purposes of the following
table, the number of shares of our common stock beneficially owned has been
determined in accordance with Rule 13d-3 under the Exchange Act, and such
information is not necessarily indicative of beneficial ownership for any other
purpose. Under Rule 13d-3, beneficial ownership includes any shares as to which
a selling shareholder has sole or shared voting power or investment power and
also any shares which that selling shareholder has the right to acquire within
60 days of the date of this prospectus supplement through the exercise of any
stock option, restricted stock unit, warrant or other rights. As of July 13,
2009, 54,506,487 shares of our common stock were outstanding.
The selling shareholder listed in
the table below has sole voting and investment power with respect to the shares
shown as beneficially owned by him, except to the extent applicable law gives
spouses shared authority. The selling shareholders address is c/o Net 1 UEPS
Technologies, Inc., President Place, 4th Floor, Corner of Jan Smuts Avenue and
Bolton Road, Rosebank, Johannesburg, South Africa.
S-2
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Shares Beneficially
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Number of
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Shares Beneficially
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Owned Before the
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Shares
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Owned After the
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Offering
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Being
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Offering
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Selling
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Shareholder
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Number
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Percent
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Offered
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Number
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Percent
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Dr. Serge C.P. Belamant (1)
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2,262,957
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4.1%
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75,000
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2,187,957
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4.0%
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(1) GB Trustees Limited for the San Roque Trust dated 8/18/92
owns 800,799 shares of common stock. Dr. Serge C.P. Belamant as proxy of GB
Trustees has the power to vote all of GB Trustees shares. The remaining
1,462,158 shares are owned directly by Dr. Belamant and include (i) 40,000
shares of restricted stock, the vesting of which is subject to the satisfaction
of certain financial performance and other conditions and (ii) options to
purchase an aggregate of 410,000 shares of common stock, 88,000 of which are
currently exercisable.
Dr. Serge Belamant is our chief
executive officer and chairman of the board.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in
this prospectus and the documents incorporated by reference herein are based on
the beliefs and assumptions of our management and on information currently
available. Forward-looking statements include information about possible or
assumed future results of operations in Managements Discussion and Analysis of
Financial Condition and Results of Operations included in our most recent
Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q and filed
separately with the Securities and Exchange Commission, and other statements
preceded by, followed by or that include the words believes, expects,
anticipates, intends, plans, estimates or similar expressions.
Forward-looking statements are
subject to a number of risks and uncertainties which could cause actual results
to differ materially from those expressed in these forward-looking statements,
including factors described from time to time in our various public filings
incorporated by reference herein. The forward-looking statements in this
prospectus and the documents incorporated by reference speak only as of the date
of the document in which the forward-looking statement is made, and we undertake
no obligation to update or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
PLAN OF DISTRIBUTION
We will not receive any proceeds
of the transfer of the common stock offered by this prospectus supplement. We
will bear all fees and expenses incident to the registration of the shares of
our common stock.
The selling shareholder is
transferring 75,000 shares of common stock to an unaffiliated third party in
settlement of certain outstanding claims. We are registering the transfer of
these shares.
S-3
PROSPECTUS
Common Stock, Preferred Stock, Debt Securities,
Warrants, Purchase Contracts and Units
We may offer from time to time
offer and sell any combination of common stock, preferred stock, debt
securities, warrants, purchase contracts or units described in this prospectus
in one or more offerings. This prospectus provides a general description of the
securities we may offer and sell. Each time we offer and sell securities we will
provide specific terms of the securities offered in a supplement to this
prospectus. The prospectus supplement may also add, update or change information
contained in this prospectus. In addition, certain selling securityholders to be
identified in a prospectus supplement may offer and sell these securities from
time to time, in amounts, at prices and on terms that will be determined at the
time the securities are offered. We urge you to read this prospectus and the
applicable prospectus supplement carefully before you invest in any
securities.
Our common stock is currently
listed on the Nasdaq Global Select Market under the symbol UEPS. On November
7, 2006, the last reported sale price of our common stock was $23.74 per
share.
You should rely only on the
information contained or incorporated by reference in this prospectus. We have
not authorized any other person to provide you with different information.
Investing in these securities
involves risks set forth in the Risk Factors section beginning on page 32 of
our Annual Report on Form 10-K that is incorporated by reference into this
prospectus.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful and
complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used
to consummate a sale of securities unless accompanied by a prospectus
supplement.
This prospectus is dated November 8, 2006.
We have not authorized any dealer, salesman or other person
to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus and the accompanying supplement
to this prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus or the accompanying
prospectus supplement. This prospectus and the accompanying supplement to this
prospectus do not constitute an offer to sell or the solicitation of an offer to
buy any securities other than the registered securities to which they relate,
nor do this prospectus and the accompanying supplement to this prospectus
constitute an offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Net1, Company, we, us and our refer
to Net 1 UEPS Technologies, Inc. and its consolidated subsidiaries
2
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS
This prospectus is part of a
registration statement that we filed with the Securities and Exchange
Commission, or the SEC, utilizing a shelf registration process. Under this
shelf process, we may offer and sell any combination of the securities described
in this prospectus in one or more offerings. This prospectus provides you with a
general description of the securities we may offer and sell. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading Where You Can Find More
Information.
3
We have filed or incorporated by
reference exhibits to the registration statement of which this prospectus forms
a part. You should read the exhibits carefully for provisions that may be
important to you.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual,
quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any documents filed by us at the SECs public
reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room. Our
filings with the SEC are also available to the public through the SECs Internet
site at
http://www.sec.gov
.
We have filed a registration
statement on Form S-3 with the SEC relating to the securities covered by this
prospectus. This prospectus is a part of the registration statement and does not
contain all of the information in the registration statement. Whenever a
reference is made in this prospectus to a contract or other document of Net 1,
please be aware that the reference is only a summary and that you should refer
to the exhibits that are a part of the registration statement for a copy of the
contract or other document. You may review a copy of the registration statement
at the SECs public reference room in Washington, D.C., as well as through the
SECs Internet site.
The SECs rules allow us to
incorporate by reference information into this prospectus. This means that we
can disclose important information to you by referring you to another document.
Any information referred to in this way is considered part of this prospectus
from the date we file that document. Any reports filed by us with the SEC after
the date of this prospectus and before the date that the offering of the
securities by means of this prospectus is terminated shall be incorporated by
reference into this prospectus and will automatically update and, where
applicable, supersede any information contained in this prospectus or
incorporated by reference in this prospectus.
We incorporate by reference into
this prospectus the following documents or information filed with the SEC (other
than, in each case, documents or information deemed to have been furnished and
not filed in accordance with SEC rules):
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(1)
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Annual Report on Form 10-K for the fiscal year ended June
30, 2006;
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(2)
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Quarterly Report on Form 10-Q for the quarter ended
September 30, 2006;
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(3)
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Definitive Proxy on Schedule 14A filed with the SEC on
October 27, 2006;
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(4)
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Current Reports on Form 8-K filed with the SEC on July
10, 2006, August 29, 2006, August 31, 2006, October 10, 2006 and Current
Report on Form 8-K/A filed with the SEC on September 13, 2006;
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(5)
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Description of our common stock contained in Item 7 of
amendment number 2 to our Form 10-SB filed on October 26, 2000 with the
SEC, including any amendment or report filed for the purpose of updating
such description;
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4
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(6)
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All documents filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the
date of this prospectus and before we stop offering the securities under
this prospectus (other than those portions of such documents described in
paragraphs (i), (k), and (l) of Item 402 of Regulation S-K promulgated by
the SEC).
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We will provide without charge to
each person, including any beneficial owner, to whom this prospectus is
delivered, upon his or her written or oral request, a copy of any or all
documents referred to above which have been or may be incorporated by reference
into this prospectus but not delivered with this prospectus excluding exhibits
to those documents unless they are specifically incorporated by reference into
those documents. You can request those documents from Mr. Herman Kotze at
President Place, 4th Floor, Cnr. Jan Smuts Avenue and Bolton Road, Rosebank,
Johannesburg, South Africa, telephone (2711) 343-2000.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Forward-looking statements in
this prospectus and the documents incorporated by reference herein are based on
the beliefs and assumptions of our management and on information currently
available. Forward-looking statements include information about possible or
assumed future results of operations in Managements Discussion and Analysis of
Financial Condition and Results of Operations included in our most recent
Annual Report on Form 10-K, and other statements preceded by, followed by or
that include the words believes, expects, anticipates, intends, plans,
estimates or similar expressions.
These forward looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the companys actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed, implied or inferred by these forward-looking
statements, such as product demand, market and customer acceptance, the effect
of economic conditions, competition, pricing, development difficulties, foreign
currency risks, costs of capital, the ability to consummate and integrate
acquisitions, and other risks detailed in the Companys SEC filings. The Company
undertakes no obligation to revise any of these statements to reflect future
circumstances or the occurrence of unanticipated events.
RISK FACTORS
Our business is influenced by
many factors that are difficult to predict, and that involve uncertainties that
may materially affect actual operating results, cash flows and financial
condition. These risk factors include those described in the documents that are
incorporated by reference in this prospectus, and could include additional
uncertainties not presently known to us or that we currently do not consider to
be material. Before making an investment decision, you should carefully consider
these risks as well as any other information we include or incorporate by
reference in this prospectus or include in any applicable prospectus
supplement.
5
NET 1 UEPS TECHNOLOGIES, INC.
We provide universal electronic
payment system, or UEPS, as an alternative payment system for the unbanked and
under-banked populations of developing economies. We believe that we are the
first company worldwide to implement a system that can enable the estimated four
billion people who generally have limited or no access to a bank account to
enter affordably into electronic transactions with each other, government
agencies, employers, merchants and other financial service providers. To
accomplish this, we have developed and deployed the UEPS. This system uses
secure smart cards that operate in real-time but offline, unlike traditional
payment systems offered by major banking institutions that require immediate
access through a communications network to a centralized computer. This offline
capability means that users of our system can enter into transactions at any
time with other card holders in even the most remote areas so long as a portable
offline smart card reader is available. In addition to payments and purchases,
our system can be used for banking, health care management, international money
transfers, voting and identification. Net1s recently acquired subsidiary, Prism
Holdings Limited (Prism), is a company focused on the development and
provision of secure transaction technology, solutions and services. Prisms core
competencies around secure online transaction processing, cryptography and
integrated circuit card (chip/smart card) technologies are principally applied
to electronic commerce transactions in the telecommunications, banking, retail,
petroleum and utilities market sectors. These technologies form the cornerstones
of the trusted transactions environment and provide us with the building
blocks for developing secure end-to-end payment solutions. More information
about us is available on our web site at
www.net1ueps.com
. Information on
our web site is not incorporated by reference into this prospectus.
Our principal executive offices
are located at President Place, 4th Floor, Cnr. Jan Smuts Avenue and Bolton
Road, Rosebank, Johannesburg, South Africa. Our phone number is (2711)
343-2000.
USE OF PROCEEDS
Unless otherwise indicated in a
prospectus supplement, we anticipate that the net proceeds from our sale of any
securities will be used for general corporate purposes, including working
capital, acquisitions, retirement of debt and other business opportunities. In
the case of a sale by a selling shareholder, we will not receive any of the
proceeds from such sale.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth
our ratio of earnings to fixed charges for the periods indicated.
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Three
Months
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Ended
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Fiscal Year Ended
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September
30,
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2006
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2006
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2005
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2004
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2003
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2002
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Ratio of earnings to fixed charges
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10.82
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11.56
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6.17
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4.25
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4.73
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7.82
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6
DESCRIPTION OF SECURITIES
This prospectus contains a
summary of the securities that Net1 or certain selling securityholders to be
identified in a prospectus supplement may sell. These summaries are not meant to
be a complete description of each security. However, this prospectus and the
accompanying prospectus supplement contain the material terms of the securities
being offered.
DESCRIPTION OF CAPITAL STOCK
The following description is
based upon our amended articles of incorporation, our bylaws and applicable
provisions of law. We have summarized certain portions of the amended articles
of incorporation and by-laws below. The summary is not complete. The amended
articles of incorporation and by-laws are incorporated by reference into this
prospectus in their entirety. You should read the articles of incorporation and
by-laws for the provisions that are important to you.
Net1s authorized capital stock
consists of 83,333,333 shares of common stock and 50,000,000 shares of preferred
stock. As of October 19, 2006, 50,429,385 shares of our common stock, par value
$0.001 per share, and 6,499,259 shares of our special convertible preferred
stock, par value $0.001 per share, which are convertible into common stock on a
one-for-one basis, were outstanding.
Common Stock
The issued and outstanding shares
of common stock are, and the shares of common stock that we may issue in the
future will be, validly issued, fully paid and nonassessable. Holders of our
common stock are entitled to share equally, share for share, if dividends are
declared on our common stock, whether payable in cash, property or our
securities. The shares of common stock are not convertible and the holders
thereof have no preemptive or subscription rights to purchase any of our
securities. Upon liquidation, dissolution or winding up of our company, the
holders of common stock are entitled to share equally, share for share, in our
assets which are legally available for distribution, after payment of all debts
and other liabilities and subject to the prior rights of any holders of any
series of preferred stock then outstanding. Each outstanding share of common
stock is entitled to one vote on all matters submitted to a vote of
stockholders. There is no cumulative voting. Except as otherwise required by law
or the amended articles of incorporation, the holders of common stock vote
together as a single class on all matters submitted to a vote of
stockholders.
Our common stock is currently
listed on the Nasdaq Global Select Market under the symbol UEPS.
Preferred Stock
We may issue shares of preferred
stock in series and may, at the time of issuance, determine the rights,
preferences and limitations of each series. Satisfaction of any dividend
preferences of outstanding shares of preferred stock would reduce the amount of
funds available for the payment of dividends on shares of common stock. Holders
of shares of preferred stock
7
may be entitled to receive a preference payment in the event of
any liquidation, dissolution or winding-up of our company before any payment is
made to the holders of shares of common stock. In some circumstances, the
issuance of shares of preferred stock may render more difficult or tend to
discourage a merger, tender offer or proxy contest, the assumption of control by
a holder of a large block of our securities or the removal of incumbent
management. Upon the affirmative vote of a majority of the total number of
directors then in office, our board of directors, without shareholder approval,
may issue shares of preferred stock with voting and conversion rights which
could adversely affect the holders of shares of common stock.
Special Convertible Preferred Stock
Our special convertible preferred
stock ranks:
-
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 on liquidation,
dissolution or winding up.
Voting Rights
. Holders of our special convertible
preferred stock have the right to receive notice of, attend, speak and vote at
general meetings, and are entitled to vote on all matters on which holders of
common stock are entitled to vote. Holders of special convertible preferred
stock vote together with the holders of common stock as a single class. Each
holder of special convertible preferred stock present in person, or the person
representing such holder, is entitled to a number of votes equal to the number
of shares of common stock that would be issued upon conversion of the special
convertible preferred stock held by such holder on the record date.
We may not take any of the
following actions without the prior vote or written consent of our holders
representing at least a majority of the then outstanding shares of special
convertible preferred stock, voting together as a separate class:
-
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.
Dividends
. Provided that
shares of special convertible preferred stock are outstanding, our board will
determine immediately prior to the declaration of any dividend or distribution
(1) the portion, if any, of our assets available for such dividend or
distribution that is attributable to funds or assets from Net 1 Applied
Technologies South Africa Limited, or New Aplitec,
8
regardless of the manner received, or the South African Amount,
and (2) the portion of such funds or assets that is not from New Aplitec, or the
Non-South African Amount. The South African Amount will not include amounts
received from New Aplitec due to its liquidation, distribution or dividend after
an insolvency or winding up.
Provided that shares of special
convertible preferred stock are outstanding, (1) any dividends or distributions
of Non-South African Amounts must be paid pro rata to all holders of common
stock and special convertible preferred stock, and (2) any dividends or
distributions of South African Amounts can be paid only to holders of common
stock. Our board has complete discretion to declare a dividend or distribution
with respect to South African Amounts or Non-South African Amounts.
Conversion
. Special
convertible preferred stock is convertible into shares of common stock on a
one-for-one basis upon the occurrence of a trigger event, which is defined as
any one of the following events: (1) notification by the reinvesting shareholder
of the intention to convert some or all of such holders special convertible
preferred stock; (2) the abolition or relaxation of Excon regulations such that
South African residents would be permitted to directly hold shares of non-South
African companies; or (3) our liquidation, insolvency or other winding up. With
each converted share of special convertible preferred stock that is to be
converted, we will receive:
-
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.
No fractional shares of common
stock shall be issued upon conversion of the special convertible preferred
stock, unless our board of directors shall otherwise determine to issue
fractional shares. In lieu of fractional shares, we will pay cash equal to such
fractional amount multiplied by the fair market value per share of common stock
on the date of conversion. If more than one share of special convertible
preferred stock is being converted at one time by the same holder, then the
number of full shares issuable upon conversion will be calculated on the basis
of the aggregate number of shares converted at that time.
We will reserve and keep
available out of our authorized but unissued shares of common stock the full
number of shares of common stock deliverable upon the conversion of all
outstanding special convertible preferred stock.
Upon conversion, all rights with
respect to shares for special convertible preferred stock will cease. Converted
shares will be cancelled and have the status of authorized but unissued
preferred stock, without designation as to series until such shares are once
more designated as part of a particular series by the board of directors.
Transfer Restrictions
.
Special convertible preferred stock may not be sold, assigned, transferred,
pledged, or encumbered, except to us upon conversion into shares of common
stock.
9
The shares of special convertible preferred stock may not be
held by any person other than the Aplitec Holdings Participation Trust for the
benefit of the New Aplitec Participation Trust and indirectly for the benefit of
reinvesting shareholders, or directly by the South African Trust for the benefit
of reinvesting shareholders in connection with a conversion into common
stock.
Liquidation, Dissolution and
Winding Up
. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up, all outstanding shares of
special convertible preferred stock will automatically convert and holders will
be entitled to receive pari passu with holders of common stock, any assets
distributed for the benefit of its shareholders.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be our
direct unsecured general obligations. The debt securities will be either senior
debt securities or subordinated debt securities. The debt securities will be
issued under one or more separate indentures between us and The Bank of New
York, as trustee. Senior debt securities will be issued under a senior indenture
to be executed between us and The Bank of New York, as trustee, which we refer
to as the senior indenture. Subordinated debt securities will be issued under a
subordinated indenture to be executed between us and The Bank of New York, as
trustee, which we refer to as the subordinated indenture. Together the senior
indenture and the subordinated indenture are called the indentures.
We have summarized select
portions of the material provisions of the indentures below. The summary is not
complete. The forms of the indentures have been filed as exhibits to the
registration statement of which this prospectus forms a part, and you should
read the indentures for provisions that may be important to you. We will
indicate in the applicable prospectus supplement any material variation from the
expected terms of the indentures described below.
General
The debt securities will be our
direct unsecured general obligations. The senior debt securities will rank
equally with all of our other senior and unsubordinated debt. The subordinated
debt securities will have a junior position to all of our senior debt.
Because we are a holding company
that conducts all of its operations through subsidiaries, holders of the debt
securities will have a junior position to claims of creditors of our
subsidiaries, including trade creditors, debtholders, secured creditors, taxing
authorities, guarantee holders and any preferred stockholders, except to the
extent that the debt securities are guaranteed by one or more subsidiary
guarantees.
The provisions of each indenture
allow us to reopen a previous issue of a series of debt securities and issue
additional debt securities of that series.
A prospectus supplement relating
to any series of debt securities being offered will include specific terms
relating to the offering. The terms will be established in an officers
certificate or a supplemental indenture. The officers certificate or
supplemental indenture will be signed at the time of issuance and will contain
important information. The officers certificate or supplemental indenture will
be filed as an exhibit to a Current Report on Form 8-K of Net1,
10
which will be publicly available. The officers certificate or
supplemental indenture will include some or all of the following terms for a
particular series of debt securities:
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the title of the securities;
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any limit on the amount that may be issued;
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whether or not the debt securities will be issued in global form and who
the depositary will be;
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the maturity date(s);
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the interest rate or the method of computing the interest rate;
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the date or dates from which interest will accrue, or how such date or
dates will be determined, and the interest payment date or dates and any
related record dates;
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the place(s) where payments will be made;
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Net1s right, if any, to defer payment of interest and the maximum length
of any deferral period;
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the terms and conditions on which the debt securities may be redeemed at
the option of Net1;
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the date(s), if any, on which, and the price(s) at which Net1 is obligated
to redeem, or at the holders option to purchase, such series of debt
securities and other related terms and provisions;
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any provisions granting special rights to holders when a specified event
occurs;
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any changes to or additional events of default or covenants;
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any special tax implications of the debt securities;
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the denominations in which the debt securities will be issued, if other
than denominations of $1,000 and whole multiples of $1,000;
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the subordination terms of any subordinated debt securities; and
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any other terms that are not inconsistent with the indenture.
Fixed Rate Debt Securities
Each fixed rate debt security
will mature on the date specified in the applicable prospectus supplement.
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Each fixed rate debt security will bear interest from the date
of issuance at the annual rate stated on its face until the principal is paid or
made available for payment. Interest on fixed rate debt securities will be
computed on the basis of a 360-day year of twelve 30-day months. Interest on
fixed rate debt securities will accrue from and including the most recent
interest payment date in respect of which interest has been paid or duly
provided for, or, if no interest has been paid or duly provided for, from and
including the issue date or any other date specified in a prospectus supplement
on which interest begins to accrue. Interest will accrue to but excluding the
next interest payment date, or, if earlier, the date of maturity or earlier
redemption or repayment, as the case may be.
Payments of interest on fixed
rate debt securities will be made on the interest payment dates specified in the
applicable prospectus supplement. However, if the first interest payment date is
less than 15 days after the date of issuance, interest will not be paid on the
first interest payment date, but will be paid on the second interest payment
date.
Unless otherwise specified in the
applicable prospectus supplement, if any scheduled interest payment date,
maturity date or date of redemption or repayment is not a business day, then we
may pay the applicable interest, principal and premium, if any, on the next
succeeding business day, and no additional interest will accrue during the
period from and after the scheduled interest payment date, maturity date or date
of redemption or repayment.
A fixed rate debt security may
pay a level amount in respect of both interest and principal amortized over the
life of the debt security. Payments of principal and interest on amortizing debt
securities will be made on the interest payment dates specified in the
applicable prospectus supplement, and at maturity or upon any earlier redemption
or repayment. Payments on amortizing debt securities will be applied first to
interest due and payable and then to the reduction of the unpaid principal
amount. We will provide to the original purchaser, and will furnish to
subsequent holders upon request to us, a table setting forth repayment
information for each amortizing debt security.
Floating Rate Debt Securities
Each floating rate debt security
will mature on the date specified in the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, each
floating rate debt security will bear interest at LIBOR plus a margin to be
specified in the applicable prospectus supplement. A floating rate debt security
may also have either or both of the following limitations on the interest
rate:
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a maximum limitation, or ceiling, on the rate of interest which may accrue
during any interest period, which we refer to as the maximum interest rate;
and/or
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a minimum limitation, or floor, on the rate of interest that may accrue
during any interest period, which we refer to as the minimum interest rate.
Any applicable maximum interest
rate or minimum interest rate will be set forth in the applicable prospectus
supplement.
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Interest on floating rate debt
securities will accrue from and including the most recent interest payment date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the issue date or any other
date specified in a prospectus supplement on which interest begins to accrue.
Interest will accrue to but excluding the next interest payment date, or, if
earlier, the date on which the principal has been paid or duly made available
for payment, except as described below.
The interest rate in effect from
the date of issue to the first interest reset date for a floating rate debt
security will be the initial interest rate specified in the applicable
prospectus supplement. We refer to this rate as the initial interest rate. The
interest rate on each floating rate debt security may be reset daily, weekly,
monthly, quarterly, semiannually or annually. This period is the interest reset
period and the first day of each interest reset period is the interest reset
date. The interest determination date for any interest reset date is the day
the calculation agent will refer to when determining the new interest rate at
which a floating rate will reset. LIBOR for each interest reset date, other
than for the initial interest rate, will be determined by the calculation agent
as follows:
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(i)
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LIBOR will be the offered rate for deposits in U.S.
dollars for the three month period which appears on Telerate Page 3750
at approximately 11:00 a.m., London time, two London banking days prior
to the applicable interest reset date.
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(ii)
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If this rate does not appear on the Telerate Page 3750,
the calculation agent will determine the rate on the basis of the rates at
which deposits in U.S. dollars are offered by four major banks in the
London interbank market (selected by the calculation agent after
consulting with us) at approximately 11:00 a.m., London time, two London
banking days prior to the applicable interest reset date to prime banks in
the London interbank market for a period of three months commencing on
that interest reset date and in principal amount equal to an amount not
less than $1,000,000 that is representative for a single transaction in
such market at such time. In such case, the calculation agent will request
the principal London office of each of the aforesaid major banks to
provide a quotation of such rate. If at least two such quotations are
provided, LIBOR for that interest reset date will be the average of the
quotations. If fewer than two quotations are provided as requested, LIBOR
for that interest reset date will be the average of the rates quoted by
three major banks in New York, New York (selected by the calculation agent
after consulting with us) at approximately 11:00 a.m., New York time, two
London banking days prior to the applicable interest reset date for loans
in U.S. dollars to leading banks for a period of three months commencing
on that interest reset date and in a principal amount equal to an amount
not less than $1,000,000 that is representative for a single transaction
in such market at such time; provided that if fewer than three quotations
are provided as requested, for the period until the next interest reset
date, LIBOR will be the same as the rate determined on the immediately
preceding interest reset date.
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The interest reset dates will be
specified in the applicable prospectus supplement. If an interest reset date for
any floating rate debt security falls on a day that is not a business day, it
will be postponed to the following business day, except that, if that business
day is in the next calendar month, the interest reset date will be the
immediately preceding business day.
A London banking day is any day
in which dealings in U.S. dollar deposits are transacted in the London interbank
market. Telerate Page 3750 means the display page so designated on the
Telerate Service for the purpose of displaying London interbank offered rates of
major banks (or any successor page).
The applicable prospectus
supplement will specify a calculation agent for any issue of floating rate debt
securities. The calculation agent will, upon the request of the holder of any
floating rate debt security, provide the interest rate then in effect. All
calculations made by the calculation agent in the absence of willful misconduct,
bad faith or manifest error shall be conclusive for all purposes and binding on
us and the holders of the floating rate debt securities. We may appoint a
successor calculation agent at any time at our discretion and without
notice.
All percentages resulting from
any calculation of the interest rate with respect to the floating rate debt
securities will be rounded, if necessary, to the nearest one-hundred thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or
.0987655) and 9.876544% (or .09876544) would be rounded to 9.87654% (or
.0987654)), and all dollar amounts in or resulting from any such calculation
will be rounded to the nearest cent (with one-half cent being rounded
upward).
Interest on the floating rate
debt securities will be computed and paid on the basis of a 360-day year and the
actual number of days in each interest payment period. The interest rate on the
floating rate debt securities will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
We will pay interest on floating
rate debt securities on the interest payment dates specified in the applicable
prospectus supplement. However, if the first interest payment date is less than
15 days after the date of issuance, interest will not be paid on the first
interest payment date, but will be paid on the second interest payment date. If
any scheduled interest payment date, other than the maturity date or any earlier
redemption or repayment date, for any floating rate debt security falls on a day
that is not a business day, it will be postponed to the following business day,
except that if that business day would fall in the next calendar month, the
interest payment date will be the immediately preceding business day. If the
scheduled maturity date or any earlier redemption or repayment date of a
floating rate debt security falls on a day that is not a business day, the
payment of principal, premium, if any, and interest, if any, will be made on the
next succeeding business day, but interest on that payment will not accrue
during the period from and after the maturity, redemption or repayment date.
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Conversion or Exchange Rights
The prospectus supplement will
describe the terms, if any, on which a series of debt securities may be
convertible into or exchangeable for our common stock, preferred stock, debt
securities or other securities, or securities of third parties. These terms will
include provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at the option of Net1. These provisions may allow or
require adjustment of the number of shares of common stock or other securities
of Net1 to be received by the holders of such series of debt securities.
Optional Redemption
Unless the prospectus supplement
relating to any series of debt securities provides otherwise with respect to
such series, each series of debt securities will be redeemable in whole at any
time or in part from time to time, at our option, at a redemption price equal to
the greater of:
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100% of the principal amount of the series of debt securities to be
redeemed; or
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the sum of the present values of the remaining scheduled payments of
principal and interest on the series of debt securities to be redeemed
(exclusive of interest accrued to the date of redemption) discounted to the
date of redemption on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months) at the then current Treasury Rate plus a spread as
specified in the applicable prospectus supplement.
In each case we will pay accrued
and unpaid interest on the principal amount to be redeemed to the date of
redemption.
Comparable Treasury Issue means
the United States Treasury security selected by the Independent Investment
Banker as having a maturity comparable to the remaining term (Remaining Life)
of the series of debt securities to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such series of debt securities.
Comparable Treasury Price
means, with respect to any redemption date, (1) the average of the Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the trustee obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all
such quotations.
Independent Investment Banker
means the investment banking institution or institutions specified in the
applicable prospectus supplement and their respective successors, or, if such
firms or the successors, if any, to such firm or firms, as the case may be, are
unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by us.
Reference Treasury Dealer means
the investment banking institutions specified as such in the applicable
prospectus supplement; provided, however, that if any of them ceases to be a
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primary U.S. Government securities dealers (each a Primary
Treasury Dealer), we will substitute another Primary Treasury Dealer.
Reference Treasury Dealer
Quotations means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third business day
preceding such redemption date.
Treasury Rate means, with respect to
any redemption date, the rate per year equal to:
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the yield, under the heading which represents the average
for the immediately preceding week, appearing in the most recently
published statistical release designated H.15(519) or any successor
publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under the
caption Treasury Constant Maturities, for the maturity corresponding to
the Comparable Treasury Issue; provided that, if no maturity is within
three months before or after the remaining life of the series of debt
securities to be redeemed, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined
and the Treasury Rate shall be interpolated or extrapolated from those
yields on a straight line basis, rounding to the nearest month;
or
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if such release (or any successor release) is not
published during the week preceding the calculation date or does not
contain such yields, the rate per year equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
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The Treasury Rate will be
calculated on the third business day preceding the redemption date. As used in
the immediately preceding sentence and in the definition of Reference Treasury
Dealer Quotations above, the term business day means any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to remain closed.
Notice of any redemption will be
mailed at least 30 but not more than 60 days before the redemption date to each
holder of record of the series of debt securities to be redeemed at its
registered address. The notice of redemption will state, among other things, the
amount of the series of debt securities to be redeemed, the redemption date, the
manner in which the redemption price will be calculated and the place or places
that payment will be made upon presentation and surrender of the series of debt
securities to be redeemed. If less than all of a series of debt securities are
to be redeemed at our option, the trustee will select, in a manner it deems fair
and appropriate, the debt securities of that series, or portions of the debt
securities of that series, to be redeemed. Unless we default in the payment of
the redemption price with
16
respect to any debt securities called for redemption, interest
will cease to accrue on such debt securities at the redemption date.
The Company will not be required
(i) to issue, register the transfer of or exchange any series of debt securities
during a period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any debt
securities of any series so selected for redemption in whole or in part, except
the unredeemed portion of any such series of debt securities being redeemed in
part.
Covenants
Under the indentures, Net1 agrees
to pay the interest, principal and any premium on the debt securities when due,
and to maintain a place of payment. In addition, we must comply with the
covenants described below:
Limitation on Liens on Stock of our Significant
Subsidiaries
. The indentures prohibit us and our subsidiaries from directly
or indirectly creating, assuming, incurring or permitting to exist any
Indebtedness secured by any lien on the voting stock or voting equity interest
of our Significant Subsidiaries (as defined in the indentures) unless the debt
securities then outstanding (and, if we so elect, any other Indebtedness of Net1
that is not subordinate to such debt securities and with respect to which we are
obligated to provide such security) are secured equally and ratably with such
Indebtedness for so long as such Indebtedness is so secured. Indebtedness is
defined as the principal of and any premium and interest due on indebtedness of
a person (as defined in the indentures), whether outstanding on the original
date of issuance of a series of debt securities or thereafter created, incurred
or assumed, which is (a) indebtedness for money borrowed and (b) any amendments,
renewals, extensions, modifications and refundings of any such indebtedness. For
the purposes of this definition, indebtedness for money borrowed means (1) any
obligation of, or any obligation guaranteed by, such person for the repayment of
borrowed money, whether or not evidenced by bonds, debentures, notes or other
written instruments, (2) any obligation of, or any obligation guaranteed by,
such person evidenced by bonds, debentures, notes or similar written
instruments, including obligations assumed or incurred in connection with the
acquisition of property, assets or businesses (provided, however, that the
deferred purchase price of any business or property or assets shall not be
considered Indebtedness if the purchase price thereof is payable in full within
90 days from the date on which such indebtedness was created), and (3) any
obligations of such person as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting principles
and leases of property or assets made as part of any sale and lease-back
transaction to which such person is a party. For purposes of this covenant only,
Indebtedness also includes any obligation of, or any obligation guaranteed by,
any person for the payment of amounts due under a swap agreement or similar
instrument or agreement, or under a foreign currency hedge or similar instrument
or agreement. If we are required to secure outstanding debt securities equally
and ratably with other Indebtedness under this covenant, we will be required to
document our compliance with the covenant and thereafter the trustee will be
authorized to enter into a supplemental agreement or indenture and to take such
action as it may deem advisable to enable it to enforce the rights of the
holders of the outstanding debt securities so secured.
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Provision of Compliance Certificate
. We are required
under the indentures to deliver to the trustee within 120 days after the end of
each fiscal year an officers certificate certifying as to our compliance with
all conditions and covenants under the relevant indenture, or if we are not in
compliance, identifying and describing the nature and status of such
non-compliance.
Consolidation, Merger or Sale
The indentures do not restrict
the ability of Net1 to merge or consolidate, or sell, convey, transfer or lease
all or substantially all of its assets as long as certain conditions are met. We
may only merge or consolidate with, or convey, transfer or lease all of our
assets to, any person, if doing so will not result in an event of default. Any
such successor, acquiror or lessor of such assets must expressly assume all of
the obligations of Net1 under the indentures and the debt securities and will
succeed to every right and power of Net1 under the indentures. Thereafter,
except in the case of a lease, the predecessor or transferor of such assets will
be relieved of all obligations and covenants under the relevant indenture and
debt securities.
Events of Default Under the Indentures
The following are events of
default under the indentures with respect to any series of debt securities
issued:
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we fail to pay interest when due and such failure continues for 90 days,
unless the time for payment has been properly extended or deferred in
accordance with the terms of the particular series;
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we fail to pay the principal or any premium when due, unless the maturity
has been properly extended in accordance with the terms of the particular
series;
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we fail to observe or perform any other covenant or agreement contained in
the debt securities or the indentures, other than a covenant or agreement
specifically relating to another series of debt securities, and such failure
continues for 90 days after we receive a notice of default from the trustee or
from the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of all of the affected series;
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certain events of bankruptcy or insolvency, whether voluntary or not; and
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any additional events of default that may be established with respect to a
particular series of debt securities under the indentures, as may be specified
in the applicable prospectus supplement.
If, with regard to any series, an
event of default resulting from a failure to pay principal, any premium or
interest occurs and is continuing, the trustee or the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of that series may
declare the principal of all debt securities of that series immediately due and
payable.
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If an event of default other than
a failure to pay principal, any premium or interest occurs and is continuing,
the trustee or the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of all affected series (all such series voting
together as a single class) may declare the principal of all debt securities of
such affected series immediately due and payable.
The holders of a majority in
principal amount of the outstanding debt securities of all affected series
(voting together as a single class) may waive any past default with respect to
such series and its consequences, except a default or events of default
regarding payment of principal, any premium or interest, in which case the
holders of the outstanding debt securities of each affected series shall vote to
waive such default or event of default as a separate class. Such a waiver will
eliminate the default.
Unless otherwise specified in the
indentures, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of its rights or powers under the relevant
indenture unless the holders of the debt securities have offered the trustee
indemnity reasonably satisfactory to the trustee against the costs, expenses and
liabilities that it might incur. The holders of a majority in principal amount
of the outstanding debt securities of all series affected by an event of
default, voting together as a single class, or, in the event of a default in the
payment of principal, any premium or interest, the holders of a majority of the
principal amount outstanding of each affected series voting as a separate class,
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
power conferred on the trustee with respect to the debt securities of such
series, provided that:
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such direction is not in conflict with any law or the applicable indenture
or unduly prejudicial to the rights of holders of any other series of debt
securities outstanding under the applicable indenture; and
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unless otherwise provided under the Trust Indenture Act, the trustee need
not take any action that might involve it in personal liability.
A holder of the debt securities
of a particular series will only have the right to institute a proceeding under
the indentures or to appoint a receiver or trustee, or to seek other remedies,
in each case with respect to such series of debt securities, if:
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the holder has given written notice to the trustee of a continuing event of
default;
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in the case of an event of default relating to the payment of principal,
any premium or interest, the holders of at least 25% in aggregate principal
amount of the outstanding debt securities of the particular series have made
written request to the trustee to institute proceedings as trustee;
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in the case of an event of default not relating to payment of principal,
any premium or interest, the holders of at least 25% in aggregate principal
amount of the outstanding debt securities of all series affected by such event
of default (voting together as a
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single class) have made written request to the
trustee to institute proceedings as trustee;
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such holders have offered indemnity reasonably satisfactory to the trustee
to cover the cost of the proceedings; and
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the trustee does not institute a proceeding, and does not receive
conflicting directions from a majority in principal amount of the outstanding
debt securities of (i) the particular series, in the case of an event of
default relating to the payment of principal, any premium or interest or (ii)
all affected series, in the case of an event of default not relating to the
payment of principal, any premium or interest, in each case, within 60 days of
receiving the written notice of an event of default.
Modification of Indenture; Waiver
Without the consent of any
holders of debt securities, Net1 and the trustee may change an indenture:
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to fix any ambiguity, defect or inconsistency in the indenture;
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to effect the assumption of a successor corporation of our obligations
under such indenture and the outstanding debt securities;
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to add to our covenants for the benefit of the holders of all or any series
of debt securities under such indenture or surrender any right or power we
have under such indenture;
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to change anything that does not materially adversely affect the interests
of any holder of debt securities of any series; and
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to effect certain other limited purposes described in the indenture.
The rights of holders of a series
of debt securities may be changed by Net1 and the trustee with the written
consent of the holders of a majority of the principal amount of the outstanding
debt securities of all series then outstanding under the relevant indenture (all
such series voting together as a single class). However, the following changes
may only be made with the consent of each holder of debt securities of each
series affected by the change:
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extending the fixed maturity;
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reducing the principal amount;
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reducing the rate of or extending the time of payment of interest;
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reducing any premium payable upon redemption;
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reducing the percentage of debt securities referred to above, the holders
of which are required to consent to any amendment; or
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in respect of the subordinated indenture, making any change to the
subordination terms of any debt security that would adversely affect the
holders of the debt securities of that series.
Rights and Duties of the Trustee
The trustee, except when there is
an event of default, will perform only those duties as are specifically stated
in the indentures. If an event of default has occurred with respect to any
series of debt securities, the trustee must exercise with respect to such debt
securities the rights and powers it has under the indenture and use the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Except as provided in the preceding sentence,
the trustee is not required to exercise any of the powers given it by the
indentures at the request of any holder of debt securities unless it is offered
reasonable security or indemnity against the costs, expenses and liabilities
that it might incur. The trustee is not required to spend or risk its own money
or otherwise become financially liable while performing its duties or exercising
its rights or powers unless it reasonably believes that it will be repaid or
receive adequate indemnity. The trustee will not be deemed to have any notice of
any default or event of default unless a responsible officer of the trustee has
actual knowledge of or receives written notice of the default which specifies
the affected securities and the relevant indenture. Furthermore, the rights and
protections of the trustee, including its right of indemnification under the
indentures, extend to the trustees officers, directors, agents and employees,
and will survive the trustees resignation and removal.
Payment and Paying Agents
We will pay interest on any debt
securities to the person in whose name the debt securities are registered on the
regular record date for the applicable interest payment date.
We will pay principal, any
premium and interest on the debt securities of a particular series at the office
of one or more paying agents that we designate for that series. Unless otherwise
stated in the applicable supplemental indenture and prospectus supplement, we
will initially designate the corporate trust office of the trustee in the City
of New York as our sole paying agent. We will be required to maintain a paying
agent in each place of payment for the debt securities.
All money we pay to a paying
agent or the trustee for the payment of principal, any premium or interest on
any debt security which remains unclaimed for a period of two years after the
principal, premium or interest has become due and payable will, upon our
request, be repaid to us, and the holder of the debt security may then look only
to us for payment of those amounts.
Governing Law
The indentures and the debt
securities will be governed by and interpreted in accordance with the laws of
the State of New York.
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Subordination of Subordinated Debt Securities
The subordinated debt securities
will be unsecured and will be subordinate and junior in priority of payment to
our other indebtedness on the terms described in the prospectus supplement
relating to such securities. The subordinated indenture does not limit the
amount of subordinated debt securities which we may issue, nor does it limit our
ability to issue any other secured or unsecured debt.
The prospectus supplement
relating to any series of subordinated debt securities will disclose the amount
of debt of Net1 that will be senior to those subordinated debt securities.
Subsidiary Guarantees
If specified in the prospectus
supplement, certain of our subsidiaries may guarantee our obligations relating
to debt securities issued under this prospectus. The specific terms and
provisions of each subsidiary guarantee will be disclosed in the applicable
prospectus supplement.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase
our debt or equity securities or securities of third parties or other rights,
including rights to receive payment in cash or securities based on the value,
rate or price of one or more specified commodities, currencies, securities or
indices, or any combination of the foregoing. Warrants may be issued
independently or together with any other securities and may be attached to, or
separate from, such securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a warrant agent.
The terms of any warrants to be issued and a description of the material
provisions of the applicable warrant agreement will be set forth in the
applicable prospectus supplement.
DESCRIPTION OF PURCHASE CONTRACTS
We may issue purchase contracts for
the purchase or sale of:
-
debt or equity securities issued by us or securities of third parties, a
basket of such securities, an index or indices of such securities or any
combination of the above as specified in the applicable prospectus supplement;
-
currencies; or
-
commodities.
Each purchase contract will
entitle the holder thereof to purchase or sell, and obligate us to sell or
purchase, on specified dates, such securities, currencies or commodities at a
specified purchase price, which may be based on a formula, all as set forth in
the applicable prospectus supplement. We may, however, satisfy our obligations,
if any, with respect to any purchase contract by delivering the cash value of
such purchase contract or the cash value of the property
22
otherwise deliverable or, in the case of purchase contracts on
underlying currencies, by delivering the underlying currencies, as set forth in
the applicable prospectus supplement. The applicable prospectus supplement will
also specify the methods by which the holders may purchase or sell such
securities, currencies or commodities and any acceleration, cancellation or
termination provisions or other provisions relating to the settlement of a
purchase contract.
The purchase contracts may
require us to make periodic payments to the holders thereof or vice versa, which
payments may be deferred to the extent set forth in the applicable prospectus
supplement, and those payments may be unsecured or prefunded on some basis. The
purchase contracts may require the holders thereof to secure their obligations
in a specified manner to be described in the applicable prospectus supplement.
Alternatively, purchase contracts may require holders to satisfy their
obligations thereunder when the purchase contracts are issued. Our obligation to
settle such pre-paid purchase contracts on the relevant settlement date may
constitute indebtedness. Accordingly, pre-paid purchase contracts will be issued
under either the senior indenture or the subordinated indenture.
DESCRIPTION OF UNITS
As specified in the applicable
prospectus supplement, we may issue units consisting of one or more purchase
contracts, warrants, debt securities, shares of preferred stock, shares of
common stock or any combination of such securities.
FORMS OF SECURITIES
Each debt security, warrant and
unit will be represented either by a certificate issued in definitive form to a
particular investor or by one or more global securities representing the entire
issuance of securities. Certificated securities in definitive form and global
securities will be issued in registered form. Definitive securities name you or
your nominee as the owner of the security, and in order to transfer or exchange
these securities or to receive payments other than interest or other interim
payments, you or your nominee must physically deliver the securities to the
trustee, registrar, paying agent or other agent, as applicable. Global
securities name a depositary or its nominee as the owner of the debt securities,
warrants or units represented by these global securities. The depositary
maintains a computerized system that will reflect each investors beneficial
ownership of the securities through an account maintained by the investor with
its broker/dealer, bank, trust company or other representative, as we explain
more fully below.
Registered Global Securities
We may issue the registered debt
securities, warrants and units in the form of one or more fully registered
global securities that will be deposited with a depositary or its nominee
identified in the applicable prospectus supplement and registered in the name of
that depositary or nominee. In those cases, one or more registered global
securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal or face amount of the securities to be
represented by registered global securities. Unless and until it is exchanged in
whole for securities in definitive registered form, a registered global security
may
23
not be transferred except as a whole by and among the
depositary for the registered global security, the nominees of the depositary or
any successors of the depositary or those nominees.
If not described below, any
specific terms of the depositary arrangement with respect to any securities to
be represented by a registered global security will be described in the
prospectus supplement relating to those securities. We anticipate that the
following provisions will apply to all depositary arrangements.
Ownership of beneficial interests
in a registered global security will be limited to persons, called participants,
that have accounts with the depositary or persons that may hold interests
through participants. Upon the issuance of a registered global security, the
depositary will credit, on its book-entry registration and transfer system, the
participants accounts with the respective principal or face amounts of the
securities beneficially owned by the participants. Any dealers, underwriters or
agents participating in the distribution of the securities will designate the
accounts to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership interests will
be effected only through, records maintained by the depositary, with respect to
interests of participants, and on the records of participants, with respect to
interests of persons holding through participants. The laws of some states may
require that some purchasers of securities take physical delivery of these
securities in definitive form. These laws may impair your ability to own,
transfer or pledge beneficial interests in registered global securities.
So long as the depositary, or its
nominee, is the registered owner of a registered global security, that
depositary or its nominee, as the case may be, will be considered the sole owner
or holder of the securities represented by the registered global security for
all purposes under the applicable indenture, warrant agreement or unit
agreement. Except as described below, owners of beneficial interests in a
registered global security will not be entitled to have the securities
represented by the registered global security registered in their names, will
not receive or be entitled to receive physical delivery of the securities in
definitive form and will not be considered the owners or holders of the
securities under the applicable indenture, warrant agreement or unit agreement.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for that registered
global security and, if that person is not a participant, on the procedures of
the participant through which the person owns its interest, to exercise any
rights of a holder under the applicable indenture, warrant agreement or unit
agreement. We understand that under existing industry practices, if we request
any action of holders or if an owner of a beneficial interest in a registered
global security desires to give or take any action that a holder is entitled to
give or take under the applicable indenture, warrant agreement or unit
agreement, the depositary for the registered global security would authorize the
participants holding the relevant beneficial interests to give or take that
action, and the participants would authorize beneficial owners owning through
them to give or take that action or would otherwise act upon the instructions of
beneficial owners holding through them.
Principal, premium, if any, and
interest payments on debt securities, and any payments to holders with respect
to warrants or units, represented by a registered global security registered in
the name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the registered global
security. None of Net1, the trustees, the
24
warrant agents, the unit agents or any other agent of Net1,
agent of the trustees or agent of the warrant agents or unit agents will have
any responsibility or liability for any aspect of the records relating to
payments made on account of beneficial ownership interests in the registered
global security or for maintaining, supervising or reviewing any records
relating to those beneficial ownership interests.
We expect that the depositary for
any of the securities represented by a registered global security, upon receipt
of any payment of principal, premium, interest or other distribution of
underlying securities or other property to holders on that registered global
security, will immediately credit participants accounts in amounts
proportionate to their respective beneficial interests in that registered global
security as shown on the records of the depositary. We also expect that payments
by participants to owners of beneficial interests in a registered global
security held through participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in street
name, and will be the responsibility of those participants.
If the depositary for any of
these securities represented by a registered global security is at any time
unwilling or unable to continue as depositary or ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, and a successor depositary
registered as a clearing agency under the Securities Exchange Act of 1934 is not
appointed by us within 90 days, we will issue securities in definitive form in
exchange for the registered global security that had been held by the
depositary. Any securities issued in definitive form in exchange for a
registered global security will be registered in the name or names that the
depositary gives to the relevant trustee, warrant agent, unit agent or other
relevant agent of ours or theirs. It is expected that the depositarys
instructions will be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in the registered
global security that had been held by the depositary.
PLAN OF DISTRIBUTION
Net1 and/or the selling
securityholders, if applicable, may sell the securities in one or more of the
following ways (or in any combination) from time to time:
The prospectus supplement will state
the terms of the offering of the securities, including:
-
the name or names of any underwriters, dealers or agents;
-
the purchase price of such securities and the proceeds to be received by
Net1, if any;
-
any underwriting discounts or agency fees and other items constituting
underwriters or agents compensation;
25
-
any initial public offering price;
-
any discounts or concessions allowed or reallowed or paid to dealers; and
-
any securities exchanges on which the securities may be listed.
Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If we and/or the selling
securityholders, if applicable, use underwriters in the sale, the securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including:
-
negotiated transactions;
-
at a fixed public offering price or prices, which may be changed;
-
at market prices prevailing at the time of sale;
-
at prices related to prevailing market prices; or
-
at negotiated prices.
Unless otherwise stated in a
prospectus supplement, the obligations of the underwriters to purchase any
securities will be conditioned on customary closing conditions and the
underwriters will be obligated to purchase all of such series of securities, if
any are purchased.
We and/or the selling
securityholders, if applicable, may sell the securities through agents from time
to time. The prospectus supplement will name any agent involved in the offer or
sale of the securities and any commissions we pay to them. Generally, any agent
will be acting on a best efforts basis for the period of its appointment.
We and/or the selling
securityholders, if applicable, may authorize underwriters, dealers or agents to
solicit offers by certain purchasers to purchase the securities from Net1 at the
public offering price set forth in the prospectus supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. The contracts will be subject only to those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth any
commissions we pay for solicitation of these contracts.
Underwriters and agents may be
entitled under agreements entered into with Net1 and/or the selling
securityholders, if applicable, to indemnification by Net1 and/or the selling
securityholders, if applicable, against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect to
payments which the underwriters or agents may be required to make. Underwriters
and agents may be customers of, engage in transactions with, or perform services
for Net1 and its affiliates in the ordinary course of business.
26
Each series of securities will be
a new issue of securities and will have no established trading market other than
the common stock which is listed on the Nasdaq Global Select Market. Any
underwriters to whom securities are sold for public offering and sale may make a
market in the securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. The
securities, other than the common stock, may or may not be listed on a national
securities exchange.
EXPERTS
The financial statements and
managements report on the effectiveness of internal control over financial
reporting incorporated in this prospectus by reference from the Companys Annual
Report on Form 10-K have been audited by Deloitte & Touche (South Africa),
an independent registered public accounting firm, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The audited consolidated
financial statements of Prism Holdings Limited beginning on page F-4 of our
Current Report on Form 8-K/A dated September 13, 2006, have been so incorporated
in reliance on the report of PricewaterhouseCoopers Inc., independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
LEGAL MATTERS
DLA Piper US LLP, New York, New
York, will provide us with an opinion as to certain legal matters in connection
with the securities we are offering.
27
5,000,000 Shares
Common Stock
|
PROSPECTUS SUPPLEMENT
|
October 2, 2008
|
|
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