Filed by Automated Filing Services Inc. (604) 609-0244 - Net 1 UEPS Technologies Inc.  - Exhibit 10.4







Exhibit 10.4


 SERVICE LEVEL AGREEMENT

  

 BETWEEN

  

 THE DEPARTMENT OF SOCIAL WELFARE

  AND POPULATION DEVELOPMENT

  KWAZULU-NATAL

 

 AND

  

 CASH PAYMASTER SERVICES

  KWAZULU-NATAL (PTY) LTD

 

 14 AUGUST 2001









MEMORANDUM OF ACCEPTANCE 



BETWEEN 



THE PROVINCE OF KWAZULU-NATAL 


 as represented by Mr L.P.H.M. MTshali, in his capacity as
  Premier 

  of the Province of KwaZulu-Natal (hereinafter referred to as “Province”)
   


AND 


 CASH PAYMASTER SERVICES KWAZULU-NATAL (PTY) LTD  

 as represented by Mr M. Yako, in his capacity as Executive
  Chairperson of 

  Cash Paymaster Services KwaZulu-Natal (Pty) Ltd (hereinafter referred to as
  ,.CPS)  

 The KwaZulu-Natal Department of Social Welfare and Population
  Development entered into a contract for the payment of grants with Cash Paymaster
  Services (Pty) Ltd on 6 September 1999. In an effort to set minimum standards,
  and address concerns of service delivery in terms of this contract, a Service
  Level Agreement has been signed. Embodied in the Service Level Agreement are
  the principles of good governance and co-responsibility, to ensure that customers
  of this Department are treated with dignity and respect. With the acceptance,
  of the Service Level Agreement, all parties commit themselves to the implementation
  of both the content and spirit of this agreement. 

 The Memorandum of Acceptance is signed for and on behalf of the parties
  so authorised.

	THUS DONE AND SIGNED AT DURBAN ON THIS 14th
      DAY OF AUGUST 2011. 	 
	 	 
	 	 
	 	 
	 	 
	FOR AND ON BEHALF OF THE PROVINCE OF KWAZULU-NATAL 	 
	 	 
	 	 
	 	 
	 	 
	FOR AND ON BEHALF OF CPS KWAZULU-NATAL (PTY) LTD 	 


AS WITNESSES:  

	 	   	 
	PRINCE G.L. ZULU FOR AND ON	 	MR N.V.E. NGIDI FOR AND ON
	BEHALF OF THE DEPARTMENT OF	 	BEHALF OF THE KWAZULU-NATAL
	SOCIAL WELFARE AND	 	WELFARE PORTFOLIO
	POPULATION DEVELOPMENT	 	COMMITTEE



2






SERVICE LEVEL AGREEMENT 


	1.	PARTIES

       The parties to this agreement are:

	 	 
	1.1 	Department of Social Welfare
        and Population DevelopmentProvince of KwaZulu-Natal 

	 	 
	 	And
	 	 
	1.2 	Cash Paymaster Services (KwaZulu-Natal) Pty Ltd
	 	 
	2.	DEFINITIONS

       In this agreement, unless the context otherwise indicates,
        the words and expression set forth below shall bear the meanings as defined.
        It must be noted that in this document

	 	 	 
	 	•
	reference to any one gender shall include
        the other gender

	 	•
	a natural person includes an artificial
        person and vice versa

	 	•
	the singular includes the plural and
        vice versa





	 	ACT	The Social Assistance Act, No. 59 of 1992, as amended
	 	 	 
	 	AFIS	Automated fingerprint identification system
	 	 	 
	 	AGREEMENT	This service level agreement, including all schedules and
      annexures thereto
	 	 	 
	 	BFIS	Biometric fingerprint identification system used for the
      positive verification of fingerprints
	 	 	 
	 	BUSINESS DAY	Any day other than a Saturday, Sunday or official public
      holiday
	 	 	 
	 	COMMUNITY	People who ordinarily reside in the Province of KwaZulu-Natal
	 	 	 
	 	CONTRACTOR	Cash Paymaster Services (KwaZulu-Natal) Pty Ltd
	 	 	 
	 	CUSTOMER	Any person to whom social assistance is rendered under the
      Social Assistance Act, 1992 as amended
	 	 	 
	 	CUSTOMER CARD	Individual smart cards which will be
        provided and issued by the Contractor to each customer after enrolment,
        according to the requirements as mutually agreed upon




3






	   	DEPARTMENT	The Department of Social Welfare and
        Population Development in the Administration of the Province of KwaZulu-Natal

	 	 	 
	 	ENROLMENT	Electronic registration of the identifying
        details, and fingerprints of each customer in the Province of KwaZulu-Natal

	 	 	 
	 	HANIS	Home Affairs National Identification
        System

	 	 	 
	 	IDENTITY DOCUMENT	13 Digit bar-coded RSA identity document

	 	 	 
	 	IMPLEMENTATION
 TIMETABLE	The implementation plan as mutually
        agreed upon by the Department and the Contractor, in accordance with the
        specifications set in the Tender Document

	 	 	 
	 	MANAGEMENT
 COMMITTEE	The team that will represent the Department
        and the Contractor in the management of the services rendered in terms
        of this contract

	 	 	 
	 	NPSI	National Payment Systems Infrastructure

	 	 	 
	 	PAYMENT MONTH	A calendar month

	 	 	 
	 	PAY POINTS	Designated venues at which the payment
        of grants may be undertaken. These may be:

	 	 	 
	 	 	Mobile - payment equipment mounted in
        vehicles, adapted to the terrain

	 	 	 
	 	 	Fixed - ATM type services for payment
        at mutually agreed upon static venues

	 	 	 
	 	 	Portable - payment equipment which is
        easily transportable, and which can be used in a variety of venues

	 	 	 
	 	 	The list of pay points is attached to
        this Service level agreement as Annexure A

	 	 	 
	 	PROVINCE	The province of KwaZulu-Natal

	 	 	 
	 	SECURITY SERVICES	The security services (both cash-in-transit
        and guarding) that will be provided by the Contractor in terms of the
        agreement contained in the tender documents




4






	   	SOCPEN	National Government’s computerised
        social assistance grant system

	 	 	 
	 	SOCPEN SCHEDULE	Schedules detailing cut-off dates for
        interaction with Socpen, as agreed upon by National Department of Social
        Development and the Provincial Departments responsible for social grant
        administration

	 	 	 
	 	SMART CARD BASED
 SYSTEM	The enhanced automated application and
        payment system which will be used to enrol and pay beneficiaries, according
        to information received from Socpen, with which this system will interface

	 	 	 
	 	TENDER DOCUMENT	The tender as proposed to the Province
        by the Contractor for rendering a comprehensive enrolment, payment and
        communication service to beneficiaries in the Province of KwaZulu-Natal





	3.	RECORD

	 	 
	3.1	 The Contractor submitted a tender to
        the Province, which was accepted by the Province on 29 July 1999. The
        contract was signed on 6 September 1999, and is valid for a 3 year period,
        with provision for an extension for a further 2 years, if mutually agreed
        to.

        Subsequently the date on which this contract became effective was changed
        to 1 January 2000, as confirmed by Tender Board.

	 	 
	3.2 	The provisions as set out in the tender
        document shall be supplementary to this document in all respects. Any
        changes to the procedure as set out in the tender document will be mutually
        negotiated and agreed to. No changes to any provision contained in the
        tender document or this agreement shall be binding unless reduced to writing.

	 	 
	3.3	 It is to be understood that all services
        rendered in terms of this agreement are to conform to the Government’s
        principles of “Batho Pele” that is - people first.

	 	 
	4.	DUTIES OF THE CONTRACTOR

       The Contractor will render the following services:

	 	 
	4.1 	enrolment of all customers and their
        nominated procurators in the Province of KwaZulu-Natal.

	 	 
	4.2 	payment of all customers and/or their
        duly nominated procurators electing to receive their payment in cash.
        This includes the transition of all customers currently paid on the voucher
        system by the South African Post Office Limited.




5






	4.3 	Dissemination of information
        to the customers as and when requested by the Department. 

	 	 	 	 
	4.4 	
Promotion of the National Payment System Infrastructure
        (NPSI) network within the Province of KwaZulu-Natal, for use by customers
        in terms of an action plan as mutually agreed upon between the Department
        and Contractor. 

	 	 	 	 
	In order to render these services, the following
      will apply in respect of 
	 	 	 	 
	4.1 	ENROLMENT  

       Enrolment will consist of both bulk (the immediate enrolment
        of all existing customers and their elected nominees onto the new payment
        system) and on-going (the continued enrolment of all new customers in
        the Province) 

       Enrolment will take place of all customers who have
        re-registered or applied for a grant after 1 October 1998, according to
        information supplied to the Contractor by the Department in the form of
        a pre-list (starter data base). 

       It is agreed that customers will be enrolled on a 13
        digit identity number only. However, provision must be made to accommodate
        the enrolment of foster parents, who are not necessarily South African
        citizens, on alternative identification numbers, as directed by the Department.
      

       Any customer who does not have fingers, or who has fingerprints
        of such a poor quality that they cannot be read by the equipment, must
        nominate a procurator for enrolment purposes. No provision will be made
        in the system for PIN (personal identification number) access. Only biometric
        identification will be permitted. 

	 	 	 	 
	 	4.1.1
	Bulk Enrolment:
         

       This will take place according to an implementation
        timetable as agreed upon by the Department and the Contractor. Bulk enrolment
        is to take place with the least disruption to the payment process and
        the least inconvenience to the customers. Advertising of the venues and
        dates for enrolment is to be a joint responsibility of the Department
        and the Contractor. This process is to be complete within a period of
        5 months from award of tender.

	 	 	 	 
	 	4.1.1.1
	 
	Bulk Enrolment : Cash Payments:
      

       Enrolment is to take place at the payment sites for
        all current cash payment methods. A hard copy of a fingerprint (preferably
        the thumb print) taken will be submitted to the Department and compared
        with the Department of Home Affairs classification system using the fingerprint
        comparers employed within the Department, after the enrolment has taken
        place. All prints not matched will be followed up by the Department. 

	 	 	 	 
	 	4.1.1.2
	 	Bulk Enrolment : Post Office Payments:
      



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	 	 	 	Enrolment of current customers paid through
        the Post Office will take place in accordance with a timetable as mutually
        agreed upon. 

	 	 	 	 
	 	4.1.1.3	 	Bulk Enrolment : ACB Payments: 

       Bulk enrolment of current ACB customers will be conducted
        at venues as determined by the Department. Individual letters will be
        sent by the Department to every customer to advise them of the enrolment
        venue and date. The Department will devise a management plan to deal with
        those customers who do not respond to this communication. 

	 	 	 	 
	 	4.1.1.4	 	Bulk Enrolment : Institution Payments: 

       Bulk enrolment of institution customers will be done
        at the institutions, in accordance with a timetable as mutually agreed
        upon. 

	 	 	 	 
	 	4.1.1.5	 	Bulk Enrolment : Bed-ridden Customers: 

       Enrolment of customers who are bed-ridden, together
        with their procurators, will have to be undertaken in their homes, in
        accordance with a programme as mutually agreed upon. The Department will
        advise the Contractor of identified cases. 

	 	 	 
	 	4.1.2 	Enrolment of New Applicants
        (ongoing):  

       Enrolment equipment will be available at each service
        office of the Department, in accordance with a timetable, mutually agreed
        upon, determined by the average number of new applications received at
        each district office each month. All new applicants will be enrolled on
        application, but the customer card will be issued on approval of that
        application only. 

      Any changes to the timetable for enrolments must be negotiated
        between the parties, and the changes agreed and confirmed by both parties.
      

	 	 	 
	4.2 	CUSTOMER CARDS 
	 	 	 	 
	 	4.2.1 	The Contractor will provide
        and issue an individual smart card to every customer, once he is enrolled
        on the new system. This card is to contain the following information:
      

       identity number of the customer 

        surname and initials of the customer 

        identity number of the procurator 

        surname and initials of the procurator 

        fingerprints of the customer 

        fingerprints of the procurator 

        bank account number (when applicable) 



7






	 	 	cash purse/s 

        control/s 

	 	 	 	 
	 	 	In addition, a facial photograph
        of the customer is taken on enrolment. This is stored by the Contractor,
        with all 10 fingerprints, on the Contractor’s central data base.
      

	 	 	 
	 	4.2.2
	The card should be easily
        identifiable as a KwaZulu-Natal customer grant in terms of a design as
        approved by the Department. 

	 	 	 
	 	4.2.3
	The Contractor will be responsible
        for the replacement of a maximum of 20% of lost or damaged cards per annum.
        Thereafter, replacement cards will be charged to the Department at the
        cost of the card. 

	 	 	 
	 	4.2.4 
	The customer card is to
        be durable and able to withstand rigorous use. All cards issued will be
        confirmed to not be faulty. 

	 	 	 
	 	4.2.5 
	All lost or damaged cards
        are to be replaced within a period of 3 business days, following the report
        of the loss. Replacement cards are to be issued to the customer or his
        procurator on biometric identification only: Lost cards will be reported
        to the Department, representative at the pay point, or the local district
        welfare office. This Departmental representative or district welfare officer
        will report the loss in writing directly to the Contractor. The Contractor
        will replace the card, and confirm this replacement through a summary
        list to a central controlling officer in the Department. The replacement
        card will be available to the customer or his procurator 3 business days
        after notification of the loss, at the reporting district office. 

	 	 	 
	 	4.2.6 
	Receipts for the damaged
        cards removed by the payment staff at pay points are to be issued to customers
        when their cards are withdrawn. Replacement of all damaged cards is to
        be done within three business days. No customer may have payment withheld
        as a result of the withdrawal of a damaged card, if this is not replaced
        within the 3 business day limit agreed upon. 

	 	 	 
	 	4.2.7 
	The initial card will be
        issued at bulk enrolment, but only activated when payment is generated.
      

	 	 	 
	 	4.2.8
	Enrolment for new applications
        will be done on application for the grant, but the card will only be generated
        once the application has been approved. 

	 	 	 
	4.3 	GRANT PAYMENTS 
	 	 	 
	 	4.3.1 
	Implementation of New
        Payment System: 

	 	 	 	 
	 	4.3.1.1
	 	Cash payment of grants on the new system will be introduced
      in terms of a timetable to be agreed upon by both the Department and the
      Contractor. 


8






	 	 	 	The transition from existing payments methods to
        the new system will be undertaken in terms of a roll-out plan, as mutually
        agreed upon. This will include the transition of post office customers
        within 12 month from implementation date of this contract. 

	 	 	 	 
	 	4.3.1.2 	 	With the phasing in of the new system, payment will
        take place at existing pay points for the first 3 months. Thereafter,
        any change of pay point will be negotiated between the Contractor and
        the Department. The number and location of pay points is detailed on the
        schedule attached as Annexure A. There is to be no amendment to this schedule
        without authorisation from the Department, which retains final approval
        for the changing or creation of any pay point. A variation of 15% of the
        initial number of pay points will be allowed in terms of this contract.
        Costs attached to any variation over or below this number will have to
        be negotiated between the Department and the Contractor. 

	 	 	 	 
	 	4.3.1.3 	 	The creation or change of any pay points will only
        be considered after full consultation between the affected community,
        the Contractor and the Department, which retains the right of final approval.
      

	 	 	 	 
	 	4.3.1.4 	 	The maximum number of customers registered to any
        one pay point should not exceed 1000, while every attempt should be made
        to ensure that no customer spends longer than 2 hours waiting for payment
        at a pay point. (This clause must be read in conjunction with clause 4.3.2.3.)
      

	 	 	 	 
	 	4.3.1.5 	 	Limits of false rejection will not exceed 0,35% on
        the 4 template approach. Limits of false acceptance will not exceed 0,01%
        on the 4 template approach. 

	 	 	 	 
	 	4.3.1.6 	 	The Contractor will bear all costs for the upgrading
        and maintenance of the system and equipment to support the service standards
        as set in the tender specifications. 

	 	 	 	 
	 	4.3.1.7 	 	All hard- or software customisation required to support
        the service standards as set in the tender document, during the contract,
        will be performed at no cost to the Department. 

	 	 	 	 
	 	4.3.1.8 	 	Identified Departmental staff will have on-line access
        to the system as managed by the Contractor. Installation costs for these
        communication links and the necessary software will be borne by the Contractor.
        Communication links will be required at the Departmental Head Office in
        Ulundi. 

	 	 	 	 
	 	4.3.2 	Payment Availability:
         

	 	 	 	 
	 	4.3.2.1 	 	Cash payment of grants will take place over the period
        of a calendar month, in accordance with the legislation. 



9






	 	4.3.2.2	 	Payment at fixed pay points must be available during
        normal office hours, that is from 08h00 to 16h00 weekdays, excluding Saturdays,
        Sundays and public holidays. Payment teams are not to leave fixed pay
        points earlier than an agreed upon time. 

	 	 	 	 
	 	4.3.2.3 	 	Cash payment of grants at any pay point, whether
        portable or mobile, is not to continue after 16h00. Should there be extraordinary
        circumstances which cause payment after 16h00, or to take place on days
        not designated as payment days, to be desirable or necessary, the Department
        (in the form of the management committee representative for that region)
        must be informed, in order to give prior approval. When a team is ready
        to leave any pay point, consultation between the Pension Committee, the
        Departmental representative and the Contractor’s team leader must
        take place, in order to ensure that the customers remain informed, and
        every reasonable effort has been made to pay every customer. 

	 	 	 	 
	 	4.3.2.4 	 	Where late payment at a pay point occurs, the Contractor
        and the Department are to make arrangements to ensure that customers are
        able to return home. Arrangements following late payments may include
        the provision of transport and refreshments for the customers at the defaulting
        party’s cost. 

	 	 	 	 
	 	4.3.2.5 	 	Manual overrides of the system should be limited.
        Where it is confirmed that money has been generated by Socpen for payment
        to any customer, arrangements must be made to ensure that the customer
        is paid, subject to clause 4.3.2.6. 

	 	 	 	 
	 	4.3.2.6 	 	The principle of “no card / no payment”
        will apply. However, if the replacement period of 3 business days for
        reported lost cards is not met, payment must be effected by the Contractor,
        and the Contractor will bear all the risks with payment outside the system.
      

	 	 	 	 
	 	4.3.2.7 	 	All pay stations must be accessible to the frail
        and disabled. 

	 	 	 	 
	 	4.3.2.8	 	The Contractor must develop contingency plans for all
        events which could affect the payment of grants. All rescheduling in the
        event of the non-payment of a pay point must be undertaken in conjunction
        with the Department. In all cases, should a pay point not be paid, payment
        must be rescheduled within a maximum of 5 working days. 

	 	 	 	 
	 	4.3.2.9 	 	A transaction receipt is to be printed for each customer
        after each transaction. Details to be included on the receipt are the
        date and time of payment; the customer’s identity number and name;
        the grant type; the amount paid; the balance available; the payment station
        at which the money was paid and the date of the next payment. The receipt
        is also to make provision for the printing of messages, in either English
        or isiZulu, which will be supplied by Socpen. 



10




 

	 	4.3.2.10
	 	The system must make provision for partial withdrawals.
      

	 	 	 	 
	 	4.3.2.11
	 	The Contractor is to provide plans for the extension
        of the NPSI network of vendors. These points may be used as additional
        withdrawal points by the customers. 

	 	 	 	 
	 	4.3.3
	Casual Illness:
         

       Provision is to be made by the Contractor for the payment
        of grants to persons nominated by the customer, in the event of temporary
        incapacity, as provided for in the legislation, in accordance with the
        following procedure: 

	 	 	 	 
	 	4.3.3.1
	 	The customer will duly authorise a nominee to collect
        his grant on his behalf. This authorisation to be on the approved form,
        or in the form of a letter, on which a thumb print of both the customer
        and the nominee, as well as both names and identity numbers are clearly
        displayed. The local district welfare office is to approve this request,
        by stamping and signing the form. 

	 	 	 	 
	 	4.3.3.2
	 	The nominee will present the approved form, together
        with the customer’s grant card, to the Contractor’s paymaster
        at the payment site. 

	 	 	 	 
	 	4.3.3.3
	 	A senior staff member on the pay team will have the
        authority to pay the grant, which will be written to the customer’s
        grant card. This staff member will retain the letter authorising the payment
        to that specific nominee, for record purposes. 

	 	 	 	 
	 	4.3.4
	Alternative Pay Points:
         

       Customers are to receive payment at their nominated
        pay point on the scheduled pay date, or any subsequent pay point in that
        district during that payment month. This must also apply to the post offices
        used as pay points. 

	 	 	 
	 	4.3.5
	Security at Pay Points:
         

       Security of the pay site and cash-in-transit is the
        Contractor’s responsibility. A security team for each pay team should
        consist of a minimum of 4armed, registered security guards. Of these four,
        one must be at least a Grade C guard, while the remainder must be at least
        Grade D guards. Each guard used must have successfully completed formal
        security training commensurate with the specified training requirements
        as laid down by the Security Officer’s Board. In addition, all guards
        used in this contract must be registered as security officers in terms
        of the Security Officer Act, 92 of 1987. 

	 	 	 
	 	4.3.6 
	Payment Denominations:
         

	 	 	 
	 	4.3.6.1
	 	The maximum denominations to be used
        in the payment of grants is R100. 



11






	 	4.3.6.2	 	Payment of the grant will be made in full, but withdrawals
        from automated cash dispensers will be rounded off to the nearest R10.

	 	 	 	 
	 	4.3.6.3	 	Authority for the Contractor to withhold payment
        issued by Socpen will be valid only when issued by the Department (either
        the Accounting Officer, or his delegated official) in writing. Where possible,
        this will be done at least 2 working days prior to payment date, and is
        valid for the current month only.

	 	 	 
	4.4 	DISSEMINATION OF INFORMATION

       The Contractor will disseminate information to the customers
        as directed by the Department. Details regarding the frequency and content
        of this information shall be dealt with by the management committee.

	 	 
	4.5 	TRAINING

       The Contractor will train identified Departmental staff
        on the new system. This facility will be available on an on-going basis,
        to ensure that, as a result of staff changes and movement, all relevant
        staff are trained. The first session of training for identified staff
        must be complete by the time the payment system is implemented.

	 	 
	5.	RESPONSIBILITIES OF THE
        DEPARTMENT

       The Department will supply the following to the Contractor
        to enable the Contractor to render the required services:

	 	 
	5.1	Information:

       The Department will supply correct, current information
        on customers to the Contractor to enable the phasing in of the new payment
        system.

	 	 
	5.2	Electronic Information:

	 	 
	 	5.2.1 
	The Department will provide
        the necessary authorisation for an electronic link, to enable data transfers
        between the Contractor and Socpen.

	 	 	 
	 	5.2.2 
	The Department will ensure
        that correct monthly payment information is received from Socpen, in accordance
        with the Socpen schedules, in order to enable the Contractor to pay the
        customers.

	 	 	 
	 	5.2.3 	The Department is responsible
        for the management of the number of customers allocated to each pay point.
        In conjunction with clause 4.3.1.4, the Department shall make every attempt
        to rationalise pay points to achieve a minimum of 100 customers per pay
        point. However, in this attempt, neither the Department nor the Contractor
        should sacrifice the overall standard of service delivery.



12






	 	5.2.4
	The Department will implement pay point changes,
        when requested by the customer, in accordance with approved procedures.

	 	 	 
	5.3 	Communication:

       The Department will ensure the provision of information
        and/or material for communication with the customers to the contractor,
        who will ensure the distribution thereof, during the payment cycle.

	 	 
	5.4 	Help Desks:

       The Department will be responsible for the provision
        of help desks at cash pay points, in accordance with a management plan,
        giving due consideration to the availability of resources.

	 	 
	6.	CONTRACTOR REMUNERATION

       The Department shall be liable for fees payable in respect
        of services rendered by the Contractor. All fees quoted are inclusive
        of VAT. The fees will be calculated as follows:

	 	 
	6.1 	Enrolment by the Contractor
        at R15,00 per enrolment.

	 	 
	6.2 	The fees for payment will
        be at a fixed rate of 3,6% of the amount paid out. The tendered fees include
        all costs for setting up the infrastructure of the new system.

	 	 
	6.3 	For the duration of the contract,
        the Contractor will be responsible for the cost of the replacement of
        all lost and damaged customer cards, to a maximum of 20% of cards lost
        or damaged.

      Any further replacement of customer cards will be charged
        to the Department all the cost of the replacement card.

	 	 
	6.4 	The cost for the system to
        be implemented in the Post Offices will be at the rate of R10,26 per payment
        transaction (that is R9,00 plus VAT). The Department will also be responsible
        for the payment of the amount of R11,49 (that is R10,08 plus VAT) per
        payment transaction to the Post Office, as Post Office employees will
        retain responsibility for the payments.

       These separate costs for the post office network are
        to be valid for a period of 12 months following implementation only As
        the Post Office pay points are migrated to the new payment system, so
        the separate costing for the post office will reduce. Once this process
        is complete, all cash payments are to be charged for in a uniform manner,
        at the agreed rate of 3,6% of the amount paid out.

	 	 
	6.5 	The Contractor shall supply
        the money to make grant payments. No money will be made available to the
        Contractor by the Department in advance. This clause will relate to the
        Post Office payments only once the new payment method has been implemented
        in post offices.



13






	6.6 	The Contractor shall, on
        confirmation of receipt of the grant by the individual customer or his
        nominated procurator, render an account to the Department for payment
        thereof. The Department will only reimburse the Contractor for grant money
        actually paid to customers. The invoices for these amounts will be submitted
        to the Department each Thursday of each week, for payment by the Friday
        of that week for the payment days prior to that Thursday. 

	 	 	 
	6.7 	The Contractor is to meet
        the Socpen cut off schedules, as set annually. All grants paid by month
        end 3 will be reconciled to Socpen by the date set for month end 3. The
        balance of the grants for that payment month should be reconciled on month
        end 3 as unresolved. These will be reconciled at the end of the payment
        month. 

	 	 
	6.8 	The Contractor is not to
        carry over payments for uncollected amounts. All grants must be reconciled
        to Socpen monthly. Any uncollected payments will be cancelled and carried
        over for payment by Socpen, for a period of three months, after which
        payment will be systematically suspended. 

	 	 
	6.9 	The account for the Contractor’s
        service fee will be rendered after the service has actually taken place,
        that is, after the customer has confirmed his existence, and has had his
        money transferred to his card. The invoice for the service fee will be
        submitted to the Department monthly, together with the amount due for
        enrolment. The two amounts will be shown separately on the invoice. 

	 	 
	6.10 	Costs for replacement of
        lost cards will be submitted to the Department monthly, on a separate
        invoice, to be included with the invoice for service fees. 

	 	 
	6.11 	The Department shall settle
        its account, within seven (7) days from the date that the invoice was
        received at the Departmental Head Office in Ulundi. Should the Department
        default in the settling of this account, interest at prime rate will be
        payable on all overdue amounts. An invoice shall be deemed to have been
        received on the same day if delivered by hand before 09h00, on the same
        day if delivered by fax, with confirmation of faxing having been effected
        before 09h00 (provided the original is then immediately posted) and on
        the seventh day after posting, if sent by pre-paid registered mail. 

	 	 
	6.12 	Price increases will occur
        annually on notification by the Contractor and will be calculated as follows:
      

	 	 	 
	 	6.12.1 
	Annual price increases will be equal
        to the average increase in the consumer price index (inflation rate /
        CPI) as published by he South African Statistical Services after every
        12 consecutive months of the agreement. 

	 	 	 
	 	6.12.2
	Price increases will come into effect
        one year after the commencement date of the contract. 

	 	 	 
	 	6.12.3 
	Any increases in benefits enjoyed by
        the customers during the period prior to the increase date each year shall
        be offset against the CPI increase before determining the fee percentage
        to be applied to the amount paid out for the new year. 



14






	 	6.12.4
	The written notification for price increases
        must be at the Department’s Head Office no later than 28 February
        annually. This will be finalised within 30 days following receipt by the
        Department.

	 	 	 
	7.	 MANAGEMENT COMMITTEE

	 	 
	7.1 	A management committee will
        be established for the purpose of managing and controlling this contract.

	 	 
	7.2 	The management committee
        shall meet monthly, under the Chairmanship of a Departmental official.
        The Department shall also provide the secretarial services. This committee
        will be the official communication channel for this contract.

	 	 
	7.3 	The management committee
        will be responsible for identifying the needs of the community, and managing
        the disbursement of the funds in the development fund to be established
        with the funds identified for RDP and pay point development in the tender
        document.

	 	 
	7.4 	The management committee
        will also monitor the Contractor’s performance regarding affirmative
        action and the benefits to the Province emanating from this contract.

	 	 
	8.	COMMUNICATION PLAN

	 	 
	8.1 	The communication of the
        implementation of the new system will be a joint responsibility of the
        Department and the Contractor.

	 	 
	8.2 	Communication regarding
        added benefits of this system will be the sole responsibility of the Contractor.

	 	 
	8.3 	Ongoing communication through,
        amongst others, pensioner committees will remain a joint responsibility
        of the Department and the Contractor.

	 	 
	9.	ADJUSTMENTS

       Adjustments to the contract agreed upon by the management
        committee that will have a financial implication for the Department will
        only be implemented after submission to, and approval by, the Head of
        the Department of Social Welfare and Population Development. No adjustments
        will be implemented until confirmed in writing.

	 	 	 
	10.	 TECHNICAL EQUIPMENT
        AND SOFTWARE

	 	 	 
	10.1	 The Contractor shall, apart
        from its duty to provide and supply all equipment necessary for enrolment.,
        grant payments and the communication link for the Departmental Head Office,
        also be responsible for:

	 	 	 
	 	•
	maintenance of equipment;




15






	 	•
	upgrading of equipment, including hard-
        and software, on a regular basis, ensure, that it remains abreast of industry
        technology, to comply with the requirements as laid down in the tender
        document;

	 	 	 
	 	•
	replacing equipment that fails, which
        does not comply to the requirements laid down in the tender document at
        its own expense;

	 	 	 
	 	•
	providing and executing of all back-up
        procedures;

	 	 	 
	 	•
	replacing all lost or stolen equipment;
        and

	 	 	 
	 	•
	ensuring that an adequate disaster recovery
        procedure is in place.

	 	 	 
	10.2 	 All equipment supplied
        and installed by the Contractor for the purpose of this contract shall
        remain the sole property of the Contractor.

	 	 	 
	10.3 	The Contractor shall be
        responsible to install and maintain all equipment to introduce this payment
        system in selected Post offices.

	 	 	 
	11.	DATA AND FEEDBACK

	 	 	 
	11.1	 All data transfers between
        the Contractor and Socpen shall be made electronically, and will comply
        with the specifications as set by Socpen.

	 	 	 
	11.2 	The Contractor shall ensure
        that the Department has on-line access to the Contractor’s central
        data base.

	 	 	 
	11.3 	All data collected and used
        during the contract will remain the confidential property of the Department
        and shall be returnable in a format as agreed upon, at no charge.

	 	 	 
	12.	RDP AND PAY POINT DEVELOPMENT

       The Contractor undertakes to pay an amount of R50 000
        per month (R600 000 per annum) into a development fund, as from the implementation
        of the new payment system for the duration of this contract, which is
        to be used for pay point development and RDP projects. The identification
        of projects for development will be a responsibility of the management
        committee.

	 	 	 
	13.	BENEFITS TO THE COMMUNITY

       The Contractor commits itself to benefit the Province
        of KwaZulu-Natal by means of the following:

	 	 	 
	13.1	The major benefit to the
        community will occur in the area of employment. A minimum of 90% of the
        staff for this contract will be recruited from this Province.




16






	13.2 	Sub-Contractors for service functions
        will be sourced from within the Province, with provision made for the
        inclusion of SMME’s in this venture. Details of SMME’s used
        are to be submitted to the management committee on a quarterly basis.

	 	 
	13.3 	The promotion of the NPSI network of
        vendors must be shown. It is expected that there will be an increase of
        30% in the number of participating dealers each year for the life of this
        contract. Businesses in rural areas are to be given priority in terms
        of this development - it is not intended to support development only in
        the towns or urban areas. The Contractor is to report progress on this
        aspect to the management committee on a quarterly basis.

	 	 
	13.4 	The Contractor must make provision in
        their Service Level Agreement with the S.A. Post Office for a roll-out
        plan for the extension of the spaza and retail post office network, with
        specific reference to how this will improve services in the rural areas.
        Progress reports on this aspect will be submitted to the management committee
        on a quarterly basis.

	 	 
	14.	AUDITING

	 	 
	14.1 	Internal reconciliation and auditing
        facilities have been built into the system by the Contractor. These facilities
        will be accessible to authorised Departmental staff, and staff from the
        office of the Auditor-General.

	 	 
	14.2 	An audited annual financial report will
        be submitted by the Contractor to the Department no later than 30 September
        each year.

	 	 
	15.	DOMICILIA CITANDI ET EXECUTANDI

       The parties hereto choose their domicilia et execulandi
        for all purposes of and in connection with this agreement as follows:





	 	The Department:	The Head
	 	 	Department of Social Welfare and
	 	 	Population Development
	 	 	2nd Floor Administration Building
	 	 	ULUNDI
	 	 	 
	 	The Contractor:	Cash Paymaster Services KwaZulu-Natal (Pty) Ltd
	 	 	113 Old Main Road
	 	 	PINETOWN
	 	 	 
	 	Should any party hereto change its domicilium, it
        shall advise the other party in writing. 

       A notice sent by one party to another shall be deemed
        to have been received on the same day, if delivered by hand on the same
        day if delivered by fax (provided the original is then immediately posted);
        on the seventh day after posting, if sent by pre-paid registered mail.
      





17






	16.	BREACH

       An event of a breach shall be deemed to have occurred
        if:

	 	 
	16.1	 any party breaches any
        of its obligations in terms of this agreement and fails to remedy the
        breach within 7 (seven) days after the receipt of written notice from
        the other party requiring the remedying thereof, if such breach is capable
        of being remedied;

	 	 
	16.2	 any party ceases or is
        unable for any reason whatsoever to conduct its business in an ordinary
        or regular manner, and fails to take reasonable steps to remedy such situation
        within 60 (sixty) days after having been called upon in writing to do
        so by the other party;

	 	 
	16.3 	any covenant or warranty
        made by any party that goes to the root of this agreement is found to
        be untrue or incorrect in any material respect;

	 	 
	16.4 	an event of a breach shall
        not be deemed to have occurred if the equipment fails temporarily. However,
        in this case, arrangements must be made to continue with the required
        service with minimum disruption to the customer;

	 	 
	16.5 	should a breach of this
        agreement, which goes to the root of this agreement, occur, which is not
        corrected within the specified time frame, the party which is not in breach
        shall be entitled to:

	 	 	 
	 	16.5.1 
	call upon the defaulting party to perform
        its obligations in terms of the agreement, or

	 	 	 
	 	16.5.2 
	cancel this agreement

	 	 	 
	16.6	 termination will become
        effective after notice has been given in writing to the defaulting party.

	 	 	 
	17.	FORCE MAJEURE

	 	 	 
	17.1 	If the performance of a
        material part of this agreement is suspended due to force majeure (that
        is, any event which is beyond the control of, and could not have been
        foreseen by that party, including an act of God, lockout, strikes, government
        action, riots, war, or events of a similar nature) that party shall give
        written notice of the force majeure to the other party.

	 	 	 
	17.2	 This notice shall be given
        within 3 (three) working days on which the event of the force majeure
        takes effect.

	 	 	 
	17.3 	The party first affected
        by force majeure shall do its utmost to reinstate the service due
        in terms of this agreement in the shortest possible time.

	 	 	 
	17.4 	Adjustment of the timetable
        for the service required shall be mutually agreed upon in the event of
        force majeure.




18






	17.5 	If a period of 90 (ninety)
        days has elapsed, and if the condition of force majeure persists,
        either party shall be entitled to cancel this agreement with immediate
        effect, and without prejudice. 

	 	 	 	 
	18. 	DETERMINATION OF DISPUTES
         

	 	 
	18.1	Mediation:
        

	 	 	 
	 	18.1.1 
	Prior to the initiation
        of formal dispute resolution procedures as set out in clause 18.2, the
        parties shall first attempt to resolve their dispute informally as follows:
      

	 	 	 	 
	 	18.1.1.1 
	 	Upon written request of either party,
        containing a short statement as to the nature of the dispute and the requesting
        party’s position with respect thereto, each party shall appoint a
        designated representative who does not devote substantially all of his
        time to performance under the Agreement, whose task will be to meet for
        the purpose of endeavouring to resolve such dispute. 

	 	 	 	 
	 	18.1.1.2 
	 	The designated representatives shall meet
        as often as the parties deem reasonably necessary in order to provide
        the other all information with respect to the dispute which the parties
        believe to be appropriate and relevant in connection with the resolution
        of the dispute. The representatives shall discuss and attempt to resolve
        the dispute without the necessity of any formal proceeding and without
        prejudice of any rights. 

	 	 	 	 
	 	18.1.1.3 
	 	During the course of discussion, all
        reasonable requests made by one party to the other for non-privileged
        information, reasonably related to the agreement shall be honoured, in
        order that each of the parties may be fully advised of the other’s
        position (provided that a party shall not be required as part of the informal
        dispute resolution process to disclose information subject to confidential
        restrictions under agreements with third parties.) 

	 	 	 	 
	 	18.1.1.4 
	 	The specific format for the discussions
        shall be left to the discretion of the designated representative. 

	 	 
	18.2 	Arbitration:
        

	 	 	 
	 	18.2.1 
	In the event of any dispute
        of difference between the parties hereto relating to or arising out of
        this agreement, including the implementation, execution, interpretation,
        rectification, validity, enforceability, termination or cancellation of
        this agreement which could not be resolved in terms of clause 18.1, the
        said dispute or difference shall, if demanded by any party on written
        notice to the other party, be submitted for resolution to an arbitrator
        in accordance with the provisions set below: 

	 	 	 
	 	18.2.2 
	Settlement of disputes 



19






	 	18.2.2.1 	 	Should any dispute arise
        between the parties in connection with the interpretation or application
        of the provisions of this agreement or its breach or termination, or the
        validity of any document furnished by the parties pursuant to the provisions
        of this agreement, that dispute will, unless resolved amongst the parties,
        be referred to and be determined by arbitration in terms of this clause.

	 	 	 
	 	18.2.2.2 	 	Any party to this agreement
        may demand that a dispute be determined in terms of this clause by written
        notice given to the other party.

       The party commencing legal action shall decide whether
        the dispute will be resolved by way of arbitration or litigation and in
        the event of the former, this clause shall be taken to constitute the
        submission of the parties to arbitration, and

	 	 	 
	 	18.2.2.3 	 	This clause will not preclude
        any party from obtaining interim relief on an urgent basis from a court
        of competent jurisdiction pending the decision of the arbitrator.

	 	 	 
	 	18.2.3 	The arbitration will be
        held:

	 	 	 
	 	18.2.3.1	 	 In Pietermaritzburg, Durban
        or Ulundi with only the legal and other representatives of the parties
        to the dispute present in accordance with the formalities and procedures
        settled by the arbitrator, and may be held in an informal and summary
        manner, on the basis that it will not be necessary to observe or carry
        out the usual formalities or procedures, pleadings and discovery, or the
        strict rules of evidence, it being the intention that the arbitration
        will be held and completed as soon as possible, and on the basis that
        the arbitrator will be entitled to decide the dispute in accordance with
        what he considers to be just and equitable in the circumstances.

	 	 	 	 
	 	18.2.3.2 	 	The arbitrator must be acceptable
        to both parties and, if the matter in a dispute is principally:

	 	 	 	 
	 	 	 	(a)
	A legal matter, be a practising attorney
        or advocate of at least ten (10) years standing;

	 	 	 	 	 
	 	 	 	(b)
	an accounting matter, be a practising
        chartered accountant of at least ten (10) years standing;

	 	 	 	 	 
	 	 	 	(c)
	any other matter, be an independent
        person.

	 	 	 	 	 
	 	18.2.4	 Should the parties to the
        dispute fail to agree whether the dispute is principally a legal, accounting
        or other matter within seven (7) working days after the arbitration was
        demanded, the matter will be deemed to be a legal matter.




20






	 	18.2.5
	 Should the parties fail
        to agree on an arbitrator within fourteen (14) working days after giving
        notice in terms of the above clause, the arbitrator will be appointed
        at the request of any party to the dispute by the Chairman for the time
        being of the Bar Council according to the provision of the above clauses.

	 	 	 
	 	18.2.6 
	The decision of the arbitrator
        will be final and binding on the parties to the dispute and may be made
        an order of any court to whose jurisdiction the parties are subject at
        the instance of any of the parties to the dispute.

	 	 	 
	 	18.2.7 
	The arbitrator will be entitled
        to make such award, including an award for specific performance, an interdict,
        damages or a penalty or otherwise as he in his sole discretion may deem
        fit and appropriate and to deal as he deems fit with the question of costs,
        including, if applicable, costs on the attorney and client scale and his
        own fees.

	 	 	 
	 	18.2.8 
	The provisions of this clause:

	 	 	 	 	 	 
	 	18.2.8.1
	 	 Constitute an irrevocable
        consent by the parties to any proceedings in terms hereof, and no party
        will be entitled to withdraw therefrom or claim at any such proceedings
        that it is not bound by such provisions;

	 	 	 	 	 	 
	 	18.2.8.2 
	 	Are severable from the rest
        of this agreement and will remain in effect despite termination of or
        invalidity for any reason of this agreement.

	 	 	 	 	 	 
	19.	PENALTY CLAUSE

	 	 
	19.1 	Should the Contractor repudiate
        the agreement at any time or commit a material breach of any term of this
        agreement, the Department shall, without prejudice to the rights it may
        have in law, have the right, notwithstanding the provisions of clause
        16, clause 18.1 and/or clause 18.2, to demand compliance with the term
        or terms of this agreement within a reasonable period stated in a written
        notice delivered by hand and confirmed by registered post to the Contractor,
        failing which, to commence immediately with the procedures as set out
        in clause 18.1 and 18.2 (if necessary). The foregoing is without prejudice
        to such other rights as the aggrieved party may have at law.

	 	 
	19.2 	Notwithstanding the provisions
        of clauses 16, 18 and 19.1, the following specific penalties shall apply
        for the non-performance as listed hereunder:

	 	 
	 	19.2.1 
	Non-performance by
        the Contractor:

	 	 	 	 
	 	 	 	(a) 
	Bulk enrolment

	 	 	 	 	 	 
	 	 	 	 	(i)
	Non-performance

       Failing to enrol all customers who present themselves
        for enrolment within the period specified in clause 4.1.1.




21






	 	 	 	 	(ii)
	Penalty for non-performance

       A reduction of 10% per month of the Contractor’s
        service charge for each month or part thereof that the Contractor needs
        following the date in clause 4.1.1 to rectify the non performance in 19.2.1(a)(i).

	 	 	 	 	 
	 	 	 	(b)
	Payment days

	 	 	 	 	 	 
	 	 	 	 	(i)
	Non performance

       Failing to pay all customers who present themselves
        for payment on or after their allocated payment days within their allocated
        districts, but no later than the last working day of each month.

	 	 	 	 	 	 
	 	 	 	 	(ii)
	Penalty

       A reduction of 15% in the Contractor’s service
        fee for all payments which took place after the last working day of each
        month.

	 	 	 	 	 
	 	 	 	(c)
	Scheduled payment days

	 	 	 	 	 	 
	 	 	 	 	(i)
	Non-performance

       Failing to visit a scheduled pay point(s) on a predetermined
        pay day(s) without prior notification to the Department (in writing) and
        customers.

	 	 	 	 	 	 
	 	 	 	 	(ii)
	Penalty

       A penalty equivalent to 20% of the Contractor’s
        service fee for customers registered to receive payment at such pay points,
        but which the Contractor failed to visit on the predetermined days.

	 	 	 	 	 
	 	 	 	(d)
	Technical support

       Penalties for non-availability of technical support
        will be affected through clauses 19.2.1(a) and 19.2.1(b).

	 	 	 	 	 
	 	 	 	(e)
	Insufficient infrastructure

       Where non-performance in 19.2.1(a) and 19.2.1(b) is
        a result of the fact that the Contractor deployed insufficient infrastructure,
        an additional penalty of 10% will be added to that already specified in
        19.2.1(a) and 19.2.2(b).




22






	 	 	 	(f)
	Reconciliation data

       The Department will be able to withhold the financial
        consideration payable to the Contractor for a particular month for as
        long as the Contractor fails to submit the reconciliation data for that
        month. The Contractor will not charge the Department interest on this
        amount.

	 	 	 	 	 
	 	19.2.2 
	Non-performance by
        the Department:

	 	 	 	 	 
	 	 	 	(a)
	Transfer of funds

       The Contractor will recover from the Department any
        cost incurred (if any) by the Contractor due to the transfer of funds
        after the period specified in clause 6.5.10, including interest (if any).

	 	 	 	 	 
	 	 	 	(b)
	Transfer of data

       The Contractor will not be held liable if any of the
        non-performances by the Contractor listed under 19.2.1 above is caused
        by SOCPEN.

	 	 	 	 
	20.	VARIATION/ MODIFICATION
        / WAIVER

       No variation, modification or waiver of any provision
        or consensual cancellation of this agreement or consent to any departure
        therefrom, shall in any way be of any force or effect unless confirmed
        in writing and signed by both parties, and then any such variation, modification
        or waiver, cancellation or consent shall be effected only in the specific
        instance and for that purpose and to the extent for which it is made or
        given.




23






	21.	WAIVER OF RIGHTS

       The waiver, whether expressed or implied, by any party
        of any breach of the terms or conditions of this agreement by any other
        party, shall not prejudice any remedy of the waiving party in respect
        of any continuing or other breach of the terms and conditions hereof.

       No failure, delay, relaxation or indulgence on the part
        of any party in exercising any power or right conferred on such party
        in terms of this agreement shall operate as a waiver of such power or
        right, nor shall any single or partial exercise of any such power or right
        preclude any other or further exercise thereof, or the exercise of any
        other power or right under this agreement.



  

	SIGNED AT	 	ON	 


 
	AS WITNESSES:	 	ON BEHALF OF THE DEPARTMENT
	 	 	 
	1.	 	 	 
	 	 	 	Duly authorised thereto
	 	 	 	 
	2.	 	 	 


  

	SIGNED AT	 	ON	 


 
	AS WITNESSES:	 	ON BEHALF OF THE CONTRACTOR
	 	 	 	 
	1.	 	 	 
	 	 	 	Duly authorised thereto
	 	 	 	 
	2.