private placement memorandum...this private placement memorandum is an invitation to subscribe for...

1IRIDIUM PRIVATE EQUITY | An Authorised Financial Service Provider FSCA:43705

PRIVATE PLACEMENT MEMORANDUM

Registration Number: 2011/108955/07 VCC Number: 002A HOBBS SINCLAIR INITIATIVE

Published date: 15 May 2019

FSCA Number: 43705

Tiro MotlogelaoEmail: [email protected]

Dear Taxpayer,

OFFER TO SUBSCRIBE FOR SHARES IN IRIDIUM INVESTMENTS LTD

This Private Placement Memorandum is an invitation to subscribe for shares in Iridium Private Equity (Pty) Ltd - a registered Venture Capital Company (VCC) and Level 2 BBBEE contributor. Registration Number: 2011/108955/07 and FSCA Number: 43705

BACKGROUND: Section 12J of the Income Tax Act was created specifically to encourage taxpayers to invest in small and medium sized enterprises in the Republic of South Africa. Taxpayers who invest in a registered Venture Capital Company (VCC) are entitled to a 100% tax deduction on monies invested, thereby achieving an immediate return of up to 45% for individuals and trusts, and 28% for companies (being the reduction in marginal taxes payable) on their investment.

Furthermore, recent changes to the BEE codes have placed a greater emphasis on the ownership of BEE-qualifying individuals; this will likely stimulate demand for BEE-compliant capital in SMMEs seeking to improve their BEE status.

Taken together, these developments create an opportunity for a fund of BEE-compliant investors to provide their sought-after capital, while taking advantage of the tax incentives provided by Section 12J.

THIS IS AN INVITATION TO:• Invest in a BEE Venture Capital Company;• Invest in carefully selected companies offering exceptional earnings and;• Take advantage of the extraordinary, unlimited, 100% tax deductions available to taxpayers who invest in a properly regulated and structured

Venture Capital Company, registered with both the Financial Sector Conduct Authority (FSCA) and South African Revenue Services (SARS);• The content of this Private Placement Memorandum does not constitute and should not be construed as investment, tax, legal, accounting

or other advice. For advice on these matters you should consult your own investment, tax, legal, accounting or other advisers about any material or information discussed in this Private Placement Memorandum or Memorandum of Incorporation.

OPPORTUNITIES:This opportunity is most applicable to all taxpayers (Individuals, trusts and companies) who: • Have high taxable income and/or high capital gains in the 2020 tax year;• Have investable cash;• Are looking to reduce their 2020 tax payment, or recover PAYE paid in 2020;• Are looking for Private Equity Investments yielding a targeted 8% dividend yield, before earnings growth, capital gains and tax deduction;• BBBEE Score card contribution

HOW IT WORKS:• Investor subscribes for shares in the VCC;• The investor receives a tax certificate which is deducted from his/her own income tax return;• The portfolio managers invest funds received in carefully selected qualifying companies;• These qualifying companies will receive BBBEE status depending on the level of investment and turnover;• The portfolio managers control the investment process and act as custodians of the funds invested;• Dividends will be declared and paid depending on the profitability and liquidity of the underlying investments;• The fund is regulated by SARS and the FSCA;• An investor is able to claim points to a maximum 25 points annually as per the BBEE codes. This is based on ownership in the fund.

Iridium will issue a certificate once the necessary verification has been undertaken. The verification will be dependent on Iridium’s own empowerment status remaining at its current levels.

Yours sincerely,




INVESTINg IN IRIDIUM

Fees

2% ANNUAL MANAGEMENT FEE

2% CAPITAL RAISING FEE

Target dividend rate

8%Target

R250 millionTarget performance

20%


TABLE OF CONTENT

1. Definitions and Interpretations

2. Executive Summary

3. The Offer

4. BBBEE Compliance

5. BBBEE Structure

6. Benefits of BBBEE

7. Classes of Shares

8. Management Costs

9. Investment Strategy

10. Exit Strategy

11. Investment Risk

12. Post Investment Management

13. Regulation of Iridium

14. Compliance with Anti-Money Laundering Regulations

15. Iridium’s Team

16. Undertaking & Subscription

ABOUT

Iridium Private Equity (Pty) Ltd hereinafter referred to as Iridium is a BBBEE compliant company regulated by the Financial Sector Conduct Authority and registered with the South African Revenue Services as a “Venture Capital Company” in terms of Section 12J of the Income Tax Act. The company has been established to enable taxpayers to take advantage of the generous tax incentives provided for by Section 12J of the Income Tax Act whilst meeting the growing needs of SMMEs for empowerment and transformation of the broader South African economy.

The tax benefits are realised through investing in promising small and medium size business enterprises in the Republic of South Africa by way of subscribing for shares as provided for in this document. Furthermore, investments in Iridium could receive a contribution to their BBBEE scorecard. This is a Private Placement memorandum for capital-raising purposes.

The investor is offered an opportunity to invest monies in the minimum amount of, but not limited to, R1 000 000 into Iridium. The investment is by way of subscription for ordinary class “A”, no par value, shared at a price to be determined. This offer will incorporate the following:

The subscription will end on 29th February 2020, or when the Board determines that the amount raised is sufficient.

4

5

5

5

6

7

7

8

8

9

10

10

10

10

11

12



1. DEFINITIONS AND INTERPRETATIONSIn this Private Placement Memorandum, unless the context clearly indicates the contrary, the following are defined as:

The Tax Act Income Tax Act No. 58 of 1962

Board Board of Directors of Iridium Private Equity (Pty) Ltd, from time to time

Business Rescue Business rescue proceedings in terms of Chapter 6 of The Companies Act No. 71 of 2008

CIPC Companies and Intellectual Property Commission of South Africa

The Companies Act The Companies Act No. 71 of 2008

Connected Persons A connected person as defined in Section 1 of The Tax Act

The FAIS Act The Financial Advisory and Intermediary Services Act No. 37 of 2002

The FICA Act The Financial Intelligence Centre Act No. 28 of 2001

FSCA The Financial Sector Conduct Authority

Investment Committee Investment Committee as appointed by the Board

Investor An individual, trust, company or other legal entity, who subscribes for shares in Iridium Private Equity (Pty) Ltd

MOI Memorandum of Incorporation, as amended from time to time

PPM Private Placement Memorandum, published 11 April 2019

Promoter Hobbs Sinclair Business Solutions (Pty) Ltd

Qualifying Company Any Company if:• that company is a resident in South Africa;• the company is not a controlled group company in relation to a group of companies;• that company’s tax affairs are in order;• company is an unlisted company as defined in Section 41 of The Tax Act or a junior mining company;• the company does not carry business in any impermissible trade as defined in Section 12J of The

Tax Act;• the sum of the investment income as defined by Section 12E(4)(c) of The Tax Act, derived by that

company during any year of assessment does not exceed an amount equal to 20 percent of the gross income of that company for that year.

Qualifying Investment An investment in the shares of an unlisted company which satisfies the conditions of a Qualifying Company as defined in Section 12J of The Tax Act.

Qualifying Share An equity share held by a Venture Capital Company which is issued to that company by a Qualifying Company, and does not include a share:• that would constitute a hybrid equity instrument as defined by Section 8E(1) of The Tax Act;• that constitutes a third party backed share as defined by Section 8EA(1) of The Tax Act.

SARS The South African Revenue Service

Section 12J Section 12J of The Tax Act

Venture Capital Company A company that has been approved by the commissioner in terms of section 12J(5) and has not been withdrawn in respect of Section 12J(6)

The heading to clauses of this PPM is for reference purposes only and shall not be used in interpreting such clauses.



2. ExECUTIVE SUMMARy

The investors will be in a position to take advantage of the following:

• A full tax deduction in respect of funds invested in the Company, subject to the provisions of Section 12J, thereby achieving an immediate return of up to 45% (being the reduction in marginal taxes payable) on their investment.

• For companies in which Iridium invests to capitalise on increased demand for BEE-compliant capital following changes to the BEE codes which place a greater influence on black ownership.

• Protection of investors interests through regulation and compliance with the FSCA and the Financial Advisory and Intermediary Services Act.• The proven expertise of Iridium as a regulated professional organisation, specialising in business restructuring and improving performance

of owner managed businesses to achieve substantially enhanced returns and increased shareholder value.• The benefit of pooling resources with other investors and diversifying risk over a number of Qualifying Companies in different business

sectors.• Iridium will invest in small and medium sized companies where the opportunity exists to significantly enhance profitability through a

management intervention. Higher risk investments will be balanced by investments into well established businesses with proven profitability and stable cash flows.

Notwithstanding the above, an investment into Iridium must be considered a high-risk investment and investors are urged to seek independent professional advice on their investment.

The content of this Private Placement Memorandum does not constitute and should not be construed as investment, tax, legal, accounting or other advice. For advice on these matters you should consult your own investment, tax, legal, accounting or other advisers about any material or information discussed in this Private Placement Memorandum and Memorandum of Incorporation.

3. ThE OFFER

The subscription is made as a once-off lump sum payment. (The total investment for the year of assessment will be calculated on the last day of February 2020 as a cut-off point). Investors will receive a tax certificate in respect of funds invested. This certificate will entitle the investor to a 100% tax deduction in the investor’s annual tax return for the year of assessment in which the investment is made.

The Board also reserves the right to accept or refuse, in whole or in part, any applications made in terms of the Private Placement, or to abate any or all applications (whether or not received timeously) in such manner as they in their sole and unfettered discretion may determine.

Iridium has set a target benchmark of an 8% return to all Class “A” shareholders. Any performance above this benchmark will be distributed to these shareholders.

Investors wishing to participate in this Private Placement are invited to do so by completing the attached memorandum of undertaking and returning the completed document via fax or e-mail as stipulated in the document. If you require clarity with regards to this invitation to subscribe please consult your banker, broker, legal adviser, accountant or any other professional advisor. An investment in the Fund involves a high degree of risk and is only suitable for investors who fully understand and are capable of bearing the risk of an investment in the Fund.

Prospective Investors should carefully consider the following factors:An investment in the Fund requires a long-term commitment, with no certainty of return. There could be little or no near-term cash flow available to the Investors for the period of the fund. The Fund’s Investments will be highly illiquid, and there can be no assurance that the Fund will be able to realise such Investments in a timely manner. Consequently, dispositions of such Investments may require a lengthy time period or may result in distributions in kind to the Investors. Since the Fund may only make a limited number of Investments, and since the Fund’s Investments generally will involve a high degree of risk, poor performance by a few of the Investments could severely affect the total returns to the Investors. There can be no assurance that the targeted internal rate of return will be attained. Past performance is not necessarily indicative of future results, and there can be no assurance that the Fund will achieve comparable results.

4. BBBEE COMPLIANCE

Provided that Iridum’s annual turnover does not exceed R50 Million, Iridium will be considered a Qualifying Small Enterprise (QSE), and so will be deemed to have a Level 2 BEE status for as long as the entity remains at least 51% Black-owned.

Referring to the diagram that follows, we can see that Iridium is a majority Black-owned company, provided that Black individuals control and hold 51% of the voting rights. When determining the effective holding in the QSE we consider Iridium 100% black owned, this follows the modified-flow through principles which the revised codes permit.

If Iridium makes a purchase of 51% of the shares in a Qualifying Company, all of these shares will be considered to be Black-owned as discussed above, thus making the stake of Black owners in the Qualifying Company equal to 51%. Thus, the Qualifying Company will also be deemed to have Level 2 BEE status for as long as its turnover stays under R50 million and Iridium remains majority Black-owned.



5. BBBEE STRUCTURE

BLACK

3rd PARTy

NON-BLACK

3rd PARTy

V.C.C

qUALIFyING SMALL ENTERPRISE

Ownership and voting rights

Other investors

Ownership and voting rights

Other investors

Considered 100% Black

Less than R50m turnover

51% 49%

20%29%

100%

100%

51%

29% 20%

6. BENEFITS OF BBBEE

The benefits of having a BBBEE Section 12 J Company are two-fold:• A vehicle to provide an immediate return to investors, up to 45%, through the Section 12 J company with investors receiving an income

tax deduction upon investment. Also, the investor benefits from a dividend flow and capital growth through the investment;

• If the majority shareholding of the Section 12 J company is “black owned” any equity investment into a qualifying company, due to the flow through principle, will be black ownership of the equity. Therefore, in addition to the tax benefits, if a BBBEE Section 12 J company invests into an EME or a Qualifying Company at 51%, the EME or Qualifying Company will be deemed to have an automatic Level 2 BBBEE status as per the amendment codes;

• The onus is on Iridium to remain a fully transformed entity for the investor to earn points on their scorecard. The investing entity will qualify for a maximum of 25 points according to the amended codes (at ownership level);

• The investing entity by virtue of investing into the fund becomes a limited partner;

• These shares can be viewed as ownership, hence the 25 points;

• The investing entity will collect these points over the life on the fund annually.

BEE Elements Code Weightings (2007) Amended Code WeightingsOwnership 20 Points 25* PointsManagement Control 10 Points

15 Points19 Points

Skills Development 15 Points20 Points

20 Points

Enterprise and Supplier Development 15 Points 40 PointsSocio Economic Development 5 Points 5 Points

Priority Elements- Will lead to discounting where thresholds not met

No tax deduction will be allowed for the taxpayer if immediately after the acquisition of the VCC shares the taxpayer becomes a connected person in relation to the VCC, per Section 12J.

CLASS “A“Share capital raised in terms of this issue will be ordinary class “A” shares and will participate in the entire

profits of Iridium except the profits ascribed to class “B” managers shares.

CLASS “B“The Iridium Team have taken on risk and incurred substantial costs in establishing and registering the company. Additionally, their involvement in identifying and managing target qualifying Companies is

essential to the success of Iridium and to fulfil the requirements of the Tax Act. They hold all the ordinary class “B” shares which entitle the Iridium Team to an ongoing participation of 20% of the profits distributed

by way of dividends.

OTHERIf permitted by regulations the company will consider issuing additional classes of shares which may include

asset equity in participating preference shares should the situation dictate. This will be at the sole discretion of the board of directors.



7. CLASSES OF ShARES

8. MANAgEMENT COSTS

Administration fees will be levied as follows:• Initiation fee: calculated up to 2% of capital invested;• Annual Management fee: 2% of capital invested.

The fees are used for the running of the company to manage underlying investments.

9. INVESTMENT STRATEgy

Investment MandateIridium will focus on well-managed companies, with established business models that are poised for national or regional expansion. The Fund will seek to partner with companies that have the capability to create value through a combination of organic expansion, add on acquisitions, strategic repositioning and consolidation strategies, thus enabling such companies to become regional champions.

Iridium has a generalist approach, it will focus on sectors that have attractive growth trajectories. Some of the sectors that Iridium expects to invest in include:

• agriculture (primary agriculture and agro-processing)• manufacturing• services• natural gas and resources• fintech

Investments will be made on forward-looking basis, based on market fundamentals, with an emphasis on a bottom-up approach to valuation.

Iridium endeavours to approach all investments in a manner that contributes to prosperity and the development of the local economy that will cater to consumers growth demands.

Iridium will approach a strategy that will balance both an active and a passive approach. Iridium has a strong preference for strategic, or significant influence which it believes will be an important driver of consistent, superior returns.

Significant influence is achieved through majority ownership by either ourselves or together with our strategic investor partners.

Tax deductibility of a Section 12J investment

Effect of Initial Investment:Initial cost of investmentMarginal tax rate

Tax deduction received (effective in the tax year of investment)Net cost of investment

yearR1000 000

45%

R450 000

R550 000

Growth of Investment Over 5 years:Capital portion at year-end (6% annual capital growth)Cumulative value of dividends reinvested (6% annual capital growth)

Dividends declared at year-end (8% dividend yield)Less: Dividends Withholding TaxValue of dividend reinvested

Proceed from sale of shares after 5 yearsCGT paid (zero base, 45% marginal tax, 40% inclusion rate)Net capital return (recoupment on dividends reinvested not accounted for)

year 1 year 2 year 3 year 4 year 5R1 060 000 R1 123 600 R1 191 016 R1 262 477 R1 338 226

R71 910 R157 328 R258 240 R376 900

R84 800(R16 960)

R1 123 600(R19 128)

R1 123 600(R21 574)

R1 123 600(R24 331)

R1 123 600(R27 442)

R1 824 893R328 481

R1 496 412

Summary of returns after 5 years:Net cost of investment R550 000

Return on investment after 5 years 172%

Section 12J - Model of individual Investor Returns: Proof of concept

Calculation of Returns Over 5 years:

Assumptions: all dividends declared are reinvested; 6% capital growth; 8% annual dividend yield; 40% capital gains inclusion rate for individuals; 45% marginal tax rate; S12J “sunset clause” is extended past 2021



Investment Selection Criteria

Medium EnterprisesThe general characteristics of companies in which we will invest are as follows:1. Typically an owner-managed business, a family business or a business managed and owned by a limited number of partners. 2. In case of Larger Enterprises, the company has a strong management team who have the ability and drive to grow the business and

who are well aligned with our investment strategy.3. The business is funded by shareholder capital, with limited or no reliance on institutional capital. 4. The success of the business is based on a limited number of individuals and most of the decision-making of the business is vested

within these individuals. 5. The business typically represents a material part of the owners’ wealth which has been accumulated over a number of years.6. Market-leaders.7. Social Impact.8. Fund delivery strategies.9. Co-investments and Partnerships.10. Strategic Partnerships.

Venture Capital

Investment will be selected based on their potential to achieve growth and high returns. The selection criteria will take into account the venture’s stage of development, the strength of the IP and value proposition, scalability, management’s ability, sector growth, attractiveness of envisaged investment returns against benchmark and exit potential. The above-mentioned selection criteria is discussed below:

Stage of development: Ideally the venture should be at a post-sales stage, about to enter into a growth phase. Revenue projections should indicate high growth and should be backed up by off-take agreements that cover most of the investment horizon (typically five to seven years).

IP & Value Proposition:The Company should have a strong value proposition protected by proprietary IP in order to gain a competitive advantage. Key IP to be considered will be patents, trademarks, design registrations, and trade secrets.

Sector Growth:The sector in which the business operates should be a high-growth sector with attractive risk-adjusted returns.

Management:The sponsor should be operationally involved in the venture and must have the necessary skill, competence and track record to drive the venture’s growth objectives and strategy.

A thorough due diligence will be conducted for each transaction and will at least cover the following categories:

• Financial• Commercial• Technical• Legal

Investment CommitteeIridium has appointed an investment committee as per section 72(1) of The Companies Act.The investment committee will investigate and analyse each proposed Qualifying Company against rigorous criteria and decide which Qualifying Companies to capitalise. The members of the committee are Tiro Motlogeloa, Mmuso Matlala and Neill Hobbs.

10. ExIT STRATEgy

Investments in Iridium should be seen as medium to long term investments of a high-risk nature. It is intended that the investment in Iridium will have an investment horizon of at least 5 to 7 years.

The equity of any of the Qualifying Companies may be listed on a stock exchange or a trade sale to realise Iridium’s investment. Where appropriate Iridium will exit the Qualifying Company by disposing of shares for capital gain, whether by outright sale or management buy-in. If an investor’s shares are sold within 5 years from the date of the acquisition into the VCC, the taxpayer will be liable for a tax recoupment and capital gains on the sale of the shares.



11. INVESTMENT RISKInvestments in Iridium, as with all investments of a Private Equity nature, are regarded to be high risk and most suitable for high net worth investors who are prepared to accept such a high risk and who understand the investment.

Iridium envisages that the high risks associated with investments in Qualifying Companies will be mitigated by:

• Acquiring a diversified portfolio of Qualifying Companies, thereby reducing the potential impact of under-performance by any individual investment;

• Strict investment criteria selection process as stipulated by the Investment Committee;

• Iridium holds an FSCA License and will be administered in accordance with FSCA regulations;

• Adherence to the principles of corporate governance through the supervision of the FSCA;

• The management control and interventions of the experienced Iridium Team. Iridium reserves the right that investments can be made with non-advice and that that no analysis of the investors needs or financial situation has been conducted. Every investor should seek their own financial advice if required.

12. POST INVESTMENT MANAgEMENT

Hobbs Sinclair is a medium sized financial services firm situated in Cape Town. The firm provides its clients with a range of services which can be categorised as audit, monthly and annual accounting, tax compliance and advisory, company secretarial, financial consulting as well as Business Rescue. Neill Hobbs was appointed as a Senior Business Rescue Practitioner when the legislation was introduced and has been involved in over 20 business rescues with a high degree of success. His team’s experience will provide stability and insight to the Qualifying Companies.

The Iridium Team together with Hobbs Sinclair will utilise their invaluable experience in identifying companies, performing management interventions, where necessary, in Qualifying Companies to facilitate the restructuring and future management of the companies. This ensures that adequate controls and reporting structures are implemented in Qualifying Companies as required by the Investment Committee.

13. REgULATION OF IRIDIUM

Iridium is a Private Equity Investment Company registered with the FSCA and SARS as a Venture Capital Company in terms of Section 12J.

The sole object of Iridium is the management of investments in Qualifying Companies.Iridium will identify and acquire Qualifying Shares in Qualifying Companies. A Qualifying Company is a company which, inter alia, does not engage in the following impermissible activities:• Any trade carried on in the respect of immovable property; other than a trade carried on as a hotel keeper;

• Activities of a bank, hire-purchase financing, short and long-term insurance;

• Financial or advisory services, including legal, tax advisory, stock broking, management consulting, auditing or accounting services; Gambling;

• Trading in liquor, tobacco, arms or ammunition; or Trade carried on mainly outside the Republic. Iridium will engage the services of the Team at a board level in Qualifying Companies to oversee the financial management and company administration as well as implement systems and strategies for the enhancement of operating returns to shareholders.

Iridium may be listed on the Johannesburg Stock Exchange or Alt X.

14. COMPLIANCE WITh ANTI-MONEy LAUNDERINg REQUIREMENTS

As a result of the increased regulatory concerns with respect to the sources of funds used in investments and other activities, the General Partner requires Investors to provide additional documentation verifying, among other things, such Investors’ identity and source of funds used to purchase the Interests. The General Partner may decline to accept a subscription on the basis of the information that is provided or if this information is not provided. Requests for documentation and additional information may be made at any time during which an Investor holds an Interest. The General Partner may be required to provide this information, or report the failure to comply with such requests, to appropriate governmental authorities, in certain circumstances without notifying the Investors that the information has been provided.

The General Partner will take such steps as they determine in their sole discretion are necessary to comply with applicable law, regulations, orders, directives or special measures. These steps may include prohibiting an Investor from making further contributions of capital to the Fund, depositing distributions or other funds or assets to which an Investor would otherwise be entitled to in an escrow account or causing the exclusion of an Investor from the Fund.



15. IRIDIUM’S TEAM

Tiro has over 11 years banking experience coupled with strong analytical capabilities.

He has had numerous roles ranging from economist, statistician to private banker at a number of banking institutions. After graduation, he was employed at ABSA as an economist in the group economic research division. He has held the role of a credit analyst at the credit card risk division at Standard Bank. This culminated in him building a provisioning model for the card credit division which also included Diners Club.

He has held an executive assistant role supporting both the Chief Executive and Head of Credit for Personal Markets at Standard Bank. It is during this period that he gained immense credit knowledge and was able to apply that in his new role working in the strategy department of the commercial banking division of Standard Bank. He was instrumental in drafting the risk appetite for the commercial banking segment.

He was also instrumental in developing the value proposition for the education segment within the Personal and Business Banking sector of Standard Bank. He holds a BComm. degree in Statistics from the University of Pretoria.

For the last 14 years, Neill has been a partner of Hobbs Sinclair where his skills have been utilised in building an accounting practice, specialising in tax structures.

Neill is a Chartered Accountant CA (SA) and has a BComm honours degree in Financial Management.

Neill completed his audit articles at Coopers & Lybrand (now PWC) Furthermore, he acted on the main board as a director and managing director for Rennie Grinaker Zimbabwe Limited, Kestrel Group and Elexir technology Holdings LTD.

Four years ago Neill became a Business Rescue Practitioner and has taken on many successful appointments to date which involved hundreds of jobs being saved and a return of profitability to these companies. His high level strategic management was a key driver which led to their success.

Neill is also a co-founder and director of Anuva Investments, another 12J VCC.

Mmuso has a strong legal background and is currently studying towards a Master’s degree in Banking Law with the University of Pretoria. Mmuso believes that the key to sustainable business lies in striving to improve society’s quality of life.

Mmuso regards Africa as a canvas of opportunity. A commerce enthusiast by nature, his biggest learning curve in entrepreneurship was in 2010, co-owning a 200-seater restaurant at the age of 19. Mmuso was MD and co-founder of Funzi, an online platform for learners which took first place at the ICT Govtech awards in 2015 held in Durban.

His entrepreneurial journey and achievements have had him profiled on Africa’s leading business and finance channel, CNBC Africa, on a show styled “Young Money”.

Tiro Motlogeloa

Neill Hobbs

Mmuso Matlala

“IN INVESTING, WHAT IS COMFORTABLE IS RARELY PROFITABLE.”

– ROBERT ARNOT





FORM: MEMORANDUM OF UNDERTAKINg TO SUBSCRIBE IN RESPECT OF THE PRIVATE PLACEMENT

FAX TO: +27 (21) 683 0500or

EMAIL TO: [email protected]

Attention: IRIDIUM BOARD

Dear Sir,

LETTER OF UNDERTAKINGI, the undersigned, ………………………………………………………….………confirm that I have full legal capacity to contract and have read the private placement memorandum dated on the front cover to which this undertaking to subscribe is attached.

I hereby undertake to subscribe to Class “A” shares at R100 per share for the amount totalling …………........................….........................................(.............................................................................…………………………………………………………………………………………………………………)

I acknowledge and undertake to pay the subscription amount to Iridium Private Equity (Pty) on or before the date agreed upon.

I acknowledge and undertake, in compliance with the Financial Intelligence Centre Act (THE FICA ACT), to deliver on or before the date agreed upon, the relevant documentation stipulated below:

Should the subscriber be a natural person, provide:

• A certified copy of your identity document or passport (not older than 3 months)• A proof of residence (utility bill not older than 3 months)• SARS correspondence containing your tax number• Proof of payment• Declaration of source of funds (attached hereto)

Should the subscriber be a juristic person, provide:

• Copy of Registration documents (COR14.3) • Written confirmation of person to act on behalf of the Company • A proof of residence/address of the Company (utility bill not older than 3 months) • SARS correspondence containing the tax registration number of the Company • Proof of payment of the subscription amount • Declaration of source of funds (attached hereto) • For each shareholders or representative of company, their;

» Certified copy of their identity document or passport (not older than 3 months) » A proof of residence/address (utility bill not older than 3 months)

Should the Investor be a Trust, provide:

• Letters of authority • Trust Deed• Written confirmation of person to act on behalf of the Trust • Proof of residence/address of the Trust (utility bill not older than 3 months) • SARS correspondence containing the tax registration number of the Trust • Proof of payment of the subscription amount • Declaration of source of funds (attached hereto) • For each trustee and beneficiary, their;

» Certified copy of their identity document or passport (not older than 3 months) » A proof of residence/address (utility bill not older than 3 months)

I warrant that the subscription price will be payable from a reputable source and shall not be in contravention of the Financial Intelligence Centre Act.

I understand that this Private Placement Memorandum is an invitation to subscribe for shares in Iridium and is issued for the purpose of providing information to investors with regard to IRIDIUM. This offer and the contents of this Private Placement Memorandum is not investment, tax, legal, accounting or other advice.

I hereby confirm that I acknowledge and accept the terms and conditions of the Private Placement as contained in the Private Placement Memorandum and Memorandum of Incorporation.

It is also understood that no advice has been given and no analysis of my financial situation has been conducted.

I warrant that the information set out below is true and correct.

Yours Sincerely

_____________________________ ______________________________ Name Signature

_____________________________ ______________________________ Witness Name Signature



Details of subscriber:

Name:

ID/registration number:

Address:

Postal code:

Tel/Fax:

Email:

*Deposit reference number:

Kindly ensure that the deposit reference number entered above is quoted when depositing the subscription price into the Iridium bank account and consists either of your identity number, company registration number, close corporation registration number or trust IT number.

Banking details of Iridium: Initial:

Account name: Iridium Private Equity (Pty) Ltd

Account number: 303292792

Bank: Standard Bank

Branch: Menlyn

Account type: Current

Banking details of subscriber: Initial:

Account name:

Account number:

Bank:

Branch:

Branch code:

Account type:

Instructions: Initial:

• Applications may be made on this application form only. Copies or reproductions of the application form will be accepted.

• Applications are irrevocable and may not be withdrawn once submitted.

• The private placement is for a minimum subscription amount of R1 000 000 per single addressee acting as principal.

• All necessary FICA documents submitted.

• Applicants should consult their brokers, bankers or other professional advisers in case of doubt as to the correct completion of the application form.

• No receipts will be issued for application forms, application monies or any supporting documentation and applications will only be regarded as completed when the relevant electronic transfer has been paid or effected. If a receipt is required, shareholders or lodging agents are required to prepare special transaction receipts for application forms lodged.

• The directors accept no responsibility, nor will they be held liable, for any damages or loss suffered by any applicant as a result of any inability by such parties to allocate payments, as a result of an illegible irrevocable undertaking to subscribe or otherwise, pursuant to payment being made, or purporting to have been be made, nor will such parties be liable for any damages or loss suffered by any applicant should Iridium or the directors be unable, for any reason whatsoever, to reconcile a payment or purported payment with a particular undertaking to subscribe. In the case of any dispute regarding alleged payment, Iridium and/or the directors, reserve the right to determine in their sole discretion what evidence constitutes satisfactory proof of payment.

• All alterations on this application form must be authenticated by full signature.

• To the extent that subscription monies emanate from blocked rand accounts, such applications will be dealt with in terms of the Exchange Control Regulations that may be applicable.



DECLARATION OF SOURCE OF FUNDS By ShAREhOLDER OF:

Company Name: Iridium Private Equity (Pty) LtdRegistration No. 2011/108955/07VCC #: 002FSP 43705

Shareholder Name:...................................................................................................................................................................

As a 12J VCC Investor I/we understand that I/we am/are required to declare the source of the funds that I/we have invested whether in Cash, Cheque, EFT, RTGS, SWIFT or any other method.

The Section 43(b) FICA Compliance Officer must obtain sufficient appropriate information to determine whether transactions involving the shareholders are consistent with the FSP’s knowledge of that shareholder and must include:

- The source of that shareholder’s income, and- the source of the funds which that person has used /expects to use in concluding the contract or transactions

Accordingly, I/we wish to declare as follows:

ThatI/We

........................................................................................................................................................................................................................................................... (Name/s of account holder/holders)

Of.......................................................................................................................................................................................................................................................... (Address)

do hereby declare that the source of the funds invested originates from (underline as appropriate):

Salary / Business Income / Dividend / Interest / Gifts / Pocket Money / Sale of an Asset / Inheritance

Other(provide details)...................................................................................................................................................................

I/we further confirm that these funds are derived from legitimate sources as stated above and that I/we will

also provide the required evidence of the source of funds if required to do so in future.

I/we declare the foregoing details to be true.

Signature of Investor:

............................................................................................... .....................................................................................................Name Signature

..............................................Dated

For Official use only:MLCO: LARRy WoRThINGToN-FITNUM .................................................................................................... Signature .................................................................................................... Date



Newlands on Main 8th Floor Letterstedt HouseMain RoadClaremont7708

P O Box 44764, Claremont, 7735

T | +27 (21) 683 0500F | +27 (21) 683 0577E | [email protected]

MSMM Inc 905 Stanza Bopape StreetArcadiaPretoria0007

T | +27 (87) 232 1799C | +27 (73) 588 1072E | [email protected] | [email protected]

Registration Number2011/108955/07

FSCA Number43705

CONTACT DETAILS

CAPE TOWN PRETORIA

Newlands on Main8th Floor Letterstedt HouseMain RoadClaremont7708 P O Box 44764, Claremont, 7735 T | +27 (21) 683 0500F | +27 (21) 683 0577 E | [email protected]

MSMM Inc905 Stanza Bopape StreetArcadiaPretoria0007 T | +27 (87) 232 1799C | +27 (73) 588 1072 E | [email protected] | [email protected]

iridiumequity.co.za

Registration Number 2011/108955/06

VCC 002

FSCA 43705

CAPE TOWN PRETORIA

private placement memorandum...this private placement memorandum is an invitation to subscribe for...

Documents