Joint Stock Company Kaspi.kz(KSPI) - 2024 Q3 - Quarterly Report

STOCK PURCHASE AGREEMENT RECITALS This section outlines the agreement's background, identifying sellers, the company's capital structure, and the buyer's acquisition of a majority stake - Sellers will sell all Class A and Class B shares of D-Market Elektronik Hizmetler ve Ticaret Anonim Şirketi to the buyer, representing a majority of the company's issued share capital[11][13] - The company's capital structure includes Class A and Class B shares, with Class B shares listed as American Depositary Shares (ADSs) on Nasdaq Global Select Market under ticker 'HEPS'[11] - Mikheil Lomtadze, Vyacheslav Kim, and Baring Fintech Nexus Limited have signed voting agreements to ensure buyer shareholder approval for the transaction[13] ARTICLE I DEFINITIONS This section defines specific terms used throughout the agreement, detailed in Appendix A, ensuring consistent interpretation - Definitions for specific terms used in the agreement are detailed in Appendix A[12] ARTICLE II PURCHASE AND SALE This section details share purchase and sale terms, including closing procedures, payment of closing and deferred cash consideration, and buyer's deduction rights - Sellers will sell and transfer their Class A and Class B shares ('Transferred Shares') to the buyer, free from any encumbrances[12] - Closing will occur at 10:00 AM (Turkey time) in Istanbul two business days before the General Assembly, with all transactions deemed simultaneous and effective at closing[12][15] - Buyer will pay sellers total consideration, comprising closing cash consideration (at closing) and deferred cash consideration (within six months post-closing), both via USD wire transfer[16][17] - Buyer may deduct amounts owed by sellers under Section 8.2 from the deferred cash consideration, subject to conditions like seller's written consent or a final court/arbitrator ruling[17] ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS This section details sellers' representations and warranties concerning their legal capacity, authority, share ownership, and compliance with anti-corruption and anti-money laundering laws - Each seller possesses full legal capacity and authority to execute and perform this agreement, which constitutes a legal and binding obligation[20] - The Transferred Shares are legally and beneficially owned by sellers, free of encumbrances, with full right to sell and transfer them to buyer at closing[21] - Sellers represent compliance with applicable anti-corruption and anti-money laundering laws, with no material violations in the past three years[23] ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY This section details sellers' representations and warranties regarding the company's organization, capital structure, SEC compliance, financial health, legal compliance, and intellectual property - The company and its subsidiaries are duly organized, validly existing, and in good standing under their respective jurisdictions, possessing all necessary powers and authorizations to conduct business[24] - The company has timely filed all required SEC reports, which complied with applicable laws at filing and contained no material misstatements or omissions[29] - The company and its subsidiaries have complied with all applicable anti-corruption, anti-money laundering, sanctions, and international trade control laws for the past five years, maintaining compliance policies and procedures[34][37] Company Capital Structure (as of Equity Reference Time) | Share Type | Authorized Share Capital | Issued and Outstanding Share Capital | | :------- | :----------------------- | :--------------------------------- | | Class A Shares | 40,000,000 | 40,000,000 | | Class B Shares | 285,998,290 | 285,998,290 | ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER This section details buyer's representations and warranties regarding its organization, SEC compliance, financial health, legal compliance, investment intent, and sufficient funds for the transaction - The buyer and its subsidiaries are duly organized, validly existing, and in good standing under Kazakhstan law, possessing all necessary powers and authorizations to conduct business[49] - The buyer has timely filed all required SEC reports, which complied with applicable laws at filing and contained no material misstatements or omissions[54] - Buyer represents compliance with applicable anti-corruption, anti-money laundering, sanctions, and international trade control laws, with no material violations in the past five years[58][61] - Buyer acquires Transferred Shares for investment purposes on its own account, not for public distribution, and commits to complying with securities law registration requirements[72] - Buyer will have sufficient cash or existing credit facilities at closing and on the deferred cash consideration payment date to complete the transaction and fulfill all obligations[74] ARTICLE VI COVENANTS This section outlines pre- and post-closing covenants, including maintaining business operations, regulatory filings, handling acquisition proposals, and ensuring buyer approvals - Prior to closing, sellers shall use commercially reasonable efforts to ensure the company and its subsidiaries operate in the ordinary course of business, maintaining their organization, contracts, and relationships[77][79] - Buyer and sellers shall cooperate and use commercially reasonable efforts to complete all necessary regulatory filings, including Turkish antitrust approval, Kazakhstan National Bank registration, and other relevant government agency approvals[78][81][83] - Sellers covenant not to solicit, encourage, or facilitate any acquisition proposals before closing, and to promptly notify buyer of any related inquiries or proposals received[84] - Buyer shall promptly convene a shareholder meeting to obtain necessary shareholder approval and ensure buyer's board approves the share acquisition[86] - All cash consideration paid by buyer must not originate directly or indirectly from activities violating anti-corruption, anti-money laundering, sanctions, or international trade control laws, and must not be paid from any Russian bank[88] ARTICLE VII CONDITIONS TO CLOSING This section outlines closing conditions, including regulatory approvals, absence of legal prohibitions, accuracy of representations, and delivery of required documents - Common closing conditions include no legal prohibitions or adverse litigation, and obtaining all necessary government approvals, such as from the Turkish Antitrust Authority, Central Bank, Banking Regulation and Supervision Agency, and Information and Communication Technologies Authority[90] - Conditions for buyer's obligations include the accuracy of sellers' and company's fundamental representations and warranties, sellers' performance of all obligations under Sections 6.1 and 7.2, and sellers' notification of the transaction to Turkcommerce B.V[92] - Conditions for sellers' obligations include the accuracy of buyer's fundamental representations and warranties, buyer's performance of all obligations under Sections 6.6, 6.9, 6.13(a), and 7.3, completion of agreement registration by the Kazakhstan National Bank, and the voting agreement remaining unamended and effective[98] - At closing, buyer must deliver a certificate of buyer's representations and warranties, Kazakhstan National Bank registration certificate, closing cash consideration, a joinder to the shareholders' agreement, and the share pledge agreement[100] - At closing, sellers must deliver a certificate of sellers' representations and warranties, stock certificates for Transferred Shares, company board resolutions for convening a general assembly, board members' resignation letters, and a copy of the company's share register[95][96] ARTICLE VIII SURVIVAL; INDEMNIFICATION This section defines the survival of representations and warranties, indemnification obligations, limitations, and procedures for claims, establishing it as the exclusive post-closing remedy - Sellers' and buyer's fundamental representations and warranties survive until the third anniversary of the closing date[101] - Sellers will indemnify buyer for losses due to inaccurate or breached seller or company representations and warranties, subject to a $75,000 deductible and a cap of 9.5% of total consideration or total consideration[102][103] - Buyer will indemnify sellers for losses due to inaccurate or breached buyer representations and warranties, subject to a cap (maximum non-fundamental liability cap for non-fundamental representations, maximum liability cap for other losses)[106][107] - Indemnification excludes punitive or exemplary damages, unless awarded to a third party in a third-party claim[113] - Each indemnified party shall use commercially reasonable efforts to minimize and mitigate any indemnifiable losses[113] - Except in cases of fraud, this indemnification provision is the sole and exclusive post-closing remedy for buyer and sellers regarding the transactions under this agreement[113] ARTICLE IX TERMINATION This section outlines termination conditions, including mutual consent, failure to close by deadline, or material breach, and specifies a $75,000,000 termination fee in certain scenarios - This agreement may be terminated at any time prior to closing by mutual written agreement of sellers and buyer[115] - Buyer or sellers may terminate the agreement if the transaction is not completed by the outside date (February 28, 2025, or extended to April 30, 2025 under specific conditions), or if a permanent injunction exists[115][146] - If buyer or sellers commit a material breach and fail to cure it within 30 calendar days of written notice, the other party may terminate the agreement[115][116] - In certain termination scenarios, the breaching party must pay the non-breaching party a $75,000,000 termination fee, considered reasonable liquidated damages, not a penalty[116][117] - Upon termination, all rights and obligations cease, except for specific sections (e.g., 9.5 and Article X), though liability for losses due to willful and material breach remains[116] ARTICLE X GENERAL PROVISIONS This section covers general provisions including notices, entire agreement, governing law, dispute resolution via ICC arbitration, specific performance, and no third-party beneficiaries - All notices, requests, and other communications must be in writing and sent via email, overnight courier, or first-class mail[121] - This agreement (including exhibits), the confidentiality agreement, and transaction documents constitute the parties' entire understanding regarding the subject matter, superseding all prior oral or written agreements[122] - The interpretation, construction, validity, and enforcement of this agreement are governed by the laws of the State of New York[125] - Any disputes related to this agreement will be submitted to International Chamber of Commerce (ICC) arbitration in New York, USA, conducted in English[125] - Parties agree that failure to perform or breach of any term will cause irreparable harm, entitling parties to seek specific performance of this agreement's terms[130] - If buyer fails to timely pay deferred cash consideration, sellers may sue in New York State courts for specific performance and additional damages for delayed payment, calculated at 9% interest as per New York CPLR §§ 5001, 5003, and 5004[127][129] EXHIBITS Exhibit A Certain Definitions This exhibit provides detailed definitions for key terms like 'Acquisition Proposal,' 'Losses,' and 'Sanctioned Jurisdiction,' ensuring consistent interpretation across the agreement - 'Acquisition Proposal' refers to mergers, joint ventures, or acquisitions involving 25% or more of the company's voting power or assets, excluding transactions under this agreement[139] - 'Anti-Corruption and Anti-Money Laundering Laws' include the Foreign Corrupt Practices Act of 1977 and other anti-bribery, anti-corruption, and anti-money laundering statutes[140] - 'Buyer Material Adverse Effect' means any effect that substantially impedes buyer's ability to perform its obligations or complete the transactions[143] - 'Company Material Adverse Effect' means any event causing a material adverse effect on the business, financial condition, operations, assets, or liabilities of the company and its subsidiaries[149] - 'Losses' are defined as non-duplicative losses, taxes, liabilities, claims, obligations, settlements, deficiencies, demands, judgments, damages, interest, penalties, fines, lawsuits, actions, causes of action, assessments, awards, forfeitures, monetary damages, and expenses (including investigation, defense, and attorneys' fees), excluding punitive damages and limited to actual, out-of-pocket costs[148] Exhibit B Transferred Shares and Consideration This exhibit itemizes the Class A and Class B shares transferred by each seller, detailing the corresponding closing cash, deferred cash, and total consideration Transferred Shares and Consideration Details | Seller | Transferred Class A Shares | Transferred Class B Shares | Closing Cash Consideration for Transferred Class A Shares ($) | Closing Cash Consideration for Transferred Class B Shares ($) | Deferred Cash Consideration for Transferred Class A Shares ($) | Deferred Cash Consideration for Transferred Class B Shares ($) | Total Consideration for Transferred Shares ($) | | :----- | :------------------------- | :------------------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | :--------------------------------------------------------- | :--------------------------------------------------------- | :------------------------------------------- | | HVDB | 40,000,000 | 29,864,015 | 161,291,362 | 75,624,169 | 141,643,807 | 66,412,082 | 444,971,420 | | VDS | N/A | 48,539,180 | N/A | 122,914,991 | N/A | 107,942,218 | 230,857,209 | | YBDF | N/A | 48,539,170 | N/A | 122,914,966 | N/A | 107,942,195 | 230,857,161 | | ADY | N/A | 44,271,070 | N/A | 112,106,924 | N/A | 98,450,725 | 210,557,649 | | ID | N/A | 2,032,785 | N/A | 5,147,589 | N/A | 4,520,540 | 9,668,129 | Exhibit C Form of Share Pledge This exhibit outlines the Share Pledge Agreement, where buyer pledges 65,199,658 Class B shares as security for deferred cash consideration, detailing rights, enforcement, and covenants - Buyer pledges 65,199,658 Class B shares of the company to sellers as ongoing security for deferred cash consideration, representing 65.41% of total company share capital and 37.63% of Class B shares acquired by buyer[163] - Prior to a default event, the pledgor (buyer) may exercise voting and other rights associated with the pledged shares, considering the pledgees' (sellers') interests fairly[171] - Upon a default event, pledgees may enforce the share pledge, opting for foreclosure under the Enforcement and Bankruptcy Law or private sale of pledged shares[175] - Pledgor represents being the sole registered, legal, and beneficial owner of the pledged shares, holding full, valid, and unencumbered title, with pledged shares representing 20% of the company's total issued share capital[180] - Pledgor covenants not to sell, transfer, pledge, or otherwise dispose of the pledged shares or related rights before the release date, except for the pledge under this agreement[184] Exhibit D Form of Consent Order and Final Judgment This exhibit provides a template for a New York State Supreme Court Consent Order and Final Judgment to enforce buyer's deferred cash consideration payment obligations - This Consent Order and Final Judgment template aims to enforce buyer's obligation to timely pay deferred cash consideration[219][220] - The court has jurisdiction over the case, ordering buyer to pay unpaid deferred cash consideration plus pre- and post-judgment interest at New York's statutory 9% rate[220][221] - The court retains jurisdiction over this case to adjudicate any other disputes for relief and issue further orders to enforce this order[221] Exhibit E Closing Procedures This exhibit details closing procedures, including regulatory approvals, share certificate delivery, cash consideration payment, share registration, and board/charter approvals - Upon final regulatory approval, the company's board shall convene a general assembly to discuss and approve changes to board members and amendments to the company's articles of association[224] - On the closing date, sellers will endorse and deliver Transferred Share certificates to buyer, and buyer will pay the closing cash consideration[224] - The closing date will also include buyer's registration in the share register, sellers' removal from it, signing and delivery of the share pledge agreement, and buyer's execution of a joinder to the shareholders' agreement[225] - At the general assembly, changes to the company's board members and amendments to the company's articles of association will be approved[227] Exhibit F-1 Form of Voting Agreement (Mikheil Lomtadze) This exhibit details Mikheil Lomtadze's voting agreement, committing to support buyer shareholder matters for the transaction, with provisions for share transfer restrictions and confidentiality - Mikheil Lomtadze commits to voting in favor of 'Buyer Shareholder Voting Matters' and other necessary items for the Stock Purchase Agreement's completion at buyer's shareholder meetings[236] - The shareholder covenants not to deposit buyer shares into a voting trust, grant proxies, or subject shares to any other voting arrangement during the agreement's term[236] - The shareholder agrees not to directly or indirectly transfer, sell, pledge, or otherwise dispose of any buyer shares during the agreement's term, unless to immediate family or affiliates who agree to be bound by this agreement[236] Buyer Shares Held by Mikheil Lomtadze | Name | Common Shares Underlying ADSs | Percentage Voting Power | | :-------------- | :---------------------------- | :---------------------- | | Mikheil Lomtadze | 42,950,623 | 22.60% | Exhibit F-2 Form of Voting Agreement (Vyacheslav Kim, Baring Fintech Nexus Limited) This exhibit details Vyacheslav Kim and BFNL's voting agreement, committing to support buyer shareholder matters for the transaction, with provisions for share transfer restrictions and confidentiality - Vyacheslav Kim and Baring Fintech Nexus Limited commit to voting in favor of 'Buyer Shareholder Voting Matters' and other necessary items for the Stock Purchase Agreement's completion at buyer's shareholder meetings[250] - The shareholder covenants not to deposit buyer shares into a voting trust, grant proxies, or subject shares to any other voting arrangement during the agreement's term[250] - The shareholder agrees not to directly or indirectly transfer, sell, pledge, or otherwise dispose of any buyer shares during the agreement's term, unless to immediate family or affiliates who agree to be bound by this agreement[250] Buyer Shares Held by Vyacheslav Kim | Name | Common Shares Underlying ADSs | Percentage Voting Power | | :------------- | :---------------------------- | :---------------------- | | Vyacheslav Kim | 52,927,955 | 27.85% |