Net 1 UEPS Technologies, Inc.: Exhibit 10.42 - Filed by newsfilecorp.com






Exhibit 10.42

EXECUTION

SECURITY CESSION & PLEDGE 

 

DATED 20 OCTOBER, 2016 

 

given by 

 

NET1 APPLIED TECHNOLOGIES SOUTH AFRICA PROPRIETARY LIMITED

(as Cedent) 

 

in favour of 

 

FIRSTRAND BANK LIMITED 
(ACTING THROUGH ITS RAND
MERCHANT BANK DIVISION) 

 

and 

 

EACH OF THE OTHER SECURED CREDITORS 
(as Cessionaries)

 

in respect of certain Shares, Shareholder Claims and Related
Rights 

	 	 	






CONTENTS 

	Clause 	 	Page 
	 	 	 	 
	 	 	 	 
	1.
      	Interpretation
      	3
  
	2.
      	Pledge
      and Cession in Security 	5
  
	3.
      	Duration
      	5
  
	4.
      	Representations
      and Warranties by the Cedent 	6
  
	5.
      	Undertakings
      by the Cedent 	7
  
	6.
      	Delivery
      of Documents 	8
  
	7.
      	Corporate
      action in respect of the Shares 	9
  
	8.
      	Rights
      of the Cedent before Default 	9
  
	9.
      	Enforcement
      	10
  
	10.
      	Appropriation
      of Proceeds 	12
  
	11.
      	Payments
      	12
  
	12.
      	Power
      of Attorney 	12
  
	13.
      	Further
      Assurances 	12
  
	14.
      	Additional
      Rights 	13
  
	15.
      	Cedent
      bound notwithstanding certain circumstances 	13
  
	16.
      	Keeping,
      inspection and delivery of records 	13
  
	17.
      	Exemption
      from Liability 	14
  
	18.
      	Changes
      to the Parties 	14
  
	19.
      	Severability
      	14
  
	20.
      	Governing
      Law 	15
  
	21.
      	Jurisdiction
      	15
  
	22.
      	Miscellaneous
      Matters 	15
  
	 	 	 	 
	 	 	 	 
	Schedule
      1 	CSDP
      Confirmation 	17
  
	 	 	 
	 	 	 	 
	 	 	 	 
	Signature
      Page 	 	19
  


2




THIS AGREEMENT is dated 20 October, 2016 and is made
between: 

	(1) 	
      NET1 APPLIED TECHNOLOGIES SOUTH AFRICA PROPRIETARY
      LIMITED, registration number 2002/031446/07, as pledgor and cedent
      (the Cedent);

	 	 
	(2) 	
      FIRSTRAND BANK LIMITED (ACTING THROUGH ITS RAND
      MERCHANT BANK DIVISION) as Secured Creditor; and

	 	 
	(3) 	
      EACH OF THE OTHER SECURED CREDITORS (as defined in
      this Agreement below).



BACKGROUND: 

As security for the due and punctual performance of the Secured
Obligations, the Cedent has agreed to pledge its Shares and to cede in
securitatem debiti all its Secured Property to the Secured Creditors, on the
terms set out in this Agreement. 

	1. 	
      INTERPRETATION




	1.1 	
      Definitions

	 	 
		
      In this Agreement:




	1.1.1 	
      Blue Label Telecoms means Blue Label Telecoms
      Limited (registration number 2006/022679/06), a public company registered
      under the laws of South Africa;

	 	 
	1.1.2 	
      Common Terms Agreement means the common terms
      agreement, dated on or about 20 October, 2016, between, among others, the
      Cedent (as borrower) and FirstRand Bank Limited (acting through its Rand
      Merchant Bank division) (as arranger, lender and facility
agent);

	 	 
	1.1.3 	
      CSDP means a Central Securities Depository
      Participant, accepted as a participant under the Financial Markets
    Act;

	 	 
	1.1.4 	
      CSP means a custody services provider regulated in
      terms of the Financial Markets Act;

	 	 
	1.1.5 	
      Financial Markets Act means the Financial Markets
      Act, 2012, as amended or replaced from time to time;

	 	 
	1.1.6 	
      Party means a party to this Agreement;

	 	 
	1.1.7 	
      Related Rights means, in relation to any Shares
      and Shareholder Claims:




	 	(a) 	
      any monies, distributions and proceeds (including the
      proceeds of a disposal or other realisation) accrued or receivable in
      respect of all or part thereof;

	 	 	 
	 	(b) 	
      all rights and benefits in respect of any agreement for
      the disposal or other realisation thereof;

	 	 	 
	 	(c) 	
      all contracts, warranties, remedies, Security,
      indemnities and other undertakings in respect thereof; and

	 	 	 
	 	(d) 	
      any of the reversionary interests referred to in Clause
      4.7.4 (Secured Property);




	1.1.8 	
      Secured Creditor means each person who is or
      becomes a Finance Party under (and as defined in) the Common Terms
      Agreement, from time to time;



3 





	1.1.9 	
      Secured Obligations means all present and future
      obligations and indebtedness of whatsoever nature (whether actual or
      contingent and whether owed jointly or severally or in any other capacity
      whatsoever, including any liability to pay damages or pursuant to
      enrichment) which an Obligor may now or at any time hereafter owe or have
      towards any Secured Creditor under or in connection with the Finance
      Documents;

	 	 
	1.1.10 	
      Secured Property means,
  collectively:




	 	(a) 	
      the Shares;

	 	 	 
	 	(b) 	
      the Shareholder Claims; and

	 	 	 
	 	(c) 	
      the Related Rights,



and all of the Cedent's rights, title
and interests therein and thereto and claims against any person in respect
thereof, of whatsoever nature and howsoever arising (whether actual, prospective
or contingent, direct or indirect, arising under common law or statute, whether
a claim for the payment of money or the performance of another obligation and
whether or not those rights and interests were within the contemplation of the
Parties at the Signature Date) and, in each case, any property forming part
thereof; 

	1.1.11 	
      Shareholder Claims means any and all claims of any
      nature whatsoever and howsoever arising which the Cedent now has, or from
      time to time in future may have (other than claims in respect of trade
      credit in respect of goods and services supplied by the Cedent from time
      to time in the ordinary course of business), against, and any and all
      indebtedness of any nature whatsoever and howsoever arising which are now,
      or from time to time in future may be, owed to the Cedent by Blue Label
      Telecoms (whether in the form of shareholder loans, inter-company loans or
      any other form of credit provided by the Cedent to the Blue Label
      Telecoms), together with the benefit of any Security given to the Cedent
      in respect of those claims;

	 	 
	1.1.12 	
      Shares means all of the following shares and
      securities of which it is or becomes the legal or beneficial owner from
      time to time or which may be issued or transferred to it in
  future:




	 	(a) 	
      117,924,529 ordinary shares in the share capital of Blue
      Label Telecoms;

	 	 	 
	 	(b) 	
      any capitalisation shares or bonus shares issued in
      respect of the shares referred to in paragraph (a) above); and

	 	 	 
	 	(c) 	
      any securities issued in substitution or exchange for the
      securities in paragraphs (a), and (b) above,




		
      including, for the avoidance of doubt, all dividends
      (whether paid or unpaid), rights to dividends and voting rights in
      relation to those shares and securities; and

	 	 
	1.1.13 	
      Signature Date means the date on which, once this
      Agreement has been signed by all the Parties, it is signed by the last
      Party to do so.




	1.2 	
      Construction




	1.2.1 	
      Terms and expressions defined in the Common Terms
      Agreement, unless expressly defined in this Agreement, have the same
      meaning in this Agreement.

	 	 
	1.2.2 	
      The provisions of Clauses 1.3 (Construction) and 1.4
      (Third Party Rights) of the Common Terms Agreement apply to this Agreement
      as though they were set out in full in this Agreement, except that any reference in that
clause to the Common Terms Agreement is to be construed as references to this
Agreement. 



4





	1.2.3 	
      Any undertaking of the Cedent under this Agreement
      remains in force until the Final Discharge Date.

	 	 
	1.2.4 	
      If any Secured Creditor considers that an amount paid to
      it under a Finance Document is capable of being avoided or otherwise set
      aside on the sequestration, liquidation, business rescue or administration
      of the payer or otherwise, then that amount will not be considered to have
      been irrevocably discharged for the purposes of this
  Agreement.




	2. 	
      PLEDGE AND CESSION IN
SECURITY




	2.1 	
      Pledge and cession

	 	 
		
      The Cedent hereby pledges to the Secured Creditors all
      its Shares and cedes in securitatem debiti to the Secured
      Creditors, jointly and severally, all its Secured Property, in each case
      individually and collectively with all other Secured Property, as
      continuing general covering collateral security for the due, proper and
      punctual payment and performance in full of all the Secured Obligations,
      on the terms set out in this Agreement, which pledge and cession the
      Secured Creditors accept.

	 	 
	2.2 	
      Nature of pledge and
cession




	2.2.1 	
      The pledge and cession contemplated by this Agreement are
      intended to operate as a pledge and a cession of each part and all of the
      Shares and the Secured Property, individually and collectively.

	 	 
	2.2.2 	
      If, for any reason, any Security intended to be created
      under this Agreement is or becomes illegal, invalid or unenforceable in
      respect of some of the Shares or the Secured Property, the pledge of those
      Shares and the cession of that Secured Property shall be severed from this
      Agreement, and this Agreement and all the Security created over the
      remainder of the Secured Property shall continue in full force and
      effect.

	 	 
	2.2.3 	
      The cession contemplated by this Agreement operates as a
      security cession and not as an outright cession, and the Cedent retains
      bare ownership of all the Secured Property, subject to the rights of the
      Secured Creditors as secured creditors under this
  Agreement.




	2.3 	
      Cedent remains liable to perform
  obligations

	 	 
		
      Notwithstanding any other provision of a Finance
      Document, the Cedent shall remain liable to perform all its duties and
      obligations, whether contractual or otherwise, in respect of the Secured
      Property and nothing in this Agreement or the exercise by a Finance Party
      of any right under a Finance Document shall constitute or be deemed to
      constitute a delegation to or acceptance by a Finance Party of any
      obligation of the Cedent or any other person.




	3. 	
      DURATION

	 	 
		
      This Agreement and the Security created pursuant to this
      Agreement:




	3.1 	
      comes into full force and effect on the Signature Date
      without any further action, consent or authority required from any
      person;

	 	 
	3.2 	
      unless otherwise agreed by the Secured Creditors, shall
      not terminate before the Final Discharge Date; and



5





	3.3 	
      shall remain of full force and effect, notwithstanding
      any intermediate discharge or settlement of, or temporary fluctuation in,
      the Secured Obligations.




	4. 	
      REPRESENTATIONS AND WARRANTIES BY THE
  CEDENT




	4.1 	
      General




	4.1.1 	
      The Cedent makes the representations and warranties set
      out in this Clause 4 to each Finance Party on each day that this Agreement
      is in force. References in this Clause to "it" or "its",
      unless the context otherwise requires, is a reference to the
  Cedent.

	 	 
	4.1.2 	
      The Finance Parties enter into the Finance Documents on
      the strength of and relying on the representations and warranties set out
      in this Clause 4, each of which is a separate representation and warranty,
      given without prejudice to any other representation or warranty and is
      deemed to be a material representation or warranty (as applicable)
      inducing the Finance Parties to enter into the Finance
  Documents.




	4.2 	
      Status




	4.2.1 	
      It is a limited liability company, duly incorporated and
      validly existing under the laws of South Africa.

	 	 
	4.2.2 	
      It has the power to own its assets (including all the
      Secured Property) and carry on its business as it is being
    conducted.




	4.3 	
      Powers and authority

	 	 
		
      It has the power to enter into and perform, and has taken
      all necessary action to authorise the entry into and performance of, this
      Agreement and the transactions contemplated by this Agreement.

	 	 
	4.4 	
      Legal validity

	 	 
		
      This Agreement:




	4.4.1 	
      creates the Security it purports to create and is not
      liable to be avoided or otherwise set aside on its liquidation or business
      rescue or otherwise; and

	 	 
	4.4.2 	
      constitutes its legally valid and binding obligation,
      enforceable against it in accordance with its
terms.




	4.5 	
      Non-conflict

	 	 
		
      Its entry into and the performance of its obligations
      under this Agreement, the transactions contemplated by and the Security
      created under this Agreement, do not and will not conflict
  with:




	4.5.1 	
      any law or regulation applicable to it;

	 	 
	4.5.2 	
      its constitutional documents; or

	 	 
	4.5.3 	
      any material agreement or instrument binding upon it or
      any of its assets, or constitute a default or termination event (however
      described) under any such document.



6





	4.6 	
      Authorisations




	4.6.1 	
      All authorisations required by it in connection with the
      entry into, performance, validity and enforceability of, the transactions
      contemplated by and the Security established under, this Agreement have
      been obtained or effected (as appropriate) and are in full force and
      effect.

	 	 
	4.6.2 	
      If it is required to give notice to or obtain consents or
      waivers from any person to pledge the Shares and cede the Secured Property
      under this Agreement, all such notices have been given and consents or
      waivers obtained before the Signature Date.




	4.7 	
      Secured Property




	4.7.1 	
      The Secured Property is and will be valid and all rights
      evidenced thereby or which exists in respect thereof are and will be
      legally valid, binding and fully enforceable in accordance with their
      terms in all respects.

	 	 
	4.7.2 	
      It is and will remain the sole legal and beneficial owner
      of all of the Secured Property over which it purports to grant the
      Security under this Agreement, to the exclusion of all others.

	 	 
	4.7.3 	
      No person has an option or right of refusal over the
      Secured Property or any part thereof which would apply on an enforcement
      by a Secured Creditor of its rights under this Agreement.

	 	 
	4.7.4 	
      No part of the Secured Property has been pledged, ceded
      (either outright or as security), discounted, factored, mortgaged under
      notarial bond or otherwise, or otherwise disposed of or hypothecated, nor
      is it subject to any other right or claim in favour of any person
      (including any rights of pre-emption) which would apply on enforcement by
      a Secured Creditor of its rights under this Agreement. If any Secured
      Property is subject to Security in breach of this representation and
      warranty then, without prejudice to any other rights that the Secured
      Creditors may have, any reversionary or other interests the Cedent may
      have in the said Secured Property are also ceded to the Secured
      Creditors.

	 	 
	4.7.5 	
      The Shares are fully paid-up and have been validly issued
      or transferred to it in compliance with all applicable laws and
      regulations and are held in uncertificated form.

	 	 
	4.7.6 	
      The CSP in respect of the Shares for the time being is
      RMB Morgan Stanley Proprietary Limited.




	5. 	
      UNDERTAKINGS BY THE CEDENT

	 	 
		
      The Cedent is bound by the undertakings set out in this
      Clause 5. The undertakings in this Clause 5 remain in force from the
      Signature Date until the Final Discharge Date.




	5.1 	
      Negative pledge

	 	 
		
      The Cedent:




	5.1.1 	
      shall not grant or permit to exist any further Security
      over any Secured Property or dispose of the Secured Property in any manner
      without the express prior consent of the Secured Creditors; and

	 	 
	5.1.2 	
      must at all times keep the Secured Property free of
      judicial attachments and other Security.



7





	5.2 	
      Preservation of Secured
Property




	5.2.1 	
      The Cedent undertakes:




	 	(a) 	
      to the extent reasonably possible, that it shall not
      permit any material depreciation of the value of, or a variation of rights
      relating to, the Secured Property or any of them to occur without the
      express prior consent of the Secured Creditors;

	 	 	 
	 	(b) 	
      not to take or omit to take any action which could
      reasonably be expected to adversely affect the rights of the Secured
      Creditors under this Agreement or the effectiveness of the Security
      created by this Agreement;

	 	 	 
	 	(c) 	
      to take all appropriate steps required from time to time
      for the care, preservation and protection of the Secured Property and the
      rights of the Secured Creditors under this Agreement; and

	 	 	 
	 	(d) 	
      to timeously comply in full with all its obligations in
      respect of the Secured Property, from time to
time.




	5.2.2 	
      The Cedent waives for the benefit of the Secured
      Creditors any and all rights it may have in respect of the Secured
      Property which conflict with or may restrict the rights of the Secured
      Creditors under this Agreement.




	5.3 	
      Shares

	 	 
		
      The Cedent irrevocably authorises each Secured Creditor
      as its agent in rem suam, in respect of any Shares of the Cedent
      which are not in certificated form, to take all steps necessary to ensure
      that an appropriate entry is made in the securities account of the Cedent
      with its CSDP, in accordance with section 39 of the Financial Markets Act,
      to record the relevant Security in those Shares created under this
      Agreement.

	 	 
	5.4 	
      Amounts received on account of Secured
    Property

	 	 
		
      If an Event of Default occurs and is continuing, the
      Cedent shall forthwith pay and transfer to the Secured Creditors or to
      their order, and place them in possession of, all cash and other assets
      received in respect of the Secured Property.




	6. 	
      DELIVERY OF DOCUMENTS

	 	 
		
      The Cedent must deliver the documents set out this Clause
      6 to the Secured Creditors by no later than the Subscription Date (or in
      respect of Secured Property acquired by the Cedent or otherwise arising
      thereafter, as soon as reasonably possible after that property becomes
      Secured Property, but in any event within 5 Business
  Days).




	6.1 	
      Shares

	 	 
		
      The Cedent must deliver to the Secured Creditors, in
      respect of all its Shares, a copy of a notice by its CSP addressed to the
      Secured Creditors, substantially in the form of Schedule 4 (CSDP
      Confirmation).

	 	 
	6.2 	
      Other requirements




	6.2.1 	
      If any Secured Property, or part thereof, is evidenced by
      a document, or when the Cedent holds Security for any obligation owed to
      it in respect of Secured Property and that Security is evidenced by a
      document, the Cedent shall, at the request of the Secured Creditors,
      promptly deliver a certified copy of that document to the Secured
      Creditors.



8





	6.2.2 	
      In addition to the documents referred to above, the
      Cedent shall deliver to the Secured Creditors:




	 	(a) 	
      in respect of all Secured Property acquired by the Cedent
      or otherwise arising after the Signature Date, all information and
      applicable items of documentation referred to in Clause 6.1;

	 	 	 
	 	(b) 	
      any other documents relating to the Secured Property for
      which the Secured Creditors may at any time reasonably
  call,




		
      which documents must be delivered to the Secured
      Creditors within a reasonable period, as agreed between the Secured
      Creditors and the Cedent and, failing such agreement, within 5 Business
      Days.

	 	 
	6.2.3 	
      The Secured Creditors may retain possession of all
      documents delivered to them under this Clause 6 and deal with them in
      accordance with the Finance Documents until the Final Discharge Date,
      after which date they shall be returned to the Cedent as soon as
      reasonably possible.

	 	 
	6.2.4 	
      If any third party consents are required by the Cedent to
      cede any of its Secured Property under this Agreement, it must obtain
      those third party consents before or on the Signature
  Date.




	7. 	
      CORPORATE ACTION IN RESPECT OF THE
SHARES

	 	 
		
      Should, prior to the Secured Creditors exercising any of
      their rights in terms of Clause 9 (Enforcement), any of the Shares be
      sub-divided, consolidated or converted into any other shares, securities
      or rights, or any shares, securities or rights be issued, distributed or
      otherwise received or accrued on account of the Shares in connection with
      any corporate action or distribution made by Blue Label Telecoms or
      otherwise, the sub-divided, consolidated or converted shares, securities
      or rights, or such other issued, distributed, received or accrued shares,
      securities or rights (as the case may be) shall automatically be ceded in
      security and pledged to the Secured Creditors upon the terms of this
      Agreement, and the Cedent shall take all such steps as are necessary to
      ensure such shares, securities or rights are ceded in security and pledged
      to the Secured Creditors in terms of this Agreement, including without any
      limitation, instructing the CSDP to note the cession in security and
      pledge in accordance with section 39 of the Financial Markets Act.
      References in this Agreement to the “Shares” shall thereafter be
      construed to include any such sub- divided, consolidated or converted
      shares, securities or rights, or such other issued, distributed, received
      or accrued shares, securities or rights (as the case may be).

	 	 
	8. 	
      RIGHTS OF THE CEDENT BEFORE
  DEFAULT




	8.1 	
      Unless the Facility Agent has given the Cedent written
      notice of a Default which is continuing, the Cedent is entitled, at its
      own cost, to:




	8.1.1 	
      enforce and receive payment for, delivery of or
      performance in respect of all amounts or obligations owing in respect of
      the Secured Property in the ordinary course of business and, subject to
      the Finance Documents, to appropriate amounts so recovered to its own use
      (including any dividends or other benefits in respect of its Shares and
      Shareholder Claims); and

	 	 
	8.1.2 	
      receive notice of every general meeting of shareholders
      of Blue Label Telecoms (provided that each such notice is to be forwarded
      to the Secured Creditors as if they were shareholders of Blue Label
      Telecoms);

	 	 
	8.1.3 	
      attend every general meeting of the shareholders of Blue
      Label Telecoms, and exercise all the votes attaching to the Shares at such
      meetings (provided that it will not exercise those votes in a manner which
      is reasonably likely to (a) be materially prejudicial to the validity or enforceability of
this Agreement, (b) materially impair the value of any Shares, or (c) be
otherwise materially prejudicial to the Secured Creditors). 



9





	8.2 	
      If the Facility Agent has given the written notice of a
      Default which is continuing as contemplated in Clause 8.1 or an Event of
      Default is continuing, all rights, powers and privileges attaching to the
      Secured Property, including, but not limited to those set out in Clause
      8.1 above, shall vest in the Secured Creditors, jointly or severally, with
      the power to exercise them either in any of their own name or in the name
      of the Cedent. If any Secured Creditor so directs when a Default is
      continuing, the Cedent shall exercise the Secured Creditors' rights,
      powers and privileges in its own name and to the greatest extent permitted
      by applicable law.




	9. 	
      ENFORCEMENT




	9.1 	
      Rights of the Secured Creditors

	 	 
		
      If an Event of Default is continuing, the Secured
      Creditors (or any of them) may, without prejudice to any other rights they
      may have against the Cedent, exercise their rights under this Clause 9,
      and otherwise put into force and effect all rights, powers and remedies
      available to them in relation to the Secured Property, in such manner and
      on such terms and conditions as they in their sole discretion consider
      most expedient. Without limiting the foregoing, if an Event of Default is
      continuing, the Secured Creditors (or any of them) may, and the Cedent
      hereby irrevocably and unconditionally authorises and empowers each of
      them or their nominee, and appoints each of them in rem suam,
      without any further authority or consent of any nature whatsoever required
      from any person, in the name of any or all of the Secured Creditors or
      their nominee or in the name of the Cedent to:




	9.1.1 	
      exercise all or any of the rights, powers and privileges
      and enforce all or any obligations attaching to the Secured Property, in
      such manner and on such terms as the Secured Creditors in their sole
      discretion deem fit;

	 	 
	9.1.2 	
      receive payment for, delivery of, and/or performance in
      respect of, the Secured Property in their own name or that of their
      nominee;

	 	 
	9.1.3 	
      authorise any officer of any Secured Creditor (whose
      appointment need not be proved) to sign, on behalf of and in the name of
      the Cedent, any document that may be necessary to give effect to any
      disposal or realisation of Secured Property by the Secured Creditors under
      this Clause;

	 	 
	9.1.4 	
      at the election of the Secured
  Creditors:




	 	(a) 	
      sell or otherwise realise all or some of the Secured
      Property by public auction;

	 	 	 
	 	(b) 	
      sell or otherwise realise at a Fair Value all or some of
      the Secured Property by private treaty; or

	 	 	 
	 	(c) 	
      take over all or some of the Secured Property at a Fair
      Value,



and, subject to the provisions of
Clause 10 (Appropriation of Proceeds), apply the proceeds of such sale, purchase
or other realisation or transfer (including the purchase price payable for any
Secured Property taken over by the Secured Creditors) against the Secured
Obligations on the basis that any excess upon realisation or balance owing to
the Cedent (as the case may be) will be paid to the Cedent and any shortfall on
realisation will remain a debt due by the Cedent to the Secured Creditors. 

10





		
      For the purposes of paragraph (c) above, the Fair
      Value of any Secured Property will be the value agreed in writing
      between the Secured Creditors and the Cedent or, failing agreement within
      ten Business Days after delivery of a notice to the Cedent stating that
      the Secured Creditors exercise their rights under this Clause 9.1, the
      value determined by an independent chartered accountant employed by either
      PwC, EY, Deloitte or KPMG agreed to by the Secured Creditors and the
      Cedent (or, failing agreement within 5 Business Days, appointed, at the
      request of either Party, by the President of the South African Institute
      of Chartered Accountants, or the successor body thereto), which
      independent accountant shall act as an expert and not as an arbitrator,
      shall be instructed to make his determination within ten Business Days and
      shall determine the liability for his charges (which shall be paid
      accordingly), provided that if a determination is manifestly unjust and a
      court exercises its general power, if any, to correct such determination,
      the Parties shall be bound thereby;

	 	 
	9.1.5 	
      institute any legal proceedings which the Secured
      Creditors may deem necessary in connection with any sale, purchase or
      other realisation or transfer of any of the Secured Property and to
      prosecute such proceedings to their final end and conclusion, including
      the prosecution of such appeals and reviews as the Secured Creditors in
      their discretion may determine;

	 	 
	9.1.6 	
      compromise any of the Secured Property, grant any
      extension or other indulgence in respect of the Secured Property, agree to
      amend the terms of the Secured Property, and/or release any security,
      guarantee or suretyship held for the Secured Property or waive any right
      which relates to or constitutes part of the Secured Property;

	 	 
	9.1.7 	
      give transfer of and convey valid title in any Secured
      Property to any person (including a Secured Creditor); and/or

	 	 
	9.1.8 	
      take all such further or other steps as the Secured
      Creditors may consider necessary to deal with the Secured Property in
      order to give effect to this Agreement.




	9.2 	
      Undertakings by the Cedent in respect of
      realisation

	 	 
		
      On the Secured Creditors taking any action under Clause
      9.1, or otherwise as required by the Secured Creditors if an Event of
      Default is continuing, the Cedent shall on demand by the Secured
      Creditors:




	9.2.1 	
      give written notice to all persons required by the
      Secured Creditors that payment for, delivery of or performance in respect
      of the relevant Secured Property must be made to the Secured Creditors or
      their nominee and that payment, delivery or performance to the Cedent or
      to anyone else will not constitute valid payment, delivery or performance,
      and the Secured Creditors shall be entitled to do likewise. The Cedent
      shall on demand by the Secured Creditors provide proof that such
      notification has been duly given;

	 	 
	9.2.2 	
      refuse to accept any payment, delivery, or performance
      tendered in respect of any of the Secured Property and order that such
      payment, delivery or performance be tendered to the Secured
    Creditors;

	 	 
	9.2.3 	
      forthwith pay over or deliver to the Secured Creditors
      any interest, dividend, negotiable instruments or other monetary benefits
      of any nature accrued or received in respect of the Secured Property after
      the date of an Event of Default, by depositing the same into any bank
      account in South Africa nominated by the Secured
  Creditors;



11





	9.2.4 	
      deliver to the Secured Creditors any property which the
      Cedent acquires or which accrues to it in connection with the Secured
      Property;

	 	 
	9.2.5 	
      at its own cost, carry out any lawful directions the
      Secured Creditors may give in regard to the realisation of Secured
      Property, and sign any document or do any other lawful act necessary
      to:




	 	(a) 	
      vest the Secured Property in the Secured
  Creditors;

	 	 	 
	 	(b) 	
      enable any sale, purchase or other realisation or
      transfer of Secured Property; or

	 	 	 
	 	(c) 	
      perfect and complete (to the extent necessary) the
      cession of any Secured Property under this
Agreement.




	9.3 	
      No obligation on the Secured Creditors

	 	 
		
      Notwithstanding anything to the contrary contained in
      this Agreement, no Secured Creditor shall be obliged to take any steps to
      preserve, protect, collect, recover or otherwise enforce its rights under
      or in respect of the Secured Property.




	10. 	
      APPROPRIATION OF PROCEEDS

	 	 
		
      The Secured Creditors shall apply the net proceeds of all
      amounts received pursuant to the sale or other realisation of Secured
      Property, or from the appropriation of cash amounts which constitute
      Secured Property, under this Agreement (after deducting all properly
      evidenced costs and expenses incurred by the Secured Creditors) in
      reduction or discharge of the Secured Obligations, in such order and in
      such manner as the Secured Creditors deem fit.

	 	 
	11. 	
      PAYMENTS

	 	 
		
      Subject to the Common Terms Agreement, and unless
      otherwise agreed or specified by the Secured Creditors by notice in
      writing, all payments due by the Cedent under this Agreement or in respect
      of the Secured Property shall be made free of any bank or other charges in
      the currency of the Secured Obligation into a bank account, or at such
      other address in South Africa, nominated by the Secured
  Creditors.

	 	 
	12. 	
      POWER OF ATTORNEY

	 	 
		
      The Cedent irrevocably and severally appoints the Secured
      Creditors, jointly and severally, and any of their delegates or
      sub-delegates to be its attorney to take any action which the Cedent is
      obliged to take under this Agreement but has failed to take. The Cedent
      ratifies and confirms whatever any attorney does or purports to do
      pursuant to its appointment under this Clause.

	 	 
	13. 	
      FURTHER ASSURANCES

	 	 
		
      The Cedent shall generally promptly do everything that
      may be required in order to comply with its obligations under this
      Agreement, and as may otherwise be required by the Secured Creditors for
      the purposes of, and to give effect to, this Agreement, failing which the
      Secured Creditors may, to the extent possible, attend thereto on behalf of
      the Cedent and recover on demand from the Cedent any reasonable expenses
      incurred in relation thereto. In particular the Cedent shall execute and
      do all such acts and things as the Secured Creditors, in their reasonable
      discretion, may require:




	13.1 	
      to perfect or protect the Security created (or intended
      to be created) by this Agreement;

	 	 
	13.2 	
      to preserve or protect any of the rights of the Secured
      Creditors under this Agreement;



12





	13.3 	
      to enforce any Security created under this Agreement on
      or at any time after it becomes enforceable;

	 	 
	13.4 	
      for the exercise of any power, authority or discretion
      vested in a Secured Creditor under this Agreement;

	 	 
	13.5 	
      to carry out the effect, intent and purpose of this
      Agreement,




		
      in any such case, forthwith upon demand by the Secured
      Creditors, to the maximum extent permitted by law and at the expense of
      the Cedent.

	 	 
	14. 	
      ADDITIONAL RIGHTS

	 	 
		
      The rights conferred on the Secured Creditors by this
      Agreement are additional to and not in substitution
for:




	14.1 	
      any other rights a Secured Creditor has, or may at any
      time in the future have, against the Cedent or any other person;

	 	 
	14.2 	
      any other Security held or hereafter to be held by a
      Secured Creditor from the Cedent or any other person, in connection with
      the Secured Obligations. A Secured Creditor may release any Security held
      by it without prejudice to its rights under this
  Agreement.




	15. 	
      CEDENT BOUND NOTWITHSTANDING CERTAIN
      CIRCUMSTANCES

	 	 
		
      The Cedent agrees that on signature of this Agreement, it
      will be bound under this Agreement to the full extent hereof, despite the
      fact that:




	15.1 	
      any additional Security from the Cedent or any other
      person for the Secured Obligations may not be obtained or may be released
      or may cease to be held for any other reason;

	 	 
	15.2 	
      the Finance Parties may agree any variation or novation
      of the Finance Documents (including any amendment providing for the
      increase in the amount of the Facility or an additional
  facility);

	 	 
	15.3 	
      any Finance Party may receive a dividend or benefit in
      any insolvency, liquidation or business rescue or any compromise or
      composition, whether in terms of any statutory enforcement or the common
      law;

	 	 
	15.4 	
      the Secured Creditors may grant any indulgences to the
      Cedent or may not exercise any one or more of its rights under the Finance
      Documents, either timeously or at all; or

	 	 
	15.5 	
      any other fact or circumstance may arise on which the
      Cedent might otherwise be able to rely on a defence based on prejudice,
      waiver or estoppel.




		
      If the Cedent suffers any loss arising from any of the
      facts, circumstances, acts or omissions referred to above, it will have no
      claim against any Secured Creditor in respect thereof.

	 	 
	16. 	
      KEEPING, INSPECTION AND DELIVERY OF
  RECORDS




	16.1 	
      The Cedent shall at all times keep up-to-date records of
      the Secured Property and shall comply with any reasonable directions the
      Secured Creditors may give in regard to the keeping of such
  records.

	 	 
	16.2 	
      The Secured Creditors or anyone authorised by the Secured
      Creditors may at any time and on reasonable notice inspect any of the
      Cedent's books of account and other records, including books of account
      and records in the possession of a third party.



13





	16.3 	
      If the Secured Creditors at any time so request, the
      Cedent shall at its own cost deliver to the Secured Creditors or their
      order certified copies of any of the books and records referred to in
      Clauses 16.1 and 16.2 above.




	17. 	
      EXEMPTION FROM
LIABILITY




	17.1 	
      A Secured Creditor, their officers, trustees, agents,
      beneficiaries, employees and advisors (each an Exempt Party) shall
      not be liable for any loss or damage, whether direct, indirect,
      consequential or otherwise, suffered by the Cedent howsoever arising in
      connection with this Agreement, whether that loss or damage arises as a
      result of a breach of contract (whether total, fundamental or otherwise),
      delict or any other cause, and whether this Agreement has been terminated
      or not, other than as a result of the gross negligence or wilful
      misconduct of that Exempt Party.

	 	 
	17.2 	
      The Cedent hereby indemnifies (and agrees to keep
      indemnified) and holds harmless the Secured Creditors and their respective
      officers, trustees, agents, beneficiaries, employees and advisors against
      any and all losses, claims, damages or liabilities (excluding any
      consequential damages, loss or liability (including opportunity cost)) to
      which they may become subject under or in connection with this Agreement,
      and agrees to reimburse the Secured Creditors for any legal or other
      expenses reasonably incurred by them in connection with investigating or
      defending any such loss, claim, damage, liability or action; provided that
      the Cedent will not be liable to any particular Secured Creditor in any
      such case to the extent that any such loss, claim, damage or liability of
      that Secured Creditor arises out of the gross negligence or wilful
      misconduct of that Secured Creditor or any of its officers, trustees,
      agents, beneficiaries, employees and advisors, as the case may
  be.




	18. 	
      CHANGES TO THE PARTIES




	18.1 	
      Transfers by a Secured
Creditor




	18.1.1 	
      A Secured Creditor may cede any of its rights and/or
      delegate any of its obligations under this Agreement to any person to whom
      it cedes any of its rights and/or delegates any of its obligations under
      the Finance Documents. The Cedent agrees to co-operate and take all such
      steps as a Secured Creditor may reasonably request to give any such
      transferee the benefit of this Agreement.

	 	 
	18.1.2 	
      To the extent that a splitting of claims arises as a
      result of any actions taken under Clause 18.1.1 above, the Cedent hereby
      consents to such splitting of claims.




	18.2 	
      Stipulation for the benefit of future Secured
      Creditors

	 	 
		
      The provisions of this Agreement which confer benefits on
      the Secured Creditors constitute stipulations for the benefit of any
      person who becomes a Finance Party and a Secured Creditor after the
      Signature Date, and shall be capable of acceptance by that person at any
      time. To the extent that a splitting of claims arises as a result of the
      provisions of this Clause, the Cedent hereby consents to such splitting of
      claims.

	 	 
	18.3 	
      Transfers by the Cedent

	 	 
		
      The Cedent may not cede any of its rights nor delegate
      any of its obligations under this Agreement.




	19. 	
      SEVERABILITY

	 	 
		
      Each term of this Agreement, whether forming an entire
      clause or only part of a clause, is divisible and severable from all the
      other terms (regardless of the manner in which they
may be linked together or grouped grammatically). If a term or
provision of this Agreement is or becomes illegal, invalid or unenforceable in
any respect in any jurisdiction, that will not affect:



14





	19.1 	
      the legality, validity or enforceability in that
      jurisdiction of any other term or provision of this Agreement which shall
      remain in full force and effect, and such illegal, invalid or
      unenforceable term or provision shall be severed from this Agreement;
      or

	 	 
	19.2 	
      the legality, validity or enforceability in other
      jurisdictions of that or any other term of this
  Agreement,




		
      and in particular, a Secured Creditor shall be entitled
      to deal with its rights in respect of the Secured Property in such manner
      as is sanctioned or approved in terms of a court order or as is otherwise
      legally permissible.

	 	 
	20. 	
      GOVERNING LAW

	 	 
		
      This Agreement and any non-contractual obligations
      arising out of or in connection with it are governed by South African
      law.

	 	 
	21. 	
      JURISDICTION




	21.1 	
      The Parties hereby irrevocably and unconditionally
      consent to the non-exclusive jurisdiction of the High Court of South
      Africa (Gauteng Local Division, Johannesburg) (or any successor to that
      division) in regard to all matters arising from this Agreement (including
      a dispute relating to the existence, validity or termination of this
      Agreement or any non-contractual obligation arising out of or in
      connection with this Agreement) (a dispute).

	 	 
	21.2 	
      The Parties agree that the courts of South Africa are the
      most appropriate and convenient courts to settle disputes. The Parties
      agree not to argue to the contrary and waive objection to this court on
      the grounds of inconvenient forum or otherwise in relation to proceedings
      in connection with this Agreement.

	 	 
	21.3 	
      This Clause 21 is for the benefit of the Secured
      Creditors only. As a result, the Secured Creditors shall not be prevented
      from taking proceedings relating to a dispute in any other court with
      jurisdiction. To the extent allowed by law, the Secured Creditors may take
      concurrent proceedings in any number of
jurisdictions.




	22. 	
      MISCELLANEOUS MATTERS




	22.1 	
      Amendments, waivers and
  cancellation




	22.1.1 	
      No contract varying, adding to, deleting from or
      cancelling this Agreement will be effective unless reduced to writing and
      signed by or on behalf of the Parties.

	 	 
	22.1.2 	
      The expiry or termination of this Agreement will not
      prejudice the rights of the Secured Creditors in respect of any antecedent
      breach by the Cedent of, or non- performance under, this
  Agreement.



15






	22.2 	
      Certificates and Determinations

	 	 
		
      Any certification or determination by a manager of a
      Secured Creditor (whose appointment need not be proved) as to the
      existence of and the amount of indebtedness by the Cedent to the Secured
      Creditors, that such amount is due and payable, the amount of interest
      accrued thereon and as to any other fact, matter or thing related to the
      Cedent's indebtedness under the Finance Documents shall be, in the absence
      of manifest error, prima facie evidence of contents and correctness
      of the matters to which it relates for the purposes of provisional
      sentence, summary judgement or any other proceedings, shall be valid as a
      liquid document for such purposes and shall, in addition, be prima facie proof
for purposes of pleading or trial in any action instituted against the Cedent
arising herefrom. 







THIS AGREEMENT has been entered into on the date stated
at the beginning of this Agreement. 

16




SCHEDULE 1 

CSDP CONFIRMATION 

	To: 	FIRSTRAND BANK LIMITED (ACTING THROUGH ITS
      RAND MERCHANT BANK DIVISION) 
	  	[•] 
	  	[•] 
	  	  
	From: 	[•] (the CSP) 


[Date] 

Dear Sirs, 

Cession and Pledge in Security dated [•]
October, 2016 
by Net1 Applied Technologies South Africa Proprietary Limited
of FirstRand Bank Limited 
(acting through its Rand Merchant Bank division)

(the Security Cession and Pledge) 

	1. 	
      We refer to the Security Cession and Pledge (a copy of
      which has been furnished to us by the Cedent).

	 	 
	2. 	
      Unless expressly otherwise defined in this letter, terms
      and expressions defined in the Security Cession and Pledge have the same
      meaning where used in this letter.

	 	 
	3. 	
      We confirm that we, as the CSP of the Cedent, are holding
      to the order of the Secured Creditors, on behalf of the Cedent, [•]
      ordinary shares in the issued share capital of Blue Label Telecoms Limited
      (the Company), which are beneficially owned by the
Cedent.

	 	 
	4. 	
      We confirm, in respect of the Shares
  that:




	4.1 	
      we are an authorised user as contemplated under the
      Financial Markets Act, 2012 (the Act); and

	 	 
	4.2 	
      an entry in favour of the Secured Creditors has been made
      in the applicable sub- register as contemplated in section 39 of the
      Act.




	5. 	
      Until we have been advised in writing by the Secured
      Creditors that the Final Discharge Date has occurred, we undertake
      that:




	5.1 	
      unless and until otherwise notified in writing by the
      Secured Creditors, we shall act solely in accordance with the instructions
      of the Secured Creditors which shall override any conflicting instructions
      or directions given to us by another person;

	 	 
	5.2 	
      we shall not transfer the Shares (or any part thereof) or
      any interest therein except with the prior written consent of the Secured
      Creditors;

	 	 
	5.3 	
      we shall hold the Shares in the name of Net1 Applied
      Technologies South Africa Proprietary Limited, subject to the terms of the
      Act;

	 	 
	5.4 	
      [we shall pay all distributions in respect of the Shares
      directly into the following bank account:



17





	 	Bank: 	[•] 	  
	 	 	 	 
	 	Branch number: 	[•] 	  
	 	 	 	 
	 	Account number: 	[•] 	  
	 	 	 	 
	 	Named account beneficiary: 	[•]]; 	and 



	5.5 	
      with effect from the date on which the Secured Creditors
      notifies us in writing that a Default is
continuing:




	5.5.1 	
      (and thereafter until otherwise notified by the Secured
      Creditors), we shall make all payments to be made in respect of its Shares
      direct to the Secured Creditors by payment into any bank account nominated
      by them in writing or otherwise as they may direct;

	 	 
	5.5.2 	
      if instructed to do so by the Secured Creditors, we shall
      transfer the Shares to the Secured Creditors or another person nominated
      by them.



Yours faithfully, 

 

	For and on
      behalf of: 	 	For and on behalf of: 
	[•] 	 	 	[•] 	 
	 	 	 	 	 
	Name: 	 	 	Name: 	 
	 	 	 	 	 
	Date: 	 	 	Date: 	 


Net1 Applied Technologies South Africa Proprietary Limited, by
its signature hereto, irrevocably authorises any action undertaken by the CSP
pursuant to this letter of undertaking. This authorisation may not be revoked or
amended without the prior written consent of the Secured Creditors. 

 


	For and on
      behalf of: 	 
	Net1 Applied Technologies South 	 
	Africa Proprietary Limited 	 
	  	  	 
	Name: 	 
    	 
	  	  	 
	Date: 	 
    	 



18




SIGNATURE PAGE 

THE CEDENT 

 


	For and on
      behalf of: 	 
	Net1 Applied Technologies South 	 
	Africa Proprietary Limited 	 
	 	 
	Name: 	/s/
      Herman G. Kotzé 	 
	 	 	 
	Office: 	Chief
      Financial Officer 	 
	  	(who warrants his authority)
	 



19 




SIGNATURE PAGE 

THE SECURED CREDITOR 

 

	For and on behalf of:
    	 	For and
      on behalf of: 
	FirstRand Bank Limited (acting through 	 	FirstRand Bank Limited (acting through
    
	its Rand Merchant Bank division) 	 	its Rand Merchant Bank division)
  



	Name: 	/s/ Niel van Zyl 	 	Name: 	/s/
      Ziyaad Manie 
	 	 	 	 	 
	Office: 	Authorised 	 	Office: 	Authorised 
	  	(who warrants his authority) 	 	  	(who warrants his authority)