**Exhibit10.30**

 

SECURITY AGREEMENT

 

This Security Agreement (“Agreement”) is executed asof February 15, 2002 between Altris Software, Inc., a California corporation(“Debtor”) and Spescom Limited, a United Kingdom corporation (“Spescom UK”) andSpescom Limited, a South African corporation (“Spescom SA” and collectivelywith Spescom UK, the “Secured Parties”), who agree as follows:

 

1.  Definitions.  For purposes of this Agreement, thefollowing definitions shall apply:

 

1.1.  “Accounts” shall mean all “accounts”as defined in the UCC now owned or hereafter acquired by Debtor, includingwithout limitation (a) all accounts receivable, contract rights, notes, draftsand other obligations or indebtedness owing to Debtor and arising from whateversource; (b) all present and future monies, securities, credit balances,deposits, deposit accounts and other property of Debtor now or hereafter heldor received by or in transit to the Secured Parties or their affiliates or atany other depository or other institution from or for the account of Debtor,whether for safekeeping, pledge, custody, transmission, collection orotherwise, and all present and future liens, security interests, rights,remedies, title and interest in, to and in respect of Accounts and other Collateral,including (i) rights and remedies under or relating to guaranties, contracts ofsuretyship, letters of credit and credit and other insurance related to theCollateral, (ii) rights of stoppage in transit, replevin, repossession,reclamation and other rights and remedies of an unpaid vendor, lien holder orsecured party, (iii) goods described in invoices, documents, contracts orinstruments with respect to, or otherwise representing or evidencing, Accountsor other Collateral, including returned, repossessed and reclaimed goods, and(iv) deposits by and property of account debtors or other persons securing theobligations of account debtors; (c) all of the rights of Debtor in, to andunder all purchase orders for goods, services or other property; (d) all moniesdue to or to become due to Debtor under all contracts for the sale, lease orexchange of goods or other property and/or the performance of services by it(whether or not yet earned by performance on the part of Debtor) and (e) all ofthe rights of Debtor to any goods, services or other property represented byany of the foregoing, in each case whether now in existence or hereafterarising or acquired including, without limitation, the right to receive theproceeds of said purchase orders and contracts and all collateral security andguarantees of any kind given by any person with respect to any of theforegoing.

 

1.2.  “Collateral” has the meaning set forthin the Paragraph in this Agreement entitled “Security Interests”

 

1.3.  “Default” shall mean any Event ofDefault and any event which with the passing of time or the giving of notice,or both, would, unless cured or waived, constitute an Event of Default.

 

1.4.  “Documents” shall mean all “documents”as defined in the UCC or other receipts covering, evidencing or representinggoods, now owned or hereafter acquired by Debtor.

 

1.5.  “Equipment” shall mean all “equipment”as defined in the UCC (excluding motor vehicles, and railway rolling stock),now or hereafter used or acquired for use in the business or otherwise ofDebtor (together with all accessions thereto and all 

 

1

----

 

substitutions and replacements thereof and parts therefor), whether ornot the same shall be deemed affixed to real property, and all rights under orarising out of present or future contracts relating to the acquisition or useof the above.

 

1.6.  "Event of Default” shall mean anydefault by Debtor (a) in the full and punctual payment of any amounts owingwith respect to the Secured Obligations which default continues for a period ofnot less than 10 days, or (b) in the full and punctual performance of itsobligations (other than those specified in clause (a) above) under thisAgreement or the Loan that has continued unremedied for a period of 30 daysafter notice thereof by any Secured Party to Debtor.

 

1.7.  "General Intangibles” shall meanall “general intangibles” as defined in the UCC now owned or hereafter acquiredby Debtor, including without limitation (a) all obligations orindebtedness owing to Debtor (other than Accounts) from whatever sourcearising, (b) all registered and unregistered (i) patent licenses, (ii)patents, (iii) trademark licenses, (iv) trademarks, (v) rights in intellectualproperty, (vi) trade names, (vii) service marks, (viii) trade secrets, (ix)copyrights, (x) permits, (xi) licenses, and (xii) applications for theforegoing, (c) goodwill, processes, drawings, blueprints and customer lists,(d) all rights or claims in respect of refunds for taxes paid, and(e) all rights in respect of any pension plan or similar arrangementmaintained for employees of Debtor or any of its subsidiaries.

 

1.8.  "Instruments” shall mean(a) all “instruments”, “chattel paper” or “letters of credit”, each asdefined in the UCC, evidencing, representing, arising from or existing inrespect of, relating to, securing or otherwise supporting the payment of, anyof the Accounts, including without limitation promissory notes, drafts, billsof exchange and trade acceptances, and (b) notes or other obligations orindebtedness owing to a Debtor (including without limitation obligations ofDebtor to any other Debtor) from whatever source arising, in each case nowowned or hereafter acquired by Debtor.

 

1.9.  "Inventory” shall mean all “inventory”as defined in the UCC, now owned or hereafter acquired by Debtor, whereverlocated, including without limitation all raw materials and other materials andsupplies, work–in–process and finished goods and any products madeor processed therefrom and all substances, if any, commingled therewith oradded thereto.

 

1.10.  "Lien” shall mean, with respectto any asset, any mortgage, lien, pledge, charge, security interest orencumbrance of any kind in respect of such asset, including the interest of a vendoror lessor under any conditional sale agreement, capital lease or other titleretention agreement.

 

1.11.  ”Loan” shall mean collectively, allloans made by the Secured Parties to the Debtor.

 

1.12.  “Note” shall  mean, collectively, the Promissory Notedated evenly herewith executed by Debtor in favor of the Secured Parties (asthe same may be amended from time to time), and all other promissory notesexecuted by Debtor in favor of either Secured Party.

 

2

----

 

 

1.13.  “Proceeds” shall mean all productsand proceeds of, and all other profits, rentals or receipts, in whatever form,arising from the collection, sale, lease, exchange, assignment, licensing orother disposition of, or realization upon, any item or portion of theCollateral, including without limitation all claims of Debtor against thirdparties for loss of, damage to, destruction of, or for proceeds payable under,or unearned premiums with respect to, policies of insurance in respect of, anyCollateral and any condemnation or requisition payments with respect to anyCollateral, in each case whether now existing or hereafter arising.

 

1.14.  “Security Interests” shall mean thesecurity interests securing the Secured Obligations, including without limitationthe Security Interests granted pursuant to this Agreement.

 

1.15.  “Secured Obligations” shall mean theNote, all obligations, liabilities and indebtedness pursuant to the Loan or future loans made by eitherSecured Party to Debtor, and all other obligations, liabilities andindebtedness of every kind, nature and description owing by Debtor to theSecured Parties and/or their affiliates, including principal, interest,charges, fees, costs and expenses, however evidenced, whether as principal, surety,endorser, guarantor or otherwise, arising under this Agreement or the Note,whether now existing or hereafter arising, whether arising before, during orafter the initial or any renewal term of this Agreement or the Note or afterthe commencement of any case with respect to Debtor under the United StatesBankruptcy Code or any similar statute (including the payment of interest andother amounts which would accrue and become due but for the commencement ofsuch case, whether or not such amounts are allowed or allowable in whole or inpart in such case), whether direct or indirect, absolute or contingent, jointor several, due or not due, primary or secondary, liquidated or unliquidated,secured or unsecured, and however acquired by the Secured Parties.

 

1.16.  “Site” shall mean the Debtor’sprincipal place of business located at the address set forth in theIntroductory Paragraph of this Agreement.

 

1.17.  “Subsidiary” shall mean, with respectto any Person, any corporation or other entity of which securities or otherownership interests having ordinary voting power to elect a majority of theboard of directors or other person performing similar functions are at the timedirectly or indirectly owned by such Person.

 

1.18.  “UCC” shall mean the Uniform CommercialCode as in effect on the date hereof in the State of California; provided thatif by reason of mandatory provisions of law, the perfection or the effect ofperfection or non–perfection of the Security Interest in any item orportion of the Collateral is governed by the Uniform Commercial Code as ineffect in a jurisdiction other than the State of California, then “UCC” shallmean the Uniform Commercial Code as in effect in such other jurisdiction forpurposes of the provisions hereof relating to such perfection or effect ofperfection or non–perfection.

 

2.  Representations and Warranties.  Except as set forth in writing to theSecured Parties, Debtor represents and warrants to the Secured Parties asfollows (which shall survive the execution and delivery of thisAgreement):

2.1.  Debtor has good and marketable titleto all of the Collateral owned by it, free and clear of any Liens other thanthe Security Interests [and “Permitted Liens”].

 

3

----

 

2.2.  Debtor has not performed any actswhich might prevent either Secured Party from enforcing any of the terms andconditions of this Agreement or which would limit either Secured Party in anysuch enforcement.  Other than financingstatements or other similar or equivalent documents or instrument with respectto the Security Interests, as of the date hereof and thereafter no financingstatement, mortgage, security agreement or other similar or equivalent documentor instrument covering all or any part of the Collateral is or will be on fileor of record in any government office in any jurisdiction in which such filingor recording would be effective to perfect a Lien on such Collateral.  No Collateral is in the possession of anyperson or entity whatsoever (other than Debtor) which has taken action toassert any claim thereto or security interest therein, except that the SecuredParties or their designee may have possession of Collateral as contemplatedhereby.

 

2.3.  The Security Interests constitutevalid security interests under the UCC securing the Secured Obligations.

 

2.4.  ThisAgreement has been duly authorized, executed and delivered by Debtor andconstitutes a valid and binding agreement of Debtor.  The execution, delivery and performance by Debtor of this Agreement,each filing, statement, supplementary assignment, pledge agreement or otherdocument related to this Agreement to which Debtor is a party do not and willnot contravene, or constitute (with or without the giving of notice or lapse oftime or both) a default under, any provision of applicable law or regulation orof the charter or by–laws of Debtor or of any material agreement,judgment, injunction, order, decree or other instrument binding upon it orresult in the creation of any Lien (other than the Security Interests) on anyasset of Debtor or any of its Subsidiaries.

 

2.5.  Debtor hasfiled, or caused to be filed, in a timely manner all material tax returns,reports and declarations which are required to be filed by it. All informationin such tax returns, reports and declarations is complete and accurate in allmaterial respects. Debtor has paid or caused to be paid all material taxes dueand payable or claimed due and payable in any assessment received by it, excepttaxes the validity of which are being contested in good faith by appropriateproceedings diligently pursued and available to Debtor and with respect towhich adequate reserves have been set aside on its books. Adequate provisionhas been made for the payment of all accrued and unpaid Federal, State, county,local, foreign and other taxes whether or not yet due and payable and whetheror not disputed.

 

2.6.  There is nopresent investigation by any governmental agency pending, or to the best ofDebtor’s knowledge threatened, against or affecting Debtor, its assets orbusiness and there is no action, suit, proceeding or claim by any person orentity pending, or to the best of Debtor’s knowledge threatened, against Debtoror its assets or goodwill, or against or affecting any transactionscontemplated by this Agreement, which if adversely determined against Debtorwould result in any material adverse change in the assets, business orprospects of Debtor or would impair the ability of Debtor to perform itsobligations hereunder or under the Note or the Loan or of the Secured Partiesto enforce any Secured Obligations or realize upon any Collateral.

 

2.7.  Debtor isnot in default in any material respect under, or in violation in any materialrespect of any of the terms of, any agreement, contract, instrument, lease orother commitment to which it is a party or by which it or any of its assets arebound and 

 

4

----

 

Debtor is in compliance in all materialrespects with all applicable provisions of laws, rules, regulations, licenses,permits, approvals and orders of any foreign, Federal, State or localgovernmental authority.

 

2.8.  Allrepresentations and warranties contained in this Agreement or any of theagreements concerning the Note or the Loan shall survive the execution anddelivery of this Agreement and shall be deemed to have been made again to theSecured Parties on the date of each additional borrowing or other creditaccommodation hereunder and shall be conclusively presumed to have been reliedon by the Secured Parties regardless of any investigation made or informationpossessed by the Secured Parties. The representations and warranties set forthherein shall be cumulative and in addition to any other representations orwarranties which Debtor shall now or hereafter give, or cause to be given, tothe Secured Parties.

 

3.  Security Interests.  In order to secure the full and punctualpayment and performance of the Secured Obligations in accordance with the termsthereof, Debtor hereby grants to the Secured Parties a continuing securityinterest in and to all of the following property of Debtor, whether now ownedor existing or hereafter acquired or arising and regardless of where located(collectively, “Collateral”):

 

3.1.  Accounts;

 

3.2.  Documents;

 

3.3.  Equipment;

 

3.4.  General Intangibles;

 

3.6.  Instruments;

 

3.7.  Inventory;

 

3.8.  All other personal property and assetsof Debtor;

 

3.9.  All books and records (including,without limitation, customer lists, supplier lists, credit files, computerprograms, printouts and other computer materials and records) of such Debtorpertaining to any of the Collateral; and

 

3.10.  All Proceeds of any of the Collateraldescribed in the preceding clauses of this Paragraph, in any form, includingwithout limitation insurance proceeds and all claims against third parties forloss or damage to or destruction of any or all of the foregoing.

4.  Further Assurances; Covenants.

4.1.  Debtor shall not change the locationof (a) its chief executive office or chief place of business or(b) the locations where it keeps or holds any Collateral, or any recordsrelating to such Collateral, from the Site unless it shall have given theSecured Parties at least 45 days’ prior written notice.  Debtor shall not in any event change thelocation of any Collateral if such change would cause the Security Interests insuch Collateral to lapse or cease to be perfected.

 

5

----

 

4.2.  Debtor shall maintain Inventory onlyat (a) the Site, (b) at a location in the United States of which theSecured Parties have received at least 45 days’ prior written notice, or(c) in transit to a location specified in the preceding clauses.

 

4.3.  Debtor shall not change its name,identity, any tradename used by it or its corporate structure in any mannerunless it shall have given the Secured Parties at least 45 days’ priorwritten notice.

 

4.4.  Debtor shall cause each Secured Partyto be named as an insured party and loss payee on each insurance policycovering  risks relating to any of itsCollateral.  Such insurance shall bemaintained against such risks as are insured against by companies ofestablished repute in the same or similar lines of business as Debtor, inamounts, under policies, and with insurers reasonably acceptable to the SecuredParties.  Debtor will deliver to eitherSecured Party, upon request of either Secured Party, the insurance policies forsuch insurance.  Each such insurancepolicy shall include effective waivers by the insurer of all claims forinsurance premiums against the Secured Parties, shall provide that, for so longas any Event of Default shall have occurred and be continuing and the insurershall have received notice thereof from the Secured Parties, all insurance proceedsshall be adjusted with and payable to the Secured Parties and shall providethat no cancellation or termination thereof shall be effective until at least30 days after receipt by the Secured Parties of written notice thereof.

 

4.5.  Debtor will, promptly upon request,provide to either Secured Party all information and evidence it may reasonablyrequest concerning the Collateral to enable such Secured Party to enforce theprovisions of this Agreement.

 

4.6.  At the request of either SecuredParty, Debtor will join with such Secured Party in executing one or more (1)Financing Statements, (2) Copyright Registration Applications, and/or (3)Notices of Assignment of Copyright pursuant to any applicable law, in formsatisfactory to the Secured Parties.

 

4.7  The Debtor shall not, without the priorwritten approval of the Secured Parties, , sell, encumber or otherwise transferany Collateral, or agree or attempt to do so, other than licenses to customersand others in the ordinary course of business, sales of Debtor’s products inthe ordinary course of business and sales of obsolete or excess assets in theordinary course of business..

 

4.8

 

(a) Debtor shall notify the Secured Parties promptlyof: (i) any material delay in Debtor’s performance of any of its obligations toany account debtor or the assertion of any claims, offsets, defenses orcounterclaims by any account debtor, or any disputes with account debtors, orany settlement, adjustment or compromise thereof, (ii) all material adverseinformation relating to the financial condition of any account debtor and (iii)any event or circumstance which, to Debtor’s knowledge would cause any thenexisting Accounts to no longer be collected pursuant to their original terms.No credit, discount, allowance or extension or agreement for any of theforegoing shall be granted to any account debtor without the Secured Parties’consent, except in the ordinary course of Debtor’s business in accordance withpractices and policies previously disclosed in writing to Debtor. So long as 

 

6

----

 

no Event of Default exists or has occurred and is continuing, Debtorshall settle, adjust or compromise any claim, offset, counterclaim or disputewith any account debtor. At any time that an Event of Default exists or hasoccurred and is continuing, the Secured Parties shall, at their option, havethe exclusive right to settle, adjust or compromise any claim, offset,counterclaim or dispute with account debtors or grant any credits, discounts orallowances.

 

(b) Either Secured Party shall have the right at anytime or times, in such Secured Party’s name or in the name of a nominee of suchSecured Party, to verify the validity, amount or any other matter relating toany Account or other Collateral, by mail, telephone, facsimile transmission orotherwise.

 

(c) Either Secured Party may, at any time or timesthat an Event of Default exists or has occurred and is continuing, (i) notifyany or all account debtors that the Accounts have been assigned to the SecuredParties and that the Secured Parties has a security interest therein and theSecured Parties may direct any or all accounts debtors to make payment ofAccounts directly to the Secured Parties, (ii) extend the time of payment of,compromise, settle or adjust for cash, credit, return of merchandise orotherwise, and upon any terms or conditions, any and all Accounts or otherobligations included in the Collateral and thereby discharge or release theaccount debtor or any other party or parties in any way liable for paymentthereof without affecting any of the Obligations, (iii) demand, collect orenforce payment of any Accounts or such other obligations, but without any dutyto do so, and the Secured Parties shall not be liable for its failure tocollect or enforce the payment thereof nor for the negligence of its agents orattorneys with respect thereto and (iv) take whatever other action the SecuredParties may deem necessary or desirable for the protection of its interests. Atany time that an Event of Default exists or has occurred and is continuing, ateither the Secured Party’s request, all invoices and statements sent to anyaccount debtor shall state that the Accounts and such other obligations havebeen assigned to the Secured Parties and are payable directly and only to theSecured Parties and Debtor shall deliver to the Secured Parties such originalsof documents evidencing the sale and delivery of goods or the performance ofservices giving rise to any Accounts as the Secured Parties may require.

 

4.9  With respect to the Equipment:

 

(a) upon either Secured Party’s request, Debtor shall,at its expense, at any time or times as such Secured Party may request on orafter an Event of Default, deliver or cause to be delivered to the Secured Partieswritten reports or appraisals as to the Equipment in form, scope andmethodology acceptable to the Secured Parties and by an appraiser acceptable tothe Secured Parties;

 

(b) Debtor shall keep the Equipment in good order,repair, running and marketable condition (ordinary wear and tear excepted);

 

(c) Debtor shall use the Equipment with all reasonablecare and caution and in accordance with applicable standards of any insuranceand in conformity with all material applicable laws;

 

(d) the Equipment is and shall be used in Debtor’sbusiness and not for personal, family, household or farming use;

 

7

----

 

(e) the Equipment is now and shall remain personalproperty and Debtor shall not permit any of the Equipment to be or become apart of or affixed to real property; and

 

(f) Debtor assumes all responsibility and liabilityarising from the use of the Equipment unless in the Secured Parties’possession.

 

4.10  Withrespect to the Inventory:

 

(a) upon either Secured Party’s request, Debtor shall,at its expense, no more than once in any twelve (12) month period, but at anytime or times as either Secured Party may request on or after an Event ofDefault, deliver or cause to be delivered to the Secured Parties writtenreports or appraisals as to the Inventory in form, scope and methodologyacceptable to the Secured Parties and by an appraiser acceptable to the SecuredParties, addressed to the Secured Parties, upon which the Secured Parties areexpressly permitted to rely;

 

(b) Debtor shall produce, use, store and maintain theInventory with all reasonable care and caution and in accordance withapplicable standards of any insurance and in conformity with applicable laws(including the requirements of the Federal Fair Labor Standards Act of 1938, asamended and all rules, regulations and orders related thereto);

 

(c) Debtor assumes all responsibility and liabilityarising from or relating to the production, use, sale or other disposition ofthe Inventory; and

 

(d) Debtor shall keep the Inventory in good andmarketable condition.

 

4.11  Debtor shall duly pay and dischargeall taxes, assessments, contributions and governmental charges upon or againstit or its properties or assets, except for taxes the validity of which arebeing contested in good faith by appropriate proceedings diligently pursued andavailable to Debtor and with respect to which adequate reserves have been setaside on its books. Debtor shall be liable for any tax or penalties (other thanincome taxes, franchise taxes and any penalties related thereto) imposed on theSecured Parties as a result of the financing arrangements provided for hereinand Debtor agrees to indemnify and hold the Secured Parties harmless withrespect to the foregoing, and to repay to the Secured Parties on demand theamount thereof, and until paid by Debtor such amount shall be added and deemedpart of the Loan. The foregoing indemnity shall survive the payment of theSecured Obligations and the termination or non-renewal of this Agreement.

 

4.12.  Exceptin the ordinary course of business, other than the Secured Obligations, Debtorshall not incur, create, assume, become liable in any manner with respect to,or permit to exist, any obligations or indebtedness.

 

5.  General Authority. Debtor herebyirrevocably appoints the Secured Parties as its true and lawful attorneys, withfull power of substitution, in the name of Debtor, the Secured Parties orotherwise, for the sole use and benefit of the Secured Parties, but at suchDebtor’s expense, to the extent permitted by law to exercise, at any time andfrom time to time while an Event of Default has occurred and is continuing, allor any of the following powers with respect to all or any of the Collateralowned by Debtor:  (a) to settle,compromise,

 

8

----

 

compound, prosecute or defend any action or proceeding with respect tothe Collateral, (b) to sell, transfer, assign or otherwise deal in or withthe same or the proceeds or avails thereof, as fully and effectually as if theSecured Parties were the absolute owner of the Collateral; provided,that the Secured Parties shall give Debtor not less than 10 days’ priorwritten notice of the time and place of any sale or other intended disposition ofany of the Collateral, except any Collateral which is perishable or threatensto decline speedily in value or is of a type customarily sold on a recognizedmarket.  Debtor agrees that such noticeconstitutes “reasonable notification” within the meaning ofSection 9-504(3) of the UCC.

 

6.  Remedies Upon Event of Default.

6.1.  If any Event of Default has occurredand is continuing, either Secured Party may exercise all other rights of asecured party under the UCC (whether or not in effect in the jurisdiction wheresuch rights are exercised) and, in addition, the Secured Parties may, withoutbeing required to give any notice, except as herein provided or as may berequired by mandatory provisions of law, sell the Collateral or any partthereof at public or private sale or at any broker’s board or on any securitiesexchange, for cash, upon credit or for future delivery, and at such price orprices as the Secured Parties may deem satisfactory.  Either Secured Party may be the purchaser of any or all of the Collateralso sold at any public sale (or, if the Collateral is of a type customarily soldin a recognized market or is of a type which is the subject of widelydistributed standard price quotations, at any private sale) and thereafter holdthe same, absolutely, free from any right or claim of whatsoever kind.  Debtor agrees to execute and deliver suchdocuments and take such other action as either Secured Party deems necessary oradvisable in order that any such sale may be made in compliance with law.  Upon any such sale, the Secured Partiesshall have the right to deliver, assign and transfer to the purchaser thereofthe Collateral so sold.  Each purchaserat any such sale shall hold the Collateral so sold to it absolutely, free fromany claim or right of whatsoever kind, including any equity or right ofredemption of Debtor which may be waived and Debtor, to the extent permitted bylaw, hereby specifically waives all rights of redemption, stay or appraisalwhich it has or may have under any law now existing or hereafter adopted.  The notice of sale shall, (1) in caseof a public sale, state the time and place fixed for such sale, and (2) inthe case of a private sale, state the day after which such sale may beconsummated.  Any such public sale shallbe held at such time or times within ordinary business hours and at such placeor places as the Secured Parties may fix in the notice of such sale.  At any such sale the Collateral may be soldin one lot as an entirety or in separate parcels, as the Secured Parties maydetermine.  The Secured Parties shallnot be obligated to make any such sale pursuant to any such notice.  The Secured Parties may, without notice orpublication, adjourn any public or private sale or cause the same to beadjourned from time to time by announcement at the time and place fixed for thesale, and such sale may be made at any time or place to which the same may beso adjourned.  In case of any sale ofall or any part of the Collateral on credit or for future delivery, theCollateral so sold may be retained by the Secured Parties until the sellingprice is paid by the purchaser thereof, but the Secured Parties shall not incurany liability in case of the failure of such purchaser to take up and pay forthe Collateral so sold and, in case of any such failure, such Collateral mayagain be sold upon like notice.  TheSecured Parties, instead of exercising the power of sale herein conferred uponthem, may proceed by a suit or suits at law or in equity to foreclose theSecurity Interests and sell the Collateral, or any portion thereof, under ajudgment or decree of a court or courts of competent jurisdiction.

 

9

----

 

6.2.  For the purpose of enforcing any andall rights and remedies under this Agreement, if any Event of Default hasoccurred and is continuing, then either Secured Party may (a) requireDebtor to, and Debtor agrees that it will, at its own expense, forthwithassemble all or any part of the Collateral as directed by such Secured Partyand make it available at a place designated by such Secured Party which is, inits opinion, reasonably convenient to such Secured Party and Debtor, whether atthe premises of Debtor or otherwise, (b) to the extent permitted byapplicable law, enter, with or without process of law and without breach of thepeace, any premise where any of the Collateral is or may be located, andwithout charge or liability to it seize and remove such Collateral from suchpremises, (c) have access to and use any of Debtor’s books and recordsrelating to the Collateral and (d) prior to the disposition of theCollateral, process, repair or recondition it or otherwise prepare it fordisposition in any manner and to the extent such Secured Party deemsappropriate and, in connection with such preparation and disposition, usewithout charge any trademark, trade name, copyright, patent or technicalprocess used by Debtor.

 

6.3.  Any laboratory which has possession ofany of the Collateral is hereby constituted and appointed by Debtor as pledgeholderfor the Secured Parties and the Secured Parties may authorize each suchpledgeholder to sell all or any portion of the Collateral upon the order anddirection of the Secured Parties, and Debtor hereby waives any and all claimsfor damages, or otherwise, for any action taken by such pledgeholder.

 

7.  Application of Proceeds. Upon theoccurrence and during the continuance of an Event of Default, the proceeds ofany sale of, or other realization upon, all or any part of the Collateral shallbe applied by the Secured Parties in the following order of priorities:

 

7.1.  First, to payment of the expenses ofsuch sale or other realization, including, on a pari passu basis, reasonablecompensation to agents and counsel for each Secured Party and all expenses,liabilities and advances incurred or made by each Secured Party in connectiontherewith, and any other unreimbursed expenses for which either Secured Partyis to be reimbursed under any other agreement or instrument entered into inconnection with the Loan or this Agreement and unpaid fees owing to eitherSecured Party.

 

7.2.  Next, to the payment of the SecuredObligations, on a pari passu basis, in accordance with the provisions of theLoan, until all such amounts have been paid in full.

 

7.3.  Finally, to Debtor or its successorsor assigns, or as a court of competent jurisdiction may direct, of any surplusthen remaining from such proceeds.

 

The Secured Parties may make distributions hereunder in cash or in kindor in any combination thereof.

 

8.  Termination of Security Interest;Release of Collateral. Upon the repayment in full of all SecuredObligations, the Security Interests shall terminate and all rights to theCollateral shall revert to Debtor.  Atany time and from time to time prior to such termination of the SecurityInterests, the Secured Parties may release any of the Collateral or releaseDebtor of its obligations hereunder with the prior written consent of eachSecured Party.

 

9.  Governing Law. This Agreement isgoverned by and construed in accordance with the laws of the State ofCalifornia, irrespective of California’s choice-of-law principles.

 

10

----

 

 

10.  Further Assurances. Each partyto this Agreement shall execute and deliver all instruments and documents andtake all actions as may be reasonably required or appropriate to carry out thepurposes of this Agreement.

 

11.  Counterparts and Exhibits. ThisAgreement may be executed in counterparts, each of which is deemed an originaland all of which together constitute one document.  All exhibits attached to and referenced in this Agreement areincorporated into this Agreement.

 

12.  Time of Essence. Time and strictand punctual performance are of the essence with respect to each provision ofthis Agreement.

 

13.  Attorney’s Fees. The prevailingparty(ies) in any litigation, arbitration, mediation, bankruptcy, insolvency orother proceeding (“Proceeding”) relating to the enforcement or interpretationof this Agreement may recover from the unsuccessful party(ies) all costs,expenses, and actual attorney’s fees (including expert witness and otherconsultants’ fees and costs) relating to or arising out of (a) theProceeding (whether or not the Proceeding proceeds to judgment), and (b) anypost-judgment or post-award proceeding including, without limitation, one toenforce or collect any judgment or award resulting from the Proceeding.  All such judgments and awards shall containa specific provision for the recovery of all such subsequently incurred costs,expenses, and actual attorney’s fees.

 

14.  Modification. This Agreement maybe modified only by a contract in writing executed by the party to thisAgreement against whom enforcement of the modification is sought.

 

15.  Headings.  The paragraph headings in thisAgreement:  (a) are included only forconvenience, (b) do not in any manner modify or limit any of theprovisions of this Agreement, and (c) may not be used in the interpretation ofthis Agreement.

 

16.  Prior Understandings.  This Agreement and all documentsspecifically referred to and executed in connection with this Agreement:  (a) contain the entire and final agreementof the parties to this Agreement with respect to the subject matter of this Agreement,and (b) supersede all negotiations, stipulations, understandings, agreements,representations and warranties, if any, with respect to such subject matter,which precede or accompany the execution of this Agreement.

 

17.  Interpretation.  Whenever the context so requires in thisAgreement, all words used in the singular may include the plural (and viceversa) and the word “person” includes a natural person, a corporation, a firm,a partnership, a joint venture, a trust, an estate or any other entity.  The terms “includes” and “including” do notimply any limitation.  For purposes ofthis Agreement, the term “day” means any calendar day and the term “businessday” means any calendar day other than a Saturday, Sunday or any other daydesignated as a holiday under California Government Code Sections6700-6701.  Any act permitted orrequired to be performed under this Agreement upon a particular day which isnot a business day may be performed on the next business day with the sameeffect as if it had been performed upon the day appointed.  No remedy or election under this Agreementis exclusive, but rather, to the extent permitted by applicable law, each suchremedy and election is cumulative with all other remedies at law or in equity.

 

11

----

 

18.  Partial Invalidity.  Each provision of this Agreement is validand enforceable to the fullest extent permitted by law.  If any provision of this Agreement (or theapplication of such provision to any person or circumstance) is or becomesinvalid or unenforceable, the remainder of this Agreement, and the applicationof such provision to persons or circumstances other than those as to which itis held invalid or unenforceable, are not affected by such invalidity orunenforceability.

 

19.  Successors-in-Interest and Assigns.  Debtor may not voluntarily or by operationof law assign, hypothecate, delegate or otherwise transfer or encumber all orany part of its rights, duties or other interests in this Agreement without theprior written consent of each Secured Party, which consent may be withheld ineach Secured Party’s sole and absolute discretion.  Any such transfer in violation of this paragraph is void.  Subject to the foregoing and any otherrestrictions on transferability contained in this Agreement, this Agreement isbinding upon and inures to the benefit of the successors-in-interest andassigns of each party to this Agreement

 

20.  Notices. All notices or othercommunications required or permitted to be given to a party to this Agreementshall be in writing and shall be personally delivered, sent by certified mail,postage prepaid, return receipt requested, or sent by an overnight expresscourier service that provides written confirmation of delivery, to such partyat the following respective address:

 

Spescom UK and Spescom SA

P.O. Box 288

Halfway House 1685 Midrand

South Africa

Attention: Hilton Isaacman

 

with a copy to:        Solomon,Ward, Seidenwurm & Smith, LLP

401 B Street, Suite 1200

San Diego, CA 92101

Attention: Norman L. Smith

 

Spescom Software, Inc.

9339 Carroll Park Drive

San Diego, CA 92121

Attention: John Low

 

Each such notice or other communication shall be deemed given,delivered and received upon its actual receipt, except that if it is sent bymail in accordance with this paragraph, then it shall be deemed given,delivered and received three days after the date such notice or othercommunication is deposited with the United States Postal Service in accordancewith this paragraph.  Any party to thisAgreement may give a notice of a change of its address to the other party(ies)to this Agreement.

 

21.  Waiver.  Any waiver of a default or provision underthis Agreement must be in writing.  Nosuch waiver constitutes a waiver of any other default or provision concerningthe same or any other provision of this Agreement.  No delay or omission by a party in the 

 

12

----

 

exercise of any of its rights or remedies constitutes a waiver of (orotherwise impairs) such right or remedy. A consent to or approval of an act does not waive or render unnecessarythe consent to or approval of any other or subsequent act.

 

22.  Drafting Ambiguities.  Each party to this Agreement has reviewedand revised this Agreement and has had the opportunity to have such party’slegal counsel review and revise this Agreement.  Each party to this Agreement acknowledges that this Agreement hasbeen prepared by Solomon Ward Seidenwurm & Smith, LLP (“SWSS”) whichrepresents only Spescom SA, that Debtor and Spescom UK are not beingrepresented by SWSS in relation to this Agreement and that Debtor and SpescomUK have been advised to retain their own legal counsel. The rule ofconstruction that ambiguities are to be resolved against the drafting party orin favor of the party receiving a particular benefit under an agreement may notbe employed in the interpretation of this Agreement or any amendment to thisAgreement.

 

23.  Third Party Beneficiaries.  Nothing in this Agreement is intended toconfer any rights or remedies on any person or entity other than the parties tothis Agreement and their respective successors-in-interest and permittedassignees, unless such rights are expressly granted in this Agreement toanother person specifically identified as a “Third Party Beneficiary.”

 

24.  ARBITRATION OF DISPUTES.  WITHOUT LIMITING IN ANY WAY THE SECUREDPARTIES’ RIGHT TO ENFORCE ANY REMEDY AVAILABLE UNDER THE UCC WITHOUT FORMALLEGAL OR JUDICIAL ACTION, ANY CONTROVERSY OR CLAIM RELATING TO THIS AGREEMENTSHALL BE SETTLED BY ARBITRATION IN SAN DIEGO, CALIFORNIA, IN ACCORDANCE WITHTHE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION, ANDJUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANYCOURT HAVING JURISDICTION.  THEARBITRATOR(S) SHALL NOT HAVE THE AUTHORITY TO AWARD PUNITIVE DAMAGES AGAINSTANY PARTY(IES) TO THIS AGREEMENT.  NOPROVISION OF THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY TO EXERCISE SELF–HELPREMEDIES SUCH AS FORECLOSURE AGAINST OR SALE OF ANY REAL OR PERSONAL PROPERTY 

COLLATERAL OR SECURITY, OR TO OBTAIN PROVISIONAL OR ANCILLARY REMEDIESFROM A COURT OF COMPETENT JURISDICTION BEFORE, AFTER, OR DURING THE PENDENCY OFANY ARBITRATION OR OTHER PROCEEDING. THE EXERCISE OF A REMEDY SHALL NOT WAIVE THE RIGHT OF EITHER PARTY TORESORT TO ARBITRATION.

 

NOTICE:  YOU ARE AGREEING TOHAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATIONAS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHTPOSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.  YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TODISCOVERY AND APPEAL.  IF YOU REFUSE TOSUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TOARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENTTO THIS ARBITRATION PROVISION IS VOLUNTARY.

 

13

----

 
| DEBTOR:          |   | ALTRIS SOFTWARE, INC         |                   |
|------------------|--------|------------------------------|------------------------|
|             |   | a California corporation     |                   |
|             |   |                         |                   |
|             |   | By:                          |   /s/John W.  Low |   |   |
|             |   | John W. Low                  |                   |
|             |   | Chief Financial Officer      |                   |
|             |   |                         |                   |
| SECURED PARTIES: |   |                         |                   |
|             |   |                         |                   |
|             |   | SPESCOM LIMITED.,            |                   |
|             |   | a South African corporation  |                   |
|             |   |                         |                   |
|             |   | By:                          |                   |   /s/Hilton  Isaacman |   |   |
|             |   | Hilton Isaacman              |                   |
|             |   | Director Corporate Finance   |                   |
|             |   |                         |                   |
|             |   |                         |                   |
|             |   | SPESCOM LIMITED.,            |                   |
|             |   | a United Kingdom corporation |                   |
|             |   |                         |                   |
|             |   | By:                          |                   |   /s/Hilton  Isaacman |   |   |
|             |   | Hilton Isaacman              |                   |
|             |   | Director Corporate Finance   |                   |
|                  |        |                              |                        |  |  |  |  |  |  |  |

 

14

----