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                                                                   EXHIBIT 10.69

                                MOVABLE HYPOTHEC


1.       DEFINITION AND INTERPRETATION

         1.1      In the Agreement, the following words shall, unless otherwise
                  provided, have the meanings set out below:

                  1.1.1    "AGREEMENT" the expression "Agreement" shall include
                           this Agreement, as it may hereafter be amended,
                           supplemented, modified, extended, renewed, replaced
                           or restated from time to time;

                  1.1.2    "CONTINUING" when used with reference to a Default or
                           an Event of Default means that the Default or Event
                           of Default has occurred and has not been either
                           waived in writing by the Holder or cured within any
                           applicable cure period;

                  1.1.3    "DEFAULT" or "DEFAULT" means any event or
                           circumstance which constitutes an Event of Default or
                           which, with the giving of notice of lapse of time or
                           both would, unless cured or waived, constitute an
                           Event of Default;

                  1.1.4    "EVENT OF DEFAULT" shall have the meaning set forth
                           in Section 7.1 hereof;

                  1.1.5    "EXIM LOAN AGREEMENT" means the Loan and Security
                           Agreement dated February 12, 2003 between, among
                           others, the Grantor, as co-borrower, and the Holder,
                           as lender, as amended, supplemented, modified,
                           extended, renewed, replaced or restated from time to
                           time;

                  1.1.6    "EXIM OBLIGATIONS" means the "Obligations" as defined
                           under the Exim Loan Agreement;

                  1.1.7    "GRANTOR" means Verso Technologies, Inc. and any
                           Person resulting from the amalgamation, merger,
                           consolidation, reorganization, continuation or other
                           transformation thereof;

                  1.1.8    "HOLDER" means Silicon Valley Bank;

                  1.1.9    "HYPOTHECATED PROPERTY" means all property, assets
                           and undertaking of the Grantor charged pursuant to
                           Section 2.1 of this Agreement and shall include all
                           or any part thereof;

                  1.1.10   "INTELLECTUAL PROPERTY COLLATERAL" means all present
                           and future intellectual property (whether registered
                           or unregistered) including



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                           without limitation all computer programs, application
                           software, hardware/software maintenance support
                           agreements and all other documents related thereto,
                           licenses of software, copyrights, patents and
                           inventions, trademarks, trade names, business names,
                           trade styles and other business identifiers,
                           industrial designs, integrated circuit topographies,
                           trade secrets and other confidential information and
                           all know-how obtained, developed or used by the
                           Grantor or contemplated at any time for use by the
                           Grantor;

                  1.1.11   "LIEN" shall mean any mortgage, charge, pledge,
                           hypothec, lien (statutory or otherwise), prior claim,
                           priority, legal hypothec, trust, deemed trust, title
                           retention, deposit, right to distrain, landlord's
                           liens, security interest, assignment or other
                           encumbrance of any nature however arising, or any
                           other security agreement, hypothecation or
                           arrangement creating in favour of any creditor a
                           right in respect of any particular property that is
                           prior to the right of any other creditor in respect
                           of such property, and includes the right of a lessor
                           relative to a lease of movable property, or a leasing
                           contract and the right of a vendor under a
                           conditional (installment) sale agreement;

                  1.1.12   "LOAN AGREEMENT" means collectively the Exim Loan
                           Agreement and the Non-Exim Loan Agreement;

                  1.1.13   "NON-EXIM LOAN AGREEMENT" means the Loan and Security
                           Agreement dated December 14, 2001, between, among
                           others, the Grantor, as co-borrower, and the Holder,
                           as lender, as amended on July 31, 2002, November 11,
                           2002, December 13, 2002 and February 12, 2003, as
                           same may be further supplemented, modified, extended,
                           renewed, replaced or restated from time to time;

                  1.1.14   "NON-EXIM OBLIGATIONS" means the "Obligations" as
                           defined under the Non-Exim Loan Agreement;

                  1.1.15   "PLEDGE AGREEMENT" means the Pledge Agreement
                           governed by the laws of the State of California
                           executed by the Grantor in favour of the Holder on
                           February 12, 2003 in respect of the Specific
                           Securities;

                  1.1.16   "PROPERTY" the expression "property" shall include
                           property, titles and rights;

                  1.1.17   "SECURED OBLIGATIONS" means collectively the Exim
                           Obligations and the Non-Exim Obligations, and all
                           interest, commissions, legal and other costs
                           (including legal fees as between a solicitor and its
                           own client), charges and expenses accruing or
                           incurred under or in connection with this Agreement;

                  1.1.18   "SECURITIES" the expression "Securities" shall
                           include shares in the capital stock of a legal
                           person, bonds, warrants, debentures, bills of



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                           exchange, promissory notes, negotiable instruments
                           and other evidences of indebtedness, options or
                           rights in respect of the foregoing, and any other
                           instrument or title generally called or included as a
                           security and the expression "SECURITIES" shall mean
                           any or all Securities and shall include the Specific
                           Securities; and

                  1.1.19   "SPECIFIC SECURITIES" means 100 common shares of
                           Clarent Canada Ltd., being all of the issued and
                           outstanding shares of Clarent Canada Ltd.

         1.2      Other capitalized terms used herein which are not defined
                  herein shall have the meanings ascribed to such terms in the
                  Loan Agreement.

         1.3      References to a section shall refer to sections in this
                  Agreement and references to dollar amounts herein are, unless
                  expressly otherwise provided, expressed in terms of Canadian
                  Dollars.

         1.4      The headings in the Agreement are included for convenience of
                  reference only, and shall not constitute a part of this
                  Agreement for any other purpose.

         1.5      The words "GRANTOR" and "HOLDER", the personal pronoun "it" or
                  "its" and any verb relating thereto and used therewith shall
                  be read and construed as required by and in accordance with
                  the context in which such words are used. The term
                  "successors" shall include, without limiting its meaning, any
                  corporation resulting from the amalgamation of a corporation
                  with another corporation.

         1.6      If one or more of the provisions contained herein shall be
                  invalid, illegal or unenforceable in any respect, the
                  validity, legality and enforceability of the remaining
                  provisions contained herein shall not in any way be affected
                  or impaired thereby.

         1.7      If the event that any day, on or before which any action is
                  required to be taken hereunder, is not a Business Day, then
                  such action shall be required to be taken on or before the
                  specified time on the first Business Day thereafter.

         1.8      This Agreement shall be construed in accordance with and be
                  governed by the laws of the Province of Quebec and the federal
                  laws of Canada applicable therein. For the purpose of legal
                  proceedings, this Agreement shall be deemed to have been made
                  in the said Province and to be performed therein and the
                  courts of that Province shall have jurisdiction over all
                  disputes which may arise under this Agreement. The Grantor
                  hereby irrevocably and unconditionally submits to the
                  non-exclusive jurisdiction of such courts, provided always
                  that nothing herein contained shall prevent the Holder from
                  proceeding at its election against the Grantor in the courts
                  of any other province, country or jurisdiction.

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2.       HYPOTHEC

         2.1      For good and valuable consideration, and as continuing and
                  collateral security for the payment and performance when due
                  of all of the Secured Obligations, the Grantor hereby
                  hypothecates in favour of the Holder (and with respect to
                  incorporeal or intangible property, and corporeal movable
                  property located outside of the Province of Quebec, hereby
                  charges , assigns, and mortgages and creates a security
                  interest in favour of the Holder in), the universality of all
                  present and future movable property of the Grantor, both
                  corporeal and incorporeal, now owned or hereafter acquired by
                  the Grantor, including without limitation the following:

                  2.1.1    all present and future machinery and equipment of the
                           Grantor, including tools, implements, furniture,
                           rolling stock, vehicles, spare parts and additions;

                  2.1.2    all present and future property in stock and
                           inventory of the Grantor whether in its possession,
                           in transit or held on its behalf, including, without
                           limitation, all movable property in reserve, raw
                           materials, goods in process, finished products,
                           packaging materials, property held by third parties
                           pursuant to a rental, leasing, franchise, licence or
                           other agreement entered into with or on behalf of the
                           Grantor, property evidenced by bill of lading,
                           animals, wares, as well as any other property held
                           for sale, lease or processing in the manufacture or
                           transformation of property intended for sale, for
                           lease, or for use in providing a service by the
                           Grantor in the ordinary course of operation of its
                           enterprise;

                  2.1.3    all present and future claims of the Grantor of any
                           nature or kind, whatever their cause, whether or not
                           evidenced by any title, and whether or not such title
                           is negotiable, bill of exchange or draft; and whether
                           or not they constitute book debts or trade accounts
                           receivable, including, without limitation, all
                           customer accounts, accounts receivable, rights of
                           action, demands, judgements, contract rights,
                           options, permits, licenses, consents, approvals,
                           orders, rulings, quotas, subsidies, franchises,
                           immunities, amounts on deposit, proceeds of sale,
                           assignment or lease of any property, rights or
                           titles, any indemnities payable under any contract of
                           insurance whether or not such insurance is on
                           property forming part of the Hypothecated Property
                           and any indemnity or proceeds of expropriation, the
                           whole which are now due or which may become due to
                           the Grantor, together with all judgments and all
                           other rights, benefits, guarantees and securities for
                           the said claims which now or may hereafter exist in
                           favour of the Grantor, and together with all books
                           and accounts, titles, letters, invoices, papers and
                           documents in any way evidencing or relating to all or
                           any of the claims;


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                  2.1.4    all present and future Securities, including, without
                           limitation, all other Securities issued or received
                           in substitution, renewal, addition or replacement of
                           Securities, or issued or received on the purchase,
                           redemption, conversion, cancellation or other
                           transformation of Securities or issued or received by
                           way of dividend or otherwise to holders of
                           Securities, and all present and future instruments,
                           bills of lading, warehouse receipts, documents or
                           other evidences of title of the Grantor, and all
                           interests of the Grantor in any partnership;

                  2.1.5    all present and future Intellectual Property
                           Collateral, goodwill, other intangible property,
                           monies, agreements and rights under agreements of the
                           Grantor, as well as all rights in any action
                           pertaining to the protection, in Canada or abroad, of
                           any such Intellectual Property Collateral or rights,
                           and all its present and future undertaking;

                  2.1.6    the proceeds of any sale, assignment, lease or other
                           disposition of the Hypothecated Property any claim
                           resulting from such a sale, assignment, lease or
                           other disposition, as well as any property acquired
                           in replacement thereof;

                  2.1.7    any present and future rights attached to the
                           Hypothecated Property as well as the fruits and
                           revenues thereof; and

                  2.1.8    all present and future titles, documents, records,
                           receipts, invoices, accounts and data of the Grantor
                           evidencing or relating to any of the Hypothecated
                           Property including, without limitation, computer
                           disks, tapes and related electronic data processing
                           media, rights of the Grantor to retrieve the same
                           from third parties, delivery receipts, catalogs,
                           insurance certificates and the like;

(all such present and future property being herein called the "HYPOTHECATED
PROPERTY").

         2.2      The amount for which the hypothec in Section 2.1 is granted is
                  TWENTY-FOUR MILLION Canadian dollars ($24,000,000), with
                  interest from the date hereof at the rate of TWENTY-FIVE
                  PERCENT (25%) per annum.

         2.3      The hypothec which is granted in this Agreement constitutes a
                  pledge of such of the Hypothecated Property which is delivered
                  to or now in possession of the Holder, including the Specific
                  Securities, as well as a pledge of any of the Hypothecated
                  Property which may in the future be delivered to or held by
                  the Holder to be initially held at the Holder's office at 3003
                  Tasman Drive, Santa Clara, California, the Holder to advise
                  the Grantor in writing of any change of location.

         2.4      The hypothec and security interest hereby created and granted
                  do not and shall not extend to, and the Hypothecated Property
                  shall not include, any contract, agreement, right, franchise,
                  licence, lease or permit (each, a "CONTRACTUAL RIGHT") to
                  which the Grantor is a party or of which the Grantor has the
                  benefit, to the


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                  extent that the creation and granting of the hypothec and
                  security interest herein would constitute a breach of the
                  terms of or permit any Person to terminate one or more
                  contractual rights, and the foregoing hypothec and security
                  interest is constituted under the suspensive condition of
                  obtaining the required authorizations or consents. The Grantor
                  shall hold such contractual rights as mandatary of the Holder
                  until such time as the suspensive condition is fulfilled in
                  respect of such contractual right. The Grantor agrees that it
                  shall, upon the request of the Holder and whether before or
                  after a default by the Grantor has occurred and the security
                  herein has become enforceable, use all commercially reasonable
                  efforts to obtain any consent required to permit any material
                  contractual rights to be subjected to the hypothec and
                  security interest hereby created and granted.

3.       REPRESENTATIONS


         In addition to the representations and warranties of the Grantor under
         the Loan Agreement which shall apply mutatis mutandis hereto, the
         Grantor represents to the Holder as follows:

         3.1      The Grantor is carrying on an enterprise and its head office
                  is situated at 400 Galleria Parkway, Suite 300, Atlanta,
                  Georgia (USA).

         3.2      The Grantor uses no business or trade name other than those
                  set forth in Schedule "A".

         3.3      This Agreement has been properly authorized and constitutes a
                  legally valid and binding obligation of the Grantor
                  enforceable in accordance with its terms.

4.       COVENANTS


         In addition to the covenants of the Grantor under the Loan Agreement
         which shall apply mutatis mutandis hereto, the Grantor agrees with the
         Holder as follows:

         4.1      The Grantor shall, at its expense, insure the Hypothecated
                  Property and shall keep the Hypothecated Property at all times
                  insured in accordance with the terms of the Loan Agreement. If
                  the Grantor fails to procure or maintain any such insurance,
                  the Holder shall have the right, but not the obligation, to
                  effect such insurance in its name or in the Grantor's name,
                  and any premiums or other expenses paid or incurred by the
                  Holder in so doing shall forthwith be due and payable by the
                  Grantor to the Holder with interest as provided in Section
                  4.5.

         4.2      The Grantor shall defend title to the Hypothecated Property
                  and shall not create or permit to exist any Lien in favour of
                  a third party on or which may affect the Hypothecated
                  Property, other than Permitted Liens and those which the
                  Holder shall have previously agreed to in writing prior to
                  their creation or assumption.


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         4.3      Except with the prior written consent of the Holder, the
                  Grantor will not change the use, destination or nature of the
                  Hypothecated Property, nor will the Grantor move the
                  Hypothecated Property to a jurisdiction in which the hypothec
                  and security interest hereby created or any other security
                  interest in favour of the Holder has not been registered and
                  perfected; nor will it permit the Hypothecated Property to be
                  incorporated in an immovable property or to be permanently
                  physically attached or joined to an immovable property, unless
                  such Hypothecated Property does not lose its individuality and
                  unless such Hypothecated Property is and will continue to be
                  used for the operation of the Grantor's enterprise or the
                  pursuit of the Grantor's activities.

         4.4      The Grantor will furnish to the Holder any information which
                  the Holder may reasonably request in respect of the Grantor's
                  operations or the Hypothecated Property or to verify if the
                  Grantor is in compliance with its covenants and obligations
                  contained in this Agreement.

         4.5      The Grantor will reimburse the Holder promptly on demand all
                  out-of-pocket fees, costs and expenses, including reasonable
                  legal fees and expenses, incurred by the Holder relating to or
                  in connection with the execution, publication, performance,
                  interpretation, administration, enforcement and realization of
                  or in respect of this Agreement, the exercise of all rights of
                  the Holder and the preservation and protection of its
                  interests under this Agreement and the rendering of the rights
                  of the Holder opposable to all third parties, including,
                  without limitation, any fees, costs and expenses of
                  consultants, professionals, legal counsel or agents retained
                  by the Holder in connection with its rights hereunder,
                  including those for and in respect of any appraisal or
                  valuation of the Hypothecated Property whether in connection
                  with the sale of an enterprise or otherwise. The Grantor will
                  pay interest on all such amounts from the date the Holder
                  demands payment thereof from the Grantor at an annual rate
                  equal to the highest rate of interest prescribed under the
                  Loan Agreement, including Section 7.2 thereof. All such costs,
                  fees, expenses and charges owing by the Grantor to the Holder,
                  with interest thereon, shall form part of the Secured
                  Obligations.

         4.6      The Grantor will duly perform and comply with all its
                  obligations to the Holder, whether under this Agreement or any
                  other agreement, instrument or other document, including under
                  the Loan Agreement and the Pledge Agreement.

5.       CERTAIN RIGHTS OF THE HOLDER

         5.1      In the event the Grantor fails to observe or perform any of
                  its obligations or undertakings under this Agreement, the
                  Holder may, but shall not be obliged to, perform the same,
                  without waiving any rights to enforce this Agreement, and any
                  fees, costs or expenses incurred in so doing shall be
                  forthwith due and payable by the Grantor to the Holder, with
                  interest as provided in Section 4.5, and shall form part of
                  the Secured Obligations.


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         5.2      The Holder may, but shall not be obliged to, cause the Holder,
                  or its nominee, to be registered as holder of Securities, in
                  which case the Holder may exercise all rights in respect of
                  such Securities, including any right to vote, any right of
                  conversion or any right of redemption, and shall be entitled
                  to receive all revenues, dividends and capital distributions
                  (but the Holder shall not be responsible for any loss
                  occasioned by the exercise of any of such rights or by failure
                  to exercise the same within the time prescribed); provided
                  however that until an Event of Default shall have occurred
                  which is continuing hereunder, the Holder hereby grants the
                  Grantor a proxy, revocable at any time, authorizing the
                  Grantor to exercise any voting rights (subject to the prior
                  written consent of the Holder) and other rights attached to
                  such Securities (subject to the prior written consent of the
                  Holder) and to receive such revenues, dividends and capital
                  distributions.

         5.3      The Grantor hereby irrevocably constitutes the Holder or any
                  officer, or representative of the Holder, its agent, with the
                  power of substitution, in order to perform any act and sign
                  any document, including any transfer or endorsement of
                  Securities, necessary or useful to the exercise of the rights
                  conferred on the Holder pursuant to this Agreement.

         5.4      The Holder may grant extensions of time and other indulgences,
                  take and give up security, accept compositions, grant releases
                  and discharges and otherwise deal with the Grantor, debtors of
                  the Grantor, sureties and others and with the Hypothecated
                  Property or other security as the Holder may see fit without
                  prejudice to the liability of the Grantor and the rights of
                  the Holder under this Agreement.

         5.5      The exercise by the Holder of any of its rights shall not
                  prevent it from exercising any other rights it may have
                  arising from this Agreement the Loan Agreement, the Pledge
                  Agreement or by law; the rights of the Holder are cumulative
                  and not alternative. The Holder may waive any provision hereof
                  or any default, however the non-exercise by the Holder of any
                  of its rights or any such waiver shall not constitute a
                  renunciation of the exercise thereafter of such right or a
                  renunciation of any other provision or of any other default.
                  The Holder may exercise the rights arising from this Agreement
                  without having exercised its rights against any other Person
                  liable for the payment of the Secured Obligations, or any of
                  them, and without having realized any other security securing
                  the Secured Obligations.

         5.6      All rights of the Holder under this Agreement shall be
                  assignable and in any action brought by an assignee to enforce
                  such rights, the Grantor shall not assert against the assignee
                  any claim or defence which the Grantor now has or may
                  hereafter have against the Holder.

         5.7      The Holder is only required to exercise reasonable prudence
                  and diligence in the exercise of its rights or the fulfilment
                  of its obligations and, in any event, the Holder is only
                  responsible for its intentional or gross fault. The Grantor
                  shall


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                  indemnify the Holder for any losses or expenses incurred by
                  the Holder, or damages claimed against the Holder, for which
                  the Holder is not so responsible.

         5.8      The Holder may delegate to any other Person, or be represented
                  by any other Person in, the exercise of its rights or the
                  fulfilment of its obligations resulting from this Agreement;
                  the Holder may furnish to such Person any information which
                  the Holder may have concerning the Grantor or the Hypothecated
                  Property.

6.       PROVISIONS APPLICABLE TO CLAIMS

         6.1      In addition to the other provisions of this Agreement, the
                  following provisions shall apply in respect of all claims
                  forming part of the Hypothecated Property:

                  6.1.1    The Holder shall, subject to the terms of the Loan
                           Agreement, have the right to collect (i) the capital
                           falling due of, and any revenues of, any such claim
                           which is or represents the indemnity payable under
                           any insurance policy in respect of loss or damage to
                           the Hypothecated Property or which is or represents
                           the indemnity payable in respect of any expropriation
                           of the Hypothecated Property and (ii) the capital and
                           revenues of any proceeds of any sale or other
                           disposition of any Hypothecated Property made outside
                           the ordinary course of business of the Grantor;

                  6.1.2    The Holder authorizes the Grantor to collect when due
                           the capital falling due of, and any revenues of, any
                           other claim until the Holder shall have given the
                           Grantor a notice withdrawing such authorization,
                           whereupon the Holder shall immediately have the right
                           to collect all such capital and revenues. This notice
                           of withdrawal may be given and/or registered at any
                           time after an Event of Default shall have occurred
                           which is continuing, and may be given and/or
                           registered from time to time in respect of all or any
                           part or parts of the claims;

                  6.1.3    Upon notice by the Holder to the Grantor, which may
                           be given after an Event of Default shall have
                           occurred which is continuing or before or after the
                           notice of withdrawal referred to in Section 6.1.2,
                           the Holder may require the Grantor to immediately
                           remit to the Holder all or a specified part of
                           capital and revenues of claims received by the
                           Grantor or to deposit the same in one or more
                           designated bank accounts or otherwise to hold, deal
                           with or deliver such capital and revenues, all on
                           such terms and conditions as the Holder may specify
                           in such notice;

                  6.1.4    The Holder shall have no obligation to exercise any
                           rights in respect of any claims nor to enforce or to
                           see to payment of the same, whether by legal action
                           or otherwise. The Holder may give acquittances for
                           any sums it collects and may, but shall not be
                           obligated to, realize any of the claims, grant
                           extensions, grant releases, accept compositions,
                           renounce and generally deal with the claims, and any
                           guarantees or security



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                                       10


                           therefor, and take any action to preserve, protect or
                           secure such claims, at such times and in such manner
                           as it deems advisable in its sole discretion, without
                           notice to or the consent of the Grantor, and without
                           incurring any liability therefor and without any
                           obligation to render any account in respect thereof
                           or in respect of moneys collected, other than to
                           remit to the Grantor any amounts collected over and
                           above the Secured Obligations;

                  6.1.5    Any amounts collected by the Grantor or by the Holder
                           or deposited in a designated bank account shall form
                           part of the Hypothecated Property and be subject to
                           the hypothec and security hereof. The Holder may
                           apply any amounts received by it towards payment of
                           all or part of the Secured Obligations, including any
                           fees, costs or other expenses incurred by the Holder
                           and secured hereunder and may impute and apply such
                           amounts towards payment of any part or parts of the
                           Secured Obligations as the Holder in its sole
                           discretion shall decide, and may change any
                           imputation or application as it sees fit;

                  6.1.6    The Grantor waives any obligation the Holder may have
                           to inform the Grantor of any irregularity in the
                           payment of any sums exigible on any claims or rights;

                  6.1.7    The Grantor shall from time to time on request of the
                           Holder deliver to the Holder, or permit the Holder or
                           its officers or agents access to its premises, in
                           accordance with the terms of the Loan Agreement, for
                           the purpose of examining and making copies of, all
                           books and accounts, letters, invoices, papers,
                           agreements, negotiable instruments, documents of
                           title, hypothecs and other documents in any way
                           evidencing or relating to all or any of the claims
                           forming part of the Hypothecated Property and shall
                           otherwise assist the Holder and furnish the Holder
                           with all information which may assist the Holder in
                           the collection thereof;

                  6.1.8    The hypothec in Section 2 on claims extends also to
                           any claim under any insurance contract on the other
                           property of the Grantor;

                  6.1.9    The Grantor represents that none of the claims which
                           now exist is itself secured by a hypothec or
                           guaranteed by a third party in favour of the Grantor,
                           and the Grantor undertakes to notify the Holder
                           immediately of any claim, present or future, which
                           hereafter is or becomes secured by a hypothec or
                           guaranteed by a third party in favour of the Grantor
                           and to deliver to the Holder the agreements or other
                           documents now or hereafter constituting or evidencing
                           the same;

                  6.1.10   If any claims arises out of a contract with the
                           federal government of Canada or the government of the
                           Province of Quebec, or any of their departments,
                           agencies or instrumentalities, the Grantor agrees to,
                           at the


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                                       11

                           request of the Holder, execute whatever instruments
                           and documents are required by the Holder in order
                           that such claims shall be assigned to the Holder and
                           the proper notice of such assignment shall be given
                           under any statute relating to the assignment of such
                           claims.

7.       DEFAULTS AND RECOURSES

         7.1      The Grantor will be in default under this Agreement
                  immediately upon the occurrence of any of the following events
                  (each an "EVENT OF DEFAULT"):

                  7.1.1    if the Grantor is in default under this Agreement; or

                  7.1.2    if an "Event of Default" (as defined in each of the
                           Exim Loan Agreement and the Non-Exim Loan Agreement)
                           has occurred.

         7.2      If an Event of Default shall have occurred which is
                  continuing, the Holder may exercise any and all of the rights
                  and recourses it may have hereunder or by law and it may
                  enforce and realize its hypothec, including the exercise of
                  the hypothecary rights in virtue of the Civil Code of Quebec.
                  The Holder may exercise its hypothecary rights against all or
                  any part of the Hypothecated Property and shall not be bound
                  to exercise the same hypothecary right against all the
                  Hypothecated Property. If the Holder gives the Grantor a prior
                  notice of its intention to exercise a hypothecary right the
                  Grantor shall, and shall cause any other Person in possession
                  of Hypothecated Property to, immediately voluntarily surrender
                  it to the Holder.

         7.3      If an Event of Default shall have occurred which is
                  continuing, whichever hypothecary right or rights or other
                  recourses the Holder may decide to exercise, the following
                  provisions shall apply:

                  7.3.1    if the Hypothecated Property has been surrendered to
                           the Holder or its agent or if the Holder or its agent
                           has possession of the Hypothecated Property, neither
                           the Holder nor its agent shall have any obligation to
                           continue to carry on the Grantor's enterprise or the
                           use, operation or exploitation of the Hypothecated
                           Property or to continue the use for which it is
                           ordinarily destined or to exercise the rights
                           pertaining to the Hypothecated Property or to make it
                           productive; and the Grantor agrees that the Holder or
                           its agent may do such acts and things, or refrain
                           from doing such acts and things, as the Holder or its
                           agent, in its sole discretion, deems appropriate for
                           the exercise of its rights and the realization and
                           enforcement of its hypothec and security;

                  7.3.2    in order to protect or to realize the value of the
                           Hypothecated Property, the Holder, at the Grantor's
                           expense, may, but shall not be obliged to:

                           7.3.2.1  continue and complete the processing,
                                    manufacture and transformation of the
                                    Hypothecated Property or any work


<PAGE>
                                       12


                                    in process or unfinished goods comprised in
                                    the Hypothecated Property as well as take
                                    any other action necessary or useful in
                                    order to prepare such property for sale;

                           7.3.2.2  alienate or dispose of any Hypothecated
                                    Property which may be obsolete, may perish
                                    or is likely to deteriorate rapidly;

                           7.3.2.3  use for its benefit all information obtained
                                    in the course of the exercise of its rights;

                           7.3.2.4  perform any obligation or covenant of the
                                    Grantor and any right with respect to the
                                    Hypothecated Property;

                           7.3.2.5  take physical possession of any and all of
                                    the Hypothecated Property and anything found
                                    therein, with the right for that purpose to
                                    enter without legal process upon any
                                    premises where the Hypothecated Property may
                                    be found, and to exclude the Grantor, its
                                    employees and agents therefrom, and the
                                    right to use such premises and to maintain
                                    such possession on the Grantor's premises or
                                    to remove the Hypothecated Property or any
                                    part thereof to such other places as the
                                    Holder may desire;

                           7.3.2.6  the Holder may, directly or indirectly,
                                    purchase or acquire the Hypothecated
                                    Property;

                  7.3.3    the Holder may, in the course of exercising its
                           rights, renounce or waive any right of the Grantor,
                           with or without consideration therefor;

                  7.3.4    the Holder shall not be bound to make an inventory,
                           to take out insurance or to furnish any bond or other
                           security;

                  7.3.5    the Grantor shall, at the request of the Holder,
                           assemble the Hypothecated Property and make same
                           available at any place designated by the Holder
                           which, in its opinion, is reasonably convenient.

         7.4      Where the Holder sells the Hypothecated Property itself, it
                  shall not be required to obtain any prior appraisal or
                  evaluation by a third party.

         7.5      The Holder may choose to sell the Hypothecated Property with
                  legal warranty given by the Grantor or with complete or
                  partial exclusion of such warranty.

         7.6      The Grantor agrees that with respect to any sale by the Holder
                  of any of the Hypothecated Property in the exercise of its
                  rights, it will be commercially reasonable to sell such
                  Hypothecated Property:


<PAGE>
                                       13


                  7.6.1    together or separately;

                  7.6.2    by auction or by call for tenders by advertising such
                           sale or call for tenders once in a local daily
                           newspaper at least ten (10) days prior to such sale
                           or close of call for tenders; and

                  7.6.3    by sale by agreement after receipt by the Holder of
                           at least two (2) offers from prospective purchasers,
                           who may include Persons related to or affiliated with
                           the Grantor or other customers of the Holder.


                  Any such sale may be on such terms as to credit or otherwise
                  and as to upset price or reserve bid or price as the Holder in
                  its sole discretion may deem advantageous, and the Grantor
                  agrees that the price received at any such sale shall
                  constitute a commercial reasonable price.


                  The foregoing shall not preclude the Holder from agreeing to
                  or making any sale in any other manner not prohibited by law
                  nor shall it be interpreted to mean that only a sale made in
                  conformity with the foregoing is commercially reasonable or
                  that only the price received at a sale made in conformity with
                  the foregoing shall constitute a commercially reasonable
                  price.

8.       GENERAL PROVISIONS

         8.1      The hypothec and security interest constituted by this
                  Agreement is in addition to and not in substitution for any
                  other hypothec or security held by the Holder, including any
                  security granted pursuant to the Loan Agreement and the Pledge
                  Agreement.

         8.2      This hypothec constitutes continuing security which shall
                  continue in effect notwithstanding any payment from time to
                  time in whole or in part of the Secured Obligations and shall
                  subsist until cancelled by the Holder. This hypothec may, by
                  agreement between the Holder and the Grantor from time to
                  time, secure obligations in addition to or in substitution of
                  the Secured Obligations.

         8.3      The mere lapse of the time provided for the Grantor to perform
                  any obligation or the arrival of any term shall automatically
                  put the Grantor in default, without any notice putting the
                  Grantor in default being required, except as may be required
                  under applicable law and the Loan Agreement.

         8.4      The rights conferred on the Holder by this Agreement shall
                  inure to the benefit of each successor of the Holder. The
                  Holder shall have the right to assign all or any part of the
                  Secured Obligations to any other Person and this Agreement
                  shall inure to the benefit of any such assignee in respect of
                  all, or such part, of the Secured Obligations which have been
                  so assigned. This Agreement shall bind any successor and
                  permitted assigns of the Grantor.

<PAGE>
                                       14


         8.5      Should any provision of this Agreement be held by any court of
                  competent jurisdiction to be void or unenforceable, such
                  defect shall not affect the remainder of this Agreement, which
                  shall continue in full force and effect.

         8.6      The terms and provisions of this Agreement may not be waived
                  or amended, except in a writing executed by Grantor and a duly
                  authorized officer of Holder.

         8.7      All notices, demands and other communications to the Grantor
                  may be given to it in accordance with the terms of the Loan
                  Agreement.

         8.8      The amount of the hypothec and rate of interest specified in
                  Section 2.2 is the amount with the rate of interest for which
                  the Hypothecated Property is hypothecated. The amount of
                  credit which the Grantor is entitled to obtain from the Holder
                  is determined by the applicable separate agreements and not by
                  the amount of the hypothec specified in Section 2.2 of this
                  Agreement.

         8.9      If the Grantor amalgamates with any corporation or
                  corporations, the Secured Obligations and the hypothec and
                  security interest created hereby shall continue and shall
                  extend to the present and future undertaking, property and
                  assets of the amalgamated corporation, as if the amalgamated
                  corporation had executed this Agreement as the Grantor.

         8.10     The Grantor shall sign, acknowledge or deliver all such
                  further instruments and shall do such other things as the
                  Holder may reasonably require to give effect to or to confirm
                  or protect the hypothec hereby constituted, including
                  necessary inscriptions for the registration, renewal, carrying
                  over or conservation of the hypothec and notices to third
                  parties.

         8.11     In the event of a conflict between any of the provisions of
                  this Agreement and the Loan Agreement, the provisions of the
                  Loan Agreement shall prevail to the extent of such conflict
                  provided that no such conflict shall invalidate the hypothecs
                  and security interest created hereunder and the absence of a
                  provision shall not be deemed to be a conflict.

         8.12     The parties hereby confirm their express wish that this
                  Agreement and all documents, agreements or notices directly or
                  indirectly related hereto be drawn up in the English language.
                  Les parties reconnaissent leur volonte expresse que le present
                  contrat ainsi que tous les documents, conventions ou avis s'y
                  rattachant directement ou indirectement soient rediges en
                  langue anglaise.




<PAGE>



SIGNED AT Atlanta, Georgia this twentieth  (20th) day of February 2003


                                       Grantor:  VERSO TECHNOLOGIES, INC.

                                       by:   /s/ Juliet M. Reising
                                          --------------------------------------
                                       by:   /s/ Steven A. Odom
                                          --------------------------------------

Accepted and agreed, as of the
date above-written

Holder: SILICON VALLEY BANK

by:  /s/ Peter M. Bendoris
   -------------------------------



<PAGE>


                                  SCHEDULE "A"

                                   TRADE NAMES




Verso Technologies,


NACT Telecommunications,


Clarent


Telemate.Net Software