Exhibit 10.3


 


EXHIBIT D


to
Subscription Agreement


 


REGISTRATION
RIGHTS AGREEMENT


 


AGREEMENT dated as of                                  ,
2005, between [INSERT NAME(S) OF SECOND CLOSING PURCHASER(S)] (the “Fund”)
and M.A.G. CAPITAL, LLC (“MAG”) (the Fund and MAG are referred to
individually as a “Holder” and collectively as the “Holders”),
and Spescom Software Inc., a California corporation (the “Company”).


 


WHEREAS, on October 25, 2005, (i) the Fund
purchased, for an aggregate of $500,000, an aggregate of 500 shares of Series H
Convertible Preferred Stock from the Company, (ii) each Fund and MAG acquired
warrants from the Company, pursuant to which the Holders have the right to
purchase in the aggregate up to 925,926 shares of Common Stock, and (iii) in connection
with such purchase of Series H Convertible Preferred Stock and such acquisition
of warrants, the Company, MAG and Monarch Pointe Fund, Ltd., entered into a
registration rights agreement (the “Initial Closing Registration Rights
Agreement”);


 


WHEREAS, on the date hereof, the Fund has purchased,
for an aggregate of $500,000, an aggregate of 500 additional shares of Series H
Convertible Preferred Stock (the “Series H Stock”) from the Company, and has
the right to cause such Series H Stock to be converted into shares of Common
Stock, no par value (the “Common Stock”), of the Company, pursuant to
the conversion formula set forth in the Certificate of Determination of Series
H Preferred Stock as filed with the Secretary of State of the State of
California on October 25, 2005 (the “Certificate of Determination”);


 


WHEREAS, on the date hereof, each Fund and MAG have
acquired additional warrants (together, the “Warrants”) from the
Company, pursuant to which the Holders have the right to purchase in the aggregate
up to 925,926 shares of Common Stock;


 


WHEREAS, the Company desires to grant to the Holders
the registration rights set forth herein with respect to the shares of Common
Stock issuable upon the conversion of the Series H Stock and the exercise of
the Warrants.


 


NOW, THEREFORE, the parties hereto mutually agree as
follows:


 


1.  Registrable
Securities.  As used
herein the terms “Registrable Security” means each of the shares of
Common Stock issued (i) upon the conversion of the Series H Stock (the “Conversion
Shares”) and (ii) upon exercise of the Warrants (the “Warrant Shares”),
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security as of the date of
determination that (a) it has been effectively registered under the
Securities Act of 1933, as amended (the “Securities Act”), and disposed
of pursuant thereto, or (b) registration under the Securities Act is no
longer required for the immediate public distribution of such security.  The term “Registrable Securities”
means any and/or all of the securities falling within the foregoing definition
of a “Registrable Security.”  In the
event of any merger, reorganization, consolidation, recapitalization or other
change in corporate structure


 


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affecting the Common Stock, such adjustment shall be
made in the definition of “Registrable Security” as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Section 1.


 


2.  Registration.


 


(a) The Company shall use its commercially reasonable efforts to file a
registration statement, an amendment to the Company’s existing Registration
Statement No. 333-121038, or an amendment to any registration statement filed
pursuant to Section 2 of the Initial Closing Registration Rights Agreement (the
“Registration Statement”) with the Securities and Exchange Commission
(the “SEC”) no later than thirty (30) days after the date of this
Agreement in order to register the resale of the Registrable Securities under
the Securities Act.  The Company shall
use its commercially reasonable efforts to cause the Registration Statement to
become effective no later than (a) ninety (90) days after the filing date if
such Registration Statement is not subject to SEC review, or (b) one hundred
twenty (120) days after the filing date if such Registration Statement is
subject to SEC review.  Once effective,
the Company shall use its commercially reasonable efforts to maintain the
effectiveness of the Registration Statement until the earliest of the following
dates (the “Expiration Date”) (i) the date that all of the
Registrable Securities have been sold, or (ii) the date that the Company
receives an opinion of counsel to the Company that all of the Registrable
Securities may be freely traded without registration under the Securities Act,
under Rule 144 promulgated under the Securities Act or otherwise.


 


(b) The Company will initially include in the
Registration Statement as Registrable Securities (i) Six Million Eight Hundred
Ninety Six Thousand Five Hundred Fifty Two (6,896,552) shares of Common Stock issuable upon conversion of the Series H
Stock and (ii) the maximum numbers of shares of Common Stock issuable upon
exercise of the Warrants.


 


(c) If (i) the Company fails to file the Registration Statement with
the SEC within thirty (30) days after the date of this Agreement, or (ii) the
Registration Statement fails to become effective within the applicable time
period set forth in Section 2(a) above of ninety (90) or one hundred twenty
(120) days, as the case may be, the Company shall pay to Holders an amount
equal to Five Hundred Dollars ($500) per day until the Registration Statement
is declared effective; provided, however, that in no event shall the aggregate
liability of the Company under this Section exceed Fifty Thousand Dollars
($50,000).


 


3.  Covenants
of the Company with Respect to Registration.


 


The Company covenants and agrees as follows:


 


(a) If any stop order shall be issued by the SEC in connection
therewith, the Company shall use commercially reasonable efforts to obtain
promptly the removal of such order. 
Following the effective date of the Registration Statement, the Company
shall, upon the request of any Holder, forthwith supply such reasonable number
of copies of the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Securities Act, and any other documents
necessary or incidental to the public offering of the Registrable Securities, as
shall be reasonably requested by the Holder to permit the Holder to make a
public


 


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distribution
of the Holder’s Registrable Securities. 
The obligations of the Company hereunder with respect to the Holder’s
Registrable Securities are subject to the Holder’s furnishing to the Company
such appropriate information concerning the Holder, the Holder’s Registrable
Securities and the terms of the Holder’s offering of such Registrable
Securities as the Company may reasonably request in writing.


 


(b) The Company shall pay all costs, fees and expenses in connection
with the Registration Statement filed pursuant to Section 2 hereof
including, without limitation, the Company’s legal and accounting fees,
printing expenses, and blue sky fees and expenses; provided, however, that each
Holder shall be solely responsible for the fees of any counsel retained by the
Holder in connection with such registration and any transfer taxes or
underwriting discounts, commissions or fees applicable to the Registrable
Securities sold by the Holder pursuant thereto.


 


(c) The Company will take all actions which may be required to qualify
or register the Registrable Securities included in the Registration Statement
for the offer and sale under the securities or blue sky laws of such states as
are reasonably requested by each Holder of such securities, provided that the
Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.


 


4.  Additional
Terms.


 


(a) The Company shall indemnify and hold harmless the Holders and each
underwriter, within the meaning of the Securities Act, who may purchase from or
sell for any Holder, any Registrable Securities, from and against any and all
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in the Registration Statement, any other registration
statement filed by the Company under the Securities Act with respect to the
registration of the Registrable Securities, any post-effective amendment to
such registration statements, or any prospectus included therein or caused by
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission based upon information furnished or required to be furnished in
writing to the Company by the Holders or underwriter expressly for use therein,
which indemnification shall include each person, if any, who controls any
Holder or underwriter within the meaning of the Securities Act and each
officer, director, employee and agent of each Holder and underwriter; provided,
however, that the indemnification in this Section 4(a) with respect to any
prospectus shall not inure to the benefit of any Holder or underwriter (or to
the benefit of any person controlling any Holder or underwriter) on account of
any such loss, claim, damage or liability arising from the sale of Registrable
Securities by the Holder or underwriter, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to such Holder or underwriter by the Company prior to the subject sale
and the subsequent prospectus was not delivered or sent by the Holder or
underwriter to the purchaser prior to such sale and provided further, that the
Company shall not be obligated to so indemnify any Holder or any such
underwriter or other person referred to above unless the Holder or underwriter
or other person, as the case may be, shall at the same time indemnify the
Company, its directors, each officer signing the Registration Statement and
each person, if any, who


 


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controls
the Company within the meaning of the Securities Act, from and against any and
all losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in the Registration Statement, any registration
statement or any prospectus required to be filed or furnished by reason of this
Agreement or caused by any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, insofar as such losses, claims, damages or liabilities are caused
by any untrue statement or omission based upon information furnished in writing
to the Company by the Holder or underwriter expressly for use therein.


 


(b) The Holder shall indemnify and hold harmless the Company, from and
against any and all losses, claims, damages and liabilities caused by any
untrue statement of a material fact contained in the Registration Statement,
any registration statement or any prospectus required to be filed or furnished
by reason of this Agreement or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, insofar as such losses, claims, damages or liabilities
are caused by any material untrue statement or material omission based upon
information furnished in writing to the Company by the Holder expressly for use
therein.


 


(c) If for any reason the indemnification provided for in the preceding
section is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.


 


(d) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 4,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential conflict of interests between
such indemnified party and any other party represented by such counsel in such
proceeding.  The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
liability to the indemnified party under this Section 4 only to the extent
the indemnifying party is prejudiced as a result thereof.


 


(e) Neither the filing of a Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by
the Holder shall impose upon any Holder any obligation to sell the Holder’s
Registrable Securities.


 


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(f) Each Holder, upon receipt of notice from the Company that an event
has occurred which requires a Post-Effective Amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of Registrable Securities until the Holder receives a copy
of a supplemented or amended prospectus from the Company, which the Company
shall provide as soon as practicable after such notice.


 


(g) If the Company fails to keep the Registration Statement referred to
above continuously effective during the requisite period, then the Company
shall, promptly upon the request of any Holder, use commercially reasonable
efforts to update the Registration Statement or file a new registration
statement covering the Registrable Securities remaining unsold, subject to the
terms and provisions hereof, so that the registration of such unsold Registered
Securities is maintained for a number of days beyond the Expiration Date equal
to the number of days that the Holder is unable to sell pursuant to Section
4(f) above.


 


(h) Each Holder agrees to provide the Company with any information or
undertakings reasonably requested by the Company in order for the Company to
include any appropriate information concerning the Holder in the Registration
Statement or in order to promote compliance by the Company or the Holder with
the Securities Act.


 


(i) Each Holder, by its acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder.


 


(j)
Each Holder, on behalf of itself, its affiliates, its successors and assigns
and any other direct or indirect transferee holding any of the Warrants, the
Series H Stock or the Registrable Securities, hereby covenants and agrees not
to, directly or indirectly, offer to “short sell”, contract to “short sell” or
otherwise “short sell” or encourage others to “short sell” any securities of
the Company, including, without limitation, shares of Common Stock that will be
received as a result of the conversion of the Series H Stock or the exercise of
the Warrants.  For purposes of this
Agreement, “short selling” shall include any sale, any trade in any option or
other derivative security, any hedging transaction relating to the securities
of the Company or any transaction intended to affect the price of the Company’s
common stock.


 


(k) If requested in writing by the Company and the managing underwriter
of an underwritten registered public offering by the Company of its Common
Stock, the Holders shall agree not to sell or otherwise transfer or dispose of
any Common Stock of the Company held by such Holders (other than those included
in the registration statement) for a period not to exceed 90 days following the
effective date of a registration statement of the Company filed under the
Securities Act, provided that all officers and directors of the Company enter
into similar agreements identical in terms to that of the Holders.


 


5.  Governing
Law.  The Registrable
Securities will be, if and when issued, delivered in California. 
This Agreement shall be deemed to have been made and delivered in the
State of California and
shall be governed as to validity, interpretation, construction, effect and in
all other respects by the internal substantive laws of the State of California, without giving effect
to the choice of law rules thereof.


 


6.  Amendment.  This Agreement may only be amended by a
written instrument executed by the Company and the Holders.


 


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7.  Entire
Agreement.  This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings
of the parties, oral and written, with respect to the subject matter hereof.


 


8.  Execution
in Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.


 


9.  Notices.  All communications hereunder shall be in
writing and shall be hand delivered, mailed by first-class mail, couriered by
next-day air courier or by facsimile at the addresses set forth below.


 


	
  If to the Holders,

  	
   

  	
  M.A.G. Capital, LLC

  
	
   

  	
   

  	
  [SECOND CLOSING PURCHASER]

  
	
   

  	
   

  	
  555 South Flower
  Street, Suite 4200

  
	
   

  	
   

  	
  Los Angeles, CA 90071

  
	
   

  	
   

  	
  Attention: David Firestone

  
	
   

  	
   

  	
   

  
	
  With a copy to

  	
   

  	
  Sheppard Mullin Richter
  & Hampton LLP

  
	
   

  	
   

  	
  333 South Hope Street

  
	
   

  	
   

  	
  48th Floor

  
	
   

  	
   

  	
  Los Angeles, CA 90071-1448

  
	
   

  	
   

  	
  Telephone No.: (213)
  620-1780

  
	
   

  	
   

  	
  Facsimile No.:  (213) 620-1398

  
	
   

  	
   

  	
  Attention:     David
  C. Ulich

  
	
   

  	
   

  	
   

  
	
  If to the Company,

  	
   

  	
  Spescom Software Inc.

  
	
   

  	
   

  	
  10052 Mesa Ridge Court,
  Suite 100

  
	
   

  	
   

  	
  San Diego, CA 92121

  
	
   

  	
   

  	
  Telephone No.: (858)
  625-3000 (ext. 6831)

  
	
   

  	
   

  	
  Facsimile No.:  (858) 625-3010

  
	
   

  	
   

  	
  Attention: John Low

  
	
   

  	
   

  	
   

  
	
  With a copy to

  	
   

  	
  Gibson, Dunn &
  Crutcher LLP

  
	
   

  	
   

  	
  1881 Page Mill Rd.

  
	
   

  	
   

  	
  Palo Alto, CA 94063

  
	
   

  	
   

  	
  Telephone No.: (650)
  849-5383

  
	
   

  	
   

  	
  Facsimile No.:  (650) 849-5083

  
	
   

  	
   

  	
  Attention:     Russell
  C. Hansen

  



 


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All such notices and communications shall be
deemed to have been duly given:  (i) when
delivered by hand, if personally delivered; (ii) five business days after being
deposited in the mail, postage prepaid, if mailed certified mail, return
receipt requested; (iii) one business day after being timely delivered to a
next-day air courier guaranteeing overnight delivery; (iv) the date of
transmission if sent via facsimile to the facsimile number as set forth in this
Section or the signature page hereof prior to 4:00 p.m. on a business day, or
(v) the business day following the date of transmission if sent via facsimile
at a facsimile number set forth in this Section or on the signature page hereof
after 4:00 p.m. or on a date that is not a business day.  Change of a party’s address or facsimile
number may be designated hereunder by giving notice to all of the other parties
hereto in accordance with this Section.


 


10.  Binding
Effect; Benefits.  Any
Holder may assign its rights hereunder; provided, however, that the rights of a
Holder hereunder may be transferred by such Holder or its transferee only to a
person or entity who acquires Series H Preferred Stock or Warrants convertible
into or exercisable for an aggregate of at least 200,000 shares of Common
Stock.  This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.  Nothing herein contained, express or implied,
is intended to confer upon any person other than the parties hereto and their
respective heirs, legal representatives and successors, any rights or remedies
under or by reason of this Agreement.


 


11.  Headings.  The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Agreement.


 


12.  Severability.  Any provision of this Agreement which is held
by a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.


 


13.  Jurisdiction.  Each of the parties irrevocably agrees that
any and all suits or proceedings based on or arising under this Agreement may
be brought only in and shall be resolved in the federal or state courts located
in the City of Los Angeles, California
and consents to the jurisdiction of such courts for such purpose.  Each of the parties irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding
in any such court.  Each of the parties
further agrees that service of process upon such party mailed by first class
mail to the address set forth in Section 9 shall be deemed in every respect
effective service of process upon such party in any such suit or
proceeding.  Nothing herein shall affect
the right of either party
to serve process in any other manner permitted by law.  Each of the parties agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.


 


14.  Attorneys’
Fees and Disbursements. 
If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party or parties shall be entitled
to receive from the other party or parties reasonable attorneys’ fees and
disbursements in addition to any other relief to which the prevailing party or
parties may be entitled.


 


[The balance of this page is
intentionally left blank.]


 


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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.


 


	
   

  	
  SPESCOM
  SOFTWARE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  
	
   

  	
  HOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [SECOND CLOSING PURCHASER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Harry Aharonian

  
	
   

  	
  Its:

  	
  Portfolio Manager

  
	
   

  	
   

  
	
   

  	
  M.A.G. CAPITAL, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Harry Aharonian

  
	
   

  	
  Its:

  	
  Portfolio Manager

  
					



 


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