Document:

Security Agreement

Exhibit

10.30

 

SECURITY AGREEMENT

 

This Security Agreement (“Agreement”) is executed as

of February 15, 2002 between Altris Software, Inc., a California corporation

(“Debtor”) and Spescom Limited, a United Kingdom corporation (“Spescom UK”) and

Spescom Limited, a South African corporation (“Spescom SA” and collectively

with Spescom UK, the “Secured Parties”), who agree as follows:

 

1.  Definitions.  For purposes of this Agreement, the

following definitions shall apply:

 

1.1.  “Accounts” shall mean all “accounts”

as defined in the UCC now owned or hereafter acquired by Debtor, including

without limitation (a) all accounts receivable, contract rights, notes, drafts

and other obligations or indebtedness owing to Debtor and arising from whatever

source; (b) all present and future monies, securities, credit balances,

deposits, deposit accounts and other property of Debtor now or hereafter held

or received by or in transit to the Secured Parties or their affiliates or at

any other depository or other institution from or for the account of Debtor,

whether for safekeeping, pledge, custody, transmission, collection or

otherwise, 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 of

suretyship, letters of credit and credit and other insurance related to the

Collateral, (ii) rights of stoppage in transit, replevin, repossession,

reclamation and other rights and remedies of an unpaid vendor, lien holder or

secured party, (iii) goods described in invoices, documents, contracts or

instruments with respect to, or otherwise representing or evidencing, Accounts

or other Collateral, including returned, repossessed and reclaimed goods, and

(iv) deposits by and property of account debtors or other persons securing the

obligations of account debtors; (c) all of the rights of Debtor in, to and

under all purchase orders for goods, services or other property; (d) all monies

due to or to become due to Debtor under all contracts for the sale, lease or

exchange 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 of

the rights of Debtor to any goods, services or other property represented by

any of the foregoing, in each case whether now in existence or hereafter

arising or acquired including, without limitation, the right to receive the

proceeds of said purchase orders and contracts and all collateral security and

guarantees of any kind given by any person with respect to any of the

foregoing.

 

1.2.  “Collateral” has the meaning set forth

in the Paragraph in this Agreement entitled “Security Interests”

 

1.3.  “Default” shall mean any Event of

Default 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 representing

goods, 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 of

Debtor (together with all accessions thereto and all 

 

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substitutions and replacements thereof and parts therefor), whether or

not the same shall be deemed affixed to real property, and all rights under or

arising out of present or future contracts relating to the acquisition or use

of the above.

 

1.6.  "Event of Default” shall mean any

default by Debtor (a) in the full and punctual payment of any amounts owing

with respect to the Secured Obligations which default continues for a period of

not less than 10 days, or (b) in the full and punctual performance of its

obligations (other than those specified in clause (a) above) under this

Agreement or the Loan that has continued unremedied for a period of 30 days

after notice thereof by any Secured Party to Debtor.

 

1.7.  "General Intangibles” shall mean

all “general intangibles” as defined in the UCC now owned or hereafter acquired

by Debtor, including without limitation (a) all obligations or

indebtedness owing to Debtor (other than Accounts) from whatever source

arising, (b) all registered and unregistered (i) patent licenses, (ii)

patents, (iii) trademark licenses, (iv) trademarks, (v) rights in intellectual

property, (vi) trade names, (vii) service marks, (viii) trade secrets, (ix)

copyrights, (x) permits, (xi) licenses, and (xii) applications for the

foregoing, (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 arrangement

maintained for employees of Debtor or any of its subsidiaries.

 

1.8.  "Instruments” shall mean

(a) all “instruments”, “chattel paper” or “letters of credit”, each as

defined in the UCC, evidencing, representing, arising from or existing in

respect of, relating to, securing or otherwise supporting the payment of, any

of the Accounts, including without limitation promissory notes, drafts, bills

of exchange and trade acceptances, and (b) notes or other obligations or

indebtedness owing to a Debtor (including without limitation obligations of

Debtor to any other Debtor) from whatever source arising, in each case now

owned or hereafter acquired by Debtor.

 

1.9.  "Inventory” shall mean all “inventory”

as defined in the UCC, now owned or hereafter acquired by Debtor, wherever

located, including without limitation all raw materials and other materials and

supplies, work–in–process and finished goods and any products made

or processed therefrom and all substances, if any, commingled therewith or

added thereto.

 

1.10.  "Lien” shall mean, with respect

to any asset, any mortgage, lien, pledge, charge, security interest or

encumbrance of any kind in respect of such asset, including the interest of a vendor

or lessor under any conditional sale agreement, capital lease or other title

retention agreement.

 

1.11.  ”Loan” shall mean collectively, all

loans made by the Secured Parties to the Debtor.

 

1.12.  “Note” shall  mean, collectively, the Promissory Note

dated evenly herewith executed by Debtor in favor of the Secured Parties (as

the same may be amended from time to time), and all other promissory notes

executed by Debtor in favor of either Secured Party.

 

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1.13.  “Proceeds” shall mean all products

and proceeds of, and all other profits, rentals or receipts, in whatever form,

arising from the collection, sale, lease, exchange, assignment, licensing or

other disposition of, or realization upon, any item or portion of the

Collateral, including without limitation all claims of Debtor against third

parties for loss of, damage to, destruction of, or for proceeds payable under,

or unearned premiums with respect to, policies of insurance in respect of, any

Collateral and any condemnation or requisition payments with respect to any

Collateral, in each case whether now existing or hereafter arising.

 

1.14.  “Security Interests” shall mean the

security interests securing the Secured Obligations, including without limitation

the Security Interests granted pursuant to this Agreement.

 

1.15.  “Secured Obligations” shall mean the

Note, all obligations, liabilities and indebtedness pursuant to the Loan or future loans made by either

Secured Party to Debtor, and all other obligations, liabilities and

indebtedness of every kind, nature and description owing by Debtor to the

Secured 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 or

after the initial or any renewal term of this Agreement or the Note or after

the commencement of any case with respect to Debtor under the United States

Bankruptcy Code or any similar statute (including the payment of interest and

other amounts which would accrue and become due but for the commencement of

such case, whether or not such amounts are allowed or allowable in whole or in

part in such case), whether direct or indirect, absolute or contingent, joint

or 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’s

principal place of business located at the address set forth in the

Introductory Paragraph of this Agreement.

 

1.17.  “Subsidiary” shall mean, with respect

to any Person, any corporation or other entity of which securities or other

ownership interests having ordinary voting power to elect a majority of the

board of directors or other person performing similar functions are at the time

directly or indirectly owned by such Person.

 

1.18.  “UCC” shall mean the Uniform Commercial

Code as in effect on the date hereof in the State of California; provided that

if by reason of mandatory provisions of law, the perfection or the effect of

perfection or non–perfection of the Security Interest in any item or

portion of the Collateral is governed by the Uniform Commercial Code as in

effect in a jurisdiction other than the State of California, then “UCC” shall

mean the Uniform Commercial Code as in effect in such other jurisdiction for

purposes of the provisions hereof relating to such perfection or effect of

perfection or non–perfection.

 

2.  Representations and Warranties.  Except as set forth in writing to the

Secured Parties, Debtor represents and warrants to the Secured Parties as

follows (which shall survive the execution and delivery of this

Agreement):

2.1.  Debtor has good and marketable title

to all of the Collateral owned by it, free and clear of any Liens other than

the Security Interests [and “Permitted Liens”].

 

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2.2.  Debtor has not performed any acts

which might prevent either Secured Party from enforcing any of the terms and

conditions of this Agreement or which would limit either Secured Party in any

such enforcement.  Other than financing

statements or other similar or equivalent documents or instrument with respect

to the Security Interests, as of the date hereof and thereafter no financing

statement, mortgage, security agreement or other similar or equivalent document

or instrument covering all or any part of the Collateral is or will be on file

or of record in any government office in any jurisdiction in which such filing

or recording would be effective to perfect a Lien on such Collateral.  No Collateral is in the possession of any

person or entity whatsoever (other than Debtor) which has taken action to

assert any claim thereto or security interest therein, except that the Secured

Parties or their designee may have possession of Collateral as contemplated

hereby.

 

2.3.  The Security Interests constitute

valid security interests under the UCC securing the Secured Obligations.

 

2.4.  This

Agreement has been duly authorized, executed and delivered by Debtor and

constitutes 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 other

document related to this Agreement to which Debtor is a party do not and will

not contravene, or constitute (with or without the giving of notice or lapse of

time or both) a default under, any provision of applicable law or regulation or

of the charter or by–laws of Debtor or of any material agreement,

judgment, injunction, order, decree or other instrument binding upon it or

result in the creation of any Lien (other than the Security Interests) on any

asset of Debtor or any of its Subsidiaries.

 

2.5.  Debtor has

filed, 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 information

in such tax returns, reports and declarations is complete and accurate in all

material respects. Debtor has paid or caused to be paid all material taxes due

and payable or claimed due and payable in any assessment received by it, except

taxes the validity of which are being contested in good faith by appropriate

proceedings diligently pursued and available to Debtor and with respect to

which adequate reserves have been set aside on its books. Adequate provision

has 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 whether

or not disputed.

 

2.6.  There is no

present investigation by any governmental agency pending, or to the best of

Debtor’s knowledge threatened, against or affecting Debtor, its assets or

business and there is no action, suit, proceeding or claim by any person or

entity pending, or to the best of Debtor’s knowledge threatened, against Debtor

or its assets or goodwill, or against or affecting any transactions

contemplated by this Agreement, which if adversely determined against Debtor

would result in any material adverse change in the assets, business or

prospects of Debtor or would impair the ability of Debtor to perform its

obligations hereunder or under the Note or the Loan or of the Secured Parties

to enforce any Secured Obligations or realize upon any Collateral.

 

2.7.  Debtor is

not in default in any material respect under, or in violation in any material

respect of any of the terms of, any agreement, contract, instrument, lease or

other commitment to which it is a party or by which it or any of its assets are

bound and 

 

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Debtor is in compliance in all material

respects with all applicable provisions of laws, rules, regulations, licenses,

permits, approvals and orders of any foreign, Federal, State or local

governmental authority.

 

2.8.  All

representations and warranties contained in this Agreement or any of the

agreements concerning the Note or the Loan shall survive the execution and

delivery of this Agreement and shall be deemed to have been made again to the

Secured Parties on the date of each additional borrowing or other credit

accommodation hereunder and shall be conclusively presumed to have been relied

on by the Secured Parties regardless of any investigation made or information

possessed by the Secured Parties. The representations and warranties set forth

herein shall be cumulative and in addition to any other representations or

warranties which Debtor shall now or hereafter give, or cause to be given, to

the Secured Parties.

 

3.  Security Interests.  In order to secure the full and punctual

payment and performance of the Secured Obligations in accordance with the terms

thereof, Debtor hereby grants to the Secured Parties a continuing security

interest in and to all of the following property of Debtor, whether now owned

or 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 assets

of Debtor;

 

3.9.  All books and records (including,

without limitation, customer lists, supplier lists, credit files, computer

programs, printouts and other computer materials and records) of such Debtor

pertaining to any of the Collateral; and

 

3.10.  All Proceeds of any of the Collateral

described in the preceding clauses of this Paragraph, in any form, including

without limitation insurance proceeds and all claims against third parties for

loss or damage to or destruction of any or all of the foregoing.

4.  Further Assurances; Covenants.

4.1.  Debtor shall not change the location

of (a) its chief executive office or chief place of business or

(b) the locations where it keeps or holds any Collateral, or any records

relating to such Collateral, from the Site unless it shall have given the

Secured Parties at least 45 days’ prior written notice.  Debtor shall not in any event change the

location of any Collateral if such change would cause the Security Interests in

such Collateral to lapse or cease to be perfected.

 

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4.2.  Debtor shall maintain Inventory only

at (a) the Site, (b) at a location in the United States of which the

Secured 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 manner

unless it shall have given the Secured Parties at least 45 days’ prior

written notice.

 

4.4.  Debtor shall cause each Secured Party

to be named as an insured party and loss payee on each insurance policy

covering  risks relating to any of its

Collateral.  Such insurance shall be

maintained against such risks as are insured against by companies of

established repute in the same or similar lines of business as Debtor, in

amounts, under policies, and with insurers reasonably acceptable to the Secured

Parties.  Debtor will deliver to either

Secured Party, upon request of either Secured Party, the insurance policies for

such insurance.  Each such insurance

policy shall include effective waivers by the insurer of all claims for

insurance premiums against the Secured Parties, shall provide that, for so long

as any Event of Default shall have occurred and be continuing and the insurer

shall have received notice thereof from the Secured Parties, all insurance proceeds

shall be adjusted with and payable to the Secured Parties and shall provide

that no cancellation or termination thereof shall be effective until at least

30 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 reasonably

request concerning the Collateral to enable such Secured Party to enforce the

provisions of this Agreement.

 

4.6.  At the request of either Secured

Party, 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 form

satisfactory to the Secured Parties.

 

4.7  The Debtor shall not, without the prior

written approval of the Secured Parties, , sell, encumber or otherwise transfer

any Collateral, or agree or attempt to do so, other than licenses to customers

and others in the ordinary course of business, sales of Debtor’s products in

the ordinary course of business and sales of obsolete or excess assets in the

ordinary course of business..

 

4.8

 

(a) Debtor shall notify the Secured Parties promptly

of: (i) any material delay in Debtor’s performance of any of its obligations to

any account debtor or the assertion of any claims, offsets, defenses or

counterclaims by any account debtor, or any disputes with account debtors, or

any settlement, adjustment or compromise thereof, (ii) all material adverse

information relating to the financial condition of any account debtor and (iii)

any event or circumstance which, to Debtor’s knowledge would cause any then

existing Accounts to no longer be collected pursuant to their original terms.

No credit, discount, allowance or extension or agreement for any of the

foregoing shall be granted to any account debtor without the Secured Parties’

consent, except in the ordinary course of Debtor’s business in accordance with

practices and policies previously disclosed in writing to Debtor. So long as 

 

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no Event of Default exists or has occurred and is continuing, Debtor

shall settle, adjust or compromise any claim, offset, counterclaim or dispute

with any account debtor. At any time that an Event of Default exists or has

occurred and is continuing, the Secured Parties shall, at their option, have

the exclusive right to settle, adjust or compromise any claim, offset,

counterclaim or dispute with account debtors or grant any credits, discounts or

allowances.

 

(b) Either Secured Party shall have the right at any

time or times, in such Secured Party’s name or in the name of a nominee of such

Secured Party, to verify the validity, amount or any other matter relating to

any Account or other Collateral, by mail, telephone, facsimile transmission or

otherwise.

 

(c) Either Secured Party may, at any time or times

that an Event of Default exists or has occurred and is continuing, (i) notify

any or all account debtors that the Accounts have been assigned to the Secured

Parties and that the Secured Parties has a security interest therein and the

Secured Parties may direct any or all accounts debtors to make payment of

Accounts directly to the Secured Parties, (ii) extend the time of payment of,

compromise, settle or adjust for cash, credit, return of merchandise or

otherwise, and upon any terms or conditions, any and all Accounts or other

obligations included in the Collateral and thereby discharge or release the

account debtor or any other party or parties in any way liable for payment

thereof without affecting any of the Obligations, (iii) demand, collect or

enforce payment of any Accounts or such other obligations, but without any duty

to do so, and the Secured Parties shall not be liable for its failure to

collect or enforce the payment thereof nor for the negligence of its agents or

attorneys with respect thereto and (iv) take whatever other action the Secured

Parties may deem necessary or desirable for the protection of its interests. At

any time that an Event of Default exists or has occurred and is continuing, at

either the Secured Party’s request, all invoices and statements sent to any

account debtor shall state that the Accounts and such other obligations have

been assigned to the Secured Parties and are payable directly and only to the

Secured Parties and Debtor shall deliver to the Secured Parties such originals

of documents evidencing the sale and delivery of goods or the performance of

services 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 or

after an Event of Default, deliver or cause to be delivered to the Secured Parties

written reports or appraisals as to the Equipment in form, scope and

methodology acceptable to the Secured Parties and by an appraiser acceptable to

the 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 reasonable

care and caution and in accordance with applicable standards of any insurance

and in conformity with all material applicable laws;

 

(d) the Equipment is and shall be used in Debtor’s

business and not for personal, family, household or farming use;

 

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(e) the Equipment is now and shall remain personal

property and Debtor shall not permit any of the Equipment to be or become a

part of or affixed to real property; and

 

(f) Debtor assumes all responsibility and liability

arising from the use of the Equipment unless in the Secured Parties’

possession.

 

4.10  With

respect 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 any

time or times as either Secured Party may request on or after an Event of

Default, deliver or cause to be delivered to the Secured Parties written

reports or appraisals as to the Inventory in form, scope and methodology

acceptable to the Secured Parties and by an appraiser acceptable to the Secured

Parties, addressed to the Secured Parties, upon which the Secured Parties are

expressly permitted to rely;

 

(b) Debtor shall produce, use, store and maintain the

Inventory with all reasonable care and caution and in accordance with

applicable standards of any insurance and in conformity with applicable laws

(including the requirements of the Federal Fair Labor Standards Act of 1938, as

amended and all rules, regulations and orders related thereto);

 

(c) Debtor assumes all responsibility and liability

arising from or relating to the production, use, sale or other disposition of

the Inventory; and

 

(d) Debtor shall keep the Inventory in good and

marketable condition.

 

4.11  Debtor shall duly pay and discharge

all taxes, assessments, contributions and governmental charges upon or against

it or its properties or assets, except for taxes the validity of which are

being contested in good faith by appropriate proceedings diligently pursued and

available to Debtor and with respect to which adequate reserves have been set

aside on its books. Debtor shall be liable for any tax or penalties (other than

income taxes, franchise taxes and any penalties related thereto) imposed on the

Secured Parties as a result of the financing arrangements provided for herein

and Debtor agrees to indemnify and hold the Secured Parties harmless with

respect to the foregoing, and to repay to the Secured Parties on demand the

amount thereof, and until paid by Debtor such amount shall be added and deemed

part of the Loan. The foregoing indemnity shall survive the payment of the

Secured Obligations and the termination or non-renewal of this Agreement.

 

4.12.  Except

in the ordinary course of business, other than the Secured Obligations, Debtor

shall not incur, create, assume, become liable in any manner with respect to,

or permit to exist, any obligations or indebtedness.

 

5.  General Authority. Debtor hereby

irrevocably appoints the Secured Parties as its true and lawful attorneys, with

full power of substitution, in the name of Debtor, the Secured Parties or

otherwise, for the sole use and benefit of the Secured Parties, but at such

Debtor’s expense, to the extent permitted by law to exercise, at any time and

from time to time while an Event of Default has occurred and is continuing, all

or any of the following powers with respect to all or any of the Collateral

owned by Debtor:  (a) to settle,

compromise,

 

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compound, prosecute or defend any action or proceeding with respect to

the Collateral, (b) to sell, transfer, assign or otherwise deal in or with

the same or the proceeds or avails thereof, as fully and effectually as if the

Secured Parties were the absolute owner of the Collateral; provided,

that the Secured Parties shall give Debtor not less than 10 days’ prior

written notice of the time and place of any sale or other intended disposition of

any of the Collateral, except any Collateral which is perishable or threatens

to decline speedily in value or is of a type customarily sold on a recognized

market.  Debtor agrees that such notice

constitutes “reasonable notification” within the meaning of

Section 9-504(3) of the UCC.

 

6.  Remedies Upon Event of Default.

6.1.  If any Event of Default has occurred

and is continuing, either Secured Party may exercise all other rights of a

secured party under the UCC (whether or not in effect in the jurisdiction where

such rights are exercised) and, in addition, the Secured Parties may, without

being required to give any notice, except as herein provided or as may be

required by mandatory provisions of law, sell the Collateral or any part

thereof at public or private sale or at any broker’s board or on any securities

exchange, for cash, upon credit or for future delivery, and at such price or

prices as the Secured Parties may deem satisfactory.  Either Secured Party may be the purchaser of any or all of the Collateral

so sold at any public sale (or, if the Collateral is of a type customarily sold

in a recognized market or is of a type which is the subject of widely

distributed standard price quotations, at any private sale) and thereafter hold

the same, absolutely, free from any right or claim of whatsoever kind.  Debtor agrees to execute and deliver such

documents and take such other action as either Secured Party deems necessary or

advisable in order that any such sale may be made in compliance with law.  Upon any such sale, the Secured Parties

shall have the right to deliver, assign and transfer to the purchaser thereof

the Collateral so sold.  Each purchaser

at any such sale shall hold the Collateral so sold to it absolutely, free from

any claim or right of whatsoever kind, including any equity or right of

redemption of Debtor which may be waived and Debtor, to the extent permitted by

law, hereby specifically waives all rights of redemption, stay or appraisal

which it has or may have under any law now existing or hereafter adopted.  The notice of sale shall, (1) in case

of a public sale, state the time and place fixed for such sale, and (2) in

the case of a private sale, state the day after which such sale may be

consummated.  Any such public sale shall

be held at such time or times within ordinary business hours and at such place

or places as the Secured Parties may fix in the notice of such sale.  At any such sale the Collateral may be sold

in one lot as an entirety or in separate parcels, as the Secured Parties may

determine.  The Secured Parties shall

not be obligated to make any such sale pursuant to any such notice.  The Secured Parties may, without notice or

publication, adjourn any public or private sale or cause the same to be

adjourned from time to time by announcement at the time and place fixed for the

sale, and such sale may be made at any time or place to which the same may be

so adjourned.  In case of any sale of

all or any part of the Collateral on credit or for future delivery, the

Collateral so sold may be retained by the Secured Parties until the selling

price is paid by the purchaser thereof, but the Secured Parties shall not incur

any liability in case of the failure of such purchaser to take up and pay for

the Collateral so sold and, in case of any such failure, such Collateral may

again be sold upon like notice.  The

Secured Parties, instead of exercising the power of sale herein conferred upon

them, may proceed by a suit or suits at law or in equity to foreclose the

Security Interests and sell the Collateral, or any portion thereof, under a

judgment or decree of a court or courts of competent jurisdiction.

 

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6.2.  For the purpose of enforcing any and

all rights and remedies under this Agreement, if any Event of Default has

occurred and is continuing, then either Secured Party may (a) require

Debtor to, and Debtor agrees that it will, at its own expense, forthwith

assemble all or any part of the Collateral as directed by such Secured Party

and make it available at a place designated by such Secured Party which is, in

its opinion, reasonably convenient to such Secured Party and Debtor, whether at

the premises of Debtor or otherwise, (b) to the extent permitted by

applicable law, enter, with or without process of law and without breach of the

peace, any premise where any of the Collateral is or may be located, and

without charge or liability to it seize and remove such Collateral from such

premises, (c) have access to and use any of Debtor’s books and records

relating to the Collateral and (d) prior to the disposition of the

Collateral, process, repair or recondition it or otherwise prepare it for

disposition in any manner and to the extent such Secured Party deems

appropriate and, in connection with such preparation and disposition, use

without charge any trademark, trade name, copyright, patent or technical

process used by Debtor.

 

6.3.  Any laboratory which has possession of

any of the Collateral is hereby constituted and appointed by Debtor as pledgeholder

for the Secured Parties and the Secured Parties may authorize each such

pledgeholder to sell all or any portion of the Collateral upon the order and

direction of the Secured Parties, and Debtor hereby waives any and all claims

for damages, or otherwise, for any action taken by such pledgeholder.

 

7.  Application of Proceeds. Upon the

occurrence and during the continuance of an Event of Default, the proceeds of

any sale of, or other realization upon, all or any part of the Collateral shall

be applied by the Secured Parties in the following order of priorities:

 

7.1.  First, to payment of the expenses of

such sale or other realization, including, on a pari passu basis, reasonable

compensation to agents and counsel for each Secured Party and all expenses,

liabilities and advances incurred or made by each Secured Party in connection

therewith, and any other unreimbursed expenses for which either Secured Party

is to be reimbursed under any other agreement or instrument entered into in

connection with the Loan or this Agreement and unpaid fees owing to either

Secured Party.

 

7.2.  Next, to the payment of the Secured

Obligations, on a pari passu basis, in accordance with the provisions of the

Loan, until all such amounts have been paid in full.

 

7.3.  Finally, to Debtor or its successors

or assigns, or as a court of competent jurisdiction may direct, of any surplus

then remaining from such proceeds.

 

The Secured Parties may make distributions hereunder in cash or in kind

or in any combination thereof.

 

8.  Termination of Security Interest;

Release of Collateral. Upon the repayment in full of all Secured

Obligations, the Security Interests shall terminate and all rights to the

Collateral shall revert to Debtor.  At

any time and from time to time prior to such termination of the Security

Interests, the Secured Parties may release any of the Collateral or release

Debtor of its obligations hereunder with the prior written consent of each

Secured Party.

 

9.  Governing Law. This Agreement is

governed by and construed in accordance with the laws of the State of

California, irrespective of California’s choice-of-law principles.

 

10

 

 

10.  Further Assurances. Each party

to this Agreement shall execute and deliver all instruments and documents and

take all actions as may be reasonably required or appropriate to carry out the

purposes of this Agreement.

 

11.  Counterparts and Exhibits. This

Agreement may be executed in counterparts, each of which is deemed an original

and all of which together constitute one document.  All exhibits attached to and referenced in this Agreement are

incorporated into this Agreement.

 

12.  Time of Essence. Time and strict

and punctual performance are of the essence with respect to each provision of

this Agreement.

 

13.  Attorney’s Fees. The prevailing

party(ies) in any litigation, arbitration, mediation, bankruptcy, insolvency or

other proceeding (“Proceeding”) relating to the enforcement or interpretation

of this Agreement may recover from the unsuccessful party(ies) all costs,

expenses, and actual attorney’s fees (including expert witness and other

consultants’ fees and costs) relating to or arising out of (a) the

Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any

post-judgment or post-award proceeding including, without limitation, one to

enforce or collect any judgment or award resulting from the Proceeding.  All such judgments and awards shall contain

a specific provision for the recovery of all such subsequently incurred costs,

expenses, and actual attorney’s fees.

 

14.  Modification. This Agreement may

be modified only by a contract in writing executed by the party to this

Agreement against whom enforcement of the modification is sought.

 

15.  Headings.  The paragraph headings in this

Agreement:  (a) are included only for

convenience, (b) do not in any manner modify or limit any of the

provisions of this Agreement, and (c) may not be used in the interpretation of

this Agreement.

 

16.  Prior Understandings.  This Agreement and all documents

specifically referred to and executed in connection with this Agreement:  (a) contain the entire and final agreement

of 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 this

Agreement, all words used in the singular may include the plural (and vice

versa) 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 not

imply any limitation.  For purposes of

this Agreement, the term “day” means any calendar day and the term “business

day” means any calendar day other than a Saturday, Sunday or any other day

designated as a holiday under California Government Code Sections

6700-6701.  Any act permitted or

required to be performed under this Agreement upon a particular day which is

not a business day may be performed on the next business day with the same

effect as if it had been performed upon the day appointed.  No remedy or election under this Agreement

is exclusive, but rather, to the extent permitted by applicable law, each such

remedy and election is cumulative with all other remedies at law or in equity.

 

11

 

18.  Partial Invalidity.  Each provision of this Agreement is valid

and enforceable to the fullest extent permitted by law.  If any provision of this Agreement (or the

application of such provision to any person or circumstance) is or becomes

invalid or unenforceable, the remainder of this Agreement, and the application

of such provision to persons or circumstances other than those as to which it

is held invalid or unenforceable, are not affected by such invalidity or

unenforceability.

 

19.  Successors-in-Interest and Assigns.  Debtor may not voluntarily or by operation

of law assign, hypothecate, delegate or otherwise transfer or encumber all or

any part of its rights, duties or other interests in this Agreement without the

prior written consent of each Secured Party, which consent may be withheld in

each Secured Party’s sole and absolute discretion.  Any such transfer in violation of this paragraph is void.  Subject to the foregoing and any other

restrictions on transferability contained in this Agreement, this Agreement is

binding upon and inures to the benefit of the successors-in-interest and

assigns of each party to this Agreement

 

20.  Notices. All notices or other

communications required or permitted to be given to a party to this Agreement

shall be in writing and shall be personally delivered, sent by certified mail,

postage prepaid, return receipt requested, or sent by an overnight express

courier service that provides written confirmation of delivery, to such party

at 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 by

mail in accordance with this paragraph, then it shall be deemed given,

delivered and received three days after the date such notice or other

communication is deposited with the United States Postal Service in accordance

with this paragraph.  Any party to this

Agreement 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 under

this Agreement must be in writing.  No

such waiver constitutes a waiver of any other default or provision concerning

the 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 (or

otherwise impairs) such right or remedy. 

A consent to or approval of an act does not waive or render unnecessary

the consent to or approval of any other or subsequent act.

 

22.  Drafting Ambiguities.  Each party to this Agreement has reviewed

and revised this Agreement and has had the opportunity to have such party’s

legal counsel review and revise this Agreement.  Each party to this Agreement acknowledges that this Agreement has

been prepared by Solomon Ward Seidenwurm & Smith, LLP (“SWSS”) which

represents only Spescom SA, that Debtor and Spescom UK are not being

represented by SWSS in relation to this Agreement and that Debtor and Spescom

UK have been advised to retain their own legal counsel. The rule of

construction that ambiguities are to be resolved against the drafting party or

in favor of the party receiving a particular benefit under an agreement may not

be employed in the interpretation of this Agreement or any amendment to this

Agreement.

 

23.  Third Party Beneficiaries.  Nothing in this Agreement is intended to

confer any rights or remedies on any person or entity other than the parties to

this Agreement and their respective successors-in-interest and permitted

assignees, unless such rights are expressly granted in this Agreement to

another person specifically identified as a “Third Party Beneficiary.”

 

24.  ARBITRATION OF DISPUTES.  WITHOUT LIMITING IN ANY WAY THE SECURED

PARTIES’ RIGHT TO ENFORCE ANY REMEDY AVAILABLE UNDER THE UCC WITHOUT FORMAL

LEGAL OR JUDICIAL ACTION, ANY CONTROVERSY OR CLAIM RELATING TO THIS AGREEMENT

SHALL BE SETTLED BY ARBITRATION IN SAN DIEGO, CALIFORNIA, IN ACCORDANCE WITH

THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND

JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY

COURT HAVING JURISDICTION.  THE

ARBITRATOR(S) SHALL NOT HAVE THE AUTHORITY TO AWARD PUNITIVE DAMAGES AGAINST

ANY PARTY(IES) TO THIS AGREEMENT.  NO

PROVISION OF THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY TO EXERCISE SELF–HELP

REMEDIES SUCH AS FORECLOSURE AGAINST OR SALE OF ANY REAL OR PERSONAL PROPERTY 

COLLATERAL OR SECURITY, OR TO OBTAIN PROVISIONAL OR ANCILLARY REMEDIES

FROM A COURT OF COMPETENT JURISDICTION BEFORE, AFTER, OR DURING THE PENDENCY OF

ANY ARBITRATION OR OTHER PROCEEDING. 

THE EXERCISE OF A REMEDY SHALL NOT WAIVE THE RIGHT OF EITHER PARTY TO

RESORT TO ARBITRATION.

 

NOTICE:  YOU ARE AGREEING TO

HAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION

AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT

POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.  YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO

DISCOVERY AND APPEAL.  IF YOU REFUSE TO

SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO

ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT

TO 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

  	

   

  
											

 

14Promissory Note

Exhibit

10.31

SECURED PROMISSORY NOTE

 

	

  $400,000.00 

  	

  SAN DIEGO, CALIFORNIA

  	

  March 15, 2002

  

 

Altris Software, Inc., a California corporation

(“Maker”), promises to pay on demand to Spescom LTD, a United Kingdom

corporation, or order (“Holder”), the principal sum of the amounts set forth in

the upper left-hand corner of this Secured Promissory Note (this “Note”), plus

interest at the rate of ten percent (10.0%) per annum, payable as more fully

set forth below:

 

1.             Payments. 

All unpaid principal and accrued interest under this Note shall be

immediately due and payable on demand by Holder.

 

2.             Manner

of Payments.  All payments by Maker

under this Note shall be (a) made in lawful money of the United States of

America without set off, deduction or counterclaim of any kind whatsoever, (b)

credited first to amounts for late charges, if any, second to amounts for

Holder’s costs of enforcing this Note, if any, third to any accrued interest

under this Note and finally to the principal balance under this Note, and (c) deemed

paid by Maker upon their actual receipt by Holder.

 

3.             Security.  This Note is secured by a security interest

over all of the assets of Debtor pursuant to a Security Agreement (the

“Security Agreement”), including applicable financing statements, and a Pledge

Agreement (the “Pledge Agreement”), all of even date herewith.

 

4.             Late

Charge.  If any amount of interest

and/or principal under this Note is not received by Holder within fifteen (15)

days after its due date, then, without any requirement for notice to Maker,

Maker shall immediately pay to Holder an additional sum of five percent (5%) of

such overdue amount as a late charge. 

Such late charge is fair and reasonable based upon the facts and

circumstances existing as of the date of this Note.  Acceptance of such late charge by Holder shall not constitute a

waiver of Maker’s default with respect to such overdue amount, nor prevent

Holder from exercising any of the other rights and remedies available to Holder

under this Note, the Security Agreement or the Pledge Agreement.

 

5.             Default

Interest.  If any payment under this

Note is not received by Holder within fifteen (15) days after its due date,

then, without any requirement for notice to Maker, the rate of interest on such

overdue amount shall increase to the lesser of fourteen percent (14%) or the

maximum legally permissible rate, whichever is the lesser, until such late

payment is made.  Such default interest

represents a fair and reasonable estimate of the costs that Holder will incur

by reason of any late payment by Maker. 

Acceptance of such default interest by Holder shall not constitute a

waiver of Maker’s default with respect to such overdue amount, nor prevent

Holder from exercising any of the other rights and remedies available to Holder

under this Note, the Security Agreement or the Pledge Agreement.

 

 

6.             Prepayment.  This Note may be prepaid in whole or in part

at any time, provided that amounts prepaid shall be credited first to amounts

for late charges, if any, second to amounts for Holder’s costs of enforcing

this Note, if any, third to any accrued interest under this Note and finally to

the principal balance under this Note.

 

7.             Note

Waivers.  Maker waives presentment,

demand, protest, notice of demand and dishonor.

 

8.             Governing

Law.  This Note is governed by and

construed in accordance with the laws of the State of California, irrespective

of California’s choice-of-law principles.

 

9.             Further

Assurances.  Each party to this Note

shall execute and deliver all instruments and documents and take all actions as

may be reasonably required or appropriate to carry out the purposes of this

Note.

 

10.           Venue

and Jurisdiction. All actions and proceedings arising in connection with

this Note must be tried and litigated exclusively in the State and Federal

courts located in San Diego County, California, which courts have personal

jurisdiction and venue over each of the parties to this Note for the purpose of

adjudicating all matters arising out of or related to this Note.  Each party authorizes and accepts service of

process sufficient for personal jurisdiction in any action against it as

contemplated by this paragraph by registered or certified mail, return receipt

requested, postage prepaid, to its address for the giving of notices set forth

in this Note.

 

11.           Time

of Essence.  Time and strict and

punctual performance are of the essence with respect to each provision of this

Note.

 

12.           Attorneys’

Fees. The prevailing party in any litigation, arbitration, mediation,

bankruptcy, insolvency or other proceeding (“Proceeding”) relating to the

enforcement or interpretation of this Note may recover from the unsuccessful

party all costs, expenses, and actual attorney’s fees (including expert witness

and other consultants’ fees and costs) relating to or arising out of (a) the

Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any

post-judgment or post-award proceeding including, without limitation, one to

enforce or collect any judgment or award resulting from the Proceeding.  All such judgments and awards shall contain

a specific provision for the recovery of all such subsequently incurred costs,

expenses, and actual attorney’s fees.

 

13.           Partial

Invalidity.  Each provision of this

Note is valid and enforceable to the fullest extent permitted by law.  If any provision of this Note (or the

application of such provision to any person or circumstance) is or becomes

invalid or unenforceable, the remainder of this Note, and the application of

such provision to persons or circumstances other than those as to which it is

held invalid or unenforceable, are not affected by such invalidity or

unenforceability.

 

14.           Waiver.  Any waiver of a default or provision under

this Note must be in writing.  No such

waiver constitutes a waiver of any other default or provision 

 

2

 

concerning the same or any other provision of this Note.  No delay or omission by a party in the

exercise of any of its rights or remedies constitutes a waiver of (or otherwise

impairs) such right or remedy.  A

consent to or approval of an act does not waive or render unnecessary the

consent to or approval of any other or subsequent act.

 

15.           Interest

Limitation.  It is not intended by

any provision of this Note to charge interest at a rate in excess of the

maximum rate of interest permitted to be charged to Maker under applicable law

on a cumulative basis over the life of the loan evidenced by this Note (the

“Loan”).  If by mistake or error, interest

in excess of such maximum rate shall be paid for any period during the term of

the Loan, the excess amount shall, if permitted by applicable law, be retained

by Holder as additional cash  collateral

for the Loan to be held without interest or trust and commingled with other

assets of Holder or, if not permitted to be so held by Holder, shall be

refunded to Maker.  If for any period

during the term of the Loan, Holder is unable, because of a limitation on the

rate of interest permitted to be charged to Maker under applicable law, to

collect all of the interest and premium provided for in this Note, such

interest or premium (“Interest Shortage”) shall, if permitted by applicable

law, be added to the interest earned or to be earned for prior or subsequent

periods during the term of the Loan so that, to the extent permitted by

applicable law on a cumulative basis over the life of the Loan, Holder may

collect all of the interest and premium provided for in this Note, the same to

be accomplished in the following manner, or otherwise as permitted by applicable

law:  (1) if Holder were permitted by

applicable law to charge interest to Maker in such prior periods in excess of

the amount of interest and premium actually charged during such prior periods,

then the interest due on the Loan for such prior periods shall automatically be

increased by the amount of such Interest Shortage, but not in excess of the

maximum interest permitted to be charged to Maker during such prior periods,

and such increased interest for such prior periods shall be immediately due and

payable upon demand; and (2) if Holder shall have collected all interest

permitted by applicable law to be charged to Maker in such prior periods, and

if Holder is thereafter permitted by applicable law to charge interest to Maker

in such subsequent periods in excess of the amount of interest and premium

actually charged during such subsequent periods, the interest due on the Loan

for such subsequent periods shall automatically be increased by the amount of

such Interest Shortage, but not in excess of the maximum interest permitted to

be charged to Maker during such subsequent period, and such increased interest

for such subsequent periods shall be due and payable at the end of each such

subsequent period upon demand.

 

16.           Notices.  All notices or other communications required

or permitted to be given to a party to this Agreement shall be in writing and

shall be personally delivered, sent by certified mail, postage prepaid, return

receipt requested, or sent by an overnight express courier service that provides

written confirmation of delivery, to such party at the following respective

address:

 

	

  Holder:

  	

  Spescom LTD

  
	

   

  	

  P.O. Box 288

  
	

   

  	

  Halfway House 1685 Midrand

  
	

   

  	

  South Africa

  
	

   

  	

  Attention: 

  Hilton Isaacman

  

 

3

 

 

	

  with a copy to:

  	

  Solomon, Ward, Seidenwurm & Smith, LLP

  
	

   

  	

  401 B Street, Suite 1200

  
	

   

  	

  San Diego, CA 92101

  
	

   

  	

  Attention: Norman L. Smith

  

 

	

   

  	

   

  
	

  Maker:

  	

  Altris 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 by

mail in accordance with this paragraph, then it shall be deemed given,

delivered and received three days after the date such notice or other

communication is deposited with the United States Postal Service in accordance

with this paragraph.  Any party to this

Note may give a notice of a change of its address to the other party to this

Note.

 

17.           Drafting

Ambiguities. Each party to this Note has reviewed and revised this

Note.  Each party to this Note has had

the opportunity to have such party’s legal counsel review and revise this

Note.  Altris acknowledges that this

Note has been prepared by Solomon Ward Seidenwurm & Smith, LLP (“SWSS”)

which represents only Spescom Ltd., a United Kingdom corporation, with respect

to this Note and all related matters, that it is not being represented by SWSS

in relation to this Note and related matters and that it has been advised to

retain its own legal counsel. The rule of construction that ambiguities are to

be resolved against the drafting party or in favor of the party receiving a

particular benefit under an agreement may not be employed in the interpretation

of this Note or of any amendments to this Note.

 

	

   

  	

   

  	

   

  	

   

  	

  ALTRIS SOFTWARE, INC.

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  a California corporation

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  By:

  	

   /s/John W.

  Low

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  John W. Low

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Chief Financial Officer

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
											

 

4

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