Document:

Security Agreement

Exhibit

10.32

SECURITY AGREEMENT

 

This Security Agreement

(“Agreement”) is executed as of March 15, 2002 between Altris Software, Inc., a

California corporation (“Debtor”) and Spescom Ltd., a United Kingdom

corporation (the “Secured Party”), 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 Party 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 titled “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 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

substitutions and replacements thereof and parts therefor), whether or not the

same shall be 

 

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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 in the full and punctual performance

of its obligations under this Agreement or the Loan.

 

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, (e) all rights in respect of any pension plan or similar

arrangement maintained for employees of Debtor or any of its Subsidiaries, and

(f) the Subsidiary Interests.

 

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 Party to the Debtor on

even date herewith or subsequent hereto.

 

1.12.  “Note”

shall mean, collectively, all promissory notes executed by Debtor in favor of

the Secured Party on even date herewith or subsequent hereto.

 

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 

 

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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 and all obligations, liabilities and indebtedness pursuant to the Loan,

including, without limitation,

principal, interest, charges, fees, costs and expenses, however evidenced,

whenever arising (including without limitation arising after the commencement

of any case with respect to Debtor under the United States Bankruptcy Code or

any similar statute and 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).

 

1.16.  “Site”

shall mean the Debtor’s principal place of business located at the address set

forth in the Paragraph in this Agreement titled “Notices”.

 

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.  ”Subsidiary

Interests” shall mean any and all of Debtor’s interest in any Person, as a

member, partner, shareholder or otherwise.

 

1.19.  “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 Party on even date herewith, Debtor represents and

warrants to the Secured Party 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.

 

2.2.  Debtor

has not performed any acts which might prevent the Secured Party from enforcing

any of the terms and conditions of this Agreement or which would limit the

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 

 

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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 Party 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 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 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 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 Party 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 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 Party 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 Party regardless of any 

 

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investigation

made or information possessed by the Secured Party. 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 Party.

 

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 Party 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.  Subsidiary

Interests;

 

3.9.  All other

personal property and assets of Debtor;

 

3.10.  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

 

3.11.  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 Party 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.

 

4.2.  Debtor

shall maintain Inventory only at (a) the Site, (b) at a location in

the United States of which the Secured Party have received at least

45 days’ prior written notice, or (c) in transit to a location

specified in the preceding clauses.

 

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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 Party at least

45 days’ prior written notice.

 

4.4.  Debtor

shall cause the 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 Party.  Debtor will deliver

to the Secured Party, upon request of the 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 Party, 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 Party, all insurance

proceeds shall be adjusted with and payable to the Secured Party and shall

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

least 30 days after receipt by the Secured Party of written notice

thereof.

 

4.5.  Debtor

will, promptly upon request, provide to the Secured Party all information and

evidence it may reasonably request concerning the Collateral to enable the

Secured Party to enforce the provisions of this Agreement.

 

4.6.  At

the request of the Secured Party, Debtor will join with the 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 Party.

 

4.7  Except in

the ordinary course of business, the Debtor shall not, without the prior

written approval of the Secured Party sell, encumber or otherwise transfer any

Collateral, or agree or attempt to do so.

 

4.8

(a) Debtor shall notify

the Secured Party 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

Party’s 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 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 Party 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.

 

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(b) The Secured Party

shall have the right at any time or times, in the Secured Party’s name or in

the name of a nominee of the 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) The 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 Party and that the Secured Party has a security

interest therein and the Secured Party may direct any or all accounts debtors

to make payment of Accounts directly to the Secured Party, (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 Party 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 Party 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 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 Party and are payable directly and only to

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

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

giving rise to any Accounts as the Secured Party may require.

 

4.9  With respect to the Equipment:

 

(a) upon the Secured

Party’s request, Debtor shall, at its expense, at any time or times as the

Secured Party may request on or after an Event of Default, deliver or cause to

be delivered to the Secured Party written reports or appraisals as to the

Equipment in form, scope and methodology acceptable to the Secured Party and by

an appraiser acceptable to the Secured Party;

 

 (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;

 

(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 Party’s possession.

 

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4.10  With respect to the Inventory:

 

(a) upon the 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 the Secured Party may request on

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

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

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

the Secured Party, addressed to the Secured Party, upon which the Secured Party

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 Party as a result of the financing arrangements provided for herein and

Debtor agrees to indemnify and hold the Secured Party harmless with respect to

the foregoing, and to repay to the Secured Party 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 Party as its true

and lawful attorney, with full power of substitution, in the name of Debtor,

the Secured Party or otherwise, for the sole use and benefit of the Secured

Party, 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, 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 Party were the absolute owner of the

Collateral; provided, that the Secured Party 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 

 

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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, the 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

Party 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 Party may deem satisfactory.  The 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 the 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 Party 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 Party 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 Party may determine.  The

Secured Party shall not be obligated to make any such sale pursuant to any such

notice.  The Secured Party 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 Party until the selling price

is paid by the purchaser thereof, but the Secured Party 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

Party, 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.

 

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 the 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 the Secured

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

in its opinion, reasonably convenient to the 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 

 

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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 the 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 Party and the Secured

Party may authorize each such pledgeholder to sell all or any portion of the

Collateral upon the order and direction of the Secured Party, 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 Party 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 the Secured

Party and all expenses, liabilities and advances incurred or made by the

Secured Party in connection therewith, and any other unreimbursed expenses for

which the 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 the 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 Party 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 Party may release any of the Collateral or

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

the 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.  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.

 

10

 

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.

 

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 

 

11

 

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 the Secured Party, which consent

may be withheld in the 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:

 

Secured

Party:              Spescom Ltd.

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

 

Debtor:                          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 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 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.

 

12

 

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 the Secured Party, that Debtor is not being

represented by SWSS in relation to this Agreement and that Debtor 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 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 PARTY’S 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.

 

[Signature

Page Follows]

 

13

 

IN WITNESS WHEREOF,

Debtor and the Secured Party have each caused this Security Agreement to be

executed by its duly authorized representative as of the day and year first

written above.

 

	

   

  	

  DEBTOR:

  	

  ALTRIS SOFTWARE, INC.

  	

   

  	

   

  
	

   

  	

   

  	

  a California

  corporation

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/John W. Low

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  John W. Low

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Chief Financial Officer

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  SECURED PARTY:

  	

  SPESCOM LTD.,

  	

   

  	

   

  
	

   

  	

   

  	

  a United Kingdom

  corporation

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/Hilton Isaacman

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Hilton Isaacman

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Director Corporate

  Finance

  	

   

  	

   

  	

   

  
										

 

SIGNATURE PAGE TO

SECURITY AGREEMENTFax to E. Burns

Exhibit

10.33

PLEDGE AGREEMENT

 

This Pledge Agreement (the “Pledge Agreement”) is

executed as of March 152002 by and between Altris Software, Inc., a California

corporation (“Pledgor”), Spescom Ltd., an United Kingdom corporation (“Secured

Party”) and Solomon Ward Seidenwurm & Smith, LLP (“Pledgeholder”) as

follows:

 

1.             Recitals

 

1.1           Concurrently

herewith Pledgor has executed and delivered a Secured Promissory Note (the

“Note”) to Secured Party in the principal amount of Four Hundred Thousand

Dollars ($400,000).

 

1.2           In

order to provide security for Pledgor’s payment obligations under the Note,

Pledgor has agreed to pledge all of its interest in Altris International

Limited, an United Kingdom corporation and Spescom Software Limited, an United

Kingdom corporation (the “Shares”) to Secured Party.

 

1.3           Concurrently

herewith, in order to provide security for Pledgor’s payment obligations under

the Note, Pledgor has granted a security interest in all of its assets to

Secured Party pursuant to a Security Agreement (the “Security Agreement”).

 

2.             Grant

of Security Interest.  To secure

Pledgor’s obligations to Secured Party under the Note (“Obligations”), Pledgor

pledges, assigns and grants to Secured Party a security interest in (a) the

Shares; and (b) all stock or cash dividends, substitutions, and shares issued

pursuant to any merger or reorganization, or any other proceeds of such Shares

as defined in Section 9306 of the California Uniform Commercial Code.

 

3.             Delivery

of Shares. Upon Pledgor’s execution of this Pledge Agreement, Pledgor shall

concurrently validly endorse the Shares in blank and deliver the Shares to

Pledgeholder and by execution hereof agrees that the Shares shall concurrently

be held in pledge by Pledgeholder hereunder to secure the Obligations.

 

4.             Terms

of Pledge.  The Shares shall be held

by Secured Party in pledge subject to the terms and conditions of this Pledge

Agreement.  As long as no default exists

as described in Paragraph 7 below, Pledgor shall have the right at all times to

vote such Shares on any and all matters.

 

5.             Negative

Covenants.  Until all obligations

secured by this Pledge Agreement shall have been fully and finally performed,

Pledgor shall not without the prior written consent of Secured Party: (a)

create or suffer to exist any further security interest in the Shares; or (b)

sell or otherwise dispose of the Shares. 

Secured Party shall retain the Shares to secure Pledgor’s obligations to

Secured Party under this Pledge Agreement.

 

6.             Events

of Default.  There shall be a default

under this Agreement if Pledgor causes or suffers an Event of Default under the

Note or the Security Agreement.

 

7.             Rights

of Secured Party Upon Default. In the event of an uncured default of an

Obligation, Secured Party shall have the rights of a secured party under the

California Uniform Commercial Code except for the right to seek a deficiency

following sale or other disposition of the Shares, it being understood that

Secured Party’s sole and only recourse shall be to the Shares.  In the foregoing event, Secured Party shall

be entitled to the delivery of the Shares endorsed to Secured Party and the

Shares shall be transferred to Secured Party on the books of the Company.

 

1

 

8.             Duties

of Pledgeholder.

 

8.1           Unless

a default has occurred which remains uncured, Pledgeholder’s sole duty shall be

to hold the Shares until such time as the Obligation has been paid in

full.  Pledgeholder shall not act

unilaterally in discharging his duties hereunder.  The Pledgeholder is directed to deliver Shares to Pledgor at such

time as the Obligation has been paid in full or otherwise satisfied or

released. At that time, Pledgeholder shall return the Shares and the

certificate representing the Shares to Pledgor, and all Shares shall be deemed

released from this pledge.

 

8.2           In

the event Secured Party determines that an uncured or incurable default has

occurred, Secured Party shall deliver written notice to Pledgor (“Notice of

Default”).  The Notice of Default shall

set forth the facts underlying the alleged default with particularity.  Pledgeholder may deliver the Shares

following such Notice of Default if he has not received a notice disputing the

default (“Notice Of Protest”) within thirty (30) days following the date that

Pledgeholder received the Notice of Default. In performing its obligations

hereunder including any performance hereunder in  the event of a dispute, the Pledgeholder shall be compensated by

for its time at its standard billable rates then in effect and shall be

reimbursed for any costs of performance hereunder.

 

9.             Representations

and Warranties of Secured Party. 

Secured Party represents and warrants to Pledgor that except for the

security interest created by this Pledge Agreement, no person or entity has any

right, title, interest, or claim in or to the Shares or any part of the Shares.

 

10.           Governing

Law.  This Pledge Agreement is

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

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

For purposes of venue and jurisdiction, this Pledge Agreement shall be deemed

made and to be performed in the City of San Diego, California.

 

11.           Further

Assurances.  Each party to this

Pledge 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 Pledge Agreement.

 

12.           Counterparts

and Exhibits.  This Pledge 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 Pledge Agreement are

incorporated into this Pledge Agreement.

 

13.           Modification.  This Pledge Agreement may be modified only

by a contract in writing executed by the party to this Pledge Agreement against

whom enforcement of the modification is sought.

 

14.           Headings.  The paragraph headings in this Pledge

Agreement:  (a) are included only for

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

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

Pledge Agreement.

 

15.           Prior

Understandings.  This Pledge

Agreement and all documents specifically referred to and executed in connection

with this Pledge Agreement:  (a) contain

the entire and final agreement of the parties to this Pledge Agreement with

respect to the subject matter of this Pledge 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 Pledge Agreement.

 

16.           Interpretation.  Wherever the context of this Pledge

Agreement requires, all words used in the singular shall be construed to have

been used in the plural, and vice versa, and the use of any gender specific

pronoun shall include any other appropriate gender. The conjunctive “or” shall

mean “and/or” unless otherwise required by the context in which the conjunctive

“or” is 

 

2

 

used.  Pledgor and Secured Party

have each had the opportunity to be represented by legal counsel and hereby

waives any benefit under any rule of law or legal decision that would require

interpretation of any ambiguities in this Pledge Agreement against the party

drafting it.  The provisions of this

Pledge Agreement shall be interpreted in a reasonable manner to effect the

purposes of the parties and this Pledge Agreement.

 

17.           Representation.  This Agreement has been prepared by Solomon

Ward Seidenwurm & Smith, LLP (“SWSS”), as counsel for Secured Party.  By this provision, SWSS affirms that it

represents no other party in this transaction and suggests the advisability of

all other parties obtaining the advice and representation of independent

counsel.

 

18.           Partial

Invalidity.  Each provision of this

Pledge Agreement is valid and enforceable to the fullest extent permitted by

law.  If any provision of this Pledge

Agreement (or the application of such provision to any person or circumstance)

is or becomes invalid or unenforceable, the remainder of this Pledge 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.           Notices.  Each notice and other communication required

or permitted to be given under this Pledge Agreement (“Notice”) must be in

writing.  Notice is duly given to

another party upon:  (a) hand delivery

to the other party, (b) receipt by the other party when sent by facsimile to

the address and number for such party set forth below (provided, however, that

the Notice is not effective unless a duplicate copy of the facsimile Notice is

promptly given by one of the other methods permitted under this paragraph), (c)

three business days after the Notice has been deposited with the United States

postal service as first class certified mail, return receipt requested, postage

prepaid, and addressed to the party as set forth below, or (d) the next

business day after the Notice has been deposited with a reputable overnight

delivery service, postage prepaid, addressed to the party as set forth below

with next–business–day delivery guaranteed, provided that the

sending party receives a confirmation of delivery from the delivery–service–provider.

 

To Debtor:       Altris Software, Inc.

9339 Carroll Park Drive

San Diego, CA  92121

Attention:  John Low

858-452-0498  (Telecopy)

 

To Secured Party:

 

Spescom Limited

P.O. Box 288

Halfway House 1685 Midrand

South Africa

Attention:  Hilton Isaacman

011-27-11-266-1707  (Telecopy)

 

Copy to:          

Solomon Ward Seidenwurm & Smith, LLP

401 B Street, Suite 1200

San Diego, CA  92101

Attn:  Norman L. Smith, Esq.

619-231-4755  (Telecopy)

 

3

 

To Pledgeholder:

 

Solomon Ward Seidenwurm

& Smith, LLP

401 B Street, Suite 1200

San Diego, CA  92101

Attn:  Norman L. Smith, Esq.

619-231-4755  (Telecopy)

 

Each party shall make a reasonable, good faith effort

to ensure that it will accept or receive Notices to it that are given in

accordance with this paragraph.  A party

may change its address for purposes of this paragraph by giving the other party

written notice of a new address in the manner set forth above.

 

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

this Pledge 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 Pledge Agreement.  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.

 

	

  PLEDGOR:

  	

   

  	

  ALTRIS SOFTWARE, INC.,

  	

   

  
	

   

  	

   

  	

  a California corporation

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/John W. Low

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  John W. Low

  	

   

  
	

   

  	

   

  	

   

  	

  Chief Financial Officer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  SECURED PARTY:

  	

   

  	

  SPECOM LTD,

  	

   

  
	

   

  	

   

  	

  an United Kingdom corporation

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/Hilton Isaacman

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Hilton Isaacman

  	

   

  
	

   

  	

   

  	

   

  	

  Director Corporate Finance

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  PLEDGEHOLDER:

  	

   

  	

  SOLOMON WARD SEIDENWURM & SMITH, LLP

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Norman L. Smith, Esq

  	

   

  	

   

  
	

   

  	

   

  	

  .

  	

   

  	

  Norman L. Smith, Esq

  	

   

  
	

   

  	

   

  	

   

  	

   

  
												

 

4

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