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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 14, 1999
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Altris Software, Inc.
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(Exact name of registrant as specified in charter)
California 0-15935 95-3634089
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(State or other jurisdiction of (Commission file (IRS employer
incorporation) number) identification no.)
9339 Carroll Park Drive, San Diego, California 92121
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (619) 625-3000
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Not applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On May 14, 1999, Altris Software, Inc. ("the Company") completed a
multi-part agreement with Spescom Ltd., a South African company publicly traded
on the Johannesburg Exchange, whereby Spescom purchased 2,000,000 shares of the
Company's common stock for $1.8 million. In addition, as part of the agreement,
Spescom paid the Company an additional $1.0 million and invested $1.2 million
directly into Altris Software Ltd. ("ASL"), a subsidiary of the Company based in
the United Kingdom, for a 60% interest in of ASL. In conjunction with the
agreement the Company contributed $400,000 to ASL and retained a 40% ownership
interest in ASL.
In addition, the Company has entered into a distribution agreement
with ASL which grants ASL exclusive distribution rights for the Company's
products world-wide excluding North America, South America and the Caribbean.
Under the distribution agreement, the exclusivity is contingent on ASL meeting
certain minimum royalty commitments beginning in 2001. The agreement provides
for a royalty to the Company on sales of the Company's products by ASL equal to
50% of the Company's list price for such products. ASL also entered into a
distribution agreement with Spescom covering the same territory, which provides
that ASL will be Spescom's exclusive distributor of EMS 2000, Spescom's
configuration management (CM) product. In addition, the agreement provides that
the Company is Spescom's exclusive distributor of EMS 2000 in North America,
South America and the Caribbean.
In order for the Company to obtain consent to the transactions by
Finova Capital (formerly Sirrom Capital), a debt holder and preferred
stockholder of the Company, the interest rate on the Company's outstanding
debenture held by Finova was increased from 11.5% to 12%. In addition, the
conversion rate on the convertible preferred stock held by Finova has been
adjusted from $6.00 per share of common stock to $1.90, and the exercise price
on warrants entitling Finova to purchase 400,000 shares of the Company's common
stock was also adjusted from $6.00 to $1.90 per share.
In addition, other terms of the transaction include:
o The Company agreed to include a nominee of Spescom in
management's slate of nominees to be elected to the board of
directors and to recommend to the stockholders the election of
such nominee (this right lasts for so long as Spescom retains
a certain percentage of its holdings in the Company);
o An additional 1,000,000 shares will be issued to Spescom if
court approval of the settlement of the Company's outstanding
securities litigation is not received, by September 30, 1999,
as anticipated;
o The Company used $200,000 of the proceeds from the transaction
to fund an escrow account which will remain in effect until
the second anniversary of
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the closing date for the purpose of securing any obligations
owed by the Company to Spescom under the agreement;
o The shares of stock representing the Company's 40% interest in
ASL were pledged to Spescom to further secure the obligations
of the Company to Spescom, with such pledge not to extend
beyond the second anniversary of the closing date.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma financial
information at the time of filing of this Current Report on Form
8-K. The required pro forma financial information will be filed as
soon as it is available, but in no event later than 30 days after
the date of this Current Report on Form 8-K was due to be filed.
(c) Exhibits:
2.1 Agreement between Spescom Limited, Spescom CIT (Pty) Limited,
Altris Software, Inc., Altris International Limited, Altris
Group Plc, and Altris Software Limited, dated May 7, 1999.
3.1 Certificate of Determination of Series E Convertible Preferred
Stock of the Company
10.1 First Amendment to Convertible Preferred Stock Purchase
Agreement dated, May 7, 1999, by and between the Company and
Finova Mezzanine Capital, Inc.
10.2 Second Amendment to Debenture Purchase Agreement dated, May 7,
1999, by and between the Company and Finova Mezzanine Capital,
Inc.
10.3 Second Amendment to Subordinated Debenture, dated May 7, 1999,
by and between the Company and Finova Mezzanine Capital, Inc.
10.4 Release Agreement, dated May 7, 1999, by and between the
Company and Finova Mezzanine Capital, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 28, 1999 ALTRIS SOFTWARE, INC.
By: /s/ John W. Low
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John W. Low
Chief Financial Officer
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[LOGO]
[Letterhead of Kallmeyer & Strime]
Agreement
between
Spescom Limited
Spescom CIT (Pty) Limited
Altris Software, Inc.
Altris International Limited
Altris Group Plc
and
Altris Software Limited
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1. Interpretation
1.1 The clause headings of this agreement are for reference purposes
only and shall not be used in the interpretation thereof.
1.2 Unless a contrary intention clearly appears -
1.2.1 expressions which denote -
1.2.1.1 any gender shall include the other genders;
1.2.1.2 a natural person shall include an artificial person and
vice versa;
1.2.1.3 the singular shall include the plural and vice versa;
1.2.2 the following expressions shall have the meanings set opposite
them below and cognate expressions shall bear corresponding
meanings -
1.2.2.1 the accounting
date - shall mean December 31, 1998;
1.2.2.2 the Accounts - shall mean the audited financial
statements of the company as at the
accounting date which is accompanied
by an opinion issued and signed by
the auditors in unqualified form save
and except for a going concern
qualification together with other
documents required by law to be
annexed thereto, a copy of which is
attached as Appendix 1;
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1.2.2.3 the Acts - shall mean the Companies Acts of 1985
and 1989 (as amended) regulating the
affairs of companies incorporated
under English law;
1.2.2.4 the Altris Group - shall mean that group of companies
comprising of Altris Inc as the
ultimate parent company and its
subsidiaries;
1.2.2.5 Altris Inc - shall mean Altris Software, Inc.
organised according to the laws of
the State of California, United
States of America, and the common
stock of which is traded on the OTC
Bulletin Board;
1.2.2.6 Altris
International - shall mean Altris International
Limited, company number 3080640,
incorporated under the Acts;
1.2.2.7 Altris Limited
or the company - shall mean Altris Software Limited,
company number 2625912, originally
incorporated under the Acts under the
name and style of Trimco Enterprises
Limited;
1.2.2.8 Altris Plc - shall mean Altris Group Plc, company
number 2253256, originally
incorporated under the Acts under the
name and style of Trimco Group Plc;
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1.2.2.9 Altris products - shall mean those products in respect
of which any member of the Altris
Group claims proprietorship and as
identified in Appendix 2;
1.2.2.10 the Altris
Software
securities
litigation - shall mean that litigation between
plaintiffs and defendants Altris Inc,
Jay V Tanna, and John W Louw, in
Robert Reiger, et al, on behalf of
themselves and all others similarly
situated, v. Altris Software, Inc.,
et al, United States District Court,
Southern District of California, Case
No. 98 CV 0528 TW(JFS), consolidated
with Case Nos. 98 CV 0553, 98 CV
0612, 98 CV 0697, 98 CV 0806, and 98
CV 0827, and all related litigation
including counterclaims and
cross-claims;
1.2.2.11 Altris' solicitors - shall mean Allen and Overy,
solicitors of London;
1.2.2.12 the attorneys - shall mean Kallmeyer & Strime,
attorneys of Johannesburg, Republic
of South Africa;
1.2.2.13 the auditors - shall mean the auditors of the
company from time to time and shall
at the effective
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date and as at the closing date be
Grant Thornton;
1.2.2.14 the bank - shall mean Lloyds Bank Plc;
1.2.2.15 the closing date - shall mean a date 3 (three) days
after the fulfilment or waiver, as
the case may be, of the conditions,
or earlier as may be agreed upon by
the parties in writing;
1.2.2.16 the conditions - shall mean those conditions to which
this agreement is subject as set out
in 4;
1.2.2.17 the distribution
agreements - shall mean those exclusive
distribution agreements to be
concluded between:-
1.2.2.17.1 Spescom CIT and Altris Limited
in terms of which Altris
Limited is afforded exclusivity
to exploit the Spescom products
in the rest of the world
excluding sub-Saharan Africa;
and
1.2.2.17.2 Altris Inc and Altris Limited
in terms of which Altris
Limited is afforded exclusivity
to exploit the Altris products
in the rest of the world;
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copies of which are attached as
Appendices 3 and 4
respectively;
1.2.2.18 effective date - shall mean 24h00 on March 31, 1999;
1.2.2.19 effective date
management
accounts - shall mean that pack of unaudited
management accounts of the company as
at the effective date, a copy of
which is attached as Appendix 5;
1.2.2.20 Excon - shall mean the Exchange Control
Authorities of the South African
Reserve Bank;
1.2.2.21 execution date - shall mean the date of last signature
hereto;
1.2.2.22 the executives - shall mean those persons whose names
are reflected in Appendix 6, being
senior executives in the employ of
Altris Limited;
1.2.2.23 letter of intent - shall mean that letter of intent
signed on behalf of SL and Altris Inc
dated March 15, 1999;
1.2.2.24 rest of the world - shall mean all territories other than
North, South, and Central America,
the Caribbean and Mexico;
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1.2.2.25 SL - shall mean Spescom Limited,
Registration No. 87/01083/06, a
company incorporated in the Republic
of South Africa, and shall for the
purposes of this agreement if the
provisions of 22.2 are applicable
refer to its nominated subsidiary;
1.2.2.26 SL warranties - shall mean those warranties which
shall be afforded to Altris Inc as
set out in Appendix 16;
1.2.2.27 the settlement - shall mean that memorandum of
understanding containing the
principal terms of a settlement in
relation to the Altris Software
securities litigation, a copy of
which is attached hereto as Appendix
18;
1.2.2.28 the shareholders
agreement - shall mean that agreement attached
hereto as Appendix 7 and which shall
come into effect on the
implementation of this agreement on
the closing date;
1.2.2.29 the shareholders
claims - shall mean all claims of whatsoever
nature and kind and howsoever arising
which at the effective date shall be
held by Altris Plc having
consolidated in its own name as a
single creditor all such claims as
may immediately prior to the
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effective date have been held by all
companies within the Altris Group as
against Altris Limited and which
shall be equal to or exceed GBP7 652
245 (seven million six hundred and
fifty two thousand two hundred and
forty five pounds sterling);
1.2.2.30 Spescom CIT - shall mean Spescom CIT (Pty) Limited,
Registration No. 83/08746/07, a
company incorporated in the Republic
of South Africa, the ultimate holding
company of which is SL;
1.2.2.31 Spescom group - shall mean SL and its various
subsidiaries and associated
companies;
1.2.2.32 Spescom products - shall mean those products in respect
of which any member of the Spescom
group claims proprietorship and as
identified in Appendix 8;
1.2.2.33 Spescom's solicitors - shall mean S J Berwin & Co.,
solicitors of London;
1.2.2.34 taxation - shall mean all forms of taxation,
duties, rates, levies, contributions,
withholdings, deductions, liabilities
to account, charges and imposts
whether imposed in the United Kingdom
or elsewhere in the world, including
but
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not limited to all penalties,
charges, costs and interest relating
thereto or otherwise imposed by any
taxation authority;
1.2.2.35 the UK warranties - shall mean those warranties and
representations which shall be made
by Altris Inc and Altris Plc in
favour of SL as set out in Appendix
9;
1.2.2.36 the US warranties - shall mean those warranties and
representations which shall be made
by Altris Inc and Altris Plc jointly
and severally in favour of SL as set
out in Appendix 10.
1.3 Any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time.
1.4 If any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of the agreement.
1.5 When any number of days is prescribed in this agreement, same shall
be reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday in
which case the last day shall be the next succeeding day which is
not a Saturday, Sunday or public holiday.
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1.6 Where figures are referred to in numerals and in words, if there is
any conflict between the two the words shall prevail.
1.7 A reference to a document includes an amendment or supplement to, or
replacement or novation of that document.
1.8 Where a certificate or determination is required by the auditors in
terms of this agreement, such shall be prepared by the auditors
acting as experts and not as arbitrators and shall be final and
binding upon the parties save for any manifest error in calculation.
1.9 Schedules, annexures and appendices to this agreement shall be
deemed to be incorporated in and form part of this agreement.
1.10 The preamble shall be deemed to be incorporated herein.
2. Preamble
It is hereby recorded that:-
2.1 the ultimate holding company of Spescom CIT is SL;
2.2 Altris International is a wholly-owned subsidiary of Altris Inc;
2.3 Altris Plc is a wholly-owned subsidiary of Altris International;
2.4 Altris Limited is a wholly-owned subsidiary of Altris Plc;
2.5 Altris Inc has established a commercial relationship with Spescom
CIT and has commenced a successful exploitation of certain of the
Altris products in
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conjunction with certain of the Spescom products principally through
Altris Limited and Altris Inc;
2.6 Altris Limited has been funded ultimately by Altris Inc;
2.7 for good commercial reasons SL is prepared subject to the terms and
conditions contained herein to invest in Altris Limited and Altris
Inc, and the Altris Group is prepared to achieve a restructure of
the shareholding in and claims against Altris Limited to meet the
requirements of SL;
2.8 the parties have reached agreement relating to the aforegoing and
peripheral matters which they require to be reduced to writing and
to be signed by them before the same shall be or become binding upon
them;
2.9 in consideration of the mutual undertakings contained herein, the
parties hereby agree as follows.
3. Indivisibility
Notwithstanding the plurality of the transactions herein recorded, this
agreement shall be construed as an indivisible whole, no one aspect being
severable from any other.
4. The conditions
4.1 This agreement in its entirety is subject to and conditional upon
the fulfilment of the following conditions precedent on or before
May 14, 1999:-
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4.1.1 the board of directors of Altris Inc, and the board of
directors and shareholders of Altris Plc approving and
ratifying this transaction to the extent required at law;
4.1.2 the boards of directors of SL and Spescom CIT approving and
ratifying this transaction to the extent required at law;
4.1.3 a due diligence of the business, assets, operations,
prospects, affairs, trade and dealings of the company being
conducted by SL, and SL in its discretion expressing its
satisfaction therewith;
4.1.4 the written approval of Merrill Lynch Business Financial
Services Inc, Sirrom Capital Corporation d/b/a Tandem Capital,
and the bank to the implementation of this transaction being
obtained including the confirmation by each of Merrill Lynch
Business Financial Services Inc and Sirrom Capital Corporation
d/b/a Tandem Capital, and the bank that it has no lien or
encumbrance on any of the assets of Altris Limited, Altris Plc
or Altris International and permitting of a pledge in favour
of SL (in a form reasonably determined by the attorneys) by
Altris Plc of its 40% shareholding as shall be owned by it in
Altris Limited by virtue of the implementation of the
provisions of this agreement, such pledge not to extend beyond
a period of 2 (two) years from the closing date;
4.1.5 the approval of Excon to the implementation of the
transactions herein envisaged being obtained;
4.1.6 except as finds expression in the Disclosure Letter to the UK
warranties, neither the bank nor any other creditor will have
instituted proceedings by way of formal motion, application or
other appropriate court procedure to place the company into
receivership,
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liquidation, administration or any similar situation, nor
shall any similar proceedings or voluntary arrangement have
been instituted against or initiated by Altris Inc or the
company; nor shall Altris Inc have made any general
arrangement or assignment for the benefit of creditors; nor
shall Altris Inc have become bankrupt, insolvent or a "debtor"
as defined in 11 U.S.C. Section 101, or any successor statute
or similar statute or law in the United States of America
(unless, in the case of a petition filed against Altris Inc,
such petition is dismissed within 30 (thirty) days after its
original filing); nor shall any appointment of a trustee or
receiver have been made to take possession of substantially
all of Altris Inc's assets (unless possession is restored to
Altris Inc within 30 (thirty) days after such taking); nor
shall there have been any attachment, execution or judicial
seizure of substantially all of Altris Inc's assets (unless
such attachment, execution or judicial seizure is discharged
within 30 (thirty) days after such attachment, execution or
judicial seizure);
4.1.7 the approval of all applicable Government, State and other
regulatory authorities both in the United Kingdom and United
States of America to the conclusion and implementation of this
agreement to the extent required, being obtained;
4.1.8 the parties shall have received opinion from legal counsel
conversant with applicable law in the United Kingdom and the
United States of America that to the extent required the terms
and conditions of this agreement insofar as they affect the
jurisdictions of the United Kingdom and the United States of
America, comply with applicable legislation and common law
(including Blue Sky), alternatively this agreement shall be
re-negotiated between the parties and signed by the parties to
comply therewith.
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4.2 This agreement in its entirety is further subject to the resolutive
conditions that on the date on which the last of the conditions
referred to in 4.1.1 to 4.1.8 inclusive is fulfilled or waived, as
the case may be:-
4.2.1 the currency exchange rate between ZAR and GBP does not exceed
a ratio of 11:1, or between ZAR and USD does not exceed a
ratio of 6,5:1;
4.2.2 the implementation of the settlement shall not have been
aborted or delayed nor shall significant and/or material
objection thereto have been noted by any person affected
thereby, which objection is reasonably expected to result in
the settlement being aborted or delayed or not approved by the
court.
4.3 The aforegoing conditions are stipulated for the benefit of the
parties and may only be waived or relaxed, in whole or in part, in
writing signed by those affected thereby.
4.4 Each of the parties undertakes to use its best endeavours to achieve
the fulfilment of the conditions.
4.5 In the event that any of the conditions are not fulfilled, waived,
or relaxed, as the case may be, by May 14, 1999 or such later date
that the parties may agree to in writing, this agreement shall, save
for the provisions of 14, 16, 17, 21, and 23 be null and void and to
the extent that any portion thereof has been implemented, the
parties shall co-operate with each other to be restored to their
respective positions quo ante.
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5. Restructuring and events upon closing date
5.1 The parties undertake upon the closing date to pass all such
resolutions and to do all things as may be required to achieve that
in consequence thereof, inter alia:-
5.1.1 through a fresh issue of shares in the company:-
5.1.1.1 the shareholders claims are converted to equity ranking
pari passu in all respects with the existing issued
share capital in the company, crediting to the extent
required share premium account having regard to the
philosophy and intent of this agreement and in
particular this 5;
5.1.1.2 against payment of the sum of USD 400 000 (four hundred
thousand United States Dollars) to the company (out of
the funds to be received by Altris Plc pursuant to the
provisions of 6) Altris Plc is issued with so many
ordinary shares in the capital of the company ranking
pari passu in all respects with all other existing
issued shares in the capital of the company (being the
two ordinary shares already owned by it constituting at
the execution date and at the closing date the entire
issued share capital of the company, and those shares
into which the shareholders' claims are capitalised
pursuant to the provisions of 5.1.1.1) and having regard
to the provisions of 5.1.1.3 such as to constitute it as
the registered and beneficial owner of 40% (forty per
cent) of the fully diluted issued share capital in the
company, the remaining 60% (sixty per cent) being owned
by SL;
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5.1.1.3 against payment of the sum of USD1 200 000 (one million
two hundred thousand United States Dollars) to the
company, SL is issued with so many ordinary shares in
the capital of the company, ranking pari passu in all
respects with all other existing share capital in the
company and having regard to the provisions of 5.1.1.1
and 5.1.1.2 such as to constitute it then as the
registered and beneficial owner of 60% (sixty per cent)
of the fully diluted issued share capital in the
company, the remaining 40% (forty per cent) being owned
by Altris Plc;
5.1.2 service agreements between the executives and the company in
the form annexed hereto as Appendices 11 and 12 shall be
signed;
5.1.3 the financial year-end of the company, i.e the accounting
reference date, shall be changed to 30 September;
5.1.4 the assets (including the software licenses and maintenance
services to which the company may be entitled in respect of
prepaid royalties and maintenance fees) stipulated in Appendix
13 and the ongoing obligations of the company beyond the
effective date as stipulated in Appendix 14 shall be ceded,
assigned and delegated in favour of Altris Inc on the closing
date which hereby accepts such delegation and assumes
liability therefor, all with the consent of the relevant
creditors, and to the extent that such consent is not obtained
Altris Inc shall discharge that liability and/or obligation
without charge upon the company hereby indemnifying and
holding harmless the company in respect of any claim against
it therefor;
5.1.5 Altris Plc shall no later than the closing date deposit or
procure the deposit of, or ensure that there is cash available
to the credit of the account of the company conducted with the
bank, an amount of
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GBP100 000 (one hundred thousand pounds) to serve as working
capital for the company, and if injected by any member of the
Altris Group (excluding the company) shall be incorporated in
and form portion of the shareholders claims to be converted to
equity pursuant to 5.1.1.1;
5.1.6 the shareholders agreement shall come into effect and the
terms thereof shall immediately be implemented, including
without derogating from the generality of the aforegoing,
insofar as the same relates to the appointment of directors
and officers of the company;
5.1.7 Altris Limited shall pay to Spescom CIT the sum of GBP19
822,75 (nineteen thousand eight hundred and twenty two pounds
seventy five pence) and Altris Inc shall pay to Spescom CIT
the sum of USD101 807,51 (one hundred and one thousand eight
hundred and seven United States Dollars fifty one cents) on
the closing date. The parties reserve the right to debate such
amounts, which are not regarded as conclusive payments in full
settlement, at a later date.
5.1.8 Altris Plc shall pledge its 40% of the fully diluted
shareholding in Altris Limited to SL in the form annexed
hereto as Appendix 19.
5.2 Altris Plc shall produce to SL, in a form reasonably acceptable to
the attorneys, written confirmation from:-
5.2.1 Merant International Limited (formerly Intersolv) (in relation
to Sequelink licences) that against payment by the company of
GBP20 000 (twenty thousand pounds) it will consent to the
company ceding, assigning and delegating all rights and
obligations in respect of existing agreement with the company
in favour of Altris Inc which hereby accepts such cession,
assignment and delegation, and in
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consequence of which Merant International Limited (formerly
Intersolv) shall have no further claims against the company;
5.2.2 Fulcrum (in relation to FTR licences) that as at the effective
date the liability due by the company to it was GBP15 151
(fifteen thousand one hundred and fifty one pounds) and that
with effect from the effective date it has consented to the
company ceding, assigning and delegating in favour of Altris
Inc which has recorded its acceptance of the cession,
assignment and delegation of all rights and obligations
arising out of the contract between Fulcrum and the company
and that as against payment of the aforesaid sum it will have
no further claims against the company;
5.2.3 Inso Corporation (in relation to Torch licences) that against
payment by the company of GBP9 697 (nine thousand six hundred
and ninety seven pounds) it will consent to the company
ceding, assigning and delegating all rights and obligations in
respect of existing agreement with the company in favour of
Altris Inc which hereby accepts such cession, assignment and
delegation, and in consequence of which Inso Corporation shall
have no further claims against the company;
5.2.4 Noblenet that as at the effective date the liability due by
the company to it was GBP10 715,91 (ten thousand seven hundred
and fifteen pounds ninety one pence) and that with effect from
the effective date it has consented to the company ceding,
assigning and delegating in favour of Altris Inc which has
recorded its acceptance of the cession, assignment and
delegation of all rights and obligations arising out of the
contract between Noblenet and the company and that as against
payment of the aforesaid sum it will have no further claims
against the company;
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5.2.5 Staffware Plc that it has passed credit in the sum of GBP 117
134 (one hundred and seventeen thousand one hundred and thirty
four pounds) in favour of the company, has no further claims
against the company and consents to all further obligations
which might have been owed by the company to it being
delegated to and assumed by Altris Inc;
5.2.6 Data General Corporation consenting to claims previously made
by it upon the company constituting claims due not by the
company but by Altris Inc, notwithstanding any documentation
to the contrary;
5.2.7 Confederation Life Insurance Company (UK) Limited and
Confederation Pooled Pensions Limited as landlords that they
consent to the agreement of lease as between the landlords and
Altris Plc as tenant being ceded, assigned and delegated
without penalty on request in favour of Altris Limited and
with effect from the effective date. The costs thereof shall
be borne equally between Altris Inc and Altris Limited.
5.3 Altris Inc shall out of the proceeds to be paid to it in terms of
7.1.1 effect payment of USD 200 000 (two hundred thousand United
States Dollars) as collateral security for any obligations owed by
Altris Inc or Altris Plc arising out of this agreement in favour of
SL, into a joint account which shall be opened in the name of Altris
Inc and administered solely by Spescom's solicitors and Altris'
solicitors. Such amount shall be invested in a demand deposit
account with a registered bank determined by the said solicitors and
shall remain so invested until extinguished by any valid claim or
until the expiration of a period of 2 (two) years from the closing
date, whichever shall occur first. The purpose of the amount so held
in escrow shall be to satisfy any valid claim made by SL pursuant to
the provisions of this agreement and SL shall enjoy a first charge
over the funds so held. The
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payment of any sum towards satisfaction of any such claim shall not
in any way prejudice or affect any other rights or remedies of SL
for the purpose of recovering any amount due by Altris Inc and/or
Altris Plc and not satisfied by payment made out of the joint
account. Interest accrued shall belong to Altris Inc. Unless
utilised in accordance with the escrow any payment out of the joint
account shall be effected on the joint signatures of Altris'
solicitors and Spescom's solicitors on the written instructions of
Altris Inc and SL, an order of court, or an arbitrator's award for
that payment to be made. In the absence of such written
instructions, Spescom's solicitors and Altris' solicitors shall have
no obligation to release any funds from the account or to otherwise
take any action.
5.4 In order to facilitate the payments to be made in terms of this
agreement all amounts to be paid by SL in terms of 6 and 7 shall be
paid to Spescom's solicitors who shall be obliged to immediately
after receipt thereof effect payment on behalf of Altris Inc and
Altris Plc of the amounts referred to in 5.1.1.2, 5.1.7, and 5.3 and
on behalf of the company the amount referred to in 5.1.7, and
thereafter account and pay the balance to the parties entitled
thereto.
5.5 The parties shall do and sign all things necessary as are required
to comply with the provisions of the Acts and to achieve the
implementation of both the letter and spirit of this agreement.
5.6 The entire restructuring as envisaged in this 5 as read with 6 and 7
shall be deemed to have taken place simultaneously.
6. Payment to Altris Inc
In consideration for the conclusion of this agreement and the
restructuring of the company as envisaged in 5, SL shall upon the closing
date effect payment of the
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sum of USD1 000 000 (one million United States Dollars) to Altris Inc,
which shall be obliged to simultaneously lend and advance Altris Plc
USD600 000 (six hundred thousand United States Dollars) to enable Altris
Plc to fulfil its obligations in terms of 5.1.1.2 and 5.3.
7. Investment by SL in Altris Inc.
7.1
7.1.1 SL undertakes upon the closing date to pay to Altris Inc the sum of
USD1 800 000 (one million eight hundred thousand United States
Dollars) against the issue of 2 000 000 (two million) shares of
common stock in Altris Inc, provided that in the event that the
settlement is aborted or delayed or is not approved by the court for
any reason, by September 30, 1999, there shall be issued to SL 1 000
000 (one million) additional shares of common stock in Altris Inc,
the parties anticipating the possibility of a decrease in the value
of such stock in such event.
7.1.2
7.1.2.1 At the request of SL sent to Altris Inc in writing Altris Inc
shall use its best efforts to register the shares purchased by
SL under 7.1.1 of this agreement under the Securities Act of
1933 ("the Securities Act") (other than on SEC Forms S-4 or
S-8) or any successor form thereto) for sale by SL at anytime
after the first anniversary of the closing date, including
compliance with California blue sky laws. Altris Inc shall
bear all costs and expenses of such registration customarily
borne by the issuing company. Notwithstanding the foregoing,
if:-
7.1.2.1.1 in the good faith judgment of the Board of Directors of
Altris Inc., the filing of a registration statement as
soon as practicable after receipt of the request for
registration
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under this 7.1.2.1 would be seriously detrimental to
Altris Inc. because there exist bona fide financing,
acquisition or other activities of Altris Inc, and the
Board of Directors concludes as a result, that it is
essential to defer the filing of such registration
statement at such time, and
7.1.2.1.2 Altris Inc. shall furnish SL a certificate signed by the
President of Altris Inc stating that in the good faith
judgment of the Board of Directors of Altris Inc, it
would be materially detrimental to Altris Inc. for such
registration statement to be filed in the near future
and that it is essential to defer the filing of such
registration statement,
then Altris Inc may defer such filing for a period of not more
that 90 days after receipt of the registration request,
provided that the Altris Inc shall not defer its obligation in
this manner for more than an aggregate of 90 days in any
twelve month period.
7.1.2.2 Altris Inc shall promptly give to SL written notice of its
decision to register any of its securities under the
Securities Act (other than on SEC forms S-4 or S-8) or any
successor form thereto) and shall use its best efforts to
include in such registration (and any related qualification
under blue sky laws or other compliance) and in any
underwriting involved therein, any or all of the shares
purchased by SL under this agreement which SL specifies in a
written request made within 15 (fifteen) days after receipt of
the written notice from Altris Inc; provided, however, that:-
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7.1.2.2.1 the maximum number of Shares to be sold shall not exceed
the maximum number of Shares which the managing
underwriter of the offering considers in good faith to
be appropriate based on market conditions and other
relevant factors (including, without limitation,
pricing) (the "Maximum Number"); and
7.1.2.2.2 if the total quantity of securities desired to be sold
exceeds the Maximum Number, Altris Inc. shall be
entitled to include in the offering the full amount of
Securities to be sold by Altris Inc. or by any holder
who has exercised a demand registration right with
respect to such offering, and each person who elects to
participate in the offering shall be entitled to sell up
to any remaining amount of Securities in proportion to
the number of Securities held by such shareholder.
Nothing in 7.1.2.2 shall derogate from SL's rights under the
provisions of 7.1.2.1.
7.1.2.3 Altris Inc shall inform SL in writing of the initiation of
each such registration and the completion thereof. Altris Inc
shall:-
7.1.2.3.1 use its best efforts to keep such registration effective
for so long as any other selling shareholder
registration statement of Altris Inc is kept effective,
or until SL has completed the distribution described in
the registration statement relating thereto, whichever
first occurs;
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7.1.2.3.2 furnish such reasonable number of prospectuses and other
documents incidental thereto as from time to time SL may
reasonably request; and
7.1.2.3.3 in connection with any underwritten registration, Altris
will enter into any underwriting agreement reasonably
necessary to effect the offer and sale of the shares
purchased by SL under this agreement, provided such
underwriting agreement contains customary underwriting
provisions.
7.1.3
7.1.3.1 The issuance by Altris Inc of any further shares shall, until
SL has been issued with those shares to which it becomes
entitled pursuant to the provisions of 7.1.1, be prohibited
unless SL shall enjoy a right to increase on a proportional
basis those shares in Altris Inc to which it becomes entitled
in terms of 7.1.1.
7.1.3.2 So long as SL continues to hold at least 10% (ten per cent) of
the Fully Diluted Shares (as hereinafter defined), subject to
the terms and conditions specified in this 7.1.3.2, Altris Inc
hereby grants to SL a right of first offer with respect to
future sales by Altris Inc of its Shares (as hereinafter
defined). Each time Altris Inc proposes to offer any shares
of, or securities convertible into or exercisable for any
shares of, any class of its capital stock ("Shares"), Altris
Inc shall first make an offering of such Shares to SL in
accordance with the following provisions:-
7.1.3.2.1 Altris Inc shall deliver a notice ("Notice") to SL
stating:-
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7.1.3.2.1.1 its bona fide intention to offer such Shares;
7.1.3.2.1.2 the number of such Shares to be offered; and
7.1.3.2.1.3 the price and terms, if any, upon which it
proposes to offer such Shares.
7.1.3.2.2 Within 15 (fifteen) calendar days after receipt of the
Notice, SL may elect to purchase or obtain, at the price
and on the terms specified in the Notice, up to that
portion of such Shares which equals the proportion that
the number of shares of common stock issued and held, or
issuable upon conversion or exercise of all convertible
or exercisable securities of Altris Inc then held
("collectively, the "Fully Diluted Shares") by SL bears
to the total number of shares of common stock of Altris
Inc then outstanding (assuming full conversion and
exercise of all convertible or exercisable securities)
issued and held by all security holders of Altris Inc.
7.1.3.2.3 If all Shares referred to in the Notice are not elected
to be obtained as provided in 7.1.3.2.2, Altris Inc may,
during the 60 (sixty) day period following the
expiration of the period provided in 7.1.3.2.2, offer
the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon
terms no more favourable to the offeree than those
specified in the Notice. If Altris Inc does not enter
into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within
30 (thirty) days of
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the execution thereof, the right provided hereunder
shall be deemed to be revived and such Shares shall not
be offered unless first re-offered to SL in accordance
herewith.
7.1.3.2.4 The right of first offer in this 7.1.3.2 shall not be
applicable:-
7.1.3.2.4.1 to the issuance or sale of shares of common stock
(or options therefor) to employees, directors, or
consultants for the primary purpose of soliciting
or retaining their employment or services, or
7.1.3.2.4.2 the issuance of securities pursuant to the
conversion or exercise of convertible or
exercisable securities, or
7.1.3.2.4.3 the issuance of securities in connection with any
merger, acquisition, consolidation, exchange,
reorganization, reclassification,.stock split,
stock dividend or similar transaction.
7.1.3.2.5 The right of first offer set forth in this 7.1.3.2 may
not be assigned or transferred, except that such right
is assignable by SL to a purchaser of all of its
securities of Altris Inc.
7.2 Effective upon the issuance of shares in Altris Inc to SL the
closing of the transactions contemplated hereby, a nominee of SL
shall be elected a director. For so long as SL or any affiliate
holds 50% (fifty per cent) of common stock issued to SL hereunder,
Altris Inc agrees to include a nominee of SL in management's slate
of nominees to be elected to the board of directors and to recommend
to the stockholders the election of such
<PAGE>
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nominee. Any nominee of SL hereunder shall be reimbursed for all
reasonable expenses incurred as a director and shall be entitled to
receive such compensation as may be received by other non-employee
directors of Altris Inc, including indemnity and advancement of
expenses to the fullest extent permitted under applicable law.
7.3 Altris Inc shall use reasonable efforts to procure that its
stockholders shall vote their stock to achieve and maintain
compliance with the provisions of 7.2.
8. Warranties
8.1 Altris Inc and Altris Plc jointly and severally hereby warrant and
represent the truth and accuracy of the UK warranties and the US
warranties to SL and acknowledge that SL has concluded the whole of
this agreement and will implement the transactions which are the
subject thereof, relying on the truth and accuracy of the UK
warranties and the US warranties.
8.2 Altris Inc and Altris Plc jointly and severally warrant, represent
and undertake to SL that each and every UK warranty and US warranty
is true, correct, accurate and not misleading at the execution date
and that each and every such warranty shall continue to be true,
correct and accurate and not misleading throughout the period from
the execution date up to and including the closing date, and hereby
indemnifies and holds SL harmless in respect of any breach thereof.
8.3 Altris Inc and Altris Plc jointly and severally acknowledge that the
conduct of the due diligence investigation referred to in 4.1.3 and
any other event or matter shall in no way whatever detract from any
of their obligations pursuant to the provisions of this agreement
and/or the warranties except a specific and duly authorised written
waiver or release.
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8.4 SL hereby gives the SL warranties to Altris Inc and acknowledges
that Altris Inc has concluded the whole of this agreement and will
implement the transactions which are the subject thereof, relying on
the truth and accuracy of the SL warranties.
8.5 The representations and warranties set forth in this agreement and
the appendices hereto shall survive for a period of two years from
the closing date and shall then expire. Upon the expiration of a
representation or warranty pursuant to this 8.5, unless written
notice of a claim based on such a representation or warranty
specifying in reasonable detail the facts on which the claim is
based shall have been delivered to the party who has made such
representation or warranty prior to such expiration, such
representation or warranty shall be deemed to be of no further force
or effect, as if never made, and no action may be brought based on
the same, whether for breach of contract, tort or under any other
legal theory, provided however that in no event shall any provision
of 8 be deemed to place any limitation on the making of any claim
arising from a fraudulent misrepresentation by any party.
8.6 Promptly after receipt of notice of commencement of any action or
the assertion of any claim by a third party against a party to this
agreement who is or may be entitled to indemnification in respect of
such action or claim for breach of a representation or warranty
hereunder, the indemnified party shall give the indemnifying party
who made such representation or warranty written notice of such
action or claim. In the case of the commencement of an action such
notice shall be provided in any event no less than 10 (ten) days (or
if notice within 10 (ten) days is not practicable, then as soon as
practicable) prior to the date on which any response is required to
be filed or served by the indemnified party. The indemnifying party
shall then have the right to undertake the defense thereof by
representatives of its own
<PAGE>
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choosing that are reasonably satisfactory to the indemnified party;
provided, however, that the indemnifying party shall be required to
provide reasonable assurances to the indemnified party (which may
include a bond, escrow or other security) of its ability to pay the
likely costs, award and any other amount for which the indemnified
party is entitled to be indemnified.
8.7 No claim in respect of a breach of a representation or warranty will
be made by any party against another party (whether for breach of
contract, tort or under any other legal theory) unless the aggregate
of all costs, expenses, damages and losses ("Losses") incurred by
the non-breaching party exceed USD16 000 (sixteen thousand United
States Dollars) and only to the extent of any such Losses in excess
of USD16 000 (sixteen thousand United States Dollars). In addition,
no claim for breach of any representation or warranty may be made by
any party against another party (whether for breach of contract,
tort or under any other legal theory) to the extent the aggregate
Losses claimed (including any Losses previously recovered) by such
party exceeds USD2 000 000 (two million United States Dollars).
8.8 If prior to the closing date any of the warranties is found to be
untrue, incorrect, inaccurate or misleading, SL shall be entitled to
rescind this agreement by notice to Altris Inc on or prior to the
closing date. This right to rescind shall be in addition and without
prejudice to any rights and remedies which would have been available
to SL had this agreement not been rescinded.
8.9 Altris Inc shall immediately give written notice to SL of the
occurrence of any event which results or may result in any of the
warranties being untrue, incorrect, inaccurate or misleading giving
sufficient details of the event.
8.10 Any information supplied by Altris Limited, its officers or
employees to Altris Inc, their agents, representatives or advisers
in connection with, or to form
<PAGE>
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the basis of, the warranties or any matter covered in the Disclosure
Letter, or for any other reason, shall be deemed not to include or
have included a representation, warranty or guarantee of its
accuracy to Altris Inc and shall not constitute a defence to Altris
Inc to any claim made by SL. Altris Inc waives any and all claims
against Altris Limited, its officers or employees in respect of any
information so supplied.
8.11 If any warranty shall prove to be untrue, inaccurate, incorrect or
misleading, SL may at its option and without prejudice to any other
right or remedy which may be available to it:-
8.11.1 claim for all loss suffered by it in consequence of such
breach of warranty (and for this purpose an amount equal to,
without limitation, the amount of any stamp duty (including
any penalty for late stamping) payable on any document which
ought to be in the possession of Altris Limited as at the date
of completion and which has not been properly stamped shall be
deemed to be a loss suffered by SL whether or not that company
has a legal obligation to present or re-present the same for
stamping); and
8.11.2 require Altris Inc and Altris Plc jointly and severally to pay
to Altris Limited such sum as is equal to the amount by which
the assets of Altris Limited are less, or less valuable, or
their liabilities greater, than they would have been if the
statement concerned had been true, accurate and correct and
not misleading, and for these purposes, without limitation, an
amount equal to the amount of any such stamp duty as is
described in 8.11.1 shall be deemed to be a liability of
Altris Limited; and
8.11.3 require Altris Inc and Altris Plc jointly and severally
forthwith when called upon so to do to purchase from Altris
Limited any debt to
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which the warranty contained in paragraph 2.4 of Appendix 9
refers except as provided in the Disclosure Letter to the UK
warranties and which shall not have been recovered in full and
as therein mentioned for an immediate cash consideration equal
to the full value thereof and SL shall procure that upon
receipt of such payment in full Altris Limited shall assign
such debt to Altris Inc or as they may direct, it being
understood, for example, that SL shall not be entitled to
require Altris Inc or Altris Plc to make payments to both
Altris Limited and SL in respect of the same losses.
and so that the exercise by SL of any of the additional remedies set
out in this 8.11 shall be without prejudice to any other of them,
provided that the provisions of this 8.11 shall be construed only to
afford compensation to SL to make SL whole, and not to afford it
additional punitive compensation.
8.12 Altris Inc agrees to pay to SL from time to time an amount equal to
any liability in respect of taxation of the company arising in
respect of or by reference to or in consequence of any of the
following:-
8.12.1 any transaction, act, circumstance, omission, agreement,
arrangement or event whatsoever occurring on or before the
closing date; or
8.12.2 any income, profits or gains arising, earned, accrued or
received on or before the closing date; or
8.12.3 any income, profits or gains arising, earned, accrued or
received on or before the closing date;
together with costs and expenses incurred and payable by SL or the
company in connection with or in consequence of any matter from
which it
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appears that a liability in respect of taxation is or may be imposed
which may give rise to a claim under this covenant.
This covenant shall notwithstanding anything to the contrary
contained in this agreement endure for a period of 6 (six) years
from the end of the accounting period current at the closing date.
8.13 References to the awareness or knowledge of Altris Inc or Altris Plc
as the case may be in a warranty in Appendix 9 shall only limit that
warranty by Altris Inc's or Altris Plc's awareness or knowledge if
Altris Inc or Altris Plc as the case may be has made all due and
careful enquiries to ascertain if the relevant information is true,
accurate, correct and not misleading.
8.14 Nothing in this agreement shall be deemed to limit the duty of any
party to mitigate its damages in the event it is entitled hereunder
to indemnification for any matter.
9. Releases and other agreements
9.1 SL undertakes that it shall use reasonable endeavours (including
without limitation substituting the guarantee of SL or Spescom CIT
or paying in full the underlying obligation) as soon as practical
after the arrival of the closing date, to achieve the release of
Altris Inc from the guarantees extended by Altris Inc in favour of
the persons stated in Appendix 15, the outstanding amount of which
is set forth in Appendix 15.
9.2 Pending the obtaining of such releases SL hereby indemnifies and
holds Altris Inc harmless in respect of any claim which may be made
upon it by any of the creditors concerned in respect of the amounts
for which SL hereby undertakes to achieve the release of Altris Inc.
<PAGE>
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9.3 The parties undertake reciprocally in favour of each other that they
shall as soon as is practical after the arrival of the closing date
take such steps as may be required to cause agreements to be
executed and implemented based on sound commercial terms to achieve
that:-
9.3.1 the company appoints Spescom CIT as its sole and exclusive
distributor of the Altris products in sub-Saharan Africa;
9.3.2 Spescom CIT appoints Altris Inc as its exclusive distributor
for the Spescom products in the North, South and Central
Americas and the Caribbean and Mexico; and
9.3.3 Spescom CIT and Altris Inc shall conclude a technology
agreement to achieve the full integration of the Spescom
products and the Altris products.
9.3.4 For the duration of Appendix 3 Altris Inc shall permit Altris
Limited without charge to use the Altris name and logo.
9.4 To the extent that the parties cannot agree upon the commercial
terms of the arrangements described in 9.3, the Chief Executive
Officer of Altris Inc and the Chief Executive Officer of SL shall
meet with a view to resolving the issue and if as between them they
are unable to do so within 30 (thirty) days, the matter shall be
referred to arbitration in terms of 17 for an arbitrator to resolve
the conflict. In so doing the parties shall have regard to the
concepts, time frames, rights, duties, privileges, and obligations
considered and given effect to in the distributor agreements.
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10. Transfer of software engineers
Altris Inc shall procure that as and from the closing date all software
engineers previously in the employ of Altris Limited, shall with their
consent have been transferred from Altris Limited to another company
within the Altris Group and Altris Inc and Altris Plc jointly and
severally hereby undertake to procure that no claim shall lie by any of
them, whether pursuant to the Transfer of Undertakings (Protection of
Employment) Regulations 1981 or otherwise, as against Altris Limited or
SL, and Altris Inc and Altris Plc jointly and severally hereby indemnify
and hold Altris Limited and SL harmless against any and all such claims.
Altris Limited shall be reimbursed for any compensation paid or payable by
Altris Limited to such engineers with respect to their employment from the
effective date through the closing date. For a period of 6 (six) months
after the closing date, Altris Limited shall continue to provide office
space and office support for such engineers in a manner consistent with
that provided to such engineers prior to the closing date. For so long as
such engineers and the facilities utilised by them are physically present
within the premises from which Altris Limited conducts business, all
direct and indirect costs listed in Appendix 17 related to the activities
of those engineers shall be borne and discharged by Altris Inc and Altris
Plc jointly and severally which indemnify and hold Altris Limited and SL
harmless therefor.
11. Non-competition
11.1 The principal activity of Altris Limited after the closing date
shall be the marketing and sales of the technology of the Altris
products and the Spescom products for the rest of the world (and in
relation to the Spescom products excluding sub-Saharan Africa).
11.2 Accordingly:-
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11.2.1 to protect the goodwill of the business of Altris Limited and
thereby ensure that SL receives the full benefit of this in
making the investment anticipated by this agreement, the
Altris Group hereby:-
11.2.1.1 undertakes that it shall not directly or indirectly,
whether through any direct or indirect subsidiary, any
other associated company (as such term is defined in
11.3) or otherwise, compete with the technologies of the
Altris products and the Spescom products in the rest of
the world and additionally with the Spescom products in
either South and Central America, the Caribbean and
Mexico; provided, however, that the marketing and sale
of products by any member of the Altris Group to
customers or resellers of Altris products for delivery
to or use in the rest of the world shall not constitute
competition in violation of this agreement if conducted
in accordance with the distribution agreements entered
into hereunder;
11.2.1.2 acknowledges that the covenants not to compete as herein
contained:-
11.2.1.2.1 are fair and reasonable in respect of geographical area
and extent and are no greater than is necessary to
protect the goodwill of Altris Limited and that the
investment by SL as anticipated by this agreement
provides adequate compensation for the restrictions
imposed; and
11.2.1.2.2 shall endure for a period ending upon the date on which
Altris Limited ceases to be entitled under the
distribution agreements to be the exclusive distributor
of Altris products in the rest of the world and shall be
relaxed only insofar as and in the territories in which
Altris Limited
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loses exclusive distribution rights as set out in the
distribution agreements;
11.2.2 the Spescom Group hereby:-
11.2.2.1 undertakes that it shall not directly or indirectly,
whether through any direct or indirect subsidiary, other
associated party (as defined in 11.3) or otherwise,
compete with the technologies of the Altris products and
the Spescom products anywhere in the world other than
sub-Saharan Africa;
11.2.2.2 acknowledges that the covenants not to compete as herein
contained are fair and reasonable in respect of
geographical area and extent, and they shall endure for
a period of 12 (twelve) months beyond that date on which
SL ceases to be the owner of shares in Altris Limited.
11.3 As used herein, the term "associated company" shall mean with
respect of any party, any entity of any kind that is controlled by
such party directly or indirectly or as to which such party owns an
equity interest (other than an interest of not more than 2% of a
publicly traded company), including but not limited to any direct or
indirect subsidiary of such party; provided however that an entity
that acquires all or a portion of any party shall not be deemed an
associated company with respect to such party for purposes hereof.
11.4 The parties agree that should any restriction be found to be void or
unenforceable without the deletion of some part of it or the
reduction in area or duration specified, that restriction shall
apply with such modification as may be necessary to make it valid.
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12. Supersession
The terms and conditions of this agreement supersede the letter of intent
in all respects which is deemed replaced by these presents.
13. Default
13.1 Subject to the provisions of 8.8, should any of the parties breach
any of the terms or provisions of this agreement and should such
breach not be remedied within 14 (fourteen) days after receipt by
the defaulting party of a written notice calling upon it to do so,
the aggrieved party shall at its election without prejudice to any
other rights which it might have for damages or otherwise be
entitled at any time prior to the performance of all those matters
required to be dealt with on the closing date to -
13.1.1 terminate this agreement; or
13.1.2 enforce specific performance of the terms hereof.
13.2 Notwithstanding the foregoing no party shall be entitled to
terminate this agreement unless the breach complained of is capable
of being remedied and is not remedied promptly in terms hereof, or
if the breach complained of is incapable of being remedied, is a
material breach of a material term going to the root of this
transaction.
13.3 For the avoidance of doubt no party shall be entitled to terminate
this agreement after those matters which are required to be dealt
with on the closing date have been duly achieved.
14. Confidentiality and announcements
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Save for any announcements and filings as shall be required by law or any
regulatory authority, this agreement shall remain confidential to the
parties and none of the parties shall be entitled to disclose any aspect
thereof or the existence thereof to any person, save for professional
advisors, without the concurrence of the others, which shall not be
unreasonably withheld, and in this regard it is anticipated that both SL
and Altris Inc will as a matter of record make public announcements
regarding this transaction and that Altris Inc will file a report with the
United States Securities and Exchange Commission that will include a copy
or description of this agreement and the other agreements contemplated
hereby.
15. Co-operation
Each of the parties hereto undertakes (as far as each is legally able) to
-
15.1 do, and to procure the doing by other persons, and to refrain and
procure that other persons will refrain from doing, all such acts;
and
15.2 pass, and to procure the passing of all such resolutions of
directors or shareholders of any company,
to the extent that the same may reasonably lie within such party's
power as may be required to give effect to the import or intent of
this agreement or to procure the fulfilment of any condition to
which it may be subject.
16. Good faith
The parties agree that they enter into this agreement on the basis of
trust and record that they will observe good faith in contracting and
dealing with each other and implementing the provisions hereof. This
implies, inter alia, that they -
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16.1 will at all times during the currency of this agreement act
reasonably and in good faith;
16.2 will perform their obligations arising from this agreement
diligently and with reasonable care;
16.3 have made a full disclosure to each other of any matter that may
affect the execution of this agreement.
17. Arbitration
17.1 All disputes, differences or questions arising out of this agreement
or as to the rights or obligations of the parties under it or in
connection with the construction of it shall be referred to the
arbitration of a single arbitrator to be agreed between the parties
or, failing agreement within 14 (fourteen) days on the nomination by
any party of an arbitrator to be appointed at the request of any
party, by the President for the time being of The Law Society of
England and Wales having due regard to any representations made to
him as to the appropriate qualifications of such arbitrator. The
arbitration shall take place in London and shall be in accordance
with the Arbitration Act 1996 or any re-enactment or modification of
such Act for the time being in force.
17.2 Notwithstanding the provisions of this 17 the parties shall remain
vested with rights to apply to Court in respect of any interdict or
urgent relief as may otherwise be required for the protection of
their rights.
18. Proper law
This agreement is governed by and is to be construed in accordance with
the substantive laws of England and Wales ignoring any question of
conflict of laws.
<PAGE>
-40-
The parties consent accordingly to the non-exclusive jurisdiction of the
appropriate court of law in England in relation to all matters, claims and
disputes arising out of or in connection with this agreement or any
document supplemental hereto. Altris Inc, Altris International and Altris
Plc hereby jointly and severally irrevocably appoint Altris' solicitors as
their agent for the service of any proceedings upon them pursuant to this
agreement. Prior to the closing date Altris Limited irrevocably appoints
Altris' solicitors and after the closing Altris Limited irrevocably
appoints Spescom's solicitors as its agent for the service of any
proceedings upon it pursuant to this agreement. SL and Spescom CIT hereby
jointly and severally irrevocably appoint Spescom's solicitors as their
agent for the service of any proceedings upon them pursuant to this
agreement.
19. Brokerage
No party shall be entitled to any brokerage arising out of the conclusion
of this agreement.
20. Whole agreement and non-waiver
20.1 This agreement together with the other documents referred to herein
constitutes the sole and exclusive record of the agreement between
the parties relating to the subject matters hereof and no
representation or warranty made or given by any party to any other
and not contained herein shall be valid and binding and no
variation, modification or waiver of any provision thereof, or
consent to any departure therefrom by any party, or consensual
cancellation, shall be of any force or effect unless the same shall
be confirmed in writing signed by or on behalf of that party and any
other party affected thereby, and in any event the same shall be
effective only in the specific instance and for the purpose, and to
the extent for which made or given.
<PAGE>
-41-
20.2 No indulgence of whatever nature or any relaxation of any of the
terms or conditions of this agreement granted by any party to any
other shall in any way constitute a waiver or a novation of the
grantor's rights to strictly enforce the terms hereof, nor operate
as any estoppel.
21. Notices
21.1 Any notice or legal process served under this agreement must be in
writing and must be served on the relevant party at the address set
out below or such other address as may have been notified to the
serving party:-
21.1.1 SL
and Spescom CIT Spescom Park
cnr Alexandra Road
and Second Street
Halfway House
Midrand 1685
Fax No. (011) 266 1707
marked for the attention of
the Managing Director
with a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank
2196 Johannesburg
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
21.1.2 Altris Inc.
Altris International
Altris Plc 9339 Carroll Park Drive
San Diego
California 92121
<PAGE>
-42-
Fax No. (619) 546 7671
marked for the attention of
the President
with a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
Los Angeles
California 90067
Attention: Russell C Hansen
Fax No. (310) 551 8741
21.1.3 Altris Limited
before the closing date 9339 Carroll Park Drive
San Diego
California 92121
Fax No. (619) 546 7671
marked for the attention of
the President
with a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
Los Angeles
California 90067
Attention: Russell C Hansen
Fax No. (310) 551 8741
after the closing date c/o SL Spescom Park
cnr Alexandra Road and
Second Street Halfway House
Midrand 1685
Fax No. (011) 266 1707
marked for the attention of
the Managing Director
<PAGE>
-43-
with a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank
2196 Johannesburg
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
21.2 All notices to be given under this agreement shall either be
delivered personally or sent by first class or airmail prepaid post
or by facsimile transmission and shall be deemed duly served unless
the contrary is proved:-
21.2.1 in the case of a notice delivered personally, at the time of
delivery;
21.2.2 in the case of a notice sent inland by first class prepaid
post, 5 (five) clear business days after the date of dispatch;
21.2.3 in the case of a notice sent overseas by airmail, 10 (ten)
business days (being business days in the place to which the
notice is dispatched) after the date of dispatch; and
21.2.4 in the case of a facsimile transmission, if sent during normal
business hours then at the time of transmission and if sent
outside normal business hours then on the next following
business day.
21.3 Each notice shall be addressed to the address of the party concerned
set out in 21.1 or to such other address as that party shall have
previously notified to the sender.
22. Prohibition against assignment
None of the parties shall be entitled to assign any of its rights arising
under this agreement, provided however that:-
<PAGE>
-44-
22.1 Spescom CIT shall be entitled to cede, assign and delegate any
rights and obligations to which it is bound in terms of this
agreement to any other company which from time to time is controlled
by SL; provided, however, that if Spescom CIT so cedes, assigns or
delegates to any such company any obligations hereunder, Spescom CIT
shall remain liable for any breach or violation by such company of
this agreement or any agreement, certificate or document executed or
delivered hereunder; and
22.2 SL shall be entitled to nominate in its place a subsidiary of SL,
whether presently in existence or to be incorporated and/or
registered after the execution date, to which the rights and
obligations vested in and/or undertaken by SL in terms of this
agreement will be passed and/or assumed. Such nominee shall become
bound in writing to the terms hereof. If SL so nominates a
subsidiary, SL shall remain liable for any breach or violation by
such subsidiary of this agreement or any other agreement,
certificate or document executed or delivered hereunder.
23. Costs
The costs hereof and incidental hereto including the costs of negotiation,
drafting and drawing this agreement and any further drafts as incurred
with the attorneys, shall be borne and paid for as follows:-
23.1 Altris Inc shall bear and pay USD10 000 (ten thousand United States
Dollars) of such costs;
23.2 SL shall bear and pay all of the remaining amount of such costs; and
23.3 Altris Inc shall bear and pay all out-of-pocket costs incurred by
it, Altris Plc, and Altris Limited.
<PAGE>
-45-
All such costs shall be on the scale as between attorney and his own
client.
24. Partial invalidity
Any provision of this agreement which is invalid, illegal or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction
or rendering that or any other provision of this agreement invalid,
illegal or unenforceable in any other jurisdiction.
25. General
25.1 Altris Inc will furnish to SL the following:-
25.1.1 Quarterly Statements
As soon as available and in any event within 45 (forty-five)
days after the end of each quarterly fiscal period (except the
last) of each fiscal year, copies of:
25.1.1.1 consolidated and consolidating balance sheets of Altris
Inc. and Subsidiaries as of the close of the three-month
period then ended, setting forth in comparative form the
consolidated figures at the end of the preceding fiscal
year;
25.1.1.2 consolidated and consolidating statements of income and
retained earnings of Altris Inc. and Subsidiaries for
the three-month period then ended, setting forth in
comparative form the consolidated figures for the
corresponding period of the preceding fiscal year; and
<PAGE>
-46-
25.1.1.3 consolidated and consolidating statements of cash flows
of Altris Inc. and Subsidiaries for the portion of the
fiscal year ending with such three-month period, setting
forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year,
all in reasonable detail and accompanied by a
certificate of an authorized financial officer of Altris
Inc. that such financial statements fairly present the
financial condition and results of operations and cash
flows of Altris Inc. at and for the periods presented,
subject to normal year-end adjustment;
25.1.2 Annual Statements
As soon as available and in any event within 90 (ninety) days
after the close of each fiscal year of Altris Inc, copies of:-
25.1.2.1 consolidated and consolidating balance sheets of Altris
Inc. and Subsidiaries as of the close of such fiscal
year, and
25.1.2.2 consolidated and consolidating statements of income and
retained earnings and cash flows of Altris Inc. and
Subsidiaries for such fiscal year, in each case setting
forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and
accompanied by an unqualified report thereon of a firm
of independent public accountants of recognized national
standing or a firm reasonably acceptable to SL;
25.1.3 Sec and Other Reports
Promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by
Altris Inc. to stockholders generally and of each periodic or
current report, and any
<PAGE>
-47-
registration statement or prospectus filed by Altris Inc. or
any Subsidiary with any securities exchange or the SEC or any
successor agency, and copies of any orders in any proceedings
to which Altris Inc. or any of its Subsidiaries is a party,
issued by any governmental agency, federal or state, having
jurisdiction over Altris Inc. or any of its Subsidiaries.
Altris Inc. specifically covenants to timely file each such
item required to be filed with the SEC and each state
requiring securities laws filings; and
25.1.4 Pipeline Report and Other Requested Information
Within 5 (five) business days after preparation, Altris Inc's
internal pipeline report, and with reasonable promptness, such
financial data and other information relating to the business
of Altris Inc. as SL may from time to time reasonably request.
25.2 Each party to this agreement shall execute all instruments and
documents and take all actions as may be reasonably required to
effectuate this agreement.
25.3 Time and strict and punctual performance are of the essence with
respect to each provision of this agreement.
25.4 In the event any litigation, arbitration, mediation, or other
proceeding ("Proceeding") is initiated by any party(ies) against any
other party(ies) to enforce, interpret or otherwise obtain judicial
or quasi-judicial relief in connection with this agreement, the
prevailing party(ies) in such Proceeding shall be entitled to
recover from the unsuccessful party(ies) all costs, expenses, actual
attorney's and expert witness fees, relating to or arising out of:-
25.4.1 such Proceeding (whether or not such Proceeding proceeds to
judgment), and
<PAGE>
-48-
25.4.2 any post-judgment or post-award proceeding including without
limitation one to enforce any judgment or award resulting from
any such Proceeding. Any such judgment or award shall contain
a specific provision for the recovery of all such subsequently
incurred costs, expenses, actual attorney's and expert witness
fees.
25.5 Each party to this agreement and its legal counsel have reviewed and
revised this agreement. The rule of construction that any
ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of this agreement or of any
amendments or exhibits to this agreement.
25.6 This agreement shall become effective when it has been executed by
all of the parties to this agreement.
25.7
25.7.1 The obligations of Altris Inc and Altris Plc under this
agreement shall be the joint and several obligations of Altris
Inc and Altris Plc.
25.7.2 Altris Inc hereby interposes and binds itself as guarantor,
jointly and severally for, and as co-principal debtor in
solidum with Altris Plc in favour of SL, in respect of any
claim arising out of this agreement or any cancellation
thereof, under renunciation of the benefits of excussion,
division and cession of action and of the benefit of all other
exceptions which might or could be pleaded by it (the meaning
and effect of which it hereby declares that it fully
appreciates and understands) and it shall -
25.7.2.1 be bound by all acknowledgments and admissions by
Altris Plc;
<PAGE>
-49-
25.7.2.2 not be entitled to be released herefrom by virtue of any
variation or novation of this agreement, the release of
any other security furnished by or on behalf of Altris
Plc, or any extension of time or other indulgence
granted by SL.
25.7.3 Altris Plc hereby interposes and binds itself as guarantor,
jointly and severally for, and as co-principal debtor in
solidum with Altris Inc in favour of SL, in respect of any
claim arising out of this agreement or any cancellation
thereof, under renunciation of the benefits of excussion,
division and cession of action and of the benefit of all other
exceptions which might or could be pleaded by it (the meaning
and effect of which it hereby declares that it fully
appreciates and understands) and it shall -
25.7.3.1 be bound by all acknowledgments and admissions by Altris
Inc;
25.7.3.2 not be entitled to be released herefrom by virtue of any
variation or novation of this agreement, the release of
any other security furnished by or on behalf of Altris
Inc, or any extension of time or other indulgence
granted by SL.
25.8 In the case of conflict between any provision of this agreement and
the shareholders agreement (Appendix 7 hereto), the provisions
hereof shall prevail.
25.9 Any provisions of this agreement shall, so far as they are capable
of being performed or observed, continue in full force and effect
notwithstanding the expiry of the execution date except in respect
of those matters already performed.
<PAGE>
-50-
25.10 This agreement may be executed in several counterparts (whether
original or facsimile) and upon the execution of all such
counterparts by one or more parties, each counterpart shall be
deemed to be an original hereof.
Thus done and signed by the parties hereto as follows -
Date: May 7, 1999 For and on behalf of
Spescom Limited
Place: London, England /s/ Hilton Isaacman
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris Software, Inc.
Place: London, England /s/ Roger Erickson
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Spescom CIT (Pty) Limited
Place: London, England /s/ Hilton Isaacman
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of each of
the companies in the Spescom group
Place: London, England /s/ Hilton Isaacman
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris Software, Inc.
Place: London, England /s/ Roger Erickson
----------------------------------------
President, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris Software Limited
Place: London, England /s/Peter J.J. Brady
----------------------------------------
<PAGE>
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Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris International Limited
Place: London, England /s/ John W. Low
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris Group Plc
Place: London, England /s/ John W. Low
----------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of each of
the companies in the Altris group
Place: London, England /s/ Peter J.J. Brady
----------------------------------------
Director, who warrants that he
is duly authorised hereto
<PAGE>
TABLE OF CONTENTS
Page
1. Interpretation.......................................................... 2
2. Preamble................................................................ 10
3. Indivisibility.......................................................... 11
4. The conditions.......................................................... 11
5. Restructuring and events upon closing date.............................. 15
6. Payment to Altris Inc................................................... 20
7. Investment by SL in Altris Inc.......................................... 21
8. Warranties.............................................................. 27
9. Releases and other agreements........................................... 32
10. Transfer of software engineers.......................................... 34
11. Non-competition......................................................... 34
12. Supersession............................................................ 37
13. Default................................................................. 37
14. Confidentiality and announcements....................................... 37
15. Co-operation............................................................ 38
16. Good faith.............................................................. 38
17. Arbitration............................................................. 39
18. Proper law.............................................................. 39
19. Brokerage............................................................... 40
20. Whole agreement and non-waiver.......................................... 40
21. Notices................................................................. 41
22. Prohibition against assignment.......................................... 43
23. Costs................................................................... 44
24. Partial invalidity...................................................... 45
25. General................................................................. 45
<PAGE>
APPENDICES
Appendix 1 Accounts
Appendix 2 Altris products
Appendix 3 Distribution Agreement
Appendix 4 Distribution Agreement
Appendix 5 Effective Date Management Accounts
Appendix 6 Executives
Appendix 7 Shareholders Agreement
Appendix 8 Spescom products
Appendix 9 U K Warranties
Appendix 10 U S Warranties
Appendix 11 Service Agreement
Appendix 12 Service Agreement
Appendix 13 Assets of Altris Limited taken over by Altris Inc
Appendix 14 Ongoing obligations of the company assumed by Altris Inc
Appendix 15 Releases
Appendix 16 SL warranties
Appendix 17 Reimbursable Costs Relating to UK Engineers
Appendix 18 Memorandum of understanding in relation to Altris Software
securities litigation
Appendix 19 Pledge
<PAGE>
APPENDIX 3
[LOGO]
[Letterhead of Kallmeyer & Strime]
Agreement
between
Altris Software, Inc.
and
Altris Software Limited
<PAGE>
-2-
1. Interpretation
1.1 The clause headings of this agreement are for reference purposes
only and shall not be used in the interpretation thereof.
1.2 Unless a contrary intention clearly appears -
1.2.1 expressions which denote -
1.2.1.1 any gender shall include the other genders;
1.2.1.2 a natural person shall include an artificial person and
vice versa;
1.2.1.3 the singular shall include the plural and vice versa;
1.2.2 the following expressions shall have the meanings set opposite
them below and cognate expressions shall bear corresponding
meanings -
1.2.2.1 "Altris Additional
Product" - shall mean any Computer Software
Program relating to knowledge
management products, document
management systems, product data
management
<PAGE>
-3-
products, or configuration management
products, other than EB or Wintrack,
in whole or in part including and
without detracting from the
generality of the aforegoing, any one
or more of the modules of the program
and any Upgrades, Modifications and
Enhancements thereto, in respect
whereof Altris Software Inc or any
other member of the Altris Group owns
the copyright or will own the
copyright in future or in respect
whereof the copyright does not
subsist at present, but will come
into being in future and will be
owned by Altris Inc or any such
member of the Altris Group;
1.2.2.2 "Altris Inc"
or "Licensor" - shall mean Altris Software, Inc.
organised according to the laws of
the State of California, United
States of America;
1.2.2.3 "Altris Limited"
<PAGE>
-4-
or "Licensee" - shall mean Altris Software Limited,
company number 2625912, incorporated
in the United Kingdom under the
Companies Act 1985;
1.2.2.4 "Altris Limited
Territory" - shall mean every territory or country
save and except for North-, Central-,
South America, Caribbean and Mexico;
1.2.2.5 "Altris products" - shall mean EB, Wintrack or Altris
Additional Product;
1.2.2.6 "Code" - shall mean a computer programming
code; unless otherwise specified,
Code shall include both object code
and source code and Code shall
include any maintenance
Modifications, Upgrades or
Enhancements thereto created by the
Licensor or owner of the copyright
from time to time;
1.2.2.7 "Computer Software
<PAGE>
-5-
Program" - shall mean the program forming the
subject matter of the right licensed
in terms of clause Error! Reference
source not found. hereof;
1.2.2.8 "EB" - shall mean EB Software, a Computer
Software Program, as more fully
particularised in annexure "A"
hereto, in whole or in part and
including, without detracting from
the generality of the aforegoing, any
one or more modules of the program
presently available;
1.2.2.9 "EMS" - shall mean EMS Software, a computer
program, as more fully particularised
in annexure "B" hereto, in whole or
in part and including, without
detracting from the generality of the
aforegoing, any one or more modules
of the program presently available
and any Upgrades, Modifications and
Enhancements thereto;
<PAGE>
-6-
1.2.2.10 "Enhancements" - shall mean significant changes to a
computer software program, resulting
in the addition of a feature or
capability not present in the
computer software program prior to
the introduction of the changes, as
well as any changes to the computer
software program designed to permit
the use of the software on hardware
or in conjunction with operating
system software other than that for
which the software was initially
designed;
1.2.2.11 "the Integrated
Software" - shall mean the integrated software
product resulting from the
combination of PRO-CM and EB and/or
Wintrack and/or the Altris Additional
Product and/or the Spescom Additional
Product;
1.2.2.12 "Intellectual
Property" - shall mean all intellectual property,
whether tangible or intangible,
relating to, associated with or
arising from the
<PAGE>
-7-
software product in question,
including and without detracting from
the generality hereof, all copyright
applications and registrations, the
right to exercise aspects of
copyright whether registered or not,
ownership of any aspect of copyright
whether registered or not, trade
marks, trade names, trade secrets,
marketing development and strategy
data, calculations, development cost
research and information, plans,
proprietary rights, installation and
user manuals whether or not
incorporated in humanly intelligible
media or data, data base designs,
data base entity relationships, data
base triggers and procedures, common
object models, information,
processes, flow diagrams and system
descriptions, technology rights,
licences, market research, field
research data, market projections,
promotional data, research and
development, tests and the result
<PAGE>
-8-
thereof whether still in progress or
otherwise, discoveries, developments,
prototypes, designs, diagrams,
engineering technology, acquisitions,
productions, all inventions,
formulas, processes, works of any
nature, techniques, diagrams,
concepts, software, Code,
information, working papers, and
anything which is devised and is
subject to any intellectual property
rights, logos, whether registered or
not and all or any rights relating to
any of the aforesaid;
1.2.2.13 the Interface
Product - shall mean a computer software
program with interface capability,
designed primarily to link the
components of the Integrated
Software, as more fully
particularised in annexure "C"
hereto, in whole or in part and
including, without detracting from
the generality of the aforegoing, any
one or more modules of the program
presently available and any Upgrades,
<PAGE>
-9-
Modifications and Enhancements
thereto;
1.2.2.14 "Licensee" - shall mean Altris Limited;
1.2.2.15 "Licensor" - shall mean Altris Inc;
1.2.2.16 "List Price" - shall mean the value placed on the
transaction in question by reference
to the price list of the Licensor
then in effect;
1.2.2.17 "Modifications" - shall mean changes, improvements or
customisation of or to a computer
software program, which may be
required to adapt the software to the
requirements of the user;
1.2.2.18 "PRO-CM" - shall mean the software program
resulting from the combination of EMS
and the Interface Product;
1.2.2.19 "restructuring
<PAGE>
-10-
agreement" - shall mean that agreement as between
Spescom Limited, Spescom CIT, Altris
Inc, Altris Limited, Altris
International Limited, and Altris
Group Plc, and to which this
constitutes Appendix 3;
1.2.2.20 "right of
copyright" - shall mean the reproduction of the
Computer Software Program for the
purposes of use thereof by third
parties, subject to the third parties
being licensed in the terms set out
in annexure "D" hereto;
1.2.2.21 "Spescom Additional
Product" - shall mean any computer software
program relating to knowledge
management products, document
management systems, product data
management products, or configuration
management products, other than EMS,
Interface Product or PRO-CM, in whole
or in part including and without
detracting from the generality of the
aforegoing, any one or more of the
modules of the
<PAGE>
-11-
program and any Upgrades,
Modifications and Enhancements
thereto, in respect whereof Spescom
CIT, SL or any other member of the
Spescom group owns the copyright or
will own the copyright in future or
in respect whereof the copyright does
not subsist at present, but will come
into being in future and will be
owned by Spescom CIT, SL or any other
member of the Spescom group;
1.2.2.22 "Spescom CIT" - shall mean Spescom CIT (Pty) Limited,
Registration No. 83/08746/07, a
company incorporated in the Republic
of South Africa, and its cessionaries
and assigns;
1.2.2.23 "Spescom products" - shall mean EMS, Interface Product,
PRO-CM or Spescom Additional Product;
1.2.2.24 "Term" - shall mean in perpetuity, subject
however to the provisions of 13;
<PAGE>
-12-
1.2.2.25 "Territory" - shall mean a single geographic
territory identified in annexure "G"
hereto, which constitutes a portion
of the Altris Limited Territory;
1.2.2.26 "Upgrades" - shall mean changes or improvements to
a computer software program, which
relate to or affect the operating
performance of the software or an
aspect of the software, but which do
not change the basic operation or
functioning of the computer software
program;
1.2.2.27 "Wintrack" - shall mean Wintrack Software, a
Computer Software Program as more
fully particularised in annexure "E"
hereto including PRO-EDM and Target,
in whole or in part and including,
without detracting from the
generality of the aforegoing, any one
or more modules of the program
presently available.
<PAGE>
-13-
1.3 Terms and expressions defined in the restructuring agreement shall,
unless the context dictates otherwise, have the same meanings where
referred to herein.
1.4 Wherever the context permits, a reference to a licence shall include
a sub-licence and vice versa and a reference to a licensor shall
include a reference to a sub-licensor and vice versa and a reference
to a licensee shall include a reference to a sub-licensee and vice
versa.
1.5 Any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time.
1.6 If any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of the agreement.
1.7 When any number of days is prescribed in this agreement, same shall
be reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday in
which case the last day shall be the next succeeding day which is
not a Saturday, Sunday or public holiday.
<PAGE>
-14-
1.8 Where figures are referred to in numerals and in words, if there is
any conflict between the two the words shall prevail.
1.9 A reference to a document includes an amendment or supplement to, or
replacement or novation of that document.
1.10 Where a certificate or determination is required by the auditors in
terms of this agreement, such shall be prepared by the auditors
acting as experts and not as arbitrators and shall be final and
binding upon the parties save for any manifest error in calculation.
1.11 Schedules, annexures or appendices to this agreement shall be deemed
to be incorporated in and form part of this agreement.
1.12 The preamble shall be deemed to be incorporated herein.
2. Preamble
It is hereby recorded that:-
<PAGE>
-15-
2.1 Spescom CIT or another member of the Spescom Group is the owner of
the full and complete copyright in the Spescom products and the
Intellectual Property associated therewith;
2.2 Altris Inc or another member of the Altris Group is the owner of the
full and complete copyright in the Altris products and the
Intellectual Property associated therewith; provided, however, that
the Altris products include software licensed to Altris Inc or such
member of the Altris Group by third parties pursuant to licenses
from such third parties which permit the sublicense of such software
hereunder.
2.3 Altris Inc and Spescom CIT enjoy rights of copyright in certain
third party computer software programs and may acquire ownership of
the copyright therein, such software being either embedded or
utilised or to be utilised in conjunction with the Altris products
and/or the Spescom products;
2.4 Altris Limited is the licensee in respect of certain right of
copyright in the Altris products which it is authorised to
sub-license in the terms contemplated in this agreement;
2.5 Spescom CIT has developed the Interface Product of which it is the
owner of the right of copyright and which enables the integration of
certain of the Altris products and certain of the Spescom products;
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2.6 Altris Inc wishes to grant to Altris Limited licenses in relation to
the Altris products in order inter alia to facilitate the marketing
of the Altris products independently of, or in conjunction with the
Spescom products;
2.7 the Integrated Software which is created by the combination of the
respective products of Altris Inc and Spescom CIT is capable of
separation at any time and the respective products are capable of
distinct identification at any time;
2.8 Altris Limited wishes to license, market and install the Integrated
Software and individual products to and at various customers as end
users and/or distributors;
2.9 the parties desire to regulate their relationship in terms of this
agreement;
2.10 the parties have reached agreement relating to the aforegoing and
peripheral matters which they require to be reduced to writing and
to be signed by them before the same shall be or become binding upon
them;
2.11 in consideration of the mutual undertakings contained herein, the
parties hereby agree as follows.
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3. Grant of licence
3.1 In consideration of the remunerations and royalties provided for
herein and subject to the terms and conditions hereof Altris Inc on
behalf of itself and each other member of the Altris Group:-
3.1.1 hereby grants to Altris Limited, for the Term and in the
Altris Limited Territory, the exclusive right, subject to
3.2.1, to exercise the right of copyright in EB and Wintrack;
and
3.1.2 agrees to grant, upon any release thereof by Licensor, to
Altris Limited for the remainder of the Term from and after
the date of such release and in the Altris Limited Territory,
the exclusive right, subject to 3.2.1, to exercise the right
of copyright in any Altris Additional Product and any
Enhancement, Upgrade or Modification of EB or Wintrack. The
license of such Enhancement, Upgrade or Modification shall be
subject to the terms set forth in 11 below.
3.2
3.2.1 The exclusivity granted to Altris Limited in terms of 3.1 is
conditional on the royalties forecast in operating statements
dated 20 February 1999 in the line "Altris Capital SW Royalty"
(identified by the initials of the parties' representatives
and annexed hereto marked "F") not
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falling below 75% of the forecast amount through the year
2001. Should a royalty deficiency arise in any period prior to
December 31, 2000, the exclusivity will remain in full effect,
it being understood that the first year in which the royalties
may affect the future exclusivity of the license granted
hereunder shall be 2001.
3.2.2 The goal and the minimum royalty amount for the year 2001 is
set forth in annexure "F". After 2001 the parties shall
determine by mutual agreement on or before 1 December of the
preceding year the amount of the aggregate goal for royalties
payable to Licensor to be generated from sales of the Altris
products by Licensee for such year and the minimum amount of
royalties for such year, which shall be equal to 75%
(seventy-five percent) of the amount of such aggregate goal;
provided, however, that in the event that the parties fail to
timely agree to the amount of such goal and minimum royalty
for any year, such goal and minimum royalty shall be
determined by the Arbitration Board in accordance with 21
below and the Arbitration Board shall take into account in
determining such goal and minimum royalty the license revenue
growth for Altris products sold in the United States. If:-
3.2.2.1 a royalty deficiency exists in any calendar year
commencing on or after January 1, 2001 such that the
royalties earned by
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Licensor fall below the minimum royalty amount for such
year (which equals 75% (seventy-five per cent) of the
amount of the aggregate goal for such year); and
3.2.2.2 the royalties earned by Licensor in any year within the
immediately succeeding 3 (three) years (hereinafter
referred to as a "Second Shortfall Year") fall below the
minimum royalty amount for such Second Shortfall Year
(which equals 75% (seventy-five per cent) of the amount
of the aggregate goal for such Second Shortfall Year);
and
3.2.2.3 in the Second Shortfall Year the royalties earned by
Licensor from the sale of Altris products in such Second
Shortfall Year in any single Territory constitutes less
than 5% (five per cent) of the aggregate goal for such
Second Shortfall Year for all of the Altris Limited
Territory,
the exclusivity of the rights of Licensee hereunder with
respect to such Territory shall thereupon cease and Altris Inc
may thereafter sell Altris products or appoint other
distributors to sell Altris products in any such Territory. In
such event, Altris Limited shall retain its distributor rights
to these Territories but on a non-exclusive basis.
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3.3 Altris Inc furthermore undertakes for the Term to provide from time
to time to Altris Limited training as may reasonably be required at
the premises of Altris Limited of such number of persons employed by
Altris Limited as is reasonably determined by Altris Limited, in the
use and marketing of the Altris products. Altris Limited shall pay
to Altris Inc:-
3.3.1 an amount necessary to reimburse Altris Inc for all travel,
subsistence and other out-of-pocket costs incurred by Altris
Inc in providing such training; and
3.3.2 50% (fifty per cent) of the published training class rate
applicable to such training.
4. Licence Fees / Royalties
4.1 The Licensee shall pay the Licensor royalties, in consideration for
the rights granted in terms of clause 3 hereof, in respect of Altris
products an amount equal to 50% (fifty per cent) of the net invoiced
value in accordance with the Licensor's published List Price minus,
in the case of sales to a distributor of Licensee who is not
affiliated or associated with Licensee , any discount provided in
the ordinary course of business to such distributor which is
approved by Licensor in advance, which approval shall not be
unreasonably withheld.
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4.2 Any payment due by the Licensee to the Licensor shall be made free
of exchange, deduction or set off within 60 (sixty) days of the
relevant invoice having been issued by the Licensee to the third
party user or within 60 (sixty) days of the end of the month in
which the Computer Software Program was delivered to the third party
user, whichever is the earlier.
4.3 Within 60 (sixty) days after the end of the Licensee's financial
year, the Licensee shall furnish the Licensor with a certificate
from its auditors verifying the quantum of the payments due by the
Licensee to the Licensor.
4.4 The parties acknowledge that certain customers and marketing
partners can be expected to order Altris products within the Altris
Limited Territory for use wholly or partially at user installations
outside the Altris Limited Territory or to order Altris products
outside the Altris Limited Territory for use wholly or partially at
user installations within the Altris Limited Territory. For purposes
of determining whether the sale is deemed to have been made by
Licensee and therefore subject to this agreement, the sale of such
Altris product and any related maintenance thereon shall be deemed
to have occurred:-
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4.4.1 within the Altris Limited Territory (and within a specific
Territory) if the purchase order is issued by the customer
from a location within the Altris Limited Territory (and such
Territory); and
4.4.2 outside the Altris Limited Territory if the purchase order is
issued by the customer from a location outside of the Altris
Limited Territory;
provided, however, that in the event that the sale of Altris
products involves a user installation with more than 100 (one
hundred) licensed seats and would otherwise be deemed to have been
made outside the territory in which such installation is located,
the portion of the revenues from such sale that relate to such user
installation of one hundred (100) or more seats shall be deemed to
have been made in such Territory as the chief executives of Licensor
and Licensee shall agree considering all of the facts and
circumstances surrounding such sale, and in the absence of such
agreement then by the Arbitration Board under Error! Reference
source not found. below. Both Licensor and Licensee shall make
available customary maintenance support services to user
installations located within their respective territories
irrespective of whether the sale of the Altris product or
maintenance thereon occurred outside of such territory. All such
maintenance support services shall be provided at the published
rates charged by Licensee or Licensor, as the case may be, for such
services.
<PAGE>
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5. Use of licence
Altris Limited shall only be entitled to market and otherwise exercise the
right granted to it in terms of clause 3 hereof, in relation to Altris
products within the Altris Limited Territory.
6. Delivery and installation
6.1 Altris Inc shall provide Altris Limited with a master copy software
for Altris products required for Altris Limited to exercise the
rights granted herein.
6.2 Altris Inc shall furnish such software and do all things,
expeditiously and diligently, reasonably necessary to give effect to
the terms of this agreement.
6.3 Installation of the Computer Software Program, shall be carried out
in accordance with the specifications of the Licensor, as set out in
Licensor's standard product documentation, as may be reasonably
amended from time to time in writing and duly delivered to the
Licensee, which new specifications shall be deemed to become part of
this agreement. Without prejudice to anything herein contained, the
Licensor shall assume no liability for software failure, malfunction
or any damage of whatsoever
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nature or howsoever arising, where the failure, malfunction or
damage is due to non-compliance with the Licensor's specifications.
6.4 The Licensor shall use its best endeavours to timeously deliver and
activate the Computer Software Program, however, neither party shall
be liable for any losses or damages suffered by the other party in
consequence of any delay in this regard.
7. Licensee's undertakings
The Licensee undertakes:-
7.1 save as contained in this agreement, not to copy, reproduce or
translate the Computer Software Program and not to communicate the
Computer Software Program to any third party, including any person
affiliated to or associated with the Licensee, without the prior
written consent of the Licensor;
7.2 to maintain accurate and updated records of the number and siting of
all copies of the Computer Software Program;
7.3 to supervise and control the use of the Computer Software Program in
accordance with the terms of this agreement;
<PAGE>
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7.4 to reproduce and include the copyright notice or notices forming
part of or reflected on the Computer Software Program;
7.5 save as contained in this agreement, not to make the Computer
Software Program available to any person.
8. Source code
8.1 It is recorded that the original Computer Software Programs
contemplated in this agreement shall be delivered in object machine
language for ease of installation and use; however, it is
acknowledged that the programs had been, can be or shall be
developed in a source language or Code different from the object
machine language.
8.2 The Licensee shall not de-compile, reverse compile, disassemble or
print the source code nor derive nor attempt to derive the source
code nor the functionality inherent in the source code of the
Computer Software Program except to the extent permissible under
English law, having regard to the provisions of section 50B of the
Copyright, Designs and Patents Act 1988 where the purpose of such
decompiling is solely to enable interoperability with other
programs.
<PAGE>
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8.3 It is specifically recorded that any breach of the aforesaid term
shall constitute an irremediable breach of this agreement.
8.4 The Licensor shall be obliged as soon as practical and at the cost
of Licensor (except that if Licensee requests the addition of any of
its customers as a party designated as eligible to access the
escrow, Licensee shall pay the costs of such designation) lodge the
source code of each Computer Software Program in escrow with an
escrow agent reasonably approved of by the Licensee and upon terms
reasonably and customarily applicable to agreements of such nature
to protect both the competing interests of:-
8.4.1 the Licensor to protect the value of the source code, to
preserve maintenance revenue, and to prevent the Licensee from
modifying the Computer Software Program; and
8.4.2 the Licensee to ensure that the Computer Software Program will
be maintained, upgraded and enhanced irrespective of the fate
of the Licensor.
In the event that the parties are unable to agree upon such terms,
they will be determined by an appropriately qualified Arbitration
Board upon the basis set out in clause 21.
<PAGE>
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9. Alterations and Modifications
Save as specifically permitted in this agreement, the Licensee shall not
be entitled to alter, modify or add to the Computer Software Program.
10. Irremediable breach
Any use of a Computer Software Program or the right to exercise the right
of copyright by the Licensee for any purpose other than that permitted
herein, without the prior written consent of the Licensor, shall
constitute an irremediable breach of this agreement.
11. Enhancements / Upgrades / Modifications
11.1 The Licensor shall supply information with regard to Enhancements of
the Computer Software Program, and shall supply such Enhancements to
the Licensee at such costs as may be notified by the Licensor from
time to time.
11.2 The Licensor shall assume no obligation in terms of this agreement,
in respect of Upgrades to the Computer Software Program. Upgrades to
the Computer Software Program shall be furnished by the Licensor to
the Licensee under
<PAGE>
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the terms and conditions provided for in a separate maintenance
agreement between the parties and shall not be deemed licensed under
this agreement.
11.3 The Licensor shall assume no obligation in terms of this agreement,
in respect of Modifications of or to the Computer Software Program.
11.4 If a particular complaint be directed to the Licensor within a
period of 90 (ninety) days from the date of an installation of the
Computer Software Program, the Licensor shall, free of charge,
furnish such materials and services as may be reasonably necessary
to correct any defects in the operations of the Computer Software
Program.
11.5 The Licensor shall perform any other services in respect of the
Computer Software Program, as may reasonably be required by the
Licensee, in accordance with the terms of a separate software
maintenance agreement between the parties materially in the form of
Annexure "H".
11.6 The Licensee shall pay to Licensor a royalty equal to 35%
(thirty-five percent) of the net invoiced amount charged by Licensee
to its customers under any software maintenance agreement under
which Upgrades of the Computer Software Program may be provided.
Such royalty shall be paid free of exchange, deduction or set off
within 60 (sixty) days of the relevant invoice
<PAGE>
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having been issued by the Licensee to the third party with whom the
maintenance agreement is entered into.
12. Exclusion of liability
12.1 Altris Limited shall ensure that the Computer Software Program shall
be sold with a disclaimer by the Licensor and Licensee in such form
as is specified from time to time by Licensor and is reasonably
acceptable to Licensee in respect of inter alia any loss or damage
arising directly or indirectly in connection with the Computer
Software Program, as the case may be, and the use thereof and
without detracting from the generality thereof:-
12.1.1 for any loss or damage arising directly or indirectly as a
result of abuse, misuse, or unauthorised use of the Computer
Software Program, as the case may be;
12.1.2 for any Modifications or other changes to the Computer
Software Program which are not carried out by an authorised
representative of the Licensor;
12.1.3 in respect of a breach of a licence;
<PAGE>
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12.1.4 for loss of profits or for incidental, special or
consequential damages arising from the installation, service,
performance and use of the Computer Software Program, as the
case may be;
12.1.5 any design flaw or any malfunction in the Computer Software
Program or the equipment relating thereto, as the case may be,
to the extent that such liability is capable of being excluded or
disclaimed under English law.
12.2 The Licensor shall not be liable to the Licensee for any loss or
damage arising directly or indirectly in connection with the
Computer Software Program, the use of the Computer Software Program
and without detracting from the generality hereof:-
12.2.1 for any loss or damage arising directly or indirectly as a
result of abuse, misuse or unauthorised use of the Computer
Software Program;
12.2.2 any Modifications to the Computer Software Program which had
not been carried out or authorised by the Licensor;
<PAGE>
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12.2.3 in respect of anything which may constitute a breach of this
agreement by the Licensor by reason of circumstances beyond
the control of either of the parties hereto;
12.2.4 for loss of profits or for incidental, special or
consequential damages arising out of or in connection with the
licensing, installation, delivery, performance, Enhancements,
Upgrades or Modifications of the Computer Software Program,
to the extent that such liability is capable of being excluded or
disclaimed under English law.
13. Commencement and termination
13.1 This agreement shall be deemed to have commenced, notwithstanding
the date of signature hereof, on the closing date of the
restructuring agreement and shall continue in force until it is
terminated in accordance with the provisions of this 13.
13.2 In addition to any rights of termination which either party may have
at law, this agreement may be terminated by either party, by written
notice, without prejudice to the aggrieved party's rights to recover
all damages and losses it may suffer and otherwise:-
<PAGE>
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13.2.1 should the other party commit a breach of any of the terms of
this agreement and fail to rectify the breach within a period
of 30 (thirty) days of receipt of a written notice specifying
the breach;
13.2.2 immediately should the breach be irremediable and material
going to the root of this agreement.
13.3 In the event of the insolvency, liquidation or the institution of
proceedings against the defaulting party or the defaulting party
making any arrangements or filing any documents in a court in
contemplation of insolvency, then and in any such event, without
prejudice to the aggrieved party's rights, the entire balance of all
and any monies due by the defaulting party to the other party shall
immediately become due and payable, notwithstanding that it would
not otherwise have been due. In such an event, and failing payment
of the full amount due within 5 (five) days of a written demand by
the aggrieved party, the aggrieved party shall be entitled, to
either terminate this agreement by written notice or to claim
specific performance; provided that in either event, the aggrieved
party shall be entitled to recover all damages it may suffer and all
amounts due to it.
13.4 Upon termination of this agreement due to a default by either of the
parties and in addition to the rights granted to the aggrieved party
in terms hereof, the
<PAGE>
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aggrieved party shall be entitled, without prejudice to its other
rights or remedies at law, to suspend performance of all its
obligations in terms of this agreement. The defaulting party shall
be liable for all costs incurred by the aggrieved party in
connection with the recovery of monies and legal costs incurred in
securing the rights of the aggrieved party in terms hereof.
13.5 This agreement may be terminated by an agreement duly signed by both
parties.
13.6 Upon the termination of this agreement for any reason whatsoever,
any right to exercise the right of copyright or license granted in
terms hereof shall terminate and the Licensee shall return to the
Licensor any version or copy of the Computer Software Program in its
possession and any master copy of the same and all Intellectual
Property relating thereto in its possession.
13.7 In the event of termination of this agreement for any reason
whatsoever, Altris Inc shall be entitled to require, within 14
(fourteen) days of termination, that any maintenance or support
agreement in respect of Altris products or any other Computer
Software Program licensed by Altris Inc in terms hereof and to which
Altris Limited is a party, be assigned to it or that it be entitled,
without prejudice to any other rights it may have, to maintain and
support the relevant Computer Software Program. In this regard,
Altris Limited shall make available all relevant information and
shall sign all documents, upon demand, to give effect hereto. In
addition hereto, the Licensor shall be
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entitled, from time to time, to conduct routine inspections as to
the maintenance, marketing distribution of the Computer Software
Program and the exercise by the Licensee of its rights in terms
hereof and in this regard, the Licensee shall furnish all reasonable
information and assistance to give effect hereto.
14. Infringement of rights of copyright
14.1 In the event that the right to exercise the right of copyright is
infringed by a third party, both parties may agree, but neither
shall be obligated to, join in instituting proceedings against the
third party and the costs of such proceedings and any damages,
account of profits, delivery-up of infringing copies and the
proceeds of any proceedings which may be recovered shall be divided
equally between them.
14.2 In the event that the parties fail to agree to jointly institute
proceedings, only the owner or Licensor of the infringed right in
question shall be entitled to institute proceedings in respect of
the same; provided that any damages, account of profits, delivery-up
of infringing copies and the proceeds of any proceedings shall
accrue to that party only.
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15. No partnership created
This agreement does not create a partnership, joint venture, or fiduciary
relationship. Each party shall conduct its obligations independently and
not as an agent or employee of the other party. Subject to the terms
hereof, each party shall be responsible for choosing the means to be
employed and the manner of carrying out its obligations hereunder. Each
party shall be responsible for the supervision and payment of its
personnel.
16. Joint marketing activities
The parties agree to consult and co-operate with each other in the
interest of promoting Altris products in order to maximize their
collective return from the division of royalties in respect thereof. To
that end, the Licensee shall:-
16.1 become familiar with the technical and operational functions and
features of the Altris products;
16.2 visit potential new customers for marketing presentations, at the
reasonable request of the other party;
16.3 conduct demonstrations and performance benchmarks of the Computer
Software Program;
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16.4 be provided with such promotional material as the Licensor shall
consider reasonable;
16.5 be entitled to call upon the Licensor to support the Computer
Software Program, subject to a separate maintenance agreement
between the parties;
16.6 not sell, market, distribute or promote any document management
system product that is similar to or competitive with any Computer
Software Program licensed or to be licensed to Licensee hereunder or
any Enhancement, Modification or Upgrade thereof; provided, however,
that in the event that the sales of Altris products in the United
States in any year commencing with 2001 decline by more than 20%
(twenty percent) from the immediately preceding year, Licensee may
elect by written notice to Licensor at any time during the
immediately succeeding year to terminate the exclusivity of this
agreement for the Altris Limited Territory, in which event Licensee
may thereafter offer competing or similar products and Licensor may
offer the Altris products in the Altris Limited Territory or appoint
another distributor or distributors to offer the Altris products.
Altris Inc shall make available to Altris Limited all its relevant
records on reasonable notice to ensure that the provisions of this
16.6 are complied with.
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17. Documentation standards
To the extent possible and in order to assist the Licensee to achieve the
goals contemplated in terms of this agreement, Altris Inc shall establish
and conform to reasonable requirement for technical and functional
documentation.
18. Supporting documentation; audit
Reasonable books of account relating to Computer Software Program
reproductions, names and addresses of customers where Computer Software
Program was installed, the charges made in respect of the aforesaid and
the relevant invoices shall be kept and maintained by Licensee. All such
records shall be open for review, copy and audit by Licensor at reasonable
times and on reasonable notice to support charges and amounts due by
Licensee to the Licensor. An audit of such records may be made, upon
demand by Licensor, no more than twice each year, by an independent firm
of accountants or by such other individuals as may be reasonably
acceptable to the Licensee.
19. Taxation
Unless a double taxation agreement between USA and the UK from time to
time permits payments due in terms of this agreement to be made without
deduction of withholding or other taxes or unless a valid exemption is
obtained, any sums in
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respect of withhold in or other taxes which USA law or UK law, as the case
may be, require to be deducted from payments due in terms of this
agreement, shall be deducted from such payments. Where applicable, either
party shall promptly furnish the other with a certificate of payment from
the appropriate authority confirming that such taxes have been paid.
20. Warranties
20.1 The Licensor warrants that it is entitled to license and transmit
the rights granted in terms hereof and for the purposes hereof and
that the Computer Software Program and the rights granted in terms
hereof do not infringe upon or violate any copyright, trademarks or
other Intellectual Property, privacy or any other right of any third
party, nor has any claim of such infringement been threatened or
asserted, nor is such a claim pending against the Licensor (or, to
the best of the Licensor's knowledge, against any entity from which
the Licensor may have obtained such a right).
20.2 The Licensor represents and warrants that it is under no obligation
or restriction, nor will it assume any obligation or restriction
that does or may in any way interfere or conflict with, its
obligations in terms hereof.
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20.3 The Licensor indemnifies the Licensee against any loss or damage
suffered by the Licensee as a result of a breach of any of the
warranties given in terms hereof.
21. Arbitration
21.1 In the event of any controversy, claim or dispute arising out of or
relating to this Agreement or the breach thereof, both parties shall
meet and exert their best efforts to find an amicable settlement.
21.2 Failing agreement within a period of 30 (thirty) days from the date
on which either party, in writing, with reference to the present
clause, requests an amicable settlement, the matter shall be settled
by arbitration adjudicated under English Law, conducted in English
and held in London, England, in accordance with Rules of
Conciliation and Arbitration of the International Chamber of
Commerce.
21.3 The Arbitration Board shall consists of three members. Each of the
parties shall appoint one arbitrator and the two so nominated shall
in turn choose a third. If the chosen arbitrators cannot agree on
the choice of the third arbitrator, such arbitrator shall be
appointed by the Court of Arbitration of the International Chamber
of Commerce.
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21.4 The arbitration shall be conducted in accordance with the Rules of
the International Chamber of Commerce and it is agreed that the
decision shall be definite and there shall be no appeal to the
Courts from the decision of the arbitrators.
21.5 Either party shall be entitled to have any arbitration award made an
order of Court.
21.6 The obligation herein to arbitrate shall not be binding upon either
party with respect to requests for temporary restraining orders,
preliminary injunctions or interdicts or other procedures (or their
functional equivalent) in a court of competent jurisdiction to
obtain interim relief when deemed necessary by such court to:-
21.6.1 preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute between the
parties; or
21.6.2 to order specific performance.
22. Confidentiality and restraint
22.1 Each party acknowledges that all material information which has or
will come into the possession or knowledge of the other in
connection with this
<PAGE>
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agreement or the performance of any obligations hereunder or the
Computer Software Program, including without limitation the
Intellectual Property of the parties, consists of confidential and
proprietary information, which, if disclosed to third parties, might
be damaging to the proprietor thereof.
22.2 Both parties therefore agree to hold such material information in
the strictest confidence, not to make use thereof other than in the
performance of the obligations under this agreement, to release it
only to employees requiring such information and not to release or
disclose it to any other party; provided, however, that any party
shall be entitled to make such disclosures to the extent such party
is required to do so by law or legal process.
22.3 Neither party shall use the name of the other in publicity releases
or advertising or for other promotional purposes, without securing
the prior written approval of the other party, save in such
instances as any of the parties are required to make public
announcements as a matter of law, regulation or rule of any stock
exchange.
22.4 The parties agree that the provisions of the clause shall survive
the termination of this agreement.
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23. Intellectual Property rights
23.1 Without prejudice to the Licensor's rights, each party acknowledges
that any and all Intellectual Property used or embodied in or in
connection with the Computer Software Program and the ownership of
the copyright in question, shall remain the exclusive property of
the Licensor.
23.2 The Licensee shall not question or dispute the ownership of any such
rights at any time during the continuation in force of this
agreement or thereafter.
23.3 The aforesaid shall apply whether or not the copyright in question
or any other similar rights are registered.
23.4 All rights to and in connection with the Computer Software Program
and copyright in question not specifically granted to the Licensee
in terms of this agreement are reserved to the Licensor.
23.5 The rights granted in terms of this agreement shall be by way of a
licence and the Licensee shall not acquire any ownership or interest
in such rights.
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24. Severability
24.1 If any provision of this agreement is found or held to be invalid,
unlawful or unenforceable, the validity of all the other provisions
hereof shall not be affected thereby and the parties agree to meet
and review the matter and if any valid and enforceable means is
reasonably available to achieve the same object as the invalid or
unenforceable provision, to adopt such means by way of variation of
this agreement.
24.2 In the event that any of the terms of this agreement are found to be
invalid, unlawful or unenforceable, such term shall be severable
from the remaining terms, which shall continue to be valid and
enforceable. If any invalid term is capable of amendment to render
it valid, the parties agree to negotiate an amendment to remove the
invalidity.
25. Force majeure
In the event that either party is unable to perform any obligation
hereunder due to any circumstances beyond its control, including the
action, intervention, or decree of any government, and such circumstances
are not caused by the fault of a party and such circumstances continue for
a period of at least 60 (sixty) days, either party may terminate this
agreement by means of written notice to the other party.
<PAGE>
-44-
26. Assignment
Neither party shall be entitled to assign, delegate, cede or transfer any
rights or obligations acquired in terms of this agreement, in whole or in
part, to any other party or person without the prior written consent of
the other party; provided, however, that Licensor shall be entitled to
assign, delegate, cede or transfer its rights and obligations hereunder to
any person or entity acquiring all or substantially all of the business of
Licensor.
27. Addresses and notices
27.1 The parties choose as their domicilia citandi et executandi for all
purposes under this agreement, whether in respect of court process,
notices or other documents or communications of whatsoever nature,
the following addresses:-
27.1.1 Altris Inc 9339 Carroll Park Drive
San Diego
California 92121
Fax No. (619) 546 7671
marked for the attention of
the President
with a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
<PAGE>
-45-
Los Angeles
California 90067
Attention: Russell C Hansen
Fax No. (310) 551 8741
27.1.2 Altris Limited
before the closing date 9339 Carroll Park Drive
San Diego
California 92121
Fax No. (619) 546 7671
marked for the attention of
the President
with a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
Los Angeles
California 90067
Attention: Russell C Hansen
Fax No. (310) 551 8741
after the closing date c/o SL
Spescom Park
cnr Alexandra Road
and Second Street
Halfway House
Midrand 1685
Republic of South Africa
Fax No. (011) 266 1707
marked for the attention of
the Managing Director
with a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank
2196 Johannesburg
Republic of South Africa
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
<PAGE>
-46-
27.2 Any notice or communication required to be given in terms of this
agreement shall be valid and effective only if in writing.
27.3 Either party may by notice to the other change its domicilium
citandi et executandi to another physical address either in the
United States of America or in the United Kingdom or in the Republic
of South Africa; provided that the change shall become effective on
the 7th day after receipt of the notice.
27.4 Any notice which the one party may require to give the other shall
be deemed to have been received:-
27.4.1 if sent by prepaid registered post addressed to the other
party, not later than 14 (fourteen) business days after the
date of posting; or
27.4.2 if delivered by hand, on the date of the delivery thereof; or
27.4.3 if despatched by telefax, on the date of a valid transmission
report indicating that a transmission had taken place, being
duly printed on the sender's telefax machine.
27.5 Notwithstanding anything to the contrary herein contained, a written
notice actually received by a party shall be an adequate written
notice to it,
<PAGE>
-47-
notwithstanding that it was not sent to or delivered at its chosen
domicilium citandi et executandi.
27.6 Where, in terms of this agreement, any communication is required to
be in writing, the term "writing" shall include communication by
telefax.
28. Whole agreement
28.1 This agreement constitutes the entire agreement between the parties.
No party shall be entitled to rely upon any term, warranty,
condition or representation unless it is herein contained.
28.2 No amendment, novation, variation, addition to or consensual
cancellation of this agreement or any provision or term thereof
(including this clause) and no extension of time, waiver or
relaxation of any of the provisions or terms of this agreement shall
be binding unless recorded in a written document signed by the
parties. Any such extension, waiver or relaxation which is so given
or made shall be construed as relating strictly to the matter in
respect whereof it was made or given.
28.3 No extension of time or waiver or relaxation of any of the
provisions or terms of this agreement shall operate as an estoppel
against any party in respect of its rights under this agreement, nor
shall it operate so as to preclude such party
<PAGE>
-48-
thereafter from exercising its rights strictly in accordance with
this agreement.
29. Proper law
This agreement is governed by and is to be construed in accordance with
the substantive laws of England and Wales ignoring any question of
conflict of laws. The parties consent accordingly to the non-exclusive
jurisdiction of the appropriate court of law in England in relation to all
matters, claims and disputes arising out of or in connection with this
agreement or any document supplemental hereto. Altris Inc hereby
irrevocably appoints Altris' solicitors as its agent for the service of
any proceedings upon it pursuant to this agreement. Prior to the closing
date Altris Limited irrevocably appoints Altris' solicitors and after the
closing Altris Limited irrevocably appoints Spescom's solicitors as its
agent for the service of any proceedings upon it pursuant to this
agreement.
Thus done and signed by the parties hereto as follows -
Date: May 7, 1999 For and on behalf of
Altris Software, Inc.
Place: London, England /s/ Roger Erickson
-------------------------------------
President, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of
Altris Software Limited
<PAGE>
-49-
Place: London, England /s/ Peter J.J. Brady
-------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7, 1999 For and on behalf of each of
the companies in the Altris group
Place: London, England /s/ John W. Low
-------------------------------------
Director, who warrants that he
is duly authorised hereto
<PAGE>
TABLE OF CONTENTS
Page
1. Interpretation.......................................................... 2
2. Preamble................................................................ 14
3. Grant of licence........................................................ 17
4. Licence Fees / Royalties................................................ 20
5. Use of licence.......................................................... 23
6. Delivery and installation............................................... 23
7. Licensee's undertakings................................................. 24
8. Source code............................................................. 25
9. Alterations and Modifications........................................... 27
10. Irremediable breach..................................................... 27
11. Enhancements / Upgrades / Modifications................................. 27
12. Exclusion of liability.................................................. 29
13. Commencement and termination............................................ 31
14. Infringement of rights of copyright..................................... 34
15. No partnership created.................................................. 35
16. Joint marketing activities.............................................. 35
17. Documentation standards................................................. 37
18. Supporting documentation; audit......................................... 37
19. Taxation................................................................ 37
20. Warranties.............................................................. 38
21. Arbitration............................................................. 39
22. Confidentiality and restraint........................................... 40
23. Intellectual Property rights............................................ 42
24. Severability............................................................ 43
25. Force majeure........................................................... 43
26. Assignment.............................................................. 44
27. Addresses and notices................................................... 44
28. Whole agreement......................................................... 47
29. Proper law.............................................................. 48
<PAGE>
ANNEXURES
"A" - EB Software Description
"B" - EMS Software Description
"C" - Interface Software Description
"D" - Form of License Agreement for use by Licensee
"E" - Wintract Software Description
"F" - Forecast Royalties
"G" - List of Territories
"H" - Software Maintenance Agreement
<PAGE>
APPENDIX 4
[LOGO]
[Letterhead of Kallmeyer & Strime]
Agreement
between
Spescom CIT (Proprietary) Limited
and
Altris Software Limited
<PAGE>
-2-
1. Interpretation
1.1 The clause headings of this agreement are for reference purposes
only and shall not be used in the interpretation thereof.
1.2 Unless a contrary intention clearly appears -
1.2.1 expressions which denote -
1.2.1.1 any gender shall include the other genders;
1.2.1.2 a natural person shall include an artificial person and
vice versa;
1.2.1.3 the singular shall include the plural and vice versa;
1.2.2 the following expressions shall have the meanings set opposite
them below and cognate expressions shall bear corresponding
meanings -
1.2.2.1 "Altris Additional
Product" - shall mean any Computer Software
Program relating to knowledge
management products, document
management systems, product data
management
<PAGE>
-3-
products, or configuration
management products, other than EB
or Wintrack, in whole or in part
including and without detracting
from the generality of the
aforegoing, any one or more of the
modules of the program and any
Upgrades, Modifications and
Enhancements thereto, in respect
whereof Altris Software Inc or any
other member of the Altris Group
owns the copyright or will own the
copyright in future or in respect
whereof the copyright does not
subsist at present, but will come
into being in future and will be
owned by Altris Inc or any such
member of the Altris Group;
1.2.2.2 "Altris Limited"
or "Licensee" - shall mean Altris Software Limited,
company number 2625912, incorporated
in the United Kingdom under the
Companies Act 1985;
1.2.2.3 "Altris Limited
<PAGE>
-4-
Territory" - shall mean every territory or
country save and except for North-,
Central-, South America, Caribbean
and Mexico;
1.2.2.4 "Altris products" - shall mean EB, Wintrack or Altris
Additional Product;
1.2.2.5 "Code" - shall mean a computer programming
code; unless otherwise specified,
Code shall include both object code
and source code and Code shall
include any maintenance
Modifications, Upgrades or
Enhancements thereto created by the
Licensor or owner of the copyright
from time to time;
1.2.2.6 "Computer Software
Program" - shall mean the program forming the
subject matter of the right licensed
in terms of clause Error! Reference
source not found. hereof;
1.2.2.7 "EB" - shall mean EB Software, a Computer
Software Program, as more fully
<PAGE>
-5-
particularised in annexure "A"
hereto, in whole or in part and
including, without detracting from
the generality of the aforegoing,
any one or more modules of the
program presently available;
1.2.2.8 "EMS" - shall mean EMS Software, a computer
program, as more fully
particularised in annexure "B"
hereto, in whole or in part and
including, without detracting from
the generality of the aforegoing,
any one or more modules of the
program presently available;
1.2.2.9 "Enhancements" - shall mean significant changes to a
computer software program, resulting
in the addition of a feature or
capability not present in the
computer software program prior to
the introduction of the changes, as
well as any changes to the computer
software program designed to permit
the use of the software on
<PAGE>
-6-
hardware or in conjunction with
operating system software other than
that for which the software was
initially designed;
1.2.2.10 "the Integrated
Software" - shall mean the integrated software
product resulting from the
combination of PRO-CM and EB and/or
Wintrack and/or the Altris
Additional Product and/or the
Spescom Additional Product;
1.2.2.11 "Intellectual
Property" - shall mean all intellectual
property, whether tangible or
intangible, relating to, associated
with or arising from the software
product in question, including and
without detracting from the
generality hereof, all copyright
applications and registrations, the
right to exercise aspects of
copyright whether registered or not,
ownership of any aspect of copyright
whether registered or not, trade
marks, trade names, trade
<PAGE>
-7-
secrets, marketing development and
strategy data, calculations,
development cost research and
information, plans, proprietary
rights, installation and user
manuals whether or not incorporated
in humanly intelligible media or
data, data base designs, data base
entity relationships, data base
triggers and procedures, common
object models, information,
processes, flow diagrams and system
descriptions, technology rights,
licences, market research, field
research data, market projections,
promotional data, research and
development, tests and the result
thereof whether still in progress or
otherwise, discoveries,
developments, prototypes, designs,
diagrams, engineering technology,
acquisitions, productions, all
inventions, formulas, processes,
works of any nature, techniques,
diagrams, concepts, software, Code,
information, working
<PAGE>
-8-
papers, and anything which is
devised and is subject to any
intellectual property rights, logos,
whether registered or not and all or
any rights relating to any of the
aforesaid;
1.2.2.12 the Interface
Product - shall mean a computer software
program with interface capability,
designed primarily to link the
components of the Integrated
Software, as more fully
particularised in annexure "C"
hereto, in whole or in part and
including, without detracting from
the generality of the aforegoing,
any one or more modules of the
program presently available and any
Upgrades, Modifications and
Enhancements thereto;
1.2.2.13 "Licensee" - shall mean Altris Limited;
1.2.2.14 "Licensor" - shall mean Spescom CIT (Proprietary)
Limited;
<PAGE>
-9-
1.2.2.15 "List Price" - shall mean the value placed on the
transaction in question by reference
to the price list of the Licensor
then in effect;
1.2.2.16 "Modifications" - shall mean changes, improvements or
customisation of or to a computer
software program, which may be
required to adapt the software to
the requirements of the user;
1.2.2.17 "PRO-CM" - shall mean the software program
resulting from the combination of
EMS and the Interface Product;
1.2.2.18 "restructuring
agreement" - shall mean that agreement as between
Spescom Limited, Spescom CIT, Altris
Inc, Altris Limited, Altris
International Limited, and Altris
Group Plc, and to which this
constitutes Appendix 4;
1.2.2.19 "right of
copyright" - shall mean the reproduction of the
Computer Software Program for the
purposes of
<PAGE>
-10-
use thereof by third parties,
subject to the third parties being
licensed in the terms set out in
annexure "D" hereto;
1.2.2.20 "Spescom Additional
Product" - shall mean any computer software
program relating to knowledge
management products, document
management systems, product data
management products, or
configuration management products,
other than EMS, Interface Product or
PRO-CM, in whole or in part
including and without detracting
from the generality of the
aforegoing, any one or more of the
modules of the program and any
Upgrades, Modifications and
Enhancements thereto, in respect
whereof Spescom CIT, SL or any other
member of the Spescom group owns the
copyright or will own the copyright
in future or in respect whereof the
copyright does not subsist at
present, but will come into
<PAGE>
-11-
being in future and will be owned by
Spescom CIT, SL or any other member
of the Spescom group;
1.2.2.21 "Spescom CIT"
or "Licensor" - shall mean Spescom CIT (Pty)
Limited, Registration No.
83/08746/07, a company incorporated
in the Republic of South Africa;
1.2.2.22 "Spescom products" - shall mean EMS, Interface Product,
PRO-CM or Spescom Additional
Product;
1.2.2.23 "Term" - shall mean in perpetuity, subject
however to the provisions of 13;
1.2.2.24 "Territory" - shall mean a single geographic
territory identified in annexure "G"
hereto, which constitutes a portion
of the Altris Limited Territory;
1.2.2.25 "Upgrades" - shall mean changes or improvements
to a computer software program,
which
<PAGE>
-12-
relate to or affect the operating
performance of the software or an
aspect of the software, but which do
not change the basic operation or
functioning of the computer software
program;
1.2.2.26 "Wintrack" - shall mean Wintrack Software, a
Computer Software Program as more
fully particularised in annexure "E"
hereto including PRO-EDM and Target,
in whole or in part and including,
without detracting from the
generality of the aforegoing, any
one or more modules of the program
presently available.
1.3 Terms and expressions defined in the restructuring agreement shall,
unless the context dictates otherwise, have the same meanings where
referred to herein.
1.4 Wherever the context permits, a reference to a licence shall include
a sub-licence and vice versa and a reference to a licensor shall
include a reference
<PAGE>
-13-
to a sub-licensor and vice versa and a reference to a licensee shall
include a reference to a sub-licensee and vice versa.
1.5 Any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time.
1.6 If any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of the agreement.
1.7 When any number of days is prescribed in this agreement, same shall
be reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday in
which case the last day shall be the next succeeding day which is
not a Saturday, Sunday or public holiday.
1.8 Where figures are referred to in numerals and in words, if there is
any conflict between the two the words shall prevail.
1.9 A reference to a document includes an amendment or supplement to, or
replacement or novation of that document.
<PAGE>
-14-
1.10 Where a certificate or determination is required by the auditors in
terms of this agreement, such shall be prepared by the auditors
acting as experts and not as arbitrators and shall be final and
binding upon the parties save for any manifest error in calculation.
1.11 Schedules, annexures or appendices to this agreement shall be deemed
to be incorporated in and form part of this agreement.
1.12 The preamble shall be deemed to be incorporated herein.
2. Preamble
It is hereby recorded that:-
2.1 Spescom CIT or another member of the Spescom Group is the owner of
the full and complete copyright in the Spescom products and the
Intellectual Property associated therewith; provided, however, that
the Spescom products include software licensed to Spescom CIT. or
such member of the Spescom Group by third parties pursuant to
licenses from such third parties which permit the sublicense of such
software hereunder;
2.2 Altris Inc or another member of the Altris Group is the owner of the
full and complete copyright in the Altris products and the
Intellectual Property
<PAGE>
-15-
associated therewith, provided, however, that the Altris products
include software licensed to Altris Inc or such member of the Altris
Group by third parties pursuant to licenses from such third parties
which permit the sublicense of such software hereunder;
2.3 Spescom CIT and Altris Inc enjoy rights of copyright in certain
third party computer software programs and may acquire ownership of
the copyright therein, such software being either embedded or
utilised or to be utilised in conjunction with the Spescom products
and/or the Altris products;
2.4 Altris Limited is the licensee in respect of certain rights of
copyright in the Spescom products which it is authorised to
sub-license in the terms contemplated in this agreement;
2.5 Spescom CIT has developed the Interface Product of which it is the
owner of the right of copyright and which enables the integration of
certain of the Spescom products and certain of the Altris products;
2.6 Spescom CIT wishes to grant to Altris Limited licenses in relation
to the Spescom products in order inter alia to facilitate the
marketing of the Spescom products independently of, or in
conjunction with the Altris products;
<PAGE>
-16-
2.7 the Integrated Software which is created by the combination of the
respective products of Altris Inc and Spescom CIT is capable of
separation at any time and the respective products are capable of
distinct identification at any time;
2.8 Altris Limited wishes to license, market and install the Integrated
Software and individual products to and at various customers as end
users and/or distributors;
2.9 the parties desire to regulate their relationship in terms of this
agreement;
2.10 the parties have reached agreement relating to the aforegoing and
peripheral matters which they require to be reduced to writing and
to be signed by them before the same shall be or become binding upon
them;
2.11 in consideration of the mutual undertakings contained herein, the
parties hereby agree as follows.
3. Grant of licence
3.1 In consideration of the remunerations and royalties provided for
herein and subject to the terms and conditions hereof Spescom CIT,
on behalf of itself
<PAGE>
-17-
and each other member of the Spescom Group, (a) hereby grants to
Altris Limited, for the Term and in the Altris Limited Territory,
the exclusive right, subject to 3.2.1, to exercise the right of
copyright in EMS and Interface Product and (b) agrees to grant, upon
any release thereof by Licensor, to Altris Limited for the remainder
of the Term from and after the date of such release and in the
Altris Limited Territory, the exclusive right, subject to 3.2.1, to
exercise the right of copyright in any Spescom Additional Product
and any Enhancement, Upgrade or Modification of EMS and Interface
Product. The license of such Enhancement, Upgrade or Modification
shall be subject to the terms set forth in 11 below.
3.2
3.2.1 The exclusivity granted to Altris Limited in terms of 3.1 is
unconditional until the end of the year 2000.
3.2.2 After 2000 the parties shall determine by mutual agreement on
or before 1 December of the preceding year (starting in
December 2000 for the year 2001) the amount of the aggregate
goal for royalties payable to Licensor to be generated from
sales of the Spescom products by Licensee for such year and
the minimum amount of royalties for such year, which shall be
equal to seventy-five percent (75%) of the amount of such
aggregate goal; provided, however, that in the event that the
parties fail to timely agree to the amount of such
<PAGE>
-18-
goal and minimum royalty for any year, such goal and minimum
royalty shall be determined by the Arbitration Board in
accordance with 21 below. If (a) a royalty deficiency exists
in any calendar year commencing on or after January 1, 2001
such that the royalties earned by Licensor fall below the
minimum royalty amount for such year (which equals seventy
five per cent (75%) of the amount of the aggregate goal for
such year), (b) the royalties earned by Licensor in any year
within the immediately succeeding three years (hereinafter
referred to as a "Second Shortfall Year") fall below the
minimum royalty amount for such Second Shortfall Year (which
equals seventy five per cent (75%) of the amount of the
aggregate goal for such Second Shortfall Year), and (c) in the
Second Shortfall Year the royalties earned by Licensor from
the sale of Spescom products in such Second Shortfall Year in
any single Territory constitute less than five percent (5%) of
the aggregate goal for such Second Shortfall Year for all of
the Altris Limited Territory, the exclusivity of the rights of
Licensee hereunder with respect to such Territory shall
thereupon cease and Spescom CIT may thereafter sell Spescom
products or appoint other distributors to sell Spescom
products in any such Territory. In such event, Altris Limited
shall retain its distributor rights to these Territories but
on a non-exclusive basis.
<PAGE>
-19-
3.3 Spescom CIT furthermore undertakes for the Term to provide from time
to time to Altris Limited training as may reasonably be required at
the premises of Altris Limited of such number of persons employed by
Altris Limited as is reasonably determined by Altris Limited, in the
use and marketing of the Spescom products. Altris Limited shall pay
to Spescom CIT (a) an amount necessary to reimburse Spescom CIT for
all travel, subsistence and other out-of-pocket costs incurred by
Spescom CIT in providing such training and (b) fifty percent (50%)
of the published training class rate applicable to such training.
4. Licence Fees / Royalties
4.1 The Licensee shall pay the Licensor royalties, in consideration for
the rights granted in terms of clause 3 hereof, in respect of
Spescom products an amount equal to 50% (fifty per cent) of the net
invoiced value in accordance with the Licensor's published List
Price minus, in the case of sales to a distributor of Licensee who
is not affiliated or associated with Licensee , any discount
provided in the ordinary course of business to such distributor
which is approved by Licensor in advance, which approval shall not
be unreasonably withheld.
4.2 Any payment due by the Licensee to the Licensor shall be made free
of exchange, deduction or set off within 60 (sixty) days of the
relevant invoice
<PAGE>
-20-
having been issued by the Licensee to the third party user or within
60 (sixty) days of the end of the month in which the Computer
Software Program was delivered to the third party user, whichever is
the earlier.
4.3 Within 60 (sixty) days after the end of the Licensee's financial
year, the Licensee shall furnish the Licensor with a certificate
from its auditors verifying the quantum of the payments due by the
Licensee to the Licensor.
4.4 The parties acknowledge that certain customers and marketing
partners can be expected to order Spescom products within the Altris
Limited Territory for use wholly or partially at user installations
outside the Altris Limited Territory or to order Spescom products
outside the Altris Limited Territory for use wholly or partially at
user installations within the Altris Limited Territory. For purposes
of determining whether the sale is deemed to have been made by
Licensee and therefore subject to this agreement, the sale of such
Spescom product and any related maintenance thereon shall be deemed
to have occurred (a) within the Altris Limited Territory (and within
a specific Territory) if the purchase order is issued by the
customer from a location within the Altris Limited Territory (and
such Territory), and (b) outside the Altris Limited Territory if the
purchase order is issued by the customer from a location outside of
the Altris Limited Territory; provided, however, that in the event
that the sale of Spescom products involves a user installation with
more than one hundred (100) licensed seats and would
<PAGE>
-21-
otherwise be deemed to have been made outside the territory in which
such installation is located, the portion of the revenues from such
sale that relate to such user installation of one hundred (100) or
more seats shall be deemed to have been made in such territory as
the chief executives of Licensor and Licensee shall agree
considering all of the facts and circumstances surrounding such
sale, and in the absence of such agreement then by the Arbitration
Board under 21 below. Both Licensor and Licensee shall make
available customary maintenance support services to user
installations located within their respective territories
irrespective of whether the sale of the Spescom product or
maintenance thereon occurred outside of such territory. All such
maintenance support services shall be provided at the published
rates charged by Licensee or Licensor, as the case may be, for such
services.
5. Use of licence
Altris Limited shall only be entitled to market and otherwise exercise the
right granted to it in terms of clause 3 hereof, in relation to Spescom
products within the Altris Limited Territory.
<PAGE>
-22-
6. Delivery and installation
6.1 Spescom CIT shall provide Altris Limited with a master copy software
for Spescom products required for Altris Limited to exercise the
rights granted herein.
6.2 Spescom CIT shall furnish such software and do all things,
expeditiously and diligently, reasonably necessary to give effect to
the terms of this agreement.
6.3 Installation of the Computer Software Program, shall be carried out
in accordance with the specifications of the Licensor, as set out in
Licensor's standard product documentation, as may be reasonably
amended from time to time in writing and duly delivered to the
Licensee, which new specifications shall be deemed to become part of
this agreement. Without prejudice to anything herein contained, the
Licensor shall assume no liability for software failure, malfunction
or any damage of whatsoever nature or howsoever arising, where the
failure, malfunction or damage is due to non-compliance with the
Licensor's specifications.
6.4 The Licensor shall use its best endeavours to timeously deliver and
activate the Computer Software Program, however, neither party shall
be liable for
<PAGE>
-23-
any losses or damages suffered by the other party in consequence of
any delay in this regard.
7. Licensee's undertakings
The Licensee undertakes:-
7.1 save as contained in this agreement, not to copy, reproduce or
translate the Computer Software Program and not to communicate the
Computer Software Program to any third party, including any person
affiliated to or associated with the Licensee, without the prior
written consent of the Licensor;
7.2 to maintain accurate and updated records of the number and siting of
all copies of the Computer Software Program;
7.3 to supervise and control the use of the Computer Software Program in
accordance with the terms of this agreement;
7.4 to reproduce and include the copyright notice or notices forming
part of or reflected on the Computer Software Program;
<PAGE>
-24-
7.5 save as contained in this agreement, not to make the Computer
Software Program available to any person.
8. Source code
8.1 It is recorded that the original Computer Software Programs
contemplated in this agreement shall be delivered in object machine
language for ease of installation and use; however, it is
acknowledged that the programs had been, can be or shall be
developed in a source language or Code different from the object
machine language.
8.2 The Licensee shall not de-compile, reverse compile, disassemble or
print the source code nor derive nor attempt to derive the source
code nor the functionality inherent in the source code of the
Computer Software Program except to the extent permissible under
English law, having regard to the provisions of section 50B of the
Copyright, Designs and Patents Act 1988 where the purpose of such
decompiling is solely to enable interoperability with other
programs.
8.3 It is specifically recorded that any breach of the aforesaid term
shall constitute an irremediable breach of this agreement.
<PAGE>
-25-
8.4 The Licensor shall be obliged as soon as practical and at the cost
of Licensor (except that if Licensee requests the addition of any of
its customers as a party designated as eligible to access the
escrow, Licensee shall pay the costs of such designation) lodge the
source code of each Computer Software Program in escrow with an
escrow agent reasonably approved of by the Licensee and upon terms
reasonably and customarily applicable to agreements of such nature
to protect both the competing interests of:-
8.4.1 the Licensor to protect the value of the source code, to
preserve maintenance revenue, and to prevent the Licensee from
modifying the Computer Software Program; and
8.4.2 the Licensee to ensure that the Computer Software Program will
be maintained, upgraded and enhanced irrespective of the fate
of the Licensor.
In the event that the parties are unable to agree upon such terms,
they will be determined by an appropriately qualified Arbitration
Board upon the basis set out in clause 21.
<PAGE>
-26-
9. Alterations and Modifications
Save as specifically permitted in this agreement, the Licensee shall not
be entitled to alter, modify or add to the Computer Software Program.
10. Irremediable breach
Any use of a Computer Software Program or the right to exercise the right
of copyright by the Licensee for any purpose other than that permitted
herein, without the prior written consent of the Licensor, shall
constitute an irremediable breach of this agreement.
11. Enhancements / Upgrades / Modifications
11.1 The Licensor shall supply information with regard to Enhancements of
the Computer Software Program, and shall supply such Enhancements to
the Licensee at such costs as may be notified by the Licensor from
time to time.
11.2 The Licensor shall assume no obligation in terms of this agreement,
in respect of Upgrades to the Computer Software Program. Upgrades to
the Computer Software Program shall be furnished by the Licensor to
the Licensee under the terms and conditions provided for in a
separate maintenance agreement between the parties and shall not be
deemed licensed under this agreement.
<PAGE>
-27-
11.3 The Licensor shall assume no obligation in terms of this agreement,
in respect of Modifications of or to the Computer Software Program.
11.4 If a particular complaint be directed to the Licensor within a
period of 90 (ninety) days from the date of an installation of the
Computer Software Program, the Licensor shall, free of charge,
furnish such materials and services as may be reasonably necessary
to correct any defects in the operations of the Computer Software
Program.
11.5 The Licensor shall perform any other services in respect of the
Computer Software Program, as may reasonably be required by the
Licensee, in accordance with the terms of a separate software
maintenance agreement between the parties materially in the form of
Annexure "H".
11.6 The Licensee shall pay to Licensor a royalty equal to thirty-five
percent (35%) of the net invoiced amount charged by Licensee to its
customers under any software maintenance agreement under which
Upgrades of the Computer Software Program may be provided. Such
royalty shall be paid free of exchange, deduction or set off within
60 (sixty) days of the relevant invoice having been issued by the
Licensee to the third party with whom the maintenance agreement is
entered into.
<PAGE>
-28-
12. Exclusion of liability
12.1 Altris Limited shall ensure that the Computer Software Program shall
be sold with a disclaimer by the Licensor and Licensee in such form
as is specified from time to time by Licensor and is reasonably
acceptable to Licensee in respect of inter alia any loss or damage
arising directly or indirectly in connection with the Computer
Software Program, as the case may be, and the use thereof, and
without detracting from the generality thereof:-
12.1.1 for any loss or damage arising directly or indirectly as a
result of abuse, misuse, or unauthorised use of the Computer
Software Program, as the case may be;
12.1.2 for any Modifications or other changes to the Computer
Software Program which are not carried out by an authorised
representative of the Licensor;
12.1.3 in respect of a breach of a licence;
12.1.4 for loss of profits or for incidental, special or
consequential damages arising from the installation, service,
performance and use of the Computer Software Program, as the
case may be;
<PAGE>
-29-
12.1.5 any design flaw or any malfunction in the Computer Software
Program or the equipment relating thereto, as the case may be,
to the extent that such liability is capable of being excluded or
disclaimed under English law.
12.2 The Licensor shall not be liable to the Licensee for any loss or
damage arising directly or indirectly in connection with the
Computer Software Program, the use of the Computer Software Program
and without detracting from the generality hereof:-
12.2.1 for any loss or damage arising directly or indirectly as a
result of abuse, misuse or unauthorised use of the Computer
Software Program;
12.2.2 any Modifications to the Computer Software Program which had
not been carried out or authorised by the Licensor;
12.2.3 in respect of anything which may constitute a breach of this
agreement by the Licensor by reason of circumstances beyond
the control of either of the parties hereto;
<PAGE>
-30-
12.2.4 for loss of profits or for incidental, special or
consequential damages arising out of or in connection with the
licensing, installation, delivery, performance, Enhancements,
Upgrades or Modifications of the Computer Software Program,
to the extent that such liability is capable of being excluded or
disclaimed under English law.
13. Commencement and termination
13.1 This agreement shall be deemed to have commenced, notwithstanding
the date of signature hereof, on the closing date of the
restructuring agreement and shall continue in force until it is
terminated in accordance with the provisions of this 13.
13.2 In addition to any rights of termination which either party may have
at law, this agreement may be terminated by either party, by written
notice, without prejudice to the aggrieved party's rights to recover
all damages and losses it may suffer and otherwise:-
13.2.1 should the other party commit a breach of any of the terms of
this agreement and fail to rectify the breach within a period
of 30 (thirty) days of receipt of a written notice specifying
the breach;
<PAGE>
-31-
13.2.2 immediately should the breach be irremediable and material
going to the root of this agreement.
13.3 In the event of the insolvency, liquidation or the institution of
proceedings against the defaulting party or the defaulting party
making any arrangements or filing any documents in a court in
contemplation of insolvency, then and in any such event, without
prejudice to the aggrieved party's rights, the entire balance of all
and any monies due by the defaulting party to the other party shall
immediately become due and payable, notwithstanding that it would
not otherwise have been due. In such an event, and failing payment
of the full amount due within 5 days of a written demand by the
aggrieved party, the aggrieved party shall be entitled, to either
terminate this agreement by written notice or to claim specific
performance; provided that in either event, the aggrieved party
shall be entitled to recover all damages it may suffer and all
amounts due to it.
13.4 Upon termination of this agreement due to a default by either of the
parties and in addition to the rights granted to the aggrieved party
in terms hereof, the aggrieved party shall be entitled, without
prejudice to its other rights or remedies at law, to suspend
performance of all its obligations in terms of this agreement. The
defaulting party shall be liable for all costs incurred by
<PAGE>
-32-
the aggrieved party in connection with the recovery of monies and
legal costs incurred in securing the rights of the aggrieved party
in terms hereof.
13.5 This agreement may be terminated by an agreement duly signed by both
parties.
13.6 Upon the termination of this agreement for any reason whatsoever,
any right to exercise the right of copyright or license granted in
terms hereof shall terminate and the Licensee shall return to the
Licensor any version or copy of the Computer Software Program in its
possession and any master copy of the same and all Intellectual
Property relating thereto in its possession.
13.7 In the event of termination of this agreement for any reason
whatsoever, Spescom CIT shall be entitled to require, within 14
(fourteen) days of termination, that any maintenance or support
agreement in respect of Spescom products or any other Computer
Software Program licensed by Spescom CIT in terms hereof and to
which Altris Limited is a party, be assigned to it or that it be
entitled, without prejudice to any other rights it may have, to
maintain and support the relevant Computer Software Program. In this
regard, Altris Limited shall make available all relevant information
and shall sign all documents, upon demand, to give effect hereto. In
addition hereto, the Licensor shall be entitled, from time to time,
to conduct routine inspections as to the maintenance, marketing
distribution of the Computer Software Program and the exercise by
the Licensee of its rights in terms hereof and in
<PAGE>
-33-
this regard, the Licensee shall furnish all reasonable information
and assistance to give effect hereto.
14. Infringement of rights of copyright
14.1 In the event that the right to exercise the right of copyright is
infringed by a third party, both parties may agree, but neither
shall be obligated to, join in instituting proceedings against the
third party and the costs of such proceedings and any damages,
account of profits, delivery-up of infringing copies and the
proceeds of any proceedings which may be recovered shall be divided
equally between them.
14.2 In the event that the parties fail to agree to jointly institute
proceedings, only the owner or Licensor of the infringed right in
question shall be entitled to institute proceedings in respect of
the same; provided that any damages, account of profits, delivery-up
of infringing copies and the proceeds of any proceedings shall
accrue to that party only.
15. No partnership created
This Agreement does not create a partnership, joint venture, or fiduciary
relationship. Each party shall conduct its obligations independently and
not as an agent or employee of the other party. Subject to the terms
hereof, each party shall
<PAGE>
-34-
be responsible for choosing the means to be employed and the manner of
carrying out its obligations hereunder. Each party shall be responsible
for the supervision and payment of its personnel.
16. Joint marketing activities
The parties agree to consult and co-operate with each other in the
interest of promoting Spescom products in order to maximize their
collective return from the division of royalties in respect thereof. To
that end, the Licensee shall:-
16.1 become familiar with the technical and operational functions and
features of the Spescom products;
16.2 visit potential new customers for marketing presentations, at the
reasonable request of the other party;
16.3 conduct demonstrations and performance benchmarks of the Computer
Software Program;
16.4 be provided with such promotional material as the Licensor shall
consider reasonable;
16.5 be entitled to call upon the Licensor to support the Computer
Software Program, subject to a separate maintenance agreement
between the parties.
<PAGE>
-35-
16.6 not sell, market, distribute or promote any knowledge management
products, document management systems, product data management
products, or configuration management products that is similar to or
competitive with any Computer Software Program licensed or to be
licensed to Licensee hereunder or any Enhancement, Modification or
Upgrade thereof. Spescom CIT shall make available to Altris Limited
all its relevant records on reasonable notice to ensure that the
provisions of this 16.6 are complied with.
17. Documentation standards
To the extent possible and in order to assist the Licensee to achieve the
goals contemplated in terms of this agreement, Spescom CIT shall establish
and conform to reasonable requirement for technical and functional
documentation.
18. Supporting documentation; audit
Reasonable books of account relating to Computer Software Program
reproductions, names and addresses of customers where Computer Software
Program was installed, the charges made in respect of the aforesaid and
the relevant invoices shall be kept and maintained by Licensee. All such
records shall be open for review, copy and audit by Licensor at reasonable
times and on
<PAGE>
-36-
reasonable notice to support charges and amounts due by Licensee to the
Licensor. An audit of such records may be made, upon demand by Licensor,
no more than twice each year, by an independent firm of accountants or by
such other individuals as may be reasonably acceptable to the Licensee.
19. Taxation
Unless a double taxation agreement between RSA and the UK from time to
time permits payments due in terms of this agreement to be made without
deduction of withholding or other taxes or unless a valid exemption is
obtained, any sums in respect of withhold in or other taxes which RSA law
or UK law, as the case may be, require to be deducted from payments due in
terms of this agreement, shall be deducted from such payments. Where
applicable, either party shall promptly furnish the other with a
certificate of payment from the appropriate authority confirming that such
taxes have been paid.
20. Warranties
20.1 The Licensor warrants that it is entitled to license and transmit
the rights granted in terms hereof and for the purposes hereof and
that the Computer Software Program and the rights granted in terms
hereof do not infringe upon or violate any copyright, trademarks or
other Intellectual Property, privacy or any other right of any third
party, nor has any claim of such infringement
<PAGE>
-37-
been threatened or asserted, nor is such a claim pending against the
Licensor (or, to the best of the Licensor's knowledge, against any
entity from which the Licensor may have obtained such a right).
20.2 The Licensor represents and warrants that it is under no obligation
or restriction, nor will it assume any obligation or restriction
that does or may in any way interfere or conflict with, its
obligations in terms hereof.
20.3 The Licensor indemnifies the Licensee against any loss or damage
suffered by the Licensee as a result of a breach of any of the
warranties given in terms hereof.
21. Arbitration
21.1 In the event of any controversy, claim or dispute arising out of or
relating to this Agreement or the breach thereof, both parties shall
meet and exert their best efforts to find an amicable settlement.
21.2 Failing agreement within a period of thirty (30) days from the date
on which either party, in writing, with reference to the present
clause, requests an amicable settlement, the matter shall be settled
by arbitration adjudicated under English Law, conducted in English
and held in London, England, in
<PAGE>
-38-
accordance with Rules of Conciliation and Arbitration of the
International Chamber of Commerce.
21.3 The Arbitration Board shall consists of three members. Each of the
parties shall appoint one arbitrator and the two so nominated shall
in turn choose a third. If the chosen arbitrators cannot agree on
the choice of the third arbitrator, such arbitrator shall be
appointed by the Court of Arbitration of the International Chamber
of Commerce.
21.4 The arbitration shall be conducted in accordance with the Rules of
the International Chamber of Commerce and it is agreed that the
decision shall be definite and there shall be no appeal to the
Courts from the decision of the arbitrators.
21.5 Either party shall be entitled to have any arbitration award made an
order of Court.
21.6 The obligation herein to arbitrate shall not be binding upon either
party with respect to requests for temporary restraining orders,
preliminary injunctions or interdicts or other procedures (or their
functional equivalent) in a court of competent jurisdiction to
obtain interim relief when deemed necessary by such court to:-
<PAGE>
-39-
21.6.1 preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute between the
parties; or
21.6.2 to order specific performance.
22. Confidentiality and restraint
22.1 Each party acknowledges that all material information which has or
will come into the possession or knowledge of the other in
connection with this agreement or the performance of any obligations
hereunder or the Computer Software Program, including without
limitation the Intellectual Property of the parties, consists of
confidential and proprietary information, which, if disclosed to
third parties, might be damaging to the proprietor thereof.
22.2 Both parties therefore agree to hold such material information in
the strictest confidence, not to make use thereof other than in the
performance of the obligations under this agreement, to release it
only to employees requiring such information and not to release or
disclose it to any other party; provided, however, that any party
shall be entitled to make such disclosures to the extent such party
is required to do so by law or legal process.
22.3 Neither party shall use the name of the other in publicity releases
or advertising or for other promotional purposes, without securing
the prior written approval
<PAGE>
-40-
of the other party, save in such instances as any of the parties are
required to make public announcements as a matter of law, regulation
or rule of any stock exchange.
22.4 The parties agree that the provisions of the clause shall survive
the termination of this agreement.
23. Intellectual Property rights
23.1 Without prejudice to the Licensor's rights, each party acknowledges
that any and all Intellectual Property used or embodied in or in
connection with the Computer Software Program and the ownership of
the copyright in question, shall remain the exclusive property of
the Licensor.
23.2 The Licensee shall not question or dispute the ownership of any such
rights at any time during the continuation in force of this
agreement or thereafter.
23.3 The aforesaid shall apply whether or not the copyright in question
or any other similar rights are registered.
23.4 All rights to and in connection with the Computer Software Program
and copyright in question not specifically granted to the Licensee
in terms of this agreement are reserved to the Licensor.
<PAGE>
-41-
23.5 The rights granted in terms of this agreement shall be by way of a
licence and the Licensee shall not acquire any ownership or interest
in such rights.
24. Severability
24.1 If any provision of this agreement is found or held to be invalid,
unlawful or unenforceable, the validity of all the other provisions
hereof shall not be affected thereby and the parties agree to meet
and review the matter and if any valid and enforceable means is
reasonably available to achieve the same object as the invalid or
unenforceable provision, to adopt such means by way of variation of
this agreement.
24.2 In the event that any of the terms of this agreement are found to be
invalid, unlawful or unenforceable, such term shall be severable
from the remaining terms, which shall continue to be valid and
enforceable. If any invalid term is capable of amendment to render
it valid, the parties agree to negotiate an amendment to remove the
invalidity.
25. Force majeure
In the event that either party is unable to perform any obligation
hereunder due to any circumstances beyond its control, including the
action, intervention, or decree
<PAGE>
-42-
of any government, and such circumstances are not caused by the fault of a
party and such circumstances continue for a period of at least 60 (sixty)
days, either party may terminate this agreement by means of written notice
to the other party.
26. Assignment
Neither party shall be entitled to assign, delegate, cede or transfer any
rights or obligations acquired in terms of this agreement, in whole or in
part, to any other party or person without the prior written consent of
the other party; provided, however, that Licensor shall be entitled to
assign, delegate, cede or transfer its rights and obligations hereunder to
any person or entity acquiring all or substantially all of the business of
Licensor.
27. Addresses and notices
27.1 The parties choose as their domicilia citandi et executandi for all
purposes under this agreement, whether in respect of court process,
notices or other documents or communications of whatsoever nature,
the following addresses:-
27.1.1 Spescom CIT Spescom Park
cnr Alexandra Road
and Second Street
Halfway House
Midrand 1685
Republic of South Africa
<PAGE>
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Fax No. (011) 266 1707
marked for the attention of
the Managing Director
with a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank
2196 Johannesburg
Republic of South Africa
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
27.1.2 Altris Limited
before the closing date 9339 Carroll Park Drive
San Diego
California 92121
Fax No. (619) 546 7671
marked for the attention of
the President
with a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
Los Angeles
California 90067
Attention: Russell C Hansen
Fax No. (310) 551 8741
after the closing date c/o SL
Spescom Park
cnr Alexandra Road
and Second Street
Halfway House
Midrand 1685
Republic of South Africa
Fax No. (011) 266 1707
marked for the attention of
the Managing Director
<PAGE>
-44-
with a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank
2196 Johannesburg
Republic of South Africa
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
27.2 Any notice or communication required to be given in terms of this
agreement shall be valid and effective only if in writing.
27.3 Either party may by notice to the other change its domicilium
citandi et executandi to another physical address either in the
Republic of South Africa or in the United Kingdom; provided that the
change shall become effective on the 7th day after receipt of the
notice.
27.4 Any notice which the one party may require to give the other shall
be deemed to have been received:-
27.4.1 if sent by prepaid registered post addressed to the other
party, not later than 14 (fourteen) business days after the
date of posting; or
27.4.2 if delivered by hand, on the date of the delivery thereof; or
<PAGE>
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27.4.3 if despatched by telefax, on the date of a valid transmission
report indicating that a transmission had taken place, being
duly printed on the sender's telefax machine.
27.5 Notwithstanding anything to the contrary herein contained, a written
notice actually received by a party shall be an adequate written
notice to it, notwithstanding that it was not sent to or delivered
at its chosen domicilium citandi et executandi.
27.6 Where, in terms of this agreement, any communication is required to
be in writing, the term "writing" shall include communication by
telefax.
28. Whole agreement
28.1 This agreement constitutes the entire agreement between the parties.
No party shall be entitled to rely upon any term, warranty,
condition or representation unless it is herein contained.
28.2 No amendment, novation, variation, addition to or consensual
cancellation of this agreement or any provision or term thereof
(including this clause) and no extension of time, waiver or
relaxation of any of the provisions or terms of this agreement shall
be binding unless recorded in a written document signed by the
parties. Any such extension, waiver or relaxation which is so
<PAGE>
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given or made shall be construed as relating strictly to the matter
in respect whereof it was made or given.
28.3 No extension of time or waiver or relaxation of any of the provision
or terms of this agreement shall operate as an estoppel against any
party in respect of its rights under this agreement, nor shall it
operate so as to preclude such party thereafter from exercising its
rights strictly in accordance with this agreement.
29. Proper law
This agreement is governed by and is to be construed in accordance with
the substantive laws of England and Wales ignoring any question of
conflict of laws. The parties consent accordingly to the non-exclusive
jurisdiction of the appropriate court of law in England in relation to all
matters, claims and disputes arising out of or in connection with this
agreement or any document supplemental hereto. Altris Inc hereby
irrevocably appoints Altris' solicitors as its agent for the service of
any proceedings upon it pursuant to this agreement. Prior to the closing
date Altris Limited irrevocably appoints Altris' solicitors and after the
closing Altris Limited irrevocably appoints Spescom's solicitors as its
agent for the service of any proceedings upon it pursuant to this
agreement.
Thus done and signed by the parties hereto as follows -
<PAGE>
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Date: May 7th, 1999 For and on behalf of
Altris Software, Inc.
Place: London, England /s/ Roger Erickson
-------------------------------------
President, who warrants that he
is duly authorised hereto
Date: May 7th, 1999 For and on behalf of
Altris Software Limited
Place: London, England /s/ Peter J.J. Brady
-------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7th, 1999 For and on behalf of each of
the companies in the Spescom group
Place: London, England /s/ Hilton Isaacman
-------------------------------------
Director, who warrants that he
is duly authorised hereto
Date: May 7th, 1999 For and on behalf of each of
the companies in the Altris group
Place: London, England /s John W. Low
-------------------------------------
Director, who warrants that he
is duly authorised hereto
<PAGE>
TABLE OF CONTENTS
Page
1. Interpretation.......................................................... 2
2. Preamble................................................................ 14
3. Grant of licence........................................................ 16
4. Licence Fees / Royalties................................................ 19
5. Use of licence.......................................................... 21
6. Delivery and installation............................................... 22
7. Licensee's undertakings................................................. 23
8. Source code............................................................. 24
9. Alterations and Modifications........................................... 26
10. Irremediable breach..................................................... 26
11. Enhancements / Upgrades / Modifications................................. 26
12. Exclusion of liability.................................................. 28
13. Commencement and termination............................................ 30
14. Infringement of rights of copyright..................................... 33
15. No partnership created.................................................. 33
16. Joint marketing activities.............................................. 34
17. Documentation standards................................................. 35
18. Supporting documentation; audit......................................... 35
19. Taxation................................................................ 36
20. Warranties.............................................................. 36
21. Arbitration............................................................. 37
22. Confidentiality and restraint........................................... 39
23. Intellectual Property rights............................................ 40
24. Severability............................................................ 41
25. Force majeure........................................................... 41
26. Assignment.............................................................. 42
27. Addresses and notices................................................... 42
28. Whole agreement......................................................... 45
29. Proper law.............................................................. 46
<PAGE>
ANNEXURES
"A" - EB Software Description
"B" - EMS Software Description
"C" - Interface Software Description
"D" - Form of License Agreement for use by Licensee
"E" - Wintract Software Description
"G" - List of Territories
"H" - Software Maintenance Agreement
<PAGE>
APPENDIX 7
[LOGO]
[Letterhead of Kallmeyer & Strime]
SHAREHOLDERS AGREEMENT
between
Spescom Limited
Altris Group Plc
Altris Software, Inc.
and
Altris Software Limited
<PAGE>
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1. Interpretation
1.1 The clause headings of this agreement are for reference purposes
only and shall not be used in the interpretation thereof.
1.2 Unless a contrary intention clearly appears -
1.2.1 expressions which denote -
1.2.1.1 any gender shall include the other genders;
1.2.1.2 a natural person shall include an artificial person and
vice versa;
1.2.1.3 the singular shall include the plural and vice versa;
1.2.2 the following expressions shall have the meanings set opposite
them below and cognate expressions shall bear corresponding
meanings -
1.2.2.1 Altris Inc - shall mean Altris Software, Inc.
organised according to the laws of
the State of California, United
States of America, and the common
stock of which is traded on the OTC
Bulletin Board;
1.2.2.2 Altris Group - shall mean that group of companies
comprising of Altris Inc as the
ultimate parent company and its
subsidiaries;
1.2.2.3 Altris Plc - shall mean Altris Group Plc, company
number 2253256, incorporated under
the Companies Acts as Trimco Group
Plc;
1.2.2.4 the auditors - shall mean the auditors of the
company for the time being and shall
initially be Grant Thornton;
<PAGE>
-3-
1.2.2.5 the Bank - shall mean Lloyds Bank Plc;
1.2.2.6 base rate - shall mean the base rate of interest
from time to time publicly quoted by
the Bank and which rate of interest
is compounded monthly in arrear and
is calculated on the basis of a 365
day year;
1.2.2.7 the Companies
Acts - shall mean the Companies Acts of 1985
and 1989, as amended, regulating the
affairs of companies incorporated
under English law;
1.2.2.8 the company - shall mean Altris Software Limited,
company number 2625912, incorporated
under the Acts and having an
authorised share capital of (pound)1
000 divided into 1 000 ordinary
shares of (pound)1,00 each, of which
2 shares have been issued;
1.2.2.9 the conditions - shall mean the conditions precedent
referred to in 4;
1.2.2.10 the effective date - shall correspond with the closing
date as defined in the restructuring
agreement;
1.2.2.11 the execution date - shall mean the date of last signature
to this agreement;
1.2.2.12 loan or loan
accounts - shall mean, in relation to any
shareholder, all amounts which may be
or become owing by the company to
such shareholder from whatever cause
arising;
<PAGE>
-4-
1.2.2.13 the restructuring
agreement - shall mean that agreement entered
into between SL, Altris Inc, the
company and others and to which this
agreement constitutes Appendix 7;
1.2.2.14 SL - shall mean Spescom Limited,
Registration No. 87/01083/06, a
company registered in the Republic of
South Africa, and shall for the
purposes of this agreement if the
provisions of 22.2 of the
restructuring agreement are
applicable refer to its nominated
subsidiary;
1.2.2.15 the shareholders/
members - shall mean Altris Plc and SL, and any
other party whom the others may
henceforth permit to own shares in
the capital of the company, and who
shall be subject to the terms hereof,
either jointly or alone as the
context may dictate;
1.2.2.16 shares - shall mean the ordinary shares in the
capital of the company;
1.2.2.17 Spescom Group - shall mean SL and its various
subsidiaries and associated
companies.
1.3 Any reference to an enactment is to that enactment as at the date of
signature hereof and as amended or re-enacted from time to time.
1.4 If any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause, effect
shall be given to it as if it were a substantive provision in the
body of the agreement.
<PAGE>
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1.5 When any number of days is prescribed in this agreement, same shall
be reckoned exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public holiday in
which case the last day shall be the next succeeding day which is
not a Saturday, Sunday or public holiday.
1.6 Where figures are referred to in numerals and in words, if there is
any conflict between the two the words shall prevail.
1.7 Where a certificate or determination is required by the auditors in
terms of this agreement, such shall be prepared by the auditors
acting as experts and not as arbitrators and shall be final and
binding upon the parties save for any manifest error in calculation.
1.8 Schedules, annexures or appendices to this agreement shall be deemed
to be incorporated in and form part of this agreement.
1.9 Terms and expressions defined in the restructuring agreement shall
have the same meaning where referred to herein unless a contrary
intention clearly appears.
1.10 The preamble shall be deemed to be incorporated herein.
2. Preamble
It is hereby recorded that -
2.1 pursuant to the terms of the restructuring agreement the
shareholding in the company shall be held as to:-
2.1.1 60% (sixty per cent) by SL; and
2.1.2 40% (forty per cent) by Altris Plc;
2.2 the shareholders desire to regulate their rights and obligations in
the company inter se;
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2.3 the parties are desirous of recording -
2.3.1 the basis upon which the company is to be restructured; and
2.3.2 the terms and conditions upon and subject to which -
2.3.2.1 their association inter se, in the company; and
2.3.2.2 the loan finance to be provided or procured;
is and will be governed;
2.4 the parties require that the terms and conditions of their agreement
be reduced to writing and be signed by them before the same shall be
or become binding upon them.
3. Future issue of shares
Unless otherwise determined by the shareholders unanimously, any future
issue of shares in the company shall be issued on the basis of the then
prevailing shareholding percentages of the shareholders in the company.
4. Conditions
4.1 This agreement is subject to and conditional upon the restructuring
agreement being signed and becoming unconditional.
4.2 Unless this condition is fulfilled by May 14, 1999, or by such later
date as may be agreed upon in writing by the parties, the provisions
of this agreement, save as set out in 18, shall be of no force or
effect.
5. Issue of Shares and Meetings of Shareholders
5.1 Should the shareholders agree to issue further shares, the shares
must first be offered to the existing shareholders pro rata to their
respective shareholding
<PAGE>
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in the company inter se unless all the shareholders will have agreed
to offer such shares directly to any third party not being a
shareholder or unless such issuance is being made to an executive of
Limited who is not an affiliate of Altris Inc. or SL pursuant to a
stock option or other management equity plan under which the company
may issue shares to its executives constituting no more than ten
percent (10%) of the number of issued shares in the company's issued
share capital from time to time.
5.2 Should a shareholder refuse an offer of further shares, such shares
not taken up shall then be offered on the same terms and conditions
to the remaining shareholders who had accepted their respective
offers until all shares are taken up by the shareholders, or until
none of the shareholders is desirous of taking up further shares.
Such shares not taken up by the shareholders shall thereafter be
offered on the same terms and conditions to any third party not
being a shareholder, provided that such third party shall be obliged
to undertake in writing to be bound and subject to the appropriate
provisions of this agreement and of any other shareholders'
agreement in respect of the company.
5.3 Notice of any shareholders' meeting shall be given a reasonable time
before the date of such meeting, but subject to the provisions of
the Act.
5.4 The chairman of any meeting shall not have a casting vote.
5.5 The presence of a representative of SL on the one hand, and of
Altris Inc on the other subject to 11.3 is necessary to constitute a
quorum at a shareholders' meeting, provided that -
5.5.1 if within 10 (ten) minutes after the time appointed for a
shareholders' meeting a quorum is not present, such meeting
shall stand adjourned to the same time and place on a day 5
(five) business days after the date of the meeting; and
5.5.2 the shareholders present at such an adjourned meeting shall be
a quorum.
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5.6 At any shareholders' meeting a resolution put to the vote of the
meeting shall be decided on a show of hands, any member who being an
individual is present in person, and a corporate member to be
represented in terms of Section 375 of the Companies Act 1985,
provided that any shareholder may demand a poll (before or on the
declaration of the result of the show of hands). The shareholders
shall be entitled to one vote in respect of every ordinary share
held. All resolutions shall be passed by a majority vote save for
any resolutions falling within the ambit of a shareholders
resolution and referred to in 11.2 save as required by law.
5.7 At the request of any shareholder, shareholders' meetings shall be
conducted utilising electronic media conferencing facilities,
provided that the required quorum is met.
5.8 The chairman of the board of directors shall act as chairman of all
shareholders meetings. If the chairman of the board of directors is
absent at the time appointed for a shareholders' meeting, the
shareholders present shall elect a chairman from one of their number
to be chairman of the meeting.
6. Directors
6.1 For every 10% (ten per cent) of the issued shares in the company as
are owned by SL, it shall be entitled to:-
6.1.1 appoint 1 (one) director, and in any subsidiary of the company
to appoint 1 (one) director, and by written notice, to remove
any such persons so appointed by it; and
6.1.2 upon such removal or upon any such appointee ceasing to hold
office for any other reason, by similar written notice to
appoint in his stead another person or persons; and
6.1.3 appoint the chairman of the company;
<PAGE>
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approved by the other shareholders whose approval shall not be
unreasonably withheld. Any dispute as to whether the approval of any
member as herein required has been unreasonably withheld shall be
dealt with in terms of 12.
6.2 For every 10% (ten per cent) of the issued shares in the company as
are owned by Altris Plc, it shall be entitled to:-
6.2.1 appoint 1 (one) director, and in any subsidiary of the company
to appoint 1 (one) director, and by written notice, to remove
any such persons so appointed by it; provided, however, that
Altris Plc shall in all events be entitled to appoint at least
1 (one) director of the company and any subsidiary so long as
it continues to hold at least 50% of the shares of the company
issued to it under the restructuring agreement (or any shares
or other securities issued hereafter in respect of such shares
of the company under any stock split, stock dividend,
reclassification, merger, reorganization or other similar
transaction affecting the capital stock of the company); and
6.2.2 upon such removal or upon any such appointee ceasing to hold
office for any other reason, by similar written notice to
appoint in his stead another person;
approved by the other shareholders whose approval shall not be
unreasonably withheld. Any dispute as to whether the approval of any
member as herein required has been unreasonably withheld shall be
dealt with in terms of 12.
6.3 Each of the directors or his alternate appointed by a particular
shareholder shall have as many votes as the number of shares which
the shareholder appointing him holds divided by the number of
directors appointed by that particular shareholder, who vote on the
particular resolution.
6.4 Each of the shareholders undertakes to exercise his voting right to
achieve compliance with the provisions of 6.1 and 6.2.
6.5 The shareholders shall have the right to nominate any person,
whether a shareholder of the company or not, possessing the
necessary qualifications of
<PAGE>
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a director, to act as alternate director during its or his nominated
director's absence or inability to act as such provided such person
is approved by all the other shareholders which approval will not be
unreasonably withheld. Any dispute as to whether the approval of any
member as herein required has been unreasonably withheld shall be
dealt with in terms of 12.
6.6 The quorum necessary for the transaction of the business of
directors is 3 (three) of which at least 1 (one) director shall be a
nominee of SL, and another subject to 11.3 a nominee of Altris Plc,
provided that -
6.6.1 if within 10 (ten) minutes after the time appointed for a
directors' meeting a quorum is not present, such meeting shall
stand adjourned to the same time and place on a day 5 (five)
business days after the date of the meeting; and
6.6.2 the directors present at such an adjourned meeting shall be a
quorum.
6.7 Notice of any directors' meeting shall be given a reasonable time
before the date of such meeting.
6.8 Directors' meetings must be held at least once a quarter at a time
and place convenient to most of the directors. At the request of any
director, directors' meetings shall be conducted utilising
electronic media conferencing facilities, provided that the required
quorum is met.
6.9 The chairman shall not have a casting vote.
6.10 If the chairman is not present at any directors' meeting, the
directors present shall elect one of their number to be chairman of
the meeting.
6.11 All resolutions put to the vote at meetings of directors shall be
passed by majority vote save that no resolution of the board of
directors shall be passed unless a vote is cast in its favour by a
majority of the directors who are nominees of Altris Plc which
relates to any of the matters referred to in 11.2.
6.12 No fees shall be payable to any person strictly for his services as
a director.
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6.13 Irrespective of any provisions to the contrary contained in this
agreement, it is recorded that it is the intention of the
shareholders that this agreement shall in no way fetter the
discretion of the directors in making decisions as directors in the
best interests of the company.
7. Funding
7.1 Any loan accounts established by the members from time to time shall
bear interest at base rate unless otherwise agreed between the
parties which having regard to prudent financial management of the
company and its available cash resources shall be paid 6 (six)
monthly (i.e. semiannually) in arrears.
7.2 Any amount owing in respect of any loan accounts to any shareholder
(subject to any contrary provision of this agreement or as may be
otherwise agreed upon where the terms of the specific loan provide a
specific date for repayment) shall only be repayable with the
consent of the other shareholders, or on the happening of one or
more of the following events -
7.2.1 a special resolution being passed for the winding-up of the
company;
7.2.2 the company being placed in liquidation;
7.2.3 an administrator is appointed in respect of the company or an
administrative receiver or receiver is appointed over the
whole or substantially the whole of the undertaking, property,
or assets of the company;
7.2.4 any assets of the company being attached in execution of a
judgment;
7.2.5 the company having cash resources surplus to its needs and
commitments for the time being, as reasonably determined by
each of the shareholders in good faith, and in the event of
there being any dispute as to whether or not it has cash
resources surplus to its usual needs and commitments and the
extent, if any, then such dispute shall be determined in terms
of 12;
<PAGE>
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and provided further that all loan accounts of the
shareholders shall be repaid on a pro rata basis.
8. Dividend Policy
Unless otherwise agreed by the board of the company commencing with the
financial period October 1, 2000 dividends will be distributed based on
40% (forty per cent) of the after tax profits of the company and shall be
distributed having regard to the financial position of the company within
90 (ninety) days of each accounting reference date.
9. Documents and Reporting
9.1 All books, papers, records, documents and correspondence relating to
or containing a reference to the business of the company shall
immediately be returned to the company by a shareholder at the
termination of such shareholder's shareholding in the company.
9.2 No later than 21 days after the end of each fiscal quarter of the
company, the company shall deliver to Altris Plc and SL the balance
sheet of the company as at the end of such quarter and the related
unaudited consolidated statements of operations and cash flows of
the company for such quarter and for the elapsed period in the year,
all in reasonable detail and in any event to the extent necessary to
enable each of Altris Inc and SL to meet their respective reporting
obligations under the securities and other laws applicable to each
of them. The company shall also furnish to each shareholder such
additional information regarding the results of operations,
financial condition, business or prospects of the company, including
projected information, as any shareholder may reasonably request.
9.3 Upon reasonable notice, the company will permit any officer,
employee, accountant or other representative or agent of a
shareholder to visit and inspect, during normal business hours, any
of the assets or properties owned or held by the company and to
audit and examine the books of account, records, reports and other
papers (and to make copies thereof) of the company
<PAGE>
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and to discuss the affairs, finances and accounts of the company
with the directors, officers, agents, accountants and attorneys of
the company, all at such times during normal business hours as such
shareholder may reasonably request.
10. Pre-Emptive Rights
10.1 Unless otherwise agreed in writing by all the members of the
company, a member may dispose of any of his shares only if in one
and the same transaction he disposes of that portion of his claims
against the company on loan account which bears the same proportion
to the whole of his claims as the shares disposed of bear to the
whole of his shareholding in the company, and a reference in this
clause 10 to "shares" shall embrace a reference to all loan
accounts.
10.2 A share -
10.2.1 may be transferred in accordance with any written agreement in
force between the members of the company;
10.2.2 may not be transferred in conflict with the provisions of any
written agreement in force between the members of the company.
10.3
10.3.1 When any shareholder intends to dispose of any shares, such
disposing shareholder shall offer them to the remaining
shareholders stating:
10.3.1.1 the number of shares which the disposer proposes to
sell;
10.3.1.2 the price (which shall sound in money in GBP) at and the
terms upon which the disposer proposes to sell those
shares.
10.3.2 Such offer shall constitute an irrevocable offer to the
offerees but, should they not have accepted the offer in full,
in writing (if more than one accepts, they shall be deemed to
have purchased pro rata to their shareholdings in the company
or in such other proportions as they may agree on and of which
they notify the disposer in writing), within 60
<PAGE>
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(sixty) days of the date upon which the notice is given, they
shall be deemed to have declined the offer, it being the
intention that all but not some of the shares of the disposer
shall be accepted in this manner. If the offer is deemed
declined the disposer shall be entitled to dispose of those
shares within a further period of 60 (sixty) days to any
person, being a bona fide third party at a price and on terms
not lower and not more favourable to such person than the
price and terms stated in the offer, provided that such third
party shall be obliged to undertake in writing to be bound and
subject to the appropriate provisions of this agreement and of
any other shareholders agreement in respect of the company.
10.4 A shareholder who has sold all his shares undertakes to immediately
resign as director of the company or, if applicable, to procure the
resignation of the director nominated by him. Any employee of the
company who is a director shall resign as such at the time of the
termination of his employment.
10.5 In the event of a sale of shares to a bona fide third party as
envisaged herein, the other shareholders undertake, by exercising
their voting rights as shareholders and/or directors, to ensure that
the transfer of such shares will be approved and effected by the
company.
10.6 If the offeror's offer in terms of 10.3 is accepted, the offeror
hereby irrevocably authorises and appoints the auditors to sign all
transfer documents on the offeror's behalf in order to effect the
transfer and cession of the shares and loan account sold into the
name of the shareholder who had accepted the offer.
10.7 If:-
10.7.1 at any time after the third anniversary of the effective date,
Altris Plc or SL receives an offer (the "outside offer") for
the purchase of all the shares in the capital of the company;
10.7.2 Altris Plc or SL has signified in writing to the remaining
shareholders its intention to accept that offer, which notice
shall be deemed to be an offer
<PAGE>
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for the purposes of 10.3 and to constitute an offer by the
Altris Group or SL, as the case may be, to sell its shares to
the remaining shareholders mutatis mutandis upon the terms of
the outside offer, which shall be irrevocable and capable of
acceptance by the remaining shareholders in their shareholding
ratios in the company inter se or in such other ratios as they
may otherwise agree upon, for a period of 30 (thirty) days
after the receipt by them of such notice; and
10.7.3 the offer referred to in 10.7.2 is refused or expires
unaccepted;
and the outside offer does not differentiate between the Altris
Group and SL, as the case may be, on the one hand and the remaining
shareholders on the other as to the price per share payable to them
or in any other respect, Altris Plc or SL, as the case may be, shall
have the right to require that the remaining shareholders shall join
in accepting the outside offer and give effect to the sale resulting
therefrom.
10.8 If:-
10.8.1 SL receives an offer (the "SL majority offer") for the
purchase of any of its shares in the capital of the company,
provided, however, that this Section 10.8 shall in no event
apply to the sale by SL of an aggregate number of such shares
equal to or less than twenty percent (20%) of the total number
of shares held by SL and Altris Plc immediately after the
effective date, after giving effect to any subsequent stock
split, stock dividend, reclassification, merger,
reorganization or other similar transaction affecting the
capital stock of the company;
10.8.2 SL has signified in writing to the remaining shareholders its
intention to accept that offer, which notice shall be deemed
to be an offer for the purposes of 10.3 and to constitute an
offer by SL to sell the shares which are the subject of the SL
majority offer to the remaining shareholders mutatis mutandis
upon the terms of the SL majority offer, which shall be
irrevocable and capable of acceptance by the remaining
shareholders in their shareholding ratios in the company inter
se or in such other ratios
<PAGE>
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as they may otherwise agree upon, for a period of 30 (thirty)
days after the receipt by them of such notice; and
10.8.3 the offer referred to in 10.8.2 is refused or expires
unaccepted;
the remaining shareholders acting jointly shall have the right to
require that SL shall procure that the offeror concerned makes a
similar offer to all of them on the same basis as made to SL and
they shall join with SL to achieve that a number of shares not more
than the number of shares to be sold by SL in the SL majority offer
shall be sold by the remaining shareholders and purchased
respectively together with their loan accounts at face value. The
requirement by the remaining shareholders to join with SL shall be
by written notice within 14 (fourteen) days after the offer in
10.8.2 expires unaccepted.
11. Management and administration of the company
11.1 The business of the company shall be managed by the board of
directors.
11.2 Prior board approval supported by the votes of the directors
nominated by SL and subject to 11.3 those nominated by Altris Plc
shall be required for the following -
11.2.1 The acquisition (whether by merger, consolidation, purchase of
stock or assets or otherwise) of any new businesses inside or
outside of the industry in which the company presently carries
on business;
11.2.2 The disposal of assets, otherwise than in the ordinary course
of business, at consideration in excess of GBP50 000 (fifty
thousand pounds);
11.2.3 The disposal of any business;
11.2.4 The raising of new debt;
11.2.5 The price, if any, at which any new shares in the company are
to be issued, it being recognised by the parties that the
company may require to raise additional capital through share
issues in the future;
<PAGE>
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11.2.6 The passing of any special resolution;
11.2.7 The approval of the company's financial statements including
the approval of (a) the company's annual budgets and any
expenditure which causes the company to exceed any such budget
and (b) the company's agreement to the amount of the minimum
royalty payments in 2002 or in any year thereafter required in
order to maintain exclusivity under the distribution
agreements;
11.2.8 Any change in the nature of the company's business, including
conducting any business outside of the industry in which it is
at present;
11.2.9 The making of any loans or the guaranteeing of the obligations
of any other person;
11.2.10 Any transaction or arrangement with any shareholder or any of
its affiliates or associated entities;
11.2.11 The dissolution, liquidation, discontinuance or winding up of
a major part of the business activity of the company;
11.2.12 The investment of any amount in another entity or the creation
of any subsidiary entity;
11.2.13 Any change in the auditors of the company or any material
change in the accounting principles and policies used by the
company;
11.2.14 The appointment, termination or acceptance of resignation of
the Managing Director of the company (or other officer having
the powers of the chief executive officer of the company) or
the Finance Director (or any other officer having the powers
of the chief financial officer of the company); or
11.2.15 The performance of anything or the decision to omit to do
anything which is inconsistent with the provisions of the
restructuring agreement or the
<PAGE>
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other agreements and documents executed under the
restructuring agreement.
11.3 The additional rights granted in favour of Altris Plc in terms of
being required to count for constituting a quorum in terms of 5.6
and 6.6, and to vote in favour of resolutions envisaged in terms of
11.2 shall be available to it only for so long as Altris Plc itself
is a shareholder owning at least 20% ( twenty per cent) of the
issued share capital in the company (excluding shares issued or
issuable to employees under employee incentive plans or
arrangements) and neither it nor Altris Inc has been placed into
receivership, liquidation, bankruptcy or suffered any other similar
diminished status by virtue of the appointment of an administrator
or administrative receiver or similar officer.
12. Arbitration
12.1 All disputes, differences or questions arising out of this agreement
or as to the rights or obligations of the parties under it or in
connection with the construction of it or any deadlock which results
in a failure to pass a resolution dealing with any matter referred
to in 11.2 shall be referred to the arbitration of a single
arbitrator to be agreed between the parties or, failing agreement
within 14 (fourteen) days on the nomination by any party of an
arbitrator to be appointed at the request of any party, by the
President for the time being of The Law Society of England and Wales
having due regard to any representations made to him as to the
appropriate qualifications of such arbitrator. The arbitration shall
take place in London and shall be in accordance with the Arbitration
Act 1996 or any re-enactment or modification of such Act for the
time being in force.
12.2 Notwithstanding the provisions of this 12 the parties shall remain
vested with rights to apply to Court in respect of any interdict or
urgent relief as may otherwise be required for the protection of
their rights.
13. Co-operation
Each of the parties hereto undertakes (so far as each is legally able) to
-
<PAGE>
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13.1 do, and to procure the doing by other persons, and to refrain and
procure that other persons will refrain from doing, all such acts;
and
13.2 pass, and to procure the passing of all such resolutions of
directors or shareholders of any company,
to the extent that the same may reasonably lie within such parties' power
and may be required to give effect to the import and intent of this
agreement or to procure the fulfilment of any condition to which it may be
subject.
14. Notices
14.1 Any notice or legal process served under this agreement must be in
writing and must be served on the relevant party at the address set
out below or such other address as may have been notified to the
serving party:-
14.1.1 SL Spescom Park
cnr Alexandra Road
and Second Street
Halfway House
Midrand
1685
Fax No. (011) 266 1707
marked for the attention of
the Managing Director
With a copy to:
Kallmeyer & Strime
2nd Floor Sanlam Arena
Entrance 3
10 Cradock Avenue
Rosebank, Johannesburg, 2196
Republic of South Africa
Attention: L A Kallmeyer
Fax No. (2711) 447 5030
<PAGE>
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14.1.2 Altris Inc
and Altris Plc 9339 Carroll Park Drive
San Diego, California 92121
Fax No. (619) 546-7671
marked for the attention of
the President
With a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Suite 4000
Los Angeles, California 90067
Attention: Russell C. Hansen
Fax No. (310) 551-8741
14.1.3 the company To each of SL and Altris Inc at the addresses and
fax numbers set forth above
14.2 All notices to be given under this agreement shall either be
delivered personally or sent by first class or airmail prepaid post
or by facsimile transmission and shall be deemed duly served:-
14.2.1 in the case of a notice delivered personally, at the time of
delivery;
14.2.2 in the case of a notice sent inland by first class prepaid
post, 2 (two) clear business days after the date of dispatch;
14.2.3 in the case of a notice sent overseas by airmail, 10 (ten)
business days (being business days in the place to which the
notice is dispatched) after the date of dispatch; and
14.2.4 in the case of a facsimile transmission, if sent during normal
business hours then at the time of transmission and if sent
outside normal business hours then on the next following
business day.
<PAGE>
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14.3 Each notice shall be addressed to the address of the party concerned
set out in 14.1 or to such other address as that party shall have
previously notified to the sender.
15. Conflict with Articles and/or Restructuring Agreement
15.1 In the event of any of the provisions of the articles of association
of the company at any time being in conflict with the terms of this
agreement, then the relevant terms of this agreement shall, as
between the shareholders, prevail. In the further event of such
conflict, if required by one or more of the shareholders, the
shareholders shall be obliged to exercise their voting rights in
favour of the passing, and shall procure the registration, of a
special resolution in terms of which the relevant conflicting
articles are amended in order to remove the conflict.
15.2 In the case of conflict between any provision of this agreement and
the restructuring agreement, the provisions of the restructuring
agreement shall prevail.
16. Entire Agreement
This agreement together with the previously executed confidentiality
agreement and simultaneously executed documents constitutes the entire
agreement between the parties and -
16.1 no variation or amendment of, addition to, deletion from this
agreement or consensual cancellation shall be of any force or effect
unless it is recorded in writing and signed by all the parties,
provided however, that any variation, amendment, addition or
deletion as envisaged herein which may affect the shareholders only,
shall be recorded in writing and signed by the shareholders only;
and
<PAGE>
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16.2 no relaxation or indulgence which any of the parties may allow each
other at any time in regard to the carrying out of their respective
obligations under this agreement or under the articles of
association, shall prejudice or be regarded as a waiver of any of
their respective rights in any manner whatsoever.
17. Cession and Assignment
Save as otherwise provided for herein no party shall cede any of its
rights or assign any of its obligations hereunder without the prior
written consent of all the other parties, which consent shall not be
unreasonably withheld. Any dispute as to whether the approval of any party
as herein required has been unreasonably withheld shall be dealt with in
terms of 12.
18. Good Faith
The parties agree that they enter into this agreement on the basis of
trust and record that they will observe good faith in contracting and
dealing with each other and implementing the provisions hereof. This
implies, inter alia, that they -
18.1 will at all times during the currency of this agreement act
reasonably and in good faith;
18.2 will perform their obligations arising from this agreement
diligently and with reasonable care;
18.3 have made a full disclosure to each other of any matter that may
affect the execution of this agreement.
<PAGE>
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19. Proper law
This agreement is governed by and is to be construed in accordance with
the substantive laws of England and Wales ignoring any question of
conflict of laws. The parties consent accordingly to the non-exclusive
jurisdiction of the appropriate court of law in England in relation to all
matters, claims and disputes arising out of or in connection with this
agreement or any document supplemental hereto. Altris Inc and Altris Plc
hereby jointly and severally irrevocably appoint Altris' solicitors as
their agent for the service of any proceedings upon them pursuant to this
agreement. SL and the company hereby jointly and severally irrevocably
appoint Spescom's solicitors as their agent for the service of any
proceedings upon them pursuant to this agreement.
20. Confidentiality
Each of the parties agrees to keep secret and confidential and not to use,
disclose or divulge to any third party or to enable or cause any person to
become aware of (except for the purposes of the company's business) any
confidential information relating to the company including but not limited
to intellectual property (whether owned or licensed by the company), lists
of customers, reports, notes, memoranda and all other documentary records
pertaining to the company or its business affairs, finances, suppliers,
customers or contractual or other arrangements but excluding any
information which is in the public domain (otherwise than through the
wrongful disclosure of any party) or which they are required to disclose
by law or by the rules of any regulatory body to which the company is
subject.
22. Announcements
No announcement concerning the terms of this agreement shall be made or
caused to be made before or after the date hereof by any party other than
as required by law or by London Stock Exchange Limited (in which case the
parties shall consult with each other on the form of the announcement)
without the prior written approval of the Board.
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23. General
23.1 A party shall cease to be a party to this agreement for the purpose
of receiving benefits and enforcing his rights with effect from the
date he ceases to hold or beneficially own any shares in the capital
of the company (but without prejudice to any benefits and rights
enjoyed prior to such cessation).
23.2 The waiver, express or implied, by any party of any right under this
agreement or any failure to perform or breach by another party shall
not constitute or be deemed a waiver of any other right under this
agreement.
23.3 This agreement may be executed in several counterparts (whether
original or facsimile) and upon the execution of all such
counterparts by one or more parties, each counterpart shall be
deemed to be an original hereof.
23.4 If at any time any provision of this agreement is or becomes
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this agreement shall
not be affected or impaired thereby.
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IN WITNESS WHEREOF, this deed has been executed and delivered on 7th May
1999
Executed as a deed by )
ALTRIS SOFTWARE, INC. )
acting by its President and )
Secretary acting under )
the authority of that company )
/s/ Roger Erickson
-------------------------
Roger Erickson, President
/s/ John W. Low
-------------------------
John W. Low, Secretary
Executed as a deed by )
SPESCOM LIMITED )
acting by Director under )
the authority of that company )
/s/ Hilton Isaacman
-------------------------
-------------------------
Executed as a deed by )
ALTRIS SOFTWARE LIMITED )
acting by Director under )
the authority of that company )
/s/ Peter J.J. Brady
-------------------------
_____________, Director
/s/ John W. Low
-------------------------
___________, Director
Executed as a deed by )
ALTRIS GROUP Plc )
acting by Director under )
the authority of that company )
<PAGE>
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/s/ Peter J.J. Brady
-------------------------
_____________, Director
-------------------------
___________, Director
<PAGE>
APPENDIX 9
[LOGO]
[Letterhead of Kallmeyer & Strime]
THE U K WARRANTIES
In these warranties:-
(1) the provisions contained in the agreement to which these warranties
constitute Appendix 9 ("the agreement"), relating to its interpretation
shall apply mutatis mutandis;
(2) expressions to which a meaning is attributed in the agreement shall bear
the same meaning.
Altris Inc and Altris Plc jointly and severally warrant to SL that save as
fully, fairly, clearly and accurately disclosed in the Disclosure Letter
attached hereto:-
1. The Shares and Share Capital
1.1 There are no agreements or other arrangements in force which:
1.1.1 provide for the present or future issue, allotment or transfer
of; or
1.1.2 accord to any person the right (absolute or conditional) to
call for the issue, allotment or transfer of any share or loan
capital of the company (including any option or right of
pre-emption or conversion).
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1.2 No share or loan capital of the company has been undertaken to be
issued or allotted or agreed to be issued or allotted whether
conditionally or absolutely after the effective date.
1.3 There is no pledge, lien, option, warrant, charge or encumbrance on,
over or affecting any of the shares in the company, no agreement to
create such pledge, lien, option, warrant, charge or encumbrance has
been made and no claim has been made that any person is entitled to
any such pledge, lien, charge or encumbrance.
1.4 So far as Altris Inc and Altris Plc are aware, as a result of the
acquisition of the investment by SL contemplated by this agreement:-
1.4.1 no material supplier of the company will cease or reduce or be
entitled to cease or reduce its supplies to the company;
1.4.2 no material customer of the company will, or will be entitled
to, cease dealing with or reduce the level of business done
with the company; and
1.4.3 no officer or senior employee of the company will leave (other
than as may be provided for in this agreement).
2. The Accounts
2.1 The Accounts:-
2.1.1 have been prepared on a consistent basis in accordance with
generally accepted accounting practice, principles, and
standards in the United Kingdom and comply with all current
Financial Reporting Standards applicable to the company as a
United Kingdom company;
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2.1.2 are accurate in all material respects and show a true and fair
view of the financial position, profits and losses, assets and
liabilities of the company and of its results for the
financial period ending on the accounting date;
2.1.3 make full provision for any bad or doubtful debt;
2.2 The Accounts set out correctly all such reserves or provisions for
Taxation as are necessary on the basis of the rates of tax in force
to cover all Taxation (present and future) in respect of any
transaction occurring prior to the accounting date liable to be
assessed on the company or for which the company is or may be
accountable up to such date and make full provision for deferred
Taxation and show the full potential liability of the company for
deferred Taxation.
2.3 All material liabilities (including liabilities for defective
products sold by the company) or outstanding capital commitments of
the company as at the accounting date have been included in the
Accounts by way of:
2.3.1 full provision or reserve; or
2.3.2 (in the case of such a liability as was contingent,
unquantified or disputed) by way of note stating the maximum
amount which has been or could be claimed and the best
estimate of the Directors (after taking all relevant
professional advice) of the likelihood of such a claim
materialising or being successful.
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2.4 Each of the book debts shown in the Accounts, in the effective date
management accounts and such other book debts relating to the period
up to and including the closing date will realise within 6 (six)
months of such date their nominal value less the value attributed to
any reserve for bad or doubtful debts included in the Accounts and
less any deferred revenue and any liabilities to the account debtors
reflected in the Accounts or effective date management accounts.
None of the book debts (or other debts of the company) is subject to
any counterclaim or set-off except as so reflected.
2.5 The effective date management accounts:
2.5.1 have been prepared on a basis consistent with that employed in
preparing the annual statutory accounts of the company;
2.5.2 are accurate in all material respects and show a true and fair
view of the assets and liabilities and profits and losses of
the company and of its results for the financial period ended
March 31, 1999;
2.5.3 All material liabilities (including liabilities for defective
products sold by the company) or outstanding capital
commitments of the company as at the accounting date have been
included in the effective date management accounts by way of:
2.5.3.1 full provision or reserve; or
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2.5.3.2 (in the case of such a liability as was contingent,
unquantified or disputed) by way of note stating the
maximum amount which has been or could be claimed and
the best estimate of the Directors (after taking all
relevant professional advice) of the likelihood of such
a claim materialising or being successful.
2.5.3.3 reflect all liabilities with respect to products
theretofore sold by the company, other than liabilities
have been effectively disclaimed by the company and
other than the company's obligation to remedy software
"bugs" occurring in the ordinary course of the company's
business provided that the cost of remedying such bugs
will not be material to the company.
3. Borrowings and lending
3.1 The total amount borrowed by the company from its bankers does not
exceed the limit of its facilities as set out in the Disclosure
Letter or in any debenture or other agreement binding on it.
3.2 Except as disclosed in the effective date management accounts, the
company does not have outstanding (whether made by or incurred by
the company):
3.2.1 any borrowing or indebtedness in the nature of borrowing
including (other than those contained in the Disclosure
Letter) any bank overdrafts liability under acceptances
(otherwise than in respect of normal trade bills) or any
acceptance credit (including any amounts due to any present or
former Directors or to
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members of the company other than remuneration accrued due or
for reimbursement of business expenses); or
3.2.2 any encumbrances; or
3.2.3 any arrangements of a type covered by Sections 320 or 330 of
the Companies Act 1985 or any agreements for such arrangements
or any other transaction in which a Director of or a person
connected with the company has a material interest.
3.3 The company:
3.3.1 has not lent any money which has not been repaid to it other
than routine travel expense advances to employees;
3.3.2 does not own the benefit of any debt (whether present or
future) or the right to receive any monies other than debts
accrued to it in the ordinary course of its business.
3.4 The company has not:-
3.4.1 applied for or received any grant, award, subsidy or financial
assistance from any Governmental department or agency;
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3.4.2 done or agreed to do anything as a result of which any
Governmental grant is or may be liable to be refunded in whole
or in part;
3.4.3 delegated any powers under a power of attorney (other than as
an incidental part of a larger transaction) which remains in
effect and has appointed any agent under an authority which
has not been revoked and other than any ostensible or implied
authorities to directors or employees and consultants to enter
into routine contracts in the normal course of their duties;
3.4.4 at any time acquired, assigned or otherwise disposed of any
leasehold property in such a way that it retains any residual
liability;
3.4.5 been and is not in default under any written agreement or
covenant to which it is a party nor under any other written
obligation binding on it being a default which would have a
materially adverse effect.
3.5 On the closing date, after giving effect to the consummation of the
transactions contemplated by the agreement, to the knowledge of
Altris Inc and Altris Plc jointly and severally, the company will
have sufficient cash reserves to meet its foreseeable obligations as
they fall due.
4. Assets
4.1
4.1.1 Except for assets disposed of by the company in the ordinary
course of trading the company is the owner of and has good and
marketable title to all assets
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included in the effective date management accounts and all
such assets are in the company's possession or under its
control.
4.1.2 There is no encumbrance or agreement to create an encumbrance
over the whole or any part of the undertaking, property,
assets, or goodwill of the company.
4.2 To the knowledge of Altris Inc and Altris Plc jointly and severally
the fixed and loose plant and machinery, fixtures and fittings,
vehicles and office equipment used in connection with the business
of the company are, in the aggregate considered as a whole:
4.2.1 in such repair and condition as is necessary to enable the
company to conduct its business on the closing date in
substantially the manner heretofore conducted, and is, to the
knowledge of Altris Inc and Altris Plc jointly and severally
regularly maintained, properly tested and certified, safe and
without risk to health when properly used;
4.2.2 capable of being efficiently and properly used in connection
with the business of the company;
4.2.3 not to any extent surplus to requirements;
4.2.4 not expected to require replacements or additions within 6
(six) months from the closing date.
<PAGE>
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4.3
4.3.1 Maintenance contracts are in full force and effect in respect
of all assets of the company which it is normal or prudent to
have maintained by independent or specialist contractors.
4.3.2 Details of all contracts entered into by the company for the
maintenance of any of the company's assets are included in the
Disclosure Letter.
4.4 All assets used in connection with the business of the company are
owned by it absolutely and are held free from any lease, hire, hire
purchase or conditional sale agreement, bill of sale or other
agreement for payment on deferred terms.
4.5 The company is not the holder or beneficial owner of and has not
agreed to acquire any class of any shares or other securities of any
other corporation (whether registered in England and Wales or
elsewhere).
4.6 The company's stock is all (save insofar as specific provision has
been made in the Accounts) in good usable and merchantable condition
and capable of being sold by the company in the ordinary course of
its business in accordance with its current price list without
rebate, allowance or discount and the levels of stock, trade debtors
and trade creditors are not materially different from those which
the company normally has at this stage of its trading year.
4.7 The asset register of the company comprises a complete and accurate
record of all plant, machinery, vehicles and equipment owned, used
or possessed by the
<PAGE>
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company (and such register or registers accurately reflect whether
such plant, machinery, vehicles or equipment are owned or used or
possessed by the company.)
4.8 The company has not sold or distributed any products or supplied any
services which were, are or will become materially defective or
which do not comply in any respect with and express or implied
warranties or representations made by any person or with all
applicable regulations, standards and requirements and the company
does not give and has not given express warranties, representations,
guarantees or indemnities as to the fitness for purpose, quality or
otherwise of any of its products or services except as provided for
in the Accounts and except for routine "bugs" which are consistent
in nature and amount with those experienced generally with similar
software products.
5. Insurances
5.1 There are existing valid policies of insurance for full replacement
values against all liabilities risks and losses (including but not
limited to the losses caused by any unlawful act on the part of any
person) against which it is normal or prudent to insure in respect
of all property owned by and in the business carried on by the
company.
5.2 All premiums due in respect of the company's insurance policies have
been paid in full.
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5.3 Nothing has been done or has been omitted to be done which could
result in any of the company's insurance policies being or becoming
void or voidable.
5.4 The executives of Altris Inc and Altris Plc are not aware of any
circumstances which would or might entitle the company to make a
claim under any of its insurance policies or which would or might be
required under any of its insurance policies to be notified to the
insurers.
6. Disputes/Litigation
6.1 The company is not engaged whether as plaintiff or defendant or
otherwise in any litigation, criminal or arbitration proceedings
before any court, tribunal, statutory or governmental body,
department, board or agency and no litigation, criminal or
arbitration proceedings are pending or, to the knowledge of Altris
Inc and Altris Plc jointly and severally threatened by or against
the company and having made due and careful enquiries the executives
of Altris Inc and Altris Plc do not know of any facts which are
likely to give rise to the same or which are likely to give rise to
proceedings in respect of which the company would be liable to
indemnify any person concerned.
6.2 There is no dispute with any Revenue or other official department in
the United Kingdom or elsewhere in relation to the affairs of the
company, and, to the knowledge of Altris Inc and Altris Plc jointly
and severally there are no facts which may give rise to such
dispute.
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6.3 There are no claims pending or, to the knowledge of Altris Inc and
Altris Plc jointly and severally threatened or capable of arising
against the company by any employee or workman or third party in
respect of any accident or injury, which are not fully covered by
insurance, subject to deductibles.
6.4 To the knowledge of Altris Inc and Altris Plc jointly and severally
the company has not manufactured and/or sold products which are or
have or will become in any material respect faulty or defective or
which do not comply in any material respect with any warranties or
representations expressly or (whether by statute or otherwise)
impliedly made by the company.
7. Compliance with statutes and licences
7.1 The company has obtained all licences, consents, approvals,
permissions, permits, test and other certificates and authorities
(public or private) necessary for the carrying on of its business
(except where the failure to obtain such licenses, consents,
approvals, permissions, permits, test and other certificates and
authorities (public or private) would not have a material adverse
effect on the business of the company) in the places and in the
manner in which such business is now carried on or to which its
products are exported, all of which are valid and subsisting, and
the executives of Altris Inc and Altris Plc know of no reason or of
any facts or circumstances which with or without the giving of
notice or lapse of time) would be likely to give rise to any reason
why any of them should be suspended, cancelled, revoked or not
renewed.
<PAGE>
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7.2 The company has conducted and is conducting its business in all
material respects in accordance with all applicable laws and
regulations (whether of the United Kingdom or elsewhere).
7.3 To the knowledge of Altris Inc and Altris Plc jointly and severally
after due inquiry, all software used by the company which is not
proprietary to or owned by the company has been properly and validly
licensed to it and all licence fees as at the closing date will have
been paid up to date, and the company will not be in breach of any
such licence agreements, except for arrearages in licence fees on
the effective date which are reflected in the effective date
management accounts and which, if paid promptly after the closing
date, will not result in the termination by the licensor of the
licence with respect to which such fees are owing.
8. Trading position
8.1 Between the effective date and the closing date:-
8.1.1 there has been no material adverse change prior to the date
hereof (nor is any such material change expected prior to the
closing date) in the position or prospects of the company or
in the value of its assets or amount or nature of the
liabilities of the company as compared with the position
disclosed in the effective date financial statements;
8.1.2 the company will not have disposed of any assets or assumed or
incurred any outstanding capital commitment or any material
liabilities (whether actual or
<PAGE>
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contingent) otherwise than in the ordinary course of carrying
on its business (and for this purpose disposals of fixed
assets, fixed and loose plant and machinery, fixtures and
fittings, vehicle and office equipment shall be deemed to be
not in the ordinary course of business);
8.1.3 the business of the company will have continued without
interruption and so as to maintain the same as a going
concern;
8.1.4 the company's business has not been materially and adversely
affected by the loss of any important customer or source of
supply;
8.1.5 no dividend or other distribution has been declared, made or
paid to the members of the company except as provided for in
the Accounts and all dividends or distributions declared, made
or paid by the company have been made, paid or declared in
accordance with its articles of association and the provisions
of any applicable legislation;
8.1.6 no change has been made in the emoluments, except for
increases in the normal course of business which are market
related, or other terms of employment of any of the company's
employees or of any of the directors and the company has not
paid any bonus or special remuneration to any such employee or
any director.
<PAGE>
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9. Contracts and arrangements
There are not now outstanding with respect to the company or to which the
company is a party:-
9.1 any long term unusual or onerous contract or any contract not made
in the ordinary course of business;
9.2 any joint venture, consortium or other partnership arrangement or
agreement;
9.3 (excepting guarantees or warranties implied by law or provided by
the company with respect to goods or services supplied or performed
by the company in the ordinary course of business) any guarantee,
warranty, undertaking or contract for indemnity or for suretyship
under which the company is under a prospective or contingent
liability;
9.4 any agreement or arrangement entered into by the company otherwise
than by way of bargain at arms length or on arms length terms and in
the ordinary course of the company's business;
9.5 any agreement or arrangement which cannot readily be fulfilled or
performed by the company in accordance with its terms and without
undue or unusual expenditure or effort or without making a loss;
<PAGE>
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9.6 any agreement containing covenants limiting or excluding its right
to do business and/or compete in any area or any field or with any
person, firm or company.
10. Intellectual property rights
10.1
10.1.1 The company owns no patents, trade marks, registered designs,
applications for any of the foregoing, copyrights, trade or
business names, inventions, processes, know-how and other
industrial property rights (together 'Intellectual Property
Rights'). Except for Intellectual Property Rights licensed to
the company by third parties under license agreements which
are in full force and effect, the Intellectual Property Rights
used by the company are vested in and beneficially owned by
Altris Plc free from encumbrances, other than the license
thereof included in the distribution agreement to be entered
into under the agreement.
10.1.2 To the knowledge of Altris Inc and Altris Plc jointly and
severally none of such Intellectual Property Rights is being
used, claimed, opposed or attacked by any other person nor
does the use of such Intellectual Property Rights or any part
of them infringe the Intellectual Property Rights owned or
enjoyed by any third party.
10.1.3 To the knowledge of Altris Inc and Altris Plc jointly and
severally none of the Intellectual Property Rights used by the
company is the subject of any claim, opposition, attack,
assertion or other arrangement of whatsoever nature which does
or may impinge upon their use, validity, enforceability or
ownership by
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the company, and there are no grounds or other circumstances
which may give rise to the same.
10.1.4 To the knowledge of Altris Inc and Altris Plc jointly and
severally the company is not using any process which involves
the exercise of rights owned by third parties or gives rise to
a liability to pay compensation under the Patents Act 1977 or
makes use of information confidential to a third party except
under valid licences from such third parties, all of which are
in full force and effect.
10.2 No licences or registered user or other rights have been granted or
agreed to be granted by the company to any third party in respect of
such Intellectual Property Rights, except to customers of the
company in the ordinary course of business.
10.3 To the knowledge of Altris Inc and Altris Plc jointly and severally
no disclosure has been made to any person other than to SL of any of
the industrial know how or the financial or trade secrets of the
company except properly and in the ordinary course of business and
on the footing that such disclosure is to be treated as being of a
confidential nature.
10.4 To the knowledge of Altris Inc and Altris Plc jointly and severally
no act has been done or has been omitted to be done to entitle any
authority or person to cancel, forfeit or modify any Intellectual
Property Rights.
10.5 All computer software and hardware utilised by and/or marketed by
the company , including that licensed by Altris Plc, was at the
effective date Y2K compliant.
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11. Employees
11.1 There are not now outstanding:
11.1.1 any service agreement or contracts between the company and any
of its Directors, officers, executives or employees which
cannot be terminated by the company by 14 (fourteen) weeks
notice or less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment);
11.1.2 any recognition or other agreement or arrangement (whether or
not legally binding) between the company and any trade union
or other body representing its employees.
11.2 The executives of Altris Inc and Altris Plc are not aware of any
outstanding claim against the company by any person who is now or
has been an officer or employee of the company and no disputes have
during the preceding three years arisen between the company and any
material number or category of employees and there are no present
circumstances which are likely to give rise to any such dispute.
11.3 Since the effective date no change has been made in the rate of
remuneration or the endowment or pension benefits of any Director or
employee or in the terms of employment of any officer or senior
executive.
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11.4 None of the following are in existence and there are no proposals
for any of the following:
11.4.1 profit sharing schemes;
11.4.2 share option schemes;
11.4.3 'phantom' share option schemes;
11.4.4 profit related pay schemes;
11.4.5 employee share ownership trusts under the Finance Act 1989;
11.4.6 employee benefit trusts.
11.5 SL has been supplied with copies of all documents comprising the
pension scheme operated by the company for the benefit of its
employees.
11.6 Save for the Pension Scheme ('the Scheme') details of which are
included in the Disclosure Letter there are no superannuation
retirement, pension, death, ill health or disability benefit schemes
or like arrangements in operation or proposed to be operated by or
in relation to the business of the company nor (save for entitlement
under the Scheme) do any of the current or past employees or any
other person have any entitlement or expectation to any such
benefits under any such scheme or arrangement.
11.7 With regard to the Scheme:
11.7.1 there is annexed to the Disclosure Letter copies of all the
Trust Deeds and Rules of the Scheme together with any
announcements booklets or other
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documentation affecting the entitlement of any member to
benefit under the Scheme;
11.7.2 the company has complied with all the provisions of the Scheme
applicable to it;
11.7.3 the Scheme is an exempt approved scheme within the meaning of
the Income and Corporation Taxes Act 1988 Section 592(1) and
to the knowledge of Altris Inc and Altris Plc jointly and
severally there is no reason why such approval could be
withdrawn;
11.7.4 the company does not hold and has never held and is not named
and has never been named in any contracting out certificate
under the Social Security Pensions Act 1975;
11.7.5 all benefits (other than a refund of contributions of interest
where appropriate) payable under the Scheme on the death of a
member while in an employment to which the Scheme relates or
during a period of sickness or disability of a member are
fully insured under a policy effected with an insurance
company of good repute and each member has been covered for
such insurance by such an insurance company at its normal
rates and on its normal terms for persons in good health.
11.7.6 there are no arrearages in the payment of amounts due and
payable by the company under the Scheme.
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11.8
11.8.1 There is annexed to the Disclosure Letter a copy of the most
recent audited accounts, trustees report and Actuarial
Valuation of the Scheme all of which are true, complete and
accurate in all material respects.
11.8.2 There has been no material change in the assets or solvency of
the Scheme as disclosed in such accounts and valuation.
11.9
11.9.1 No power to augment or alter benefits under the Scheme has
been exercised and no employee or member of the Scheme has
been notified that such an exercise may be contemplated.
11.9.2 No discretion has been exercised under the Scheme to provide
in respect of any member a benefit which would not otherwise
be provided in respect of such member and no member of the
Scheme has been notified that such an exercise may be
contemplated.
11.10
11.10.1 The Scheme is funded on a money purchase basis and there is no
obligation to continue to make contributions to the Scheme
after Completion, and if contributions to the Scheme were to
cease with effect from Completion there would be no liability
to make any further payments to the Scheme and there would be
no liability whatsoever to the Trustees and to or in respect
of the
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members and former members of the Scheme or otherwise with
regard to the Scheme.
11.10.2 The scheme has no employer related investments as defined in
the Social Security Act 1990.
11.11
11.11.1 Except for any liability under the Scheme, any liability
existing by law and any liability to any member of the Altris
Group, the company has no liability to:
11.11.1.1 any of the executives and employees apart from
remuneration accrued during the month in which the
agreement has been entered into;
11.11.1.2 any associates of any of the executives and employees;
or
11.11.1.3 any company of which 15% or more of the equity share
capital is owned or controlled directly or indirectly by
any of the executives, employees and/or their respective
associates.
11.11.2 None of the executives of Altris Inc or Altris Plc nor (so far
as the executives of Altris Inc and Altris Plc are aware) the
employees and their respective associates has any interest in
any other person (other than Altris Inc) which has or has had
a material or close trading relationship with or is or may be
in competition with the company.
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11.11.3 To the knowledge of Altris Inc and Altris Plc jointly and
severally each of the executives is free to continue his
employment and is not in breach of any other contract of
employment (past or now subsisting) and is not liable to any
action (whether for damages, injunction, specific performance
or otherwise) relating to any such contract and is not in any
breach of duty of confidence or any undertaking or arrangement
relating to any intellectual property rights and is not now
liable to any action (whether for damages, injunction,
specific performance or otherwise) relating to any continuous
or continuing obligation in any such contract.
12. Taxation
12.1 Save to the extent that specific provision has been made in the
effective date management accounts for any liability to Taxation and
save for any liability to corporation tax arising in the ordinary
course of the company's normal trading since the accounting date,
the company has no liability or contingent liability in respect of
any form of Taxation (the deprivation or nullifying of any relief or
advantage (including the right to set past losses against future
profits) or the requirement to make any payment or the loss of the
right to any repayment by or to the Inland Revenue or any other
authority being deemed to be a liability in respect of Taxation for
the purposes of this paragraph).
12.2 The company has duly complied in all material respects with its
obligations to account to the Inland Revenue and all other relevant
authorities for all amounts for which it
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is accountable in respect of Taxation or amounts payable under
social security legislation.
12.3 All returns and computations in connection with Taxation that should
have been made by the company have been made correctly and on a
proper basis in all material respects; no such return or computation
has been or, to the knowledge of Altris Inc and Altris Plc jointly
and severally is likely to be disputed and there are no facts known
or which would on reasonable enquiry be known to Altris Inc and
Altris Plc jointly and severally which may give rise to any such
dispute or to any claim for any Taxation or to the deprivation of
any relief from taxation or advantage that might have been
available.
12.4 The company has not been a party to any scheme or arrangement
designed partly or wholly for the purpose of artificially and
unlawfully avoiding Taxation.
12.5 The company is duly registered for VAT purposes and has in all
material respects complied with the Value Added Tax Act 1983 and all
orders, regulations, directions or conditions made or imposed
thereunder and has maintained correct and up-to-date records,
invoices and other documents appropriate or necessary for the
purposes of such legislation and is not in arrear with any payment
or returns thereunder or liable to any abnormal or non-routine
payment or any forfeiture or penalty or to the operation of any
penal provision.
12.6 All material information necessary for computation of Taxation
liabilities of company in possession or under control of company.
<PAGE>
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13. Information and general
13.1 The information set out in the recitals to the agreement and in the
Disclosure Letter is true, complete and accurate.
13.2
13.2.1 The forecasts, business plan, and projections in respect of
the company handed to SL were prepared in good faith and after
diligent and careful consideration and enquiry and on the
basis of assumptions which were and remain, to the knowledge
of Altris Inc and Altris Plc jointly and severally fair and
realistic and none of the executives of Altris Inc or Altris
Plc is now aware of any fact or matter which will, or is
likely to, result in any of such forecasts or projections not
being achieved in any material respect.
13.2.2 None of the executives of Altris Inc or Altris Plc disagrees
with any of the opinions or views expressed in the forecasts,
business plan and projections.
13.3 To the knowledge of Altris Inc and Altris Plc jointly and severally
there are fully and accurately disclosed in the Disclosure Letter
all matters which:
13.3.1 are necessary to qualify the statements set out in this
Appendix 9 in order for such statements, when so qualified, to
be fair, accurate and not misleading;
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13.3.2 which are expected to materially and adversely affect the
future value of the company.
13.4 Altris Inc and Altris Plc jointly and severally are not aware of any
fact or matter not disclosed in writing to SL, the disclosure of
which might reasonably affect the willingness of SL to make the
investment contemplated by this agreement.
13.5 The records, statutory books and books of account of the company are
duly entered up and maintained in accordance with all legal
requirements applicable thereto and contain true, full and accurate
records of all matters required to be dealt with therein and all
such books and all records and documents (including, without
limitation, all documents of title, accounts, books, ledgers and
contracts to which it is a party) which are the property of the
company are in its possession or under its control and all accounts,
documents, returns and forms required to be delivered or made to the
Registrar of Companies and any relevant foreign equivalent have been
duly and correctly delivered or made.
13.6 The company does not trade and has never traded under any name other
than its corporate name and no action has been taken against the
company under Section 28 of the Companies Act 1985.
13.7 The company at the effective date was not and at the closing date
will not be indebted to:-
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13.7.1 Data General Corporation, other than accounts payable by the
company for maintenance in the ordinary course of business in
an amount not in excess of GBD5 000 (five thousand pounds)
13.7.2 David Gaunt
13.7.3 Octagon
all of which obligations have been validly assumed by Altris Inc.
14. The company
The copies certified by the secretary of the company of the Memorandum and
Articles of Association of the company and of the resolutions of the
company annexed to the Disclosure Letter are true copies and the register
of members and other statutory books of the company are true, accurate and
complete.
15. Insolvency
15.1 No administrator, administrative receiver, receiver, manager of
assets, liquidator or any other similar officer has ever been
appointed in respect of the whole or any part of the assets or
undertaking of the company and no order has been made, petition
presented or resolution passed for the purpose of the making of any
order in relation to administration, administrative receivership,
receivership, liquidation, management of assets or any other similar
situation of the company.
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15.2 After giving effect to the transaction contemplated in terms of the
restructuring agreement, the company is neither insolvent nor unable
to pay its debts as they fall due (as such expression is defined in
either sub-section (1)(a) to (d) (inclusive) or sub-section (2) of
Section 123 of the Insolvency Act 1986).
15.3 No voluntary arrangement (as referred to in the Insolvency Act 1986)
or scheme or arrangement as regards its creditors has been proposed
by the directors or is in operation in relation to the company.
15.4 The company has not entered into any transaction nor been given a
preference to which sections 238, 239 or 423 of the Insolvency Act
1986 apply or which may otherwise be liable to be set aside or
avoided for any reason.
<PAGE>
U S WARRANTIES - APPENDIX 10
1. Representations and Warranties of Altris Inc and Altris Plc
jointly and severally.
<PAGE>
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Altris Inc and Altris Plc jointly and severally hereby represent and
warrant to SL as follows:
1.1. Corporate Status.
1.1.1. Altris Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and has
the corporate power to own and operate its properties, to carry on its business
as now conducted and to enter into and to perform its obligations under this
Agreement and any other document executed and delivered by Altris Inc. in
connection herewith or therewith (collectively, the "Operative Documents").
Altris Inc. is qualified to do business and is in good standing in each state or
other jurisdiction in which such qualification is necessary under applicable
law, except where the failure to so qualify would not have a material adverse
effect on the financial condition or results of operations of Altris Inc.
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1.1.2. The Annual Report on Form 10-K of Altris, Inc. for the
year ended December 31, 1998 (the "Annual Report") sets forth a complete list of
each corporation, partnership, joint venture, limited liability company or other
business organization in which Altris Inc. owns, directly or indirectly, any
capital stock or other equity interest (the "Subsidiary" or, collectively, the
"Subsidiaries"), or with respect to which Altris Inc. or any Subsidiary, alone
or in combination with others, is in a control position, which list shows the
jurisdiction of incorporation or other organization, and, if Altris Inc. does
not directly or indirectly own 100% of the outstanding equity interests in the
entities so listed on the Annual Report, the percentage interest so owned by
Altris Inc. or any Subsidiary. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
incorporation or other organization as indicated on the Annual Report, each has
all requisite power and authority and holds all material licenses, permits and
other required authorizations from government authorities necessary to own its
properties and assets and to conduct its business as now being conducted, and
each is qualified to do business as a foreign corporation (or business
organization) and is in good standing in every jurisdiction in which such
qualification is necessary under applicable law, except where the failure to so
qualify would not have a material adverse effect on the financial condition or
results of operations of Altris Inc.. All of the outstanding shares of capital
stock, or other equity interests, of each Subsidiary owned, directly or
indirectly, by Altris Inc. have been validly issued, are fully paid and
nonassessable, and are owned by Altris Inc. directly or indirectly free and
clear of all liens, charges, security interests, or encumbrances. "Material
adverse event" shall mean any event or circumstance, or set of events or
circumstances, individually or collectively, that reasonably could be expected
to result in any (i) material adverse effect upon the validity or enforceability
of any of the Operative Documents, or (ii) material and adverse effect on the
financial condition of Altris Inc. as represented to SL herein or in any
document delivered to SL in connection herewith, or (iii) material default or
potential material default under any of the Operative Documents.
1.2. Capitalization.
1.2.1. The Annual Report accurately describes the authorized
capital stock of Altris Inc. All shares of Common Stock outstanding have been
validly issued and are fully paid and nonassessable. There are no statutory or
contractual preemptive rights, rights of first refusal, antidilution rights, or
any similar rights held by any party with respect to the issuance of the common
stock of Altris Inc. to be acquired by SL pursuant to this Agreement.
1.2.2. Except as described in the Annual Report and as
otherwise disclosed to SL by Altris, Inc. in writing: Altris Inc. has not
granted, or agreed to grant or issue, any options, warrants or rights to
purchase or acquire from Altris Inc. any shares of capital stock of Altris Inc.,
there are no securities
<PAGE>
-4-
outstanding or committed to be issued by Altris Inc. or any Subsidiary which are
convertible into or exchangeable for any shares of capital stock or other
securities of Altris Inc., and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions as to which Altris Inc. is a party,
or by which it is bound, requiring or restricting the issuance of any shares of
capital stock or other securities of Altris Inc., whether or not outstanding.
Except as set forth on the Annual Report, all such shares have been duly
reserved for issuance, have been duly and validly authorized, and upon issuance
in accordance with the terms of the respective instruments and receipt of
payment therefor, will be validly issued, fully paid, and nonassessable.
1.2.3. The common stock (the "Purchased Common Stock") that is
being purchased by SL, when issued, sold, and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid, and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement and the
Operative Documents and under applicable state and federal securities laws. The
Common Stock being purchased under this Agreement has been duly and validly
reserved for issuance and, upon issuance will be duly and validly issued, fully
paid, and nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws.
1.3. Authorization. Altris Inc. has full legal right, power and
authority to enter into and perform its obligations under this Agreement and the
Operative Documents without the consent or approval of any other person, firm,
governmental agency, or other legal entity, except as contemplated hereby or
thereby. The execution and delivery of this Agreement, the issuance of the
Purchased Common Stock hereunder, the execution and delivery of each other
document in connection herewith or therewith to which Altris Inc. is a party,
and the performance by Altris Inc. of its obligations hereunder or thereunder
are within the corporate powers of Altris Inc. and have been duly authorized by
all necessary corporate action properly taken, have received all necessary
governmental approvals, if any were required, and do not and will not contravene
or conflict with (i) the Articles of Incorporation or Bylaws of Altris Inc.,
(ii) any material agreement to which Altris Inc. or any of its Subsidiaries is a
party or by which any of them or their properties is bound, or constitute a
default thereunder, or result in the creation or imposition of any lien, charge,
security interest, or encumbrance of any nature upon any of the property or
assets of Altris Inc. or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument, or (iii) violate any provision of law or any
applicable judgment, ordinance, regulation or order of any court or governmental
agency. The officer executing this Agreement, and any other document executed
and delivered by Altris Inc. in connection herewith or therewith, is duly
authorized to act on behalf of Altris Inc.
<PAGE>
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1.4. Validity And Binding Effect. Each of the Operative Documents is
the legal, valid and binding obligation of Altris Inc., enforceable against
Altris Inc. in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
1.5. Contracts And Other Commitments. Except as disclosed Altris
Inc. and its Subsidiaries do not have and are not bound by any loans, liens,
pledges, security interests agreements, indentures or other instruments defining
the rights of security holders, under any securities or other financings upon
which Altris Inc. or any Subsidiary is obligated or by which Altris Inc. is
bound.
1.6. Litigation. Except as set forth on the Annual Report or as
disclosed in the Disclosure Letter to the UK Warranties, there is no litigation,
arbitration, claim, proceeding or investigation pending or threatened in writing
to which Altris Inc. or any Subsidiary is a party or to which any of its
respective properties or assets is the subject which, if determined adversely to
Altris Inc. or such Subsidiary, would individually or in the aggregate have a
material adverse effect on the financial position, results of operations, or
business of Altris Inc. and its Subsidiaries.
1.7. Financial Statements. The consolidated financial statements of
Altris Inc. and its Subsidiaries for the fiscal years ended December 31, 1998,
1997, and 1996, [and the preliminary draft of the unaudited consolidated
financial statements as of and for the three months ended March 31, 1999 (the
"Interim Financial Statements")], and the related notes, copies of which Altris
Inc. previously has delivered to SL, fairly present the financial position,
results of operations, cash flows and changes in stockholders' equity of Altris
Inc. and its consolidated Subsidiaries, at the respective dates of and for the
periods to which they apply in such financial statements, and have been prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods indicated, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the most recent audited consolidated financial
statements).
1.8. SEC Reports. Altris Inc.'s common stock is listed for trading
on the OTC Bulletin Board and has been duly registered with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Since January 1, 1994, Altris Inc. has timely
filed all reports, registrations, proxy or information statements, and all other
documents, together with any amendments required to be made thereto
<PAGE>
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(collectively, the "SEC Reports"), required to be filed with the SEC under the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934 (the "Exchange Act"), except for delays in the filing of
SEC Reports filed in 1998. [NOTE: In connection with the restatement of the
Company's financial statements, the 10-k and certain 10-Q's were filed late.]
The SEC Reports, as amended by amendments filed with the SEC, complied in all
material respects with all rules and regulations promulgated by the SEC and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. [NOTE: The 1996 10-K and several 10-Q's relating to 1996 and 1997
were amended in 1998 to restate previously reported financial information.]
1.9. Absence of Changes. Since December 31, 1998, except as
contemplated hereby or by the other Operative Documents and except as reflected
in the Interim Financial Statements, (i) neither Altris Inc. nor any of its
Subsidiaries have incurred any liabilities or obligations, direct or contingent,
or entered into any transactions, not in the ordinary course of business, that
are material to Altris Inc., (ii) neither Altris Inc. nor any of its
Subsidiaries have purchased any of its outstanding capital stock or declared, or
paid any dividend or other distribution or payment in respect of its capital
stock, (iii) there has not been any change in the authorized or issued capital
stock, long-term debt, or short-term debt of Altris Inc., and (iv) there has not
been any material adverse change in or affecting the business, operations,
properties, prospects, assets, or condition (financial or otherwise) of Altris
Inc. or any Subsidiary, taken as a whole.
1.10. No Defaults. Except as set forth on the Annual Report, except
for amounts due to creditors that will be satisfied promptly upon the closing of
the transactions contemplated by the agreement, and except where a default or
event of default does not and would not constitute a material adverse event, no
default or event of default by Altris Inc. or any Subsidiary exists under this
Agreement or any of the other Operative Documents, or under any material
contract, instrument or agreement to which Altris Inc. or any Subsidiary is a
party or by which Altris Inc. or any Subsidiary or its respective properties may
be bound, except for any such default or event of default which would not
reasonably be expected to cause a material adverse event, and no event has
occurred and is continuing that with notice or the passage of time or both would
constitute a default or event of default thereunder.
1.11. Compliance with Law. Altris Inc. is in compliance with all
foreign, federal, state or local laws, regulations, decrees and orders
applicable to it (including but not limited to the Foreign Corrupt Practices
Act, occupational and health standards and controls, antitrust, monopoly,
restraint of trade or unfair competition) to the extent that noncompliance, in
the aggregate, would not reasonably be expected to cause a material adverse
event.
<PAGE>
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1.12. Taxes. Except as set forth on the Annual Report, Altris Inc.
and its Subsidiaries have filed or caused to be filed all federal, state and
local income, excise and franchise tax returns required to be filed (except for
returns that have been appropriately extended or returns which when filed will
not result in any additional tax or material penalty), and have paid, or
provided for the payment of, all taxes shown to be due and payable on said
returns and all other taxes, impositions, assessments, fees or other charges
imposed on it by any governmental authority, agency or instrumentality, prior to
any delinquency with respect thereto (other than taxes, impositions,
assessments, fees and charges currently being contested in good faith by
appropriate proceedings, for which appropriate amounts have been reserved), and
Altris Inc. does not know of any proposed assessment for additional taxes or any
basis therefor. No tax liens have been filed against Altris Inc. or its
properties. Altris Inc.'s federal income tax liability has been finally
determined by the Internal Revenue Service and satisfied for all taxable years
up to and including the taxable year ended December 31, 1993, or closed by
applicable statutes of limitation.
1.13. Certain Transactions. Except as set forth on in the proxy
statements filed by Altris Inc. with the SEC and except as to indebtedness
incurred in the ordinary course of business and approved by the Board of
Directors of Altris Inc., neither Altris Inc. nor any Subsidiary is indebted,
directly or indirectly, to any of its officers or directors, or to their
respective spouses or children, or to any affiliate, in excess of an aggregate
amount of $60,000, and none of such officers or directors or any members of
their immediate families or affiliates, are indebted to Altris Inc. or any
Subsidiary in excess of an aggregate amount of $60,000, or have any direct or
indirect ownership interest in any firm or corporation with which Altris Inc. or
any Subsidiary is affiliated or with which Altris Inc. has a business
relationship, or any firm or corporation which competes with Altris Inc. or any
Subsidiary, except that Altris Inc.'s officers and directors may own
individually no more than 1% of the outstanding capital stock of any publicly
traded company which competes directly with Altris Inc.. Except as set forth in
the proxy statements filed by Altris Inc. with the SEC, no officer or director
of Altris Inc. or any Subsidiary or any member of their immediate families is,
directly or indirectly, interested in any material contract with Altris Inc. or
any Subsidiary that would require disclosure under Item 404 of Regulation S-K.
Except as set forth on the Annual Report, neither Altris Inc. nor any Subsidiary
is a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
1.14. Title to Property. Altris Inc. and each Subsidiary has good
and marketable title to all of the real and personal property owned by it, free
and clear of all liens, security interests, pledges, encumbrances, equities,
claims and restrictions of every kind and nature whatsoever, except as disclosed
on the Annual Report and other than (a) liens for taxes not yet due, (b)
imperfections
<PAGE>
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in title, if any, not material in amount and which, individually or in the
aggregate, do not materially interfere with the conduct of the business of
Altris Inc. or the use of its assets, (c) such secured indebtedness as is
disclosed in the Financial Statements covering the assets and properties
referred to therein (if any), (d) liens in the ordinary course of business
consistent with past practice and (f) installments of special assessments not
yet delinquent, recorded easements, covenants and other restrictions, and
utility easements, building restrictions, zoning restrictions and other
easements and restrictions existing generally with respect to properties of a
similar character. Any real property and buildings held under lease by Altris
Inc. or any Subsidiary are held under valid existing and enforceable leases,
except as disclosed on the Annual Report or which are not material and do not
interfere with the use to be made of such buildings or property by Altris Inc.
1.15. Intellectual Property.
1.15.1.
Except as set forth in the Annual Report, to Altris Inc.'s
knowledge, Altris Inc. is the lawful owner or has a valid right to use the
proprietary information used in its business free and clear of any claim, right,
trademark, patent or copyright protection of any third party; provided, however,
that this paragraph (a) shall not be deemed to include any representation
regarding the absence of infringements or conflicts with the rights of others,
which representation is made only in paragraph (c) hereof and only to the
knowledge of Altris Inc.. As used herein, "proprietary information" includes
without limitation (i) any computer software and related documentation,
inventions, technical and nontechnical data related thereto, and (ii) other
documentation, inventions and data related to patterns, plans, methods,
techniques, drawings, finances, customer lists, suppliers, products, special
pricing and cost information, designs, processes, procedures, formulas, research
data owned or used by Altris Inc. or any Subsidiary or marketing studies
conducted by Altris Inc., all of which Altris Inc. considers to be commercially
important and competitively sensitive and which generally has not been disclosed
to third parties other than customers in the ordinary course of business.
1.15.2.
Except as set forth in the Annual Report, to Altris Inc.'s
knowledge, Altris Inc. has good and marketable title to or has a valid right to
use all patents, trademarks, trade names, service marks, copyrights or other
intangible property rights, and registrations or applications for registration
thereof, owned by Altris Inc. or any Subsidiary or used or required by Altris
Inc. or any Subsidiary in the operation of its business as presently being
conducted; provided, however, that this paragraph (a) shall not be deemed to
include any representation regarding the absence of infringements or conflicts
with the rights of others, which representation is made only in paragraph (c)
hereof and only to the knowledge of Altris Inc.
1.15.3.
Altris Inc. has no knowledge of any infringements or conflict
with asserted rights of others with respect to copyrights, patents, trademarks,
<PAGE>
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service marks, trade names, trade secrets or other intangible property rights or
know-how which could cause a material adverse event. To Altris Inc.'s knowledge,
no products or processes of Altris Inc. infringe or conflict with any rights of
patent or copyright, or any discovery, invention product or process, that is the
subject of a patent or copyright application or registration known to Altris
Inc.. Altris Inc. follows such procedures as Altris Inc. deems necessary or
appropriate to provide reasonable protection of Altris Inc.'s trade secrets and
proprietary rights in intellectual property of all kinds. To the knowledge of
Altris Inc., no person employed by or affiliated with Altris Inc. has employed
or proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the knowledge of Altris Inc., no
person employed by or affiliated with Altris Inc. has violated any confidential
relationship that such person may have had with any third person, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of Altris Inc.
1.16. Environmental Matters. Altris Inc. has duly complied in all
material respects with, and its business, operations, assets, equipment,
property, leaseholds or other facilities are in compliance in all material
respects with, the provisions of all federal, state and local environmental,
health, and safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder except to the extent that the violation thereof would not
reasonably be expected to cause a material adverse event. Altris Inc. has been
issued and will maintain all required material federal, state and local permits,
licenses, certificates and approvals relating to (i) air emissions; (ii)
discharges to surface water or groundwater; (iii) noise emissions; (iv) solid or
liquid waste disposal; (v) the use, generation, storage, transportation or
disposal of toxic or hazardous substances or wastes (which shall include any and
all such materials listed in any federal, state or local law, code or ordinance
and all rules and regulations promulgated thereunder as hazardous or potentially
hazardous); or (vi) other environmental, health or safety matters, except to the
extent that the absence thereof would not reasonably be expected to cause a
material adverse event. Altris Inc. has not during the two years prior to the
date hereof received notice of, does not know of, and does not suspect facts
which might constitute a material violation of any federal, state or local
environmental, health or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder with respect to its businesses, operations,
assets, equipment, property, leaseholds, or other facilities. Except in
accordance with a valid governmental permit, license, certificate or approval,
there has been no material emission, spill, release or discharge into or upon
(i) the air; (ii) soils, or any improvements located thereon; (iii) surface
water or groundwater; or (iv) the sewer, septic system or waste treatment,
storage or disposal system servicing the premises, of any toxic or hazardous
substances or wastes at or from the premises, except to the extent that any such
emission, spill, release or discharge would not reasonably be expected to cause
a material adverse event. During the two years prior to the date hereof, there
has been no complaint, order, directive, claim,
<PAGE>
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citation or notice by any governmental authority or any person or entity with
respect to (i) air emissions; (ii) spills, releases or discharges to soils or
improvements located thereon, surface water, groundwater or the sewer, septic
system or waste treatment, storage or disposal systems servicing the premises;
(iii) noise emissions; (iv) solid or liquid waste disposal; (v) the use,
generation, storage, transportation or disposal of toxic or hazardous substances
or waste; or (vi) other environmental, health or safety matters materially
affecting Altris Inc. or its business, operations, assets, equipment, property,
leaseholds or other facilities. Altris Inc. does not have any material
indebtedness, obligation or liability (absolute or contingent, matured or not
matured), with respect to the storage, treatment, cleanup or disposal of any
solid wastes, hazardous wastes or other toxic or hazardous substances (including
without limitation any such indebtedness, obligation, or liability with respect
to any current regulation, law or statute regarding such storage, treatment,
cleanup or disposal).
1.17. Accounting Matters. Altris Inc. and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for the assets of Altris Inc. and each of
its Subsidiaries; (iii) access to the assets of Altris Inc. and each of its
Subsidiaries is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets of
Altris Inc. and each of its Subsidiaries are compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
1.18. Distributions To Company. Except for limitations existing
under applicable law, no Subsidiary of Altris Inc. is currently prohibited,
directly or indirectly, from paying any dividends to Altris Inc., from making
any other distributions on such Subsidiary's capital stock, from repaying to
Altris Inc. any loans or advances to such Subsidiary, or from transferring any
of such Subsidiary's property or assets to Altris Inc. or any other Subsidiary
of Altris Inc.
1.19. Prior Sales. All offers and sales of Altris Inc.'s capital
stock prior to the date hereof were at all relevant times (i) exempt from the
registration requirements of the Securities Act or were duly registered under
the Securities Act, and (ii) were duly registered or were the subject of an
available exemption from the registration requirements of all applicable state
securities or Blue Sky laws.
1.20. Regulatory Compliance. Except as set forth in the Annual
Report, the conduct of the business and the ownership of the assets of Altris
Inc. is not dependent on any license, permit, approval, waiver or other
authorization of any federal, state or local governmental or regulatory body
which
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Altris Inc. has not obtained, except to the extent that the absence thereof
would not reasonably be expected to cause a material adverse event. All material
licenses, permits and authorizations held by Altris Inc. are in full force and
effect.
1.21. Margin Regulations. Altris Inc. is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock. No
proceeds received pursuant to this Agreement will be used to purchase or carry
any equity security of a class which is registered pursuant to Section 12 of the
Exchange Act.
1.22. Limited Offering. Subject in part to the truth and accuracy of
SL's representations set forth in this Agreement, the offer, sale and issuance
of the Common Stock is exempt from the registration requirements of the
Securities Act, and neither Altris Inc. nor any authorized agent acting on its
behalf has taken or will take any action hereafter that would cause the loss of
such exemption.
1.23. Registration Obligations. Except as described in the Annual
Report, Altris Inc. is not under any obligation to register under the Securities
Act or the Trust Indenture Act of 1939, as amended, any of its presently
outstanding securities or any of its securities that are proposed to be
subsequently issued.
1.24. Insurance. Altris Inc. has maintained, and has caused each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers with respect to their respective properties and business in such forms
and amounts and against such risks, casualties and contingencies as are
customary for corporations of comparable size and condition (financial and
otherwise) engaged in the same or a similar business and owning and operating
similar properties.
1.25. Governmental Consents. No consent, approval, qualification,
order or authorization of, or filing with, any local, state, or federal
governmental authority is required on the part of Altris Inc. in connection with
Altris Inc.'s valid execution, delivery, or performance of this Agreement by
Altris Inc., except such filings as have been made prior to the Closing, except
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act or such post-closing filings as may be
required under applicable state securities laws, which will be timely filed
within the applicable periods therefore.
1.26. Employees. To the best of Altris Inc.'s knowledge, there is no
strike, labor dispute or union organization activities pending or threatened
between it and its employees. None of Altris Inc.'s employees belongs to any
union or collective bargaining unit. To the knowledge of Altris Inc.,
<PAGE>
-12-
Altris Inc. has complied in all material respects with all applicable state and
federal equal opportunity and other laws related to employment. To the knowledge
of Altris Inc., no employee of Altris Inc. is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with Altris Inc., or any other party because
of the nature of the business conducted or presently proposed to be conducted by
Altris Inc. or to the use by the employee of his or her best efforts with
respect to such business. Other than as set forth on the Annual Report hereto,
Altris Inc. is not a party to or bound by any employment contract, deferred
compensation agreement, bonus plan, incentive plan, profit sharing plan,
retirement agreement, or other employee compensation agreement. To the knowledge
of Altris Inc., it is not aware that any officer or key employee, or that any
group of key employees, intends to terminate employment with Altris Inc., nor
does Altris Inc. have a present intention to terminate the employment of any of
the foregoing. Subject to general principles related to wrongful termination of
employees, the employment of each officer and employee of Altris Inc. is
terminable at the will of Altris Inc.
1.27. ERISA. Altris Inc. is in compliance in all material respects
with all applicable provisions of Title IV of the Employee Retirement Income
Security Act of 1974, Pub. L. No. 93-406, September 2, 1974, 88 Stat. 829, 29
U.S.C.A. SS 1001 et seq. (1975), as amended from time to time ("ERISA"). Neither
a reportable event nor a prohibited transaction (as defined in ERISA) has
occurred and is continuing with respect to any "pension plan" (as such term is
defined in ERISA, a "Plan"); no notice of intent to terminate a Plan has been
filed nor has any Plan been terminated; no circumstances exist which constitute
grounds entitling the Pension Benefit Guaranty Corporation (together with any
entity succeeding to or all of its functions, the "PBGC") to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; neither Altris Inc. nor any commonly
controlled entity (as defined in ERISA) has completely or partially withdrawn
from a multiemployer plan (as defined in ERISA). Altris Inc. and each commonly
controlled entity has met its minimum funding requirements under ERISA with
respect to all of its Plans and the present fair market value of all Plan
property equals or exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of Altris Inc. or any commonly controlled
entity to the PBGC or the Plan under Title IV or ERISA; and neither Altris Inc.
nor any commonly controlled entity has incurred any liability to the PBGC under
ERISA.
1.28. Fees/Commissions. Altris Inc. has not agreed to pay any
finder's fee, commission, origination fee or other fee or charge to any person
or entity with respect to or as a result of the consummation of the transactions
contemplated hereunder.
<PAGE>
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1.29. Disclosure. No representation or warranty made as of the date
hereof by Altris Inc. contained in this Agreement, taken as a whole, contains or
will (as of the time so furnished) contain any untrue statement of a material
fact, or omits or will (as of the time so furnished) omit to state any material
fact which is necessary in order to make the statements contained herein or
therein not misleading.
1.30. Survival. The representations and warranties of Altris Inc.
contained in the agreement shall survive the agreement for the period set forth
in the agreement.
<PAGE>
APPENDIX 16
[LOGO]
[Letterhead of Kallmeyer & Strime]
THE SL WARRANTIES
In these warranties:-
(1) the provisions contained in the agreement to which these warranties
constitute Appendix 16 ("the agreement"), relating to its interpretation
shall apply mutatis mutandis;
(2) expressions to which a meaning is attributed in the agreement shall bear
the same meaning.
<PAGE>
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SL warrants to Altris Inc and Altris Limited that save as disclosed in the
Disclosure Letter attached hereto:-
1. Organization, Corporate Power and Authority
Each of SL and Spescom CIT is a corporation duly incorporated, validly
existing and in good standing under the laws of the Republic of South
Africa and is duly qualified to do business as a foreign corporation in
the jurisdictions in which it conducts its business, except where the
failure so to qualify will not have a material adverse effect on its
business. Each of SL and Spescom CIT has all requisite corporate power and
authority to own, operate and lease its assets, to conduct its business,
to execute and deliver the agreement and the other documents and
agreements to be executed and delivered by it pursuant to the agreement
and to perform its obligations thereunder.
2. Authorization of Agreements
The execution, delivery and performance by each of SL and Spescom CIT of
the agreement and the other documents and agreements to be executed and
delivered by it pursuant to the agreement, and the consummation by it of
the transactions contemplated thereby, have been duly authorized by all
necessary corporate action by each of SL and Spescom CIT. This agreement
has been, and each of the other documents and agreements to be executed
and delivered by each of SL and Spescom CIT pursuant to the agreement will
be on the closing date, duly executed and delivered by it and constitute,
or will, when delivered, constitute, the legal, valid and binding
obligations of SL or Spescom CIT, as the case may be, enforceable against
it in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation
<PAGE>
-3-
or other similar laws relating to, or affecting generally the enforcement
of creditors' rights and remedies or by other equitable principles of
general application.
3. Effect of agreement
The execution, delivery and performance by each of SL and Spescom CIT of
the agreement and the other documents and agreements to be executed and
delivered by it pursuant to the agreement, and the consummation by it of
the transactions contemplated thereby, will not violate its charter or
by-laws or any judgment, award or decree or any indenture, agreement or
other instrument to which it is a party, or by which it or its assets are
bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under, any such indenture,
agreement or other instrument, or result in the creation or imposition of
any lien, charge, security interest or encumbrance of any nature
whatsoever upon any of its assets, except to the extent that the effect
thereof is not materially adverse to its business.
4. Government approvals
Except for the approval of exchange control authorities of the South
African Reserve Bank, no approval, authorization, consent or order or
action of or filing with any court, administrative agency or other
governmental or regulatory authority is required to be obtained by SL or
Spescom CIT for the execution and delivery by it of the agreement and the
other documents and agreements to be executed and delivered by it pursuant
to the agreement or the consummation by it of the transactions
contemplated thereby.
<PAGE>
-4-
5. Investment representations
5.1 SL is acquiring the investment in Altris Inc contemplated by clause
7 of the agreement, and the shares of Altris Inc common stock
(hereinafter referred to as the "Investment"), for SL's own account,
for investment purposes only, and not with a view to or for the
resale or distribution thereof, in whole or in part.
5.2 SL understands that the offering and sale of the Investment
(hereinafter referred to as the "Offering") are intended, save as
set out in clause 7.1.2 of the agreement, to be exempt from
registration under the Securities Act of 1933, as amended
(hereinafter referred to as the "1933 Act"), by virtue of Section
4(2) of the 1933 Act, among other provisions. SL is an accredited
investor under the 1933 Act and has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Investment and has
obtained, in its judgment, sufficient information from Altris Inc.
to evaluate the merits and risks of such investment.
5.3 Altris Inc has provided SL with the Annual Report on Form 10-K filed
by Altris Inc. with the Securities and Exchange Commission for the
year ended December 31, 1998 and preliminary interim financial
information with respect to the quarter ended March 31, 1999.
5.4 Altris Inc. has provided SL with access and the opportunity to ask
questions of, and receive answers from, Altris Inc. concerning the
terms and conditions of the Offering, the business, financial
condition, results of operations and prospects of Altris Inc. and
other matters pertaining to its investment.
<PAGE>
-5-
5.5 SL has determined that the Investment is a suitable investment and
that SL has the financial ability to bear the economic risk of its
investment in Altris Inc. (including the possible complete loss of
its investment), has adequate means of providing for current needs
and contingencies and has no current or prospective need for
liquidity with respect to its investment.
5.6 SL understands that it must bear the economic risk of its investment
for an indefinite period of time because, among other reasons, the
Investment has not been registered under the 1933 Act or under the
securities laws of any state. Consequently, the Investment cannot be
resold, pledged, assigned or otherwise disposed of, except in
accordance with an exemption from such registration.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF DETERMINATION OF
SERIES E CONVERTIBLE PREFERRED STOCK
OF
ALTRIS SOFTWARE, INC.
The undersigned, Roger H. Erickson and John W. Low, hereby certify that:
I. They are the duly elected and acting President and Secretary,
respectively, of Altris Software, Inc., a California corporation (the
"Company").
II. The Company has 1,000,000 shares of preferred stock authorized, of
which 478,261 shares have been previously designated as Series A Preferred
Stock, none of which are issued and outstanding as of the date hereof; 172,500
shares have been previously designated as Series B Convertible Preferred Stock,
none of which are issued and outstanding as of the date hereof; 100,000 shares
have been previously designated as Series C Convertible Preferred Stock, none of
which are issued and outstanding as of the date hereof; and 3,000 shares have
been previously designated as Series D Convertible Preferred Stock, 3,000 of
which are issued and outstanding as of the date hereof. No other series of
preferred stock has been designated and no other shares of preferred stock have
been issued. The number of shares of preferred stock to be designated as Series
E Convertible Preferred Stock is 3,000, none of which are issued and
outstanding.
III. The holders of at least two-thirds of the issued and outstanding
shares of Series D Convertible Preferred Stock have approved this Certificate of
Determination of Series E Convertible Preferred Stock.
IV. Pursuant to authority given to it by the Company's Articles of
Incorporation, the Board of Directors of the Company has duly adopted the
following recitals and resolutions.
WHEREAS, the Articles of Incorporation of the Company, as amended, provide
for a class of shares known as preferred stock issuable from time to time in one
or more series;
WHEREAS, the Board of Directors of the Company is authorized, within the
limitations and restrictions stated in the Articles of Incorporation, to
determine and alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of preferred stock, to fix the
number of shares constituting any such series and to determine the designation
thereof;
<PAGE>
WHEREAS, the Board of Directors of the Company desires, pursuant to its
authority as aforesaid, to designate a new series of preferred stock and the
number of shares constituting such series and to fix the rights, preferences,
privileges and restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the Company
hereby designates a new series of preferred stock and the number of shares
constituting such series and fixes the rights, preferences, privileges and
restrictions relating to such series as follows:
1. Designation, Amount, Ranking and Par Value. The series of Preferred
Stock shall be designated as the Series E Convertible Preferred Stock (the
"Preferred Stock") and the number of shares so designated shall be 3,000. The
par value of each share of Preferred Stock shall be $1.00. Each share of
Preferred Stock shall have a stated value of $1,000.00 per share (the "Stated
Value"). The shares of the Preferred Stock shall rank senior to all other shares
of preferred stock (unless otherwise approved under Section 3) and Common Stock
as to distribution of assets (upon liquidation or otherwise) and payment of
dividends.
2. Dividends.
(a) Holders of Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative cash dividends at the rate per share (as a
percentage of the Stated Value per share) equal to 11.5% per annum, payable
quarterly in arrears on March 1, June 1, September 1 and December 1 in each
year, with the first dividend payable on June 1, 1999. Dividends on the
Preferred Stock shall accrue on March 1, June 1, September 1 and December 1 of
each year beginning on June 1, 1999 and shall be deemed to accrue on such date
whether or not earned or declared. Each such dividend will be payable to holders
of record as they appear on the books of the Company on such record dates, which
shall be 30 days prior to the payment dates thereof unless another record date,
which shall be no more than 45 days prior to such payment dates, shall be fixed
by the Board of Directors of the Company. The party that holds the Preferred
Stock on an applicable record date for any dividend payment will be entitled to
receive such dividend payment and any other accrued and unpaid dividends which
were accrued prior to such dividend payment date, without regard to any sale or
disposition of such Preferred Stock subsequent to the applicable record date but
prior to the applicable dividend payment date. The Company shall pay interest on
all accrued but unpaid dividends at an annual rate of 11.5% compounded annually
from the date of accrual until paid.
(b) So long as any Preferred Stock shall remain outstanding, in no event
shall any dividend or distribution (other than a dividend or distribution
described in Section 5) be paid upon, nor shall any distribution be made in
respect of, the Junior Stock, nor shall any monies be set aside for or applied
to the purchase or redemption (through a sinking fund or otherwise) of the
Junior Stock unless all dividends on the Preferred Stock for all past dividend
periods shall have been paid, plus interest at an annual rate of 11.5%
compounded annually from the date of accrual until paid.
<PAGE>
3. Voting Rights. The holder of each share of Preferred Stock shall be
entitled to one vote on all matters submitted to the vote of the holders of
Common Stock, and shall vote as a class with the holders of Common Stock.
Provided, so long as any shares of the Preferred Stock are outstanding, the
Company shall not, without the affirmative vote of the holders of two-thirds of
the outstanding shares of the Preferred Stock, (i) alter or change adversely the
powers, preferences or rights given to the Preferred Stock, or (ii) authorize or
create any class of stock or series of preferred stock ranking as to dividends
or distribution of assets (upon liquidation or otherwise) prior to or pari passu
with the Preferred Stock.
4. Liquidation. In the event of any complete liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, the holders of
shares of the Preferred Stock shall be entitled to receive out of the assets of
the Company, whether such assets are capital or surplus, for each share of the
Preferred Stock an amount equal to $1,000.00 per share, plus (i) an amount equal
to accrued but unpaid dividends per share, whether declared or not, and (ii)
interest on all accrued but unpaid dividends at an annual rate of 11.5%
compounded annually from the date of accrual until paid, before any distribution
shall be made to the holders of Junior Stock of the Company, and if the assets
of the Company shall be insufficient to pay in full such amounts, then such
assets shall be distributed among such holders ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full.
5. Conversion.
(a)(i) Each share of Preferred Stock shall be convertible into shares of
Common Stock at the Conversion Ratio (subject to reduction under Section
5(a)(ii)), at the option of the holder, in whole or in part at any time. The
holder shall effect conversions by delivering to the Company a written notice
(the "Conversion Notice"), accompanied by the certificate representing the
shares of the Preferred Stock to be converted. Each Conversion Notice shall
specify the number of shares of Preferred Stock to be converted and the date on
which such conversion is to be effected (the "Conversion Date"), which shall in
no event be earlier than the date such Conversion Notice is given in accordance
with Section 5(j) below. Each Conversion Notice, once given, shall be
irrevocable (subject to Section 5(b) below). If the holder is converting less
than all shares of Preferred Stock, the Company shall promptly deliver to the
holder a certificate for such number of shares of Preferred Stock as have not
been converted.
(ii) If on the Conversion Date applicable to any conversion, the
Conversion Price (as defined below) then in effect is such that the aggregate
number of shares of Common Stock that would then be issuable upon conversion of
all then-outstanding shares of Preferred Stock, when combined with (i) any
shares of Common Stock previously issued upon conversion of any shares of
Preferred Stock and (ii) any shares of Common Stock issued or issuable upon the
exercise of warrants to purchase shares of the Common Stock pursuant to the
Stock Purchase Warrant, Convertible Preferred Stock Contingent Stock Purchase
Warrant and Subordinated Debenture Contingent Stock Purchase Warrant, each
granted by the Company to the initial purchaser of the
<PAGE>
Preferred Stock (all such warrants will be collectively referred to herein as
the "Warrants"), would equal or exceed approximately 1,906,692 shares of Common
Stock (the "Issuable Maximum"), then the Company shall be obligated to effect
the conversion of only such portion of each share of Preferred Stock subject to
such conversion as is represented by the Conversion Percentage, and the
remaining portion of such share shall be subject to the mandatory redemption
provisions of Section 6.
The Conversion Percentage shall be a fraction, the numerator of which is
the Allowable Conversion Maximum and the denominator of which is the total
number of shares of Preferred Stock outstanding prior to such conversion. The
Allowable Conversion Maximum at any time shall be the difference between the
Issuable Maximum and the total number of shares of Common Stock (i) previously
issued upon conversion of shares of Preferred Stock and (ii) issued or issuable
upon exercise of the Warrants. In the event of any stock split, stock dividend,
recapitalization, reorganization or other similar action or event, appropriate
adjustment shall be made to the Issuable Maximum and the Allowable Conversion
Maximum.
(b) Three Trading Days after the Conversion Date, the Company will deliver
to the holder (i) a certificate or certificates which shall be free of
restrictive legends and trading restrictions (other than those then required by
law), representing the number of shares of Common Stock being acquired upon the
conversion of shares of Preferred Stock (subject to any reduction required
pursuant to Section 5(a)(ii)), and (ii) subject to Section 6 below, the
certificate representing the number of shares of Preferred Stock not converted;
provided, however that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of any shares of
Preferred Stock (or with respect to shares subject to redemption pursuant to
Section 5(a)(ii) and 6, to pay the redemption price payable under Section 6),
until certificates evidencing such shares of Preferred Stock are either
delivered to the Company or any transfer agent for the Preferred Stock or Common
Stock, or the holder notifies the Company that such certificates have been lost,
stolen or destroyed and provides a bond (or other adequate security acceptable
to the Company) satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection therewith. In the case of a conversion
pursuant to a Conversion Notice, if such certificate or certificates are not
delivered by the date required under this Section 5(b), the holder shall be
entitled by written notice to the Company at any time on or before such holder's
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the shares of Preferred Stock tendered for conversion.
(c)(i) The Conversion Price (the "Conversion Price") in effect on any
Conversion Date shall be $1.90.
(ii) If the Company, at any time while any shares of Preferred Stock are
outstanding, (a) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Junior Stock payable in shares of its capital
stock (whether payable in shares of its Common Stock or of capital stock of any
class), (b) subdivide outstanding shares of Common Stock into larger number of
shares, (c) combine outstanding shares of Common Stock into a smaller number of
shares, or (d) issue by reclassification of shares of Common Stock any shares of
capital stock
<PAGE>
of the Company, the Conversion Price designated in Section 5(c)(i) shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock of the Company outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 5(c)(ii) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
(iii) In case the Company, at any time while any shares of the Preferred
Stock are outstanding, shall issue rights or warrants to all holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Per Share Market Value of Common Stock at the
record date mentioned below, the Conversion Price designated in Section 5(c)(i)
shall be multiplied by a fraction, of which the denominator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of additional shares
of Common Stock offered for subscription or purchase, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered would purchase at such Per Share Market Value. Such adjustment
shall be made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Price pursuant to this Section
5(c)(iii), if such right or warrant shall expire and shall not have been
exercised, the Conversion Price shall immediately upon such expiration be
recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section 5 after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights or warrants been made on the basis of
offering for subscription or purchase only that number of shares of Common Stock
actually purchased upon the exercise of such rights or warrants actually
exercised.
(iv) In case the Company, at any time while any shares of the Preferred
Stock are outstanding, shall issue (A) options or warrants entitling the holder
to subscribe for or purchase shares of Common Stock at an exercise price less
than the Conversion Price, or (B) securities convertible into Common Stock at a
conversion price less than the Conversion Price (in either of (A) or (B) other
than with respect to such issuances or grants of options, warrants or securities
convertible into Common Stock (1) under the Company's Amended and Restated 1996
Stock Incentive Plan or pursuant to a successor plan thereof, (2) in connection
with any merger or acquisition involving the Company and (3) in connection with
the issuance of options, warrants or convertible securities to the initial
purchaser of the Series D Convertible Preferred Stock of the Company or any
successor to any of the rights which were granted to such initial purchaser as a
result of or in connection with the purchase of the Series D Convertible
Preferred Stock of the Company or any of the Company's 11.5% Subordinated
Debentures which were purchased by
<PAGE>
such initial purchaser), then the Conversion Price designated in Section 5(c)(i)
shall be multiplied by a fraction, of which the denominator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such options, warrants or convertible securities, as the
case may be, plus the number of additional shares of Common Stock offered for
subscription, purchase or conversion into, and of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such options, warrants or convertible
securities, as the case may be, plus the number of shares which the aggregate
exercise or conversion price (as the case may be) of the total number of shares
issuable upon exercise or conversion of such options, warrants or convertible
securities would purchase at the Conversion Price. Such adjustment shall be made
whenever such options, warrants or convertible securities are issued at an
exercise or conversion price less than the Conversion Price, and such adjustment
shall become effective immediately after the date on which such options,
warrants or convertible securities are issued at an exercise or conversion price
less than the Conversion Price. However, upon the expiration of any option or
warrant to purchase or subscribe for Common Stock, or upon the expiration of the
conversion feature of a convertible security, the issuance of any of which
resulted in an adjustment in the Conversion Price pursuant to this Section
5(c)(iv), if such option, warrant or the conversion feature of a convertible
security shall expire and shall not have been exercised, the Conversion Price
shall immediately upon such expiration be recomputed and effective immediately
upon such expiration be increased to the price which it would have been (but
reflecting any other adjustments in the Conversion Price made pursuant to the
provisions of this Section 5 after the issuance of such options, warrants or
convertible securities) had the adjustment of the Conversion Price made upon the
issuance of such options, warrants or convertible securities been made on the
basis of offering for purchase, subscription or conversion into only that number
of shares of Common Stock actually purchased, subscribed for or converted into
upon the exercise or conversion of such options, warrants or convertible
securities actually exercised or converted.
(v) In case the Company, at any time while shares of Preferred Stock are
outstanding, shall distribute to all holders of Common Stock (and not to holders
of Preferred Stock) evidences of its indebtedness or assets or rights or
warrants, to subscribe for or purchase any security (excluding those referred to
in Section 5(c)(iii) above) then in each such case the Conversion Price at which
each share of the Preferred Stock shall thereafter be convertible shall be
determined by multiplying the Conversion Price in effect prior to the record
date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Per Share
Market Value of Common Stock determined as of the record date mentioned above,
and of which the numerator shall be such Per Share Market Value of the Common
Stock on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board of Directors
of the Company in good faith; provided, however that in the event of a
distribution exceeding ten percent of the net assets of the Company, then such
fair market value shall be determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of
<PAGE>
the Company) (an "Appraiser") selected in good faith by the holders of a
majority in interest of the shares of Preferred Stock; and provided, further
than the Company, after receipt of the determination by such Appraiser shall
have the right to select an additional Appraiser, in which case the fair market
value shall be equal to the average of the determination by each such Appraiser.
In either case the adjustments shall be described in a statement provided to all
holders of Preferred Stock of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.
(vi) All calculations under this Section 5 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
(vii) Whenever the Conversion Price is adjusted pursuant to Section
5(c)(ii), (iii), (iv), (v) or (vi), the Company shall promptly mail to each
holder of shares of Preferred Stock, a notice setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
(viii) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which share exchange the Common Stock is
converted into other securities, cash or property, then the holders of the
shares of Preferred Stock then outstanding shall have the right thereafter to
convert such shares only into the kind and amount of shares of stock and other
securities and property receivable upon or deemed to be held following such
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of a number of shares of the Common Stock of the Company into which such
shares of Preferred Stock could have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange. The
terms of any such consolidation, merger, sale transfer or share exchange shall
include such terms so as to continue to give to the holder of shares of
Preferred Stock the right to receive the securities or property set forth in
this Section 5(c)(viii) upon any conversion following such consolidation,
merger, sale, transfer or share exchange. This provision shall similarly apply
to successive reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
(ix) In case:
(A) the Company shall declare a dividend (or any other distribution)
on its Common Stock; or
(B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of its Common Stock; or
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
<PAGE>
(D) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock of
the Company (other than a subdivision or combination of the outstanding
shares of Common Stock), any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or
(E) of the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of Preferred Stock, and shall cause to
be mailed to the holders of the shares of Preferred Stock at their last
addresses as they shall appear upon the stock books of the Company, at least 10
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(d) In case at any time conditions shall arise by reason of action
taken by the Company which in the opinion of the Board of Directors of the
Company are not adequately covered by the other provisions hereof and which
might materially and adversely affect the rights of the holders of shares of
Preferred Stock (different than or distinguished from the effect generally on
the rights of holders of any class of the Company's capital stock) or in case at
any time any such conditions are expected to arise by reason of any action
contemplated by the Company, an Appraiser selected by the holders of a majority
in interest of the shares of Preferred Stock shall give its opinion as to the
adjustment, if any (not inconsistent with the standards established in this
Section 5), of the Conversion Price (including, if necessary, any adjustment as
to the securities into which shares of Preferred Stock may thereafter be
convertible) and any distributions which is or would be required to preserve
without diluting the rights of the holders of the shares of Preferred Stock;
provided, however, that the Company, after receipt of the determination by such
Appraiser, shall have the right to select an additional Appraiser, in which case
the adjustment shall be equal to the average of the adjustments recommended by
each such Appraiser. The Board of Directors of the Company shall make the
adjustment recommended forthwith upon the receipt of such opinion or opinions or
the taking of any such action contemplated, as the case may be; provided,
however, that no such adjustment of the Conversion Price shall be made which in
the opinion of the Appraiser(s) giving the aforesaid opinion or
<PAGE>
opinions would result in an increase of the Conversion Price to more than the
Conversion Price then in effect.
(e) The Company covenants that it will at all times reserve and keep
available, out of its authorized and unissued Common Stock solely for the
purpose of issuance upon conversion of Preferred Stock as herein provided, free
from preemptive rights or any other actual contingent purchase rights of Persons
other than the holders of shares of Preferred Stock, such number of shares of
Common Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 5(c) hereof) upon the conversion of all outstanding
shares of Preferred Stock. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly and validly issued and
fully paid and nonassessable.
(f) Except as otherwise required by Section 6 hereof, the Company
shall not be required to issue stock certificates representing fractions of
shares of Common Stock, but may if otherwise permitted, make a cash payment in
respect of any final fraction of a share based on the Per Share Market Value at
such time. If the Company elects not, or is unable, to make such a cash payment,
the holder of a share of Preferred Stock shall be entitled to receive, in lieu
of the final fraction of a share, one whole share of Common Stock; provided,
however, that in no event shall any such issuance of a whole share result in the
issuance of a number of shares of Common Stock in excess of the Issuable Maximum
and if such issuance would so result in the issuance of a number of shares in
excess of the Issuable Maximum, the holder shall be entitled to receive the cash
payment described above as soon as such cash payment may be lawfully made.
(g) The issuance of certificates for shares of Common Stock on
conversion of Preferred Stock shall be made without charge to the holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a name
other than that of the holder of the shares of Preferred Stock converted and the
Company shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
(h) Shares of Preferred Stock converted into Common Stock shall be
canceled and shall have the status of authorized but unissued shares of
preferred stock.
(i) If the Company intends to initiate a public offering of its
securities in an amount exceeding $5,000,000 in the aggregate and the Company
reasonably believes that the conversion of any shares of Preferred Stock may
have an adverse effect on the ability of the Company to complete such offering
or the price at which such securities could be sold therein, the Company, upon
at least 30 days prior written notice to the holders of Preferred Stock, may
suspend the right of the holders of the shares of Preferred Stock to convert
such shares pursuant to Section 5 for the period commencing on the date the
Company files a registration statement with the Securities and Exchange
Commission and terminating 90 days after the closing of the
<PAGE>
public offering, provided that the last day that the Preferred Stock is
convertible (as set forth in Section 5(a)) shall be extended for such number of
days as the conversion right was suspended under this Section 5(i).
(j) Each Conversion Notice shall be given by facsimile and by mail,
postage prepaid, addressed to the attention of the Chief Financial Officer of
the Company at the facsimile telephone number and address of the principal place
of business of the Company. Any such notice shall be deemed given and effective
upon the earliest to occur of (i) receipt of such facsimile at the facsimile
telephone number specified in this Section 5(j), (ii) three days after deposit
in the United States mails, or (iii) upon actual receipt by the party to whom
such notice is required to be given.
6. Mandatory Redemption of the Preferred Stock.
(a) If on the Conversion Date specified in any Conversion Notice the
provisions of Section 5(a)(ii) do not permit the issuance of the full number of
shares into which the shares of Preferred Stock to be converted would otherwise
be convertible, then the Company shall, with respect to each share of Preferred
Stock that is subject to such Conversion Notice, redeem, from funds legally
available therefor at the time of such redemption, a portion of such share that
is represented by the fraction that is the difference between one and the
Conversion Percentage (such fraction to be known as the "Redemption Ratio"). The
redemption price for such portion of each share of Preferred Stock to be
redeemed shall be an amount equal to the product of (i) the Per Share Market
Value on the Conversion Date, (ii) the number of shares of Common Stock into
which such share of Preferred Stock would then be convertible, but for Section
5(a)(ii), times (iii) the Redemption Ratio. If any portion of such redemption
price shall not be paid by the Company within 20 days after the Conversion Date,
such redemption price shall be increased by an amount accruing after the
twenty-first (21st) day at the rate of 14% per annum. If, on any such Conversion
Date, the Company is prohibited under the relevant provisions of the California
General Corporation Law (the "CGCL") from paying, in whole or in part, the
redemption price for any shares of Preferred Stock, any portion of the
redemption price which may be lawfully paid in accordance with the CGCL shall be
paid pro rata to the holders of the shares of Preferred Stock being redeemed on
such Conversion Date and the remainder of such redemption price shall be paid on
a pro rata basis to such holders as soon as such payment is permissible under
the CGCL.
7. Optional Redemption of the Preferred Stock.
(a) From June 27, 1999 through June 26, 2002. The Preferred Stock
may be redeemed, at the option of the Company, in whole or in part, at any time
from and after June 27, 1999 until June 26, 2002, provided the average bid price
of the Company's Common Stock for the 20 trading days preceding the date of the
Redemption Notice (as defined below) (which such 20-trading day period may
include trading days that fall on or prior to June 27, 1999) exceeds $9.50 per
share, at a redemption price per share equal to the sum of (i) $1,000, (ii) all
accrued but unpaid dividends and (iii) interest on such accrued but unpaid
dividends at an annual rate of 11.5% (the "Redemption Price").
<PAGE>
(b) From and After June 27, 2002. The Preferred Stock may be
redeemed, in whole or in part, at the option of the Company, at any time from
and after June 27, 2002 at the Redemption Price.
(c) Partial Redemption. In the event of a redemption of only a part
of the then-outstanding Preferred Stock under Section 7(a) or 7(b) above, the
Company shall effect such redemption pro rata according to the number of shares
held by each holder of the Preferred Stock.
(d) Notice of Redemption; Conversion. At least thirty (30) days and
not more than sixty (60) days prior to the date fixed for any redemption of the
Preferred Stock (the "Redemption Date"), written notice (the "Redemption
Notice") shall be mailed, postage prepaid, to each holder of record of the
Preferred Stock to be redeemed pursuant to such Redemption Notice, at such
holder's address as last shown on the records of the Company. The Redemption
Notice may be given on or prior to the date on which redemption is permissible
at the Company's option pursuant to Sections 7(a) and 7(b) above; provided that
the Redemption Date falls on or after the date on which redemption is first
permissible at the Company's option pursuant to Sections 7(a) and 7(b) above.
Notwithstanding the receipt of such notice, prior to and in lieu of redemption,
any holder of Preferred Stock may convert all or any part of such holder's
shares of Preferred Stock into Common Stock in accordance with Section 5(a)(i)
provided that the Conversion Date occurs prior to the Redemption Date. The
Redemption Notice shall state:
(i) whether or all less than all of the outstanding shares of
Preferred Stock are to be redeemed and the total number of shares being
redeemed;
(ii) the number of shares of Preferred Stock held by the
holder (to whom the Redemption Notice is addressed) which the Company
intends to redeem;
(iii) the Redemption Date and the Redemption Price; and
(iv) that the holder is to surrender to the Company, in the
manner and at the place designated, such holder's certificate or
certificates representing the Preferred Stock that is being redeemed.
(e) Surrender of Certificates. On or before the Redemption Date,
each holder of Preferred Stock to be redeemed shall surrender the certificate or
certificates representing such shares to the Company, in the manner and at the
place designated in the Redemption Notice, and thereupon the Redemption Price
for such shares shall be payable to the order of the person whose name appears
on such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event less than all of the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.
(f) Payment. On or before the Redemption Date, the Company shall
deposit with any bank or trust company, having a capital and surplus of at least
$100,000,000, as a trust fund,
<PAGE>
a sum equal to the Redemption Price of all of the Preferred Stock called for
redemption, with irrevocable instructions and authority to the bank or trust
company to pay, on or after the Redemption Date, the Redemption Price to the
respective holders upon the surrender of their share certificates. From and
after the Redemption Date, the shares so called for redemption shall be
redeemed. The deposit shall constitute full payment of the shares to their
holders, and from and after the Redemption Date the shares shall be deemed to be
no longer outstanding, and the holders thereof shall cease to be stockholders
with respect to such shares and shall have no rights with respect thereto except
the rights to receive from the bank or trust company payment of the Redemption
Price of the shares, without further interest thereon, upon surrender of their
certificates therefor. Any monies so deposited and unclaimed at the end of one
year from the Redemption Date shall be released or repaid to the Company, after
which the holders of shares called for redemption shall be entitled to receive
payment of the Redemption Price only from the Company.
8. Definitions. For the purposes hereof,
"Common Stock" means shares now or hereafter authorized of the class of
Common Stock, no par value, of the Company presently authorized and stock of any
other class into which such shares may hereafter have been reclassified or
changed.
"Conversion Ratio" means, at any time, a fraction, of which the numerator
is Stated Value plus (i) accrued but unpaid dividends, and (ii) interest on all
accrued but unpaid dividends at an annual rate of 11.5% compounded annually from
the date of accrual until paid, and of which the denominator is the Conversion
Price at such time.
"Junior Stock" means the Common Stock of the Company and any other stock
of the Company over which shares of the Preferred Stock have preference as to
distribution of assets.
"Original Issue Date" means the date of the first issuance of any shares
of the Preferred Stock.
"Per Share Market Value" means on any particular date (a) the last sale
price per share of the Common Stock on such date on the Nasdaq National Market
or other stock exchange on which the Common Stock has been listed or if there is
no such price on such date, then the last price on such exchange on the date
nearest preceding such date, or (b) if the Common Stock is not listed on the
Nasdaq National Market or any stock exchange, the average of the bid and asked
price for a share of Common Stock in the over-the-counter market, as reported by
the Nasdaq Stock Market at the close of business on such date, or (c) if the
Common Stock is not quoted on the Nasdaq Stock Market, the average of the bid
and asked price for a share of Common stock in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices), or (d) if the Common
Stock is no longer publicly traded the fair market value of a share of Common
Stock as determined by an Appraiser (as defined in Section 5(c)(v) above)
selected in good faith by the holders of a majority in interest of the shares of
the Preferred Stock; provided, however, that the
<PAGE>
Company, after receipt of the determination by such Appraiser, shall have the
right to select an additional Appraiser, in which case, the fair market value
shall be equal to the average of the determinations by each such Appraiser.
"Person" means a corporation, an association, a partnership, limited
liability company, organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
"Trading Day" means (a) a day on which the Common Stock is traded on the
Nasdaq National Market or principal stock exchange on which the Common Stock has
been listed, or (b) if the Common Stock is not listed on the Nasdaq National
Market or any stock exchange, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the Nasdaq Stock Market, or (c) if the
Common Stock is not quoted on the Nasdaq Stock Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices).
RESOLVED FURTHER, that the President and Secretary of the Company be, and
they hereby are, authorized and directed to prepare, execute, verify, and file
in the Office of the California Secretary of State, a Certificate of
Determination in accordance with this resolution and as required by law.
Each of the undersigned further declares under penalty of perjury under
the laws of the State of California that the matters set forth in this
certificate are true and correct of his own knowledge.
Executed at San Diego, California on the __th day of May, 1999.
/s/ Roger H. Erickson
------------------------------------
Roger H. Erickson, President
/s/ John W. Low
------------------------------------
John W. Low, Secretary
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT
This First Amendment to Convertible Preferred Stock Purchase
Agreement ("Amendment") is made and entered into as of the 7th day of May, 1999,
by and between ALTRIS SOFTWARE, INC. (the "Company"), a California corporation,
and FINOVA MEZZANINE CAPITAL INC. f/k/a Sirrom Capital Corporation d/b/a Tandem
Capital (the "Purchaser"), a Tennessee corporation.
W I T N E S S E T H:
WHEREAS, the Purchaser and the Company have previously executed that
Convertible Preferred Stock Purchase Agreement dated June 27, 1997 (the
"Purchase Agreement"; capitalized terms used herein that are not otherwise
defined shall have the meaning set forth in the Purchaser Agreement);
WHEREAS, the Purchaser and the Company wish to amend the Purchase
Agreement and to evidence the consent of the Purchaser to certain actions
proposed by the Company;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are acknowledged, it is agreed as follows:
1. The Purchaser hereby consents to the Company and its affiliates
entering into certain transactions (the "Spescom Transactions") proposed by the
Company to be closed, in all material respects, as described in (i) that
Agreement (the "Restructuring Agreement") among Spescom Limited, Spescom CIT
(Pty) Limited, Altris Software, Inc., Altris Software Limited, Altris
International Limited and Altris Group PLC (draft 5/4/99), (ii) that
Shareholders Agreement among Spescom Electronics Limited, Altris Software, Inc.
and Altris Software Limited (draft 5/4/99), and (iii) that Agreement between
Altris Software, Inc. and Altris Software Limited (draft 5/4/99). Such consent
is given, and any contrary provision waived, under the Operative Documents, the
"Operative Documents" as such term is defined in the Debenture Purchase
Agreement dated June 27, 1999 between the Purchaser and the Company, as amended
by the First Amendment dated November 1, 1998, and by the Second Amendment of
even date herewith, and the Security Agreement dated January 22, 1997 between
the Purchaser and the Company. In accordance with Section 4.1.3 of the
Restructuring Agreement, the Purchaser further hereby (a) confirms that it has
no lien or encumbrance on any of the assets of Altris Software Limited, Altris
Group PLC or Altris International Limited and (b) consents to the pledge in
favor of Spescom Limited by Altris Group PLC of its 40% shareholdings to be held
by
<PAGE>
it after giving effect to the Spescom Transactions in order to secure the
obligations of the Company and Altris Group PLC to the purchaser.
2. The Purchase Agreement is hereby amended by deleting the
Conversion Price of "$6.00" and inserting in its place the figure "$1.90" in
line 11 of Section 1.1 and in line 2 of Section 7.1.
3. The Purchase Agreement is hereby amending the table in Section
1.4 to provide an exercise price for the issuance dates scheduled for the third
and fourth anniversaries of the Closing Date equal to One and 90/100 Dollars
($1.90). Exhibit A-3 to the Purchase Agreement is hereby similarly modified in
Section 2 thereof.
4. The Company hereby represents and warrants to the Purchaser that
all of the representations made in Section 2 of the Purchase Agreement are true
and correct as of the date hereof, except as otherwise disclosed in the
Company's Annual Report or Form 10-K for the year ended December 31, 1998 and as
modified or supplemented by Schedule 4-2 attached hereto and incorporated herein
by this reference and except for such non-material matters that have occurred
since the date of the Purchase Agreement in the ordinary course of business.
5. The Company warrants and represents that its execution, delivery
and performance hereof and of all documents required herein have been duly
authorized by all necessary corporate action and do not (i) violate or conflict
with the Company's corporate charter or bylaws, (ii) violate any applicable law
or regulation, (iii) violate any order, writ, judgment or decree by which the
Company or any of its assets are bound, or (iv) violate, constitute a breach of,
or occasion any rights or remedies under any other loan agreement, lease,
indenture or other agreement by which the Company or any of its assets are
bound.
6. As modified and amended hereby, the Operative Documents shall
remain in full force and effect. The Company warrants and represents that (a)
the Operative Documents are valid, binding and enforceable against the Company
according to their terms, subject to principles of equity and laws applicable to
the rights of creditors generally, including bankruptcy laws, (b) the security
interests previously granted in the Operative Documents remain perfected and
continue to secure the Obligations with the priority required by the Operative
Documents, and (c) no default or Event of Default presently exists under the
Operative Documents and no condition presently exists which, with the giving of
notice, the passing of time, or both, would cause such a default or Event of
Default. The Company further acknowledges that the Company's obligations
evidenced by the Operative Documents are not subject to any counterclaim,
defense or right of setoff, and the Company hereby releases the Purchaser and
its officers, directors, agents and attorneys from any claim, known or unknown,
that the Company may have against any or all of them as of the execution of this
Amendment. In this regard, the Company acknowledges that the Company is familiar
with Section 1542 of the Civil Code of the State of California, which provides
as follows:
<PAGE>
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.
The Company hereby waives and relinquishes all rights and benefits which it has
or may have under any provision of applicable law that is to the same effect as
the above Section 1542.
Notwithstanding the foregoing, this release shall not affect the future
obligations of the Purchaser set forth in the Operative Documents.
7. Concurrently with the execution of this Amendment, the Company
shall pay all of the fees and expenses of the Purchaser and its counsel in
connection with this Amendment and all previously billed fees and expenses that
remain unpaid.
8. Concurrently with the execution of this Amendment, the Company
shall deliver to the Purchaser the following executed documents:
(a) This Agreement.
(b) Second Amendment to Debenture Purchase Agreement.
(c) Certified copy of resolutions of the Company's Board of
Directors authorizing the execution, delivery and performance of
this Agreement and all related documents.
(d) Opinion letter issued by the Company's outside counsel,
addressing such customary matters as the Purchaser may reasonably
require.
(e) Closing Statement evidencing the payment by the Company of all
expenses due from Purchaser.
9. (a) The Purchaser represents and warrants to the Company that the
Purchaser is the holder of record and beneficially of 3,000 shares of the
Company's Series D Convertible Preferred Stock, free and clear of any liens,
charges, security interests or encumbrances. Immediately following the closing
of the Spescom Transactions, the Company shall cause to be filed with the
Secretary of State of the State of California the Certificate of Determination
of Series E Convertible Preferred Stock substantially in the form attached
hereto as Exhibit A. Immediately following the filing of such Certificate of
Determination of Series E Convertible Preferred Stock, and in any event on or
before May 21, 1999, the Company shall issue 3,000 shares of Series E
Convertible Preferred Stock to the Purchaser in exchange for the 3,000 shares of
the Company's Series D Convertible Preferred Stock owned of record and
beneficially by the Purchaser, and the Purchaser shall surrender for
cancellation the stock certificate representing the 3,000 shares of Series D
Convertible Preferred Stock held by the
<PAGE>
Purchaser upon receipt of the stock certificate representing the 3,000 shares of
Series E Convertible Preferred Stock to be issued in exchange therefor. The
Company shall deliver to the Purchaser with such new shares an opinion letter
issued by the Company's outside counsel confirming such customary matters with
respect to the new shares as the Purchaser may require. The Purchaser hereby
represents and warrants to the Company that all of the representations made in
Section 3 of the Purchase Agreement are true and correct, as of the date hereof
and are hereby made in connection with the issuance to Purchaser of the
Company's Series E Convertible Preferred Stock in consideration for its shares
of the Company's Series D Convertible Preferred Stock.
(b) In connection with the issuance to Purchaser of the Series E
Convertible Preferred Stock and shares of the Company's common stock, no par
value, issuable upon conversion thereof pursuant to the Purchase Agreement and
this Amendment, the Purchaser further represents and warrants to the Company
that the Purchaser has a preexisting business relationship with the Company, and
by reason of the Purchaser's business or financial experience or the business or
financial experience of its professional advisors, which advisors are
unaffiliated with and are not compensated by the Company or any affiliate or
selling agent of the Company, directly or indirectly, the Purchaser has the
capacity to protect its own interests in connection with the transaction.
(c) Wherever appropriate to make such definitions consistent with
the exchange of Series D Convertible Preferred Stock for Series E Convertible
Preferred Stock, the definition in the Purchase Agreement of "Convertible
Preferred Stock" shall be deemed to include the shares of Series E Convertible
Preferred Stock exchanged for the Purchaser's shares of Series D Convertible
Preferred Stock and the definition of "Certificate of Determination" shall be
deemed to include the Certificate of Determination for the Series E Convertible
Preferred Stock.
10. Concurrently with the execution and delivery of this Agreement,
the Purchaser and the Company shall execute and deliver the Release Agreement in
the form of Exhibit B attached hereto.
11. This Amendment shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of California.
[the remainder of this page is intentionally left blank]
<PAGE>
Executed as of the date stated above.
ALTRIS SOFTWARE, INC.
By:______________________________________
Title:___________________________________
FINOVA MEZZANINE CAPITAL INC.
formerly known as
Sirrom Capital Corporation and
formerly doing business as Tandem Capital
By:______________________________________
Title:___________________________________
<PAGE>
EXHIBIT 10.2
SECOND AMENDMENT TO DEBENTURE PURCHASE AGREEMENT
This Second Amendment to Debenture Purchase Agreement ("Amendment")
is made and entered into as of the7th day of May, 1999, by and between ALTRIS
SOFTWARE, INC. (the "Company"), a California corporation, and FINOVA MEZZANINE
CAPITAL INC. f/k/a Sirrom Capital Corporation d/b/a Tandem Capital (the
"Purchaser"), a Tennessee corporation.
W I T N E S S E T H:
WHEREAS, the Purchaser and the Company have previously executed that
Debenture Purchase Agreement dated June 27, 1997, as amended by that First
Amendment to Debenture Purchase Agreement dated November 1, 1998 (the "Purchase
Agreement"; capitalized terms used herein that are not otherwise defined shall
have the meaning set forth in the Purchaser Agreement);
WHEREAS, the Purchaser and the Company wish to further amend the
Purchase Agreement and to evidence the consent of the Purchaser to certain
actions proposed by the Company;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are acknowledged, it is agreed as follows:
1. The Purchase Agreement is hereby amended by deleting the interest
rate of "11.5%" in line four of Section 1.1 and inserting in its place the
interest rate of "12.0%".
2. Any reference in the Purchase Agreement and/or related documents
to that 11.5% Subordinated Debenture shall mean the same debenture amended
hereby.
3. The Purchase Agreement is hereby further amended by deleting the
Exercise Price of "$6.00 per share" in line five of Section 1.2 and inserting in
its place the amount "$1.90 per share".
4. The Company warrants and represents that the source code, object
code and all related process diagrams and supporting information and manuals
relating to the software programs marketed by the Company and its Affiliates are
owned by the Company and that the Purchaser continues to hold a second priority
perfected security interest therein to secure the Subordinated Debenture.
5. The Company warrants and represents that its execution, delivery
and performance hereof and of all documents required herein have been duly
authorized by all necessary corporate action and do not (i) violate or conflict
with the Company's corporate charter
<PAGE>
or bylaws, (ii) violate any applicable law or regulation, (iii) violate any
order, writ, judgment or decree by which the Company or any of its assets are
bound, or (iv) violate, constitute a breach of, or occasion any rights or
remedies under any other loan agreement, lease, indenture or other agreement by
which the Company or any of its assets are bound.
6. As modified and amended hereby, the Operative Documents shall
remain in full force and effect. The Company warrants and represents that (a)
the Operative Documents are valid, binding and enforceable against the Company
according to their terms, subject to principles of equity and laws applicable to
the rights of creditors generally, including bankruptcy laws, (b) the security
interests previously granted in the Operative Documents remain perfected and
continue to secure the Obligations with the priority required by the Operative
Documents, and (c) no default or Event of Default presently exists under the
Operative Documents and no condition presently exists which, with the giving of
notice, the passing of time, or both, would cause such a default or Event of
Default. The Company further acknowledges that the Company's obligations
evidenced by the Operative Documents are not subject to any counterclaim,
defense or right of setoff, and the Company hereby releases the Purchaser and
its officers, directors, agents and attorneys from any claim, known or unknown,
that the Company may have against any or all of them as of the execution of this
Amendment. In this regard, the Company acknowledges that the Company is familiar
with Section 1542 of the Civil Code of the State of California, which provides
as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.
The Company hereby waives and relinquishes all rights and benefits which it has
or may have under any provision of applicable law that is to the same effect as
the above Section 1542.
Notwithstanding the foregoing, this release shall not affect the future
obligations of the Purchaser set forth in the Operative Documents.
7. Concurrently with the execution of this Amendment, the Company
shall pay all of the fees and expenses of the Purchaser and its counsel in
connection with this Amendment.
8. Concurrently with the execution of this Amendment, the Company
shall deliver to the Purchaser the following executed documents:
(a) This Agreement.
(b) Second Amendment to Subordinated Debenture.
(c) First Amendment to Convertible Preferred Stock Purchase
Agreement.
<PAGE>
(c) Certified copy of resolutions of the Company's Board of
Directors authorizing the execution, delivery and performance of
this Agreement and all related documents.
(d) Opinion letter issued by the Company's outside counsel,
addressing such matters as the Purchaser may reasonably require.
(e) Closing Statement evidencing the payment by the Company of all
expenses incurred by the Purchaser in connection with this
Amendment.
9. This Amendment shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of California.
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<PAGE>
Executed as of the date stated above.
ALTRIS SOFTWARE, INC.
By:______________________________________
Title:___________________________________
FINOVA MEZZANINE CAPITAL INC.
formerly known as
Sirrom Capital Corporation and
formerly doing business as Tandem Capital
By:______________________________________
Title:___________________________________
<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT TO SUBORDINATED DEBENTURE
This Second Amendment to Subordinated Debenture ("Amendment") is
made and entered into as of the 7th day of May, 1999, by and between ALTRIS
SOFTWARE, INC. (the "Company"), a California corporation, and FINOVA MEZZANINE
CAPITAL INC. f/k/a Sirrom Capital Corporation d/b/a Tandem Capital (the
"Purchaser"), a Tennessee corporation.
W I T N E S S E T H:
WHEREAS, the Purchaser and the Company have previously executed that
11.5% Subordinated Debenture Due June 27, 2002, in the principal amount of
$3,000,000, as amended by that First Amendment to Subordinated Debenture dated
November 1, 1998 (the "Debenture");
WHEREAS, the Purchaser and the Company wish to amend the Debenture;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are acknowledged, it is agreed as follows:
1. The Debenture is hereby amended by deleting the interest rate of
"11.5%" in line one of fourth paragraph and in its place inserting the rate of
"12.0%".
2. The Debenture remains in full effect, as amended hereby.
[the remainder of this page is intentionally left blank]
<PAGE>
Executed as of the date stated above.
ALTRIS SOFTWARE, INC.
By:______________________________________
Title:___________________________________
FINOVA MEZZANINE CAPITAL INC.
formerly known as
Sirrom Capital Corporation and
formerly doing business as Tandem Capital
By:______________________________________
Title:___________________________________
<PAGE>
EXHIBIT 10.4
RELEASE AGREEMENT
This RELEASE AGREEMENT (this "Agreement") is made and entered into by and
between ALTRIS SOFTWARE, INC. ("Altris"), a California corporation, and FINOVA
MEZZANINE CAPITAL INC. f/k/a SIRROM CAPITAL CORPORATION d/b/a TANDEM CAPITAL
("Finova"), a Tennessee corporation.
RECITALS
WHEREAS Altris and Finova previously entered into a Convertible Preferred Stock
Purchase Agreement dated June 27, 1997 (the "Convertible Preferred Stock
Purchase Agreement") and a Debenture Purchase Agreement dated June 27, 1997 (the
"Debenture Purchase Agreement"), pursuant to which (a) Finova purchased shares
of the Series D Convertible Preferred Stock of Altris for an aggregate purchase
price of $3,000,000, (b) Finova purchased a 11.5% Subordinated Debenture of
Altris in the principal amount of $3,000,000, and (c) Altris issued certain
Stock Purchase Warrants and agreed to issue certain additional contingent Stock
Purchase Warrants;
WHEREAS Altris made certain representations and warranties in connection with
the Convertible Preferred Stock Purchase Agreement and the Debenture Purchase
Agreement and the transactions contemplated thereby;
WHEREAS Altris thereafter restated its financial statements for the year ended
December 31, 1996, and its quarterly financial statements for each of the first
three quarters in the years ended December 31, 1996 and December 31, 1997
(collectively, the "Restatements") and amended certain reports previously filed
by Altris with the Securities and Exchange Commission (the "SEC Reports"),
including but not limited to its Annual Report on Form 10-K for 1996 and its
Quarterly Reports on Form 10-Q for each of the first three quarters of 1996 and
1997 (the "SEC Report Amendments");
WHEREAS Altris and Finova have entered into a First Amendment to Convertible
Preferred Stock Purchase Agreement dated as of May 7, 1999 and a Second
Amendment to Debenture Purchase Agreement dated as of May 7, 1999 (collectively,
the "Consent Agreements"), pursuant to which Altris agreed to exchange shares of
Series E Convertible Preferred Stock for Finova's Series D Convertible Preferred
Stock, and to amend the 11.5% subordinated Debenture and the Stock Purchase
Warrants issued or to be issued under the Convertible Preferred Stock Purchase
Agreement and the Debenture Purchase Agreement in consideration for Finova's
consent to certain transactions and Finova's release of any and all claims that
it has or may have, had or may have had, or may ever have in the future, arising
out of, resulting from, or relating to the Restatements or the SEC Report
Amendments;
NOW, THEREFORE, in consideration of the covenants and agreements contained in
this Agreement and in the Consent Agreements, Altris and Finova agree as
follows:
1. Finova, on behalf of itself and all of its parents, subsidiaries, affiliates,
licensees, divisions, predecessors, successors, assigns, shareholders,
directors, officers, employees, agents, administrators, representatives,
servants, heirs, executors, beneficiaries, and attorneys, absolutely and forever
releases and discharges Altris and all of its past and current parents,
subsidiaries, affiliates, licensees, divisions, predecessors, successors,
assigns, shareholders, directors, officers,
<PAGE>
employees, agents, administrators, representatives, servants, heirs, executors,
beneficiaries, and attorneys from any and all actions, claims, demands,
obligations, interests, financial or property losses, damages, debts,
liabilities, accounts, costs, attorneys' fees, expenses, liens, and causes of
action of every kind and nature whatsoever (whether known or unknown, suspected
or unsuspected) that Finova now has or may have, had or may have had, or at any
time in the future may have against any released person or entity arising out
of, resulting from, or relating to the Restatements or the SEC Report
Amendments, including but not limited to (a) any inaccuracy or misrepresentation
in, or any omission from, the financial statements as originally prepared by
Altris or the SEC Reports as originally filed with the Securities and Exchange
Commission, certain of which may have been presented to Finova and may have been
the subject of representations, warranties or covenants of Altris to Finova and
(b) any failure to timely file with the Securities and Exchange Commission or
deliver to Finova financial statements or reports for the periods covered by the
SEC Reports or the Restatements or the year ended December 31, 1997 or the
quarter ended March 31, 1998.
2. The release identified in Paragraph 1 of this Agreement extends to all claims
of every nature and kind whatsoever, known or unknown, suspected or unsuspected,
existing, claimed to exist, or that may hereafter arise out of or result from,
be connected with, pertain to, or relate in any way to the Restatements or the
SEC Report Amendments, and Finova waives the provisions of Section 1542 of the
California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
3. Finova acknowledges that it may discover facts different from or in addition
to those that it now knows or believes to be true with respect to the claims
released in Paragraph 1 of this Agreement, and Finova agrees that this Agreement
and the release contained in this Agreement are and will remain in effect in all
respects notwithstanding any such different or additional facts, or the
discovery of them.
4. It is expressly understood and agreed that this Agreement does not in any way
constitute an admission on the part of Altris of any unlawful or wrongful
conduct or of any liability. This Agreement may not be used for any evidentiary
or similar purpose, or be referenced in any way, in any litigation, arbitration
or other similar proceeding, except in the case of a dispute concerning this
Agreement or its enforcement.
5. Finova represents that it has not assigned to any person or entity all or any
portion of any of the claims released in this Agreement.
6. Finova and Altris acknowledge and warrant that they have been represented by
independent counsel of their own choice throughout all of the negotiations that
preceded the execution of this Agreement, have read all of this Agreement and
had it explained to them by their attorneys, and fully understand all of the
terms used in this Agreement and their significance.
7. This Agreement contains the entire Agreement and
understanding between Altris and Finova concerning the release of the claims
released in paragraph 1 above, and supersedes and replaces all prior
negotiations, proposed agreements, and agreements, written and oral, concerning
their respective rights and obligations relating to any of the claims released
in this
<PAGE>
Agreement. Altris and Finova, and each of them, acknowledge that no party to
this Agreement, nor any agent or attorney of any party, has made any promise,
representation, or warranty whatsoever, express or implied, not contained in
this Agreement or in the Consent Agreement to induce either party to execute
this Agreement. Altris and Finova, and each of them, further acknowledge that
they are not executing this Agreement in reliance on any promise,
representation, or warranty not contained in this Agreement or in the Consent
Agreement. This Agreement may be amended only by a written agreement executed by
each of the parties to this Agreement. No breach of any provision of this
Agreement can be waived unless that waiver is in writing and signed by the party
to be bound.
8. This Agreement is made and entered into in the State of California and is in
all respects to be interpreted, enforced and governed by the laws of the State
of California. The parties agree that this Agreement is to be construed as a
whole according to its fair meaning and is not to be construed for or against
any of the parties to this Agreement.
9. This Agreement may be executed in several counterparts, each of which will
constitute an original as against any party who signed it, and all of which will
constitute one and the same document. Altris and Finova further expressly agree
that this Agreement is binding on and will inure to the benefit of their heirs,
successors and assigns. The signatories to this Agreement further represent and
warrant that they have authority and approval to execute this Agreement on
behalf of the party they are identified as representing.
EXECUTED at ________, _________, this ____ day of _____________, 1999.
ALTRIS SOFTWARE, INC.
By:______________________________________
EXECUTED at _________, _______, this ____ day of __________, 1999.
FINOVA MEZZANINE CAPITAL INC. f/k/a SIRROM CAPITAL CORPORATION d/b/a TANDEM
CORPORATION
By_______________________________________
