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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 3)(1)
Altris Software, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
022091 10 2
- --------------------------------------------------------------------------------
(CUSIP Number)
Norman L. Smith
Solomon Ward Seidenwurm & Smith, LLP
401 B Street, Suite 1200
San Diego, CA 92101
(619) 231-0303
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 14, 2000
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 5 Pages)
- ----------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1
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CUSIP No. 022091 10 2 13D Page 2 of 5 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Spescom Limited
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
South Africa
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7 SOLE VOTING POWER
NUMBER OF 5,576,187
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,576,187
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,576,187
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[-]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
40.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
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CUSIP No. 022091 10 2 13D Page 3 of 5 Pages
This Amendment No. 3 to Schedule 13D (this "Amendment No. 3") amends and
supplements the Schedule 13D filed by Spescom Limited ("Spescom") by furnishing
the information set forth below. Unless set forth below, all previous Items are
unchanged. Capitalized terms used herein which are not defined herein have the
meanings given to them in the Schedule 13D previously filed with the Securities
and Exchange Commission. Items 3 - 7 are hereby supplemented as follows:
- --------------------------------------------------------------------------------
Item 3. Source and Amount of Funds or Other Consideration.
On January 14, 2000, Spescom entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") with Altris Software, Inc.("Altris"), under which Spescom
has agreed to purchase an additional 5,285,714 shares of Altris Common Stock for
$3.7 million. In addition, $3,000,000 of Subordinated Debt and $3,000,000 of
Convertible Preferred Stock of Altris owned by Spescom, along with related
accrued interest and dividends, will be converted into 9,528,096 shares of
Altris Common Stock.
In addition, in January 2000 Spescom acquired 1,428,571 shares of Altris
Common Stock from Altris upon the conversion of a $500,000 convertible loan made
by Spescom to Altris in September 1999.
The source of the funds for the purchase of the Altris Common Stock is Spescom's
working capital.
- --------------------------------------------------------------------------------
Item 4. Purpose of Transaction.
Spescom is purchasing the Altris Common Stock as a strategic investment due to
Altris's synergistic technology, established customer base, and established
sales and support infrastructure.
As part of the transaction,
- - Altris will transfer the balance of its 40% holding in Altris
Software Limited (UK)("ASL") to Spescom;
- - Spescom will sell all the rights to its EMS 2000 knowledge management
software to Altris, which will be integrated with Altris's eB technology;
- - the Altris board of directors will be reconstituted to incorporate two
Spescom representatives together with three current Altris board members;
- - ASL will retain the exclusive distribution rights for the Altris products
for all regions excluding North and South America, Mexico and the
Caribbean subject to achieving minimum annual royalty commitments.
Although the foregoing reflects activities presently contemplated by Spescom
with respect to Altris, the foregoing is subject to change at any time, and
there can be no assurance that Spescom will take any of the actions set forth
above. Except as set forth above, Spescom has no plans or proposals with respect
to any of the matters set forth in paragraphs (a) through (j) of Item 4 of
Schedule 13D.
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Item 5. Interest in Securities of the Issuer.
Before giving effect to the acquisition of the Altris Common Stock pursuant to
the Stock Purchase Agreement, Spescom beneficially owns approximately an
aggregate of 5,576,187 shares of Common Stock of Altris, which represents 40.5%
of the issued and outstanding shares of Common Stock of Altris (after giving
effect to the possible conversion and/or exercise of convertible Securities
owned by Spescom, based on accrual of interest and dividends through January 1,
2000).
Spescom has the sole power to vote or to direct the vote and the sole power to
dispose or to direct the disposition of all 5,576,187 shares of Altris Common
Stock beneficially owned by it.
The completion of the purchase of the Altris Common Stock under the Stock
Purchase Agreement is subject to a number of conditions, including approval of
Altris's shareholders at a special meeting, the receipt of certain consents and
other customary conditions.
After giving effect to the acquisition of the Altris Common Stock under the
Stock Purchase Agreement, Spescom will beneficially own an aggregate of
18,542,381 shares of Common Stock of Altris, which will represent approximately
69.3% of the issued and outstanding shares of Common Stock of Altris. Spescom
will have the sole power to vote or to direct the vote and the sole power to
dispose or to direct the disposition of all 18,542,381 shares of Altris Common
Stock it will beneficially own.
3
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
In connection with the purchase of the Common Stock, Spescom has entered into a
Stock Purchase Agreement with Altris. The Stock Purchase Agreement provides
Spescom certain registration rights for the Altris Common Stock. Such
registration rights include the right, subject to certain conditions, to demand
at any time and on up to three occasions that Altris register such Altris Common
Stock for resale.
- --------------------------------------------------------------------------------
Item 7. Exhibits
Exhibit
Number Description
1 Stock Purchase Agreement between Altris Software, Inc. and Spescom
Limited, dated January 14, 2000.
4
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
14 January 2000
-------------------------------------------
(Date)
/S/ HILTON ISAACMAN
-------------------------------------------
(Signature)
Hilton Isaacman, Director Corporate Finance
-------------------------------------------
(Name/Title)
Attention. Intentional misstatements or omissions of fact constitute federal
criminal violations (see 18 U.S.C. 1001).
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Exhibit 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), is entered into as of
January 14, 2000, by and between Altris Software, Inc., a California corporation
(the "Company") and Spescom Limited, a corporation organized under the laws of
South Africa ("Spescom"), who agree as follows:
RECITALS
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A. On December 9, 1999, Spescom acquired the following outstanding
securities of the Company from Finova Mezzanine Capital, Inc. ("Finova"):
(1) the Company's 11.5% Subordinated Debenture in the
principal amount of $3,000,000 issued as of June 27, 1997, as amended
by the First Amendment to Debenture Purchase Agreement dated November
1, 1998 and the Second Amendment to Debenture Purchase Agreement dated
May 7, 1999 (collectively, the "Debenture"); and
(2) 3,000 shares of Series E Convertible Preferred Stock of
the Company (the "Preferred Stock").
B. Spescom is the owner of the technology described on the attached
SCHEDULE A (the "EMS 2000 Technology"). The Company desires to acquire the EMS
2000 Technology from Spescom.
C. Spescom currently owns 60% of the outstanding capital stock of
Altris Software Limited, a corporation incorporated under the laws of the United
Kingdom ("Altris UK"). The Company, indirectly through its Subsidiaries, owns
the remaining 40% of the capital stock of Altris UK. Subject to the terms and
conditions set forth herein, Spescom desires to acquire all of the Company's
interests in Altris UK.
D. In September 1999, Spescom loaned $500,000 to the Company (the
"Loan"). Under the terms of the Loan, the principal of the Loan is convertible
at the option of Spescom into Common Stock of the Company on or before January
1, 2000 at $0.35 per share.
E. In November 1999, Spescom loaned $100,000 to the Company under the
terms of a promissory note (the "Note") attached as EXHIBIT A.
F. Subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to Spescom, and Spescom desires to purchase
from the Company, an aggregate of 16,242,381 shares of the Company's Common
Stock (the "Shares") on the terms set forth in this Agreement.
AGREEMENT
---------
1. DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
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1.1. The term "Affiliate" of a Person means any Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with such Person.
1.2. The term "Annual Plan" has the meaning set forth in Section
9.3.12.
1.3. The term "Closing" has the meaning set forth in Section 3.1.
1.4. The term "Closing Date" has the meaning set forth in Section
3.1.
1.5. The term "control" (including the terms "controlling,"
"controlled by" and "under common control") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting stock, by
contract, or otherwise.
1.6. The term "Damages" has the meaning set forth in Section 10.1.
1.7. The term "Employment Agreement" has the meaning set forth in
Section 7.8.
1.8. The term "Encumbrance" means any charge, claim, community
property interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
1.9. The term "ERISA" has the meaning set forth in Section 4.27.
1.10. The term "Escrow Funds" has the meaning set forth in Section
2.1.6.
1.11. The term "Exchange Act" has the meaning set forth in Section
4.8.
1.12. The term "Finova Instruments" shall mean the following
documents: (a) the Convertible Preferred Stock Purchase Agreement, dated as of
June 27, 1997, by and between the Company and Finova (the "Convertible Preferred
Stock Purchase Agreement"); (b) the First Amendment to Convertible Preferred
Stock Purchase Agreement, dated as of May 7, 1999, by and between the Company
and Finova (the "First Amendment to Convertible Preferred Stock Purchase
Agreement"); (c) the Debenture Purchase Agreement, dated as of June 27, 1997, by
and between the Company and Finova (the "Debenture Purchase Agreement"); (d) the
Registration Rights Agreement, dated as of June 27, 1997, by and between the
Company and Finova (the "Finova Registration Rights Agreement"); (e) the First
Amendment to Debenture Purchase Agreement, dated as of November 1, 1998, by and
between the Company and Finova (the "First Amendment to Debenture Purchase
Agreement"); (f) the Security Agreement, dated as of January 22, 1999, by and
between the Company and Finova (the "Security Agreement"); (g) the Second
Amendment to Debenture Purchase Agreement dated, May 7, 1999, by and between the
Company and Finova (the "Second Amendment to Debenture Purchase Agreement"); (h)
the Stock Purchase Warrant dated June 27, 1997, executed by the Company and
Finova, as amended; (i) the Debenture; and (j) the Preferred Stock.
1.13. The term "GAAP" has the meaning set forth in Section 4.7.
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1.14. The term "Indemnified Persons" has the meaning set forth in
Section 10.1.
1.15. The term "Material Adverse Event" means 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 the Company as
represented to Spescom herein or in any document delivered to Spescom in
connection herewith.
1.16. The term "Notice" has the meaning set forth in Section 11.9.
1.17. The term "Operative Documents" has the meaning set forth in
Section 4.1.1.
1.18. The term "PBGC" has the meaning set forth in Section 4.27.
1.19. The term "parties" means the Company and Spescom
collectively.
1.20. The term "Person" means an individual, partnership,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
1.21. The term "Proceeding" has the meaning set forth in Section
11.4.
1.22. The term "Purchase Price" has the meaning set forth in
Section 2.1.1.
1.23. The term "Registration Rights Agreement" has the meaning set
forth in Section 3.2.4.
1.24. The term "Reserve Bank Approval" has the meaning set forth in
Section 5.6.
1.25. The term "SEC" has the meaning set forth in Section 4.5.
1.26. The term "SEC Reports" has the meaning set forth in Section
4.8.
1.27. The term "Securities Act" has the meaning set forth in
Section 4.5.
1.28. The term "Spescom" shall mean Spescom Limited and/or another
entity designated by Spescom in writing and approved in accordance with Section
3.4 below.
1.29. The term "Spescom Nominee" has the meaning set forth in
Section 9.1.
1.30. The terms "Subsidiary" or "Subsidiaries" have the meaning set
forth in Section 4.1.2.
1.31. The term "Technology Transfer Agreement" has the meaning set
forth in Section 3.2.3.
3
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1.32. The term "Third Party Beneficiary" has the meaning set forth
in Section 11.12.
1.33. The term "Transactions" has the meaning set forth in Section
2.1.
2. TRANSACTIONS. Subject to the terms and conditions set forth in this
Agreement:
2.1. PURCHASE AND SALE OF SHARES. On the Closing Date (as defined
below), the Company will sell and issue to Spescom, and Spescom will purchase
from the Company, the Shares and the parties will consummate the other
transactions (collectively, the "Transactions") described in this Agreement for
the following consideration:
2.1.1. The Company will issue 5,285,714 Shares to Spescom at a
subscription price of $0.70 per share, for a total of $3,700,000 payable in cash
at the Closing (as defined below) (the "Purchase Price").
2.1.2. The Company will issue 9,528,096 Shares to Spescom in
exchange for delivery to the Company of the Debenture and the Preferred Stock
(including any right to accrued interest and dividends).
2.1.3. The Company will pay Spescom the sum of $200,000
payable in cash at the Closing for transfer of the EMS 2000 Technology to the
Company.
2.1.4. The Company shall pay the Note out of the proceeds of
the Purchase Price or if the Transactions are not approved in accordance with
Section 6.3 below by April 15, 2000, Spescom shall have the option to convert
all amounts then due under the Note into Shares in the Company Common Stock at a
price of $0.70 per share.
2.1.5. The Company will cause all of the shares in the capital
stock of Altris UK held by the Company or its Subsidiary ("Altris UK Shares") to
be transferred to Spescom free and clear of all Encumbrances.
2.1.6. Spescom will release to the Company the sum of $200,000
held in escrow pursuant to Section 5.3 of that certain Agreement dated May 7,
1999 between Spescom, Spescom CIT (Pty) Limited, the Company, Altris
International Limited, Altris Group Plc and Altris UK (the "Escrow Funds") (the
"May 1999 Agreement").
3. CLOSING.
3.1. The consummation of the Transactions shall take place at the
offices of Solomon Ward Seidenwurm & Smith, LLP, 401 B Street, Suite 1200, San
Diego, California as soon thereafter as all the conditions set forth in this
Agreement have been satisfied or waived, or such other time as the parties may
agree, but in no event later than April 15, 2000 (which time and place are
designated herein as the "Closing" and the date thereof as the "Closing Date").
3.2. At the Closing, the Company shall deliver the following to
Spescom:
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3.2.1. certificates representing the Shares;
3.2.2. the certificates and legal opinions referred to in
Section 7 of this Agreement;
3.2.3. a duly executed copy of the Technology Transfer
Agreement, in substantially the form attached to this Agreement as EXHIBIT B
(the "Technology Transfer Agreement");
3.2.4. a duly executed copy of the Registration Rights
Agreement in the form attached to this Agreement as EXHIBIT C (the "Registration
Rights Agreement");
3.2.5. a certified check or other credit acceptable to Spescom
in the amount of $200,000 pursuant to Section 2.1.3 of this Agreement; and
3.2.6. a certified check or other credit acceptable to Spescom
in an amount necessary to pay the Note in full.
3.2.7. certificates representing the Altris UK Shares, duly
endorsed in favor of Spescom, or other documentation acceptable to Spescom
evidencing the transfer of the Altris UK Shares to Spescom.
3.3. At the Closing, Spescom will deliver the following to the
Company:
3.3.1. the Purchase Price, payable by certified check payable
to the Company or by wire transfer of immediately available funds to such
account as the Company may designate in writing to Spescom;
3.3.2. the original Debenture;
3.3.3. the original stock certificates for the Preferred Stock;
3.3.4. a duly executed copy of the Technology Transfer
Agreement;
3.3.5. a duly executed copy of the Registration Rights
Agreement; and
3.3.6. the Note endorsed by Spescom as canceled.
3.4. Spescom may designate in writing another entity to acquire some
or all of Spescom's rights under this Agreement providing that if such designee
is not an Affiliate of Spescom then such designation shall require Altris'
approval which shall not be unreasonably withheld. Spescom will remain liable
for its obligations under this Agreement notwithstanding any designation or
assignment under this Section.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Spescom that the following are true and accurate as
of the date of this Agreement. Except as may be set forth in the Disclosure
Schedule attached hereto:
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4.1. CORPORATE STATUS.
4.1.1. The Company 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 the Company in
connection with this Agreement (collectively, the "Operative Documents"). The
Company 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 cause a Material Adverse
Event.
4.1.2. SCHEDULE 4.1.2 sets forth a complete list of each
corporation, partnership, joint venture, limited liability company or other
business organization in which the Company owns, directly or indirectly, any
capital stock or other equity interest (the "Subsidiary" or, collectively, the
"Subsidiaries"), or with respect to which the Company 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 the Company does
not directly or indirectly own 100% of the outstanding equity interests in the
entities so listed on SCHEDULE 4.1.2, the percentage interest so owned by the
Company or any Subsidiary. Altris UK shall not be regarded as a Subsidiary for
the purpose of this Agreement. 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 SCHEDULE 4.1.2, 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 cause a Material Adverse Event. All of the outstanding shares
of capital stock, or other equity interest, of each Subsidiary owned, directly
or indirectly, by the Company have been validly issued, are fully paid and
nonassessable, and are owned by the Company free and clear of all liens,
charges, security interests, or encumbrances.
4.2. CAPITALIZATION.
4.2.1. The authorized capital stock of the Company consists of
(i) 1,000,000 shares of Preferred Stock, of which 3,000 shares of Series E
Preferred Stock are issued and outstanding, and (ii) 30,000,000 shares of Common
Stock, of which 13,101,734 shares are issued and outstanding. 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 Shares, except as set forth in the Finova
Instruments, the May 1999 Agreement and Section 4.2.2 below.
4.2.2. The Company has not granted, or agreed to grant or
issue, any options, warrants or rights to purchase or acquire from the Company
any shares of capital stock of the Company, there are no securities outstanding
or committed to be issued by the Company or any Subsidiary which are convertible
into or exchangeable for any shares of capital stock or other securities of the
Company, and there are no contracts, commitments, agreements, understandings,
6
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arrangements or restrictions as to which the Company is a party, or by which it
is bound, requiring or restricting the issuance of any shares of capital stock
or other securities of the Company, whether or not outstanding except for (i)
the Finova Instruments, (ii) the Initial Warrants and the Additional Warrants
issued pursuant to the Finova Instruments, (iii) options to purchase an
aggregate of 83,500 shares of the Company's Common Stock outstanding under its
1987 Stock Option Plan, (iv) options to purchase an aggregate of 1,086,750
shares of the Company's Common Stock outstanding under its Amended and Restated
1996 Stock Incentive Plan, (v) 2,304,271 shares of the Company's Common Stock to
be issued pursuant to the settlement of certain securities class action lawsuits
against the Company approved by the United States District Court for the
Southern District of California on July 30, 1999, (vi) shares of the Company's
Common Stock to Broadmark as consideration for certain advice rendered by
Broadmark in connection with the Transactions, and (vii) the Note. 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.
4.2.3. The Shares that are being purchased by Spescom, 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 applicable state and federal securities laws.
4.2.4. The Company is the lawful owner and holder of the Altris
UK Shares it owned as of the May 1999 Agreement, free and clear of all
Encumbrances except for a lien over all of the Company's assets in favor of
Merrill Lynch Business Financial Services, Inc.
4.3. AUTHORIZATION. The Company 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
Shares hereunder, the delivery of the Altris UK Shares, the execution and
delivery of each other document in connection herewith or therewith to which the
Company is a party, and the performance by the Company of its obligations
hereunder or thereunder are within the corporate powers of the Company 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 the Company, (ii) except to the extent of the required consents as
contemplated by Section 6.4, any material agreement to which the Company 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 Encumbrance upon any of the property or assets of the Company
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 the
Company in connection herewith or therewith, is duly authorized to act on behalf
of the Company.
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4.4. VALIDITY AND BINDING EFFECT. Each of the Operative Documents is
the legal, valid and binding obligation of the Company, enforceable against the
Company 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.
4.5. CONTRACTS AND OTHER COMMITMENTS. Except as disclosed on
SCHEDULE 4.5 and other than as filed by the Company with the Securities and
Exchanges Commission ("SEC") as an exhibit pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act of 1933, as amended (the "Securities
Act"), the Company 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 the Company or any Subsidiary is obligated or by
which the Company is bound.
4.6. LITIGATION. Except as previously disclosed in writing to
Spescom, there is no litigation, arbitration, claim, proceeding or investigation
pending or threatened in writing to which the Company or any Subsidiary is a
party or to which any of its respective properties or assets is the subject
which, if determined adversely to the Company or such Subsidiary, would
individually or in the aggregate cause a Material Adverse Event.
4.7. FINANCIAL STATEMENTS. The consolidated financial statements of
the Company and its Subsidiaries for the fiscal years ended December 31, 1998,
1997, and 1996 (as subsequently restated), and the unaudited consolidated
financial statements as of and for the nine months ended September 30, 1999, and
the related notes, copies of which the Company previously has delivered to
Spescom, fairly present the financial position, results of operations, cash
flows and changes in stockholders' equity of the Company 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). No financial
statements of any other Person(s) are required by GAAP to be included in the
consolidated financial statements of the Company.
4.8. SEC REPORTS. The Company's Common Stock is listed for trading
on the OTC Bulletin Board and has been duly registered with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Since June
1998, the Company has timely filed all reports, registrations, proxy or
information statements, and all other documents, together with any amendments
required to be made thereto, required to be filed with the SEC under the
Securities Act and the Exchange Act (collectively, the "SEC Reports"). As of
their respective dates, the SEC Reports filed since June 1998 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.
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4.9. ABSENCE OF CHANGES. Except as set forth in SCHEDULE 4.9, the
Company's unaudited financial statements for the nine-month period ended
September 30, 1999 and the SEC Reports, since December 31, 1998, and except as
contemplated by this Agreement or by the Transactions, (i) neither the Company
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 the Company, (ii) neither the Company 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 the Company, 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 the Company or any Subsidiary, taken as a whole.
4.10. NO DEFAULTS. Except as set forth on SCHEDULE 4.10 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 the Company or any Subsidiary
exists under this Agreement or any of the Operative Documents, or under any
contract, or other material instrument or agreement to which the Company or any
Subsidiary is a party or by which the Company 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.
4.11. COMPLIANCE WITH LAW. Except as disclosed in the SEC Reports,
the Company has complied with and 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.
4.12. TAXES. Except as set forth on SCHEDULE 4.12, the Company 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), 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 the Company does not know of
any proposed assessment for additional taxes or any basis therefor. No tax liens
have been filed against the Company or its properties. The Company'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, 1995, or closed by applicable statutes of limitation.
4.13. CERTAIN TRANSACTIONS. Except as set forth in the proxy
statements filed by the Company with the SEC and except as to indebtedness
incurred in the ordinary course of business and approved by the Board of
Directors of the Company, neither the Company 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 the Company 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 the Company or
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any Subsidiary is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company or any
Subsidiary, except that the Company'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 the Company. Except as set forth in
the proxy statements filed by the Company with the SEC, no officer or director
of the Company or any Subsidiary or any member of their immediate families is,
directly or indirectly, interested in any material contract with the Company or
any Subsidiary that would require disclosure under Item 404 of Regulation S-K.
Neither the Company nor any Subsidiary is a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
4.14. TITLE TO PROPERTY. The Company 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, other than (a)
liens for taxes not yet due, (b) imperfections 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 the Company 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 (e) 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 the Company or any Subsidiary are held under valid existing
and enforceable leases, except which are not material and do not interfere with
the use to be made of such buildings or property by the Company.
4.15. INTELLECTUAL PROPERTY.
4.15.1. To the Company's knowledge, the Company 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 Section 4.15.1 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 Section 4.15.3 hereof and only to the knowledge of the Company. 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 the
Company or any Subsidiary or marketing studies conducted by the Company, all of
which the Company 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.
4.15.2. To the Company's knowledge, the Company 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 the Company or
any Subsidiary or used or required by the Company or any Subsidiary in the
operation of its business as presently being conducted; provided, however, that
this Section 4.15.2 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 Section 4.15.3 hereof and only to the knowledge
of the Company.
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4.15.3. The Company has no knowledge of any infringements or
conflict with asserted rights of others with respect to copyrights, patents,
trademarks, service marks, trade names, trade secrets or other intangible
property rights or know-how which could cause a Material Adverse Event. To the
Company's knowledge, no products or processes of the Company 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 the Company. The Company follows such procedures as the
Company deems necessary or appropriate to provide reasonable protection of the
Company's trade secrets and proprietary rights in intellectual property of all
kinds. To the knowledge of the Company, no person employed by or affiliated with
the Company has employed or proposes to employ any trade secret or any
information or documentation proprietary to any former employer, and to the
knowledge of the Company, no person employed by or affiliated with the Company
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 the Company.
4.16. ENVIRONMENTAL MATTERS. The Company 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. The Company 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. The Company 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, 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
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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 the
Company or its business, operations, assets, equipment, property, leaseholds or
other facilities. The Company 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).
4.17. ACCOUNTING MATTERS. The Company 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 the Company and each of
its Subsidiaries; (iii) access to the assets of the Company 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 the
Company and each of its Subsidiaries are compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.18. DISTRIBUTIONS TO THE COMPANY. Except for limitations existing
under applicable law, no Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distributions on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary, or from transferring any of
such Subsidiary's property or assets to the Company or any other Subsidiary of
the Company.
4.19. PRIOR SALES. All offers and sales of the Company'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.
4.20. REGULATORY COMPLIANCE. The conduct of the business and the
ownership of the assets of the Company is not dependent on any license, permit,
approval, waiver or other authorization of any federal, state or local
governmental or regulatory body which the Company 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 the Company are in full force and effect.
4.21. MARGIN REGULATIONS. The Company 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.
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4.22. LIMITED OFFERING. Subject in part to the truth and accuracy of
Spescom's representations set forth in this Agreement, the offer, sale and
issuance of the Shares is exempt from the registration requirements of the
Securities Act, and neither the Company nor any authorized agent acting on its
behalf has taken or will take any action hereafter that would cause the loss of
such exemption.
4.23. REGISTRATION OBLIGATIONS. Except as described in SCHEDULE
4.23, the Company 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.
4.24. INSURANCE. The Company 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.
4.25. 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 the Company in connection with
the Company's valid execution, delivery, or performance of this Agreement by the
Company, except such filings as have been made prior to the Closing, notices of
sale required to be filed with the SEC 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
therefor.
4.26. EMPLOYEES. To the best of the Company's knowledge, there is no
strike, labor dispute or union organization activities pending or threatened
between it and its employees. None of the Company's employees belongs to any
union or collective bargaining unit. To the knowledge of the Company, the
Company has complied in all material respects with all applicable state and
federal equal opportunity and other laws related to employment. To the knowledge
of the Company, no employee of the Company 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 the Company, or any other party because
of the nature of the business conducted or presently proposed to be conducted by
the Company or to the use by the employee of his or her best efforts with
respect to such business. Other than as set forth on SCHEDULE 4.26 hereto and
other than the Company's 1987 Stock Option Plan and its Amended and Restated
1996 Stock Incentive Plan, the Company 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. There are no threatened or pending claims by or on behalf of any such
benefit plan, or any employee covered under any such plan that allege a breach
of fiduciary duties or violation of other applicable state or federal law, nor
is there any basis for such a claim. To the knowledge of the Company, it is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate employment with the Company, nor does the Company 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 the Company is terminable at the will
of the Company.
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4.27. ERISA. The Company 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 the Company nor any commonly
controlled entity (as defined in ERISA) has completely or partially withdrawn
from a multiemployer plan (as defined in ERISA). The Company 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 the Company or any commonly controlled
entity to the PBGC or the Plan under Title IV or ERISA; and neither the Company
nor any commonly controlled entity has incurred any liability to the PBGC under
ERISA.
4.28. FEES/COMMISSIONS. The Company 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.
4.29. DISCLOSURE. No representation or warranty made as of the date
hereof by the Company 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.
4.30. NO UNDISCLOSED LIABILITIES. The Company has no debt, liability
or obligation of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) required by GAAP to be reflected or reserved
against on its balance sheet, except for liabilities or obligations reflected or
reserved against in the consolidated audited balance sheet of the Company and
its Subsidiaries for the fiscal year ended December 31, 1998, and the unaudited
consolidated balance sheet as of and for the nine months ended September 30,
1999, and current liabilities incurred in the ordinary course of business since
the respective dates thereof.
4.31. SURVIVAL. The representations and warranties of the Company
contained in this Agreement shall survive until the first anniversary of the
date of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF SPESCOM. Spescom represents and
warrants to the Company that the following are true and accurate as of the date
of this Agreement. Spescom, as of the Closing Date, makes the following
representations and warranties to the Company:
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5.1. CORPORATE STATUS. Spescom is a corporation duly organized,
validly existing and in good standing under the laws of South Africa 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 or delivered by Spescom in connection
herewith.
5.2. AUTHORIZATION. Spescom has full legal right, power and
authority to enter into and perform its obligations under this Agreement and any
other document executed and delivered by Spescom in connection herewith, without
the consent or approval of any other person, firm, governmental agency or other
legal entity. The execution and delivery of this Agreement and any other
document executed and delivered by Spescom in connection herewith, and the
performance by Spescom of its obligations hereunder and/or thereunder are within
the corporate powers of Spescom, have received all necessary governmental
approvals, if any were required, have been duly authorized by all necessary
corporate action properly taken, and do not and will not contravene or conflict
with (i) the Memorandum and Articles of Association of Spescom, (ii) any
material agreement to which Spescom is a party or by which it or any of its
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 Spescom 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(s) executing this Agreement and any other
document executed and delivered by Spescom in connection herewith, is duly
authorized to act on behalf of Spescom.
5.3. VALIDITY AND BINDING EFFECT. This Agreement and any other
document executed and delivered by Spescom in connection herewith are the legal,
valid and binding obligations of Spescom, enforceable against it in accordance
with their respective terms.
5.4. NONRECOURSE ASSIGNMENT. Spescom is the owner of the Debenture
and the Preferred Stock, free and clear of all Encumbrances. Spescom's sale and
assignment of the Debenture and the Preferred Stock shall be made without
recourse against Spescom and without any warranties by Spescom except as
expressly set forth in this Agreement.
5.5. ACCREDITED INVESTOR; INVESTMENT INTENT. In connection with the
issuance and sale to Spescom of the Shares pursuant to this Agreement, Spescom
further represents and warrants to the Company as follows:
5.5.1. Spescom is acquiring the Shares for its own account as
principal, for investment, and not with a view to the distribution or resale
thereof, in whole or in part, in violation of the Securities Act or any
applicable state securities law, and Spescom has no present intention of
selling, negotiating or otherwise disposing of the Shares.
5.5.2. (i) The Shares have not been registered under the
Securities Act, and as such, such Shares are "restricted securities" as defined
in Rule 144; (ii) the Shares may not be resold unless they are registered under
the Securities Act or unless an exemption therefrom is available; (iii) Spescom
understands that the availability of Rule 144 for the sale and transfer of the
Shares is limited, and that certain conditions and events must exist and occur
before Spescom would be able to utilize Rule 144 in connection with the sale or
other disposition of the Shares.
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5.5.3. Spescom is an "accredited investor" under Rule 501(a)
under the Securities Act. Spescom understands that its investment in the Shares
involves a high degree of risk. Spescom has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investments contemplated by this Agreement. Spescom has been
afforded, to the satisfaction of Spescom, the opportunity to review the
financial and other information which it has requested from the Company, and to
obtain such additional publicly available information concerning the Company and
its business, and to ask such questions and receive such answers (based upon
publicly available information), as Spescom deems necessary to make an informed
investment decision.
5.5.4. Spescom understands that the Shares are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of the U.S. securities laws and that the Company is relying of the
truth and accuracy of, and Spescom's compliance with, the representations,
warranties, agreements, acknowledgments and understandings set forth herein in
order to determine the availability of such exemptions and the eligibility of
Spescom to acquire the Shares.
5.5.5. Notwithstanding anything in this Section 5.5 to the
contrary, Spescom may transfer and assign its rights and obligations under this
Agreement to one or more of its wholly-owned subsidiaries, provided that any
such subsidiary shall agree to become bound by the terms of this Agreement,
including the representations and warranties contained in this Section 5.5, and
provided, further that Spescom shall remain liable for the performance of its
obligations hereunder notwithstanding any such assignment.
5.6. GOVERNMENTAL CONSENTS. Except for the approval of the South
Africa Reserve Bank under the South Africa Exchange Control Regulations for
consummation of the Transaction ("Reserve Bank Approval"), Spescom is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court of governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or purchase the
Shares in accordance with terms hereof. Spescom shall use its commercially
reasonable best efforts to obtain Reserve Bank Approval.
5.7. NO DEFAULT. Spescom has no actual knowledge of any breach by
the Company of the Company's representations and warranties in the May 1999
Agreement.
5.8. SURVIVAL. The representations and warranties of Spescom
contained in this Agreement shall survive until the first anniversary of the
date of this Agreement.
6. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Transactions is subject to the satisfaction of, or
waiver by the Company of, the following conditions prior to or contemporaneously
with the Closing, unless otherwise indicated:
6.1. The representations and warranties made by Spescom in this
Agreement shall be true and correct in all material respects as of the Closing,
as if made at and as of the Closing Date, and Spescom shall have complied with
the covenants, agreements, and obligations set forth in this Agreement and
required to be performed by it at or before the Closing;
6.2. There shall not be any order, decree, injunction, or judgment
enjoining the consummation of this Agreement;
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6.3. The shareholders of the Company shall have approved the sale
and issuance of the Shares to Spescom and the other Transactions; and
6.4. Any consents or approvals required to be obtained from any
third party, and any amendments of agreements which shall be necessary to permit
the consummation of the Transactions on the Closing Date, shall have been
obtained and all such consents or amendments shall be satisfactory in form and
substance to the Company and the Company's counsel.
6.5. Spescom shall have delivered to the Company a certificate,
dated the Closing Date, signed by the Managing Director or Financial Director of
Spescom, substantially in the form attached hereto as EXHIBIT D;
6.6. All proceedings taken in connection with the Transactions, and
all documents necessary to the consummation thereof, shall be reasonably
satisfactory in form and substance to the Company and the Company's counsel, and
Spescom shall have delivered to the Company a certificate, dated the Closing
Date, signed by the Secretary of Spescom, substantially in the form attached
hereto as EXHIBIT E;
6.7. The Company shall have received the opinion of Solomon Ward
Seidenwurm & Smith, LLP, counsel for Spescom, dated the Closing Date, addressed
to the Company, in form and substance satisfactory to the Company's counsel, and
covering the matters set forth in EXHIBIT F hereto.
7. CONDITIONS TO OBLIGATIONS OF SPESCOM. The obligation of Spescom to
consummate the Transactions is subject to the satisfaction of, or the waiver by
Spescom of, the following conditions prior to or contemporaneously with the
Closing, unless otherwise indicated:
7.1. The representations and warranties made by the Company in this
Agreement shall be true and correct in all material respects as of the Closing,
as if made at and as of the Closing Date, and the Company shall have complied
with the covenants, agreements, and obligations set forth in this Agreement and
required to be performed by it at or before the Closing;
7.2. There shall not be any order, decree, injunction, or judgment
enjoining the consummation of this Agreement;
7.3. The shareholders of the Company shall have approved the sale
and issuance of the Shares to Spescom and the other Transactions;
7.4. The Company's Board of Directors shall have adopted the Annual
Plan for fiscal year during which the Closing occurs.
7.5. Any consents or approvals required to be obtained from any
third party, and any amendments of agreements which shall be necessary to permit
the consummation of the Transactions on the Closing Date, shall have been
obtained and all such consents or amendments shall be satisfactory in form and
substance to Spescom and Spescom's counsel;
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7.6. The Company shall have issued to Spescom a new Stock Purchase
Warrant to replace the Warrant Spescom purchased from Finova;
7.7. The Company shall have issued 1,428,571 Shares to Spescom in
consideration of the conversion of the Loan into Common Stock of the Company.
7.8. The Company shall have entered into an employment agreement
with Roger Erickson, on terms reasonably satisfactory to Spescom (the
"Employment Agreement");
7.9. Spescom shall have obtained the Reserve Bank Approval.
7.10. The Company shall have issued to Spescom the following
certificates of public officials, in each case as of a date within ten days of
the Closing Date:
7.10.1. the Articles of Incorporation of the Company certified
by the Secretary of State of the State of California; and
7.10.2. a certificate as to the legal existence and good
standing of the Company from the Secretary of State of the State of California.
7.11. The Company shall have delivered to Spescom a certificate,
dated the Closing Date, signed by the President or Chief Financial Officer of
the Company, substantially in the form attached hereto as EXHIBIT G;
7.12. All proceedings taken in connection with the Transactions, and
all documents necessary to the consummation thereof, shall be reasonably
satisfactory in form and substance to Spescom and Spescom's counsel, and the
Company shall have delivered to Spescom a certificate, dated the Closing Date,
signed by the Secretary of the Company, substantially in the form attached
hereto as EXHIBIT H;
7.13. Spescom shall have received the opinion of Gibson, Dunn &
Crutcher LLP, counsel for the Company, dated the Closing Date, addressed to
Spescom, in form and substance satisfactory to Spescom's counsel, and covering
the matters set forth in EXHIBIT I hereto.
8. FAILURE TO CLOSE.
8.1. If on the Closing Date the Company fails to tender to Spescom
the Shares to be issued to Spescom for any reason other than the failure of the
shareholders of the Company to approve the Transactions, or if the conditions
specified in this Section 8 have not been fulfilled, Spescom may thereupon elect
to be relieved of all further obligations under this Agreement, without
prejudice to any other Spescom's rights or remedies. Without limiting the
foregoing, if the conditions specified in this Section 8 have not been
fulfilled, Spescom may waive compliance by the Company with any such condition
to such extent as Spescom, in Spescom's sole discretion, may determine. Nothing
in this Section 8.1 shall operate to relieve the Company of any of its
obligations hereunder or to waive any of Spescom's rights against the Company.
8.2. If the Company fails to consummate this Agreement solely for
non-fulfillment of the condition specified in Section 6.3, then:
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8.2.1. Subject to the fulfillment, or waiver by the Company, of
the conditions in Sections 6.1, 6.2, 6.4 and 6.5, the Company will cause 40% of
the outstanding shares of the capital stock of Altris UK to be transferred to
Spescom against delivery under Section 8.2.2 below;
8.2.2. Subject to the fulfillment, or waiver by Spescom, of the
conditions specified in Sections 7.1 and 7.11, Spescom will release to the
Company the Escrow Funds; and
8.2.3. Spescom may thereupon elect to be relieved of all
further obligations under this Agreement without prejudice to any other
Spescom's rights or remedies.
9. COVENANTS.
9.1. BOARD OF DIRECTORS DESIGNEES. Effective upon the Closing, (i)
the size of the Board of Directors of the Company shall be five (5) directors,
and (ii) two nominees of Spescom shall be elected as directors (the "Spescom
Nominees"). For so long as Spescom or any Affiliate of Spescom holds at least
thirty-three (33%) of the Shares, the Company agrees to include two nominees of
Spescom in management's slate of nominees to be elected to the Board of
Directors of the Company and to recommend to the stockholders the election of
such nominees. Any Spescom Nominees 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 or employee directors of
the Company, as the case may be, including indemnity and advancement of expenses
to the fullest extent permitted under applicable law.
9.2. USE OF PROCEEDS. The Purchase Price shall be deposited in a
separate bank account in the name of the Company. Any expenditure, disbursement,
commitment, or other use by the Company of the Purchase Price that is not
provided for in the applicable budget in the Annual Plan shall require: (a) if
more than $100,000 (i) the approval of the Company's Board of Directors, and
(ii) the unanimous approval of both Spescom Nominees, and (b) if less than
$100,000 but more than $25,000, the approval of one of Spescom's Nominees.
9.3. ADDITIONAL COVENANTS. From and after the Closing Date:
9.3.1. CORPORATE EXISTENCE, ETC. The Company will preserve and
keep in force and effect, and will cause each Subsidiary to preserve and keep in
force and effect, its corporate existence and good standing in the state of
incorporation thereof, its qualification and good standing as a foreign
corporation in each jurisdiction where such qualification is required by
applicable law except where the failure to so qualify would not constitute a
Material Adverse Event, and all licenses and permits necessary to the proper
conduct of its business.
9.3.2. MAINTENANCE, ETC. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties and assets which are used or useful in the conduct of its business
(whether owned in fee or pursuant to a leasehold interest) in good repair and
working order and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times the efficiency thereof
shall be maintained.
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9.3.3. NATURE OF BUSINESS. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be substantially changed from the general
nature of the business engaged in by the Company and its Subsidiaries on the
date of this Agreement.
9.3.4. INSURANCE. The Company will maintain, and will cause
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.
9.3.5. TAXES, CLAIMS FOR LABOR AND MATERIALS. The Company will
promptly pay and discharge, and will cause each Subsidiary promptly to pay and
discharge, (i) all lawful taxes, assessments and governmental charges or levies
imposed upon the property or business of the Company or such Subsidiary,
respectively, (ii) all trade accounts payable in accordance with usual and
customary business terms, and (iii) all claims for work, labor or materials,
which if unpaid might become a lien or charge upon any property of the Company
or such Subsidiary; provided the Company or such Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of the Company or such Subsidiary or any material
interference with the use thereof by the Company or such Subsidiary, and (ii)
the Company or such Subsidiary shall set aside on its books, reserves deemed by
it to be adequate with respect thereto.
9.3.6. COMPLIANCE WITH LAWS, AGREEMENTS, ETC. Except where
failure to do so does not and would not constitute a Material Adverse Event, the
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (i) all applicable federal, state and
local laws, regulations and ordinances, and such laws, regulations and
ordinances of foreign jurisdictions, governing such business operations and the
use and ownership of such property, and (ii) all agreements, licenses,
franchises, indentures and mortgages to which the Company is a party or by which
the Company or any of its properties is bound. Without limiting the foregoing,
the Company shall pay all of its indebtedness promptly and substantially in
accordance with the terms thereof.
9.3.7. ERISA MATTERS. If the Company has in effect, or
hereafter institutes, a Plan, then the following covenants shall be applicable
during such period as any such Plan shall be in effect: (i) throughout the
existence of the Plan, the Company's contributions under the Plan will meet the
minimum funding standards required by ERISA and the Company will not institute a
distress termination of the Plan; and (ii) the Company will send to Spescom a
copy of any notice of a reportable event (as defined in ERISA) required by ERISA
to be filed with the Labor Department or the PBGC, at the time that such notice
is so filed.
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9.3.8. BOOKS AND RECORDS: RIGHTS OF INSPECTION. The Company
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company or
such Subsidiary, in accordance with GAAP consistently maintained. The Company
shall permit a representative of Spescom to visit any of its properties and
inspect its corporate books and financial records, and will discuss its
accounts, affairs and finances with a representative of Spescom, during
reasonable business hours, at such times as Spescom may reasonably request.
9.3.9. REPORTS. The Company will furnish to Spescom the
following:
9.3.9.1. QUARTERLY STATEMENTS. As soon as available and
in any event within 45 days after the end of each quarterly fiscal period
(except the last) of each fiscal year, copies of the following, in each case
setting forth in comparative form the consolidated figures for the preceding
fiscal year, all in reasonable detail:
(a) consolidated balance sheets of the Company
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,
(b) consolidated statements of income of the
Company 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
(c) consolidated statements of cash flows of
the Company 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.
9.3.9.2. ANNUAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the Company,
copies of the following, in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in reasonable detail and
accompanied by a report thereon of a firm of independent public accountants of
recognized national standing or a firm reasonably acceptable to Spescom:
(a) consolidated balance sheets of the Company
and Subsidiaries as of the close of such fiscal year, and
(b) consolidated statements of income and
changes in shareholders equity and cash flows of the Company and Subsidiaries
for such fiscal year.
9.3.10. SEC AND OTHER REPORTS. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each periodic or
current report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the SEC or any
successor agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any governmental
agency, federal or state, having jurisdiction over the Company or any of its
Subsidiaries. The Company specifically covenants to timely file each such item
required to be filed with the SEC and each state requiring securities laws
filings; and
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9.3.11. PIPELINE REPORT AND OTHER REQUESTED INFORMATION. Within
five business days of request by Spescom, the Company's internal pipeline
report, and with reasonable promptness, such financial data and other
information relating to the business of the Company as Spescom may from time to
time reasonably request.
9.3.12. ANNUAL PLAN. The Board of Directors shall adopt no
later than the thirty-first day of each fiscal year, a financial plan for the
Company, which shall include at least a projection of income and expenses
(including capital expenditures) and a projected cash flows statement for each
quarter in such fiscal year, and a projected balance sheet as of the end of each
quarter in such fiscal year (the "Annual Plan"). The Annual Plan may only be
amended or revised, in any material manner, with the written approval of the
Board of Directors and both Spescom Nominees.
9.3.13. FURTHER ASSURANCES. The Company and Spescom will each
take all actions reasonably requested by the other party to effect the
Transactions and the other Operative Documents.
9.3.14. CONFIDENTIALITY. Spescom shall maintain in confidence
all confidential information it receives pursuant to Sections 9.3.8 or 9.3.11
above. Spescom acknowledges having been informed and advised of its obligations
under applicable securities laws with respect to trading on "insider
information."
9.3.15. REGISTRATION RIGHTS. Spescom shall be entitled to
register the Shares as provided in the Registration Rights Agreement.
9.3.16. CONFLICT. If the rights set forth in Sections 9.3.4
through 9.3.12 are different than any other agreement subsisting between the
Company and Spescom, the provisions of this Agreement shall prevail and apply.
9.3.17. EXPIRATION OF COVENANTS. The covenants contained in
this Section 9.3 shall expire on the earlier of (a) the fifth anniversary of the
Closing Date, or (b) such date when Spescom (together with its Affiliates) holds
less than 15% of the Shares.
9.4. EMPLOYMENT OF JOSEPH BUCKLEY. Effective as of the Closing,
Spescom shall ensure that Joseph Buckley enters into an employment relationship
with the Company on terms substantially similar the terms of his present
employment with Spescom.
9.5. MODIFICATION OF FINOVA INSTRUMENTS. Effective as of the
Closing, the Finova Instruments shall be modified as follows:
9.5.1. CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT.
Effective as of the Closing, the following provisions of the Convertible
Preferred Stock Agreement shall terminate and be of no further force or effect.
Section 1.4 (Contingent Warrants), Article 7 (Conversion of Preferred Stock),
Section 8.2 (Registration Rights) and Article 9 (Events of Default; Remedies).
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9.5.2. DEBENTURE PURCHASE AGREEMENT. Effective as of the
Closing, the following provisions of the Debenture Purchase Agreement shall
terminate and be of no further force or effect. Section 1.3 (Additional
Warrants), Article 7 (Subordination of Debentures), Section 8.2 (Registration
Rights) and Article 9 (Events of Default; Remedies).
9.5.3. FINOVA REGISTRATION RIGHTS AGREEMENT. Effective as of
the Closing, the Finova Registration Rights Agreement shall terminate and be of
no further force or effect.
9.5.4. SECURITY AGREEMENT. Effective as of the Closing, the
Security Agreement shall terminate and be of no further force or effect.
9.6. MODIFICATION OF MAY 1999 AGREEMENT. Effective as of the
Closing, the May 1999 Agreement shall be modified as follows:
9.6.1. Effective as of the Closing, Section 7.1.2 (Registration
Rights) of the May 1999 Agreement shall terminate and be of no further force or
effect.
9.6.2. Effective as of the Closing, Section 7.2 of the May 1999
Agreement shall terminate and be of no further force or effect.
9.6.3. Effective as of the Closing, Section 17 of the May 1999
Agreement shall be amended to provide that any arbitration under the May 1999
Agreement will take place in San Diego, California, in accordance with the
provisions of Section 11.14 of this Agreement.
9.6.4. Effective as of the Closing, Section 25.1 of the May
Agreement shall be amended to provide that pipeline reports shall be delivered
within five days of request by Spescom.
9.7. TERMINATION OF SHAREHOLDERS AGREEMENT. Effective as of the
Closing, the Shareholders Agreement between Spescom, Altris Group Plc, the
Company and Atris UK, dated May 7, 1999 (the "Shareholders Agreement") shall
terminate and be of no further force or effect. The Company shall execute, and
shall cause Altris Group Plc to execute, any document requested by Spescom to
reflect such termination.
10. INDEMNIFICATION AND LIMITATION ON LIABILITY.
10.1. INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE COMPANY. The
Company will indemnify and hold harmless Spescom and its stockholders,
controlling persons, and Affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage, expense (including costs of investigation and defense and
reasonable attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with: (a) any breach of any representation or warranty
made by the Company in this Agreement, the Disclosure Schedule, or in any
certificate delivered by the Company pursuant to this Agreement, (b) any breach
by the Company of any covenant or obligation of the Company in this Agreement,
or (c) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with the Company (or any Person acting on its behalf) in
connection with any of the Transactions. The remedies provided in this Section
10.1 will be exclusive remedies available to Spescom or the other Indemnified
Persons for the Damages sets forth above without prejudice to any equitable
relief to which Spescom may be entitled.
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10.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SPESCOM. Spescom
will indemnify and hold harmless the Company, and will pay to the Company the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any breach of any representation or warranty made by Spescom in this
Agreement or in any certificate delivered by Spescom pursuant to this Agreement,
(b) any breach by Spescom of any covenant or obligation of Spescom in this
Agreement, or (c) any claim by any Person against Spescom for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Spescom (or any
Person acting on its behalf) in connection with any of the Transactions. The
remedies provided in this Section 10.2 will be exclusive remedies available to
the Company for the Damages sets forth above without prejudice to any equitable
relief to which the Company may be entitled.
10.3. LIMITATIONS ON AMOUNT - THE COMPANY. The Company will have no
liability (for indemnification or otherwise) with respect to the matters
described in Section 10.1 until the total of all Damages with respect to such
matters exceeds $50,000, and then only for the amount by which such Damages
exceed $50,000. The total liability (for indemnification or otherwise) for
Damages that the Company shall be liable for in connection with any breach of
the representations and warranties made by the Company in this Agreement
(including any indemnification obligation pursuant to Section 10.1 relating to
such representations and warranties) shall be limited in the aggregate amount of
the Purchase Price. However, this Section 10.3 will not apply to any breach of
any of the Company's representations and warranties of which the Company had
knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach by the Company of any covenant or
obligation, and the Company will be liable for all Damages with respect to such
breaches.
10.4. LIMITATIONS ON AMOUNT - SPESCOM. Spescom will have no
liability (for indemnification or otherwise) with respect to the matters
described in Section 10.2 until the total of all Damages with respect to such
matters exceeds $50,000, and then only for the amount by which such Damages
exceed $50,000. The total liability for Damages that Spescom shall be liable for
in connection with any breach of the representations and warranties made by
Spescom in this Agreement (including any indemnification obligation pursuant to
Section 10.2 relating to such representations and warranties) shall be limited
in the aggregate amount of the Purchase Price. However, this Section 10.4 will
not apply to any breach of any of Spescom's representations and warranties of
which Spescom had knowledge at any time prior to the date on which such
representation and warranty is made or any intentional breach by Spescom of any
covenant or obligation, and Spescom will be liable for all Damages with respect
to such breaches.
11. MISCELLANEOUS.
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11.1. GOVERNING LAW, VENUE AND JURISDICTION. This Agreement is
governed by and construed in accordance with the laws of the State of
California, irrespective of California's choice-of-law principles. All actions
and proceedings arising in connection with this Agreement must be tried and
litigated exclusively in the State or Federal courts located in the County of
San Diego, State of California, which courts have personal jurisdiction and
venue over each of the parties to this Agreement for the purpose of adjudicating
all matters arising out of or related to this Agreement. Each party authorizes
and accepts service of process sufficient for personal jurisdiction in any
action against it as contemplated by this Section by registered or certified
mail, return receipt requested, postage prepaid, to its address for the giving
of notices set forth in this Agreement.
11.2. FURTHER ASSURANCES. Each party to this Agreement shall
execute and deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this Agreement.
11.3. TIME OF ESSENCE. Time and strict and punctual performance are
of the essence with respect to each provision of this Agreement.
11.4. ATTORNEY'S FEES. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies) all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, and actual attorney's fees.
11.5. MODIFICATION. This Agreement may be modified only by a
contract in writing executed by the party to this Agreement against whom
enforcement of the modification is sought.
11.6. PRIOR UNDERSTANDINGS. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
11.7. INTERPRETATION. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa). The terms "includes" and "including" do not imply any limitation. No
remedy or election under this Agreement is exclusive, but rather, to the extent
permitted by applicable law, each such remedy and election is cumulative with
all other remedies at law or in equity. The Section headings in this Agreement:
(a) are included only for convenience, (b) do not in any manner modify or limit
any of the provisions of this Agreement, and (c) may not be used in the
interpretation of this Agreement.
11.8. PARTIAL INVALIDITY. Each provision of this Agreement is valid
and enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, are not affected by such invalidity
or unenforceability.
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11.9. NOTICES. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing. Notice
is duly given to another party upon: (a) hand delivery to the other party, (b)
receipt by the other party when sent by facsimile to the address and number for
such party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this Section), (c) three business days after the
Notice has been deposited with the United States postal service as first class
certified mail, return receipt requested, postage prepaid, and addressed to the
party as set forth below, or (d) the next business day after the Notice has been
deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery-service-provider.
If to Spescom: Spescom Limited
Spescom Park
Cnr Alexandra & Second Street
Halfway House
Midrand 1685
South Africa
Telecopier: 2711-266-1707
Attention: Hilton Isaacman
with a copy to: Solomon Ward Seidenwurm & Smith, LLP
401 B Street, Suite 1200
San Diego, California 92101
Telecopier: (619) 231-4755
Attention: Norman L. Smith, Esq.
If to the Company: Altris Software, Inc.
9339 Carroll Park Drive
San Diego, California 92121
Facsimile No.: (858) 546-7671
Attention: Roger Erickson
with a copy to: Gibson, Dunn & Crutcher LLP
2029 Century Park East, Suite 4000
Los Angeles, California 90067
Facsimile No.: (310) 551-8741
Attention: Russell C. Hansen, Esq.
Each party shall make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this Section.
A party may change its address for purposes of this Section by giving the other
party(ies) written notice of a new address in the manner set forth above.
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11.10. WAIVER. Any waiver of a default or provision under this
Agreement must be in writing. No such waiver constitutes a waiver of any other
default or provision concerning the same or any other provision of this
Agreement. No delay or omission by a party in the exercise of any of its rights
or remedies constitutes a waiver of (or otherwise impairs) such right or remedy.
A consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
11.11. DRAFTING AMBIGUITIES. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of construction
that ambiguities are to be resolved against the drafting party or in favor of
the party receiving a particular benefit under an agreement may not be employed
in the interpretation of this Agreement or any amendment to this Agreement.
11.12. THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this Agreement
to another person specifically identified as a "Third Party Beneficiary."
11.13. AUTHORITY. Each of the individuals signing below on behalf
of an entity represents and warrants that it is fully authorized to do so on
behalf of such entity.
11.14. ARBITRATION. Arbitration constitutes the sole and exclusive
remedy for the settlement of any dispute or controversy concerning this
Agreement, any other agreements between the parties or the rights of the parties
under such agreements, including whether the dispute or controversy is
arbitrable. If any other agreement subsisting between Spescom and the Company
provides for arbitration of any dispute and such arbitration provision is
different than the arbitration set forth in this Section 11.14, this Section
11.14 shall prevail and apply. The arbitration proceeding will be conducted in
San Diego, California, before a single arbitrator under the Commercial
Arbitration Rules of the American Arbitration Association in effect at the time
a demand for arbitration is made. The single arbitrator shall be a former or
retired judge of a California Superior Court or a U.S. Federal Court (having
appointment under Article 3 of the U.S. Constitution). California law governs
this Agreement, irrespective of California's or any other jurisdiction's
choice-of-law principles. To the extent that there is any conflict between the
rules of the American Arbitration Association and this arbitration clause, this
clause will govern and determine the rights of the parties. The decision of the
arbitrator, including the determination of the amount of any damages suffered,
will be exclusive, final, and binding on all parties, their heirs, executors,
administrators, successors, and assigns, as applicable, and judgment thereon may
be entered in any court of competent jurisdiction. The costs of arbitration,
including administrative fees, fees for a record and transcript, and the
arbitrator's fees, as well as reasonable attorney's fees will be awarded to the
party determined by the arbitrator to be the prevailing party. The parties
incorporate the provisions of California Code of Civil Procedure Section 1283.05
into this Agreement and make those provisions part of and applicable to any
proceedings arising under the terms of this Agreement.
11.15. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein shall survive the execution and
delivery hereof and remain in full force and effect, notwithstanding any
investigation made at any time by or on behalf of any party hereto.
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11.16. PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
permitted assigns of the parties hereto, whether so expressed or not. Spescom
shall have the right to assign or transfer its rights hereunder to one or more
Affiliates of Spescom.
ALTRIS SOFTWARE, INC.
By: /S/ JOHN W. LOW
-----------------------------------
Name: JOHN H. LOW
Title: CHIEF FINANCIAL OFFICER
SPESCOM LIMITED
By: /S/ H. J. ISAACMAN
-----------------------------------
Name: H. J. ISAACMAN
Title: DIRECTOR CORPORATE FINANCE
