Exhibit 10.3

 

AMENDED AND RESTATED SECURITY AGREEMENT

 

This Amended and Restated Security Agreement, dated as of December 16, 2015
(this “Security Agreement”), is made by and among Determine, Inc., a Delaware
corporation formerly known as Selectica, Inc. (“Grantor”), Lloyd I. Miller, III
as “Lenders’ Agent,” and the parties listed on the signature pages hereto (each
a “Lender” or “Secured Party” and, collectively, the “Lenders” or “Secured
Parties”).

 

RECITALS

 

A.     Certain of the Secured Parties (the “Existing Lenders”) are parties to
that certain Security Agreement, dated as of March 11, 2015 (the “Prior
Agreement”), with Grantor, entered into in connection with the sale and issuance
by Grantor of Junior Secured Convertible Promissory Notes, dated March 11, 2015,
to the Existing Lenders in the aggregate principal amount of $3 million (the
“Existing Loans”).

 

B.     Each Secured Party has agreed to make certain additional loans to Grantor
pursuant to that certain Junior Secured Convertible Note Purchase Agreement,
dated as of December 16, 2015, by and among Grantor and the Secured Parties (as
the same may from time to time be amended, modified or supplemented or restated,
the “Additional Purchase Agreement”), such advances and financial accommodation
being referred to herein as the “Additional Loans” and, together with the
Existing Loans, the “Loans.”

 

C.     In order to induce the Secured Parties to make the Additional Loans under
the Additional Purchase Agreement, the Company and the Existing Lenders desire
to amend and restate the Prior Agreement to add such Additional Loans as secured
obligations hereunder, as more fully set forth below.

 

D.     Each Secured Party acknowledges that the security interest granted
hereunder will, upon perfection thereof, be a second priority lien on the
subject assets and that the rights of the Lenders’ Agent and Secured Parties
will in all respects be subject to the first priority security position granted
to Western Alliance Bank, as successor in interest to Bridge Bank, National
Association (“Bank”) under that certain Amended and Restated Business Financing
Agreement, dated as of July 25, 2014, as amended (the “Senior Credit Facility”),
between Grantor and Bank, and the Amended and Restated Subordination Agreement
to be executed and delivered by Lenders’ Agent in favor of Bank simultaneously
herewith.

 

E.     Each Secured Party is willing to make the Additional Loans to Grantor,
and consents to execution and delivery by Lenders’ Agent of the Amended and
Restated Subordination Agreement, but only upon the condition, among others,
that Grantor shall have granted the security interest set forth herein and
executed and delivered to such Secured Party this Security Agreement.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and in order to induce the Secured Parties to
make the Additional Loans under the Additional Purchase Agreement, the Prior
Agreement is hereby amended and restated as set forth herein, and the parties
hereby represent, warrant, covenant and agree as follows:

 

1.     DEFINED TERMS. When used in this Security Agreement the following terms
shall have the meanings set forth below (such meanings being equally applicable
to both the singular and plural forms of the terms defined). Any other
capitalized term used in this Security Agreement but not defined herein shall
have the meaning ascribed to it under the Purchase Agreements.

 

 
 

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“Bankruptcy Code” means Title XI of the United States Code.

 

“Collateral” shall have the meaning assigned to such term in Section 2 of this
Security Agreement.

 

“Contracts” means all contracts (including any customer, vendor, supplier,
service or maintenance contract), leases, licenses, undertakings, purchase
orders, permits, franchise agreements or other agreements (other than any right
evidenced by Chattel Paper, Documents or Instruments), whether in written or
electronic form, in or under which Grantor now holds or hereafter acquires any
right, title or interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the terms of
performance thereof.

 

“Copyright License” means any agreement, whether in written or electronic form,
in which Grantor now holds or hereafter acquires any interest, granting any
right in or to any Copyright or Copyright registration (whether Grantor is the
licensee or the licensor thereunder) including, without limitation, licenses
pursuant to which Grantor has obtained the exclusive right to use a copyright
owned by a third party.

 

“Copyrights” means all of the following now owned or hereafter acquired or
created (as a work for hire for the benefit of Grantor) by Grantor or in which
Grantor now holds or hereafter acquires or receives any right or interest, in
whole or in part: (a) all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, Australia, any State or Province
thereof or any other country; (b) registrations, applications, recordings and
proceedings in the United States Copyright Office or in any similar office or
agency of the United States or any other country; (c) any continuations,
renewals or extensions thereof; (d) any registrations to be issued in any
pending applications, and shall include any right or interest in and to work
protectable by any of the foregoing which are presently or in the future owned,
created or authorized (as a work for hire for the benefit of Grantor) or
acquired by Grantor, in whole or in part; (e) prior versions of works covered by
copyright and all works based upon, derived from or incorporating such works;
(f) income, royalties, damages, claims and payments now and hereafter due and/or
payable with respect to copyrights, including, without limitation, damages,
claims and recoveries for past, present or future infringement; (g) rights to
sue for past, present and future infringements of any copyright; and (h) any
other rights corresponding to any of the foregoing rights throughout the world.

 

“Event of Default” has the meaning set forth in the Notes.

 

“Intellectual Property” means any intellectual property, in any medium, of any
kind or nature whatsoever, now or hereafter owned or acquired or received by
Grantor or in which Grantor now holds or hereafter acquires or receives any
right or interest, and shall include, in any event, any Copyright, Trademark,
Patent, trade secret, customer list, internet domain name (including any right
related to the registration thereof), proprietary or confidential information,
mask work, source, object or other programming code, invention (whether or not
patented or patentable), technical information, procedure, design, knowledge,
know-how, software, data base, data, skill, expertise, recipe, experience,
process, model, drawing, material or record.

 

“Lenders’ Agent” means Lloyd I. Miller, III.

 

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests, whether in-bound or out-bound, whether in
written or electronic form, now or hereafter owned or acquired or received by
Grantor or in which Grantor now holds or hereafter acquires or receives any
right or interest, and shall include any renewals or extensions of any of the
foregoing thereof.

 

 
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“Lien” has the meaning set forth in the Purchase Agreements.

 

“Loan Documents” means the Purchase Agreements, the Notes, this Security
Agreement and the Subordination Agreement.

 

“Loans” means the Existing Loans and the Additional Loans.

 

“Notes” means, collectively, the Junior Secured Convertible Promissory Notes
issued under the Purchase Agreements evidencing the Loans.

 

“Patent License” means any agreement, whether in written or electronic form, in
which Grantor now holds or hereafter acquires any interest, granting any right
with respect to any invention on which a Patent is in existence (whether Grantor
is the licensee or the licensor thereunder).

 

“Patents” means all of the following in which Grantor now holds or hereafter
acquires any interest: (a) all letters patent of the United States, Australia or
any other country, all registrations and recordings thereof and all applications
for letters patent of the United States, Australia or any other country,
including, without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state or any other country; (b) all reissues, divisions,
continuations, renewals, continuations-in-part or extensions thereof; (c) all
petty patents, divisionals and patents of addition; (d) all patents to issue in
any such applications; (e) income, royalties, damages, claims and payments now
and hereafter due and/or payable with respect to patents, including, without
limitation, damages, claims and recoveries for past, present or future
infringement; and (f) rights to sue for past, present and future infringements
of any patent.

 

“Permitted Lien” means: (i) any liens arising under Grantor’s Senior Credit
Facility; (ii) purchase money security interests to secure purchase money
indebtedness of Grantor, so long as such security interests arise or are created
(A) in the ordinary course of business and consistent with past practices and
(B) substantially contemporaneously with the purchase or acquisition by Grantor
of the respective property or assets to which such security interests relate and
the incurrence of the respective purchase money indebtedness which such security
interests secure, secure only the respective purchase money indebtedness so
incurred by Grantor to enable Grantor to so purchase or acquire such property or
assets, and no other indebtedness, and encumber only the respective property or
assets so purchased or acquired, and no other property or assets of Grantor;
(iii) any liens arising in connection with capital leases or equipment financing
arrangements of Grantor; (iv) liens acquired with liabilities assumed by Grantor
in connection with acquisitions of existing businesses, business divisions, or
assets, in whole or in part after the date hereof; (v) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, processor’s, landlord’s
liens or other like liens arising in the ordinary course of business that are
not overdue for a period of more than thirty (30) days or which are being
contested in good faith by appropriate proceedings; (vi) liens arising in
connection with worker’s compensation, unemployment insurance, old age pensions
and social security benefits and similar statutory obligations (excluding liens
arising under ERISA), provided that no enforcement proceedings in respect of
such liens are pending and provisions have been made for the payment of such
liens on the books of such person as may be required by generally accepted
accounting principles; (vii) liens of an immaterial nature for taxes, fees,
assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings; (viii) licenses or
sublicenses granted to others in the ordinary course of business if such are
otherwise permitted hereunder and do not interfere in any material respect with
Grantor’s business; and (ix) (A) liens incurred in the ordinary course of
business to secure the performance of statutory obligations arising in
connection with progress payments or advance payments due under contracts with
the United States government or any agency thereof entered into in the ordinary
course of business and (B) liens incurred or deposits made in the ordinary
course of business to secure the performance of statutory obligations, bids,
leases, fee and expense arrangements with trustees and fiscal agents, trade
contracts, surety and appeal bonds, performance bonds and other similar
obligations (exclusive of obligations incurred in connection with the borrowing
of money, any lease-purchase arrangements or the payment of the deferred
purchase price of property), provided, that in each case full provision for the
payment of all such obligations;

 

 
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provided, however, that, notwithstanding the foregoing, and only following the
date that all Senior Debt (as defined in the Subordination Agreement) has been
paid in full in cash and Bank’s obligation to lend under the Senior Credit
Facility has terminated, a Permitted Lien shall not include any lien,
encumbrance or other interest which would cause, or could reasonably be expected
to cause, a Material Adverse Effect.

 

“Prior Purchase Agreement” means that certain Junior Secured Convertible Note
Purchase Agreement, dated as of March 11, 2015, by and among Grantor and the
Existing Lenders.

 

“Pro Rata” means, as to any Secured Party at any time, the percentage equivalent
at such time of such Secured Party’s aggregate unpaid principal amount of Loans,
divided by the combined aggregate unpaid principal amount of all Loans of all
Secured Parties.

 

“Purchase Agreements” means, together, the Additional Purchase Agreement and the
Prior Purchase Agreement.

 

“Secured Obligations” means (a) the obligation of Grantor to repay the Secured
Parties all of the unpaid principal amount of, and accrued interest on
(including any interest that accrues after the commencement of bankruptcy) the
Loans and (b) the obligation of Grantor to pay any fees, costs and expenses of
the Secured Parties under Section 6(b) hereof or pursuant to any other provision
of a Loan Document.

 

“Trademark License” means any agreement, whether in written or electronic form,
in which Grantor now holds or hereafter acquires any interest, granting any
right in and to any Trademark or Trademark registration (whether Grantor is the
licensee or the licensor thereunder).

 

“Trademarks” means any of the following in which Grantor now holds or hereafter
acquires any interest: (a) any trademarks, tradenames, corporate names, company
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all registrations and recordings thereof and
any applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or any other country (collectively, the “Marks”); (b) any reissues,
extensions or renewals thereof; (c) the goodwill of the business symbolized by
or associated with the Marks; (d) income, royalties, damages, claims and
payments now and hereafter due and/or payable with respect to the Marks,
including, without limitation, damages, claims and recoveries for past, present
or future infringement; and (e) rights to sue for past, present and future
infringements of the Marks.

 

“UCC” means the Uniform Commercial Code as the same may from time to time be in
effect in the State of California (and each reference in this Security Agreement
to an Article thereof (denoted as a Division of the UCC as adopted and in effect
in the State of California) shall refer to that Article (or Division, as
applicable) as from time to time in effect, which in the case of Article 9 shall
include and refer to Revised Article 9 from and after the date Revised Article 9
became effective in the State of California); provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Parties’ security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term “UCC” shall mean the
Uniform Commercial Code (including the Articles thereof) as in effect at such
time in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.

 

 
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In addition, the following terms shall be defined terms having the meaning set
forth for such terms in the UCC: “Account” (including health-care-insurance
receivables), “Account Grantor”, “Chattel Paper” (including tangible and
electronic chattel paper), “Commercial Tort Claims”, “Commodity Account”,
“Deposit Account”, “Documents”, “Equipment” (including all accessions and
additions thereto), “Fixtures”, “General Intangibles” (including payment
intangibles and software), “Instrument”, “Inventory” (including all goods held
for sale or lease or to be furnished under a contract of service, and including
returns and repossessions), “Investment Property” (including securities and
securities entitlements), “Letter-of-Credit Right” (whether or not the letter of
credit is evidenced by a writing), “Payment Intangibles”, “Proceeds”,
“Promissory Notes”, “Securities Account”, and “Supporting Obligations”. Each of
the foregoing defined terms shall include all of such items now owned, or
hereafter acquired, by Grantor.

 

2.     GRANT OF SECURITY INTEREST. As collateral security for the full, prompt,
complete and final payment and performance when due (whether at stated maturity,
by conversion, acceleration or otherwise) of all the Secured Obligations and to
induce the Secured Parties to cause the Additional Loans to be made, Grantor
hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to
Lenders’ Agent for the benefit of the Secured Parties, and hereby grants to the
Lenders’ Agent for the benefit of Secured Parties, a security interest in all of
Grantor’s right, title and interest in, to and under the following, whether now
owned or hereafter acquired, (all of which being collectively referred to herein
as the “Collateral”), subject to the first-position rights of Bank under the
Senior Credit Facility and the Subordination Agreement:

 

(a)     All Accounts of Grantor;

 

(b)     All Chattel Paper of Grantor;

 

(c)     All Commercial Tort Claims of Grantor;

 

(d)     All Contracts of Grantor;

 

(e)     All Deposit Accounts of Grantor;

 

(f)     All Documents of Grantor;

 

(g)     All Equipment of Grantor;

 

(h)     All Fixtures of Grantor;

 

(i)     All General Intangibles of Grantor, including, without limitation,
Payment Intangibles, all Intellectual Property, Copyrights, Patents, Trademarks,
Licenses, designs, drawings, technical information, marketing plans, customer
lists, trade secrets, proprietary or confidential information, inventions
(whether or not patentable), procedures, know-how, models and data;

 

(j)     All Instruments of Grantor, including, without limitation, Promissory
Notes;

 

 
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(k)     All Inventory of Grantor;

 

(l)     All Investment Property of Grantor;

 

(m)     All Letter-of Credit Rights of Grantor;

 

(n)     All Supporting Obligations of Grantor;

 

(o)     All property of Grantor held by any Secured Party, or any other party
for whom any Secured Party is acting as agent hereunder, including, without
limitation, all property of every description now or hereafter in the possession
or custody of or in transit to any Secured Party or such other party for any
purpose, including, without limitation, safekeeping, collection or pledge, for
the account of Grantor, or as to which Grantor may have any right or power;

 

(p)     All other goods and personal property of Grantor, wherever located,
whether tangible or intangible, and whether now owned or hereafter acquired,
existing, leased or consigned by or to Grantor;

 

(q)     All of the Grantor’s books and records including ledgers, federal and
state tax returns, records regarding the Grantor’s assets or liabilities, the
Collateral, business operations or financial condition, and all computer
programs or storage or any equipment containing such information relating to the
foregoing, and any and all claims, rights and interests in any of the above and
all substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing; and

 

(r)     To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for and rents,
profits and products of each of the foregoing.

 

3.     PLEDGE OF SUBSIDIARIES. In addition, and without limiting any other
rights of the Secured Parties pursuant to this Security Agreement, to secure the
prompt payment and satisfaction of the Notes, all obligations and liabilities of
Grantor under the Purchase Agreements and all interest, reasonable costs and
expenses, and reasonable attorneys’ fees which may be made or incurred by the
Lender in the disbursement, administration, and collection of such amounts,
following the written demand of the Lender, Grantor shall pledge, assign and
grant a security interest to the Lender in all of Grantor’s right, title and
interest to the equity securities of each of the subsidiaries of Grantor (and
any subsidiary of Grantor acquired after the date hereof), which are set forth
on SCHEDULE A, as the same shall be amended from time to time (each a
“Subsidiary” and, collectively, the “Subsidiaries”), including all attendant
rights in equity, economic, voting or otherwise, together with all distributions
of capital, income, cash-flow, profits and all other fees and payments of any
nature whatsoever arising from said interest(s) and any interest on any of the
foregoing and all fees, accounts, contract rights, claims, advances and loans
payable to Grantor by any Subsidiary, and all collateral therefor, and all
proceeds of the foregoing, which, collectively, shall be incorporated into the
Collateral; provided, however, that Grantor may not pledge, assign or grant such
right, title and interest to the equity securities of the Subsidiaries to the
Lenders until after all Senior Debt has been paid in full in cash and Bank’s
obligation to lend under the Senior Credit Facility has terminated. Following a
written demand of the Lenders’ Agent under this Section 3, Grantor shall execute
and deliver to the Lenders such instruments and documents, including
certificates representing the pledged securities of the Subsidiaries, as the
Lenders’ Agent may deem reasonably necessary or advisable to perfect the rights
of the Lenders under this Section 3.

 

 
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4.     REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and warrants to
the Secured Parties that:

 

(a)     Except for the security interest granted to the Secured Parties under
this Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner of, and holds marketable title to, each item of the Collateral
in which it purports to grant a security interest hereunder.

 

(b)     No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral exists, except such as may have been filed by Grantor in favor
of the Secured Parties pursuant to this Security Agreement and except for
Permitted Liens.

 

(c)     This Security Agreement creates a legal and valid security interest on
and in all of the Collateral in which Grantor now has rights; this Security
Agreement and the other Loan Documents are the legal, valid and binding
obligations of Grantor and are enforceable in accordance with their terms.

 

(d)     This Security Agreement is effective to create in favor of the Secured
Parties a legal, valid and enforceable security interest in all right, title and
interest of the Grantor in the Collateral, and the Lender’s Agent, for the
benefit of the Secured Parties, has (or within ten (10) days following the
Closing Date will have) a fully perfected security interest in all right, title
and interest in all of the Collateral, subject to no other Liens (other than
Permitted Liens).

 

(e)     All filings, registrations, recordings and other actions necessary or
appropriate to create, preserve and perfect the security interest granted by
Grantor to the Secured Parties hereby in respect of the Collateral have been
accomplished, and the security interest granted to the Secured Parties pursuant
to this Security Agreement in and to the Collateral creates a valid and,
together with all such filings, registrations, recordings and other actions, a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens), and the
Secured Parties and Lender’s Agent are entitled to all the rights, priorities
and benefits afforded by the UCC or other relevant law as enacted in any
relevant jurisdiction to perfected security interests, in each case to the
extent that the Collateral consists of the type of property in which a security
interest may be perfected by possession or control (within the meaning of the
UCC), by filing a financing statement under the UCC as enacted in any relevant
jurisdiction.

 

(f)     Grantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is located in Delaware for
purposes of the UCC; Grantor is duly qualified to do business and in good
standing in each state in which it conducts its business.

 

(g)     Grantor’s chief executive office, principal place of business, and the
place where Grantor maintains its records concerning the Collateral are
presently located at the addresses set forth on the signature page hereof.

 

(h)     The name and address of each depository institution at which Grantor
maintains any Deposit Account and the account number and account name of each
such Deposit Account is listed on SCHEDULE B attached hereto.

 

(i)     The information set forth on SCHEDULES A AND B is true and accurate.

 

(j)     None of the execution and delivery of this Security Agreement or the
other Loan Documents, the consummation of the transactions contemplated hereby
and thereby or the performance of the obligations of Grantor hereunder or
thereunder will result in, no constitute a breach of, applicable law, the
organizational documents of Grantor or any Subsidiary, the provisions of any
judgment or order of any governmental body or authority or any agreement to
which Grantor or any Subsidiary is a party.

 

 
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(k)     All action on the part of Grantor and its directors and officers
necessary for the authorization, execution, delivery and performance of this
Security Agreement (and all other Loan Documents) has been taken; Grantor has
full right, power and authority to enter into and perform its obligations under
each of the Loan Documents.

 

(l)     The representations and warranties of Grantor contained in this Security
Agreement will survive the execution and delivery of this Security Agreement and
the other Loan Documents and the making of the Loans until the Secured
Obligations are indefeasibly repaid in full and all other obligations of the
Grantor hereunder and under the other Loan Documents have terminated.

 

5.     COVENANTS. Grantor covenants and agrees with the Secured Parties that
from and after the date of this Security Agreement and until the Secured
Obligations have been performed and paid in full:

 

5.1     Limitation on Liens on Collateral. Grantor shall not, directly or
indirectly, create, permit or suffer to exist, and shall defend the Collateral
against and take such other action as is necessary to remove, any Lien on the
Collateral, except (a) Permitted Liens and (b) the Lien granted to the Secured
Parties under this Security Agreement. Further, Grantor shall not sell, assign,
pledge, dispose of or transfer in any manner any interest in the Collateral to
any party other than the Secured Parties and Bank and other than (i) in the
ordinary course of business, (ii) non-exclusive licenses and similar
arrangements for the use of the property of such Grantor in the ordinary course
of business, other licenses that would not result in a legal transfer of title
of the licensed property but that may be exclusive, or licenses or transfers
under such Grantor’s source code escrow arrangements, (iii) sales or disposal of
surplus, worn-out or obsolete equipment and (iv) transfers of other assets of
any Grantor that do not in the aggregate exceed Two Hundred and Fifty Thousand
Dollars ($250,000) in the aggregate for all Grantors during any fiscal year of
Grantors.

 

5.2     Taxes and Assessments. Grantor shall pay when due all taxes, assessments
and other charges lawfully levied or assessed upon the Collateral, and if such
taxes or other assessments remain unpaid after the date fixed for the payment of
the same, except to the extent and so long as (i) the same are being contested
in good faith and by appropriate proceedings in a manner that will not cause any
material adverse effect upon the Collateral, or the loss of any right of
redemption from any sale thereunder and (ii) Grantor shall have set aside on its
books adequate reserves with respect thereto; provided, however, if any lien,
other than a Permitted Lien, shall be claimed which might possibly create a
valid obligation having priority over the rights granted to the Secured Parties
herein, the Secured Parties shall have the right, but not the obligation, with
one day’s prior written notice to Grantor, pay such taxes, assessments, charges
or claims, and the amount thereof shall be added to the obligations under the
Note

 

5.3     Further Assurances. At any time and from time to time, upon the written
request of the Lenders’ Agent, and at the sole expense of Grantor, Grantor shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Lenders’ Agent may reasonably deem
necessary or desirable for the Lenders collectively to obtain the full benefits
of this Security Agreement, including, without limitation, executing, delivering
and causing to be filed any financing or continuation statements (including “in
lieu” continuation statements) under the UCC with respect to the security
interests granted hereby and obtaining deposit account control agreements in
form satisfactory to the Lenders’ Agent with respect to the Deposit Accounts
listed on SCHEDULE B. Grantor also hereby authorizes Lenders’ Agent to file any
such financing or continuation statement (including “in lieu” continuation
statements) without the signature of Grantor. Grantor approves, authorizes and
ratifies any filings or recordings made by or on behalf of the Lenders in
connection with the perfection of the security interest in favor of the Secured
Parties, whether the same is by Lenders’ Agent or by any individual Lender.
Grantor shall pay all filing, registration and recording fees or re-filing,
re-registration and re-recording fees, and all reasonable expenses incident to
the execution of and acknowledgement of this Security Agreement and all federal,
state, county and municipal stamp taxes and other taxes, duties, imports,
assessments and charges arising out of or in connection with the execution and
delivery of this Security Agreement and any agreement supplemental hereto and
any instruments of further assurance. Grantor shall, promptly upon request,
provide to the Lenders’ Agent all information and evidence he may reasonably
request concerning the Collateral to enable the Lenders to administer or enforce
the provisions of this Security Agreement.

 

 
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5.4     Power of Attorney. Grantor hereby irrevocably appoints the Lender’s
Agent as its attorney-in-fact, with full power and authority in its place and
stead and in its name or in the Secured Parties’ name to do any or all of the
following after the occurrence and during the continuance of a Grantor default
under any Loan Document: (a) endorse its name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Secured Parties’ possession; (b) receive, endorse and collect all checks and
other orders for the payment of money made payable to Grantor representing any
dividend or distribution payable in respect of the Collateral; (c) collect any
Collateral; and (d) take all actions and do all things necessary to carry out
the terms of this Security Agreement, and all related documents. The powers
conferred on the Lender’s Agent hereunder are solely to protect the Secured
Parties’ interests in the Collateral and shall not impose any duty upon it to
exercise such powers. Neither the Secured Parties nor Lender’s Agent will be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law relating to the foregoing actions. This power of attorney is coupled with
any interest and is irrevocable by Grantor. Notwithstanding the foregoing, this
power of attorney may not be exercised until all Senior Debt (as defined in the
Subordination Agreement) has been paid in full in cash, and Bank has released
its lien on the Collateral.

 

5.5     Consents. Grantor will promptly upon the written request by Lender’s
Agent, and in any event within thirty (30) days after such written request, use
its commercially reasonable efforts to obtain a waiver or consent, in a form
reasonably satisfactory to Lender’s Agent, from (i) each landlord from whom
Grantor now or hereafter may lease real property where any existing or future
Collateral is located and (ii) any bailee in possession of Collateral, in each
case if such Collateral has an aggregate fair market value of not less than
Twenty-Five Thousand Dollars ($25,000.00), indicating that such bailee or
landlord holds such Collateral for the benefit of the Secured Parties and shall
act upon the instructions of the Lender’s Agent, without the further consent of
such Grantor.

 

5.6     Insurance. Grantor will at all times maintain insurance, at Grantor’s
own expense, to the extent required in the Purchase Agreements, if specified,
and, in any case, consistent with its prior practices and industry standards.
Except to the extent otherwise permitted to be retained by Grantor or applied by
Grantor pursuant to the terms of the Loan Documents, Lender’s Agent shall, at
the time any proceeds of such insurance are distributed to the Secured Parties,
apply such proceeds in accordance with Section 7 hereof. Grantor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of Grantor to pay the Secured Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to Grantor.

 

5.7     Existence. Grantor will maintain its existence and good standing in the
State of Delaware and its qualification and good standing as a foreign
corporation in each jurisdiction in which such qualification is required by
applicable law. Grantor will not change its legal name or the location of its
principal business office without the prior written consent of Lender’s Agent.

 

 
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6.     EVENTS OF DEFAULT. The following shall constitute Events of Default under
this Security Agreement:

 

(a)     The failure of any representation or warranty made by Grantor to be true
and correct; and

 

(b)     The occurrence of any Event of Default under the Purchase Agreements or
the Note evidencing any Lender’s Loan.

 

7.     RIGHTS AND REMEDIES UPON DEFAULT. Beginning on the date on which any
Event of Default shall have occurred and while such Event of Default is
continuing, and subject to the rights of Bank under the Senior Credit Facility
and the Subordination Agreement:

 

(a)     At the sole and absolute discretion of the Lenders’ Agent and for the
benefit of the Secured Parties, the Lenders’ Agent may exercise in addition to
all other rights and remedies granted to it under this Security Agreement all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Grantor expressly agrees that in any such event the
Lenders’ Agent, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other person, may (i) reclaim,
take possession, recover, store, maintain, finish, repair, prepare for sale or
lease, shop, advertise for sale or lease and sell or lease (in the manner
provided herein) the Collateral, and in connection with the liquidation of the
Collateral and collection of the accounts receivable pledged as Collateral, use
any Trademark, Copyright, or process used or owned by Grantor and (ii) forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker’s board or at any Secured
Party’s offices or elsewhere at such prices as it may deem commercially
reasonable, for cash or on credit or for future delivery without assumption of
any credit risk. Grantor further agrees, at the Lenders’ Agent’s request, to
assemble its Collateral and make it available to the Lenders’ Agent for the
benefit of the Secured Parties at places which the Lenders’ Agent shall
reasonably select, whether at Grantor’s premises or elsewhere. The Secured
Parties shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale as provided in Section 6(d), below, with
Grantor remaining liable for any deficiency remaining unpaid after such
application. Grantor agrees that the Secured Parties need not give more than ten
(10) days’ notice of the time and place of any public sale or of the time after
which a private sale may take place and that such notice is reasonable
notification of such matters.

 

(b)     Grantor also agrees to pay all fees, costs and expenses of the Secured
Parties, including, without limitation, reasonable attorneys’ fees, incurred in
connection with the enforcement of any of its rights and remedies hereunder.

 

(c)     Grantor hereby waives presentment, demand, protest or any notice (to the
maximum extent permitted by applicable law or under the Senior Credit Facility)
of any kind in connection with this Security Agreement or any Collateral.

 

(d)     The Proceeds of any sale, disposition or other realization upon all or
any part of the Collateral shall be received by the Lenders’ Agent and
distributed by Lenders’ Agent to the Secured Parties to be applied to the
Secured Obligations in the following order of priorities:

 

 
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FIRST, to the reasonable costs, fees and expenses incurred by Lenders’ Agent but
not yet paid in connection with the sale, disposition or other realization on
the Collateral, including all fees, costs, expenses, liabilities in connection
therewith, including reasonable attorneys’ fees;

 

SECOND the extent that any Secured Party has advanced to the Lenders’ Agent any
amount in connection with the sale, disposition or other realization on the
Collateral, then to each Secured Party in an amount sufficient to pay in full
the reasonable costs of such Secured Party actually advanced by such Secured
Party in connection with such sale, disposition or other realization, including
all fees, costs, expenses, liabilities and advances incurred or made by any
Secured Party in connection therewith, including, without limitation, reasonable
attorneys’ fees;

 

THIRD, to the Secured Parties in amounts proportional to the Pro Rata share of
the then unpaid Secured Obligations of each Secured Party;

 

FOURTH, upon payment in full of the Secured Obligations, to the holder of any
subordinate security interest, judgment lien or other similar encumbrance
affecting the Collateral, in accordance with the UCC, otherwise applicable law
or as a court of competent jurisdiction may direct; and

 

FINALLY, thereafter to Grantor or its representatives, in accordance with the
UCC or as a court of competent jurisdiction may direct.

 

(e)     The costs of enforcing or pursuing any right or remedy hereunder,
including without limitation any repossession, sale, possession and management
(including, without limitation, reasonable attorneys’ fees), and distribution
shall be borne Pro Rata by the Secured Parties to the extent that such costs,
fees and expenses are not paid by Grantor and without prejudice to the right of
Lenders’ Agent to recover the same from Grantor as provided in this Security
Agreement, the Purchase Agreements and the Notes. Each Secured Party shall pay
to the Lenders’ Agent promptly upon demand therefor, its Pro Rata share of all
such costs.

 

8.     MISCELLANEOUS.

 

8.1     Waivers; Amendments. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by Grantor and the Lenders’ Agent; provided, however that
Schedule A shall be deemed automatically amended to add the name of any
Subsidiary acquired by Grantor after the date hereof without any executed
writing required.

 

8.2     Termination of this Security Agreement. This Security Agreement shall
automatically terminate upon the earlier of the conversion or payment and
performance in full of the Secured Obligations.

 

8.3     Successor and Assigns. This Security Agreement and all obligations of
Grantor hereunder shall be binding upon the successors and assigns of Grantor,
and shall, together with the rights and remedies of the Secured Parties
hereunder, inure to the benefit of the Secured Parties and their respective
successors and assigns. Grantor shall not be permitted to sell, assign, transfer
or otherwise convey its rights or obligations hereunder.

 

 
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8.4     Counterparts; Facsimile. This Security Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Security Agreement and each other
agreement or instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to the
extent signed and delivered by means of electronic mail or a facsimile machine,
shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. No party hereto
or to any such agreement or instrument shall raise the use of electronic mail or
a facsimile machine to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of
electronic mail or a facsimile machine as a defense to the formation or
enforceability of a contract and each such party forever waives any such
defense.

 

8.5     Governing Law. In all respects, including all matters of construction,
validity and performance, this Security Agreement and the Secured Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the conflict of laws provisions of
the State of New York or of any other state.

 

8.6     Entire Agreement. This Security Agreement (including its exhibits and
together with the other Loan Documents) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
(and thereof) and supersedes any prior written or oral agreement, including,
without limitation, the Prior Agreement.

 

8.7     Severability. Should any provision of this Security Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Security Agreement, which shall continue
in full force and effect.’

 

8.8     Subordination Agreement. This Security Agreement and the Loan Documents
(other than the Subordination Agreement) are subject to the Subordination
Agreement. In the event of any conflict between the terms and condition of this
Security Agreement or any Loan Document (other than the Subordination
Agreement), on the one hand, and the Subordination Agreement, on the other hand,
the terms and conditions of the Subordination Agreement shall govern and
control.

 

[Signature pages follow]

 

 
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.

 

 

ADDRESSES OF GRANTOR

 

DETERMINE, INC.  

 

               

2121 South El Camino Real, 10th Floor

 

By:

 

 

San Mateo, CA 94403

 

Name:

 

 

 

 

Title:

 

 

12800 North Meridian Street, Suite 425         Carmel, IN 46032                
            ACCEPTED AND ACKNOWLEDGED BY:                   SECURED PARTIES    
                        LLOYD I. MILLER, III, AS LENDERS’ AGENT AND AS A SECURED
PARTY   ALLIANCE SEMICONDUCTOR CORPORATION                           By:    
Signature   Name: Alan B. Howe       Title: Interim Chief Executive Officer    
        MILFAM II L.P., a Georgia limited partnership                   By:
MILFAM LLC         Its: General Partner                             By:
____________________________________________         Name: Lloyd I. Miller, III
        Title: Manager                             LLOYD I. MILLER TRUST A-4    
              By: MILFAM LLC         Its: Investment Advisor                    
        By: ____________________________________________         Name: Lloyd I.
Miller, III         Title: Manager        

 

 
 

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SCHEDULE A

 

SUBSIDIARIES

 

 

■

Selectica GmbH

 

 

■

Selectica Canada, Inc.

 

 

■

Selectica Mexico S. de R.L. de C.V. (dormant)

 

 

■

Selectica Scandinavia AB (dormant)

 

 

■

Wakely Acquisition Corp. (dormant)

 

 

■

Selectica Sourcing Inc.

 

 

■

Iasta Limited

 

 

■

Determine SAS

 

 

■

b-pack Software

 

 

■

b-pack Services

 

 

■

b-pack Inc.

  

 
 

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SCHEDULE B

 

LIST OF DEPOSIT ACCOUNTS1

 

Institution

Account Name

Account No.

     

Western Alliance Bank

New AP Disbursements

*5581

 

New General Account

*6341

 

New ZBA Payroll Account

*9394

Silicon Valley Bank/SVB Relationship Accounts

USD IAS Operating Account

*1286

 

USD IRI Account

*9959

 

GBP IAS Royal Bank of Scotland Account

*0622

 

CAD IAS Bank of Montreal Account

*7134

 

EUR IUKLTD Royal Bank of Scotland

IASTAEURC

 

GBP IUKLTD Royal Bank of Scotland

*3964