Exhibit 10.5

 

GUARANTY FEE AGREEMENT

 

This Guaranty Fee Agreement (this “Agreement”), dated as of June 1, 2017 (the
“Effective Date”), is entered into by and among each of Determine, Inc., a
Delaware corporation (the “Company”), Lloyd I. Miller, III (“Mr. Miller”),
MILFAM II L.P. (“MILFAM”) and Alimco Financial Corporation f/k/a Alliance
Semiconductor Corporation (“ALIMCO” and, together with Mr. Miller and MILFAM,
the “Guarantors”).

 

Each Guarantor is party to a Limited Guaranty, each as amended to date
(collectively, the “Guaranties”), with Western Alliance Bank, as successor in
interest to Bridge Bank, National Association (“Lender”), to serve as limited
guarantors of certain loans from Lender made pursuant to the Amended and
Restated Business Financing Agreement, dated as of July 25, 2014, as amended
(the “Credit Agreement”), between the Company and Lender,

 

The Guarantors have agreed to extend the termination date of their respective
Guaranties, and in connection with such extensions, the Company has agreed to
pay the Guarantors an arm’s length guaranty fee with shares of Company stock, as
more fully set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and
covenants contained herein, the Company and the Guarantors hereby agree as
follows:

 

1.             Guaranty Extension Fees.

 

a.     Initial Extension Fee. On the Effective Date, Company shall cause to be
issued to the Guarantors an aggregate of 50,000 fully paid and nonassessable
shares of Company common stock, $0.0001 par value per share (the “Payment
Shares”). The Payment Shares shall be issued to the Guarantors in such amounts
as set forth on Exhibit A hereto. As soon as reasonably practicable following
the Effective Date, the Company shall cause its transfer agent to deliver
certificates to the Guarantors, registered in such name or names as the
Guarantors may designate, representing the Payment Shares.

 

b.     Additional Extension Fee. If the Additional Maturity Extension (as
defined in each Guaranty) occurs, the Company shall cause to be issued to the
Guarantors an additional aggregate of 62,500 fully paid and nonassessable shares
of Company common stock, $0.0001 par value per share (the “Additional Extension
Payment Shares”), subject to adjustments pursuant to Section 1(c) hereto. The
Additional Extension Payment Shares shall be issued to the Guarantors in such
amounts as set forth on Exhibit A hereto. As soon as reasonably practicable
following the date of the Additional Maturity Extension, the Company shall cause
its transfer agent to deliver certificates to the Guarantors, registered in such
name or names as the Guarantors may designate, representing the Additional
Extension Payment Shares.

 

c.     Adjustment. In the event of changes in the outstanding common stock of
the Company for which the Additional Extension Payment Shares may be payable by
reason of stock dividends, split-ups, recapitalizations, reclassifications,
conversions, combinations or exchanges of shares, separations, reorganizations,
liquidations, or the like, the number of Additional Extension Payment Shares in
the aggregate shall be correspondingly adjusted to give the Guarantors the total
number as the Guarantors would be entitled to receive had the Additional
Maturity Extension occurred prior to such event.

 

 

 
 

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2.             Representations and Warranties of the Guarantors. Each Guarantor
hereby represents and warrants to the Company that:

 

a.     Organization and Existence. Such Guarantor, if such Guarantor is an
entity, is a validly existing corporation, limited partnership or limited
liability company and has all requisite corporate, partnership or limited
liability company power and authority, and if such Guarantor is a natural
person, all requisite power and authority, to invest in the Payment Shares and
the Additional Extension Payment Shares pursuant to this Agreement.

 

b.     Authorization. The execution, delivery and performance by such Guarantor
of this Agreement has been duly authorized and will constitute the valid and
legally binding obligation of such Guarantor, enforceable against such Guarantor
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

 

c.     Purchase Entirely for Own Account. The Payment Shares to be received and
the Additional Extension Payment Shares (if received) by such Guarantor
hereunder will be acquired for such Guarantor’s own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of the Securities Act 1933, as amended (the “1933 Act”), and such
Guarantor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the 1933 Act, without prejudice,
however, to such Guarantor’s right at all times to sell or otherwise dispose of
all or any part of such Payment Shares or Additional Extension Payment Shares
(if received) in compliance with applicable federal and state securities laws.
Nothing contained herein shall be deemed a representation or warranty by such
Guarantor to hold the Payment Shares or Additional Extension Payment Shares (if
received) for any period of time. Neither such Guarantor nor any affiliate of
such Guarantor is a broker-dealer registered with the SEC under the Securities
Exchange Act of 1934, as amended, or an entity engaged in a business that would
require it to be so registered.

 

d.     Investment Experience. Such Guarantor acknowledges that it can bear the
economic risk and complete loss of its investment in the Payment Shares and
Additional Extension Payment Shares (if received) and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment contemplated hereby.

 

e.     Restricted Securities. Such Guarantor understands that the Payment Shares
and Additional Extension Payment Shares (if received) are characterized as
“restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the 1933 Act only in certain limited
circumstances.

 

f.     Legends. It is understood that certificates evidencing the Payment Shares
and Additional Extension Payment Shares (if received) may bear the following or
any similar legend:

 

“The securities represented hereby have not been registered with the Securities
and Exchange Commission or the securities commission of any state in reliance
upon an exemption from registration under the Securities Act of 1933, as
amended, and, accordingly, may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933, as amended.”

 

If required by the authorities of any state in connection with the issuance of
sale of the Payment Shares or Additional Extension Payment Shares (if received),
the legend required by such state authority.

 

 

 
 

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g.     Accredited Investor. Such Guarantor is an accredited investor as defined
in Rule 501(a) of Regulation D, as amended, under the 1933 Act, as amended by
the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

3.             Miscellaneous.

 

a.     Further Instruments. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement and to effect the issuance of the Payment
Shares and the Additional Extension Payment Shares.

 

b.     Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient (i) upon receipt, when delivered
personally or by courier, (ii) the next business day after sent, when sent by
overnight delivery service, (iii) upon delivery if given by electronic mail
during normal business hours of the recipient, and if not sent during normal
business hours, then on the recipient’s next business day, or (iv) three (3)
business days after being deposited in the U.S. mail as certified or registered
mail, return receipt requested, with postage prepaid, if in each instance such
notice is addressed to the party to be notified at such party’s address as set
forth on the signature pages hereto or as subsequently modified by written
notice.

 

c.     Successors and Assigns. This Agreement, and the obligations and rights of
the parties hereunder, shall be binding upon and inure to the benefit of the
parties’ respective heirs, personal representatives, successors and assigns.

 

d.     Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without regard to the
principles of conflicts of laws of any jurisdiction).

 

e.     Entire Agreement. This Agreement shall constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and any and all other written or oral agreements existing
between the parties hereto are expressly canceled.

 

f.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.

 

g.     Expenses. The Company agrees to reimburse the Guarantors on demand for
all documented fees and expenses, costs, and expenses (including reasonable
out-of-pocket attorneys’ fees and expenses) for the preparation, amendment,
negotiation, administration, defense, collection and enforcement of this
Agreement and the Guaranties (including, without limitation, those incurred in
connection with appeals or insolvency proceedings) or otherwise incurred with
respect to the Company.

 

 

 

[Remainder of Page Intentionally Left Blank]

 

 

 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

“Company”

 

DETERMINE, INC.

 

 

By: /s/ John K. Nolan                                               

        John K. Nolan

        Chief Financial Officer

 

 

 

“Guarantors”

 

LLOYD I. MILLER, III

 

 

/s/ Lloyd I. Miller, III                                               

Signature

 

 

 

MILFAM II L.P.

 

By: MILFAM LLC

Its: General Partner

 

 

By: /s/ Lloyd I. Miller, III                                          

Name:  Lloyd I. Miller, III

Title:    Manager

 

 

 

ALIMCO FINANCIAL CORPORATION f/k/a

ALLIANCE SEMICONDUCTOR CORPORATION

 

 

By: /s/ Alan B. Howe                                                 

Name: Alan B. Howe

Title:    CEO

 

 

 
 

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EXHIBIT A

 

PAYMENT SHARES ALLOCATION

 

Guarantor

Number of Payment Shares

Lloyd I. Miller, III

8,334

MILFAM II L.P.

8,333

Alimco Financial Corporation f/k/a

Alliance Semiconductor Corporation

33,333

Totals:

50,000

  

 

ADDITIONAL EXTENSION PAYMENT SHARES ALLOCATION

 

Guarantor

Number of Payment Shares

Lloyd I. Miller, III

10,417

MILFAM II L.P.

10,417

Alimco Financial Corporation f/k/a

Alliance Semiconductor Corporation

41,666

Totals:

62,500