Document:

ex10-2.htm

Exhibit 10.2

 

THIS INSTRUMENT AND THE OBLIGATIONS EVIDENCED HEREBY ARE EXPRESSLY SUBORDINATED PURSUANT TO THAT CERTAIN AMENDED AND RESTATED SUBORDINATION AGREEMENT, DATED AS OF DECEMBER 16, 2015 (THE “SUBORDINATION AGREEMENT”), AMONG THE HOLDER OF THIS INSTRUMENT, THE MAKER OF THIS INSTRUMENT, AND WESTERN ALLIANCE BANK, AS SUCCESSOR IN INTEREST TO BRIDGE BANK, NATIONAL ASSOCIATION. EACH SUCCESSIVE HOLDER OF THIS INSTRUMENT OR ANY PORTION HEREOF, OR OF ANY RIGHTS OBTAINED HEREUNDER, BY ITS ACCEPTANCE HEREOF OR THEREOF, AGREES (1) TO BE BOUND BY THE TERMS OF THE SUBORDINATION AGREEMENT, AND (2) THAT IF ANY CONFLICT EXISTS BETWEEN THE TERMS OF THIS INSTRUMENT OR ANY DOCUMENT EXECUTED IN CONNECTION WITH THE DELIVERY OF THIS INSTRUMENT AND THE TERMS OF THE SUBORDINATION AGREEMENT, THE TERMS OF THE SUBORDINATION AGREEMENT SHALL GOVERN AND BE CONTROLLING.

 

THIS JUNIOR SECURED CONVERTIBLE PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS.

 

 

JUNIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

	
$[●].00
	
December 16, 2015

Effective Date

 

FOR VALUE RECEIVED, Determine, Inc., a Delaware corporation formerly known as Selectica, Inc. (the “Company”), promises to pay to the order of [●], or its registered assigns (“Lender”), the principal sum of [●] Dollars ($[●].00) (the “Principal Amount”) with interest on the outstanding Principal Amount accruing as set forth in Section 1. Interest shall commence with the date hereof and shall continue on the outstanding principal of this Junior Secured Convertible Promissory Note (this “Note”) as set forth in Section 1 until paid in accordance with the provisions hereof. 

 

1.   Interest.

 

(a)  Interest shall accrue on the outstanding Principal Amount at the rate of eight percent (8%) per annum simple interest (computed on the basis of actual days elapsed and a fiscal year of 364 days).

 

(b)  Accrued interest shall be payable quarterly, in arrears, beginning on December 31, 2015, and thereafter on the last calendar day of each successive three (3) month period. Notwithstanding the foregoing, but provided the Company is not then in default pursuant to this Note or any other Loan Document, the Company may elect to pay the interest due by converting such interest amount to Conversion Shares at the Conversion Price (as each such term is defined in Section 6(a) below) (the “PIK Right”), subject to applicable NASDAQ listing rule limitations (including, if applicable, approval by the Company’s stockholders); provided, however, that, if the Company elects to convert interest to Common Stock pursuant to this Section 1(b), such interest shall be deemed to have accrued at the rate of ten percent (10%) per annum simple interest (computed on the basis of actual days elapsed and a fiscal year of 364 days). The election of the PIK Right shall be made by written notice to Lender not less than ten (10) business days prior to the date such interest payment is due, and the Company’s failure to so exercise the PIK Right shall be deemed a waiver of the PIK Right with respect to such interest payment. Any such conversion of interest into shares of Common Stock upon exercise of the PIK Right shall be in accordance with Section 6(e) below.

 

(c)  Upon any default pursuant to this Note or any other Loan Document, this Note shall bear interest at the rate of the lesser of (i) thirteen percent (13%) and (ii) such maximum rate of interest allowable under the laws of the State of New York (the “Default Rate”).

 

 

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2.  Junior Secured Convertible Note Purchase Agreement; Security.

 

(a) This Note is issued pursuant to, and subject in all respects to, the terms of that certain Junior Secured Convertible Note Purchase Agreement, dated as of December 16, 2015 (the “Note Agreement”), by and among the Company, Lender and the other investors named therein. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement or in the Amended and Restated Security Agreement, dated as of December 16, 2015 (the “Security Agreement”), by and among the Company, Lender and the other secured parties named therein.

 

(b) The indebtedness evidenced by this Note is secured by all of the assets of the Company, as further described in the Security Agreement.

 

3.  Maturity. The entire unpaid principal amount and all unpaid accrued interest (collectively, the “Obligations”) shall become fully due and payable on the fifth (5th) anniversary of the date hereof (the “Maturity Date”).

 

4.   Payments.

 

(a)  All payments of the Obligations shall be made in lawful money of the United States of America to Lender, at the address specified in the Note Agreement, or at such other address as may be specified from time to time by Lender in a written notice delivered to the Company. All payments shall be applied first to accrued interest, expenses or fees due to Lender pursuant to this Note or any other Loan Document, and thereafter to principal.

 

(b) The Obligations under this Note may be prepaid, or converted in accordance with Section 6(b) below, at the Company’s election prior to the Maturity Date.

 

5.  Use of Proceeds. The Company shall use the proceeds from this Note for working capital and general corporate purposes.

 

6.  Conversion.

 

(a) Subject to applicable NASDAQ listing rule limitations (including, if applicable, approval by the Company’s stockholders), at any time following the date of this Note and up to the Maturity Date, the then outstanding Obligations under this Note (or any portion thereof) may be converted into fully paid and nonassessable shares of Company Common Stock, $0.0001 par value per share (the “Conversion Shares”), at the sole election of Lender upon written notice to the Company (the “Conversion Notice”), which Conversion Notice shall state the proposed effective date of such conversion (which date shall be no fewer than ten (10) business days following the date of delivery of the Conversion Notice) (the “Conversion Date”). The Obligations hereunder shall convert at a conversion price equal to $3.75 per share, subject to adjustment for any stock dividend, stock split, combination or other similar recapitalization event with respect to the Company’s Common Stock (each a “Recapitalization Event”); provided, however, that if prior to the Maturity Date the Company offers and sells its Common Stock (or other securities that are convertible into or exercisable for shares of Common Stock) in a private placement primarily intended to raise capital at a price per share of Common Stock of $3.25 or less (subject to adjustment for any Recapitalization Event), then the conversion price of the Obligations under this Note shall be reduced to such Common Stock offer price plus $0.50 per share (the applicable conversion price with respect to a conversion under this Section 6(a) hereinafter is referred to as the “Conversion Price”).

 

(b) Notwithstanding the conversion rights set forth in Section 6(a) above, subject to applicable NASDAQ listing rule limitations (including, if applicable, approval by the Company’s stockholders), in the event that the closing bid price per share of Company Common Stock as traded on the principal securities exchange or securities market on which the Common Stock are then traded equals or exceeds $10.00 (subject to adjustment for any Recapitalization Event) for ten (10) Trading Days (as defined below) in any fifteen- (15-)Trading Day period, the then-outstanding Obligations under this Note (or any portion thereof) may be converted into Conversion Shares, at the sole election of the Company following delivery of the Conversion Notice to Lender, which Conversion Notice shall state the proposed Conversion Date (which date, for the sake of clarity, shall be no fewer than ten (10) business days following the date of delivery of the Conversion Notice) at a conversion price equal to the then-current Conversion Price.

 

 

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(c) Notwithstanding anything in this Section 6 to the contrary, the Company shall not effect the conversion of this Note, and Lender shall not have the right to convert this Note, to the extent that the aggregate number of Conversion Shares issued upon conversion of this Note and the other Notes issued under the Note Agreement (together with any other securities issued by the Company that are deemed integrated into the issuance of the Notes under the Note Agreement pursuant to applicable NASDAQ listing rules) would be in excess of 19.99% of the shares of Company Common Stock outstanding immediately prior to the issuance of this Note. In the event the holders of the Notes issued under the Note Agreement elect to convert the Notes pursuant to Section 6(a), and such Notes will not be fully convertible due to the limitations set forth in this Section 6(c), the Company shall use its commercially reasonable efforts to obtain stockholder approval of the issuance of the Notes in accordance with NASDAQ listing rule 5635(d) as soon as reasonably practicable, including by calling a special meeting of stockholders. For purposes of this Section 6(c), the terms “commercially reasonable efforts” shall include, without limitation, the obligation of the Company take all action necessary to call a meeting of its stockholders (the “Stockholders Meeting”), which shall occur not later than 90 days after Lender’s request for the same (the “Stockholders Meeting Deadline”), for the purpose of seeking approval of the Company’s stockholders for, among other things, the issuance and sale of the Conversion Shares to Lender (the “Proposal”). In the event the Proposal is not approved by the Company’s stockholders at the Stockholders Meeting, the Company shall take all action necessary to call up to three (3) additional meetings of its stockholders (each a “Subsequent Stockholders Meeting”) for the purpose of seeking approval of the Proposal, to be held promptly following the completion of the Stockholders Meeting and in no event more than one year after Lender’s request for the same, to the extent reasonably practicable. In connection with the Stockholders Meeting and, if applicable, each Subsequent Stockholders Meeting, the Company will promptly prepare and file with the SEC proxy materials (including a proxy statement and form of proxy) for use at the Stockholders Meeting and, if applicable, each Subsequent Stockholders Meeting, and, after receiving and promptly responding to any comments of the SEC thereon, shall promptly mail such proxy materials (or, if permitted, notice of the availability of such proxy materials) to the stockholders of the Company. Lender shall promptly furnish in writing to the Company such information relating to such Lender and its investment in the Company as the Company may reasonably request for inclusion in each Proxy Statement. The Company will comply with Section 14(a) of the 1934 Act and the rules promulgated thereunder in relation to any proxy statement (as amended or supplemented, each a “Proxy Statement”) and any form of proxy to be sent or made available to the stockholders of the Company in connection with the Stockholders Meeting or, if applicable, each Subsequent Stockholders Meeting, and each Proxy Statement shall not, on the date that such Proxy Statement (or any amendment thereof or supplement thereto) is first mailed or made available to stockholders or at the time of the Stockholders Meeting or any Subsequent Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies or the Stockholders Meeting which has become false or misleading. If the Company should discover at any time prior to the Stockholders Meeting or, if applicable, any Subsequent Stockholders Meeting, any event relating to the Company or any of its Subsidiaries or any of their respective Affiliates, officers or directors that is required to be set forth in a supplement or amendment to the applicable Proxy Statement, in addition to the Company's obligations under the 1934 Act, the Company will promptly inform the Lender thereof. 

 

(d) Upon the Conversion Date with respect to a conversion of this Note pursuant to either Section 6(a) or 6(b) above, Lender hereby agrees to deliver the original of this Note to the Company for cancellation (or a notice to the effect that the original Note has been lost, stolen or destroyed and an agreement acceptable to the Company whereby Lender agrees to indemnify the Company from any loss incurred by it in connection with this Note); provided, however, that upon the Conversion Date, this Note (or portion thereof) shall be deemed converted and of no further force and effect, whether or not it is delivered for cancellation as set forth in this sentence.

 

 

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(e) On or before the second Trading Day following the Conversion Date (the “Share Delivery Date”), the Company shall, (i) provided that the Company’s transfer agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the certificates therefor are not required to bear a legend regarding restriction on transferability, upon the request of Lender, credit such aggregate number of shares of Common Stock to which Lender is entitled pursuant to such exercise to Lender’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (ii), if the Company’s transfer agent is not participating in the FAST Program or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Conversion Notice or as provided by Lender to the Company, a certificate, registered in the Company’s share register in the name of Lender or its designee, for the number of shares of Common Stock to which Lender is entitled pursuant to such exercise. Upon the Conversion Date, Lender shall be deemed for all corporate purposes to have become the holder of record of the Conversion Shares with respect to which this Note (or portion thereof) has been converted, irrespective of the date such Conversion Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Conversion Shares, as the case may be.

 

For purposes of this Note, “Trading Day” means any day on which the Common Stock are traded on The NASDAQ Capital Market or, if such market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

(f) No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to Lender upon the conversion of this Note, the Company shall pay to Lender an amount equal to the product obtained by multiplying the Conversion Price by the fraction of a share not issued pursuant to the previous sentence. 

 

7. Subordination. The Obligations evidenced by this Note are hereby expressly subordinated in right of payment to the prior payment in full of all of the Company’s Senior Credit Facility and any Liens on property of the Company in favor of Lender are hereby expressly subordinated in priority to any Liens on the Company’s property in favor of any holder of debt under the Senior Credit Facility, in accordance with the Subordination Agreement. The Obligations evidenced by this Note are pari passu with the Obligations evidenced by those Junior Secured Convertible Promissory Notes, dated as of March 11, 2015, in the aggregate principal amount of $3 million issued pursuant to the Junior Secured Convertible Note Purchase Agreement, dated as of March 11, 2015, by and among the Company and the investors named therein.

 

8.  Default.

 

(a)  Events of Default. For purposes of this Note, any of the following events shall constitute an “Event of Default”:

 

(i) The Company shall fail to pay when due any Obligations hereunder;

 

(ii) Any representation or warranty of the Company under the Note Agreement, the other Loan Documents or any agreement ancillary thereto (collectively, the “Ancillary Agreements”), as applicable, shall be untrue in any material respect as of the date made;

 

 

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(iii) The Company shall breach any covenant set forth in this Note or the Ancillary Agreements, taking into account applicable periods of notice and cure, if any; provided, however, that, in the event no grace or cure period is so provided, the Company shall have a period of (A) three (3) days after the earlier of the Company’s actual knowledge thereof and written notice of non-compliance to cure such non-compliance to the extent it relates to any monetary default and (B) twenty (20) days after the earlier of the Company’s actual knowledge thereof and written notice of non-compliance to cure any other non-compliance; provided that, in the event that any default described in clause (B) cannot reasonably be cured within such twenty (20) day period, then the Company shall have an additional ten (10) days in which to cure such non-compliance, so long as the Company continues to diligently pursue curing such non-compliance;

 

(iv) Any default occurs under the Senior Credit Facility and such default is not cured, or waived by the lender thereunder, within the time period, if any, provided under the Senior Credit Facility;

 

(v) The Company makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due, or files a voluntary petition for bankruptcy, or files any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, dissolution or similar relief under any present or future statute, law or regulation, or seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of the Company, or of all or any substantial part of the properties of the Company, or the Company or its respective directors or majority stockholders takes any action looking to the dissolution, liquidation or winding up of the Company;

 

(vi) An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Company under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of the property or assets of the Company or (iii) the winding-up or liquidation of the Company or; and such proceeding or petition shall continue undismissed for thirty (30) days or an order or decree approving or ordering any of the foregoing shall be entered; or

 

(vii) One or more judgments shall be rendered against the Company or and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Company or to enforce any such judgment and such judgment either (i) is for the payment of money in an aggregate amount in excess of $250,000 or (ii) is for injunctive relief and could reasonably be expected to result in a Material Adverse Effect;

 

(viii) If any material portion of the Collateral (as defined in the Security Agreement) is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within fifteen (15) days, or if the Company is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien upon any material portion of the Collateral, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of the Collateral by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within fifteen (15)  days after the Company receives notice thereof;

 

(ix) There shall occur any material event of loss, theft, damage or destruction of any Collateral for which there is less than 80% insurance coverage (subject to reasonable deductibles as determined by the Company and consistent with the Company’s past practices); or

 

(x) The occurrence of any event (financial or otherwise) resulting in, or which will likely result in, a Material Adverse Effect in the Company, as determined by Lender’s Agent in his reasonable discretion, and remains uncured for a period of fifteen (15) days following the earlier of the Company’s knowledge of such event and written notice of such event by Lender’s Agent to the Company (or, such longer period of time as reasonable given the circumstances if such occurrence is not reasonably curable within such thirty (30) day period and provided that the Company is taking steps to cure such occurrence during such thirty (30) day period and thereafter diligently pursues to completion).

 

 

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(b)  Consequences of Events of Default. Subject to the rights of Western Alliance Bank under the Senior Credit Facility, if any Event of Default shall occur for any reason, whether voluntary or involuntary, or continue beyond the expiration of any applicable cure period:

 

(i) upon notice or demand, the Lender’s Agent may declare the outstanding indebtedness under this Note, together with all other amounts due or owing to Lender pursuant to any Ancillary Agreements, to be due and payable, whereupon each of the foregoing shall be and become immediately due and payable, and the Company shall immediately pay to Lender all such indebtedness, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company, anything contained herein or in any Ancillary Agreement to the contrary notwithstanding; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Company under the United States Bankruptcy Code, then all indebtedness under this Note, together with all other amounts due or owing to Lender pursuant to any Ancillary Agreements, shall automatically be due immediately without notice of any kind;

 

(ii) Lender’s Agent may exercise from time to time any rights and remedies available to him under applicable law, including without limitation the right to: (A) immediate possession of the Collateral by Lender’s Agent, (B) institute legal proceedings to foreclose upon the lien and security interest granted under the Security Agreement or for the sale of all Collateral, to recover judgment for all amounts then due and owing from the Company, and to collect the same out of any Collateral or the proceeds of any sale of the Collateral, and (C) peacefully enter upon any premises (whether it be the Lender’s Agent, his agents or attorneys, or an appointment of a receiver selected or appointed by Lender’s Agent to which the Company shall consent to in all respects) where Collateral may then be located, and take possession of all or any of it and/or render it unusable and without being responsible for loss or damage to such Collateral, hold, operate, sell, lease, or dispose of all or any Collateral at one or more public or private sales, leasings or other dispositions, at places and times and on terms and conditions as Lender may deem fit, without any previous demand or advertisement (unless such demand or advertisement is expressly required by law).

 

The Company agrees to pay Lender’s Agent all out-of-pocket costs and expenses reasonably incurred by Lender’s Agent and Lender in any effort to collect indebtedness under this Note and to exercise remedies under the Note Agreement or any Ancillary Agreement, including, without limitation, reasonable attorneys’ fees, and to pay interest at the Default Rate on such costs and expenses to the extent not paid when demanded. Lender’s Agent may exercise any and all of its remedies under the Note Agreement or any Ancillary Agreement contemporaneously or separately from the exercise of any other remedies hereunder or under applicable law.

 

9.  Lost, Stolen, Destroyed or Mutilated Note. In case this Note shall be mutilated, lost, stolen or destroyed, the Company shall issue a new Note of like date, tenor and denomination and deliver the same in exchange and substitution for and upon surrender and cancellation of any mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft or destruction of such Note and an agreement from Lender to indemnify the Company against any claim that may be made against the Company on account of the mutilation, loss, theft or destruction of this Note.

 

10.  Governing Law. This Note is to be construed in accordance with and governed by the laws of the State of New York, without regard to principles of conflict of laws.

 

11.  Amendment and Waiver. Any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consents of the Lender’s Agent and the Company.

 

 

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12.  Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Note shall be made in accordance with Section 7(d) of the Note Agreement.

 

13.  Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

14.  Successors and Assigns; Assignment. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign this Agreement without the prior written consent of the other party.

 

15.  Remedies Cumulative; Failure or Indulgence Not a Waiver. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, the Note Agreement and the Ancillary Agreements. No failure or delay on the part of Lender in the exercise of any power, right or privilege hereunder or under this Note, the Note Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

16.  Payments. Whenever any payment of cash is to be made by the Company to Lender pursuant to this Note, such payment shall be made in lawful money of the United States of America by, at the Company’s option, a check drawn on the account of the Company and sent via overnight courier service to Lender at the address previously provided to the Company in writing (which address shall initially be the address for Lender as set forth in the Note Agreement), electronic funds transfer, or wire transfer of immediately available funds, to an account designated in writing by Lender. Whenever any payment to be made shall otherwise be due on a day which is not a business day, such payment shall be made on the immediately succeeding business day and such extension of time shall be included in the computation of accrued interest.

 

17.  Excessive Interest. Notwithstanding any other provision herein to the contrary, this Note is hereby expressly limited so that the interest rate charged hereunder shall at no time exceed the maximum rate permitted by applicable law. If, for any circumstance whatsoever, the interest rate charged exceeds the maximum rate permitted by applicable law, the interest rate shall be reduced to the maximum rate permitted, and if Lender shall have received an amount that would cause the interest rate charged to be in excess of the maximum rate permitted, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal, such excess shall be refunded to the Company.

 

18.  Waiver of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note or the Ancillary Agreements.

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its officers, thereunto duly authorized as of the date first above written.

 

 

 

	
 
	
DETERMINE, INC.
	
 

	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
Name: 
	
 
	
 

	 	 	 	 
	 	Title:ex10-3.htm

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.

 

 

 

 

  

“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]

 

 

12

 

 

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	 	 	 	 

 

 

 

 

  

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.

  

 

 

 

  

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00252-of-00352.parquet"}]]