SECURITIES AND EXCHANGE COMMISSION  

WASHINGTON, D.C. 20549

 

FORM 8-K  

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

 

Date of report (Date of earliest event reported): February 3, 2016

 

 

DETERMINE , INC.

(Exact name of Company as specified in Charter)

 

 

 

 

 

 

 

Delaware
(State or other jurisdiction of
incorporation or organization)
 

 

000-29637
(Commission File No.)
 

 

77-0432030
(IRS Employee Identification No.)

 

2121 South El Camino Real

San Mateo, California 94403

(Address of Principal Executive Offices)

 

(650) 532-1500
(Issuer Telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2 below).

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

   

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR240.14a-12)

 

   

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

   

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13(e)-4(c))

   

 
 

 

   

Item 1.01

Entry into a Material Definitive Agreement.

 

Amendment of Business Financing Agreement

 

On February 3, 2016, Determine, Inc. (the “Company”) and its wholly owned subsidiary, Determine Sourcing Inc., entered into Amendment Number Five to Amended and Restated Business Financing Agreement (the “Amendment”) with Western Alliance Bank, as successor in interest to Bridge Bank, N.A. (“Western Alliance Bank”). The Amendment, among other things, increases the Company’s available credit under the existing credit facility with Western Alliance Bank (the “Credit Facility”) up to a total available credit amount of $12 million.

 

The summary set forth above does not purport to be complete and is qualified in its entirety by reference to the Amendment included in Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated by reference herein.

 

Limited Guaranty

 

In order to satisfy certain conditions for Western Alliance Bank to lend additional funds under the Credit Facility and enter into the Amendment, on February 3, 2016, Alliance Semiconductor Corporation, a Delaware corporation (“ALSC”) and an affiliate of Lloyd I. Miller, III, the Company’s largest stockholder, entered into a Limited Guaranty (the “Guaranty”) with Western Alliance Bank to provide a limited, non-revocable guaranty of the Company’s Credit Facility in the amount of $3 million, plus an amount equal to 90 days’ finance charges with respect to the cash-secured advances under the Credit Facility. The term of the Guaranty is two years. Western Alliance Bank, in its sole discretion, may reduce, but not increase, the guaranteed amount under the Guaranty during the term. Alan Howe, a member of the Company’s board of directors, is the interim CEO of ALSC.

 

The summary set forth above does not purport to be complete and is qualified in its entirety by reference to the Guaranty filed as Exhibit 10.2 to this Current Report on Form 8-K, which is incorporated by reference herein.

 

Guaranty Fee Agreement

 

In connection with the Guaranty, the Company entered into a Guaranty Fee Agreement (the “Fee Agreement”) with ALSC, pursuant to which the Company agrees to pay ALSC a commitment fee of $100,000 and a monthly fee during the term of the Guaranty. The monthly fee is calculated as follows: Prior to the date that the Company draws the amount under the Credit Facility that is then guaranteed by the Guaranty (the “Guaranteed Amount”), the monthly fee shall be equal to 0.5% of the Guaranteed Amount for the first 12 months of the term and 0.75% of the Guaranteed Amount for the second 12 months of the term. Following the date that the Company draws the Guaranteed Amount under the Credit Facility, the monthly fees shall increase to 1.0% of the Guaranteed Amount during the first 12 months of the term and 1.5% of the Guaranteed Amount during the second 12 months of the term. Such fee increase will not be retroactive for months lapsed during the term of the Guaranty during which the Company has not drawn any portion of the Guaranteed Amount under the Credit Facility. Such commitment fee and the aggregate amount of the monthly fees are payable in cash by the Company within five business days following the termination or expiration of the Guaranty.

 

The summary set forth above does not purport to be complete and is qualified in its entirety by reference to the Fee Agreement filed as Exhibit 10.3 to this Current Report on Form 8-K, which is incorporated by reference herein.

 

Amendment to 2015 Guaranty Fee Agreement

 

On February 3, 2016, the Company, Mr. Miller and MILFAM II L.P., an affiliate of Mr. Miller (together, the “2015 Guarantors”), entered into an Amendment to Guaranty Fee Agreement (the “Fee Amendment”), which amended the Guaranty Fee Agreement, dated March 11, 2015 (the “2015 Fee Agreement”) (which was filed as an exhibit to our Current Report on Form 8-K filed on March 16, 2015 (the “March 2015 8-K”)), entered into by the Company and the 2015 Guarantors in connection with entry into Limited Guaranties, dated March 11, 2015 (the “2015 Guaranties”), by the 2015 Guarantors, as described in the March 2015 8-K. Pursuant to the Fee Amendment, the accrual of fees under the 2015 Fee Agreement is amended such that the monthly fees thereunder began accruing on the date that the Company drew from the Credit Facility the amounts guaranteed by the 2015 Guaranties.

 

 
 

 

   

The summary set forth above does not purport to be complete and is qualified in its entirety by reference to the Fee Amendment filed as Exhibit 10.4 to this Current Report on Form 8-K, which is incorporated by reference herein.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibit

No.

 

Description

10.1

 

Amendment Number Five to Amended and Restated Business Financing Agreement, dated as of February 3, 2016.

     

10.2

 

Limited Guaranty, dated February 3, 2016.

     

10.3

 

Guaranty Fee Agreement, dated February 3, 2016.

     

10.4

 

Amendment to Guaranty Fee Agreement, dated February 3, 2016.

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: February 8, 2016

 

 

     
  DETERMINE, INC.  

 

 

 

 

 

 

 

 

 

By:

/s/ John K. Nolan 

 

 

Name:

John K. Nolan

 

 

Title:

Chief Financial Officer

 

 

 
 

 

 

EXHIBIT INDEX

 

Exhibit

No.

 

Description

10.1

 

Amendment Number Five to Amended and Restated Business Financing Agreement, dated as of February 3, 2016.

     

10.2

 

Limited Guaranty, dated February 3, 2016.

     

10.3

 

Guaranty Fee Agreement, dated February 3, 2016.

     

10.4

 

Amendment to Guaranty Fee Agreement, dated February 3, 2016.

 

Exhibit 10.1

 

AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED BUSINESS FINANCING AGREEMENT

 

This AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED BUSINESS FINANCING AGREEMENT (this “ Amendment ”), dated as of February 3, 2016, is entered into by and among Western Alliance Bank, an Arizona corporation, as successor in interest to Bridge Bank, National Association (“ Lender ”), on the one hand, and Determine Inc., a Delaware corporation, f/k/a Selectica, Inc. (“ Determine ”), and Determine Sourcing, Inc., a Delaware corporation, f/k/a Selectica Sourcing Inc. (“ Sourcing ,” together with Determine, each a “ Borrower ,” and collectively “ Borrowers ”) on the other hand, with reference to the following facts:

 

A.     Borrowers and Lender previously entered into that certain Amended and Restated Business Financing Agreement, dated as of July 25, 2014, as amended by that certain Amendment Number One to Amended and Restated Business Financing Agreement and Waiver of Defaults, dated as of December 31, 2014, that certain Amendment Number Two to Amended and Restated Business Financing Agreement, dated as of March 11, 2015, that certain Amendment Number Three to Amended and Restated Business Financing Agreement, dated as of June 5, 2015, and that certain Amendment Number Four to Amended and Restated Business Financing Agreement and Waiver of Defaults, dated as of November 13, 2015 (as so amended, the “ Agreement ”).

 

B.     Borrowers and Lender desire to further amend the Agreement in accordance with the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby agree as follows:

 

1.      Defined Terms . All initially capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Agreement.

 

2.      Global Amendments to Agreement . The Agreement is hereby amended to replace all references to Selectica Sourcing Inc., a Delaware corporation, with Determine Sourcing, Inc., a Delaware corporation, f/k/a Selectica Sourcing Inc.

 

3.      Amendment to Section 1.1 . Section 1.1 of the Agreement is hereby amended in its entirety as follows:

 

1.1      Advances .

 

 

(a)

ABL Advances . Subject to the terms and conditions of this Agreement, from the date on which this Agreement becomes effective until the Maturity Date, Lender will make ABL Advances to Borrowers not exceeding the ABL Credit Limit or the Borrowing Base, whichever is less; provided that in no event shall Lender be obligated to make any ABL Advance that results in an Overadvance or while any Overadvance is outstanding.

 

 

(b)

Cash-Secured Advances . Subject to the terms and conditions of this Agreement, from the date on which this Agreement becomes effective until the Maturity Date, Lender will make Cash-Secured Advances to Borrowers not exceeding the Cash-Secured Credit Limit; provided that in no event shall Lender be obligated to make any Cash-Secured Advance unless the Cash Collateral is on deposit with Lender and subject to Lender’s first priority perfected security interest.

   

 
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(c)

Cash-Secured Advances II . Subject to the terms and conditions of this Agreement, from the date on which this Agreement becomes effective until the Cash-Secured Advances II Maturity Date, Lender will make Cash-Secured Advances II to Borrowers not exceeding the Cash-Secured Credit Limit II; provided that in no event shall Lender be obligated to make any Cash-Secured Advance II unless the Cash Collateral II is on deposit with Lender and subject to Lender’s first priority perfected security interest.

 

 

(d)

Revolving Advances . Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement. It shall be a condition to each Advance that (a) an Advance Request acceptable to Lender has been received by Lender, (b) all of the representations and warranties set forth in Section 3 are true and correct on the date of such Advance as though made at and as of each such date, and (c) no Default has occurred and is continuing, or would result from such Advance

 

4.      Amendment to Section 1.7 . Section 1.7 of the Agreement is hereby amended in its entirety as follows:

 

 

1.7

Recourse; Maturity . Advances and the other Obligations shall be with full recourse against Borrowers. On the Maturity Date, Borrowers will pay all then outstanding ABL Advances, Cash-Secured Advances and other Obligations (other than Cash-Secured Advances II) to the Lender or such earlier date as shall be herein provided. On the Cash-Secured Advances II Maturity Date, Borrowers will pay all then outstanding Cash-Secured Advances II and other Obligations to the Lender or such earlier date as shall be herein provided.

 

5.      Amendment s to Section s 2.2(a) and (b) . Sections 2.2(a) and (b) of the Agreement are hereby amended in their entirety as follows:

 

 

(a)

Termination Fee . In the event this Agreement is terminated on or before February 3, 2017, Borrowers shall pay Lender the Termination Fee.

 

 

(b)

Facility Fee . Borrowers shall pay (i) the Facility Fee with respect to the ABL Credit Limit and the Cash Secured Credit Limit to Lender on March 20 of each year, and (ii) the Facility Fee with respect to the Cash Secured Credit Limit II to Lender on February 3 of each year.

 

6.      Amendment s to Section 12.1 .

 

(a)     The following defined terms set forth in Section 12.1 of the Agreement are hereby amended in their entirety as follows:

 

Advance ” means an ABL Advance, a Cash-Secured Advance, or a Cash-Secured Advance II.

 

Advance Request ” means a writing in form and substance satisfactory to Lender and signed by an Authorized Person requesting either an ABL Advance, a Cash-Secured Advance, or a Cash-Secured Advance II.

 

Asset Coverage Ratio means (i) the sum of (a) Borrowers’ unrestricted cash maintained on deposit at Lender (or subject to a control agreement in form and substance reasonably acceptable to Lender in its sole discretion) (excluding proceeds of Cash-Secured Advances) plus (b) Eligible Receivables (as reported on the most recent borrowing base certificate), divided by (ii) the Obligations (excluding Cash-Secured Advances, Cash Secured Advances II, and Advances under the Non-Formula Sublimit).

 

 
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Collateral ” means all of each Borrower’s rights and interest in any and all personal property, whether now existing or hereafter acquired or created and wherever located, and all products and proceeds thereof and accessions thereto, including but not limited to the following: (a) all accounts (including health care insurance receivables), chattel paper (including tangible and electronic chattel paper), inventory (including all goods held for sale or lease or to be furnished under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto), instruments (including promissory notes), investment property (including securities and securities entitlements), documents (including negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of such Borrower which is now or hereafter identified by Borrowers or Lender, general intangibles (including payment intangibles and software), goods (including fixtures) and all of such Borrower’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; (b) the Cash Collateral and the Cash Collateral II, and (c) any and all cash proceeds and/or noncash proceeds thereof, including without limitation, insurance proceeds, and all supporting obligations and the security therefore or for any right to payment.

 

Credit Limit ” means $12,000,000, which is intended to be the maximum amount of Advances at any time outstanding.

 

Facility Fee ” means, (a) with respect to the ABL Credit Limit and the Cash Secured Credit Limit, a payment of an annual fee equal to $67,500 due on March 20 of each year so long us any ABL Advance or Cash Secured Advance is outstanding or available hereunder, and (b) with respect to the Cash Secured Credit Limit II, a payment of an annual fee equal to $22,500 due on February 3 of each year so long us any Cash Secured Advance II is outstanding or available hereunder.

 

Finance Charge Percentage ” means, (a) with respect to all ABL Advances, a rate per year equal to the Prime Rate plus one quarter of one percentage point (0.25), plus an additional 5.00 percentage points during any period that an Event of Default has occurred and is continuing, (b) with respect to all Cash-Secured Advances, a rate per year equal to the CD Rate plus two (2) percentage points, plus an additional 5.00 percentage points during any period that an Event of Default has occurred and is continuing, and (c) with respect to all Cash-Secured Advances II, a rate per year equal to the CD Rate plus two (2) percentage points, plus an additional 5.00 percentage points during any period that an Event of Default has occurred and is continuing.

 

(b)     The following new defined terms are hereby added to Section 12.1 of the Agreement in alphabetical order:

 

Alliance ” means Alliance Semiconductor Corporation, a Delaware corporation.

 

Cash Collateral II ” means the sum of $3,000,000 plus an amount equal to 90 days Finance Charge with respect to the Cash-Secured Advances II (assuming that the full amount of Cash-Secured Advances II available hereunder are outstanding at all times) in cash collateral in which Alliance has granted to Lender a first priority perfected security interest to secure the Cash-Secured Advances II and all other Obligations.

 

Cash-Secured Advance II ” means an advance made by Lender to Borrowers under Section 1.1(c) of this Agreement.

 

 
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Cash-Secured Advance s II Maturity Date ” means February 3, 2017.

 

Cash-Secured Credit Limit II ” means $3,000,000, which is intended to be the maximum amount of Cash-Secured Advances II at any time outstanding.

 

7.              Amendment to Section 15 . Section 15 of the Agreement is hereby amended in its entirety as follows:

 

 

15.

EXECUTION, EFFECTIVENESS, SURVIVAL . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other documents executed in connection herewith constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall become effective upon the execution and delivery hereof by Borrowers and Lender, and shall continue in full force and effect until all Obligations have been paid in full and all of Lender’s obligations hereunder have been terminated. Lender reserves the right to issue press releases, advertisements, and other promotional materials describing any successful outcome of services provided on Borrowers’ behalf. Each Borrower agrees that Lender shall have the right to identify such Borrower by name in those materials.

 

8.             Conditions Precedent to Effectiveness of Amendment . The effectiveness of this Amendment is subject to and contingent upon the fulfillment of each and every one of the following conditions to the satisfaction of Lender:

 

(a)            Lender shall have received this Amendment, duly executed by Borrowers;

 

(b)            Lender shall have received a limited continuing guaranty of the Cash-Secured Advances II, duly executed by Alliance and otherwise in form and substance satisfactory to Lender;

 

(c)            Lender shall have received a collateral pledge agreement of the Cash Collateral II, duly executed by Alliance and otherwise in form and substance satisfactory to Lender;

 

(d)            Lender shall have received the Cash Collateral II in accordance with the collateral pledge agreement described above;

 

(e)            Lender shall have received the Facility Fee with respect to the Cash-Secured Credit Limit II in the amount of $22,500, which Facility Fee shall be fully earned and non-refundable.

 

(f)            No Event of Default or Default shall have occurred and be continuing; and

 

(g)           All of the representations and warranties set forth herein and in the Agreement shall be true, complete and accurate in all respects as of the date hereof (except for representations and warranties which are expressly stated to be true and correct as of the date of the Agreement).

 

9.            Representations and Warranties . In order to induce Lender to enter into this Amendment, each Borrower hereby represents and warrants to Lender that:

 

(a)           No Event of Default or Default is continuing;

 

 
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(b)          All of the representations and warranties set forth herein and in the Agreement are true, complete and accurate in all respects (except for representations and warranties which are expressly stated to be true and correct as of the date of the Agreement); and

 

(c)          This Amendment has been duly executed and delivered by Borrowers, and the Agreement continues to constitute the legal, valid and binding agreements and obligations of Borrowers, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, and similar laws and equitable principles affecting the enforcement of creditors’ rights generally.

 

10.          Counterparts; Telefacsimile Execution . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

 

11.          Integration . The Agreement as amended by this Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and thereof, and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof and thereof.

 

12.          No Waiver . The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default, whether or not known to Lender and whether or not existing on the date of this Amendment.

 

13.           Release .

 

(a)     Each Borrower hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Borrower has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. Each Borrower certifies that it has read the following provisions of California Civil Code Section 1542:

 

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

 

(b)     Each Borrower understands and acknowledges that the significance and consequence of this waiver of California Civil Code Section 1542 is that even if it should eventually suffer additional damages arising out of the facts referred to above, it will not be able to make any claim for those damages. Furthermore, each Borrower acknowledges that it intends these consequences even as to claims for damages that may exist as of the date of this release but which it does not know exist, and which, if known, would materially affect its decision to execute this Agreement, regardless of whether its lack of knowledge is the result of ignorance, oversight, error, negligence, or any other cause.

 

 
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14.           Reaffirmation of the Agreement . The Agreement as amended hereby remains in full force and effect.

 

[remainder of page intentionally left blank]

 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the date first hereinabove written.

 

 

DETERMINE INC . ,

 

  a Delaware corporation  

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name: 

 

 

 

Title: 

 

 

       
       
  DETERMINE SOURCING, INC. ,  
  a Delaware corporation  
       
       
  By:    
  Name:    
  Title:    

 

 

 

Amendment Number Five to Amended and Restated Business Financing Agreement

 

 
 

 

 

 

 

WESTERN ALLIANCE BANK,

 

  an Arizona corporation  

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Amendment Number Five to Amended and Restated Business Financing Agreement 

Exhibit 10.2

 

LIMITED GUARANTY
as of February 3, 2016

 

To:     WESTERN ALLIANCE BANK

 

1.            The Guaranty .

 

(a)     For valuable consideration, the undersigned (" Guarantor ") hereby unconditionally guarantees and promises to pay promptly to Western Alliance Bank, an Arizona corporation, as successor-in-interest to Bridge Bank, N.A. (" Lender "), or order, in lawful money of the United States, any and all Indebtedness of Determine, Inc., a Delaware corporation, f/k/a Selectica, Inc., and Determine Sourcing, Inc., a Delaware corporation, f/k/a Selectica Sourcing Sourcing Inc., (individually and collectively, jointly and severally, the " Borrower "), to Lender when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter. Except as otherwise provided in Section 1(b) , the liability of Guarantor under this Guaranty is not limited as to the principal amount of the Indebtedness guaranteed and includes, without limitation, liability for all interest, fees, indemnities (including, without limitation, hazardous waste indemnities), and other costs and expenses relating to or arising out of the Indebtedness. The liability of Guarantor is continuing and relates to any Indebtedness, including that arising under successive transactions which shall either continue the Indebtedness or from time to time renew it after it has been satisfied. This Guaranty is cumulative and does not supersede any other outstanding guaranties, and the liability of Guarantor under this Guaranty is exclusive of Guarantor's liability under any other guaranties signed by Guarantor. If more than one individual or entity sign this Guaranty, their obligations under this Guaranty shall be joint and several.

 

(b)     Notwithstanding anything to the contrary contained in this Guaranty, the maximum liability of Guarantor to Lender pursuant to this Guaranty shall be an amount equal to $3,000,000.00, plus an amount equal to 90 days Finance Charge with respect to the Cash-Secured Advances II (assuming that the full amount of Cash-Secured Advances II available under the Financing Agreement (as hereinafter defined), are outstanding at all times), plus any amounts owing under Section 25 of this Guaranty (collectively, the " Guaranteed Amount ").

 

(c)     Notwithstanding anything to the contrary contained in this Guaranty, Guarantor's obligations under this Guaranty shall automatically and immediately terminate at such time as (i) the Indebtedness has been fully performed and indefeasibly paid in full, and (ii) all of Lender's obligations under the Financing Agreement have been terminated.

 

2.            Definitions . All initially capitalized terms used but not defined herein have the respective meanings assigned to them in the Financing Agreement:

 

(a)     " Borrower " means the individual or the entity named in Paragraph 1 of this Guaranty and, if more than one, then any one or more of them.

 

(b)     " Financing Agreement " means that certain Amended and Restated Business Financing Agreement dated as of July 25, 2014 by and between Borrower and Lender, as amended by that certain Amendment Number One to Amended and Restated Business Financing Agreement and Waiver of Defaults dated as of December 31, 2014, that certain Amendment Number Two to Amended and Restated Business Financing Agreement and Consent dated as of March 11, 2015, that certain Amendment Number Three to Amended and Restated Business Financing Agreement dated as of June 5, 2015, that certain Amendment Number Four to Amended and Restated Business Financing Agreement dated as of November 13, 2015, that certain Amendment Number Five to Amended and Restated Business Financing Agreement dated as of even date herewith, and as may be further amended or restated from time to time.

 

(c)     " Guarantor " means the individual or the entity signing this Guaranty and, if more than one, then any one or more of them, jointly and severally.

 

 
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(d)     " Indebtedness " means any and all debts, liabilities, and obligations of Borrower to Lender, now or hereafter existing, whether voluntary or involuntary and however arising, whether direct or indirect or acquired by Lender by assignment, succession, or otherwise, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, held or to be held by Lender for its own account or as agent for another or others, whether Borrower may be liable individually or jointly with others, whether recovery upon such debts, liabilities, and obligations may be or hereafter become barred by any statute of limitations, and whether such debts, liabilities, and obligations may be or hereafter become otherwise unenforceable. Indebtedness includes, without limitation, any and all obligations of Borrower to Lender for reasonable attorneys' fees and all other costs and expenses incurred by Lender in the collection or enforcement of any debts, liabilities, and obligations of Borrower to Lender.

 

3.            Obligations Independent . The obligations hereunder are independent of the obligations of Borrower or any other guarantor, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Borrower or any other guarantor or whether Borrower or any other guarantor be joined in any such action or actions. Anyone executing this Guaranty shall be bound by its terms without regard to execution by anyone else.

 

4.            Rights of Lender . Guarantor authorizes Lender, without notice or demand and without affecting its liability hereunder, from time to time to: (a) renew, compromise, extend, accelerate, or otherwise change the time for payment, or otherwise change the terms, of the Indebtedness or any part thereof (subject only to the terms of the Financing Agreement), including increase or decrease of the rate of interest thereon, or otherwise change the terms of the Indebtedness; (b) receive and hold security for the payment of any Indebtedness and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security; (c) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; and (d) release or substitute any Guarantor or any one or more of any endorsers or other guarantors of any of the Indebtedness.

 

5.            Guaranty to be Absolute . Guarantor agrees that until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated, Guarantor shall not be released by or because of the taking, or failure to take, any action that might in any manner or to any extent vary the risks of Guarantor under this Guaranty or that, but for this paragraph, might discharge or otherwise reduce, limit, or modify Guarantor's obligations under this Guaranty. Guarantor waives and surrenders any defense to any liability under this Guaranty based upon any such action, including but not limited to any action of Lender described in the immediately preceding paragraph of this Guaranty. It is the express intent of Guarantor that Guarantor's obligations under this Guaranty are and shall be absolute and unconditional.

 

6.            Guarantor's Waivers of Certain Rights and Certain Defenses . Guarantor waives: (a) any right to require Lender to proceed against Borrower, proceed against or exhaust any security for the Indebtedness, or pursue any other remedy in Lender's power whatsoever; (b) any defense arising by reason of any disability or other defense of Borrower, or the cessation from any cause whatsoever of the liability of Borrower; (c) any defense based on any claim that Guarantor's obligations exceed or are more burdensome than those of Borrower; and (d) the benefit of any statute of limitations affecting Guarantor's liability hereunder. No provision or waiver in this Guaranty shall be construed as limiting the generality of any other waiver contained in this Guaranty.

 

7.            Waiver of Notices . Guarantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of intent to accelerate, notices of acceleration, notices of any suit or any other action against Borrower or any other person, any other notices to any party liable on the Indebtedness (including Guarantor), notices of acceptance of this Guaranty, and notices of the existence, creation, or incurring of new or additional Indebtedness.

 

8.           Waivers of Other Rights and Defenses .

 

(a)     Guarantor waives any rights and defenses that are or may become available to Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code.

 

 
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(b)     Guarantor waives all rights and defenses that Guarantor may have because any of the Indebtedness is secured by real property. This means, among other things: (i) Lender may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower; and (ii) if Lender forecloses on any real property collateral pledged by Borrower: (1) the amount of the Indebtedness may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because any of the Indebtedness is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

 

(c)     Guarantor waives any right or defense it may have at law or equity, including California Code of Civil Procedure Section 580a, to a fair market value hearing or action to determine a deficiency judgment after a foreclosure.

 

9.             Security . To secure all of Guarantor's obligations hereunder, Guarantor assigns and grants to Lender a security interest in all moneys, securities, and other property of Guarantor now or hereafter in the possession of Lender, all deposit accounts of Guarantor maintained with Lender, and all proceeds thereof. Upon default or breach of any of Guarantor's obligations to Lender, Lender may apply any deposit account to reduce the Indebtedness, and may foreclose any collateral as provided in the Uniform Commercial Code and in any security agreements between Lender and Guarantor.

 

10.           Subordination . Any indebtedness of Borrower to Guarantor, now or hereafter existing, including but not limited to any indebtedness to Guarantor as subrogee of Lender or resulting from Guarantor's performance under this Guaranty, are hereby subordinated to the Indebtedness. In addition to Guarantor's waiver of any right of subrogation as set forth in this Guaranty with respect to any indebtedness of Borrower to Guarantor as subrogee of Lender, Guarantor agrees that, if Lender so requests at any time when an Event of Default has occurred and is continuing, Guarantor shall not demand, take, or receive from Borrower, by setoff or in any other manner, payment of any other indebtedness of Borrower to Guarantor until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated. If any payments are received by Guarantor in violation of such waiver or agreement, such payments shall be received by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Indebtedness, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. Any security interest, lien, or other encumbrance that Guarantor may now or hereafter have on any property of Borrower is hereby subordinated to any security interest, lien, or other encumbrance that Lender may have on any such property.

 

11.           Revocation of Guaranty .

 

(a)     Guarantor absolutely, unconditionally, knowingly, and expressly waives any right to revoke this Guaranty as to future Indebtedness and, in light thereof, all protection afforded Guarantor under Section 2815 of the California Civil Code. Guarantor fully realizes and understands that, upon execution of this agreement, Guarantor will not have any right to revoke this Guaranty as to any future Indebtedness and, thus, may have no control over such Guarantor's ultimate responsibility for the Indebtedness. If, contrary to the express intent of this agreement, any such revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that: (a) no such revocation shall be effective until written notice thereof has been received by Lender; (b) no such revocation shall apply to any Indebtedness in existence on such date (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof); (c) no such revocation shall apply to any Indebtedness made or created after such date to the extent made or created pursuant to a legally binding commitment of Lender which is, or is believed in good faith by Lender to be, in existence on the date of such revocation; (d) no payment by Borrower, or from any other source, prior to the date of such revocation shall reduce the obligations of such Guarantor hereunder; and (e) any payment by Borrower or from any source other than such Guarantor, subsequent to the date of such revocation, shall first be applied to that portion of the obligations, if any, as to which the revocation by such Guarantor is effective (and which are not, therefore, guarantied by such Guarantor hereunder), and, to the extent so applied, shall not reduce the obligations of such Guarantor hereunder.

 

 
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(b)     In the event of the death of a Guarantor, the liability of the estate of the deceased Guarantor shall continue in full force and effect as to (i) the Indebtedness existing at the date of death, and any renewals or extensions thereof, and (ii) loans or advances made to or for the account of Borrower after the date of the death of the deceased Guarantor pursuant to a commitment made by Lender to Borrower prior to the date of such death. As to all surviving Guarantors, this Guaranty shall continue in full force and effect after the death of a Guarantor, not only as to the Indebtedness existing at that time, but also as to the Indebtedness thereafter incurred by Borrower to Lender.

 

(c)     Guarantor acknowledges and agrees that this Guaranty may be revoked only in accordance with the foregoing provisions of this paragraph and shall not be revoked simply as a result of any change in name, location, or composition or structure of Borrower, the dissolution of Borrower, or the termination, increase, decrease, or other change of any personnel or owners of Borrower.

 

12.           Reinstatement of Guaranty . If this Guaranty is revoked, returned, or cancelled, and subsequently any payment or transfer of any interest in property by Borrower to Lender is rescinded or must be returned by Lender to Borrower, this Guaranty shall be reinstated with respect to any such payment or transfer, regardless of any such prior revocation, return, or cancellation.

 

13.           Stay of Acceleration . In the event that acceleration of the time for payment of any of the Indebtedness is stayed upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise, all such Indebtedness guaranteed by Guarantor shall nonetheless be payable by Guarantor immediately if requested by Lender.

 

14.           No Deductions . All payments by Guarantor hereunder shall be paid in full, without setoff or counterclaim or any deduction or withholding whatsoever, including, without limitation, for any and all present and future taxes. In the event that Guarantor or Lender is required by law to make any such deduction or withholding, Guarantor agrees to pay on behalf of Lender such amount directly to the appropriate person or entity, or if the Guarantor cannot legally comply with the foregoing, Guarantor shall pay to Lender such additional amounts as will result in the receipt by Lender of the full amount payable hereunder. Guarantor shall promptly provide Lender with evidence of payment of any such amount made on Lender's behalf.

 

15.           Information Relating to Borrower . Guarantor acknowledges and agrees that it shall have the sole responsibility for, and has adequate means of, obtaining from Borrower such information concerning Borrower's financial condition or business operations as Guarantor may require, and that Lender has no duty, and Guarantor is not relying on Lender, at any time to disclose to Guarantor any information relating to the business operations or financial condition of Borrower.

 

16.           Borrower's Authorization . Where Borrower is a corporation, partnership, trust, or limited liability company, it is not necessary for Lender to inquire into the powers of Borrower or of the officers, directors, partners, members, managers, or agents acting or purporting to act on its behalf, and any Indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder, subject to any limitations on Guarantor's liability set forth herein.

 

17.           Information Relating to Guarantor . Guarantor authorizes Lender to verify or check any information given by Guarantor to Lender, check Guarantor's credit references, verify employment, and obtain credit reports. Guarantor acknowledges and agrees that the authorizations provided in this paragraph apply to any individual general partner of Guarantor and to Guarantor's spouse and any such general partner's spouse if Guarantor or such general partner is married and lives in a community property state.

 

18.           Guarantor's Covenants . Until the Indebtedness has been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Indebtedness have been terminated and each and every term, covenant, and condition of this Guaranty is fully performed, Guarantor agrees:

 

 
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(a)     to provide the following financial information and statements in form and content acceptable to Lender, and such additional information as requested by Lender from time to time:

 

(i)     Guarantor's annual financial statements upon request of Lender. These financial statements must be audited by a Certified Public Accountant ("CPA") acceptable to Lender;

 

(ii)     Guarantor's quarterly financial statements upon request of Lender. These financial statements must be certified and dated by an authorized financial officer of Guarantor;

 

(iii)     additional information reasonably requested by Lender from time to time regarding the financial condition of any corporations, partnerships, limited liability companies, or other entities in which Guarantor owns, directly or indirectly, a material interest; and

 

(iv)     copies of Guarantor's federal income tax return (with all forms K-1 attached, if applicable) together with a statement of any contributions made by Guarantor to any subchapter S corporation or trust, and, if requested by Lender, copies of any extensions of the filing date.

 

19.           Taxes . Guarantor represents and warrants that it is organized and resident in the United States of America. If Guarantor must make a payment under this Guaranty, Guarantor represents and warrants that it will make the payment from one of its U.S. resident offices to a U.S. office of Lender so that no withholding tax is imposed on the payment. If notwithstanding the foregoing, Guarantor makes a payment under this Guaranty to which withholding tax applies, then Guarantor shall pay any taxes (other than taxes on net income (a) imposed by the country or any subdivision of the country in which Lender's principal office or actual lending office is located and (b) measured by the United States taxable income Lender would have received if all payments under or in respect of this Guaranty were exempt from taxes levied by Guarantor's country) that are at any time imposed on any such payments under or in respect of this Guaranty including, but not limited to, payments made pursuant to this paragraph. Further, Guarantor shall also pay to Lender, on demand, all additional amounts that Lender specifies as necessary to preserve the after-tax yield Lender would have received if such taxes had not been imposed.

 

20.           Change of Status . Guarantor shall not enter into any consolidation, merger, or other combination unless Guarantor is the surviving business entity. Further, Guarantor shall not change its legal structure unless (a) Guarantor obtains the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed, and (b) all Guarantor's obligations under this Guaranty are assumed by the new business entity.

 

21.           Notices . All notices required under this Guaranty shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of this Guaranty, or sent by facsimile to the fax numbers listed on the signature page, or sent by electronic mail to the email addresses listed on the signature page, or to such other addresses as Lender and Guarantor may specify from time to time in writing. Notices sent by (a) first class mail shall be deemed delivered on the earlier of actual receipt or on the fourth business day after deposit in the U.S. mail, postage prepaid, (b) overnight courier shall be deemed delivered on the next business day, and (c) telecopy and electronic mail shall be deemed delivered when transmitted.

 

22.           Successors and Assigns . This Guaranty (a) binds Guarantor and Guarantor's executors, administrators, successors, and assigns, provided that Guarantor may not assign its rights or obligations under this Guaranty without the prior written consent of Lender, and (b) inures to the benefit of Lender and Lender's indorsees, successors, and assigns. Lender may, with notice to Guarantor and without affecting Guarantor's obligations hereunder, sell, assign, grant participations in, or otherwise transfer to any other person, firm, or corporation the Indebtedness and this Guaranty, in whole or in part. Guarantor agrees that Lender may disclose to any assignee or purchaser, or any prospective assignee or purchaser, of all or part of the Indebtedness any and all information in Lender's possession concerning Guarantor, this Guaranty, and any security for this Guaranty.

 

 
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23.           Amendments, Waivers, and Severability . No provision of this Guaranty may be amended or waived except in writing. No failure by Lender to exercise, and no delay in exercising, any of its rights, remedies, or powers shall operate as a waiver thereof, and no single or partial exercise of any such right, remedy, or power shall preclude any other or further exercise thereof or the exercise of any other right, remedy, or power. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision of this Guaranty.

 

24.           Costs and Expenses . Guarantor agrees to pay all reasonable attorneys' fees, including allocated costs of Lender's in-house counsel, and all other costs and expenses which may be reasonably incurred by Lender (a) in the enforcement of this Guaranty or (b) in the preservation, protection, or enforcement of any rights of Lender in any case commenced by or against Guarantor or Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute.

 

25.           Governing Law and Jurisdiction . This Guaranty shall be governed by and construed under the laws of the State of California. Guarantor irrevocably (a) submits to the non-exclusive jurisdiction of any federal or state court sitting in the State of California in any action or proceeding arising out of or relating to this Guaranty and (b) waives to the fullest extent permitted by law any defense asserting an inconvenient forum in connection therewith. Service of process by Lender in connection with such action or proceeding shall be binding on Guarantor if sent to Guarantor by registered or certified mail at its address specified below.

 

26.           Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

 

27.           Reference Provision .

 

(a)     In the event the Jury Trial waiver is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

 

(b)     With the exception of the items specified in Section 28(c) below, any controversy, dispute or claim (each, a " Claim ") between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned parties (collectively in this Section, the " Loan Documents "), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (" CCP "), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the " Court ").

 

 
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(c)     The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

 

(d)     The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

 

(e)     The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.

 

(f)     The referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party's failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based upon good cause shown, no party shall be entitled to "priority" in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

 

(g)     Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject to the referee's power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

 

(h)     The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding and conclusive. The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

 

 
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(i)     If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

 

(j)     THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

28.           Remedies . All rights and remedies provided in this Guaranty and any instrument or agreement referred to herein are cumulative and are not exclusive of any rights or remedies otherwise provided by law. Any single or partial exercise of any right or remedy shall not preclude the further exercise thereof or the exercise of any other right or remedy.

 

29.           Severability . The illegality or unenforceability of any provision of this Guaranty or any instrument or agreement referred to herein shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Guaranty or any instrument or agreement referred to herein.

 

[remainder of this page intentionally left blank]

 

 
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Executed as of the date set forth on the first page.

 

 

 

ALLIANCE SEMICONDUCTOR CORPORATION ,

 

  a Delaware corporation  

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

       
     
Address for notices to Lender: Address for notices to Guarantor:  
     
Western Alliance Bank Alliance Semiconductor Corporation  
55 Almaden Boulevard, Suite 100 10755 Scripps Poway Parkway, # 302  
San Jose, CA 95113 San Diego, CA 92131  
Attn: Lee Shodiss Attn: Alan Howe  
  Email: ahowe@bbi-llc.com  

 

 

LIMITED GUARANTY 

Exhibit 10.3

 

GUARANTY FEE AGREEMENT

 

This Guaranty Fee Agreement (this “ Agreement ”) sets forth the terms of a guaranty fee arrangement entered into and made effective as of February 3, 2016 (“the Effective Date ”) by and between the Guarantor, as defined below, and Determine, Inc., a Delaware corporation formerly known as Selectica, Inc. (the “ Company ” and, collectively with the Guarantor, the “ Parties ” and each a “ Party ”).

 

RECITALS

 

WHEREAS, pursuant to the Limited Guaranty, dated of even date herewith (the “ Guaranty ”), entered into by Alliance Semiconductor Corporation (the “ Guarantor ”), the Company and Western Alliance Bank, as successor in interest to Bridge Bank, National Association (“ Lender ”), the Guarantor agreed to serve as a limited guarantor of $3 million of the Company’s loan 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, as such guaranteed amount may be reduced in accordance with the terms of the Guaranty (such guaranteed amount as is in effect on any specific date during the term of this Agreement, the “ Guaranteed Amount ”);

 

WHEREAS, the Guaranty was entered into to satisfy certain conditions for Lender to lend additional funds to the Company under the Credit Agreement; and

 

WHEREAS, the Guarantor has agreed to guarantee the payment obligations of the Company with respect to the Guaranteed Amount under the Credit Agreement, and in consideration thereof, the Company has agreed to pay the Guarantor an arm’s length guaranty fee, as described herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth, the Parties hereto agree as follows:

 

1.      Guaranty Fees .

 

(a)      Commitment Fee . In consideration of the Guaranty, the Company shall pay the Guarantor a commitment fee of $100,000 (the “ Commitment Fee ”), payable in cash within five (5) business days following the date of termination or expiration of this Agreement (the date of such payment, the “ Payment Date ”). The Commitment Fee shall accrue, without interest, on the Effective Date.

 

(b)      Monthly Fee . During the term of this Agreement, the Company shall pay the Guarantor a monthly fee calculated as follows:

 

(i)     Prior to the date that the Company draws down the Guaranteed Amount under the Credit Agreement (the “ Draw Date ”), the monthly fee shall be equal to (A) 0.5% of the Guaranteed Amount for months (including partial months) 1 through 12 following the Effective Date (including the month in which the Effective Date falls) and (B) 0.75% of the Guaranteed Amount for months 13 through 24 following the Effective Date (the “ Pre-Draw Date Monthly Fee ”); and

 

(ii)     Following the Draw Date, the monthly fee shall be increased to equal (A) 1.0% of the Guaranteed Amount for months (including partial months) 1 through 12 following the Effective Date and (B) 1.5% of the Guaranteed Amount for months 13 through 24 following the Effective Date (the “ Post-Draw Date Monthly Fee ” and, together with the Pre-Draw Date Monthly Fee, the “ Monthly Fee ”). For the sake of clarity, following the Draw Date, the Company shall have no obligation to make up the difference between the Pre-Draw Date Monthly Fee and Post-Draw Date Monthly Fee for the months elapsed prior to the Draw Date.

 

(iii)     The aggregate amount of the Monthly Fees shall be payable in cash on the Payment Date. The applicable Monthly Fees shall accrue, without interest, on the first business day of each month during the term of this Agreement.

 

 
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2.      Term . The term of this Agreement shall begin on the Effective Date and shall automatically terminate upon the expiration or termination of the Guaranty.

 

3.      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).

 

4.      Severability . If any provision in this Agreement shall be found or be held to be invalid or unenforceable, then the meaning of said provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement which shall remain in full force and effect unless the severed provision is essential and material to the rights or benefits received by any Party. In such event, the Parties shall use good faith efforts to negotiate a substitute, valid and enforceable provision or agreement that most nearly affects the Parties’ intent in entering into this Agreement.

 

5.      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.

 

6.      Assignment . The Company may not assign this Agreement, its rights or responsibilities hereunder, without the prior written authorization of the Guarantor. Any assignment in derogation of the foregoing shall be void.

 

7.      Amendment . This Agreement may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by the Company and the Guarantor.

 

8.      Notices . Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient (a) upon receipt, when delivered personally or by courier, (b) the next business day after sent, when sent by overnight delivery service, (c) 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 (d) 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.

 

9.      Sufficiency of Consideration . The Parties jointly and severally represent, warrant and covenant that each has received full and sufficient consideration for all grants made and obligations undertaken, in this Agreement.

 

10.      Taxes . Each Party hereto shall be responsible for any and all taxes levied as a result of the performance of each Party’s respective activities under this Agreement.

 

11.      Entire Agreement . This Agreement, along with the Guaranty, 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.

 

12.      Headings . The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

13.      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.

 

 
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IN WITNESS WHEREOF, this Guaranty Fee Agreement has been duly executed as of the date first set forth above:

 

 

 

Company”

 

 

 

DETERMINE, INC.

   

 

 

 

By:

   

 

Name: John K. Nolan

Title: Chief Financial Officer

 

 

 

Address for notices:

 

 

 

Determine, Inc.

2121 South El Camino Real, 10th Floor

San Mateo, CA 94403

Attention: John K. Nolan

Fax: (650) 532-1540

E-mail: jnolan@determine.com

 

 

 

With a copy to:

 

 

 

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, CA 94303

Attention: Eric Wang

Fax: (650) 687-1205

E-mail: eric.wang@dlapiper.com

 

 

 

 

 

Guarantor”

 

 

 

ALLIANCE SEMICONDUCTOR CORPORATION

 

 

   
  By:    
 

Name:

Title:

   
 

Address for notices:

   
 

10755 Scripps Poway Pkwy, #302

San Diego, CA 92131

Attention: Alan B. Howe, Interim CEO

   
 

With a copy to:

   
  O’Melveny & Myers, LLP

Two Embarcadero Center, 28th Floor

San Francisco, CA 94111

Attention: Brophy Christensen

Fax: (415) 984-8701

E-mail: bchristensen@omm.com

 

Exhibit 10.4

 

AMENDMENT TO GUARANTY FEE AGREEMENT

 

This Amendment to Guaranty Fee Agreement (this “ Amendment ”), effective as of February 3, 2016 (the “ Effective Date ”), is entered into by and among each of Determine, Inc., a Delaware corporation formerly known as Selectica, Inc. (the “ Company ”), Lloyd I. Miller, III and MILFAM II L.P. together, the “ Guarantors ”). Capitalized terms used but not otherwise defined herein shall have the meaning assigned to them in the Fee Agreement (as defined below).

 

The Company and the Guarantors are parties to the Guaranty Fee Agreement, effective as of March 11, 2014 (the “ Fee Agreement ”), pursuant to each of which the Company agreed to pay certain fees to the Guarantors in exchange for the debt Guaranties provided by the Guarantors contemplated thereunder.

 

The Company and the Guarantors desire to amend the Fee Agreement in order to clarify certain terms and conditions therein, as more fully set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the Company and the Guarantors hereby amend the Fee Agreement in the following manner:

 

1.          Amendment of Monthly Fee . Section 1(b) of the Fee Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b)      Monthly Fee . During the term of this Agreement, following the date that the Company draws down the Guaranteed Amount under the Credit Agreement (the “ Draw Date ”), the Company shall pay the Guarantors a monthly fee equal to (i) 1.0% of the Guaranteed Amount for months (including partial months) 1 through 12 following the Effective Date (including the month in which the Draw Date falls, but excluding any months prior to the Draw Date) and (ii) 1.5% of the Guaranteed Amount for months 13 through 24 following the Effective Date (the “ Monthly Fee ”). The Monthly Fees shall accrue, without interest, on the first business day of each month, beginning with the month in which the Draw Date occurs. By way of example for the sake of clarity, if the Draw Date occurs in the second month of the term of this Agreement, no Monthly Fee would accrue for the first month of the term of this Agreement, and the Company would owe the Guarantors Monthly Fees equal to 1.0% of the Guaranteed Amount for months 2 through 12 and 1.5% of the Guaranteed Amount for months 13 through 24. The aggregate amount of the Monthly Fees shall be payable in cash on the Payment Date.”

 

2.          Miscellaneous .

 

a.      Effect on Fee Agreement . Except as amended hereby, the Fee Agreement shall remain in full force and effect.

 

b.      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 Amendment.

 

c.      Notice . All notices and communications required or permitted hereunder shall be given as set forth in the Fee Agreement.

 

 
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d.      Successors and Assigns . This Amendment, 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.

 

e.      Governing Law . This Amendment 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).

 

f.      Entire Agreement . This Amendment, along with the Fee Agreement (as amended hereby), 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.

 

g.      Counterparts . This Amendment 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.

 

 

 

[Remainder of Page Intentionally Left Blank]

 

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

 

 

 

“Company”

 

 

 

DETERMINE, INC.

 

 

 

 

 

By:

 

 

 

John K. Nolan

Chief Financial Officer

 

 

 

 

 

 

“Guarantors”

 

 

 

LLOYD I. MILLER, III

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

MILFAM II L.P.

   
 

By: MILFAM LLC

 

Its: General Partner

   
   
  By:  
 

Name:  Lloyd I. Miller, III

Title:    Manager