CALICO COMMERCE INC/
EXHIBIT 10.16
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>3
<FILENAME>f73716ex10-16.txt
<DESCRIPTION>EXHIBIT 10.16
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.16

[LOGO]

                  SECURITY AGREEMENT
--------------------------------------------------------------------------------
As of March 16, 2001, for value received, the undersigned ("Debtor") grants to
Comerica Bank-California ("Bank"), a California banking corporation, a
continuing security interest in the Collateral (as defined below) to secure
payment when due, whether by stated maturity, demand acceleration or otherwise,
of all existing and future indebtedness ("Indebtedness") to the Bank of Calico
Commerce, Inc. ("Borrower") and/or Debtor. Indebtedness includes without limit
any and all obligations or liabilities of the Borrower and/or Debtor to the
Bank, whether absolute or contingent, direct or indirect, voluntary or
involuntary, liquidated or unliquidated, joint or several, known or unknown;
any and all obligations or liabilities for which the Borrower and/or Debtor
would otherwise be liable to the Bank were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law,
or for any other reason; any and all amendments, modifications, renewals and/or
extensions of any of the above; all costs incurred by Bank in establishing,
determining, continuing, or defending the validity or priority of its security
interest, or in pursuing its rights and remedies under this Agreement or under
any other agreement between Bank and Borrower and/or Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation
to Borrower and/or Debtor; and all other costs of collecting Indebtedness,
including without limit attorney fees. Debtor agrees to pay Bank all such costs
incurred by the Bank, immediately upon demand, and until paid all costs shall
bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorney fees shall be deemed a reference to
reasonable fees, costs, and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted and to court costs if
a suit or action is instituted, and whether attorney fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative
or probate proceeding or otherwise.

1.    Collateral shall mean all of the following property Debtor now or later
      owns or has an interest in, wherever located:

      *     specific items listed below and/or on attached Schedule A, if any,
            is/are also included in Collateral: Money Market, account
            #1890682436 maintained at Bank dated March 25, 1997 in the name of
            Calico Commerce, Inc. in an amount equal to $750,000.00 and all
            subsequent renewals or replacements thereof.

      *     all goods, instruments, documents, policies and certificates of
            insurance, deposits, money or other property (except real property
            which is not a fixture) which are now or later in possession of
            Bank, or as to which Bank now or later controls possession by
            documents or otherwise, and

      *     all additions, attachments, accessions, parts, replacements,
            substitutions, renewals, interest, dividends, distributions, rights
            of any kind (including but not limited to stock splits, stock
            rights, voting and preferential rights), products, and proceeds of
            or pertaining to the above including, without limit, cash or other
            property which were proceeds and are recovered by a bankruptcy
            trustee or otherwise as a preferential transfer by Debtor.

2.    Warranties, Covenants and Agreements. Debtor warrants, covenants and
      agrees as follows:

      2.1   Debtor shall furnish to Bank, in form and at intervals as Bank may
            request, any information Bank may reasonably request and allow Bank
            to examine, inspect, and copy any of Debtor's books and records.
            Debtor shall, at the request of Bank, mark its records and the
            Collateral to clearly indicate the security interest of Bank under
            this Agreement.

      2.2   At the time any Collateral becomes, or is represented to be,
            subject to a security interest in favor of Bank, Debtor shall be
            deemed to have warranted that (a) Debtor is the lawful owner of the
            Collateral and has the right and authority to subject it to a
            security interest granted to Bank; (b) none of the Collateral is
            subject to any security interest other than that in favor of Bank
            and there are no financing statements on file, other than in favor
            of Bank; and (c) Debtor acquired its rights in the Collateral in
            the ordinary course of its business.

      2.3   Debtor will keep the Collateral free at all times from all claim,
            liens, security interests and encumbrances other than those in
            favor of Bank. Debtor will not, without the prior written consent
            of Bank, sell, transfer or lease, or permit to be sold, transferred
            or leased, any or all of the Collateral, except (where Inventory is
            pledged as Collateral) for Inventory in the ordinary course of its
            business and will not return any Inventory to its supplier. Bank or
            its representatives may at all reasonable times inspect the
            Collateral and may enter upon all premises where the Collateral is
            kept or might be located.

      2.4   Debtor will do all acts and will execute or cause to be executed
            all writings requested by Bank to establish, maintain and continue
            a perfected and first security interest of Bank in the Collateral.
            Debtor agrees that Bank has no obligation to acquire or perfect any
            lien on or security interest in any asset(s), whether realty or
            personality, to secure payment of the Indebtedness, and Debtor is
            not relying upon assets in which the Bank may have a lien or
            security interest for payment of the Indebtedness.

      2.5   Debtor will pay within the time that they can be paid without
            interest or penalty all taxes, assessments and similar charges
            which at any time are or may become a lien, charge, or encumbrance
            upon any Collateral, except to the extent contested in good faith
            and bonded in a manner satisfactory to Bank. If Debtor fails to pay
            any of these taxes, assessments, or other charges in the time
            provided above, Bank has the option (but not the obligation) to do
            so and Debtor agrees to repay all amounts so expended by Bank
            immediately upon demand, together with interest at the highest
            lawful default rate which could be charged by Bank on any
            Indebtedness.

      2.6   Debtor will keep the Collateral in good condition and will protect
            it from loss, damage, or deterioration from any cause. Debtor has
            and will maintain at all times (a) with respect to the Collateral,
            insurance under an "all risk" policy against fire and other risks
            customarily insured against, and (b) public liability insurance and
            other insurance as may be required by law or reasonably required by
            Bank, all of which insurance shall be in amount, form and content,
            and written by companies as may be satisfactory to Bank, containing
            a lender's loss payable endorsement acceptable to Bank. Debtor will
            deliver to Bank immediately upon demand evidence satisfactory to
            Bank that the required insurance has been procured. If Debtor fails
            to maintain satisfactory insurance, Bank has the option (but not
            the obligation) to do so and Debtor agrees to repay all amounts so
            expended by Bank immediately upon demand, together with interest at
            the highest lawful default rate which could be charged by Bank on
            any Indebtedness.

      2.7   If Accounts Receivable are pledged as Collateral under this
            Agreement, then on each occasion on which Debtor evidences to Bank
            the account balances on and the nature and extent of the Accounts
            Receivable, Debtor shall be deemed to have warranted that except as
            otherwise indicated (a) each of those Accounts Receivable is valid
            and enforceable without performance by Debtor of any act; (b) each
            of those account balances are in fact owing, (c) there are no
            setoffs, recoupments, credits, contra accounts, counterclaims or
            defenses against any of those Accounts Receivable, (d) as to any
            Account Receivable represented by a note, trade acceptance, draft
            or other instrument or by any chattel paper or document, the same
            have been endorsed and/or delivered by Debtor to Bank, (e) Debtor
            has not received with respect to any Account Receivable, any notice
            of the death of the related account debtor, nor of the dissolution,
            liquidation, termination of existence, insolvency, business
            failure, appointment of a receiver for, assignment for the benefit
            of creditors by, or filing of a petition in bankruptcy by or
            against, the account debtor, and (f) as to each Account Receivable,
            the account debtor is not an affiliate of Debtor, the United States
            of America or any department, agency or instrumentality of it, or a
            citizen or resident of any jurisdiction outside of the United
            States. Debtor will do all acts and will execute all writings
            requested by Bank to perform, enforce performance of, and collect
            all Accounts Receivable. Debtor shall neither make nor permit any
            modification, compromise or substitution for any Account Receivable
            without the prior written consent of Bank. Debtor shall, at Bank's
            request, arrange for verification of Accounts Receivable directly
            with account debtors or by other methods acceptable to Bank.

      2.8   Debtor at all times shall be in strict compliance with all
            applicable laws, including without limit any laws,

<PAGE>   2
          ordinances, directives, orders, statutes, or regulations an object of
          which is to regulate or improve health, safety, or the environment
          ("Environmental Laws").

    2.9   If marketable securities are pledged as Collateral under this
          Agreement and if at any time the outstanding principal balance of the
          Indebtedness exceeds (N/A) of the value of the Collateral, as such
          value is determined from time to time by Bank (herein called the
          "Margin Requirement"), Debtor shall immediately pay or cause to be
          paid to Bank an amount sufficient to reduce the Indebtedness such that
          the remaining principal outstanding thereunder is equal to or less
          than the Margin Requirement. Bank shall apply payments made under this
          paragraph in payment of the Indebtedness in such order and manner of
          application as Bank collateral in the form of cash or other property
          acceptable to Bank and with a value, as determined by Bank, that when
          added to the Collateral will constitute compliance with the Margin
          Requirement.

    2.10  If Bank, acting in its sole discretion, redelivers Collateral to
          Debtor or Debtor's designee for the purpose of (a) the ultimate sale
          or exchange thereof; or (b) presentation, collection, renewal, or
          registration of transfer thereof; or (c) loading, unloading, storing,
          shipping, transshipping, manufacturing, processing or otherwise
          dealing with its preliminary to sale or exchange; such redelivery
          shall be in trust for the benefit of Bank and shall not constitute a
          release of Bank's security interest in it or in the proceeds or
          products of its unless Bank specifically so agrees in writing. If
          Debtor requests any such redelivery, Debtor will deliver with such
          request a duly executed financing statement in form and substance
          satisfactory to Bank. Any proceeds of Collateral coming into Debtor's
          possession as a result of any such redelivery shall be held in trust
          for Bank and immediately delivered to Bank for application on the
          Indebtedness. Bank may (in its sole discretion) deliver any or all of
          the Collateral to Debtor, and such delivery by Bank shall discharge
          Bank from all liability or responsibility for such Collateral. Bank,
          at its option, may require delivery of any Collateral to Bank at any
          time with such endorsements or assignments of the Collateral as Bank
          may request.

    2.11  At any time and without notice, Bank may, as to Collateral other than
          Equipment, Fixtures or Inventory, (a) cause any or all of such
          Collateral to be transferred to its name or to the name of its
          nominee; (b) receive or collect by legal proceedings or otherwise all
          dividends, interest, principal payments and other sums and all other
          distributions at any time payable or receivable on account of such
          Collateral, and hold the same as Collateral, or apply the same to the
          Indebtedness, the manner and distribution of the application to be in
          the sole discretion of Bank; (c) enter into any extension,
          subordination, reorganization, deposit, merger or consolidation
          agreement or any other agreement relating to or affecting such
          Collateral, and deposit or surrender control of such Collateral, and
          accept other property in exchange for such Collateral and hold or
          apply the property or money so received pursuant to this Agreement.

    2.12  Bank may assign any of the Indebtedness and deliver any or all of the
          Collateral to its assignee, who then shall have with respect to
          Collateral so delivered all the rights and powers of Bank under this
          Agreement, and after that Bank shall be fully discharged from all
          liability with respect to Collateral so delivered.

    2.13  Debtor delivers this Agreement based solely on Debtor's independent
          investigation of (or decision not to investigate) the financial
          condition of Borrower and is not relying on any information furnished
          by Bank. Debtor assumes full responsibility for obtaining any further
          information concerning the Borrower's financial condition, the status
          of the Indebtedness or any other matter which the undersigned may deem
          necessary or appropriate now or later. Debtor waives any duty on the
          part of Bank, and agrees that Debtor is not relying upon nor expecting
          Bank to disclose to Debtor any fact now or later known by Bank,
          whether relating to the operations or condition of Borrower, the
          existence, liabilities or financial condition of any guarantor of the
          Indebtedness, the occurrence of any default with respect to the
          Indebtedness, or otherwise, notwithstanding any effect such fact may
          have upon Debtor's risk or Debtor's rights against Borrower. Debtor
          knowingly accepts the full range of risk encompassed in this
          Agreement, which risk includes without limit the possibility that
          Borrower may incur Indebtedness to Bank after the financial condition
          of Borrower, or Borrower's ability to pay debts as they mature, has
          deteriorated.

    2.14  Debtor shall defend, indemnify and hold harmless Bank, its employees,
          agents, shareholders, affiliates, officers, and directors from and
          against any and all claims, damages, fines, expenses, liabilities or
          causes of action of whatever kind, including without limit consultant
          fees, legal expenses, and attorney fees, suffered by any of them as a
          direct or indirect result of any actual or asserted violation of any
          law, including, without limit, Environmental Laws, or of any
          remediation relating to any property required by any law, including
          without limit Environmental Law.

3.  Collection of Proceeds

    3.1   Debtor agrees to collect and enforce payment of all Collateral until
          Bank shall direct Debtor to the contrary. Immediately upon notice to
          Debtor by Bank and at all times after that, Debtor agrees to fully and
          promptly cooperate and assist Bank in the collection and enforcement
          of all Collateral and to hold in trust for Bank all payments received
          in connection with Collateral and from the sale, lease or other
          disposition of any Collateral, all rights by way of suretyship or
          guaranty and all rights in the nature of a lien or security interest
          which Debtor nor or later has regarding Collateral. Immediately upon
          and after such notice, Debtor agrees to (a) endorse to Bank and
          immediately deliver to Bank all payments received on Collateral or
          from the sale, lease or other disposition of any Collateral or arising
          from any other rights or interests of Debtor in the Collateral, in the
          form received by Debtor without commingling with any other funds, and
          (b) immediately deliver to Bank all property in Debtor's possession or
          later coming into Debtor's possession through enforcement of Debtor's
          rights or interests in the Collateral. Debtor immediately authorizes
          Bank or any Bank employee or agent to endorse the name of Debtor upon
          any checks or other items which are received in payment for any
          Collateral, and to do any and all things necessary in order to reduce
          these items to money. Bank shall have no duty as to the collection or
          protection of Collateral or the proceeds of it, nor as to the
          preservation of any related rights, beyond the use of reasonable care
          in the custody and preservation of Collateral in the possession of
          Bank. Debtor agrees to take all steps necessary to preserve rights
          against prior parties with respect to the Collateral. Nothing in this
          Section 3.1 shall be deemed a consent by Bank to any sale, lease or
          other disposition of any Collateral.

    3.2   If Accounts Receivable are pledged as Collateral, this Section 3.2
          shall be applicable and Debtor agrees that immediately upon Bank's
          request (whether or not any Event of Default exists) the Indebtedness
          shall be on a "remittance basis" as follows: Debtor shall at its sole
          expense establish and maintain (and Bank, at Bank's option, may
          establish and maintain at Debtor's expense): (a) an United States Post
          Office Lock box (the "Lock Box"), to which Bank shall have exclusive
          access and control. Debtor expressly authorizes Bank, from time to
          time, to remove contents from the Lock Box, for disposition in
          accordance with this Agreement. Debtor agrees to notify all account
          debtors and other parties obligated to Debtor that all payments made
          to Debtor (other than payments by electronic funds transfer) shall be
          remitted, for the credit of Debtor, to the Lock Box and Debtor shall
          include a like statement on all invoices; and (b) a non-interest
          bearing deposit account with Bank which shall be titled as designated
          by Bank (the "Cash Collateral Account") to which Bank shall have
          exclusive access and control. Debtor agrees to notify all account
          debtors and other parties obligated to Debtor that all payments made
          to Debtor by electronic funds transfer shall be remitted to the Cash
          Collateral Account, and Debtor, at Bank's request, shall include a
          like statement on all invoices. Debtor shall execute all documents and
          authorizations as required by Bank to establish and maintain the Lock
          Box and the Cash Collateral Account.

    3.3   If Accounts Receivable are pledged as Collateral, this Section 3.3
          shall be applicable, and all items or amounts which are remitted to
          the Lock Box, to the Cash Collateral Account, or otherwise delivered
          by or for the benefit of Debtor to Bank on account of partial or full
          payment of, or with respect to, any Collateral shall, at Bank's
          option, (i) the applied to the payment of the Indebtedness, whether
          then due or not, in such order or at such time of application as Bank
          may determine in its sole discretion, or, (ii) be deposited to the
          Cash Collateral Account. Debtor agrees that Bank shall not be liable
          for any loss or damage which Debtor may suffer as a result of Bank's
          processing of items or its exercise of any other rights or remedies
          under this Agreement, including without limitation indirect, special
          consequential damages, loss of revenues or profits, or any claim,
          demand or action by any third party arising out of or in connection
          with the processing of items or the exercise of any other rights or
          remedies under this Agreement. Debtor agrees to indemnify and hold
          Bank harmless from and against all


<PAGE>   3
          such third party claims, demands or actions, and all related expenses
          or liabilities, including, without limitation, attorney fees.

4.   Defaults, Enforcement and Application of Proceeds

     4.1  Upon the occurrence of any of the following events (each an "Event of
          Default"), Debtor shall be in default under this Agreement:

          (a)  Any failure to pay the Indebtedness or any other indebtedness or
               any other indebtedness when due, or such portion of its as may be
               due, by acceleration or otherwise; or

          (b)  Any failure or neglect to comply with, or breach of or default
               under, any term of this Agreement, or any other agreement or
               commitment between Borrower, Debtor, or any guarantor of any of
               the Indebtedness ("Guarantor") and Bank; or

          (c)  Any warranty, representation, financial statement, or other
               information made, given or furnished to Bank by or on behalf of
               Borrower, Debtor, or any Guarantor shall be, or shall prove to
               have been, false or materially misleading when made, given, or
               furnished; or

          (d)  Any loss, theft, substantial damage or destruction to or of any
               Collateral, or the issuance or filing of any attachment, levy,
               garnishment or the commencement of any proceeding in connection
               with any Collateral or of any other judicial process of, upon or
               in respect of Borrower, Debtor, any Guarantor, or any Collateral;
               or

          (e)  Sale or other disposition by Borrower, Debtor, or any Guarantor
               of any substantial portion of its assets or property or voluntary
               suspension of the transaction of business by Borrower, Debtor, or
               any Guarantor, or death, dissolution, termination of existence,
               merger, consolidation, insolvency, business failure, or
               assignment for the benefit of creditors of or by Borrower,
               Debtor, or any Guarantor; or commencement of any proceedings
               under any state or federal bankruptcy or insolvency laws or laws
               for the relief of debtors by or against Borrower, Debtor, or any
               Guarantor; or the appointment of a receiver, trustee, court
               appointee, sequestrator or otherwise, for all or any part of the
               property of Borrower, Debtor, or any Guarantor; or

          (f)  Bank deems the margin of Collateral insufficient or itself
               insecure, in good faith believing that the prospect of payment of
               the Indebtedness or performance of this Agreement is impaired or
               shall fear deterioration, removal, or waste of Collateral.

     4.2  Upon the occurrence of any Event of Default, Bank may at its
          discretion and without prior notice to Debtor declare any or all of
          the Indebtedness to be immediately due and payable, and shall have and
          may exercise any one or more of the following rights and remedies:

          (a)  Exercise all the rights and remedies upon default, in foreclosure
               and otherwise, available to secured parties under the provisions
               of the Uniform Commercial Code and other applicable law;

          (b)  Institute legal proceedings to foreclose upon the lien and
               security interest granted by this Agreement, to recover judgment
               for all amounts then due and owing as Indebtedness, and to
               collect the same out of any Collateral or the proceeds of any
               sale of it;

          (c)  Institute legal proceedings for the sale, under the judgment or
               decree of any court of competent jurisdiction, of any or all
               Collateral; and/or

          (d)  Personally or by agents, attorneys, or appointment of a receiver,
               enter upon any premises 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 Bank may deem fit, without any previous demand or
               advertisement; and except as provided in this Agreement, all
               notice of sale, lease or other disposition, and advertisement,
               and other notice or demand, any right or equity of redemption,
               and any obligation of a prospective purchaser or lessee to
               inquire to the power and authority of Bank to sell, lease, or
               otherwise dispose of the lessee to inquire as to the power and
               authority of Bank to sell, lease, or otherwise dispose of the
               Collateral or as to the application by Bank of the proceeds of
               sale or otherwise, which would otherwise be required by, or
               available to Debtor under, applicable law or expressly waived by
               Debtor to the fullest extent permitted.

               At any sale pursuant to this Section 4.2, whether under the power
               of sale, by virtue of judicial proceedings or otherwise, it shall
               not be necessary for Bank or a public officer under order of a
               court to have present physical or constructive possession of
               Collateral to be sold. The recitals contained in any conveyances
               and receipts made and given by Bank or the public officer to any
               purchaser at any sale made pursuant to this Agreement shall, to
               the extent permitted by applicable law, conclusively establish
               the truth and accuracy of the matters stated (including, without
               limit, as to the amounts of the principal of and interest on the
               Indebtedness, the accrual and nonpayment of it and advertisement
               and conduct of the sale); and all prerequisites to the sale shall
               be presumed to have been satisfied and performed. Upon any sale
               of any Collateral, the receipt of the officer making the sale
               under judicial proceedings or of Bank shall be sufficient
               discharge to the purchaser for the purchase money, and the
               purchaser shall not be obligated to see to the application of the
               money. Any sale of any Collateral under this Agreement shall be a
               perpetual bar against Debtor with respect to that Collateral.

     4.3  Debtor shall at the request of Bank, notify the account debtors or
          obligors of Bank's security interest in the Collateral and direct
          payment of it to Bank. Bank may, itself, upon the occurrence of any
          Event of Default so notify and direct any account debtor or obligor.

     4.4  The proceeds of any sale or other disposition of Collateral authorized
          by this Agreement shall be applied by Bank first upon all expenses
          authorized by the Uniform Commercial Code and all reasonable attorney
          fees and legal expenses incurred by Bank; the balance of the proceeds
          of the sale or other disposition shall be applied in the payment of
          the Indebtedness, first to interest, then to principal, then to
          remaining Indebtedness and the surplus, if any, shall be paid over to
          Debtor or to such other person(s) as may be entitled to it under
          applicable law. Debtor shall remain liable for any deficiency, which
          it shall pay to Bank immediately upon demand.

     4.5  Nothing in this Agreement is intended, nor shall it be construed, to
          preclude Bank from pursuing any other remedy provided by law for the
          collection of the Indebtedness or for the recovery of any other sum to
          which Bank may be entitled for the breach of this Agreement by Debtor.
          Nothing in this Agreement shall reduce or release in any way any
          rights or security interests of Bank contained in any existing
          agreement between Borrower, Debtor, or any Guarantor and Bank.

     4.6  No waiver of default or consent to any act by Debtor shall be
          effective unless in writing and signed by an authorized officer of
          Bank. No waiver of any default or forbearance on the part of Bank in
          enforcing any of its rights under this Agreement shall operate as a
          waiver of any other default or of the same default on a future
          occasion or of any rights.

     4.7  Debtor irrevocably appoints Bank or any agent of Bank (which
          appointment is coupled with an interest) the true and lawful attorney
          of Debtor (with full power of substitution) in the name, place and
          stead of, and at the expense of, Debtor:

          (a)  to demand, receive, sue for, and give receipts or acquittances
               for any moneys due or to become due on any Collateral and to
               endorse any item representing any payment on or proceeds of the
               Collateral;

          (b)  to execute and file in the name of and on behalf of Debtor all
               financing statements or other filings deemed necessary or
               desirable by Bank to evidence, perfect, or continue the security
               interests granted in this
<PAGE>   4
                        Agreement; and

                (c)     to do and perform any act on behalf of Debtor permitted
                        or required under this Agreement.

        4.8     Upon the occurrence of an Event of Default, Debtor also agrees,
                upon request of Bank, to assemble the Collateral and make it
                available to Bank at any place designated by Bank which is
                reasonably convenient to Bank and Debtor.

5.      Miscellaneous.

        5.1     Until Bank is advised in writing by Debtor to the contrary, all
                notices, requests and demands required under this Agreement or
                by Law shall be given to, or made upon, Debtor at the first
                address indicated in Section 5.15 below.

        5.2     Debtor will give Bank not less than 90 days prior written notice
                of all contemplated changes in Debtor's name, chief executive
                office location, and/or location of any Collateral, but the
                giving of this notice shall not cure any Event of Default caused
                by this change.

        5.3     Bank assumes no duty of performance or other responsibility
                under any contracts contained within the Collateral.

        5.4     Bank has the right to sell, assign, transfer, negotiate or grant
                participations or any interest in, any or all of the
                Indebtedness and any related obligations, including without
                limit this Agreement. In connection with the above, but without
                limiting its ability to make other disclosures to the full
                extent allowable, Bank may disclose all documents and
                information which Bank now or later has relating to Debtor, the
                Indebtedness or this Agreement, however obtained. Debtor further
                agrees that Bank may provide information relating to this
                Agreement or relating to Debtor to the Bank's parent,
                affiliates, subsidiaries, and service providers.

        5.5     In addition to Bank's other rights, any indebtedness owing from
                Bank to Debtor can be set off and applied by Bank on any
                Indebtedness at any time(s) either before or after maturity or
                demand without notice to anyone.

        5.6     Debtor waives any right to require the Bank to: (a) proceed
                against any person or property; (b) give notice of the terms,
                time and place of any public or private sale of personal
                property security held from Borrower or any other person, or
                otherwise comply with the provisions of Section 9-504 of the
                Uniform Commercial Code; or (c) pursue any other remedy in the
                Bank's power. Debtor waives notice of acceptance of this
                Agreement and presentment, demand, protest, notice of protest,
                dishonor, notice of dishonor, notice of default, notice of
                intent to accelerate or demand payment of any Indebtedness, any
                and all other notices to which the undersigned might otherwise
                be entitled, and diligence in collecting any Indebtedness, and
                agree(s) that the Bank may, once or any number of times, modify
                the terms of any Indebtedness, compromise, extend, increase,
                accelerate, renew or forbear to enforce payment of any or all
                Indebtedness, or permit Borrower to incur additional
                Indebtedness, all without notice to Debtor and without affecting
                in any manner the unconditional obligation of Debtor under this
                Agreement. Debtor unconditionally and irrevocably waives each
                and every defense and setoff of any nature which, under
                principles of guaranty and otherwise, would operate to impair or
                diminish in any way the obligation of Debtor under this
                Agreement, and acknowledges that such waiver is by this
                reference incorporated into each security agreement, collateral
                assignment, pledge and/or other document from Debtor now or
                later securing the Indebtedness, and acknowledges that as of the
                date of this Agreement no such defense or setoff exists.

        5.7     Debtor waives any and all rights (whether by subrogation,
                indemnity, reimbursement, or otherwise) to recover from Borrower
                any amounts paid or the value of any Collateral given by Debtor
                pursuant to this Agreement.

        5.8     In the event that applicable law shall obligate Bank to give
                prior notice to Debtor of any action to be taken under this
                Agreement, Debtor agrees that a written notice given to Debtor
                at least five days before the date of the act shall be
                reasonable notice of the act and, specifically, reasonable
                notification of the time and place of any public sale or of the
                time after which any private sale, lease, or other disposition
                is to be made, unless a shorter notice period is reasonable
                under the circumstances. A notice shall be deemed to be given
                under this Agreement when delivered to Debtor or when placed in
                an envelope addressed to Debtor and deposited, with postage
                prepaid, in a post office or official depository under the
                exclusive care and custody of the United States Postal Service
                or delivered to an overnight courier. The mailing shall be by
                overnight courier, certified, or first class mail.

        5.9     Notwithstanding any prior revocation, termination, surrender, or
                discharge of this Agreement in whole or in part, the
                effectiveness of this Agreement shall automatically continue or
                be reinstated in the event that any payment received or credit
                given by Bank in respect of the Indebtedness is returned,
                disgorged, or rescinded under any applicable law, including,
                without limitation, bankruptcy or insolvency laws, in which case
                this Agreement, shall be enforceable against Debtor as if the
                returned, disgorged, or rescinded payment or credit had not been
                received or given by Bank, and whether or not Bank relied upon
                this payment or credit or changed its position as a consequence
                of it. In the event of continuation or reinstatement of this
                Agreement, Debtor agrees upon demand by Bank to execute and
                deliver to Bank those documents which Bank determines are
                appropriate to further evidence (in the public records or
                otherwise) this continuation or reinstatement, although the
                failure of Debtor to do so shall no affect in any way the
                reinstatement or continuation.

        5.10    This Agreement and all the rights and remedies of Bank under
                this Agreement shall inure to the benefit of Bank's successors
                and assigns and to any other holder who derives from Bank title
                to or an interest in the Indebtedness or any portion of it, and
                shall bind Debtor and the heirs, legal representatives,
                successors, and assigns of Debtor. Nothing in this Section 5.10
                is deemed a consent by Bank to any assignment by Debtor.

        5.11    If there is more than one Debtor, all undertakings, warranties
                and covenants made by Debtor and all rights, powers and
                authorities given to or conferred upon Bank are made or given
                jointly and severally.

        5.12    Except as otherwise provided in this Agreement, all terms in
                this Agreement have the meanings assigned to them in Division 9
                (or, absent definition in Division 9, in any other Division) of
                the Uniform Commercial Code, as of the  date of this Agreement.
                "Uniform Commercial Code" means the California Uniform
                Commercial Code, as amended.

        5.13    No single or partial exercise, or delay in the exercise, of any
                right or power under this Agreement, shall preclude other or
                further exercise of the rights and powers under this Agreement.
                The unenforceability of any provision of this Agreement shall
                not affect the enforceability of the remainder of this
                Agreement. This Agreement constitutes the entire agreement of
                Debtor and Bank with respect to the subject matter of this
                Agreement. No amendment or modification of this Agreement shall
                be effective unless the same shall be in writing and signed by
                Debtor and an authorized officer of Bank. This Agreement shall
                be governed by and construed in accordance with the internal
                laws of the State of California, without regard to conflict of
                laws principles.

        5.14    To the extent that any of the Indebtedness if payable upon
                demand, nothing contained in this Agreement shall modify the
                terms and conditions of that Indebtedness nor shall anything
                contained in this Agreement prevent Bank from making demand,
                without notice and with or without reason, for immediate payment
                of any or all of that Indebtedness at any time(s), whether or
                not an Event of Default has occurred.

        5.15    Debtor's chief executive office is located and shall be
                maintained at
                333 West San Carlos Street, #300
                ---------------------------------
                STREET ADDRESS

                San Jose                CA              95110
                ----------------------------------------------------------------
                CITY                    STATE           ZIP CODE        COUNTY

                If Collateral is located at other than the chief executive
                office, such Collateral is located and shall be maintained at


                ----------------------------------------------------------------
                STREET ADDRESS


                ----------------------------------------------------------------
                CITY                    STATE           ZIP CODE        COUNTY

<PAGE>   5
            Collateral shall be maintained only at the locations identified in
            this Section 5.15.

      5.16  A carbon, photographic or other reproduction of this Agreement
            shall be sufficient as a financing statement under the Uniform
            Commercial Code and may be filed by Bank in any filing office.

      5.17  This Agreement shall be terminated only by the filing of a
            termination statement in accordance with the applicable provisions
            of the Uniform Commercial Code, but the obligations contained in
            Section 2.14 of this Agreement shall survive termination.

6.    DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
      CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
      CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
      THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
      WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING
      THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
      AGREEMENT OR THE INDEBTEDNESS.

7.    Special Provisions Applicable to this Agreement. (*None, if left blank)

                                    DEBTOR: Calico Commerce, Inc.
                                           ---------------------------------
                                            DEBTOR NAME TYPED/PRINTED

                                    By: /s/ LESLIE E. WRIGHT
                                       -------------------------------------
                                       SIGNATURE OF

                                    Its: CFO
                                        ------------------------------------
                                        TITLE (If applicable)

                                    By:
                                       -------------------------------------
                                       SIGNATURE OF

                                    Its:
                                        ------------------------------------
                                        TITLE (If applicable)

                                    By:
                                       -------------------------------------
                                       SIGNATURE OF

                                    Its:
                                        ------------------------------------
                                        TITLE (If applicable)

                                    By:
                                       -------------------------------------
                                       SIGNATURE OF

                                    Its:
                                        ------------------------------------
                                        TITLE (If applicable)


Borrower(s):
Calico Commerce, Inc.


PEDESTAL -  Dynamic Security Agreement
Revision Date (5/97) GMZ
<PAGE>   6
[COMERICA LOGO]

              CORPORATION RESOLUTIONS AND INCUMBENCY CERTIFICATION
                           AUTHORITY TO PROCURE LOANS

--------------------------------------------------------------------------------

I certify that I am the duly elected and qualified Secretary of Calico Commerce,
Inc., a Delaware corporation (the "Corporation") and the keeper of the records
of the Corporation; that the following is a true and correct copy of
resolutions duly adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.

COPY OF RESOLUTIONS:

Be it Resolved, That:

1.   Any (insert number required to sign) (1) one of the following (insert
     titles only) CFO of the Corporation are/is authorized, for, on behalf of,
     and in the name of the Corporation to:

     (a)  Negotiate and procure loans, letters of credit and other credit or
          financial accommodations from Comerica Bank California (the "Bank"),
          a California banking corporation, up to an amount not exceeding
          $ Unlimited;

     (b)  Discount with the Bank, commercial or other business paper belonging
          to the Corporation made or drawn by or upon third parties, without
          limit as to amount;

     (c)  Purchase, sell, exchange, assign, endorse for transfer and/or deliver
          certificates and/or instruments representing stocks, bonds,
          evidences of indebtedness or other securities owned by the
          Corporation, whether or not registered in the name of the Corporation;

     (d)  Give security for any liabilities of the Corporation to the Bank by
          grant, security interest, assignment, lien, deed of trust or mortgage
          upon any real or personal property, tangible or intangible of the
          Corporation; and

     (e)  Execute and deliver in form and content as may be required by the Bank
          any and all notes, evidences of indebtedness, applications for letter
          of credit, guaranties, subordination agreements, loan and security
          agreements, financing statements, assignments, liens, deeds of trust,
          mortgages, trust receipts and other agreements, instruments to
          documents to carry out the purposes of those Resolutions, any or all
          of which may relate to all or to substantially all of the
          Corporation's property and assets.

2.   Said Bank be and it is authorized and directed to pay the proceeds of any
     such loans or discounts as directed by the persons so authorized to sign,
     whether so payable to the order of any of said persons in their individual
     capacities or not, and whether such proceeds are deposited to the
     individual credit of any of said persons or not;

3.   Any and all agreements, instruments and documents previously executed and
     acts and things previously done to carry out the purposes of these
     Resolutions and ratified, confirmed and approved as the act or acts of the
     Corporation.

4.   These Resolutions shall continue in force, and the Bank may consider the
     holders of said offices and their signatures to be and continue to be as
     set forth in a certified copy of these Resolutions delivered to the Bank,
     until notice to the contrary in writing is duly served on the Bank (such
     notice to have no effect on any action previously taken by the Bank in
     reliance on these resolutions.

5.   Any person, corporation or other legal entity dealing with the Bank may
     rely upon a certificate signed by an officer of the Bank to effect that
     these Resolutions and any agreement, instrument or document executed
     pursuant to them are still in full force and effect and binding upon the
     Corporation.

6.   The Bank may consider the holders of the offices of the Corporation and
     their signatures, respectively, to be and continue to be as set forth in
     the Certificate of the Secretary of the Corporation until notice to the
     contrary in writing is duly served on the Bank.

     I further certify that the above Resolutions are in full force and effect
     as of the date of this Certificate; that these Resolutions and any
     borrowings or financial accommodations under these Resolutions have been
     properly noted in the corporate books and records, and have not been
     rescinded, annulled, revoked, or modified; that neither the foregoing
     Resolutions nor any actions to be taken pursuant to them are or will be in
     contravention of any provision of the articles of incorporation or bylaws
     of the Corporation or of any agreement, indenture or other instrument to
     which the Corporation is a party or by which it is bound; and that neither
     the articles of incorporation nor bylaws of the Corporation nor any
     agreement, indenture or other instrument to which the Corporation is a
     party or by which it is bound require the vote or consent of shareholders
     of the Corporation to authorize any act, matter or thing described in the
     foregoing Resolutions.

I further certify that the following named persons have been duly elected to
the offices set opposite their respective names, that they continue to hold
these offices at the present time, and that the signatures which appear below
are the genuine, original signatures of each respectively.

         (PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)

  NAME (Type or Print)               TITLE                    SIGNATURE

LESLEY E. WRIGHT           CFO                        /s/ LESLEY E. WRIGHT
-------------------------  -------------------------  -------------------------

-------------------------  -------------------------  -------------------------

-------------------------  -------------------------  -------------------------

-------------------------  -------------------------  -------------------------

-------------------------  -------------------------  -------------------------

-------------------------  -------------------------  -------------------------

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal of said Corporation to be affixed on April 17, 2001.

                                                        /s/ G M GALLO
                                                 ------------------------------
                                                 Gregory Gallo, Asst. Secretary

-------------------------------------------------------------------------------
The Above Statements are Correct.
                                 -----------------------------------------------
                                   SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE,
                                      A SHAREHOLDER OTHER THAN SECRETARY IS
                                             AUTHORIZED TO SIGN ALONE

Failure to complete the above when the Secretary is authorized to sign alone
shall constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.
--------------------------------------------------------------------------------

CP 00 190 (3-2000)

</TEXT>
</DOCUMENT>
