Exhibit 10.5

 

JUNIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

 

This Junior Secured Convertible Note Purchase Agreement (the “Agreement”) is
made as of March 11, 2015 by and among Selectica, Inc., a Delaware corporation
(the “Company”) and the persons or entities set forth on the Schedule of
Purchasers attached to this Agreement as Schedule I (each a “Purchaser” and,
collectively, the “Purchasers”).

 

RECITALS

 

A.     The Company desires to issue and sell, and the Purchasers desire to
purchase, junior secured convertible promissory notes in substantially the form
attached to this Agreement as Exhibit A (each a “Note” and, collectively, the
“Notes”).

 

B.     Contemporaneous with the sale of the Notes, the parties hereto will
execute and deliver (i) a Security Agreement in the form attached hereto as
Exhibit B (the “Security Agreement”), pursuant to which the Notes will be
secured by a second position on the Company’s assets, subject to the first
priority security position granted to Bridge Bank, National Association (“Bridge
Bank”) under that certain Business Financing Agreement, effective as of
September 27, 2011, as amended (the “Senior Credit Facility”), between the
Company and Bridge Bank and (ii) a Subordination Agreement in the form attached
hereto as Exhibit C (the “Subordination Agreement”) with Bridge Bank.

 

AGREEMENT

 

In consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:

 

1.     Purchase and Sale of Notes.

 

(a)     Sale and Issuance of Notes. Subject to the terms and conditions of this
Agreement, the Purchasers agree to purchase at the Closing (as defined below)
and the Company agrees to sell and issue to the Purchasers at the Closing Notes
in the aggregate principal amount of $3,000,000 (the “Purchase Price”), as set
forth on Schedule I hereto.

 

(b)     Closing; Delivery.

 

(i)     The purchase and sale of the Notes (the “Closing”) shall take place at
the offices of DLA Piper LLP (US), 2000 University Ave., East Palo Alto,
California 94303, as soon as practicable after such date that each of the
conditions set forth in Sections 4 and 5 hereof is satisfied or waived, or on
such other date and at such other place as the parties hereto may agree upon in
writing; provided, however, that the date of the Closing may be up to forty-five
(45) calendar days following the date of this Agreement, at the Purchasers’ sole
election (the date on which the Closing occurs is referred to herein as the
“Closing Date”).

 

(ii)     At the Closing, the Company shall deliver or caused to be delivered to
the Purchasers:

 

(1)     the Notes executed by the Company;

 

(2)     the Security Agreement and Subordination Agreement executed by the
Company;

 

(3)     such instruments, certificates or documents as reasonably requested by
the Purchasers in order to perfect the Purchasers’ second position security
interest in the Company’s assets, in accordance with the Security Agreement,
executed by the Company;

 

 

 
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(4)     a certificate of the Chief Executive Officer of the Company certifying
the accuracy of the Company’s representations and warranties as of the Closing;
and

 

(5)     a certificate of the Secretary of the Company certifying the authority
of the officer executing this Agreement and all agreements and other documents
ancillary hereto and contemplated hereby, including the Notes, the Security
Agreement and the Subordination Agreement (collectively, the “Loan Documents”).

 

(iii)     At the Closing, the Purchasers shall pay the Purchase Price for the
Notes, less any fees, expenses or other amounts owed to Purchasers from the
Company under Section 6(h) hereof and under Section 9.5(ii) of that certain
Purchase Agreement, dated as of February 6, 2015 (the “Purchase Agreement”), by
wire transfer in immediately available funds to a bank designated by the Company
and shall deliver or cause to be delivered to the Company the Security Agreement
and Subordination Agreement executed by the Purchasers.

 

2.     Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers that, except as set forth in the
schedules delivered herewith (collectively, the “Disclosure Schedules”):

 

(a)     Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and to own or lease its properties. Each of the
Company and its Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to be in good standing or so qualify has
not had and could not reasonably be expected to have a Material Adverse Effect.
The Company’s Subsidiaries are listed on Schedule 2(a) hereto.

 

For purposes of this Agreement, the following terms have the meanings set forth
below:

 

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Loan
Documents.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

 

(b)     Authorization. The Company has all corporate power and authority and,
except for the approval of the Proposal by its stockholders as contemplated in
Section 6(j), has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Loan Documents, (ii) the authorization of the
performance of all obligations of the Company hereunder or thereunder, and (iii)
the authorization, issuance (or reservation for issuance) and delivery of the
Notes and the shares of Common Stock issuable upon conversion thereof (the
“Conversion Shares” and, together with the Notes, the “Securities”). The Loan
Documents, upon execution and delivery thereof by the Company, will constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally and to
general equitable principles.

 

 

 
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(c)     Capitalization. Schedule 2(c) sets forth as of the date hereof (i) the
authorized capital stock of the Company; (ii) the number of shares of capital
stock issuable pursuant to the Company’s stock plans; and (iii) the number of
shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Notes) exercisable for, or convertible into or
exchangeable for any shares of capital stock of the Company. All of the issued
and outstanding shares of the Company’s capital stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of pre-emptive
rights and were issued in full compliance with applicable state and federal
securities law and any rights of third parties. Except as described on Schedule
2(c), all of the issued and outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full compliance
with applicable state and federal securities law and any rights of third parties
and are owned by the Company, beneficially and of record, subject to no Lien (as
defined below). Except as described on Schedule 2(c), no Person is entitled to
pre-emptive or similar statutory or contractual rights with respect to any
securities of the Company. Except as contemplated by the Loan Documents and
except as described on Schedule 2(c), there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any of its Subsidiaries is or may be
obligated to issue any equity securities of any kind and except as contemplated
by the Loan Documents, neither the Company nor any of its Subsidiaries is
currently in negotiations for the issuance of any equity securities of any kind.
Except as described on Schedule 2(c) and except for the Loan Documents, there
are no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held by
them. Except as described on Schedule 2(c) and except as contemplated under this
Agreement, no Person has the right to require the Company to register any
securities of the Company under the Securities Act of 1933, as amended (the
“1933 Act”), whether on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of any other
Person.

 

For purposes of this Agreement, “Lien” shall mean, with respect to any asset,
(a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law, (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities, in all cases, other than Permitted Liens (as defined
in the Notes)

 

(d)     Governmental Approvals. No action, consent or approval of, registration
or filing with or any other action by any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body
(collectively, “Governmental Authority”) is or will be required in connection
with the transactions contemplated hereby, except for (i) filings necessary to
perfect liens created pursuant to the Loan Documents and (ii) such as have been
made or obtained and are in full force and effect and NASDAQ listing
requirements and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the applicable time
periods.

 

 

 
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(e)     Accuracy of Filings. Neither the Company’s most recent Annual Report on
Form 10-K for the fiscal year ended March 31, 2014 (the “10-K”) nor any of the
Company’s reports, schedules, forms, statements and other documents filed with
the Securities and Exchange Commission (the “SEC”) since the filing of the 10-K
(collectively, the “SEC Reports”) at the time of filing contained any untrue
statement of a material fact or omitted to state a material fact required to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading, except to the extent that such statements have
been modified or superseded by later SEC Reports filed on a non-confidential
basis filed prior to the date hereof.

 

(f)      No Material Adverse Effect. Since March 31, 2014, except as identified
and described in the SEC Reports or as described in Schedule 2(f), no Material
Adverse Effect has occurred with respect to the business, assets, liabilities,
operations, condition (financial or otherwise), or operating results of the
Company or any Subsidiary, taken as a whole.

 

(g)     Title to Properties. The Company and each Subsidiary has good and
marketable title to all real properties and all other properties and assets
owned by it, in each case free from Liens that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; the Company and each Subsidiary holds any leased real or
personal property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or currently planned to be made
thereof by them.

 

(h)     Intellectual Property.

 

(i)     Section 2(h) of the Disclosure Schedules sets forth all of the
registered Intellectual Property (as defined below) of the Company. All
Intellectual Property of the Company and its Subsidiaries necessary for the
operation of the business as currently conducted or as presently proposed to be
conducted is currently in material compliance with all legal requirements
(including timely filings, proofs and payments of fees) and is valid and
enforceable. No Intellectual Property of the Company or its Subsidiaries which
is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute or
litigation, and, to the Company’s knowledge, no such action is threatened. No
patent of the Company or its Subsidiaries has been or is now involved in any
interference, reissue, re-examination or opposition proceeding.

 

For purposes of this Agreement, “Intellectual Property” means all of the
following: (A) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); (B)
trademarks, service marks, trade dress, trade names, corporate names, logos,
slogans and Internet domain names, together with all goodwill associated with
each of the foregoing; (C) copyrights and copyrightable works; (D)
registrations, applications and renewals for any of the foregoing; and
(E) proprietary computer software (including but not limited to data, data bases
and documentation).

 

(ii)     All of the licenses and sublicenses and consent, royalty or other
agreements concerning Intellectual Property which are necessary for the conduct
of the Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, “License Agreements”) are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company’s knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally,
and, to the Company’s knowledge, there exists no event or condition which will
result in a material violation or breach of or constitute (with or without due
notice or lapse of time or both) a default by the Company or any of its
Subsidiaries under any such License Agreement.

 

 

 
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(iii)     The Company and its Subsidiaries own or have the valid right to use
all of the Intellectual Property that is necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted and for the ownership,
maintenance and operation of the Company’s and its Subsidiaries’ properties and
assets, free and clear of all Liens, adverse claims or obligations to license
all such owned Intellectual Property and trade secrets, confidential information
and know-how (including but not limited to ideas, formulae, compositions,
processes, procedures and techniques, research and development information,
computer program code, performance specifications, support documentation,
drawings, specifications, designs, business and marketing plans, and customer
and supplier lists and related information) (collectively, “Confidential
Information”), other than licenses entered into in the ordinary course of the
Company’s and its Subsidiaries’ businesses. The Company and its Subsidiaries
have a valid and enforceable right to use all third party Intellectual Property
and Confidential Information used or held for use in the respective businesses
of the Company and its Subsidiaries.

  

(iv)     To the knowledge of the Company, the conduct of the Company’s and its
Subsidiaries’ businesses as currently conducted does not infringe or otherwise
impair or conflict with (collectively, “Infringe”) any Intellectual Property
rights of any third party or any confidentiality obligation owed to a third
party, and, to the Company’s knowledge, the Intellectual Property and
Confidential Information of the Company and its Subsidiaries which are necessary
for the conduct of Company’s and each of its Subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted are not being
Infringed by any third party. There is no litigation or order pending or
outstanding or, to the Company’s knowledge, threatened, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property or Confidential Information of the Company and its
Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and, to the
Company’s knowledge, there is no valid basis for the same.

 

(v)     The consummation of the transactions contemplated hereby and by the
other Loan Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its Subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be conducted.

 

(vi)     The Company and its Subsidiaries have taken reasonable steps to protect
the Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information. Each employee, consultant and contractor who has had
access to Confidential Information which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such Confidential Information and has executed
appropriate agreements that are substantially consistent with the Company’s
standard forms thereof. Except under confidentiality obligations, there has been
no material disclosure of any of the Company’s or its Subsidiaries’ Confidential
Information to any third party.

 

(i)          Compliance with Laws. Except as set forth on Schedule 2(i), there
are no actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any business,
property or rights of any of the foregoing (i) that involve this Agreement or
any Loan Document or (ii) as to which, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect in the Company or any Subsidiary. Neither the Company nor any Subsidiary
or any of their respective properties or assets is in violation of, nor will the
continued operation of their properties and assets as currently conducted
violate, any law, rule or regulation (including any applicable environmental
law, ordinance, code or approval) or any restrictions of record or agreements
affecting the properties, or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect
in the Company or any Subsidiary. The Company and each Subsidiary possess
adequate certificates, authorities or permits issued by appropriate Governmental
Authorities necessary to conduct the business now operated by it, except where
such failure has not had and could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate, and neither the Company nor
any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if determined
adversely to the Company or such Subsidiary, could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate.

 

 

 
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(j)      Tax Returns. The Company and each Subsidiary has timely prepared and
filed (or timely filed for an extension for) all tax returns required to have
been filed by the Company or such Subsidiary with all appropriate Governmental
Authorities and timely paid all taxes shown thereon or otherwise owed by it,
other than taxes being contested in good faith and for which adequate reserves
have been made on the Company’s financial statements included in the SEC
Reports. The charges, accruals and reserves on the books of the Company in
respect of taxes for all fiscal periods are adequate in all material respects,
and there are no material unpaid assessments against the Company or any
Subsidiary nor, to the Company’s knowledge, any basis for the assessment of any
additional taxes, penalties or interest for any fiscal period or audits by any
federal, state or local taxing authority except for any assessment which is not
material to the Company and its Subsidiaries, taken as a whole. All taxes and
other assessments and levies that the Company or any Subsidiary is required to
withhold or to collect for payment have been duly withheld and collected and
paid to the proper Governmental Authority or third party when due, other than
taxes being contested in good faith and for which adequate reserves have been
made on the Company’s financial statements included in the SEC Reports. There
are no tax Liens or claims pending or, to the Company’s knowledge, threatened
against the Company or any Subsidiary or any of their respective assets or
property. Except as described on Schedule 2(j), there are no outstanding tax
sharing agreements or other such arrangements between the Company and any
Subsidiary or other corporation or entity.

 

(k)     Solvency. Immediately after the consummation of the transactions to
occur on the Closing Date and immediately following the purchase of the Notes
and after giving effect to the application of the proceeds thereof as of the
date thereof, (i) the fair value of the assets of the Company and its
Subsidiaries, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value of
the property of the Company and its Subsidiaries will be greater than the amount
that will be required to pay the current probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; and (iii) in the reasonable
judgment of the Company, each of the Company and its Subsidiaries will be able
to pay its debts and liabilities then-outstanding at such time.

 

(l)      Rule 506 Compliance. To the Company’s knowledge, neither the Company
nor any director, executive officer, other officer of the Company participating
in the offering, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power,
and any promoter connected with the Company in any capacity on the date hereof
(each, an “Insider”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2)(i) or
(d)(3) of the 1933 Act. The Company is not disqualified from relying on Rule 506
of Regulation D under the 1933 Act (“Rule 506”) for any of the reasons stated in
Rule 506(d) in connection with the issuance and sale of the Securities to the
Purchasers pursuant to this Agreement. The Company has exercised reasonable
care, including without limitation, conducting a factual inquiry that is
appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) exists. The Company has furnished to each
Purchaser, a reasonable time prior to the date hereof, a description in writing
of any matters relating to the Company and the Insiders that would have
triggered disqualification under Rule 506(d) but which occurred before September
23, 2013, in each case, in compliance with the disclosure requirements of Rule
506(e). The Company has exercised reasonable care, including without limitation,
conducting a factual inquiry that is appropriate in light of the circumstances,
into whether any such disqualification under Rule 506(d) would have existed and
whether any disclosure is required to be made to the Purchasers under Rule
506(e). Any outstanding securities of the Company (of any kind or nature) that
were issued in reliance on Rule 506 at any time on or after September 23, 2013
have been issued in compliance with Rule 506(d) and (e).

 

 

 
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3.     Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants to the Company that:

 

(a)     Organization and Existence. Such Purchaser, if such Purchaser is an
entity, is a validly existing corporation, limited partnership or limited
liability company and has all requisite corporate, partnership or limited
liability company power and authority, and if such Purchaser is a natural
person, all requisite power and authority, to invest in the Securities pursuant
to this Agreement.

 

(b)     Authorization. The execution, delivery and performance by such Purchaser
of the Loan Documents to which such Purchaser is a party have been duly
authorized and each will constitute the valid and legally binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.

 

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

 

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

 

(e)     Disclosure of Information. Such Purchaser has had an opportunity to
receive all information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities. Such
Purchaser acknowledges receipt of copies of the SEC Reports. Neither such
inquiries nor any other due diligence investigation conducted by such Purchaser
shall modify, limit or otherwise affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement.

 

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

 

 

 
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(g)     Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:

 

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

 

(ii)     If required by the authorities of any state in connection with the
issuance of sale of the Securities, the legend required by such state authority.

 

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

 

(i)      Rule 506 Compliance. Neither such Purchaser nor any of its directors,
executive officers, other officers that may serve as a director or officer of
any company in which it invests, general partners or managing members is subject
to any Disqualification Event (as defined above), except for Disqualification
Events covered by Rule 506(d)(2)(ii) or (iii) under the 1933 Act and disclosed
in writing in reasonable detail to the Company.

 

4.     Conditions of the Purchasers’ Obligations at Closing. The obligations of
the Purchasers to the Company under this Agreement are subject to the
fulfillment of each of the following conditions, unless otherwise waived:

 

(a)     Representations and Warranties. The representations and warranties made
by the Company in Section 2 hereof qualified as to materiality shall be true and
correct at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the Company in
Section 2 hereof not qualified as to materiality shall be true and correct in
all respects at all times prior to and on the Closing Date, except to the extent
any such representation or warranty expressly speaks as of an earlier date, in
which case such representation or warranty shall be true and correct in all
respects as of such earlier date. The Company shall have performed in all
respects all obligations and covenants herein required to be performed by it on
or prior to the Closing Date.

 

(b)     Qualifications. All authorizations, approvals or permits, if any, of any
Governmental Authority that are required in connection with the lawful issuance
and sale of the Securities pursuant to this Agreement shall be obtained and
effective as of the Closing. For the avoidance of doubt, any authorization,
approval or permit of any party, including of the stockholders of the Company,
that may be required for the Purchasers to convert the Notes in whole or in part
pursuant to any law, regulation or rule to which the Company is then subject
shall be obtained and effective as of the such time and not as of the date of
the Closing; provided, however, that the failure of the Company to obtain any
approval to convert the Notes as of the Stockholders Meeting Deadline (as
defined in Section 6(j)) shall cause the interest rate under the Notes to
increase to the Default Rate, as such term is defined in the Notes, for the
period beginning on the day following the Stockholders Meeting Deadline and
continuing until such time that the Company obtains stockholder approval to
convert the Notes.

 

 

 
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(c)     Deliveries. The Company shall have executed the Note, Security Agreement
and Subordination Agreement and shall have made all deliveries required pursuant
to Section 1(b)(ii).

 

5.     Conditions of the Company’s Obligations at Closing. The obligations of
the Company to the Purchasers under this Agreement are subject to the
fulfillment of each of the following conditions, unless otherwise waived:

 

(a)     Representations and Warranties. The representations and warranties made
by the Purchasers in Section 3 hereof, other than the representations and
warranties contained in Sections 3(c), (d), (e), (f), (g) and (h) (the
“Investment Representations”), shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date. The Investment Representations shall be true and correct in all
respects when made, and shall be true and correct in all respects on the Closing
Date with the same force and effect as if they had been made on and as of said
date. The Purchaser shall have performed in all material respects all
obligations and covenants herein required to be performed by them on or prior to
the Closing Date.

 

(b)     Deliveries. The Purchaser shall have executed and delivered the Security
Agreement and Subordination Agreement and shall have delivered the Purchase
Price for the Notes to the Company, in accordance with Section 1(b)(iii).

 

6.     Covenants of the Company. The Company covenants and agrees with the
Purchasers that, so long as this Agreement shall remain in effect and until all
Liabilities under the Notes (as defined therein) have been satisfied by the
Company, unless the Purchasers shall otherwise consent in writing:

 

(a)     Existence; Compliance with Laws. The Company and each Subsidiary shall
(i) do or cause to be done all things reasonably necessary to preserve, renew
and keep in full force and effect its legal existence; (ii) do or cause to be
done all things reasonably necessary to obtain, preserve, renew, extend and keep
in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in substantially the
manner in which it is presently conducted and operated other than any change
thereof that would not result in a Material Adverse Effect; comply in all
material respects with all applicable laws, rules, regulations and decrees and
orders of any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition; (iii) keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with competitors in the
same industry operating in similar locations, including public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it; and maintain such other insurance as may be
required by law; (iv) pay and discharge promptly when due (or otherwise escrow,
bond or insure) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge (or escrow, bonding or insurance) shall not be
required with respect to any such tax, assessment, charge, levy or claim so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Company shall have set aside on its books
adequate reserves with respect thereto in accordance with generally accepted
accounting principles and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and
there is no risk of forfeiture of such property; (v) solely in the case of the
Company, timely and accurately file, report and otherwise disclose all matters
required by any Governmental Authority, including, without limitation, all
reports and forms required pursuant to rules promulgated by the SEC.

 

 

 
9

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(b)     Notices. The Company shall furnish to the Purchasers prompt written
notice of the following: (i) any Event of Default or Default (each as defined in
the Note), specifying the nature and extent thereof and the corrective action
(if any) taken or proposed to be taken with respect thereto; (ii) the filing or
commencement of, or any threat or notice of intention of any person or entity to
file or commence, any action, suit or proceeding, whether at law or in equity or
by or before any Governmental Authority, against the Company or any Subsidiary
that could reasonably be expected to result in a Material Adverse Effect; (iii)
any loss, damage, or destruction to the real or personal properties (or any
other assets) of the Company or any Subsidiary in the amount of $150,000 or
more, whether or not covered by insurance; (iv) any notices received by the
Company regarding any (A) alleged material default, (B) termination of a lease
or eviction from any leased premises or (C) failure to pay rent or any other
material monetary obligation, each with respect to any leased property (copies
of which notices shall be delivered not later than five (5) days after receipt
thereof by such person); (v) any development that has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect; and (vi) any
change (A) in its corporate name, (B) in the jurisdiction of organization or
formation, (C) in its identity or corporate structure or (D) in its Federal
Taxpayer Identification Number. The Company agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Purchaser to continue at all times following such change to have a valid,
legal and perfected security interest in all the assets of the Company and the
Subsidiaries.

 

(c)    Additional Collateral; Further Assurances. The Company shall execute any
and all further documents, financing statements, agreements and instruments, and
take all further action (including filing Uniform Commercial Code, United States
Patent and Trademark Office and other financing statements not later than one
(1) business day after the Closing Date) that may be required under applicable
law, or that the Purchasers may reasonably request, in order to effectuate the
transactions contemplated by the Loan Documents and in order to grant, preserve,
protect and perfect the validity of the security interests created or intended
to be created by the Notes and the other Loan Documents. Subject to any express
provision of this Agreement to the contrary, the Company will cause any existing
or subsequently acquired or organized subsidiary to become a guarantor by
executing a guaranty in substantially the form attached hereto as Exhibit D and
a joinder to each applicable Loan Document in favor of the Purchasers. In
addition, from time to time, the Company shall, at its cost and expense and
subject to the terms of the Notes and the Subordination Agreement, promptly
secure the Notes by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
as the Purchasers shall designate. Such security interests and Liens will be
created under the Loan Documents and other security agreements, mortgages, deeds
of trust and other instruments and documents in form and substance satisfactory
to the Purchasers, and the Company shall deliver or cause to be delivered to the
Purchaser all such instruments and documents as the Purchaser shall reasonably
request to evidence compliance with this Section 6(c). The Company agrees to
provide such evidence as the Purchaser shall reasonably request as to the
perfection of each such security interest and Lien. In furtherance of the
foregoing, the Company will give prompt notice to the Purchasers of the
acquisition by it or any of its subsidiaries of any property (or any interest in
property) having a value in excess of $100,000.

 

(d)     Indebtedness. The Company and the Subsidiaries shall not incur, create,
assume or permit to exist any indebtedness for borrowed money in excess of
$250,000 in the aggregate, other than indebtedness (i) created hereunder and
under the other Loan Documents, (ii) up to a maximum aggregate borrowed amount
of $11,000,000 under the Senior Credit Facility, (iii) constituting or arising
in connection with a purchase money security interest arising in the ordinary
course of business and consistent with the Company’s past practice, so long as
the same is not a material obligation of the Company and the Subsidiaries, taken
as a whole, or (iv) constituting trade debt arising in the ordinary course of
business and consistent with the Company’s past practices.

 

 

 
10

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(e)     Liens. The Company and the Subsidiaries shall not create, incur, assume
or permit to exist any Lien on any property or assets now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any thereof,
except Permitted Liens (as defined in the Note), Liens created hereunder and
under the other Loan Documents, Liens for taxes not yet due or contested in
compliance with this Agreement and Liens pursuant to customary security deposits
under operating leases in the ordinary course of business.

 

(f)          Restrictive Agreements. The Company and the Subsidiaries shall not
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon its ability to create, incur
or permit to exist any Lien upon any of its property or assets pursuant to any
Loan Document, other than as required by the Senior Credit Facility and the
Subordination Agreement.

 

(g)     Transactions with Affiliates. The Company and the Subsidiaries shall
not, except for transactions between the Company and a Subsidiary, sell or
transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
affiliates, except that (i) the Company or a Subsidiary may engage in any of the
foregoing transactions in the ordinary course of business at prices and on terms
and conditions not less favorable to the Company or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties and (ii) the
Company may consummate the transactions contemplated under the Purchase
Agreement and the Subscription Agreement, dated as of February 6, 2015, by and
between the Company and the investors set forth in each agreement.

 

(h)     Material Adverse Effect. The Company and the Subsidiaries shall not
permit the occurrence of any Material Adverse Effect, and, in the event thereof,
shall take all steps necessary and desirable, in the reasonable judgment of the
Purchasers, to correct such Material Adverse Effect.

 

(i)          Unregistered Shares; Registration of Shares.

 

(i) The Purchasers acknowledge that the Securities have not been registered for
issuance and resale. The Company agrees (promptly following the Closing Date,
but no later than forty-five (45) days following the Closing Date) to file a
Form S-3 or other applicable form (the “Registration Statement”) including a
resale prospectus covering sales of any Conversion Shares owned by the
Purchasers and their affiliates, successors and assigns. The Company shall use
commercially reasonable efforts to have the Registration Statement declared
effective as soon as practicable, and in any event no later than (A) five (5)
business days after the SEC shall have informed the Company that no review of
the Registration Statement will be made or that the SEC has no further comments
on the Registration Statement or (B) the 90th day after the Closing Date (the
120th day if the SEC reviews the Registration Statement). The Company will pay
all expenses associated with effecting the registration of the Conversion
Shares, including filing and printing fees, the Company’s counsel and accounting
fees and expenses, costs associated with clearing the Conversion Shares for sale
under applicable state securities laws, listing fees, fees and expenses of one
counsel to the Purchasers and the Purchasers’ other reasonable expenses in
connection with the registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Conversion Shares being sold.

 

(ii) The Company shall maintain the Registration Statement and the prospectuses
included therein in effect for a period that will terminate upon the earlier of
(i) the date on which all of the Conversion Shares covered by such Registration
Statement, as amended from time to time, have been sold, and (ii) the Conversion
Shares are eligible for resale pursuant to Rule 144 promulgated by the SEC. The
Company further covenants to the Purchasers that upon request of the Purchaser,
it shall enter into a registration rights agreement on customary terms
reasonably and mutually acceptable to the parties, including the Company’s
agreement to provide comfort letters and legal opinions in customary form as may
be reasonably requested by the Purchaser; provided, however, that the terms and
conditions of such registration rights agreement shall be substantially the same
as those contained in the Registration Rights Agreement, dated as of February 6,
2015, between the Company and the investors named therein.

 

 

 
11

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(j)       Proxy Statement; Stockholders Meeting.

 

(i) Promptly following the Closing, the Company shall take all action necessary
to call a meeting of its stockholders (the “Stockholders Meeting”), which shall
occur not later than May 31, 2015 (the “Stockholders Meeting Deadline”), for the
purpose of seeking approval of the Company’s stockholders for, among other
things, the issuance and sale of the Securities to the Purchasers (the
“Proposal”). In the event the Proposal is not approved by the Company’s
stockholders at the Stockholders Meeting, the Company shall take all action
necessary to call up to three (3) additional meetings of its stockholders (each
a “Subsequent Stockholders Meeting”) for the purpose of seeking approval of the
Proposal, to be held promptly following the completion of the Stockholders
Meeting and in no event more than one year after the Closing Date to the extent
reasonably practicable. In connection with the Stockholders Meeting and, if
applicable, each Subsequent Stockholders Meeting, the Company will promptly
prepare and file with the SEC proxy materials (including a proxy statement and
form of proxy) for use at the Stockholders Meeting and, if applicable, each
Subsequent Stockholders Meeting, and, after receiving and promptly responding to
any comments of the SEC thereon, shall promptly mail such proxy materials (or,
if permitted, notice of the availability of such proxy materials) to the
stockholders of the Company. Each Purchaser shall promptly furnish in writing to
the Company such information relating to such Purchaser and its investment in
the Company as the Company may reasonably request for inclusion in each Proxy
Statement. The Company will comply with Section 14(a) of the 1934 Act and the
rules promulgated thereunder in relation to any proxy statement (as amended or
supplemented, each a “Proxy Statement”) and any form of proxy to be sent or made
available to the stockholders of the Company in connection with the Stockholders
Meeting or, if applicable, each Subsequent Stockholders Meeting, and each Proxy
Statement shall not, on the date that such Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed or made available to stockholders
or at the time of the Stockholders Meeting or any Subsequent Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein not false
or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies or the Stockholders Meeting which has become false or misleading. If the
Company should discover at any time prior to the Stockholders Meeting or, if
applicable, any Subsequent Stockholders Meeting, any event relating to the
Company or any of its Subsidiaries or any of their respective Affiliates,
officers or directors that is required to be set forth in a supplement or
amendment to the applicable Proxy Statement, in addition to the Company's
obligations under the 1934 Act, the Company will promptly inform the Investors
thereof. The date on which the Proposal is approved by the Company’s
stockholders is referred to herein as the “Approval Date.”

 

(ii) Subject to their fiduciary obligations under applicable law (as determined
in good faith by the Company’s Board of Directors after consultation with the
Company’s outside counsel), the Company’s Board of Directors shall recommend to
the Company’s stockholders that the stockholders vote in favor of the Proposal
(the “Company Board Recommendation”) at the Stockholders Meeting and, if
applicable, each Subsequent Stockholders Meeting, and take all commercially
reasonable action (including, without limitation, the hiring of a proxy
solicitation firm of nationally recognized standing) to solicit the approval of
the stockholders for the Proposal unless the Board of Directors shall have
modified, amended or withdrawn the Company Board Recommendation pursuant to the
provisions of the immediately succeeding sentence. The Company covenants that
the Board of Directors of the Company shall not modify, amend or withdraw the
Company Board Recommendation unless the Board of Directors (after consultation
with the Company’s outside counsel) shall determine in the good faith exercise
of its business judgment that maintaining the Company Board Recommendation would
be inconsistent with its fiduciary duty to the Company’s stockholders. Whether
or not the Company’s Board of Directors modifies, amends or withdraws the
Company Board Recommendation pursuant to the immediately preceding sentence, the
Company shall in accordance with Section 146 of the Delaware General Corporation
Law and the provisions of its Certificate of Incorporation and Bylaws, (A) take
all action necessary to convene the Stockholders Meeting and, if necessary, each
Subsequent Stockholders Meeting as promptly as practicable, but no later than
the Stockholders Meeting Deadline with respect to the Stockholders Meeting and
as soon as practicable with respect to each Subsequent Stockholders Meeting, to
consider and vote upon the approval of the Proposal and (B) submit the Proposal
at the Stockholders Meeting or, if applicable, each Subsequent Stockholders
Meeting to the stockholders of the Company for their approval. The Company
represents and warrants to the Purchasers that, as of the date hereof, the
Company has received executed voting agreements from stockholders holding a
majority of the Company’s issued and outstanding stock to vote in favor of the
Proposal.

 

 

 
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7.     Miscellaneous.

 

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

 

(b)     Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

(c)     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

 

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

 

 

 
13

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If to the Company, addressed to:

 

Selectica, Inc.

2121 South El Camino Real, 10th Floor

San Mateo, CA 94403

Attention: Todd A. Spartz

Fax: (650) 532-1505

E-mail: tspartz@selectica.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

 

If to any Purchaser, addressed to:

 

Mr. Lloyd I. Miller, III

3300 South Dixie Highway, Suite 1-365

West Palm Beach, Florida 33405

 

With a copy to:

 

Andrews Kurth LLP

450 Lexington Avenue

New York, New York 10017

Attn: Roger J. Griesmeyer, Esq.

 

(e)     Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the Company and Lloyd I. Miller, III.

 

(f)      Confidentiality. Each party hereto agrees that, except with the prior
written permission of the other party or otherwise required by law, it shall at
all times keep confidential and not divulge, furnish or make accessible to
anyone any confidential information, knowledge or data concerning or relating to
the business or financial affairs of the other party (or its affiliates) to
which such party has been or shall become privy by reason of this Agreement or
any other Loan Document, discussions or negotiations relating to this Agreement
or any other Loan Document, or the performance of its obligations hereunder or
thereunder. This Section does not apply to information that is entirely in the
public domain, previously known to the recipient of the information (as
evidenced by written, dated business records of such recipient), received
lawfully from a third party, or independently developed without access to such
information. Notwithstanding the foregoing, the parties agree that the Company
shall (i) file a Current Report on Form 8-K describing the transactions
contemplated under the Loan Documents and attaching copies of the Loan Documents
and (ii) prior to the issuance of any press release with respect to the
transactions contemplated hereby, provide such press release to the Purchasers
for their review and approval, such approval not to be unreasonably withheld. In
addition, the Company will make such other filings and notices in the manner and
time required by the SEC or NASDAQ.

 

 

 
14

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(g)     Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.

 

(h)     Expenses. The parties hereto shall pay their own costs and expenses
related to the transactions contemplated by this Agreement, the Purchase
Agreement and the Subscription Agreement, except that the Company shall pay the
reasonable fees and expenses of Andrews Kurth LLP, legal counsel to the
Purchasers, with respect to the transactions contemplated by this Agreement, the
Purchase Agreement, the Subscription Agreement and the Limited Guaranties and
the Guaranty Fee Agreement entered into by the Company, certain of the
Purchasers and Bridge Bank, National Association, not to exceed $75,000 in the
aggregate, regardless of whether the transactions contemplated hereby or thereby
are consummated. If the Closing hereunder does not occur, then the Company shall
reimburse the applicable portion of such fees and expenses not later than five
(5) business days following notice by the Company or the Purchasers of their
intent not to proceed with the transactions contemplated hereunder.

 

(i)     Entire Agreement. This Agreement and the Loan Documents constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof, and any and all other written or oral agreements existing between the
parties hereto are expressly canceled, including, without limitation, that
certain convertible note financing term sheet dated February 9, 2015, by and
among the parties.

 

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

 

 

[Remainder of page intentionally blank; signature pages to follow]

 

 

 
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IN WITNESS WHEREOF, the parties have executed this Junior Secured Convertible
Note Purchase Agreement as of the date first written above.

 

 

COMPANY:

 

SELECTICA, INC.

 

 

By:                                                        

Name:

Title:

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Junior Secured Convertible
Note Purchase Agreement as of the date first written above.

 

 

PURCHASERS:

 

 

LLOYD I. MILLER, III

 

 

                                                                   

Signature

 

 

 

MILFAM II L.P., a Georgia limited partnership

 

By: MILFAM LLC

Its: General Partner

 

 

By:                                                             

Name: Lloyd I. Miller, III

Title: Manager

 

 

 

LLOYD I. MILLER TRUST A-4

 

By: MILFAM LLC

Its: Investment Advisor

 

 

By:                                                             

Name: Lloyd I. Miller, III

Title: Manager

 

 

 

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Schedule I

 

Schedule of Purchasers

 

Name

 

Note Principal Amount

           

Lloyd I. Miller, III

  $ 1,000,000.00            

MILFAM II L.P.

  $ 1,000,000.00            

Lloyd I. Miller Trust A-4

  $ 1,000,000.00            

Total

  $ 3,000,000.00  

 

 

 

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EXHIBIT A

 

Form of Note

 

 

 
 

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EXHIBIT B

 

Security Agreement

 

 

 
 

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EXHIBIT C

 

Subordination Agreement

 

 

 
 

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EXHIBIT D

 

Form of Guaranty

 

THIS GUARANTY ("Guaranty") is made as of this [__] day of [__], 2015, by
[____________], a [___________] (the "Guarantor"), in favor of Lloyd I. Miller,
III, Milfam II L.P., a Georgia limited partnership, and Lloyd I. Miller Trust
A-4 (collectively, the “Lender”), to guarantee all Obligations (as defined
below) of Selectica, Inc., a Delaware corporation and owner of one hundred
percent (100%) of the equity of Guarantor ("Debtor").

 

To secure the prompt and faithful payment and satisfaction of the Junior Secured
Convertible Promissory Notes, dated as of March 11, 2015, and executed by Debtor
in favor of Lender (the “Notes”), in the aggregate amount of Three Million
Dollars ($3,000,000) due and owing to Lender (the "Obligations"), Guarantor
unconditionally, irrevocably and absolutely guarantees the full and prompt
payment and satisfaction of the Obligations when due, whether by acceleration or
otherwise, and at all times thereafter. Capitalized terms not otherwise defined
in this Guaranty shall have the meanings set forth in the Notes.

 

Lender may, from time to time, and in accordance with the terms of this
Guaranty, the Notes, Note Agreement and other Loan Documents, and without notice
to Guarantor, take any or all of the following actions: (a) retain or obtain a
Lien against any property, including the Guarantor Collateral (as defined
below), to secure any of the Obligations or this Guaranty; (b) subject to the
terms of the Note Agreement, retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the Guarantor, with
respect to any of the Obligations; (c) extend or renew for one or more periods
all or any part of the Obligations, whether or not longer than the original
periods, or modify or alter any of the terms or provisions (including, by way of
example and not limitation, the interest rate, maturity, or installment amount)
of any of the Obligations, or accelerate or exchange any of the Obligations, or
release Debtor or compromise any of the Obligations of any guarantor or any
obligor with respect to any of the Obligations; (d) release its security
interest or encumbrance in, or surrender, sell, transfer, exchange, substitute,
dispose of, or otherwise deal with all or any part of any collateral, including
the Guarantor Collateral; (e) discharge, release, compound or settle with Debtor
or any guarantor as to the Obligations; (f) file, or elect not to file, a proof
of claim against the estate of any bankrupt, insolvent, incompetent or deceased
Debtor, guarantor or other person or entity; or (g) apply any and all amounts
received by Lender from whatever source on account of the Obligations toward the
payment of the Obligations in such order as Lender may from time to time elect.

Subject to the terms of the Subordination Agreement and the Security Agreement,
at any time after a default by Debtor pursuant to the Note or any Loan
Document(s), Lender may sue Debtor or Guarantor or both to enforce the payment
of any sum or for the performance of any of the Obligations, or for the recovery
of damages, and without regard to the existence of additional causes of action.
Guarantor shall pay Lender for all attorneys’ fees and expenses and costs of
collection reasonably incurred by it in collecting any of the Obligations. The
rights, remedies, and benefits provided to Lender shall be cumulative and shall
not be exclusive of any other rights, remedies or benefits allowed by law, and
may be exercised either successively or concurrently.

 

In connection with this Guaranty, and subject to any Permitted Liens and the
terms of the Subordination Agreement, Guarantor hereby grants to Lender a
continuing security interest in all assets of Guarantor whether now owned or
hereafter acquired, including all proceeds therefrom (collectively, the
“Guarantor Collateral”) to secure the payment of the Obligations, plus all
interest, costs, expenses, and reasonable attorneys’ fees, which may be made or
incurred by Lender in the disbursement, administration, and collection of such
amounts, and in the protection, maintenance, and liquidation of the Guarantor
Collateral. Other than in connection with any Permitted Liens or in accordance
with the Subordination Agreement and the Security Agreement, Guarantor shall not
sell, assign, transfer, pledge or otherwise dispose of or encumber any Guarantor
Collateral to any third party while the Note is in effect without the prior
written consent of Lender.

 

 

 
 

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Guarantor shall execute and deliver to Lender, concurrently with the execution
hereof, and at any time or times hereafter at the request of Lender, all
financing statements, assignments, affidavits, reports, notices, schedules of
accounts, letters of authority and all other documents that Lender may
reasonably request, in form satisfactory to Lender, to perfect and maintain
perfected Lender’s security interests in the Guarantor Collateral. In addition,
Guarantor irrevocably authorizes Lender, its agents, attorneys, and
representatives, to file financing statements and amendments thereto, at
Guarantor’s expense, necessary to establish and maintain Lender’s perfected
security interest in the Guarantor Collateral. In order to fully consummate all
of the transactions contemplated hereunder, Guarantor shall make appropriate
entries on its books and records disclosing Lender’s security interests in the
Guarantor Collateral. Immediately upon payment or conversion of the Note,
without further notice from Guarantor, Lender shall terminate any financing
statements, assignments, affidavits, reports, notices, schedules of accounts,
letters of authority and all other documents used to perfect and maintain
perfected Lender’s security interests in the Guarantor Collateral.

 

If default is made in the performance or satisfaction of any of the Obligations
and such default continues beyond any applicable cure periods, Lender may, at
its option, and without further notice, but subject to the terms of the
Subordination Agreement, declare the Obligations due and payable, or subject to
any Permitted Liens and the Subordination Agreement, sell any collateral,
including the Guarantor Collateral, or any part of it, or cause it to be sold at
public or private sale, and Lender may become purchaser thereof at its option.

 

Guarantor waives demand, notice, protest, notice of acceptance of this Guaranty,
notice of any loans made, extensions granted, renewals, collateral received or
delivered, or other action taken in reliance on this Guaranty, all demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of any note, payment of which is guaranteed by this Guaranty, and
all other demands and notices of any description.

 

This Guaranty is to be construed in accordance with and governed by the laws of
the State of New York, without regard to principles of conflict of laws. Any
term of this Guaranty may be amended and the observance of any term of this
Guaranty may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the prior written consent of Lender.
Except as may be otherwise provided herein, all notices, requests, waivers and
other communications made pursuant to this Guaranty shall be made in accordance
with Section 7(d) of the Note Agreement. If one or more provisions of this
Guaranty are held to be unenforceable under applicable law, such provision shall
be excluded from this Guaranty and the balance of the Guaranty shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms. The Guaranty may not be assigned without the prior
written consent of Lender.

 

[Signature Page Follows]

  

 

 
 

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Guarantor has executed this Guaranty as of the date set forth above.

 

 GUARANTOR

 

[____________________]

 

 

 

By: _________________________________

 

Name: _______________________________

 

Its: _________________________________