(Mark One) | ||
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 |
|
For the fiscal year ended March 31, 2005 | ||
OR | ||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 |
||
For the transition period from to |
Delaware
|
77-0432030 | |
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
3 West Plumeria Drive, San Jose, California | 95134-2111 | |
(Address of principal executive offices) | (Zip Code) |
1
Item 1. | Business |
The Internet as a Technology Platform |
2
Complexity in Electronic Commerce |
The Opportunity to Order Gap |
Limitations of Existing Solutions |
3
| have not been engineered for the Internet platform and, as a result, are not easily deployed across a broad range of Internet-enabled channels and/or devices; | |
| require significant custom programming for deployment and maintenance; | |
| provide a limited interactive experience; or | |
| employ application architectures that limit their scalability and reliability. |
Enables Selling Process to Support Key Business Goals |
Shortens Sales Cycles |
4
| providing comprehensive product information to the customer or sales person at the point of sale without requiring interaction with product experts; and | |
| automating the pricing and configuration of complex products and services, thereby providing sales professionals and their customers with accurate, real-time information. |
Ensures Accuracy of Quotes |
Provides Comprehensive Solution |
Opportunity for Increased Sales |
Opportunity for Greater Revenue per Customer |
Improves Efficiency of the Indirect Sales Channel |
Enhances Customer Relations |
5
Reduced Costs of Ownership |
| Selectica Configurator is a procedural based configuration based engine. Development tools allow for modeling pricing and other rules on product and service offerings and the engine manages the execution of these stored rules. | |
| Selectica Pricer engine is used to automate pricing and quoting processes. Price management tools enable definition of complex pricing rules and allow modeling of pricing scenarios. The pricing engine executes the pricing rules to determine the price dynamically based on the supplied rule factors. | |
| Selectica Solutions Advisor is an application built on the core Selectica Configurator engine and is used by businesses to guide their customers to find the right product online. Selectica Solutions Advisor comes with a user friendly data management module to capture the sales rules associated with guiding users to the right products based on their needs and a front-end interactive selling application that captures users needs and guides them to a ranked list of applicable product offers. | |
| Our EPS-M Application platform that uses some of the core SCMS engines is a vertical specific application for the manufacturing industry. |
6
Product | Features | Benefits | ||
1. Selectica Configurator
|
Configuration engine | Enables representation of product and service data and rules associated with them | ||
Multiple deployment modes | Enables deployment through Selectica server and native EJB | |||
Highly scalable Internet-architecture | Designed to support millions of simultaneous users by installing more servers | |||
Supports open standard integration interfaces | Integrates with other web-based applications and legacy systems through web services | |||
Dynamic information update | Ability to update product information without stopping selling process | |||
Supports devices with limited processing power | Ability to be deployed on a broad range of devices | |||
HTML-based client | Designed to run on any device with a standard web browser | |||
2. Selectica Pricer
|
Rules-based pricing | Designed to eliminate SKU proliferation through bundling and intelligent pricing rules | ||
Multiple deployment modes | Enables deployment through Selectica server and native EJB | |||
Dynamic information update | Updates pricing information without stopping selling process | |||
Allows users to manage sophisticated pricing logic across the enterprise | Accelerates the introduction of new pricing schemes | |||
3. Selectica Mobile
|
Complete stand-alone selling system that runs on laptop computers | Enables mobile users to access our solution with the same user interface as a connected system | ||
Automatically synchronizes KnowledgeBases and quotes | Enables updated product and pricing information and orders | |||
Provides comprehensive functionality on mobile platforms using the same performance and reliability as the Selectica Configurator | Reduces time and inconsistency | |||
4. Selectica Application Data Manager (ADM)
|
Enables rapid updates of product, pricing and service data; anytime (24x7 accessibility), anywhere | Improved responsiveness to changing market conditions | ||
Easy-to-use interface provides a consolidated view of corporate data repositories | Enables users to maintain and manage product and service information with the ability to add, modify and delete product, pricing and service information without IT intervention |
7
Product
Features
Benefits
Central server and storage facility for customer orders,
configurations and pricing information
Enables users to generate, save and revise quotes online.
Provides easy access from remote devices to quote archives
Enables accurate quotes and orders
Models, tests and debugs applications using a single tool
Simplifies development process
Graphical KnowledgeBase and user interface development tools
Enables application deployment and maintenance by non-technical
personnel
Create and maintain automated KnowledgeBases through a
Knowledgebase Development Environment (KDE)
Maintain the consistency of KnowledgeBases; fully automated
environment via a command line interface will eliminate need for
user interface.
Database that stores KnowledgeBase in readable, format which can
be easily queried.
Provides distributed team development of KnowledgeBases for easy
development and maintenance.
Enterprise and hosted ASP for buy-side and sell-side contract
management and compliance
Provides enterprises with state-of-the- art tools to effectively
manage costs, performance and compliance of critical customer
and vendor contractual relationships.
Packaged guided selling solution. Intuitive web-based
development environment.
Enables enterprises to rapidly create applications that help
customers find the products that best fit their needs.
Out-of-box functionality without customization.
Next generation end-to-end packaged application based on our
industry configuration and pricing engines coupled with best
practice implementation methodology derived from numerous
industry-first deployments.
Out-of-box packaged application that enables companies to manage
their complex product and service offering data, rules and
pricing information to power multi-channel e-business quoting
and sales. Employs non-programmatic, business-user friendly
methods to manage product, service and pricing data through a
unified data model.
8
| declarative constraint engine; | |
| integrated modeling environment; | |
| multi-threaded server; and | |
| scalable, thin-client architecture. |
Declarative Constraint Engine |
Integrated Modeling Environment |
| easily create and update KnowledgeBases containing product attributes; | |
| create HTML-based graphical user interface (GUI) applications; | |
| test the application interactively as the application is being built and conduct batch order checks; | |
| verify the semantics of the KnowledgeBase; and | |
| create flexible models from individual models. |
Multi-threaded Server |
9
Scalable Thin-client Architecture |
EPS-M Technology |
Consulting Services |
10
Customer Support and Maintenance |
| vertical domain expertise; | |
| product functionality and features; | |
| product architecture and technology; | |
| incumbency of vendors; | |
| availability of global support; | |
| relationship with system integrators; | |
| coverage of direct sales force; | |
| ease and speed of product implementation; | |
| vendor and product reputation; | |
| financial condition of similar vendors; | |
| ability of products to support large numbers of concurrent users; | |
| price of the solution; |
11
| flexibility in delivering the solution (premise, hosted and on-demand); | |
| hosted and on-demand solutions; | |
| customer referenceability; | |
| measurable value (top and bottom line) to the customer; and | |
| implementation complexity and time requirement. |
| a longer operating history; | |
| a preferred vendor status with our customers; | |
| more extensive name recognition and marketing power; | |
| significantly greater financial, technical, marketing and other resources, giving them the ability to respond more quickly to new or changing opportunities, technologies and customer requirements; and | |
| in the case where we attempt to bridge gaps between CRM and ERP solutions, an existing relationship with our target customers. |
12
Consulting Services |
Customer Support |
13
| cease selling, incorporating or using products or services that incorporate the challenged intellectual property; | |
| obtain from the holder of the infringed intellectual property right a license to sell or use the relevant intellectual property, which license may not be available on reasonable terms; | |
| redesign those products or services that incorporate such intellectual property; or | |
| pay money damages to the holder of the infringed intellectual property right. |
14
Item 2. | Properties |
Item 3. | Legal Proceedings |
15
16
Item 4. | Submission of Matters to a Vote of Security Holders |
17
18
| potential adverse effects on our operating results, including unanticipated costs and liabilities, unforeseen accounting charges or fluctuations from failure to accurately forecast the financial impact of an acquisition. | |
| use of cash; | |
| issuance of stock that would dilute our current stockholders percentage ownership; | |
| incurring debt; | |
| assumption of liabilities; | |
| amortization expenses related to other intangible assets; | |
| incurring large and immediate write-offs; or | |
| incurring legal and professional fees. |
| problems combining the purchased operations, technologies or products with ours; | |
| unanticipated costs; | |
| diversion of managements attention from our core business; | |
| adverse effects on existing business relationships with suppliers and customers; and | |
| potential loss of key employees, particularly those of the acquired organizations. |
19
Fiscal Year ended March 31, 2005
|
|||||
Customer A
|
23% | ||||
Customer B
|
14% | ||||
Customer C
|
12% | ||||
Customer D
|
11% | ||||
Fiscal Year ended March 31, 2004
|
|||||
Customer A
|
39% | ||||
Customer B
|
20% | ||||
Fiscal Year ended March 31, 2003
|
|||||
Customer B
|
25% | ||||
Customer E
|
14% |
20
| cease selling, incorporating or using products or services that incorporate the challenged intellectual property; |
21
| obtain from the holder of the infringed intellectual property right a license to sublicense or use the relevant intellectual property, which license may not be available on reasonable terms; | |
| redesign those products or services that incorporate such intellectual property; and/or | |
| pay money damages to the holder of the infringed intellectual property right. |
22
| a longer operating history; | |
| preferred vendor status with our customers; | |
| more extensive name recognition and marketing power; and | |
| significantly greater financial, technical, marketing and other resources, giving them the ability to respond more quickly to new or changing opportunities, technologies, and customer requirements. |
23
Years Ended | |||||||||||||
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Gross Margin
|
|||||||||||||
License
|
91 | % | 92 | % | 88 | % | |||||||
Services
|
43 | % | 27 | % | 27 | % |
24
25
26
Patent Infringement |
| cease selling, incorporating or using products or services that incorporate the challenged intellectual property; | |
| obtain from the holder of the infringed intellectual property right a license to sublicense or use the relevant intellectual property, which license may not be available on reasonable terms; | |
| redesign those products or services that incorporate such intellectual property; and/or | |
| pay money damages to the holder of the infringed intellectual property right. |
27
Class Action |
28
| providing for a classified board of directors with staggered three-year terms; | |
| restricting the ability of stockholders to call special meetings of stockholders; | |
| prohibiting stockholder action by written consent; | |
| establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and | |
| granting our board of directors the ability to designate the terms of and issue new series of preferred stock without stockholder approval. |
29
30
| inadequate reliability of the network infrastructure; | |
| slow development of enabling technologies and complementary products; and | |
| limited accessibility and ability to deliver quality service. |
Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities |
31
High | Low | ||||||||
Fiscal 2004
|
|||||||||
First Quarter
|
$ | 3.34 | $ | 2.69 | |||||
Second Quarter
|
$ | 4.75 | $ | 3.09 | |||||
Third Quarter
|
$ | 5.44 | $ | 4.05 | |||||
Fourth Quarter
|
$ | 5.55 | $ | 4.29 | |||||
Fiscal 2005
|
|||||||||
First Quarter
|
$ | 5.60 | $ | 4.05 | |||||
Second Quarter
|
$ | 4.53 | $ | 3.59 | |||||
Third Quarter
|
$ | 4.03 | $ | 3.16 | |||||
Fourth Quarter
|
$ | 3.54 | $ | 3.17 |
A | B | C | ||||||||||
Number of securities | ||||||||||||
Number of securities | Weighted-average | remaining available for | ||||||||||
to be issued upon | exercise price of | future issuance under | ||||||||||
exercise of outstanding | outstanding | equity compensation plans | ||||||||||
options, warrants and | options, warrants | (excluding securities | ||||||||||
Plan category | rights | and rights | reflected in Column A) | |||||||||
Equity compensation plans approved by security holders
|
5,937 | $ | 4.37 | 7,017 | (1)(2) | |||||||
Equity compensation plans not approved by security holders
|
2,503 | $ | 3.71 | 377 | ||||||||
Total
|
8,440 | $ | 4.17 | 7,394 | ||||||||
(1) | These plans permit the grant of options, stock appreciation rights, shares of restricted stock and stock units. |
(2) | On each January 1, starting in 2001, the number of shares reserved for issuance under our 1999 Equity Incentive Plan will be automatically increased by the lesser of 5% of the then outstanding shares of |
32
common stock or 1.8 million shares. On each May 1, starting in 2001, the number of shares reserved for issuance under our 1999 Employee Stock Purchase Plan will be automatically increased by the lesser of 2% of the then outstanding shares of common stock or 1.0 million shares. |
Stock Option Plans Not Required to be Approved by Stockholders |
Officer Option Agreement |
2001 Supplemental Plan |
33
Item 6. | Selected Consolidated Financial Data |
Years Ended March 31, | ||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||
Consolidated Statement of Operations Data:
|
||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||
License
|
$ | 9,133 | $ | 16,935 | $ | 10,218 | $ | 16,683 | $ | 23,933 | ||||||||||||
Services
|
21,987 | 23,089 | 25,350 | 30,511 | 31,367 | |||||||||||||||||
Total revenues
|
31,120 | 40,024 | 35,568 | 47,194 | 55,300 | |||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||
License
|
819 | 1,410 | 1,185 | 1,023 | 1,457 | |||||||||||||||||
Services
|
12,428 | 16,827 | 18,518 | 28,660 | 28,678 | |||||||||||||||||
Total cost of revenues
|
13,247 | 18,237 | 19,703 | 29,683 | 30,135 | |||||||||||||||||
Gross profit
|
17,873 | 21,787 | 15,865 | 17,511 | 25,165 | |||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||
Research and development
|
12,359 | 13,474 | 13,202 | 15,343 | 21,849 | |||||||||||||||||
Sales and marketing
|
11,861 | 14,491 | 19,368 | 25,215 | 50,686 | |||||||||||||||||
General and administrative
|
10,396 | 5,385 | 6,068 | 8,922 | 14,876 | |||||||||||||||||
Total operating expenses
|
34,616 | 33,350 | 38,638 | 49,480 | 87,411 | |||||||||||||||||
Loss from operations
|
(16,743 | ) | (11,563 | ) | (22,773 | ) | (31,969 | ) | (62,246 | ) | ||||||||||||
Other income, net
|
| 1,092 | | | | |||||||||||||||||
Interest income
|
1,973 | 1,625 | 2,999 | 5,896 | 12,654 | |||||||||||||||||
Net loss before taxes
|
(14,770 | ) | (8,846 | ) | (19,774 | ) | (26,073 | ) | (49,592 | ) | ||||||||||||
Provision for income taxes
|
(117 | ) | | | 304 | 275 | ||||||||||||||||
Net loss before cumulative effect of an accounting change
|
(14,653 | ) | (8,846 | ) | (19,774 | ) | (26,377 | ) | (49,867 | ) | ||||||||||||
Cumulative effect of an accounting change to adopt FAS 142
|
| | (9,974 | ) | | | ||||||||||||||||
Net loss
|
$ | (14,653 | ) | $ | (8,846 | ) | $ | (29,748 | ) | $ | (26,377 | ) | $ | (49,867 | ) | |||||||
Basic and diluted net loss per share
|
$ | (0.45 | ) | $ | (0.28 | ) | $ | (0.92 | ) | $ | (0.75 | ) | $ | (1.44 | ) | |||||||
Shares used in computing basic and diluted net loss per share
|
32,665 | 31,165 | 32,219 | 35,090 | 34,580 |
34
Years Ended March 31,
2005
2004
2003
2002
2001
(in thousands)
$
98,349
$
100,597
$
117,853
$
133,456
$
167,181
9,275
25,819
19,296
36,628
42,591
8,470
12,896
22,731
15,509
26,265
1,434
1,482
1,338
1,223
969
89,879
87,701
95,122
117,947
140,916
107,624
126,416
137,149
170,084
209,772
97,720
112,038
113,080
153,352
182,538
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Years Ended | ||||||||||||||
March 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
As a Percentage of Total Revenues:
|
||||||||||||||
Revenues:
|
||||||||||||||
License
|
29 | % | 42 | % | 29 | % | ||||||||
Services
|
71 | 58 | 71 | |||||||||||
Total revenues
|
100 | 100 | 100 | |||||||||||
Cost of revenues:
|
||||||||||||||
License
|
3 | 4 | 3 | |||||||||||
Services
|
40 | 42 | 52 | |||||||||||
Total cost of revenues
|
43 | 46 | 55 | |||||||||||
Gross profit
|
57 | 54 | 45 | |||||||||||
Operating expenses:
|
||||||||||||||
Research and development
|
40 | 34 | 37 | |||||||||||
Sales and marketing
|
38 | 36 | 55 | |||||||||||
General and administrative
|
33 | 13 | 17 | |||||||||||
Total operating expenses
|
111 | 83 | 109 | |||||||||||
Loss from operations
|
(54 | ) | (29 | ) | (64 | ) |
35
Years Ended
March 31,
2005
2004
2003
3
6
4
8
(47
)
(22
)
(56
)
(47
)
(22
)
(56
)
(28
)
(47
)%
(22
)%
(84
)%
36
Bookings and Revenue |
Expense Management |
37
Revenue Recognition |
38
39
Years Ended March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
As a Percentage of Total Revenues:
|
||||||||||||
Contract Accounting
|
73 | % | 51 | % | 80 | % | ||||||
Residual Method
|
| 3 | 2 | |||||||||
Ratable Method (includes Maintenance)
|
27 | 46 | 18 | |||||||||
Total Revenues
|
100 | % | 100 | % | 100 | % | ||||||
Short Term Investments |
Allowance for Doubtful Accounts |
Contingencies and Litigation |
40
Related Party Transaction and Severance Agreement |
Fiscal Year ended March 31, 2005
|
|||||
Customer A
|
23 | % | |||
Customer B
|
14 | % | |||
Customer C
|
12 | % | |||
Customer D
|
11 | % | |||
Fiscal Year ended March 31, 2004
|
|||||
Customer A
|
39 | % | |||
Customer B
|
20 | % | |||
Fiscal Year ended March 31, 2003
|
|||||
Customer B
|
25 | % | |||
Customer E
|
14 | % |
41
2005 | Change | 2004 | Change | 2003 | |||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||
License
|
$ | 9,133 | (46 | )% | $ | 16,935 | 66 | % | $ | 10,218 | |||||||||||
Percentage of total revenues
|
29 | % | 42 | % | 29 | % | |||||||||||||||
Services
|
$ | 21,987 | (5 | )% | $ | 23,089 | (9 | )% | $ | 25,350 | |||||||||||
Percentage of total revenues
|
71 | % | 58 | % | 71 | % | |||||||||||||||
Total revenues
|
$ | 31,120 | (22 | )% | $ | 40,024 | 13 | % | $ | 35,568 |
42
2005 | Change | 2004 | Change | 2003 | |||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||
Cost of license revenues
|
$ | 819 | (42 | )% | $ | 1,410 | 19 | % | $ | 1,185 | |||||||||||
Percentage of license revenues
|
9 | % | 8 | % | 12 | % | |||||||||||||||
Cost of services revenues
|
$ | 12,428 | (26 | )% | $ | 16,827 | (9 | )% | $ | 18,518 | |||||||||||
Percentage of services revenues
|
57 | % | 73 | % | 73 | % |
43
2005 | 2004 | 2003 | ||||||||||
Gross margin, license revenues
|
91 | % | 92 | % | 88 | % | ||||||
Gross margin, services revenues
|
43 | % | 27 | % | 27 | % | ||||||
Gross margin, total revenues
|
57 | % | 54 | % | 45 | % |
2005 | Change | 2004 | Change | 2003 | |||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||
Research and development
|
$ | 12,359 | (8 | )% | $ | 13,474 | 2 | % | $ | 13,202 | |||||||||||
Percentage of total revenues
|
40 | % | 34 | % | 37 | % | |||||||||||||||
Sales and marketing
|
$ | 11,861 | (18 | )% | $ | 14,491 | (25 | )% | $ | 19,368 | |||||||||||
Percentage of total revenues
|
38 | % | 36 | % | 55 | % | |||||||||||||||
General and administrative
|
$ | 10,396 | 93 | % | $ | 5,385 | (11 | )% | $ | 6,068 | |||||||||||
Percentage of total revenues
|
33 | % | 13 | % | 17 | % |
44
45
46
2005 | Change | 2004 | Change | 2003 | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||
Interest Income
|
$ | 1,891 | 16 | % | $ | 1,625 | (46 | )% | $ | 2,999 |
47
2005 | Change | 2004 | Change | 2003 | ||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$ | 93,263 | (4 | )% | $ | 97,303 | (11 | )% | $ | 109,217 | ||||||||||
Working capital
|
$ | 89,879 | 2 | % | $ | 87,701 | (8 | )% | $ | 95,122 | ||||||||||
Net cash used for operating activities
|
$ | (19,172 | ) | 89 | % | $ | (10,167 | ) | 50 | % | $ | (6,784 | ) | |||||||
Net cash provided by (used for) investing activities
|
$ | 19,196 | (188 | )% | $ | (21,919 | ) | (201 | )% | $ | 21,613 | |||||||||
Net cash provided by (used for) financing activities
|
$ | 561 | (90 | )% | $ | 5,821 | (146 | )% | $ | (12,593 | ) |
48
Payments Due By Period | ||||||||||||||||||||
Less Than | 1-3 | 4-5 | After 5 | |||||||||||||||||
Contractual Obligations: | Total | 1 Year | Years | Years | Years | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating Leases
|
$ | 11,858 | $ | 2,420 | $ | 4,889 | $ | 4,549 | $ | |
49
Item 7A: | Quantitative and Qualitative Disclosures About Market Risk |
50
2006 | 2007 | Total | ||||||||||
(thousands) | ||||||||||||
Auction rate preferreds
|
$ | 7,000 | $ | | $ | 7,000 | ||||||
Weighted Average yield
|
2.63 | % | | 2.63 | % | |||||||
Government agencies
|
46,159 | 4,461 | 50,620 | |||||||||
Weighted Average yield
|
2.00 | % | 2.90 | % | 2.08 | % | ||||||
Corporate notes & bonds
|
9,178 | | 9,178 | |||||||||
Weighted Average yield
|
2.20 | % | | 2.20 | % | |||||||
Certificate of Deposit
|
1,566 | 1,145 | 2,711 | |||||||||
Weighted Average yield
|
5.16 | % | 5.86 | % | 5.46 | % | ||||||
Total investments
|
$ | 63,903 | $ | 5,606 | $ | 69,509 | ||||||
51
Item 8. | Consolidated Financial Statements and Supplementary Data |
Quarters Ended | ||||||||||||||||||
June 30, | Sept. 30, | Dec. 31, | Mar. 31, | |||||||||||||||
2004 | 2004 | 2004 | 2005 | |||||||||||||||
(in thousands) | ||||||||||||||||||
Consolidated Statement of Operations Data:
|
||||||||||||||||||
Revenues:
|
||||||||||||||||||
License
|
$ | 2,056 | $ | 2,276 | $ | 2,301 | $ | 2,500 | ||||||||||
Services
|
5,687 | 4,917 | 6,613 | 4,770 | ||||||||||||||
Total revenues
|
7,743 | 7,193 | 8,914 | 7,270 | ||||||||||||||
Cost of revenues:
|
||||||||||||||||||
License
|
199 | 214 | 217 | 189 | ||||||||||||||
Services
|
3,152 | 3,067 | 3,088 | 3,121 | ||||||||||||||
Total cost of revenues
|
3,351 | 3,281 | 3,305 | 3,310 | ||||||||||||||
Gross profit
|
4,392 | 3,912 | 5,609 | 3,960 | ||||||||||||||
Operating expenses:
|
||||||||||||||||||
Research and development
|
3,255 | 3,201 | 3,049 | 2,854 | ||||||||||||||
Sales and marketing
|
2,975 | 3,180 | 2,939 | 2,767 | ||||||||||||||
General and administrative
|
1,984 | 2,112 | 1,931 | 4,369 | ||||||||||||||
Total operating expenses
|
8,214 | 8,493 | 7,919 | 9,990 | ||||||||||||||
Loss from operations
|
(3,822 | ) | (4,581 | ) | (2,310 | ) | (6,030 | ) | ||||||||||
Interest income
|
223 | 515 | 798 | 437 | ||||||||||||||
Net loss before taxes
|
(3,599 | ) | (4,066 | ) | (1,512 | ) | (5,593 | ) | ||||||||||
Provision for income taxes
|
| | | 117 | ||||||||||||||
Net loss
|
$ | (3,599 | ) | $ | (4,066 | ) | $ | (1,512 | ) | $ | (5,476 | ) | ||||||
Basic and diluted, net loss per share
|
$ | (0.11 | ) | $ | (0.12 | ) | $ | (0.05 | ) | $ | (0.17 | ) | ||||||
Weighted-average shares of common stock used in computing basic
and diluted net loss per share
|
32,516 | 32,564 | 32,450 | 32,751 | ||||||||||||||
52
Quarters Ended
June 30,
Sept. 30,
Dec. 31,
Mar. 31,
2003
2003
2003
2004
(in thousands)
$
4,704
$
4,325
$
4,796
$
3,110
7,083
5,591
5,189
5,226
11,787
9,916
9,985
8,336
264
327
289
530
5,354
3,932
4,109
3,432
5,618
4,259
4,398
3,962
6,169
5,657
5,587
4,374
3,223
3,573
3,149
3,529
3,994
4,164
3,044
3,289
1,299
1,453
1,327
1,306
8,516
9,190
7,520
8,124
(2,347
)
(3,533
)
(1,933
)
(3,750
)
1,092
499
334
388
404
$
(1,848
)
$
(3,199
)
$
(453
)
$
(3,346
)
$
(0.06
)
$
(0.10
)
$
(0.01
)
$
(0.10
)
30,635
30,915
31,235
31,879
53
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
First, management identified a material weakness for insufficient controls over the Quote to Collect process related to the review, approval, and accounting for the Allowance for Doubtful Accounts. The Company had incorrectly included a general reserve provision in the Allowance for Doubtful Accounts as of December 31, 2004. Also, the Company had incorrectly recorded a receivable as uncollectible as of March 31, 2005, for which payment was subsequently received after March 31, 2005 but prior to the completion of the quarterly close process. As a result of this material weakness, Accounts Receivable and Services Revenue were incorrectly stated. Adjustments were recorded to increase Accounts Receivable and Services Revenue as of December 31, 2004 and as of March 31, 2005, prior to the issuance of our financial statements for the respective dates. | |
Second, management identified a material weakness for insufficient controls for the Treasury process related to the classification of Cash Equivalents and Investments. The Company had incorrectly classified Cash Equivalents and Investments in its India subsidiary. As a result of this material weakness, Cash Equivalents, Short Term and Long Term Investments were not classified in accordance with generally accepted accounting principles. An adjustment was recorded to reduce Cash Equivalents and increase Short Term and Long Term Investments as of March 31, 2005. | |
Third, management identified the following deficiencies in its revenue recognition process, which constitute a material weakness in the aggregate. | |
a) Insufficient controls over the monitoring of deferred revenue accounts for the purpose of determining when revenue should be recognized. The Company failed to reverse deferred revenue when all criteria for revenue recognition had occurred. |
54
b) Insufficient controls for the identification of services to be provided to customers at no charge. The Company inappropriately recorded revenue related to a service provided to a customer that was provided for no charge. | |
Fourth, management identified the following deficiencies in its payroll process, which constitute a material weakness in the aggregate. | |
a) Insufficient controls over the recording of expenses related to the benefits of terminated employees. The Company had failed to record the expenses related to the benefits extended when employees were involuntarily terminated as part of a reduction in force program. These inadequate controls resulted in an adjustment as of March 31, 2005 to increase Accrued Payroll and Related Liabilities, and increase Sales and Marketing expense. | |
b) Insufficient controls over the recording of expenses related to the acceleration of stock options for a former executive. The error arose because of a lack of in-depth review of the appropriate accounting treatment for this transaction. These inadequate controls resulted in an adjustment as of March 31, 2005 to decrease Additional Paid In Capital and Sales and Marketing expense. | |
Fifth, management identified the following deficiencies in our financial statement close process, which constitute a material weakness in the aggregate. | |
a) Insufficient controls over the monitoring of the terms of employment agreements and bonus programs and determining the appropriate accounting treatment for related accrued bonuses in accordance with employment agreements and bonus programs. These inadequate controls resulted in adjustments as of December 31, 2004 and March 31, 2005 to decrease Accrued Payroll and Related Liabilities, and decrease General and Administrative expense. These adjustments were recorded prior to the issuance of the respective financial statements. | |
b) Insufficient controls over the monitoring of accrued liabilities recorded upon the sale of the e-insurance business to Accenture in December 2003. The Company had incorrectly not reversed the accrual when the related obligation expired on December 31, 2004. The error arose because of a lack of in-depth review of the account reconciliation. These inadequate controls resulted in an adjustment as of December 31, 2004 to decrease Accrued Liabilities and decrease General and Administrative expense. The adjustment was recorded prior to the issuance of the December 31, 2004 financial statements. |
55
Date: June 24, 2005 | |
/s/ VINCENT G. OSTROSKY | |
|
|
Vincent G. Ostrosky | |
President and Chief Executive Officer | |
/s/ STEPHEN BENNION | |
|
|
Stephen Bennion | |
Chief Financial Officer |
56
57
58
First, the Company identified a material weakness for
insufficient controls over the Quote to Collect process related
to the review, approval, and accounting for the Allowance for
Doubtful Accounts. The Company had incorrectly included a
general reserve provision in the Allowance for Doubtful Accounts
as of December 31, 2004. Also, the Company had incorrectly
recorded a receivable as uncollectible as of March 31,
2005, for which payment was subsequently received after
March 31, 2005 but prior to the completion of the quarterly
close process. As a result of this material weakness, Accounts
Receivable and Services Revenue were incorrectly stated.
Adjustments were recorded to increase Accounts Receivable and
Services Revenue as of December 31, 2004 and as of
March 31, 2005, prior to the issuance of our financial
statements for the respective dates.
Table of Contents
Second, the Company identified a material weakness for
insufficient controls for the Treasury process related to the
classification of Cash Equivalents and Investments. The Company
had incorrectly classified Cash Equivalents and Investments in
its India subsidiary. As a result of this material weakness,
Cash Equivalents, Short Term and Long Term Investments were not
classified for in accordance with generally accepted accounting
principles. An adjustment was recorded to reduce Cash
Equivalents and increase Short Term and Long Term Investments as
of March 31, 2005.
Third, the Company identified the following deficiencies in its
revenue recognition process, which constitute a material
weakness in the aggregate.
a) Insufficient controls over the monitoring of deferred
revenue accounts for the purpose of determining when revenue
should be recognized. The Company failed to reverse deferred
revenue when all criteria for revenue recognition had occurred.
b) Insufficient controls for the identification of services
to be provided to customers at no charge. The Company
inappropriately recorded revenue related to a service provided
to a customer that was provided for no charge.
Fourth, the Company identified the following deficiencies in our
payroll process, which constitute a material weakness in the
aggregate.
a) Insufficient controls over the recording of expenses
related to the benefits of terminated employees. The Company had
failed to record the expenses related to the benefits extended
when employees were involuntarily terminated as part of a
reduction in force program. These inadequate controls resulted
in an adjustment as of March 31, 2005 to increase Accrued
Payroll and Related Liabilities and increase Sales and Marketing
expense.
b) Insufficient controls over the recording of expenses
related to the acceleration of stock options for a former
executive. The error arose because of a lack of in-depth review
of the appropriate accounting treatment for this transaction.
These inadequate controls resulted in an adjustment as of
March 31, 2005 to decrease Additional Paid In Capital and
Sales and Marketing expense.
Fifth, the Company identified the following deficiencies in our
financial statement close process, which constitute a material
weakness in the aggregate.
a) Insufficient controls over the monitoring of the terms
of employment agreements and bonus programs and determining the
appropriate accounting treatment for related accrued bonuses in
accordance with employment agreements and bonus programs. These
inadequate controls resulted in adjustments as of
December 31, 2004 and March 31, 2005 to decrease
Accrued Payroll and Related Liabilities, and decrease General
and Administrative expense. These adjustments were recorded
prior to the issuance of the respective financial statements.
b) Insufficient controls over the monitoring of accrued
liabilities recorded upon the sale of the e-insurance business
to Accenture in December 2003. The Company had incorrectly not
reversed the accrual when the related obligation expired on
December 31, 2004. The error arose because of a lack of
in-depth review of the account reconciliation. These inadequate
controls resulted in an adjustment as of December 31, 2004
to decrease Accrued Liabilities and decrease General and
Administrative expense. The adjustment was recorded prior to the
issuance of the December 31, 2004 financial statements.
Table of Contents
Item 10. | Directors and Executive Officers of the Registrant |
59
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. | Certain Relationships and Related Transactions |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K |
| Consolidated Balance Sheets as of March 31, 2005 and 2004 | |
| Consolidated Statement of Operations for the years ended March 31, 2005, 2004, and 2003 | |
| Consolidated Statement of Stockholders Equity for the years ended March 31, 2005, 2004, and 2003 | |
| Consolidated Statements of Cash Flows for the years ended March 31, 2005, 2004, and 2003 | |
| Notes to Consolidated Financial Statements | |
| Report of Independent Registered Public Accounting Firm |
60
Exhibit
No.
Description
3.1(1)
The Second Amended and Restated Certificate of Incorporation.
3.2(4)
Certificate of Designation of Series A Junior or
Participating Preferred Stock.
3.3(4)
Amended and Restated Bylaws.
4.1(1)
Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2(1)
Form of Registrants Common Stock certificate.
4.3(1)
Amended and Restated Investor Rights Agreement dated
June 16, 1999.
4.4(2)
Rights Agreement between Registrant and U.S. Stock Transfer
Corporation, as Rights Agent, dated February 4, 2003.
10.1(1)
Form of Indemnification Agreement.
10.2(1)
1996 Stock Plan.
10.3(4)
1999 Employee Stock Purchase Plan.
10.4(4)
1999 Equity Incentive Plan, as amended and restated
December 11, 2002.
10.5(1)
Lease between John Arrillaga Survivors Trust and the Richard T.
Perry Separate Property Trust as Landlord and the Registrant as
Tenant, dated October 1, 1999.
10.6(3)
Employment Agreement between the Registrant and Stephen Bennion
dated as of January 1, 2003.
10.7(1)
Lease between John Arrillaga Survivors Trust and Richard T.
Perry Separate Property Trust as Landlord and the Registrant as
Tenant, dated October 1, 1999.
10.8(4)
Warrant to Purchase Common Stock issued to Sales. Technologies
Limited, dated April 4, 2001.
10.9(4)
Licensed Works Agreement between the Registrant and
International Business Machines Corporation, dated
December 11, 2002.
10.10(4)
Licensed Works Agreement Statement of Work between the
Registrant and International Business Machines Corporation,
dated December 11, 2002.
10.11(4)
Professional Services Agreement between the Registrant and GE
Medical Services, dated June 28, 2002.
10.12(4)
Major Account License Agreement between the Registrant and
GE Medical Systems, dated June 28, 2002.
10.13(4)
Amendment #1 to Major Account License Agreement
between the Registrant and GE Medical Systems.
10.14(4)
Amendment #2 to Major Account License Agreement
between the Registrant and GE Medical Systems, dated
October 8, 2002.
10.15(4)
Amendment #3 to Major Account License Agreement
between the Registrant and GE Medical Systems, dated
March 31, 2003.
10.16(4)
Addendum #1 to Professional Services Agreement between
Registrant and GE Medical Services, dated August 27, 2002.
10.17(4)
Amendment #2 to Professional Services Agreement between
Registrant and GE Medical Services, dated March 3, 2003.
10.18(5)
Settlement Agreement and General Release between Registrant and
David Choi, dated August 13, 2003.
10.19(5)
Letter Agreement between Registrant and Sanjay Mittal, Dated
September 22, 2003.
10.20
1999 Equity Incentive Plan Stock Option Agreement.
10.21
1999 Equity Incentive Plan Stock Option Agreement (Initial Grant
to Directors).
10.22
1999 Equity Incentive Plan Stock Option Agreement (Annual Grant
to Directors).
10.23
Selectica UK Limited Major Account License Agreement dated
December 5, 2003.
10.24
Amendment Agreement between MCI Worldcom, Limited and Selectica
UK Limited, dated December 23, 2004.
61
Exhibit
No.
Description
10.25(6)
Employment Agreement between the Registrant and Vincent G.
Ostrosky dated as of October 1, 2004.
21.1(4)
Subsidiaries.
23.1
Consent of Independent Registered Public Accounting Firm.
31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2
Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(1) | Previously filed in the Companys Registration Statement (No. 333-92545) declared effective on March 9, 2000. |
(2) | Previously filed in the Companys report on Form 8-K filed on February 6, 2003. |
(3) | Previously filed in the Companys report on Form 10-Q filed on February 14, 2003. |
(4) | Previously filed in the Companys report on Form 10-K filed on June 30, 2003. |
(5) | Previously filed in the Companys report on Form 10-Q filed on November 11, 2003. |
(6) | Previously filed in the Companys report on Form 8-K filed on October 21, 2004. |
62
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-31 |
F-1
March 31,
2005
2004
(in thousands,
except par value)
$
29,360
$
28,728
63,903
68,575
2,811
697
2,093
2,597
182
98,349
100,597
3,158
3,620
511
548
5,606
21,471
180
$
107,624
$
126,416
$
2,261
$
644
1,935
1,726
1,472
2,769
2,802
7,757
8,470
12,896
1,434
1,482
4
4
292,616
291,055
(91
)
(158
)
(172,613
)
(157,960
)
(448
)
47
(21,748
)
(20,950
)
97,720
112,038
$
107,624
$
126,416
F-2
Years Ended March 31,
2005
2004
2003
(in thousands, except per share amounts)
$
9,133
$
16,935
$
10,218
21,987
23,089
25,350
31,120
40,024
35,568
819
1,410
1,185
12,428
16,827
18,518
13,247
18,237
19,703
17,873
21,787
15,865
12,359
13,474
13,202
11,861
14,491
19,368
10,396
5,385
6,068
34,616
33,350
38,638
(16,743
)
(11,563
)
(22,773
)
82
1,092
1,891
1,625
2,999
(14,770
)
(8,846
)
(19,774
)
117
(14,653
)
(8,846
)
(19,774
)
(9,974
)
$
(14,653
)
$
(8,846
)
$
(29,748
)
$
(0.45
)
$
(0.28
)
$
(0.61
)
(0.31
)
$
(0.45
)
$
(0.28
)
$
(0.92
)
32,665
31,165
32,219
F-3
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Stockholder | Comprehensive | Treasury Stock | Total | |||||||||||||||||||||||||||||||||||||||||
Paid-In | Deferred | Notes | Accumulated | Income | Stockholders | Comprehensive | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Compensation | Receivable | Deficit | (Loss) | Shares | Amount | Equity | Loss | ||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2002
|
36,288 | $ | 4 | $ | 283,847 | $ | (4,032 | ) | $ | (880 | ) | $ | (119,366 | ) | $ | 29 | (1,800 | ) | $ | (6,250 | ) | $ | 153,352 | |||||||||||||||||||||||
Repurchase of common stock
|
| | | | | | | (4,052 | ) | (13,422 | ) | (13,422 | ) | |||||||||||||||||||||||||||||||||
Exercise of stock options by employees, net of repurchase
|
177 | | 309 | | | | | | | 309 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock for services
|
18 | | 48 | | | | | | | 48 | ||||||||||||||||||||||||||||||||||||
Net option cancellation
|
| | (376 | ) | 376 | | | | | | | |||||||||||||||||||||||||||||||||||
Shares issued in connection with ESPP
|
137 | | 370 | | | | | | | 370 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to acceleration of stock options
for certain terminated employees
|
| | 249 | | | | | | | 249 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to variable accounting of exercised
options
|
| | 7 | | | | | | | 7 | ||||||||||||||||||||||||||||||||||||
Net deferred compensation related to options granted at less
than FMV
|
| | | 1,787 | | | | | | 1,787 | ||||||||||||||||||||||||||||||||||||
Repayment of shareholders notes receivable
|
| | | | 150 | | | | | 150 | ||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss
|
| | | | | | (22 | ) | | | (22 | ) | $ | (22 | ) | |||||||||||||||||||||||||||||||
Net loss
|
| | | | | (29,748 | ) | | | | (29,748 | ) | (29,748 | ) | ||||||||||||||||||||||||||||||||
Total Comprehensive loss
|
$ | (29,770 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2003
|
36,620 | $ | 4 | $ | 284,454 | $ | (1,869 | ) | $ | (730 | ) | $ | (149,114 | ) | $ | 7 | (5,852 | ) | $ | (19,672 | ) | $ | 113,080 | |||||||||||||||||||||||
Repurchase of common stock
|
| | | | | | | (384 | ) | (1,278 | ) | (1,278 | ) | |||||||||||||||||||||||||||||||||
Exercise of stock options by employees, net of repurchase
|
1,984 | | 6,163 | | | | | | | 6,163 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock for services
|
2 | | 9 | | | | | | | 9 | ||||||||||||||||||||||||||||||||||||
Net option cancellation
|
| | (604 | ) | 604 | | | | | | | |||||||||||||||||||||||||||||||||||
Shares issued in connection with ESPP
|
94 | | 206 | | | | | | | 206 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to acceleration of stock options
for certain terminated employees
|
| | 234 | | | | | | | 234 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to variable accounting of exercised
options
|
| | 149 | | | | | | | 149 | ||||||||||||||||||||||||||||||||||||
Net deferred compensation related to options granted at less
than FMV
|
| | | 1,107 | | | | | | 1,107 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to modification of stock options
|
| | 444 | | | | | | | 444 | ||||||||||||||||||||||||||||||||||||
Exercise of warrant
|
31 | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
Repayment of shareholders notes receivable
|
| | | | 730 | | | | | 730 | ||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss
|
| | | | | | 40 | | | 40 | 40 | |||||||||||||||||||||||||||||||||||
Net loss
|
| | | | | (8,846 | ) | | | | (8,846 | ) | (8,846 | ) | ||||||||||||||||||||||||||||||||
Balance at March 31, 2004
|
38,731 | $ | 4 | $ | 291,055 | $ | (158 | ) | $ | 0 | $ | (157,960 | ) | $ | 47 | (6,236 | ) | $ | (20,950 | ) | $ | 112,038 | $ | (8,806 | ) | |||||||||||||||||||||
Repurchase of common stock
|
| | | | | | | (202 | ) | (798 | ) | (798 | ) | |||||||||||||||||||||||||||||||||
Exercise of stock options by employees, net of repurchase
|
389 | | 1,123 | | | | | | | 1,123 | ||||||||||||||||||||||||||||||||||||
Issuance of restricted common stock for services
|
15 | | 51 | (51 | ) | | | | | | | |||||||||||||||||||||||||||||||||||
Net option cancellation
|
| | 13 | (13 | ) | | | | | | | |||||||||||||||||||||||||||||||||||
Shares issued in connection with ESPP
|
99 | | 237 | | | | | | | 237 | ||||||||||||||||||||||||||||||||||||
Net deferred compensation related to options granted at less
than FMV
|
| | | 131 | | | | | | 131 | ||||||||||||||||||||||||||||||||||||
Compensation expense related to modification of stock options
for terminated employee
|
| | 137 | | | | | | | 137 | ||||||||||||||||||||||||||||||||||||
Comprehensive loss:
|
||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss
|
| | | | | | (495 | ) | | | (495 | ) | (495 | ) | ||||||||||||||||||||||||||||||||
Net loss
|
| | | | | (14,653 | ) | | | | (14,653 | ) | (14,652 | ) | ||||||||||||||||||||||||||||||||
Balance at March 31, 2005
|
39,234 | $ | 4 | $ | 292,616 | $ | (91 | ) | $ | 0 | $ | (172,613 | ) | $ | (448 | ) | (6,438 | ) | $ | (21,748 | ) | $ | 97,720 | $ | (15,147 | ) | ||||||||||||||||||||
F-4
Years Ended March 31,
2005
2004
2003
(in thousands)
$
(14,653
)
$
(8,846
)
$
(29,748
)
1,285
2,104
3,505
(25
)
107
(5
)
131
1,107
1,787
9,974
9
48
149
7
16
234
249
121
444
(2,114
)
2,788
254
504
1,266
(203
)
37
162
11
1,617
(292
)
(389
)
209
(206
)
(785
)
(1,345
)
(464
)
114
(4,955
)
(8,729
)
8,397
(19,172
)
(10,167
)
(6,784
)
(880
)
(573
)
(1,454
)
83
16
5
(2
)
1,286
(34,043
)
(109,045
)
(108,494
)
(38,502
)
(77,037
)
(70,299
)
59,913
126,834
136,204
32,674
36,600
65,651
19,243
(21,919
)
21,613
(798
)
(1,278
)
(13,422
)
730
150
1,359
6,369
679
561
5,821
(12,593
)
632
(26,265
)
2,236
28,728
54,993
52,757
$
29,360
$
28,728
$
54,993
$
201
$
574
$
376
$
(495
)
$
40
$
(22
)
F-5
1. | Organization and Operations |
2. | Summary of Significant Accounting Policies |
Principles of Consolidation |
Use of Estimates |
Foreign Currency Transactions |
Concentrations of Credit Risk |
Cash Equivalents and Investments |
F-6
Accounts Receivable and Allowance for Doubtful Accounts |
Balance at | Charged | Reversal | Balance | |||||||||||||||||
Beginning | Against | Amounts | Benefit to | at End of | ||||||||||||||||
Fiscal Year | of Period | Revenue | Written Off | Revenue | Period | |||||||||||||||
(In thousands) | ||||||||||||||||||||
2005
|
$ | 115 | $ | 228 | $ | | $ | 194 | $ | 149 | ||||||||||
2004
|
$ | 741 | $ | 58 | $ | 241 | $ | 443 | $ | 115 | ||||||||||
2003
|
$ | 1,194 | $ | | $ | 453 | $ | | $ | 741 |
Property and Equipment |
Revenue Recognition |
F-7
F-8
Customer Concentrations |
F-9
March 31,
2005
2004
2003
23
%
39
%
*
14
%
20
%
25
%
12
%
*
*
11
%
*
*
*
*
14
%
* | Revenues were less than 10% of total revenues. |
March 31, | ||||||||
2005 | 2004 | |||||||
Customer A
|
45 | % | * | |||||
Customer B
|
26 | % | * | |||||
Customer C
|
10 | % | * | |||||
Customer D
|
* | 47 | % | |||||
Customer E
|
* | 18 | % | |||||
Customer F
|
* | 12 | % |
* | Customer account was less than 10% of gross accounts receivable. |
Warranties and Indemnifications |
Advertising Expense |
F-10
Development Costs |
Accumulated Other Comprehensive Income or Loss |
Stock-Based Compensation |
Pro Forma Disclosure of the Effect of Stock-Based Compensation |
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Risk-free interest rate
|
2.64 | % | 2.83 | % | 2.91 | % | ||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | ||||||
Expected volatility
|
65.93 | % | 64.76 | % | 71.54 | % | ||||||
Expected option life in years
|
1.92 | 1.70 | 1.28 | |||||||||
Weighted average fair value at grant date
|
$ | 1.81 | $ | 1.70 | $ | 2.45 |
F-11
March 31,
2005
2004
2003
3.31
%
2.89
%
2.75
%
0.00
%
0.00
%
0.00
%
68.29
%
42.77
%
75.15
%
3.85
3.86
4.00
$
1.90
$
1.68
$
1.51
2005 | 2004 | 2003 | ||||||||||
Net loss, as reported
|
$ | (14,653 | ) | $ | (8,846 | ) | $ | (29,748 | ) | |||
Add: Stock based employee compensation expense included in
reported net loss
|
131 | 1,107 | 1,787 | |||||||||
Deduct: Total stock based employee compensation determined under
fair value based method for all awards
|
3,662 | 7,856 | 15,091 | |||||||||
Pro forma net loss
|
$ | (18,446 | ) | $ | (15,595 | ) | $ | (43,052 | ) | |||
Basic and diluted net loss per share, as reported
|
$ | (0.45 | ) | $ | (0.28 | ) | $ | (0.92 | ) | |||
Basic and diluted pro forma net loss per share
|
$ | (0.57 | ) | $ | (.50 | ) | $ | (1.34 | ) | |||
Segment Information |
Years Ended March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
International revenues
|
33 | % | 10 | % | 24 | % | ||||||
Domestic revenues
|
67 | % | 90 | % | 76 | % | ||||||
Total Revenues
|
100 | % | 100 | % | 100 | % | ||||||
F-12
Contract termination |
Sale of eInsurance Assets |
Concurrent Transaction |
Related Party Transaction and Severance Agreement |
New Accounting Pronouncements |
F-13
Reclassifications |
3. | Cash, Cash Equivalents and Investments |
Unrealized | |||||||||||||||||
Cost | Gain | Loss | Market | ||||||||||||||
(in thousands) | |||||||||||||||||
March 31, 2005:
|
|||||||||||||||||
Cash and cash equivalents:
|
|||||||||||||||||
Cash
|
$ | 3,861 | $ | | $ | | $ | 3,861 | |||||||||
Money market fund
|
17,002 | | | 17,002 | |||||||||||||
Commercial paper
|
8,498 | | (1 | ) | 8,497 | ||||||||||||
$ | 29,361 | $ | | $ | (1 | ) | $ | 29,360 | |||||||||
Short-term investments:
|
|||||||||||||||||
(due in less than 12 months)
|
|||||||||||||||||
Auction rate securities
|
$ | 7,000 | $ | | $ | | $ | 7,000 | |||||||||
Government agencies
|
46,517 | | (358 | ) | 46,159 | ||||||||||||
Corporate notes & bonds
|
9,225 | | (47 | ) | 9,178 | ||||||||||||
Certificate of deposit
|
1,566 | | 1,566 | ||||||||||||||
$ | 64,308 | $ | | $ | (405 | ) | $ | 63,903 | |||||||||
F-14
Unrealized
Cost
Gain
Loss
Market
(in thousands)
$
4,503
$
$
(42
)
$
4,461
1,145
1,145
$
5,648
$
$
(42
)
$
5,606
$
24,929
$
$
$
24,929
2,800
2,800
999
999
$
28,728
$
$
$
28,728
$
27,850
$
$
$
27,850
25,536
27
25,563
14,411
7
14,418
744
744
$
68,541
$
34
$
$
68,575
$
18,543
$
15
$
$
18,558
849
(2
)
847
2,066
2,066
$
21,458
$
15
$
(2
)
$
21,471
F-15
4.
Property and Equipment
March 31,
2005
2004
(in thousands)
$
8,397
$
9,768
2,878
3,162
2,409
2,615
1,118
1,109
39
14,841
16,654
(11,683
)
(13,034
)
$
3,158
$
3,620
5. | Stockholder Notes Receivable |
6. | Operating Lease Commitments |
Offices | Equipment | Total | |||||||||||
(In thousands) | |||||||||||||
2006
|
$ | 2,382 | $ | 38 | $ | 2,420 | |||||||
2007
|
2,370 | 27 | 2,397 | ||||||||||
2008
|
2,466 | 27 | 2,493 | ||||||||||
2009
|
2,562 | 12 | 2,574 | ||||||||||
2010
|
1,975 | | 1,975 | ||||||||||
Total future minimum payments
|
$ | 11,755 | $ | 104 | $ | 11,859 | |||||||
7. | Litigation |
F-16
Patent Infringement |
Class Action |
F-17
8. | Letters of Credit |
9. | Goodwill |
F-18
10. | Stockholders Equity |
Common Stock Reserved for Future Issuance |
(in thousands) | ||||||
Stock option plans:
|
||||||
Outstanding
|
8,440 | |||||
Reserved for future grants
|
5,587 | |||||
Employee Stock Purchase Plan
|
1,807 | |||||
Total common stock reserved for future issuance
|
15,834 | |||||
Preferred Stock |
Stock Issued for Services |
F-19
Deferred Compensation |
Stock Repurchase |
Dividend Distribution of Preferred Stock Purchase Rights |
F-20
Tender Offer |
Stock Option Plans Approved by Stockholders |
1996 Plan |
F-21
1999 Equity Incentive Plan |
F-22
1999 Employee Stock Purchase Plan |
Stock Option Plans Not Required to be Approved by Stockholders |
Officer Option Agreement |
F-23
2001 Supplemental Plan |
F-24
Options Outstanding | |||||||||||||||||
Shares | Weighted- | ||||||||||||||||
Available for | Number of | Average | |||||||||||||||
Grant | Shares | Exercise Price | Exercise Price | ||||||||||||||
(in thousands) | |||||||||||||||||
Balance at March 31, 2002
|
1,003 | 9,015 | $ | 0.10 $74.69 | $ | 8.45 | |||||||||||
Increase in shares reserved
|
3,308 | | |||||||||||||||
Options granted
|
(2,623 | ) | 2,623 | $ | 1.99 $4.35 | $ | 2.73 | ||||||||||
Options exercised
|
| (187 | ) | $ | 0.10 $3.92 | $ | 1.80 | ||||||||||
Options canceled
|
2,080 | (2,893 | ) | $ | 0.30 $74.69 | $ | 13.50 | ||||||||||
Balance at March 31, 2003
|
3,768 | 8,558 | $ | 0.20 $63.48 | $ | 5.13 | |||||||||||
Increase in shares reserved
|
1,571 | | |||||||||||||||
Options granted
|
(2,289 | ) | 2,289 | $ | 2.35 $5.30 | $ | 4.46 | ||||||||||
Options exercised
|
| (1,984 | ) | $ | 0.20 $4.38 | $ | 3.11 | ||||||||||
Options canceled
|
1,750 | (1,841 | ) | $ | 1.25 $63.48 | $ | 6.82 | ||||||||||
Balance at March 31, 2004
|
4,800 | 7,022 | $ | 0.20 $63.48 | $ | 5.62 | |||||||||||
Increase in shares reserved
|
1,635 | | |||||||||||||||
CEO compensation plan
|
990 | | |||||||||||||||
Options granted
|
(3,615 | ) | 3,615 | $ | 3.13 $5.38 | $ | 3.56 | ||||||||||
Options exercised
|
| (389 | ) | $ | 0.20 $4.24 | $ | 2.87 | ||||||||||
Options canceled
|
1,777 | (1,777 | ) | $ | 1.99 $63.48 | $ | 6.49 | ||||||||||
Awards issued
|
| (15 | ) | $ | 3.40 $3.40 | $ | 3.40 | ||||||||||
Balance at March 31, 2005
|
5,587 | 8,440 | $ | 0.50 $63.48 | $ | 4.17 | |||||||||||
F-25
Options Outstanding
Options Vested
Weighted-
Number of
Average
Weighted-
Outstanding
Remaining
Average
Range of
Shares as of
Contractual
Range of
Options Vested at
Exercise
Exercise Prices
March 31, 2005
Life
Exercise Prices
March 31, 2005
Price
(in thousands)
(in thousands)
$0.50 $ 2.56
1,700
7.21
$
0.50 $ 2.56
1,370
$
2.48
$2.69 $ 3.40
3,020
8.39
$
2.69 $ 3.40
458
$
3.13
$3.44 $ 4.16
1,920
6.98
$
3.44 $ 4.16
1,416
$
3.97
$4.20 $ 5.30
1,415
7.76
$
4.20 $ 5.30
1,048
$
4.47
$5.38 $63.48
385
5.69
$
5.38 $63.48
340
$
19.27
$0.50 $63.48
8,440
8.01
$
0.50 $63.48
4,631
$
4.68
March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Weighted average options with strike price below FMV
|
2.79 | 2.08 | 1.87 | |||||||||
Weighted average options with strike price at FMV
|
1.88 | 1.65 | 1.50 | |||||||||
Weighted average options with strike price above FMV
|
| | |
Weighted-Average | Number of Securities | |||||||||||
Number of Securities to | Exercise Price of | Remaining Available | ||||||||||
be Issued upon Exercise | Outstanding | for Future Issuance | ||||||||||
of Outstanding Options, | Options and | Under Equity | ||||||||||
and Rights | Rights | Compensation Plans | ||||||||||
Plans Approved by Stockholders
|
||||||||||||
1996 Stock Plan
|
1,165 | $ | 4.85 | 712 | ||||||||
1999 Equity Incentive Plan
|
4,772 | $ | 4.25 | 4,498 | (1) | |||||||
1999 Employee Stock Purchase Plan
|
| $ | 2.41 | 1,807 | (2) | |||||||
Plans Not Required to be Approved by Stockholders
|
||||||||||||
Officer Option Agreement
|
990 | $ | 3.40 | | ||||||||
2001 Supplemental Plan
|
1,513 | $ | 3.91 | 377 | ||||||||
Total
|
8,440 | 7,394 | ||||||||||
(1) | On each January 1, starting in 2001, the number of shares reserved for issuance will be automatically increased by the lesser of 5% of the then outstanding shares of common stock or 1.8 million shares. |
(2) | On each May 1, starting in 2001, the number of shares reserved for issuance will be automatically increased by the lesser of 2% of the then outstanding shares of common stock or 1.0 million shares. |
F-26
11. | Computation of Basic and Diluted Net Loss Per Share |
Years Ended March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Net loss
|
$ | (14,653 | ) | $ | (8,846 | ) | $ | (29,748 | ) | |||
Basic and diluted:
|
||||||||||||
Weighted-average shares of common stock outstanding
|
32,665 | 31,177 | 32,331 | |||||||||
Less weighted-average shares subject to repurchase
|
| (12 | ) | (112 | ) | |||||||
Weighted-average shares used in computing basic and diluted net
loss per share
|
32,665 | 31,165 | 32,219 | |||||||||
Basic and diluted net loss per share
|
$ | (0.45 | ) | $ | (0.28 | ) | $ | (0.92 | ) | |||
Years Ended March 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(in thousands) | ||||||||||||
Options excluded due to the exercise price exceeding the average
fair market value of the Companys common stock during the
period
|
6,493 | 589 | 3,798 | |||||||||
Options excluded for which the exercise price was less than the
average fair market value of the Companys common stock
during the period but were excluded as inclusion would decrease
the Companys net loss per share
|
1,947 | 6,425 | 4,752 | |||||||||
Common shares excluded resulting from common stock subject to
repurchase
|
| | 43 | |||||||||
Total common stock equivalents excluded from diluted net loss
per common share
|
8,440 | 7,014 | 8,593 | |||||||||
12. | Income Taxes |
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Domestic Pre-Tax Loss
|
$ | (15,628 | ) | $ | (7,380 | ) | $ | (20,358 | ) | ||||
Foreign Pre-Tax Income/(Loss)
|
858 | (1,466 | ) | 584 | |||||||||
Total Pre-Tax Loss
|
$ | (14,770 | ) | $ | (8,846 | ) | $ | (19,774 | ) | ||||
F-27
Years Ended March 31,
2005
2004
2003
$
(5,170
)
$
(3,096
)
$
(9,822
)
70
50
50
57
240
169
5,165
2,861
6,194
52
511
724
3,276
(235
)
(240
)
(169
)
4
29
31
(60
)
(355
)
(453
)
$
(117
)
$
$
Years Ended March 31,
2005
2004
2003
$
(114
)
$
$
(3
)
$
(117
)
$
$
March 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Deferred tax assets:
|
|||||||||||||
Net operating loss carryforwards
|
$ | 56,325 | $ | 47,043 | $ | 38,181 | |||||||
Tax credit carryforwards
|
5,418 | 4,766 | 4,065 | ||||||||||
Deferred revenue
|
767 | 618 | 5,766 | ||||||||||
Other
|
4,067 | 4,316 | 4,576 | ||||||||||
Total net deferred tax assets
|
66,577 | 56,743 | 52,588 | ||||||||||
Valuation allowance
|
(66,577 | ) | (56,743 | ) | (52,588 | ) | |||||||
Net deferred tax assets
|
$ | | $ | | $ | | |||||||
F-28
13. | Benefit Plan |
14. | Restructuring |
F-29
(in thousands)
$
667
(317
)
350
1,759
(350
)
(1,577
)
182
1,760
(182
)
(249
)
(1,247
)
264
(198
)
(66
)
929
(891
)
$
38
15. | Subsequent Events |
F-30
/s/ Ernst & Young LLP |
F-31
SELECTICA, INC. | |
Registrant | |
/s/ Vincent G. Ostrosky | |
|
|
Vincent G. Ostrosky | |
President and Chief Executive Officer |
Signature | Title | Date | ||||
Principal Executive Officer: | ||||||
/s/
Vincent G. Ostrosky
|
President and Chief Executive Officer
|
June 29, 2005 | ||||
Principal Financial Officer and Principal
Accounting Officer: |
||||||
/s/
Stephen Bennion
|
Chief Financial Officer
|
June 29, 2005 | ||||
Direc | tors: | |||||
/s/
Jamie Arnold
|
Director
|
June 29, 2005 | ||||
/s/
John Fisher
|
Director
|
June 29, 2005 | ||||
/s/
Michael Lyons
|
Director
|
June 29, 2005 | ||||
/s/
Sanjay Mittal
|
Director
|
June 29, 2005 | ||||
/s/
Thomas Neustaetter
|
Director
|
June 29, 2005 | ||||
/s/
Vincent Ostrosky
|
Director
|
June 29, 2005 |
Exhibit
No.
Description
3
.1(1)
The Second Amended and Restated Certificate of Incorporation.
3
.2(4)
Certificate of Designation of Series A Junior or
Participating Preferred Stock.
3
.3(4)
Amended and Restated Bylaws.
4
.1(1)
Reference is made to Exhibits 3.1, 3.2 and 3.3.
4
.2(1)
Form of Registrants Common Stock certificate.
4
.3(1)
Amended and Restated Investor Rights Agreement dated
June 16, 1999.
4
.4(2)
Rights Agreement between Registrant and U.S. Stock Transfer
Corporation, as Rights Agent, dated February 4, 2003.
10
.1(1)
Form of Indemnification Agreement.
10
.2(1)
1996 Stock Plan.
10
.3(4)
1999 Employee Stock Purchase Plan.
10
.4(4)
1999 Equity Incentive Plan, as amended and restated
December 11, 2002.
10
.5(1)
Lease between John Arrillaga Survivors Trust and the Richard T.
Perry Separate Property Trust as Landlord and the Registrant as
Tenant, dated October 1, 1999.
10
.6(3)
Employment Agreement between the Registrant and Stephen Bennion
dated as of January 1, 2003.
10
.7(1)
Lease between John Arrillaga Survivors Trust and Richard T.
Perry Separate Property Trust as Landlord and the Registrant as
Tenant, Dated October 1, 1999.
10
.8(4)
Warrant to Purchase Common Stock issued to Sales. Technologies
Limited, dated April 4, 2001.
10
.9(4)
Licensed Works Agreement between the Registrant and
International Business Machines Corporation, dated
December 11, 2002.
10
.10(4)
Licensed Works Agreement Statement of Work between the
Registrant and International Business Machines Corporation,
Dated December 11, 2002.
10
.11(4)
Professional Services Agreement between the Registrant and GE
Medical Services, dated June 28, 2002.
10
.12(4)
Major Account License Agreement between the Registrant and
GE Medical Systems, dated June 28, 2002.
10
.13(4)
Amendment #1 to Major Account License Agreement
between the Registrant and GE Medical Systems.
10
.14(4)
Amendment #2 to Major Account License Agreement
between the Registrant and GE Medical Systems, dated
October 8, 2002.
10
.15(4)
Amendment #3 to Major Account License Agreement
between the Registrant and GE Medical Systems, dated
March 31, 2003.
10
.16(4)
Addendum #1 to Professional Services Agreement between
Registrant and GE Medical Services, dated August 27, 2002.
10
.17(4)
Amendment #2 to Professional Services Agreement between
Registrant and GE Medical Services, dated March 3, 2003.
10
.18(5)
Settlement Agreement and General Release between Registrant and
David Choi, dated August 13, 2003.
10
.19(5)
Letter Agreement between Registrant and Sanjay Mittal, dated
September 22, 2003.
10
.20
1999 Equity Incentive Plan Stock Option Agreement.
10
.21
1999 Equity Incentive Plan Stock Option Agreement (Initial Grant
to Directors).
10
.22
1999 Equity Incentive Plan Stock Option Agreement (Annual Grant
to Directors).
10
.23
Selectica UK Limited Major Account License Agreement dated
December 5, 2003.
10
.24
Amendment Agreement between MCI Worldcom, Limited and Selectica
UK Limited, dated December 23, 2004.
Table of Contents
Exhibit
No.
Description
10
.25(6)
Employment Agreement between the Registrant and Vincent G.
Ostrosky dated as of October 1, 2004.
21
.1(4)
Subsidiaries.
23
.1
Consent of Independent Registered Public Accounting Firm.
31
.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31
.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32
.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32
.2
Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(1)
Previously filed in the Companys Registration Statement
(No. 333-92545) declared effective on March 9, 2000.
(2)
Previously filed in the Companys report on Form 8-K
filed on February 6, 2003.
(3)
Previously filed in the Companys report on Form 10-Q
filed on February 14, 2003.
(4)
Previously filed in the Companys report on Form 10-K
filed on June 30, 2003.
(5)
Previously filed in the Companys report on Form 10-Q
filed on November 11, 2003.
(6)
Previously filed in the Companys report on Form 8-K
filed on October 21, 2004.
EXHIBIT 10.20
Selectica, Inc. 1999 Equity Incentive Plan
Notice of Stock Option Grant
You have been granted the following option to purchase shares of the Common Stock of Selectica, Inc. (the Company):
Name of Optionee:
|
«Name» | |
|
||
Total Number of Shares:
|
«TotalShares» | |
|
||
Type of Option:
|
Nonstatutory Stock Option | |
|
||
Exercise Price Per Share:
|
$«PricePerShare» | |
|
||
Date of Grant:
|
«DateGrant» | |
|
||
Vesting Commencement Date:
|
«VestDay» | |
|
||
Vesting Schedule:
|
This option becomes exercisable with respect to the first 25% of the Shares subject to this option when you complete 12 months of continuous Service (as defined in the Plan) from the Vesting Commencement Date. Thereafter, this option becomes exercisable with respect to an additional 1/48 th of the Shares subject to this option when you complete each month of Service. | |
|
||
Expiration Date:
|
«ExpDate». This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement. |
You and the Company agree that this option is granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the Plan) and the Stock Option Agreement, both of which are attached to and made a part of this document.
You further agree that the Company may deliver by email all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.
Optionee: | Selectica, Inc. | |||
|
||||
|
By: | |||
|
||||
|
||||
|
Title: | |||
|
Selectica, Inc. 1999 Equity Incentive Plan
Stock Option Agreement
Tax Treatment | This option is intended to be a nonstatutory stock option, as provided in the Notice of Stock Option Grant, and is not intended to qualify as an incentive stock option under section 422 of the Internal Revenue Code. | |||
|
||||
Vesting | This option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable as follows in the event that the Company is subject to a Change in Control (as defined in the Plan): | |||
|
||||
|
| This option becomes exercisable in full at the time of the Change in Control unless this option (a) remains outstanding after the Change in Control, (b) is assumed by the surviving corporation (or by the parent or a subsidiary thereof) or (c) is replaced by the surviving corporation (or by the parent or a subsidiary thereof) with an award that has substantially the same terms. The determination of whether a replacement award has substantially the same terms as this option will be made by the Compensation Committee of the Companys Board of Directors, and its determination will be final, binding and conclusive. | ||
|
||||
|
| If the preceding paragraph does not apply, and if you are subject to an Involuntary Termination (as defined in the Plan) within 12 months after the Change in Control, then the exercisable portion of this option will be determined by adding 12 months to the actual period of Service that you completed. | ||
|
||||
|
This option will in no event become exercisable for additional shares after your Service has terminated for any reason. | |||
|
||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10 th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | |||
|
||||
Regular Termination | If your Service terminates for any reason except death or total and permanent disability, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. The Company determines when your Service terminates for this purpose. |
2
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. | |||
|
||||
Disability | If your Service terminates because of your total and permanent disability, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. | |||
|
||||
For all purposes under this Agreement, total and permanent disability means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | ||||
|
||||
Leaves of Absence and Part-Time Work | For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. | |||
|
||||
If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Companys leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Companys part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule. | ||||
|
||||
Restrictions on
Exercise |
The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. | |||
|
||||
Notice of Exercise | When you wish to exercise this option, you must notify the Company by filing the proper Notice of Exercise form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Company receives it. | |||
|
||||
If someone else wants to exercise this option after your death, that person must prove to the Companys satisfaction that he or she is entitled to do so. |
3
4
Restrictions on
Resale |
You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | |||
|
||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. | |||
|
||||
Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouses interest in your option in any other way. | ||||
|
||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | |||
|
||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. | |||
|
||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan. | |||
|
||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). | |||
|
||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. | |||
|
||||
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan.
5
EXHIBIT 10.21
Selectica, Inc. 1999 Equity Incentive Plan
Notice of Stock Option Grant
(Initial Grant to Directors)
You have been granted the following option to purchase shares of the Common Stock of Selectica, Inc. (the Company):
Name of Optionee:
|
«Name» | |
|
||
Total Number of Shares:
|
«TotalShares» | |
|
||
Type of Option:
|
Nonstatutory Stock Option | |
|
||
Exercise Price Per Share:
|
$«PricePerShare» | |
|
||
Date of Grant:
|
«DateGrant» | |
|
||
Vesting Schedule:
|
This option becomes exercisable with respect to the first 25% of the Shares subject to this option when you complete 12 months of continuous Service (as defined in the Plan) from the Date of Grant. Thereafter, this option becomes exercisable with respect to an additional 1/48 th of the Shares subject to this option when you complete each month of Service. | |
|
||
Expiration Date:
|
«ExpDate». This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement. |
You and the Company agree that this option is granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the Plan) and the Stock Option Agreement, both of which are attached to and made a part of this document.
You further agree that the Company may deliver by email all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.
Optionee: | Selectica, Inc. | |||||
|
||||||
|
By: | |||||
|
||||||
|
||||||
|
Title: | |||||
|
Selectica, Inc. 1999 Equity Incentive Plan
Stock Option Agreement
|
||||
Tax Treatment | This option is intended to be a nonstatutory stock option, as provided in the Notice of Stock Option Grant, and is not intended to qualify as an incentive stock option under section 422 of the Internal Revenue Code. | |||
|
||||
|
||||
Vesting | This option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable in full in the event that: | |||
|
||||
|
| The Company is subject to a Change in Control (as defined in the Plan); or | ||
|
||||
|
| Your Service terminates because of death, total and permanent disability, or retirement at or after age 65. For all purposes under this Agreement, total and permanent disability means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | ||
|
||||
This option will in no event become exercisable for additional shares after your Service has terminated for any reason. | ||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10 th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | |||
|
||||
Regular Termination | If your Service terminates for any reason except death or total and permanent disability, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. The Company determines when your Service terminates for this purpose. | |||
|
||||
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. | |||
|
||||
Disability | If your Service terminates because of your total and permanent disability, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. |
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price and any withholding taxes. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special Notice of Exercise form provided by the Company. | |||
|
||||
Withholding Taxes and Stock Withholding | You will not be allowed to exercise this option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the option exercise. With the Companys consent, these arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes. | |||
|
||||
Restrictions on
Resale |
You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | |||
|
||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. | |||
|
||||
Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouses interest in your option in any other way. | ||||
|
||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause, subject to applicable law and the Companys bylaws. | |||
|
||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. | |||
|
||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan. |
4
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). | |||
|
||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. | |||
|
||||
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan.
5
EXHIBIT 10.22
Selectica, Inc. 1999 Equity Incentive Plan
Notice of Stock Option Grant
(Annual Grant to Directors)
You have been granted the following option to purchase shares of the Common Stock of Selectica, Inc. (the Company):
Name of Optionee:
|
«Name» | |
|
||
Total Number of Shares:
|
«TotalShares» | |
|
||
Type of Option:
|
Nonstatutory Stock Option | |
|
||
Exercise Price Per Share:
|
$«PricePerShare» | |
|
||
Date of Grant:
|
«DateGrant» | |
|
||
Vesting Schedule:
|
This option becomes exercisable in full when you complete 12 months of continuous Service (as defined in the Plan) from the Date of Grant. | |
|
||
Expiration Date:
|
«ExpDate». This option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement. |
You and the Company agree that this option is granted under and governed by the terms and conditions of the 1999 Equity Incentive Plan (the Plan) and the Stock Option Agreement, both of which are attached to and made a part of this document.
You further agree that the Company may deliver by email all documents relating to the Plan or this option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a web site maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a web site, it will notify you by email.
Optionee: | Selectica, Inc. | |||||||
|
||||||||
|
By: | |||||||
|
||||||||
|
||||||||
|
Title: | |||||||
|
Selectica, Inc. 1999 Equity Incentive Plan
Stock Option Agreement
Tax Treatment | This option is intended to be a nonstatutory stock option, as provided in the Notice of Stock Option Grant, and is not intended to qualify as an incentive stock option under section 422 of the Internal Revenue Code. | |||
|
||||
Vesting | This option becomes exercisable in full when you complete 12 months of continuous Service from the Date of Grant, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable in full in the event that: | |||
|
||||
|
| The Company is subject to a Change in Control (as defined in the Plan); or | ||
|
||||
|
| Your Service terminates because of death, total and permanent disability, or retirement at or after age 65. For all purposes under this Agreement, total and permanent disability means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | ||
|
||||
|
This option will in no event become exercisable for additional shares after your Service has terminated for any reason. | |||
|
||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10 th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | |||
|
||||
Regular Termination | If your Service terminates for any reason except death or total and permanent disability, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. The Company determines when your Service terminates for this purpose. | |||
|
||||
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. |
2
3
|
expense) with respect to this option for financial reporting purposes. | |||
|
||||
|
| Irrevocable directions to a securities broker approved by the Company to sell all or part of your option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special Notice of Exercise form provided by the Company. | ||
|
||||
Withholding Taxes and Stock Withholding | You will not be allowed to exercise this option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the option exercise. With the Companys consent, these arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes. | |||
|
||||
Restrictions on
Resale |
You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | |||
|
||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. | |||
|
||||
Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouses interest in your option in any other way. | ||||
|
||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause, subject to applicable law and the Companys bylaws. | |||
|
||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. |
4
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan. | |||
|
||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). | |||
|
||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. | |||
|
||||
This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
By signing the cover sheet of this Agreement, you agree to all of the
terms and conditions described above and in the Plan.
5
Exhibit 10.23
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
SELECTICA, UK LIMITED
MAJOR ACCOUNT LICENSE AGREEMENT
This Agreement, dated as of December 05, 2003 (the Effective Date), is made and entered into by and between Selectica UK Limited, Venture House, Arlington Square, Downshire Way, Bracknell, Berkshire. RG12 1WA, United Kingdom (SELECTICA), and MCI WorldCom, Limited.,(Customer). SELECTICA and Customer agree as follows:
1. | DEFINITIONS |
Whenever used in this Agreement, the following terms will have the following specified meanings:
1.1 WorldCom Affiliate means any entity directly or indirectly controlling or controlled by or under common control with WorldCom, Inc. a Georgia corporation.
1.2 EMEA Subsidiary means any WorldCom Affiliate with its headquarters located in Europe, the Middle East, or Africa.
1.3 Documentation means the documentation specified in Exhibit A attached hereto and licensed to Customer hereunder, together with any and all new releases, corrections and updates furnished by SELECTICA to Customer under this Agreement.
1.4 Software means the computer software specified in Exhibit A attached hereto, in object code form.
2. | SOFTWARE DELIVERY AND LICENSE |
2.1 Deliverables. Upon execution of this Agreement, SELECTICA shall deliver to Customer one reproducible master copy of the Software licensed hereunder to Customer, in object code form, and one copy of the Documentation.
2.2 Grant. Subject to the terms of this Agreement and payment of all fees , SELECTICA hereby grants Customer and each EMEA Subsidiary a nonexclusive, nontransferable, EMEA wide, perpetual license to:
(a) Install and use the Software ordered by Customer hereunder for use by Customer and each EMEA Subsidiary on the number of Customers or EMEA Subsidiarys servers and/or users then authorized under this Agreement. The number of servers and/or users initially authorized hereunder is set forth in Exhibit A.
(b) Reproduce the Documentation for the Software ordered by Customer or any EMEA Subsidiary hereunder and/or incorporate all or any portion of the Documentation in training materials prepared by the Customer or any EMEA Subsidiary, in each case solely for the use of the Customer or any EMEA Subsidiary and provided that the copyright notices and other proprietary rights legends of SELECTICA are included on each copy of the Documentation and such materials.
(c) Reproduce and make one copy of the Software for archival and backup purposes.
2.3 Restrictions. Customer shall use the Software and Documentation only for the purposes specified in section 2.2. In addition, without limitation, Customer shall not:
(a) use, copy, modify, change, translate, enhance or prepare derivative works of the Software or Documentation except as expressly permitted in Section 2.2;
(b) reverse engineer, disassemble or decompose the Software, except to the extent that such acts may not be prohibited under applicable law;
(c) remove, obscure, or alter any notice of patent, copyright, trade secret, trademark, or other proprietary rights notices present on any Software Documentation;
(d) sublicense, sell, lend, rent, lease, or otherwise transfer all or any portion of the Software or the Documentation to any third party except as may be permitted in Section 10.4 hereof;
(e) use the Software or the Documentation to provide services to third parties, or otherwise use the same on a service business basis provided; however, Customer shall have the right to allow customers and other authorized parties to access the Software as part of its normal course of business; and
(f) use the Software, or allow the transfer, transmission, export, or re-export of the Software or any portion thereof in violation of any export control laws or regulations applied by the United Kingdom [or administered by the U.S. Commerce Department, OFAC, or any other applicable government agency.
2.4 Proprietary Rights. The Software and the Documentation contains valuable patent, copyright, rights in databases, trade secret, trademark and other proprietary rights of SELECTICA. Except for the license granted under Section 2.2, SELECTICA reserves all rights to the Software and Documentation. No title to or ownership of any Software or proprietary rights related to the Software or Documentation is transferred to Customer under this Agreement.
2.5 Protection Against Unauthorized Use. Customer shall promptly notify SELECTICA of any unauthorized use of the Software or Documentation which comes to Customers attention. In the event of any unauthorized use by any of Customers employees, agents or representatives, Customer shall use its best efforts to terminate such unauthorized use and to retrieve any copy of the Software or Documentation in the possession or control of the person or entity engaging in such unauthorized use. SELECTICA may, at its option and expense, participate in any such proceeding and, in such an event, Customer shall provide such authority, information and assistance related to such proceeding as SELECTICA may reasonably request.
2.6 Records. Customer shall ensure that each copy it makes of all or any portion of the Software or the Documentation includes the notice of copyright or other proprietary rights legends appearing in or on the Software or the Documentation delivered to Customer by SELECTICA; shall keep accurate records of the reproduction and location of each copy; and upon request of SELECTICA, shall provide SELECTICA with complete access to such records and to Customer facilities, computers and the Software and Documentation for the purpose of auditing and verifying Customers compliance with this Agreement.
3. | SUPPORT SERVICES, TRAINING AND MAINTENANCE |
Provided Customer has paid SELECTICA the applicable maintenance fee specified in Exhibit B , SELECTICA will use reasonable commercial efforts to provide the maintenance services set forth as described in Exhibit C and the training services described in Exhibit D .
4. | COMPENSATION |
4.1 License Fee. Customer will pay SELECTICA the Software License Fee specified in Exhibit B .
4.2 Maintenance Fee. Customer agrees to pay SELECTICA the Annual Maintenance Fee in the amount and in accordance with the terms of Exhibit B for maintenance services for the first twelve (12) month period commencing on the Effective Date. Customer may renew the maintenance services described in Exhibit C thereafter on an annual basis by payment of the maintenance fee before the beginning of each new twelve (12) month period. SELECTICA reserves the right to change the maintenance fee from time to time after the end of the first twelve (12) month period after the Effective Date, but such change in the fees shall only impact Customer for a subsequent term and Selectica may not increase the fees due from Customer during the course of any given term SELECTICA shall give Customer at least sixty (60) days prior written notice of any such change. SELECTICA reserves the right to charge Customer a reinstatement fee to resume such maintenance services if Customer has not continuously maintained such services in effect in accordance with the terms of this Section 4.2.
1
4.3 Payment. All fees, charges and other sums payable to SELECTICA under this Agreement will be due and payable on the dates specified in Exhibit B , or within thirty (30) days after invoice date if no date is specified in Exhibit B . All monetary amounts are specified and shall be paid in the lawful currency of the United Kingdom. Customer shall pay all amounts due under this Agreement to SELECTICA at the address set forth herein or such other location as SELECTICA designates in writing. Any amount not paid when due will bear interest at the rate of 4% above the base lending rate of SELECTICAs principal bankers, determined and compounded on a daily basis from the date due until the date paid. All fees, charges and other sums payable to SELECTICA under this Agreement do not include any sales, use, excise, value added or other applicable taxes, tariffs or duties (excluding any applicable federal and state taxes based on SELECTICAs net income), payment of which shall be the sole responsibility of Customer.
5. | TERM AND TERMINATION |
5.1 Term. The term of this Agreement and the license set forth in Section 2.2 shall commence on the Effective Date and shall end upon the termination of this Agreement pursuant to Section 5.2 or 5.3.
5.2 Termination by Customer. Customer may terminate this Agreement and any licenses upon thirty (30) days written notice to SELECTICA. Upon termination, Customer shall return to SELECTICA all copies of the Software and the documentation in its possession or control, or provide written notice certifying destruction of such, subject to verification of the same by SELECTICA to SELECTICAs satisfaction in its sole discretion. Such termination shall not relieve Customer of any of its outstanding financial obligations to SELECTICA.
5.3 Termination by SELECTICA. If Customer defaults in the performance of or compliance with any of its obligations under this Agreement, and such default has not been remedied or cured within thirty (30) days after SELECTICA gives Customer written notice specifying the default (or immediately in the case of a breach of Section 2), SELECTICA may terminate this Agreement and any licenses. Termination is not an exclusive remedy and all other remedies will be available whether or not termination occurs.
5.4 Either party may terminate this Contract immediately at any time by giving written notice to the other party if the other party becomes or is deemed insolvent, has a receiver, manager, administrator or equivalent officer appointed of the whole or any part of its assets or business, makes any composition or arrangement with its creditors, takes or suffers any similar action in consequence of debt or an order or resolution is made for its dissolution or liquidation (other than for the purposes of amalgamation or reconstruction).
5.5 Post Termination. Upon termination of this Agreement, Customer shall promptly cease the use of the Software and Documentation and destroy (and in writing certify such destruction) or return to SELECTICA all copies of the Software and Documentation then in Customers possession or control.
5.6 Survival. Sections 2.3-2.6, 4, 5.4, 8, 9 and 10 shall survive the termination of this Agreement. The license granted under Section 2.2 shall survive termination of this Agreement, provided that Selectica may terminate such license immediately upon a breach of Sections 2, 4, 6, 8, 10.1 or 10.4. Termination shall be without prejudice to the rights of either party accrued at the date of termination.
6. | CONFIDENTIALITY |
6.1 Both parties acknowledge that, in the course of performing this Agreement, they may obtain information relating to products (such as goods, services, and software) of the other party, or relating to the parties themselves, which is of a confidential and proprietary nature (Confidential Information). Confidential Information includes, Software, Documentation and all communications concerning Selecticas or Customers business and marketing strategies including but not limited to employee and customer lists, customer profiles, project plans, design documents, product strategies and pricing data, research, advertising plans, leads and sources of supply, development activities, design and coding, interfaces with Selectica software, anything provided by Selectica in connection its support or warranty obligations under this Agreement, including, without limitation, computer programs, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), schematics and other technical plans and other information of the parties which by its nature can be reasonably expected to be proprietary and confidential, whether it is presented in oral, printed, written, graphic or photographic or other tangible form (including information received, stored or transmitted electronically) even though specific designation as Confidential Information has not been made.
6.2 The parties (including subcontractors) shall at all times, both during the term of this Agreement and thereafter keep in trust and confidence all Confidential Information of the other party and shall not use such Confidential Information other than as necessary to carry out its duties under this Agreement, nor shall either party disclose any such Confidential Information to third parties, excluding subcontractors with a need to know and who have signed comparable non-disclosure agreements to protect Customers Confidential Information, without the other partys prior written consent. Nothing in this Agreement shall be construed to limit Selecticas ability to use or disclose Developer Stock (as defined below).
6.3 The obligations of confidentiality shall not apply to information which (a) has entered the public domain except where such entry is the result of a partys breach of this Agreement; (b) prior to disclosure hereunder was already in the receiving partys possession without restriction; (c) subsequent to disclosure hereunder is obtained by the receiving party on a non-confidential basis from a third party who has the right to disclose such information; or (d) was developed by the receiving party without use of the Confidential Information.
6.4 Neither party shall disclose, advertise, or publish the terms and conditions of this Agreement or any SOW without the prior written consent of the other party except that Selectica may disclose the terms of this Agreement to 1) potential acquirers pursuant to the terms of a non-disclosure or confidentiality agreement, 2) potential investors and 3) as required by law or court order.
6.5 Neither party grants the other party any rights to use its trademarks, service marks, or other proprietary symbols or designations.
7. | WARRANTIES AND REMEDIES |
7.1 Performance Warranty and Remedy. SELECTICA warrants to Customer that when operated in accordance with the Documentation and other instructions provided by SELECTICA, the Software will perform substantially in accordance with the functional specifications set forth in the Documentation for a period of ninety (90) days after delivery of the Software to the Customer. If the Software fails to comply with the warranty set forth in this Section 7.1, SELECTICA will use reasonable commercial efforts to promptly correct the noncompliance provided that: Customer notifies SELECTICA of the noncompliance within (90) ninety days after delivery of the Software to the Customer, and SELECTICA is able to reproduce the noncompliance as communicated by Customer to SELECTICA. If after the expenditure of reasonable efforts, SELECTICA is unable to correct any such noncompliance, SELECTICA may refund to Customer all or an equitable portion of the license fee paid by Customer to SELECTICA for such Software in full satisfaction of Customers claims relating to such noncompliance upon Customers return of said Software. ANY LIABILITY OF SELECTICA WITH RESPECT TO THE SOFTWARE OR PERFORMANCE THEREOF UNDER ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY WILL BE LIMITED EXCLUSIVELY TO SOFTWARE REPLACEMENT OR, IF PRODUCT REPLACEMENT IS INADEQUATE AS A REMEDY OR, IN THE SELECTICAS OPINION, IMPRACTICAL, TO A REFUND OF THE LICENSE FEE.
7.2 Warranty Limitations. The warranties set forth in Section 7.1 apply only to the latest release of the Software made available by SELECTICA to Customer. Such warranties do not apply to any noncompliance of the software resulting from misuse, casualty loss, use or combination of the Software with any products, goods, services or other items furnished by anyone other than SELECTICA, any modification not made by or for SELECTICA, or any use of the Software by Customer in contradiction of the terms of this Agreement.
8. | INDEMNIFICATION |
SELECTICA agrees to hold Customer and the EMEA Affiliates harmless from liability to third parties resulting from infringement of any
2
patent or copyright, rights in databases or trade secret by the Software as used within the scope of this Agreement, and to pay all damages and costs, including reasonable legal fees, which may be assessed against Customer under any such claim or action. SELECTICA shall be released from the foregoing obligation unless Customer provides SELECTICA with (i) written notice within fifteen (15) days of the date Customer first becomes aware of such a claim or action, or possibility thereof; (ii) sole control and authority over the defense or settlement thereof; and (iii) proper and full information and assistance to settle and/or defend any such claim or action. Without limiting the foregoing, if a final injunction is, or SELECTICA believes, in its sole discretion, is likely to be, entered prohibiting the use of the Software by Customer as contemplated herein, SELECTICA will, at its sole option and expense, either (a) procure for Customer the right to use the infringing Software as provided herein or (b) replace the infringing Software with noninfringing, functionally equivalent products, or (c) suitably modify the infringing Software so that it is not infringing; or (d) in the event (a), (b) and (c) are not commercially reasonable, terminate the license, accept return of the infringing Software and refund to Customer an equitable portion of the license fee paid therefor. Except as specified above, SELECTICA will not be liable for any costs or expenses incurred without its prior written authorization. Notwithstanding the foregoing, SELECTICA assumes no liability for infringement claims with respect to Software (i) not supplied by SELECTICA, (ii) made in whole or in part in accordance to Customers specifications, (iii) that is modified after delivery by SELECTICA, (iv) combined with other products, processes or materials where the alleged infringement relates to such combination, (v) where Customer continues allegedly infringing activity after being notified thereof or after being informed of modifications that would have avoided the alleged infringement, or (vi) where Customers use of the Software is not strictly in accordance with this Agreement. THE FOREGOING PROVISIONS OF THIS SECTION 8 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF SELECTICA AND THE EXCLUSIVE REMEDY OF CUSTOMER, WITH RESPECT TO ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET, RIGHTS IN DATABASE, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT BY THE SOFTWARE. CUSTOMER SHALL HAVE NO REMEDY IN RESPECT OF ANY UNTRUE STATEMENT MADE TO IT UPON WHICH IT RELIED IN ENTERING THIS AGREEMENT (UNLESS SUCH UNTRUE STATEMENT WAS MADE KNOWING IT WAS UNTRUE) OTHER THAN ANY REMEDY IT MAY HAVE FOR BREACH OF THE EXPRESS TERMS OF THIS AGREEMENT.
9. | DISCLAIMER WARRANTY AND LIMITATION OF LIABILITY |
9.1 Disclaimer of Warranties. TO THE EXTENT PERMITTED BY LAW EXCEPT AS SET FORTH IN SECTION 7.1, SELECTICA MAKES NO WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY REGARDING OR RELATING TO THE SOFTWARE OR THE DOCUMENTATION OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED TO CUSTOMER UNDER THIS AGREEMENT. SELECTICA SPECIFICALLY DISCLAIMS ALL IMPLIED CONDITIONS, WARRANTIES, AND TERMS OF FITNESS FOR A PARTICULAR PURPOSES, AND SATISFACTORY QUALITY WITH RESPECT TO THE SOFTWARE, DOCUMENTATION AND ANY OTHER MATERIALS AND SERVICES PROVIDED BY SELECTICA HEREUNDER, AND WITH RESPECT TO THE USE OF THE FOREGOING. FURTHER, SELECTICA DOES NOT WARRANT RESULTS OF USE OR THAT THE SOFTWARE IS BUG FREE OR THAT THE CUSTOMERS USE WILL BE UNINTERRUPTED.
9.2 Limitation of Liability. EXCEPT AS SET FORTH IN SECTION 8, IN NO EVENT WILL SELECTICA BE LIABLE FOR ANY LOSS OF REVENUE, PROFITS (INCLUDING LOSS OF PROFIT ON CONTRACTS), LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF USE OF MONEY, ANTICIPATED SAVINGS, GOODWILL, LOSS, DAMAGE OR CORRUPTION OF DATA, COST TO RECOVER, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES HOWSOEVER CAUSED OF ANY KIND IN CONNECTION WITH OR ARISING OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE, DOCUMENTATION OR ANY MATERIALS OR SERVICES PERFORMED HEREUNDER, WHETHER ALLEGED AS A BREACH OF CONTRACT, DELICT OR TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, INCLUDING NEGLIGENCE, EVEN IF SELECTICA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN ADDITION, SELECTICA WILL NOT BE LIABLE FOR ANY DAMAGES CAUSED BY DELAY IN THE DELIVERY OR FURNISHING OF THE SOFTWARE, DOCUMENTATION, OR OTHER MATERIALS OR SERVICES. SELECTICAs LIABILITY UNDER THIS AGREEMENT FOR DAMAGES WILL NOT, IN ANY EVENT, EXCEED 100 (ONE HUNDRED) PERCENT OF THE TOTAL VALUE FOR THIS AGREEMENT.
9.3 SUBJECT TO SECTION 9.1 AND 9.2, SELECTICA SHALL BE LIABLE FOR LOSS OR DAMAGE TO THE CUSTOMERS TANGIBLE PROPERTY RESULTING FROM (i) DEFECTS IN THE SOFTWARE CAUSED BY SELECTICAS NEGLIGENCE OR (ii) BY THE NEGLIGENCE OF ITS EMPLOYEES IN THE PERFORMANCE OF THIS AGREEMENT, UP TO A MAXIMUM OF £10,000 PER EVENT OR SERIES OF CONNECTED EVENTS.
NEITHER COMPUTER OR MAGNETIC MEDIA NOR LOSS OF DATA SHALL CONSTITUTE PHYSICAL DAMAGE TO PROPERTY FOR THE PURPOSES OF THIS SECTION 9.3.
9.4 NOTHING IN THIS AGREEMENT SHALL EXCLUDE OR LIMIT SELECTICAS LIABILITY FOR (i) THE TORT OF DECEIT (ii) DEATH OR PERSONAL INJURY CAUSED BY ITS NEGLIGENCE (AS DEFINED IN S.1(1) UNFAIR CONTRACT TERMS ACT 1977) (iii) ANY BREACH OF THE OBLIGATIONS IMPLIED BY S.12 SALE OF GOODS ACT 1979 OR S.2 SUPPLY OF GOODS AND SERVICES ACT 1982 OR (iv) ANY LIABILITY WHICH CANNOT BE EXCLUDED BY LAW.
10. | MISCELLANEOUS |
10.1 Nondisclosure of Agreement. Customer shall not disclose the terms of this Agreement or the ongoing business relationship initiated by this Agreement except as required by law or governmental regulation without SELECTICAs prior written consent, except that customer may disclose the terms of this Agreement on a confidential basis to Customers accountants, attorneys, parent organizations and financial advisors and lenders.
10.2 Reference Account. Customer consents to SELECTICAs identification of Customer as a user of the Software and will cooperate with SELECTICA in furnishing nonconfidential information about Customers software use for informational and promotional use by SELECTICA. No public press releases, case studies or other public forum information exchange about Customers use of SELECTICAs Software will be implemented without prior written permission of Customer. Customer agrees to the following reference account activities under this agreement between Customer and SELECTICA; Press Release upon deal signature, Case Study upon project completion and execution of reference calls by a nominated representative of Customer.
10.3 Notices. Any notice or other communication under this Agreement given by either party to the other will be deemed to be properly given if given in writing and delivered in person or facsimile, if acknowledged received by return facsimile or followed within one day by a delivered or mailed copy of such notice, or if mailed, properly addressed and stamped with the required postage, to the intended recipient at its address specified in this Agreement. Either party may from time to time change its address for notices under this Section by giving the other party notice of the change in accordance with this Section 10.3.
10.4 Assignment. Customer may not assign sub-contract, sub-license or sell (directly, by operation of law or otherwise) this Agreement or any of its rights under this Agreement without the prior written consent of SELECTICA except that Customer may assign all, but not part, of this Agreement and the Software and Documentation then in its possession or control to the successor of Customer in a merger or other similar corporate reorganization outside of the course of Customers normal business operations or to the purchaser of substantially all of Customers assets, provided such successor or purchaser agrees in writing to comply with the terms of this Agreement. Subject to the foregoing, this Agreement is binding upon, inures to the benefit of and is enforceable by the parties and their respective successors and assigns.
10.5 Nonwaiver. Any failure of either party to insist upon or enforce performance by the other party of any of the provisions of this Agreement or to exercise any rights or remedies under this Agreement will not be interpreted or construed as a waiver or relinquishment of such
3
partys right to assert or rely upon such provision, right or remedy in that or any other instance.
10.6 Entire Agreement. This Agreement constitutes the entire agreement, and supersedes any and all prior agreements, between SELECTICA and Customer relating to the Software, Documentation, services and other items subject to this Agreement. No amendment of this Agreement will be valid unless set forth in a written instrument signed by both parties.
10.7 Governing Law and Arbitration. The rights and obligations of the parties under this Agreement shall not be governed by the 1980 UN Convention on Contracts for the International Sale of Goods, but instead shall be governed by and construed under the laws England. The parties irrevocably submit to the [exclusive] jurisdiction or English courts.
10.8 Language. This Agreement is in the English language only, which language shall be controlling in all respects, and all versions hereof in any other language shall not be binding to the parties hereto. All communications and notices to be made or given pursuant to this Agreement shall be in the English language.
10.9 Applicability of Provisions Limiting SELECTICAs Liability. The provisions of this Agreement under which the liability of SELECTICA is excluded or limited, shall not apply to the extent that such exclusions or limitations are declared illegal or void under any applicable laws, unless the illegality or invalidity is cured under such laws by the fact that the law of England governs this Agreement.
10.10 Force Majeure. Neither party will be liable for, or be considered to be in breach of or default under this Agreement, other than monetary obligations, as a result of any cause or condition beyond such partys reasonable control.
10.11 Acceptance. Neither this Agreement nor any of its EXHIBITs will become effective until accepted by SELECTICA at its offices in United Kingdom. In addition, neither this Agreement nor any of its EXHIBITs will become effective until an SAP Purchase order referring to this Agreement is issued by Customer or any EMEA Affiliate, provided that if no such Purchase Order is issued within thirty (30) days after execution by SELECTICA, the entire agreement shall become null and void.
In Witness whereof, the parties have executed this Agreement by their duly authorized representatives.
SELECTICA, UK LIMITED
(SELECTICA)
By:
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Title:
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Date:
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Address:
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[*] | ||
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Telephone #: | [*] | |
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Facsimile #: | [*] |
MCI WorldCom Limited
(Customer)
By:
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Name:
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Title:
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* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
Exhibit A
Description of Software
Licensed Servers, Seats and User Sessions
Selectica Configurator Platform
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Unix (Solaris/AIX/Itanium) 2 CPU License
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[*] | |
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Selectica Configurator Usage Licensing Simultaneous Users Sessions
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[*] | |
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Selectica Configurator, Test and Development Server 2 CPU License
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[*] | |
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Selectica Integrated Modelling Environment Studio and Application Builder
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[*] | |
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Selectica Application Data Manager (ADM)
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[*] | |
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Selectica Pricer Platform
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Unix (Solaris) 2 CPU License
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[*] | |
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Selectica Pricer Usage Licensing Simultaneous Users Sessions
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[*] | |
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Selectica Pricer, Test and Development Server 2 CPU License
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[*] | |
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Selectica Pricer, Pricer Manager
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[*] | |
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Selectica Pricer, Price List Manager
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[*] | |
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Selectica Integration Environment
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Selectica JAVA API Advanced Development Kit (ADK) Application License
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[*] | |
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Selectica Connector to IBM WebSphere Business Integration Services
Application License
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[*] | |
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In each instance above where no reference is made to either CPUs, Simultaneous Sessions or Application Licenses the number refers to the number of Licensed Seats. A Licensed Seat is an individual who is authorized by Customer to use the Software, regardless of whether the individual is actively using the Software at any given time. The Application License is for the EMEA Siebel 7 Phase 1B Order Validation and Pricing Application.
Simultaneous User Sessions
Simultaneous Users Session shall be defined as the elapsed time during which an individual user of the system begins a process utilizing the Software until the user either finishes the Software process, or abandons the Software process and the system times out.
The total number of Simultaneous User Sessions shall be the average of the [*] of Simultaneous User Sessions during separate days within any quarterly period (on a calendar year basis). Selectica shall provide Customer with instructions to generate reports documenting the number of Simultaneous Users Session. Customer will send Selectica quarterly reports within thirty (30) days of the end of each fiscal quarter documenting the number of Simultaneous Users Sessions.
Customer shall be required to inform Selectica of any installations of the Software on additional Customer sites.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Exhibit B
License and Maintenance Fees
1. | License Fee | |||
License Fee: £ [*] | ||||
Software License Fee Payment Schedule |
Invoice Date | Amount | Payment Terms | ||||||
December 5th, 2003
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[*] | Net 30 Days |
2. | Maintenance Fee . Maintenance fees are equal to 18% of the current published product license list price, and are due in advance on an annual basis. Maintenance fees for the use of the Software on any additional servers or workstations licensed subsequent to the Effective Date will be payable concurrently with the additional server or user license fee on a pro-rated annual basis. | |||
Annual Maintenance Fee: £ [*] | ||||
Maintenance and Support Services Payment Schedule |
Invoice Date | Amount | Payment Terms | ||||||
December 5th, 2003
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[*] | Net 30 Days |
Pursuant to Section 4.3 of the Agreement, the fees set forth above do not include tax, fees or duties, if any. |
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Exhibit C
Maintenance Terms and Conditions
The following sets forth the terms and conditions of the maintenance services offered to Customer. Capitalized terms not defined in this Attachment have the same meaning as in this Agreement.
1. | DEFINITIONS . |
| Error means an error in the Software which significantly degrades such Software as compared to Selecticas published performance specifications. | |||
| Error Correction means the use of reasonable commercial efforts to correct Errors. | |||
| Fix means the repair or replacement of object or executable code versions of the Software to remedy an Error. | |||
| Support Services means Selecticas support services as described in Section 2. | |||
| Update means a release of a Software Product which consists of minor corrections, bug fixes and enhancements without substantial added functionality or features and which is denoted by any change to the numbers to the right of the first decimal point (e.g., a change from 2.0 to 2.1 or from 2.1.1 to 2.1.2). | |||
| Upgrade means a release of a Software Product which consists of a new version with substantial enhancements, added functionality or new features and which is denoted by a change to the number to the left of the first decimal point (e.g., a change from 2.x to 3.x). | |||
| Workaround means a change in the procedures followed or data supplied by Company to avoid an Error without substantially impairing Customer use of the Software. | |||
| Regular Hours means 8:30AM to 5:00PM Greenwich Mean Time on Selecticas regular business days. |
2. | SCOPE OF SUPPORT SERVICES . Subject to Section 4 of this Attachment, Selectica shall use all reasonable commercial efforts to provide the following services for the Software: |
| Technical Communication . Maintain a center capable of receiving information from Company by telephone, electronic mail, fax or postal mail for support of the Software. Live communication with Selectica personnel is limited to Regular Hours. Outside of such regular hours, Selectica shall have an automated answering service to take messages, such messages shall be reviewed by Selectica technical personnel at the beginning of the next business day. Company may only have access to the Selectica support organization via Customer Authorized Contact Persons designated above. In case of the Select Advantage support program, technical communication will be provided beyond regular business hours via pager support. | |||
| Maintenance Release . From time to time, provide Updates and Upgrades of the Software to Company (free of charge) that Selectica makes generally available. All such Updates and Upgrades and shall be subject to the terms and conditions of the Agreement. | |||
| Modifications of Software . Selectica shall accommodate requests for modifications, however, Selectica is under no obligation to incorporate those requests from Company in future releases of The Software. | |||
| Error Correction . Selectica shall exercise commercially reasonable efforts to correct any Error reported by Company in the current unmodified release of Software. |
Call Process and Escalation Matrix
ESCALATION MATRIX
Engineering | ||||||||
Notify Field | Notified (Field | |||||||
Management | Account | |||||||
Severity Criteria | Response Time | Acting Party | Technical | Engineer on | ||||
Support | Site if | |||||||
Manager | necessary) | |||||||
1. Down system,
100% of users
affected
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[*] hour |
Field Account
Engineer/Support Engineer |
After [*] hours | After [*] hours | ||||
2. System up,
critical features
(backup, login,
check-in, search)
inoperable, NO
WORKAROUND
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[*] hour |
Field Account
Engineer/Support Engineer |
After [*] hours | After [*] hours | ||||
3. System up,
critical features
inoperable,
WORKAROUND
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[*] hours response
time |
Field Account
Engineer/Support Engineer |
After [*] hours | After [*] week | ||||
4. Non-Critical
feature inoperable
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[*] hours response
time |
Field Account
Engineer/Support Engineer |
See call process | See call process | ||||
5. User question;
enhancement
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[*] hours response
time |
Field Account
Engineer/Support Engineer |
See call process | See call process |
CALL PROCESS for rows 4 and 5 of Escalation Matrix
Process Steps | Response Time | Acting Party | Next Action | |||
Initial Call
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Within [*] hours |
Field Account
Engineer/Support Engineer |
Severity Evaluation
(See severity criteria) |
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Severity Evaluation
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Within [*] hour |
Field Account
Engineer/Support Engineer |
See Problem Determination . | |||
Problem Determination
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Within [*] weeks |
Field Account
Engineer/Support Engineer |
Field, Technical
Support Manager notified |
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Plan for resolution,
schedule to fix
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Dependent upon
problem, but as soon as possible |
Field Account Engineer,
Technical Support Manager, Support Engineer |
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3. | CUSTOMER RESPONSIBILITIES . Company is responsible for isolating the problem, for eliminating other factors as potential causes of the problem and for providing sufficient information, data and test cases to allow Selectica to readily reproduce all reported Errors. If Selectica believes that a problem reported by Company may not be due to an Error in Software, Selectica will so notify Company. | |||
4. | EXCLUSIONS . Selectica shall have no obligation to support: (i) Customer altered or Customer damaged Software or any portion of Software incorporated with or into other software; (ii) Software that is not the then current release or immediately Previous Sequential Release which is aged six (6) months or more since the issuance of the successive release; (iii) Software problems caused by Customer negligence, abuse or misapplication, use of Software other than as specified in Selectica user manual or other causes beyond the control of Selectica; or (iv) Software installed on any hardware that is not listed in Exhibit A and agreed with Selectica. Selectica shall have no liability for any changes in Customer hardware, which may be necessary to use Software due to a Workaround or maintenance release. | |||
5. | DISCLAIMER OF WARRANTY . THESE TERMS AND CONDITIONS DEFINE A SERVICE ARRANGEMENT AND NOT A SOFTWARE WARRANTY. ALL LICENSED PRODUCTS AND MATERIALS RELATED THERETO ARE SUBJECT EXCLUSIVELY TO THE WARRANTIES SET FORTH IN THIS AGREEMENT. THESE TERM AND CONDITIONS DO NOT CHANGE OR SUPERSEDE ANY TERM OF ANY SUCH AGREEMENT. |
Exhibit D
Training Services
Selectica Studio Modelling Course
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Selectica Graphical User Interface Course
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Selectica Pricer Manager Course
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Selectica Server Administration Course
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Selectica JAVA API Advanced Development Kit Course
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1. | Educational Services Fee | |||
Educational Services Fee: £ [*] | ||||
Educational Services Fee Schedule |
Invoice Date | Amount | Payment Terms | ||
On Training Completion
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[*] | Net 30 Days |
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Exhibit 10.24
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
AMENDMENT AGREEMENT BETWEEN
MCI WORLDCOM, LIMITED. AND SELECTICA UK LIMITED
This Amendment Agreement (Amendment) between MCI WorldCom Limited (Customer) and Selectica UK Limited. (Selectica) amending the Selectica, UK Limited Major Account License Agreement dated 5 December, 2003 (the License Agreement) is made as of the date of signature by the last signing party (the Effective Date) by and among Customer and Selectica.
RECITAL
WHEREAS, on 5 December, 2003 Customer and Selectica entered into the License Agreement by which Selectica licensed certain software products to Customer and agreed to perform certain services for Customer;
WHEREAS, the parties to the License Agreement now wish to amend the Agreement, as provided in Section 10.6 of the Agreement, as follows by executing this Amendment;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, Customer and Selectica hereby agree as follows:
1. Additional Software. The License Agreement is amended by adding the following software products to Exhibit A .
Selectica Manager
Selectica Management Centre
Selectica Configurator
Selectica Pricer
Selectica Quoter
Selectica Workflow
Selectica Connector to IBM WebSphere Business Integration Services
Advanced Development Kit: Java API
Advanced Development Kit: C API
Connector to Enterprise Applications
Selectica Integrated Modelling Environment - Studio & Application Builder
Selectica Workflow Designer
Selectica Pricer Manager
Selectica Repository
Selectica KnowledgeBase Development Environment (KDE)
Selectica Application Data Manager (ADM)
Selectica Monitoring Agent
Selectica Mobile Professional Edition
Selectica Mobile Production Suite
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For the avoidance of doubt, the aforementioned products shall be considered Software for the purposes of the License Agreement.
2. Usage Restrictions.
a. The License Agreement is amended by deleting all restrictions of usage set forth in Exhibit A of the License Agreement.
b. Notwithstanding the foregoing, the usage of the following products which contain an OEM component (the OEM Products) will be limited as follows:
Selectica Mobile Professional Edition [*] copies
Selectica Monitoring Agent [*] copies
Selectica Worfklow Designer [*] copies
Selectica Studio: Model Builder [*] copies
c. Customer shall have all rights sets forth in the Section 2.2 of the License Agreement with respect to the Software. For further clarity, pursuant to Section 2.2 of the License Agreement, the license grant with respect to the Software shall be limited to the EMEA region.
3. License Modification. The deletion of the restrictions set forth in Exhibit A is a term license beginning on the Effective Date and terminating on October 1, 2006. After October 1, 2006, Customer shall have a fixed number of Simultaneous Sessions (as defined in the License Agreement) equal to the average number of Simultaneous Sessions for the Software for the first two weeks of September, 2006. Selectica will notify the Company in writing prior to October 1, 2006 as to the number of Simultaneous Sessions. The foregoing shall not modify the restrictions to the OEM Products, which will remain fixed after October 1, 2006. For the avoidance of doubt. Customer shall have the rights to deploy unlimited numbers of users until October 1, 2006. After October 1, 2006, whatever number of Simultaneous Session are in production and/or development use will become fixed and perpetual for MCIs use going forward. After October 1, 2006, any new license requirements will then be subject to a renegotiation of mutually agreeable licensing arrangements at that point in time.
4.
Maintenance Payment
. Exhibit B of the License Agreement is amended to increase the Annual
Maintenance Fee to [*] (USD). The following calculation method was used to derive the new Annual
Maintenance Fee.
[*]
In Dollars (USD)
[*]
In Dollars (USD)
[*]
New Total Net Software Licensed
[*]
New Annual Maintenance at 18% of the Net (USD)
[*]
Such payment will made on a pro rated basis due thirty days from the Effective Date.
* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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5. License Fee. In consideration for the License described in Section 3 of this Amendment, Customer shall pay Selectica a License Fee of $[*], of which $[*] shall be payable upon execution of this Amendment and the remainder of which shall be payable on the earlier to occur of (i) the completion of user acceptance testing for the Customer SPEED Programme Release 1.0 or (ii) [*]. Such payment shall be made pursuant to Section 4.3 of the Agreement.
6. Payment of Services Fees . Upon execution of this Amendment, Selectica shall invoice MCI for the services delivered to-date (SOW SPEED Programme Release 1.0 dated 22 December 2004, Version 1.3 copy attached). As of December 22, 2004, Selectica has completed [*]% of the services outlined in this SOW. The amount to be invoiced will be [*]% of the fee in this SOW: $[*]. The balance of the payments will be invoiced on acceptance of key milestone(s) in accordance with acceptance criteria which will be mutually agreed between MCI and Selectica at a later date but no later than 30 th January 2005.
7. Miscellaneous
All other terms and conditions of the License Agreement, including exhibits and schedules remain unchanged. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly signed and authorized.
MCI WORLDCOM, LIMITED. | SELECTICA UK LIMITED | |||||
(Customer) | (SELECTICA) | |||||
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By:
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Address:
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Date:
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* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements (Form S-8
No.s 333-64246, 333-56576, 333-32666, 333-103622, 333-116449 and 333-122708) pertaining to the
1996 Stock Plan, the 1999 Employee Stock Purchase Plan, the 2001 Supplemental Plan, and the 1999
Equity Incentive Plan of Selectica, Inc. of our reports dated June 24, 2005, with respect to the
consolidated financial statements of Selectica, Inc., Selectica, Inc. managements assessment of
the effectiveness of internal control over financial reporting, and the effectiveness of internal
control over financial reporting of Selectica, Inc. included in the Annual Report (Form 10-K) for
the year ended March 31, 2005.
/s/ ERNST & YOUNG LLP
Walnut Creek, California
June 29, 2005
Exhibit 31.1
SELECTICA, INC.
CERTIFICATION PURSUANT TO
CERTIFICATION
I, Vincent G. Ostrosky, certify that:
Date: June 29, 2005
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
1)
I have reviewed this annual report on Form 10-K of Selectica, Inc;
2)
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3)
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4)
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d 15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5)
The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants auditors
and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b)
Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
/s/ VINCENT G. OSTROSKY
Vincent G. Ostrosky
President and Chief Executive Officer
Exhibit 31.2
SELECTICA, INC.
CERTIFICATION PURSUANT TO
CERTIFICATION
I, Stephen Bennion, certify that:
Date: June 29, 2005
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
1)
I have reviewed this annual report on Form 10-K of Selectica, Inc;
2)
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3)
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4)
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d 15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5)
The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants auditors
and the audit committee of the registrants board of directors (or persons performing the
equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b)
Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
/s/ STEPHEN BENNION
Stephen Bennion
Chief Financial Officer
EXHIBIT 32.1
SELECTICA, INC.
CERTIFICATION PURSUANT TO
In connection with the annual report of Selectica, Inc. (the Company) on Form 10-K for the year
ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the
Report), I, Vincent G. Ostrosky, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
Date: June 29, 2005
/s/ VINCENT G. OSTROSKY
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.
Vincent G. Ostrosky
President and Chief Executive Officer
EXHIBIT 32.2
SELECTICA, INC.
CERTIFICATION PURSUANT TO
In connection with the annual report of Selectica, Inc. (the Company) on Form 10-K for the year
ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the
Report), I, Stephen Bennion, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Date: June 29, 2005
/s/ STEPHEN BENNION
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.
Stephen Bennion
Chief Financial Officer