PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT 10.1
This preferred stock purchase agreement (this “Agreement”) is dated as of June 20, 2014 (the “Effective Date”), by and between Astea International Inc., a Delaware corporation (the “Company”), and Xxxx Xxxxxxxx, an individual (the “Purchaser”).
Now, therefore, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:
ARTICLE I
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.
“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of Delaware are authorized or required by law or other governmental action to close.
“Certificate of Designation” means that certain Certificate of Designation of Series B Convertible Preferred Stock of even date herewith that sets forth the rights, preferences, powers, privileges, restrictions, qualifications and limitations of the Preferred Stock.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.
“Company Counsel” means Xxxxxx Xxxxxxxx LLP, with offices located at 3000 Two Xxxxx Square, Xxxxxxxxxx xxx Xxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
“Conversion Shares” means such shares of Common Stock which, from time to time, have been issued, or may be issuable, pursuant to the exercise of the conversion rights of the Preferred Stock.
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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Independent Director” means an independent director as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
“NASDAQ” means The NASDAQ Stock Market LLC.
“Original Purchase Price” means $2.51.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred Stock” means the Series B Convertible Preferred Stock of the Company, par value $0.01 per share, issued or issuable to the Purchaser pursuant to this Agreement with such rights, preferences, powers, privileges, restrictions, qualifications and limitations as are set forth in the Certificate of Designation.
“Promissory Note” means that certain Revolving Promissory Note, dated March 26, 2014, issued by the Company to the Purchaser, in the original principal amount of Three Million Dollars ($3,000,000), pursuant to which principal indebtedness in the amount of Two Million One Hundred Fifty Thousand Dollars ($2,150,000) plus accrued interest is outstanding on the date of this Agreement.
“Related Party Transaction” means any transaction with the Purchaser or an Affiliate of the Purchaser.
“Registrable Securities” means all of the Common Stock issuable in connection with any conversion of the Preferred Stock. Upon the sale, pursuant to a registration statement declared effective by the Commission or an exemption from registration under the Securities Act (such that all transfer restrictions and restrictive legends with respect to such securities being sold are removed upon the consummation of such sale), of any of the securities described by the preceding sentence, such securities sold shall no longer be Registrable Securities. The foregoing notwithstanding, any shares of Common Stock which may be sold pursuant to Rule 144 without regard to volume or other restrictions (aside from making any filing required by Rule 144 resulting from the sale) shall not be Registrable Securities.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such rule.
“Securities” means, as context requires, the Preferred Stock, the Conversion Shares or both.
“Trading Day” means a day on which the Common Stock is, or is able to be, traded on a Trading Market.
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“Trading Market” means NASDAQ’s Capital Market.
“Transfer Agent” means American Stock Trust & Transfer Company, with a mailing address of 00 Xxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and a facsimile number of (000) 000-0000, and any successor transfer agent of the Company.
(a) the headings of particular provisions of this Agreement are inserted for convenience only and will not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement;
(b) words importing any gender shall include other genders;
(c) words importing the singular only shall include the plural and vice versa;
(d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation” or “but not limited to;”
(e) the words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement;
(f) references to “Articles,” “Exhibits,” “Sections” or “Schedules” shall be to Articles, Exhibits, Sections or Schedules of or to this Agreement; and
(g) references to any Person include the successors and permitted assigns of such Person.
ARTICLE II
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HUNDRED FIFTY THOUSAND DOLLARS ($150,000). The Company shall thereafter record the purchase of the Seven Hundred Ninety-Seven Thousand Four Hundred Forty-Eight (797,448) shares of Preferred Stock on the books of the Company, and certificates evidencing the Preferred Stock shall be delivered in accordance with Section 5.3. In accordance with the Promissory Note and the Loan Documents (as defined therein), the Company is required to pay any accrued and unpaid interest on the Promissory Note on a monthly basis, and thus, shall deliver to the Purchaser on July 1, 2014, via wire transfer, $[ ] in immediately available funds, which equals the amount of accrued and unpaid interest under the Promissory Note as of June 30, 2014. This Agreement shall constitute a modification of the Promissory Note and a consent to the exchange of the Exchange Debt for shares of Preferred Stock in accordance with the terms hereof. Upon the receipt by the Purchaser of such the shares of Preferred Stock and cash in the amount of the accrued interest provided for in this Section 2.2, the Purchaser shall be deemed to have released and forever discharged the Company all claims, demands, obligations and liabilities with respect to the Exchange Debt and the interest accrued.
Section 2.3. Filing of the Certificate of Designation. No later than the Business Day following the date hereof, the Company shall file with the Secretary of State of the State of Delaware the Certificate of Designation.
ARTICLE III
The Company hereby represents and warrants as of the date hereof to the Purchaser as follows:
Section 3.1. Organization and Qualification. The Company is an entity duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents.
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extent applicable, with its disclosure obligations under Rule 506(e).
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ARTICLE IV
The Purchaser hereby represents and warrants as of the date hereof to the Company as follows:
statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state or other securities law.
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ARTICLE V
(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, or to the Company, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement.
(b) The Purchaser agrees to the imprinting, so long as is required by this Section 5.1, of a legend on any of the Securities in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
(c) Certificates evidencing any Securities shall not contain any legend (including the legend set forth in Section 5.1(b)), (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144, (iii) if such Securities are eligible for sale under Rule 144(b)(1), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue promptly a legal opinion to the Transfer Agent if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any portion of the Preferred Stock is converted to Common Stock at a time when there is an effective registration statement to cover the resale of the Conversion Shares, certificates representing such Conversion Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under this Section 5.1(c), it will, upon the written request of the Purchaser, no later than 5 Trading Days following the delivery to the Company or the Transfer
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Agent of a certificate representing Preferred Stock or Conversion Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. Notwithstanding the foregoing, the Company shall not be required to remove any legends until all Securities represented by a single certificate are no longer subject to restrictions. If only a portion of the Securities represented by any single certificate are subject to restrictions, the holder of the certificate may request, or the Company may require, that such certificate be cancelled and two new certificates be issued. One certificate shall represent, and be in the amount of, Securities not subject to restrictions and shall bear no legend and the second certificate shall represent, and be in the amount of, Securities subject to restrictions and shall bear an appropriate legend. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 5.1.
(d) The Purchaser agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 5.1 is predicated upon the Company’s reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.
Section 5.4. Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchaser. The Purchaser shall take all commercially reasonable actions that are reasonably requested by the Company related to, or to effectuate, the filing of a Form D or any filing required pursuant to the “Blue Sky” laws of the states of the United States which, for purposes of clarity, shall not include the payment of any fees by the Purchaser.
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outstanding, with a view to making available to the holders of the Registrable Securities the benefits of Rule 144.
Section 5.7. Other Covenants of the Purchaser. Until the fifth anniversary of the date hereof, the Purchaser shall:
(a) use his commercially reasonable efforts to nominate and elect at all times at least two Independent Directors as members of the board of directors of the Company (the “Board”); and
(b) not engage in any Related Party Transaction unless such Related Party Transaction is approved by at least a majority of the Independent Directors.
ARTICLE VI
Section 6.1. Registration Rights. If at any time after the date hereof and as long as Registrable Securities remain outstanding, the Company shall file with the Commission a registration statement of the Company under the Securities Act (a “Registration Statement”), relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities (a “Registration”), the Company shall send to the Purchaser a written notice of such determination and, if within 15 days after the giving of such notice, the Purchaser shall so request in writing, the Company shall include in such Registration Statement all of the Registrable Shares of the Purchaser, except that if, in connection with any underwritten Registration for the account of the Company, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in a Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Shares as the underwriter(s) shall permit, if any. If a Registration in connection with which the Purchaser is entitled to registration under this Section 6.1 is an underwritten Registration, then the Purchaser shall, unless otherwise agreed by the Company, offer and sell such Registrable Shares in an underwritten offering using the same underwriter(s) and, subject to the provisions of this Article VI, on the same terms and conditions as other shares of Common Stock included in such underwritten offering.
(a) Notwithstanding any other provision of this Agreement, this Article VI shall not apply to, and the Purchaser’s right to participate in a Registration shall not be triggered by, the filing of a Registration Statement (i) covering shares of Common Stock issued pursuant to an employee benefit plan, (ii) on Form S-4 (or successor form) under the Securities Act for the purpose of offering such securities to another business entity or the shareholders of such entity in connection with the acquisition of assets or shares of capital stock, respectively, of such entity, or (iii) in connection with a resale shelf registration filed in connection with an acquisition, reorganization, recapitalization, merger, consolidation or similar transaction involving the Company.
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(b) If any Registration was initiated by the Company to effect, in whole or in part, a primary public offering of its securities and, if at any time after giving written notice of its intention to so register securities and before the effectiveness of the Registration Statement filed in connection with such Registration, the Company determines for any reason either not to effect such Registration or to delay such Registration, the Company may, at its election, by prior written notice to the Purchaser: (i) in the case of a determination not to effect such Registration, relieve itself of its obligation set forth this Section 6.1 to register the Registrable Shares in connection with such Registration; or (ii) in the case of a determination to postpone such Registration, delay the Registration of the Registrable Shares for the same period as the Registration of the Company’s securities is postponed.
(c) Notwithstanding any other provision of this Article VI, the Company shall not be required to effect a Registration pursuant to this Section 6.1, or file any post-effective amendment to such a Registration: (i) if a Registration, or any post-effective amendment to such Registration, requires, under applicable statutes and rules, a special audit (other than a normal fiscal year-end audit) of the financial statements of the Company, unless the Purchaser agrees to pay the fees and expenses of accountants incurred in connection with the special audit and which would otherwise not be incurred but for the participation of the Purchaser in such Registration; or (ii) the Company has not received from the Purchaser all information the Company has requested pursuant to Section 6.3.
(a) It shall be a condition precedent to the obligations of the Purchaser that the Company shall obtain the consent of the sole stockholder of the Company’s issued and outstanding Series A Convertible Preferred Stock approving the authorization and issuance of the Series B Convertible Preferred Stock;
(b) Promptly prepare and file with the Commission a Registration Statement with respect to the shares to be included in such Registration (the “Registered Shares”) and use its commercially reasonable efforts to cause the Registration Statement to become and remain effective as soon as reasonably practicable thereafter;
(c) Prepare and file such amendments to the Registration Statement and supplements to the prospectus contained therein as may be necessary to keep the Registration Statement effective as required herein;
(d) Furnish to the Purchaser and any underwriters of the Registered Shares such reasonable number of copies of the Registration Statement and any amendments thereto, any related prospectus and supplements thereto, all correspondence to and from the Commission, including comment letters and responses thereto, and such other documents as such underwriters may reasonably request in order to facilitate the public offering of the Registered Shares;
(e) Register or qualify the Registered Shares under such state securities or “blue sky” laws of such jurisdictions as the Purchaser may reasonably (in light of a reasonable
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plan of distribution) request as soon as reasonably practicable, but in any event within 20 days following the original filing of the Registration Statement; provided, that the Company shall not be required to take any action in any jurisdiction which would require it to qualify to do business in such jurisdiction or otherwise subject it to service of process, except with respect to the offering and sale of the Registered Shares;
(f) Notify the Purchaser promptly after it shall receive notice thereof of the time when the Registration Statement has become effective or a supplement to any prospectus forming a part of the Registration Statement has been filed;
(g) Notify the Purchaser promptly of any request by the Commission or applicable state securities agency for the amending or supplementing of the Registration Statement or prospectus or for additional information;
(h) Prepare and promptly file with the Commission and promptly notify the Purchaser of the filing of such amendment or supplement to the Registration Statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to the Registered Shares is required to be delivered under the Securities Act, any event shall have occurred, the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading;
(i) In case the Purchaser or any underwriter(s) are required to deliver a prospectus at a time when the prospectus then in circulation is not in compliance with the Securities Act, the Company will prepare and file such supplements or amendments to the Registration Statement and such prospectus or prospectuses as may be necessary to permit compliance with the requirements of the Securities Act as soon as reasonably practicable thereafter;
(j) Advise the Purchaser, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
(k) Permit the Purchaser a reasonable amount of time (not to exceed 7 days) to review the Registration Statement, any amendments thereto, and any related prospectus(es) and supplement(s) thereto prior to their filing with the Commission, and will not file any such document in a form to which the Purchaser shall reasonably have objected in writing on the grounds that such document does not comply in all material respects with the requirements of the Securities Act or the rules and regulations thereunder; and
(l) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering.
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(a) It shall be a condition precedent to the obligations of the Company to include in a Registration any Registrable Securities pursuant to this Section VI that the Purchaser shall furnish to the Company such information regarding himself, the Registrable Shares and the intended method or manner of disposition of the Registrable Shares as shall be reasonably required to effect a Registration of such Registrable Shares and shall execute such documents in connection with such Registration as the Company may request. At least 10 business days prior to the first anticipated filing date of a Registration Statement (which is intended to include Registrable Securities), the Company shall notify the Purchaser of the information the Company requires;
(b) The Purchaser agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement (which is intended to include Registrable Securities);
(c) The Purchaser agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6.2(h), the Purchaser will immediately discontinue disposition of Registrable Shares pursuant to the Registration Statement covering such Registrable Shares until the Purchaser’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 6.2(h) and, if so directed by the Company, the Purchaser shall deliver to the Company or destroy (and deliver to the Company a certificate of destruction) all copies in the Purchaser’s possession, of the prospectus covering such Registrable Shares current at the time of receipt of such notice;
(d) The Purchaser may not participate in any underwritten Registration hereunder unless the Purchaser (i) agrees to sell his Registrable Shares on the basis provided in any underwriting arrangements entered into by the Company; (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions applicable to the sale of the Registrable Securities; and
(e) The Purchaser agrees to comply with all applicable laws and regulations in connection with any sale, transfer or other disposition of Registrable Shares.
ARTICLE VII
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preparation, execution, delivery and performance of this Agreement. The foregoing notwithstanding, the Company shall pay up to $35,000 of fees and expenses incurred by the Purchaser for legal counsel in relation to the negotiation and execution of this Agreement and the purchase of the Preferred Stock. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser. The Company shall pay, and shall indemnify the Purchaser against any liability for, any brokerage or finder’s fees or commissions payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the purchase of the Preferred Stock pursuant to this Agreement.
If to the Company:
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
Xxxxxxxxxx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Purchaser:
Xxxx Xxxxxxxx
X.X. Xxx 000
Xxxxxxx Xxxxxx, XX 00000
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with a copy to:
XxXxxxxxxx Keen & Xxxxxxx
Radnor Court, Suite 160
000 X. Xxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Section 7.7. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof.
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such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
[signature pages follow]
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The parties hereto have caused this Preferred Stock Purchase Agreement to be duly executed as of the Effective Date.
THE COMPANY:
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Chief Financial Officer
THE PURCHASER:
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
[signature page to the Preferred Stock Purchase Agreement]
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