EXHIBIT 10.23
EXECUTION COPY
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SERIES B PREFERRED STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SEGUE SOFTWARE, INC.
AND
THE INVESTOR
AS DEFINED HEREIN
DATED AS OF MARCH 22, 2002
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Segue Software, Inc.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
March 22, 2002
TABLE OF CONTENTS
SECTION I - PURCHASE AND SALE OF SHARES........................................1
1.1 Purchase and Sale of Series B Preferred Stock; Closing..............1
SECTION II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................1
2.1 Organization and Corporate Power....................................1
2.2 Authorization and Non-Contravention.................................2
2.3 Authorized and Outstanding Stock....................................2
2.4 No Brokers or Finders...............................................3
SECTION III - REPRESENTATIONS AND WARRANTIES OF THE INVESTOR...................4
3.1 Authorization.......................................................4
3.2 Purchase Entirely for Own Account...................................4
3.3 Disclosure of Information...........................................4
3.4 Accredited Investor.................................................4
3.5 Restricted Securities...............................................4
3.6 Investment Banking; Brokerage Fees..................................4
SECTION IV - CONDITIONS OF THE INVESTOR'S OBLIGATIONS..........................5
4.1 Effectiveness of Series B Preferred Stock Terms.....................5
4.2 Delivery of Documents...............................................5
4.3 Approvals and Consents..............................................5
SECTION V - MISCELLANEOUS......................................................5
5.1 Survival of Representations and Warranties..........................5
5.2 Entire Agreement....................................................5
5.3 Amendments, Waivers and Consents....................................5
5.4 Notices and Demands.................................................6
5.5 Severability........................................................6
5.6 Counterparts........................................................6
5.7 Effect of Headings..................................................7
5.8 Governing Law.......................................................7
EXHIBITS
Exhibit A Form of Certificate of Designations
(i)
Schedule A Wire Transfer Instructions
(ii)
SERIES B
PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B
PREFERRED STOCK PURCHASE AGREEMENT is made as of March
22, 2002, by and among Segue Software, Inc., a
Delaware corporation (the
"Company") and S-7 Associates, LLC, a New York limited liability company (the
"Investor").
WHEREAS, the Company has agreed to sell, and the Investor has agreed to
purchase, 666,667 shares of the Company's Series B Preferred Stock, par value
$0.01 per share (the "Series B Preferred Stock"), for the purchase price
specified herein in accordance with the terms and provisions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION I - PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE OF SERIES B PREFERRED STOCK; CLOSING.
Subject to the terms and conditions of this Agreement and in reliance on the
representations, warranties and covenants herein set forth, the Company agrees
to issue and sell to the Investor, and the Investor agrees to purchase from the
Company, 666,667 shares of Series B Preferred Stock for an aggregate purchase
price equal to $2,000,000 (the "Purchase Price"). The Series B Preferred Stock
shall have the rights, preferences and other terms set forth in the certificate
of designations of the Company (the "Certificate of Designations") attached as
EXHIBIT A hereto. The shares of Series B Preferred Stock purchased pursuant to
this Section 1.1 are hereinafter referred to as the "Shares." Subject to the
satisfaction or waiver of the conditions set forth herein, the purchase of the
Shares shall be made at a closing (the "Closing") to be held on the date hereof.
At the Closing, the Company will deliver to the Investor one or more
certificates representing the Shares purchased by the Investor against payment
of the Purchase Price to the Company by wire transfer payable in immediately
available funds in accordance with the wire transfer instructions set forth on
SCHEDULE A.
SECTION II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Investor to enter into this Agreement and
consummate the transactions contemplated hereby, the Company hereby makes to the
Investor the following representations and warranties.
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of
Delaware. The Company has all requisite corporate power and authority
to own its properties, to carry on its business as presently conducted, to enter
into and perform this Agreement and the agreements, documents and instruments
contemplated hereby (together, the "Transaction Documents") to which it is a
party and to carry out the transactions contemplated hereby and thereby. The
Company is duly licensed or qualified to do business as a foreign corporation in
each jurisdiction wherein the character of its property, or the nature of the
activities presently conducted by it,
makes such qualification necessary, except where the failure to be so licensed
or qualified would not have a material adverse effect on the financial
condition, business or results of operations of the Company (a "Material Adverse
Effect"). The Company is not in violation of any term or provision of its
certificate of incorporation, as restated (the "Certificate of Incorporation"),
or its by-laws (the "By-laws"), each as in effect as of this date.
2.2 AUTHORIZATION AND NON-CONTRAVENTION. The Transaction Documents
are valid and binding obligations of the Company, enforceable in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws, from time to time in
effect, which affect enforcement of creditors' rights generally. The execution,
delivery and performance of the Transaction Documents, the sale and delivery of
the Shares in accordance with this Agreement and, if converted in accordance
with the Certificate of Incorporation, the issuance of the Common Stock received
upon conversion of the Series B Preferred Stock (the "Conversion Shares"), have
been duly authorized by all necessary corporate or other action of the Company
and its stockholders. The execution, delivery and performance of the Transaction
Documents, including, without limitation, the sale and delivery of the Shares in
accordance with this Agreement and, if the Shares are converted, the issuance of
the Conversion Shares in accordance with the Certificate of Incorporation and
the performance of any transactions contemplated by the Transaction Documents
will not (i) violate, conflict with or result in a default (whether after the
giving of notice, lapse of time or both) under any contract or obligation to
which the Company is a party or by which it or its assets are bound, or any
provision of the Certificate of Incorporation or By-Laws, or cause the creation
of any lien or encumbrance upon any of the assets of the Company, except for
those which would not have a Material Adverse Effect; (ii) violate, conflict
with or result in a default (whether after the giving of notice, lapse of time
or both) under, any provision of any law, regulation or rule, or any order of,
or any restriction imposed by any court or other governmental agency applicable
to the Company, except for those which would not have a Material Adverse Effect;
(iii) require from the Company any notice to, declaration or filing with, or
consent or approval of any governmental authority or other third party other
than pursuant to federal or state securities or blue sky laws; or (iv)
accelerate any obligation under, or give rise to a right of termination of, any
agreement, permit, license or authorization to which the Company is a party or
by which it is bound, which acceleration or termination would have a Material
Adverse Effect.
2.3 AUTHORIZED AND OUTSTANDING STOCK. After giving effect to the
transactions contemplated hereby, the authorized capital stock of the Company
will consist of (i) 30,000,000 shares of its common stock, par value $0.01 per
share (the "Common Stock"), of which 9,532,862 shares were issued and
outstanding as of March 8, 2002, and (ii) 9,000,000 shares of preferred stock,
of which (a) 4,000,000 shares have been designated as Series A Preferred Stock,
par value $0.01 per share, no shares of which are outstanding, and (b) 1,500,000
shares have been designated as Series B Preferred Stock, par value $0.01 per
share (the "Series B Preferred Stock"), 666,667 shares of which are issued and
outstanding. Except as disclosed in the Company SEC reports (as defined below)
and in the Transaction Documents, there are no outstanding subscriptions,
options, warrants, phantom rights, commitments, agreements, arrangements or
commitments of any kind for or relating to the issuance, or sale of, or
outstanding securities convertible into or exchangeable for, any shares of
capital stock of any class or other equity interests of the Company. Except as
set forth in the Company SEC Reports,
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the Company has no obligation to purchase, redeem, or otherwise acquire any of
its capital stock or any interests therein. After giving effect to the
transactions contemplated hereby, all of the outstanding shares of capital stock
of the Company will have been duly and validly authorized and issued and will be
fully paid and non-assessable and free and clear of all liens and encumbrances
created by or through the Company. Assuming the accuracy of the Investor's
representations in Section III, the offer, issuance, sale and delivery of the
Shares and Conversion Shares are or will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act") and the
qualification or registration provisions of applicable state securities laws.
The Company has duly and validly authorized and reserved 666,667 shares of
Common Stock for issuance upon conversion of the Series B Preferred Stock, and
the Conversion Shares so issued in accordance with the Certificate of
Incorporation will, upon such conversion and issuance, be validly issued, fully
paid and non-assessable and free and clear of all liens and encumbrances created
by or through the Company. There are no preemptive rights, rights of first
refusal, put or call rights or obligations or anti-dilution rights with respect
to the issuance, sale or redemption of the Company's capital stock, other than
rights set forth herein or in the Certificate of Incorporation. Other than the
rights set forth in the Transaction Documents, there are no rights to have the
Company's capital stock registered for sale to the public pursuant to the laws
of any jurisdiction, and there are no agreements of which the Company is aware
relating to the voting of the Company's voting securities or restrictions on the
transfer of the Company's capital stock.
2.4 NO BROKERS OR FINDERS. No person has or will have, as a result
of the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Company for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company.
2.5 COMPANY SEC REPORTS, GOVERNMENT REPORTS, FINANCIAL STATEMENTS.
Since January 1, 2001, the Company and each Company Subsidiary has filed each
report or other filing that it was required to file with the Securities and
Exchange Commission (the "SEC") (together with any permitted filings on Form
8-K, the "Company SEC Reports"). As of their respective dates, each of the
Company SEC Reports was true and correct in all material respects and complied
in all material respects with the Securities Exchange Act of 1934 and the
regulations promulgated thereunder, and did not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading (except to the extent revised or superseded by a
later-filed Company SEC Report). The financial statements of the Company
included in the Company SEC Reports comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
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SECTION III - REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
3.1 AUTHORIZATION. The Investor has full power and authority to
enter into this Agreement and the Registration Rights Agreement referred to in
Section 4.2(b), and each such agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Series B Preferred Stock to be received by the Investor and
the Conversion Shares (collectively, the "Securities") will be acquired for
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
any applicable law, and that the Investor has no present intention of selling,
granting any participation in or otherwise distributing the same to any other
person. By executing this Agreement, the Investor further represents that the
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to any of the Securities.
3.3 DISCLOSURE OF INFORMATION. The Investor represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series B Preferred
Stock and the business, properties, prospects and financial condition of the
Company.
3.4 ACCREDITED INVESTOR. The Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.5 RESTRICTED SECURITIES. The Investor understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of any effective
registration statement covering the Securities or an available exemption from
registration under the Act, the Series B Preferred Stock (and any Common Stock
issued on conversion thereof) must be held indefinitely. In this connection, the
Investor represents that it is familiar with Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.
3.6 INVESTMENT BANKING; BROKERAGE FEES. The Investor has not
incurred or taken any action that would cause the Company to be or become liable
for any investment banking fees, brokerage commissions, broker's or finder's
fees or similar compensation (exclusive of professional fees to lawyers and
accountants) in connection with the transactions contemplated by this Agreement.
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SECTION IV - CONDITIONS TO CLOSING
The obligation of the Investor to purchase and pay for the Shares shall
be subject to the fulfillment to the Investor's reasonable satisfaction or
waiver on or before the Closing of the following conditions:
4.1 EFFECTIVENESS OF SERIES B PREFERRED STOCK TERMS. The terms of
the Series B Preferred Stock as set forth in EXHIBIT A hereto shall have become
effective by the filing of the Certificate of Designations with the Secretary of
State of the State of
Delaware.
4.2 DELIVERY OF DOCUMENTS. The Company shall have executed and/or
delivered to the Investor (or shall have caused to be executed and delivered to
the Investor by the appropriate persons) the following:
(a) certificates representing the Shares;
(b) a Registration Rights Agreement; and
(c) a legal opinion from Xxxxxxx Procter LLP, counsel to
the Company, dated as of the Closing, addressed to the Investor, in form and
substance satisfactory to the Investor and its counsel.
4.3 APPROVALS AND CONSENTS. The Company shall have made all
filings with and notifications of governmental authorities, regulatory agencies
and other entities required to be made by it in connection with the execution
and delivery of this Agreement and the performance by it of the transactions
contemplated hereby.
SECTION V - MISCELLANEOUS
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery hereof and the Closing contemplated hereby and shall bind
the successors and assigns of the relevant party, whether so expressed or not,
and all such covenants, agreements, representations and warranties shall inure
to the benefit of the successors and assigns of the parties hereto and to
transferees of the Shares or Conversion Shares, whether so expressed or not.
5.2 ENTIRE AGREEMENT. The Transaction Documents constitute the
full and entire understanding and agreement among the parties hereto with
respect to the subject matters hereof and thereof, and any and all other written
or oral agreements existing prior to or contemporaneously herewith are expressly
superseded and canceled.
5.3 AMENDMENTS, WAIVERS AND CONSENTS. For the purposes of this
Agreement and all agreements, documents and instruments executed pursuant
hereto, except as otherwise specifically set forth herein or therein, no course
of dealing between the Company on the one hand and the Investor on the other and
no delay on the part of any party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. Any
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term or provision hereof may be amended, terminated or waived (either generally
or in a particular instance and either retroactively or prospectively) with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 5.3 shall be binding upon each holder
of Shares purchased under this Agreement at the time outstanding (including
Conversion Shares into which the Shares have been converted), each future holder
of all such securities and the Company.
5.4 NOTICES AND DEMANDS. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if faxed (with transmission acknowledgment received), delivered
personally or mailed by certified or registered mail (return receipt requested)
as follows:
To the Company: 000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, President
With a copy to: Xxxxxxx Procter LLP
Exchange Place
Boston, MA 02109
Attn: Xxxxxxx X. Xxxxxx, P.C.
Facsimile Number (000) 000-0000
To the Investor: S-7 Associates, LLC
c/o Renaissance Technologies Corp.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to: Xxxxx Xxxxx Xxxxxx, Esq.
c/o Renaissance Technologies Corp.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
5.5 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
5.6 COUNTERPARTS. This Agreement and any Exhibit or Schedule
hereto may be executed in multiple counterparts, each of which shall constitute
an original but all of which shall constitute but one and the same instrument.
One or more counterparts of this Agreement or any
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Exhibit or Schedule hereto may be delivered via telecopier, with the intention
that they shall have the same effect as an original counterpart hereof.
5.7 EFFECT OF HEADINGS. The descriptive headings in this Agreement
have been inserted for convenience only and shall not be deemed to limit or
otherwise affect the construction of any provision hereof.
5.8 GOVERNING LAW. This Agreement shall be deemed a contract made
under the laws of the State of
Delaware and all disputes, claims or
controversies arising out of this Agreement or the negotiation, validity or
performance hereof or the transactions contemplated herein, shall be construed
under and governed by the laws of such state, without giving effect to its
conflicts of laws principles.
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IN WITNESS WHEREOF, the undersigned have executed this Series B
Preferred Stock Purchase Agreement as of the day and year first above written.
COMPANY:
SEGUE SOFTWARE, INC.
By:
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Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
INVESTOR:
S-7 ASSOCIATES, LLC
By:
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Name: Xxxxx X. Xxxxxx
Title: Managing Member
[SIGNATURE PAGE TO SERIES B STOCK PURCHASE AGREEMENT]
