**Exhibit10.25**

** **

**EXECUTIONCOPY**

 

** **

**SERIES C PREFERRED STOCK PURCHASE AGREEMENT**

** **

**By and Between**

** **

**Segue Software, Inc.andThe Investors**

**as defined hereinDated as of October 21, 2003**

 

 

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SegueSoftware, Inc.

 

SERIES C PREFERRED STOCKPURCHASE AGREEMENT

 

October 21, 2003

 

TABLE OF CONTENTS

 
| **SECTION I - PURCHASE AND SALE OF  SHARES**                      |
|------------------------------------------------------------------------|
| **1.1**                                                                | **Purchase  and Sale of Series C Preferred Stock; Closing** |
|                                                                   |   |
| **SECTION II  - REPRESENTATIONS AND WARRANTIES OF THE COMPANY**   |
| **2.1**                                                                | **Organization and  Corporate Power.** |
| **2.2**                                                                | **Authorization and  Non-Contravention** |
| **2.3**                                                                | **Authorized and  Outstanding Stock.** |
| **2.4**                                                                | **No Brokers or Finders** |
|                                                                   |   |
| **SECTION III-  REPRESENTATIONS AND WARRANTIES OF THE INVESTORS** |
| **3.1**                                                                | **Authorization** |
| **3.2**                                                                | **Purchase Entirely for  Own Account** |
| **3.3**                                                                | **Disclosure of Information** |
| **3.4**                                                                | **Accredited Investors** |
| **3.5**                                                                | **Restricted Securities** |
| **3.6**                                                                | **Investment Banking;  Brokerage Fees** |
|                                                                   |   |
| **SECTION IV  - CONDITIONS TO CLOSING**                           |
| **4.1**                                                                | **Effectiveness  of Series C Preferred Stock Terms** |
| **4.2**                                                                | **Delivery of Documents** |
| **4.3**                                                                | **Approvals and Consents** |
|                                                                   |   |
| **SECTION V -  MISCELLANEOUS**                                    |
| **5.1**                                                                | **Survival of  Representations and Warranties** |
| **5.2**                                                                | **Entire Agreement** |
| **5.3**                                                                | **Amendments, Waivers  and Consents** |
| **5.4**                                                                | **Notices and Demands** |
| **5.5**                                                                | **Severability** |
| **5.6**                                                                | **Counterparts** |
| **5.7**                                                                | **Effect of Headings** |
| **5.8**                                                                | **Governing Law** |
|                                                                   |   |
| EXHIBITS                                                               |   |

 

Exhibit A                                               Form ofCertificate of Designations

 

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Schedule A                                  WireTransfer Instructions

 

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# **SERIESC PREFERRED STOCK PURCHASE AGREEMENT**

# ** **

THIS SERIES C PREFERREDSTOCK PURCHASE AGREEMENT is made as of October 21, 2003, by andamong Segue Software, Inc., a Delawarecorporation (the “Company”), S-7 Associates, LLC, a New York limited liabilitycompany (“S-7”) and Dr. Howard L. Morgan (together with S-7, the“Investors”).

 

**WHEREAS**, the Company has agreed to sell,and the Investors have agreed to purchase, 166,667 shares of the Company’sSeries C Preferred Stock, par value $0.01 per share (the “Series C PreferredStock”), for the purchase price specified herein in accordance with the termsand provisions hereof.

 

**NOW, THEREFORE**, for good and valuableconsideration, 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 CPreferred Stock; Closing**. Subject to the terms and conditions of this Agreement and in reliance onthe representations, warranties and covenants herein set forth, the Companyagrees to issue and sell to the Investors, and the Investors agree to purchasefrom the Company, 166,667 shares of Series C Preferred Stock for an aggregatepurchase price equal to $500,001 (the “Purchase Price”).  The Series C Preferred Stock shall have therights, preferences and other terms set forth in the certificate ofdesignations of the Company (the “Certificate of Designations”) attached as ExhibitA hereto.  The shares of Series CPreferred Stock purchased pursuant to this Section 1.1 are hereinafterreferred to as the “Shares.”  Subject tothe satisfaction or waiver of the conditions set forth herein, the purchase ofthe Shares shall be made at a closing (the “Closing”) to be held on the datehereof.  At the Closing, the Companywill deliver to the Investors one or more certificates representing the Sharespurchased by the Investors against payment of the Purchase Price to the Companyby wire transfer payable in immediately available funds in accordance with thewire transfer instructions set forth on Schedule A.

 

**SECTION II- REPRESENTATIONS AND WARRANT****IES OF THE COMPANY**

 

In order to induce the Investors to enter into thisAgreement and consummate the transactions contemplated hereby, the Companyhereby makes to the Investors 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 corporatepower and authority to own its properties, to carry on its business aspresently conducted, to enter into and perform this Agreement and theagreements, documents and instruments contemplated hereby (together, the“Transaction Documents”) to which it is a party and to carry out thetransactions contemplated hereby and thereby. The Company is duly licensed or qualified to do business as a foreigncorporation in each jurisdiction

 

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wherein the character of its property, or the nature of the activitiespresently conducted by it, makes such qualification necessary, except where thefailure to be so licensed or qualified would not have a material adverse effecton the financial condition, business or results of operations of the Company (a“Material Adverse Effect”). The Company is not in violation of any term orprovision of its certificate of incorporation, as restated (the “Certificate ofIncorporation”), or its by-laws (the “By-laws”), each as in effect as of thisdate.

 

**2.2****                               Authorization and Non-Contravention**.  The Transaction Documents are valid andbinding 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, whichaffect enforcement of creditors’ rights generally.  The execution, delivery and performance of the TransactionDocuments, the sale and delivery of the Shares in accordance with thisAgreement and, if the Shares are converted in accordance with the Certificateof Incorporation (as amended to date, including by any Certificates ofDesignations, the “Certificate of Incorporation”), the issuance of the commonstock, par value $0.01 per share (the “Common Stock”) received upon conversionof the Series C Preferred Stock (the “Conversion Shares”), have been dulyauthorized by all necessary corporate or other action of the Company and itsstockholders.  The execution, deliveryand performance of the Transaction Documents, including, without limitation,the sale and delivery of the Shares in accordance with this Agreement and, ifthe Shares are converted, the issuance of the Conversion Shares in accordancewith the Certificate of Incorporation and the performance of any transactionscontemplated by the Transaction Documents will not (i) violate, conflict withor result in a default (whether after the giving of notice, lapse of time orboth) under any contract or obligation to which the Company is a party or bywhich it or its assets are bound, or any provision of the Certificate ofIncorporation or By-Laws, or cause the creation of any lien or encumbrance uponany of the assets of the Company, except for those which would not have aMaterial Adverse Effect; (ii) violate, conflict with or result in a default(whether after the giving of notice, lapse of time or both) under, anyprovision of any law, regulation or rule, or any order of, or any restrictionimposed by any court or other governmental agency applicable to the Company,except for those which would not have a Material Adverse Effect; (iii) requirefrom the Company any notice to, declaration or filing with, or consent orapproval of any governmental authority or other third party other than pursuantto federal or state securities or blue sky laws; or (iv) accelerate anyobligation 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 itis bound, which acceleration or termination would have a Material AdverseEffect.

 

**2.3****                               Authorized and Outstanding Stock**.  After giving effect to the transactionscontemplated hereby, the authorized capital stock of the Company will consistof (i) 30,000,000 shares of its Common Stock, of which 9,923,998 shares wereissued and outstanding as of October 16, 2003, and (ii) 9,000,000 sharesof preferred stock, of which (a) 4,000,000 shares have been designated asSeries A Preferred Stock, par value $0.01 per share, no shares of which areoutstanding, and (b) 1,500,000 shares have been designated as Series BPreferred Stock, par value $0.01 per share (the “Series B Preferred Stock”),801,448 shares of which are issued and outstanding as of October 19, 2003,and (c) 166,667 shares have been designated as Series C Preferred Stock,166,667 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

 

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outstanding subscriptions, options, warrants, phantom rights,commitments, agreements, arrangements or commitments of any kind for orrelating to the issuance, or sale of, or outstanding securities convertibleinto or exchangeable for, any shares of capital stock of any class or otherequity interests of the Company.  Exceptas set forth in the Company SEC Reports, the Company has no obligation topurchase, redeem, or otherwise acquire any of its capital stock or anyinterests therein.  After giving effectto the transactions contemplated hereby, all of the outstanding shares ofcapital stock of the Company will have been duly and validly authorized andissued and will be fully paid and non-assessable and free and clear of allliens and encumbrances created by or through the Company.  Assuming the accuracy of the Investorsrepresentations in Section III, the offer, issuance, sale and delivery ofthe Shares and Conversion Shares are or will be exempt from the registrationrequirements of the Securities Act of 1933, as amended (the “Act”) and thequalification or registration provisions of applicable state securitieslaws.  The Company has duly and validlyauthorized and reserved 1,500,000 shares of Common Stock for issuance uponconversion of the Series B Preferred Stock, and the shares issuable uponconversion of the Series B Preferred Stock in accordance with the Certificateof Incorporation will, upon such conversion and issuance, be validly issued,fully paid and non-assessable and free and clear of all liens and encumbrancescreated by or through the Company.  TheCompany has duly and validly authorized and reserved 166,667 shares of CommonStock for issuance upon conversion of the Series C Preferred Stock, and theConversion Shares issued in accordance with the Certificate of Incorporationwill, upon such conversion and issuance, be validly issued, fully paid andnon-assessable and free and clear of all liens and encumbrances created by orthrough the Company.  There are nopreemptive rights, rights of first refusal, put or call rights or obligationsor anti-dilution rights with respect to the issuance, sale or redemption of theCompany’s capital stock, other than rights set forth herein or in theCertificate of Incorporation.  Otherthan the rights set forth in the Transaction Documents, there are no rights tohave the Company’s capital stock registered for sale to the public pursuant tothe laws of any jurisdiction, and there are no agreements of which the Companyis aware relating to the voting of the Company’s voting securities orrestrictions 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 transactionscontemplated by this Agreement, any right, interest or claim against or uponthe Company for any commission, fee or other compensation as a finder or brokerbecause of any act or omission by the Company.

 

**2.5****                               CompanySEC Reports, Government Reports, Financial Statements**.  Since January 1, 2001, the Company andeach Company Subsidiary has filed each report or other filing that it wasrequired 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 andcorrect in all material respects and complied in all material respects with theSecurities Exchange Act of 1934 and the regulations promulgated thereunder, anddid not contain any untrue statement of a material fact or omit to state anymaterial fact necessary in order to make the statements made therein, in lightof the circumstances under which they were made, not misleading (except to theextent revised or superseded by a later-filed Company SEC Report).  The financial statements of the Companyincluded in the Company SEC Reports comply as to form in all material respectswith applicable accounting requirements and the published rules and regulationsof the SEC with respect thereto,

 

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have been prepared in accordance with generally accepted accountingprinciples (“GAAP”) (except, in the case of unaudited statements, as permittedby Form 10-Q of the SEC) applied on a consistent basis during the periodsinvolved (except as may be indicated in the notes thereto) and fairly presentthe financial position of the Company and its consolidated subsidiaries as ofthe dates thereof and their consolidated results of operations and cash flowsfor the periods then ended (subject, in the case of unaudited statements, tonormal year-end audit adjustments).

 

**SECTION III-REPRESENTATIONS AND WARRANT****IES OF THE INVESTORS**

 

Each Investor, severally and not jointly, herebyrepresents and warrants to the Company as follows:

 

**3.1****                               Authorization**.  Such Investor has full power and authorityto enter into this Agreement and the Amended and Restated Registration RightsAgreement referred to in Section 4.2(b), and each such agreementconstitutes its valid and legally binding obligation, enforceable in accordancewith its terms.

 

**3.2****                               Purchase Entirely for Own Account**.  This Agreement is made with such Investor inreliance upon such Investor’s representation to the Company, which by suchInvestor’s execution of this Agreement such Investor hereby confirms, that theSeries C Preferred Stock to be received by such Investor and the ConversionShares (collectively, the “Securities”) will be acquired for investment forsuch Investor’s own account, not as a nominee or agent, and not with a view tothe resale or distribution of any part thereof in violation of any applicablelaw, and that such Investor has no present intention of selling, granting anyparticipation in or otherwise distributing the same to any other person.  By executing this Agreement, each Investorfurther represents that such Investor does not have any contract, undertaking,agreement or arrangement with any person to sell, transfer or grantparticipation to such person or to any third person, with respect to any of theSecurities.

 

**3.3****                               Disclosure of Information**.  Such Investor represents that it has had anopportunity to ask questions and receive answers from the Company regarding theterms and conditions of the offering of the Series C Preferred Stock and thebusiness, properties, prospects and financial condition of the Company.

 

**3.4****                               Accredited Investors**.  Such Investor is an “accredited investor” within the meaning ofSEC Rule 501 of Regulation D, as presently in effect.

 

**3.5****                               Restricted Securities**.  Such Investor understands that the Securities are characterizedas “restricted securities” under the federal securities laws inasmuch as theyare being acquired from the Company in a transaction not involving a publicoffering and that under such laws and applicable regulations such Securitiesmay be resold without registration under the Act only in certain limitedcircumstances.  In the absence of anyeffective registration statement covering the Securities or an availableexemption from registration under the Act, the Series C Preferred Stock (andany Common Stock issued on conversion thereof) must be held indefinitely.  In this connection, such Investor representsthat it is familiar with Rule 144, as presently in effect, and understands theresale limitations imposed thereby and by the Act.

 

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**3.6****                               Investment Banking; Brokerage Fees**.  Such Investor has not incurred or taken anyaction that would cause the Company to be or become liable for any investmentbanking fees, brokerage commissions, broker’s or finder’s fees or similarcompensation (exclusive of professional fees to lawyers and accountants) inconnection with the transactions contemplated by this Agreement.

 

**SECTION IV- CONDITIONS TO CLOSING**

 

The obligation of the Investors to purchase and payfor his or its Shares shall be subject to the fulfillment to such Investor’sreasonable satisfaction or waiver on or before the Closing of the followingconditions:

 

**4.1****                               Effectiveness of Series CPreferred Stock Terms**. The terms of the Series C Preferred Stock as set forth in Exhibit Ahereto shall have become effective by the filing of the Certificate ofDesignations 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 Investors(or shall have caused to be executed and delivered to the Investors by theappropriate persons) the following:

 

(a)                                  certificatesrepresenting the Shares; and

 

(b)                                 anAmended and Restated Registration Rights Agreement by and among the Company andthe Investors (the “Amended and Restated Registration Rights Agreement”),amending and restating that certain Registration Rights Agreement, dated as ofMarch 22, 2002, by and between the Company and S-7.

 

**4.3****                               Approvals and Consents**. The Company shall havemade all filings with and notifications of governmental authorities, regulatoryagencies and other entities required to be made by it in connection with theexecution and delivery of this Agreement and the performance by it of thetransactions contemplated hereby.

 

**SECTION V- MISCELLANEOUS**

 

**5.1****                               Survival of Representations andWarranties**.  Therepresentations, warranties, covenants and agreements made herein or in anycertificates or documents executed in connection herewith shall survive theexecution and delivery hereof and the Closing contemplated hereby and shallbind the successors and assigns of the relevant party, whether so expressed ornot, and all such covenants, agreements, representations and warranties shallinure to the benefit of the successors and assigns of the parties hereto and totransferees of the Shares or Conversion Shares, whether so expressed or not.

 

**5.2****                               Entire Agreement**.  TheTransaction Documents constitute the full and entire understanding andagreement among the parties hereto with respect to the subject matters hereofand thereof, and any and all other written or oral agreements existing prior toor contemporaneously herewith are expressly superseded and canceled.

 

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**5.3****                               Amendments, Waivers and Consents**.  For the purposes of this Agreement and allagreements, documents and instruments executed pursuant hereto, except asotherwise specifically set forth herein or therein, no course of dealingbetween the Company on the one hand and an Investor on the other and no delayon the part of any party hereto in exercising any rights hereunder or thereundershall operate as a waiver of the rights hereof and thereof.  Any term or provision hereof may be amended,terminated or waived (either generally or in a particular instance and eitherretroactively or prospectively) with the written consent of the Company and theInvestors subscribing for a majority of the Shares to be purchasedhereunder.  Any amendment or waivereffected in accordance with this Section 5.3 shall be binding upon eachholder of Shares purchased under this Agreement at the time outstanding(including Conversion Shares into which the Shares have been converted), eachfuture holder of all such securities and the Company.

 

**5.4****                               Notices and Demands**.  All notices, requests, demands and other communications hereundershall be in writing and shall be deemed to have been duly given if faxed (withtransmission acknowledgment received), delivered personally or mailed bycertified or registered mail (return receipt requested) as follows:

 
| To the Company:          |   | 201 Spring Street                         |
|--------------------------|--------|-------------------------------------------|
|                     |   | Lexington, MA  02421                 |
|                     |   | Facsimile:  781-402-1099             |
|                     |   | Attention:   Samuel J. Gallo,        |
|                     |   | Senior Vice President and General Counsel |
|                     |   |                                      |
| With a copy to:          |   | Goodwin Procter LLP                       |
|                     |   | Exchange Place                            |
|                     |   | Boston, MA   02109                   |
|                     |   | Attn:   Jeffrey C. Hadden, P.C.      |
|                     |   | Facsimile Number (617) 523-1231           |
|                     |   |                                      |
| To S-7:                  |   | S-7 Associates, LLC                       |
|                     |   | c/o Renaissance  Technologies Corp.       |
|                     |   | 800 Third Avenue                          |
|                     |   | New York, NY 10022                        |
|                     |   | Facsimile:  212-758-7136             |
|                     |   |                                      |
| With a copy to:          |   | Carla Volpe Porter, Esq.                  |
|                     |   | c/o Renaissance  Technologies Corp.       |
|                     |   | 800 Third Avenue                          |
|                     |   | New York, NY 10022                        |
|                     |   | Facsimile:  212-758-7136             |
|                     |   |                                      |
| To Dr. Howard L. Morgan: |   | 764 Mt. Moro Road                         |
|                     |   | Villanova, PA   19085                |
|                     |   | Facsimile:   413-556-1781            |

 

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or to such other address or fax number of which any party may notifythe other parties as provided above. Notices shall be effective as of the date of such delivery, mailing orfax.

 

**5.5****                               Severability**.  Whenever possible, each provision of thisAgreement shall be interpreted in such a manner as to be effective and validunder applicable law, but if any provision of this Agreement shall be deemedprohibited or invalid under such applicable law, such provision shall beineffective to the extent of such prohibition or invalidity, and suchprohibition or invalidity shall not invalidate the remainder of such provisionor the other provisions of this Agreement.

 

**5.6****                               Counterparts**.  This Agreement and any Exhibit orSchedule hereto may be executed in multiple counterparts, each of whichshall constitute an original but all of which shall constitute but one and thesame instrument.  One or morecounterparts of this Agreement or any Exhibit or Schedule hereto may bedelivered via telecopier, with the intention that they shall have the sameeffect as an original counterpart hereof.

 

**5.7****                               Effect of Headings**.  The descriptive headings in this Agreement have been inserted forconvenience only and shall not be deemed to limit or otherwise affect theconstruction of any provision hereof.

 

**5.8****                               Governing Law**.  This Agreement shall be deemed a contractmade under the laws of the State ofDelaware and all disputes, claims or controversies arising out of thisAgreement or the negotiation, validity or performance hereof or thetransactions contemplated herein, shall be construed under and governed by thelaws of such state, without giving effect to its conflicts of laws principles.

 

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**INWITNESS WHEREOF**, the undersigned have executed this Series CPreferred Stock Purchase Agreement as of the day and year first above written.

 
|   | **COMPANY:**              |
|--------|---------------------------|
|   |                      |
|   | **SEGUE  SOFTWARE, INC.** |
|   |                      |
|   |                      |
|   | By:                       | /s/Joseph Krivickas |   |
|   |                      | Name: | Joseph Krivickas |
|   |                      | Title: | President and Chief Executive Officer |
|   |                      |
|   |                      |
|   | **INVESTORS:**            |
|   |                      |
|   | **S-7  ASSOCIATES, LLC**  |
|   |                      |
|   |                      | /s/James H. Simons |
|   |                      | Name: | James H. Simons |
|   |                      | Title: | Managing Member |
|   |                      |   |   |
|   |                      |   |   |
|   |                      | /s/Dr. Howard L. Morgan |   |
|   |                      | Name: Dr. Howard L. Morgan |
|        |                           |  |  |  |  |  |  |

 

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**[Signature Page to Series C Stock Purchase Agreement]**

 

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