Exhibit
10.25


 


EXECUTION
COPY


 




 





SERIES C PREFERRED STOCK PURCHASE AGREEMENT


 


By and Between


 


Segue Software, Inc.



and



The Investors




as defined herein



Dated as of October 21, 2003




 





 

















 


Segue
Software, Inc.


 


SERIES C PREFERRED STOCK
PURCHASE 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 of
Certificate of Designations


 


i

















 


Schedule A                                  Wire
Transfer Instructions


 


ii

















 


SERIES
C PREFERRED STOCK PURCHASE AGREEMENT


 


THIS SERIES C PREFERRED
STOCK PURCHASE AGREEMENT is made as of October 21, 2003, by and
among Segue Software, Inc., a Delaware
corporation (the “Company”), S-7 Associates, LLC, a New York limited liability
company (“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’s
Series C Preferred Stock, par value $0.01 per share (the “Series C 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 C
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 Investors, and the Investors agree to purchase
from the Company, 166,667 shares of Series C Preferred Stock for an aggregate
purchase price equal to $500,001 (the “Purchase Price”).  The Series C 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 C
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 Investors one or more certificates representing the Shares
purchased by the Investors 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 Investors to enter into this
Agreement and consummate the transactions contemplated hereby, the Company
hereby 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 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 the Shares are converted in accordance with the Certificate
of Incorporation (as amended to date, including by any Certificates of
Designations, the “Certificate of Incorporation”), the issuance of the common
stock, par value $0.01 per share (the “Common Stock”) received upon conversion
of the Series C 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, of which 9,923,998 shares were
issued and outstanding as of October 16, 2003, 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”),
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


 


2

















 


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, 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 Investors
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 1,500,000 shares of Common Stock for issuance upon
conversion of the Series B Preferred Stock, and the shares issuable upon
conversion of the Series B Preferred Stock 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.  The
Company has duly and validly authorized and reserved 166,667 shares of Common
Stock for issuance upon conversion of the Series C Preferred Stock, and the
Conversion Shares 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,


 


3

















 


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).


 


SECTION III-
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS


 


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


 


3.1                               Authorization.  Such Investor has full power and authority
to enter into this Agreement and the Amended and Restated 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 such Investor in
reliance upon such Investor’s representation to the Company, which by such
Investor’s execution of this Agreement such Investor hereby confirms, that the
Series C Preferred Stock to be received by such Investor and the Conversion
Shares (collectively, the “Securities”) will be acquired for investment for
such 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 such Investor has no present intention of selling, granting any
participation in or otherwise distributing the same to any other person.  By executing this Agreement, each Investor
further represents that such 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.  Such 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 C Preferred Stock and the
business, properties, prospects and financial condition of the Company.


 


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


 


3.5                               Restricted Securities.  Such 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 C Preferred Stock (and
any Common Stock issued on conversion thereof) must be held indefinitely.  In this connection, such Investor represents
that it is familiar with Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act.


 


4

















 


3.6                               Investment Banking; Brokerage Fees.  Such 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.


 


SECTION IV
- CONDITIONS TO CLOSING


 


The obligation of the Investors to purchase and pay
for his or its Shares shall be subject to the fulfillment to such Investor’s
reasonable satisfaction or waiver on or before the Closing of the following
conditions:


 


4.1                               Effectiveness of Series C
Preferred Stock Terms. 
The terms of the Series C 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 Investors
(or shall have caused to be executed and delivered to the Investors by the
appropriate persons) the following:


 


(a)                                  certificates
representing the Shares; and


 


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


 


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

















 


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 an 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 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
Investors subscribing for a majority of the Shares to be purchased
hereunder.  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:

  	
   

  	
  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

  



 


6

















 


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 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.


 


7

















 


IN
WITNESS WHEREOF, the undersigned have executed this Series C
Preferred 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

  
								



 

















 


[Signature Page to Series C Stock Purchase Agreement]


 


2