SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of December 19, 2011 (the “Effective Date”) by and among TCV IV, L.P., TCV IV Strategic Partners, L.P., TCV III (GP), TCV III, L.P., TCV III (Q), L.P. and TCV III Strategic Partners, L.P. (each, a “Seller,” and, collectively, the “Sellers”) and IGC Fund VI, L.P. (the “Purchaser”).
WITNESSETH:
WHEREAS, prior to the consummation of the transactions contemplated by this Agreement (the “Transactions”), each of the Sellers own the book entry shares (the “Mattersight Book Entry Shares”), as set forth on Exhibit A annexed to this Agreement, of the common stock, par value $0.01 per share (the “Mattersight Common Stock”), of Mattersight Corporation (formerly known as eLoyalty Corporation), a Delaware corporation (the “Company”);
WHEREAS, prior to the consummation of the Transactions, each of the Sellers own the certificated shares (the “Mattersight Certificated Shares,” and, together with the Mattersight Book Entry Shares, the “Purchased Securities”), as set forth on Exhibit B annexed to this Agreement, of the Mattersight Common Stock;
WHEREAS, each of the Sellers are a party to that certain Amended and Restated Investor Rights Agreement, dated as of December 19, 2001, by and among the Company and certain of the Company’s investors (the “Investor Rights Agreement”);
WHEREAS, the Sellers desire to sell, assign, transfer, convey and deliver the Purchased Securities to the Purchaser, and the Purchaser desires to purchase, pay for, acquire and accept from each of the Sellers the Purchased Securities, upon the terms and conditions as are more fully set forth in this Agreement; and
WHEREAS, each of the Sellers and the Purchaser believe it to be in their respective best interests to enter into and perform this Agreement on the terms set forth herein, and to consummate the Transactions.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Purchase and Sale of the Purchased Securities.
(a) Upon the terms and subject to the conditions of this Agreement, and on the basis of the representations, warranties, acknowledgments, waivers, covenants and agreements contained herein, (i) each of the Sellers hereby sells, assigns, transfers, conveys and delivers to the Purchaser, the Purchased Securities, and (ii) the Purchaser hereby purchases, pays for, acquires and accepts from each of the Sellers, the Purchased Securities.
Section 2. Purchase Price. Upon the terms and subject to the conditions of this Agreement, in consideration of the sale, assignment, transfer conveyance and delivery of the Purchased Securities, the Purchaser hereby agrees to deliver to the Sellers, a purchase price of Three Dollars and Eighty Cents ($3.80) per share of the Purchased Securities, or an aggregate price of Four Million Two Hundred Twenty-Four Thousand Eighty Dollars ($4,224,080), allocated amongst the Sellers for the Mattersight Book Entry Shares and the Mattersight Certificated Shares as set forth on Exhibit A and Exhibit B annexed to this Agreement (the “Purchase Price”). The Purchase Price shall be paid in full in cash as set forth in Section 4 of this Agreement.
Section 3. Closing; Closing Deliverables. The closing of the purchase and sale of the Purchased Securities pursuant to this Agreement (the “Closing”) shall take place as promptly as possible after the execution and delivery of this Agreement by the parties. At the Closing:
(a) each of the Sellers shall promptly deliver to the Company’s transfer agent (the “Transfer Agent”) (i) an executed and medallion guaranteed Transfer of Stock Ownership Form (the “Transfer Instructions”) required by the Transfer Agent to, among other things, instruct the Transfer Agent to make the necessary and proper notations in the stock transfer records of the Company to transfer the Mattersight Certificated Shares to the Purchaser and to reflect the purchase and sale of the Mattersight Certificated Shares effected hereby and (ii) the original Mattersight Certificated Shares certificates as set forth on Exhibit B annexed to this Agreement;
(b) the Purchaser shall promptly deliver to the Transfer Agent an executed set of Transfer Instructions which such instructions shall include the applicable information required by the Transfer Agent from the Purchaser for the transfer of the Mattersight Certificated Shares as contemplated by this Agreement;
(c) each of the Sellers shall promptly instruct their respective prime brokers or other similar custodians to deliver the Mattersight Book Entry Shares to the Purchaser via DTC pursuant to the DTC instructions as set forth on Exhibit A annexed to this Agreement; and
(d) each of the Sellers and the Purchaser shall execute and deliver all such further documents and instruments, and take all such further actions, reasonably requested by any party hereto, the Transfer Agent and/or the Company that are consistent with the terms of this Agreement in order to properly effect and memorialize the Transactions.
Section 4. Payment of Purchase Price.
(a) Upon receipt of the Mattersight Book Entry Shares delivered to the Purchaser as more fully set forth in Section 3(c) of this Agreement, the Purchaser shall instruct its prime broker or other similar custodian to deliver to the Sellers the Purchase Price for the Mattersight Book Entry Shares by wire transfer in immediately available funds to the respective accounts set forth on Exhibit A annexed to this Agreement.
(b) Upon oral confirmation from the Transfer Agent that the necessary and proper Transfer Instructions and the Mattersight Certificated Shares have been received by the Transfer Agent, the Purchaser shall promptly deliver the Purchase Price to the Sellers for the Mattersight Certificated Shares, allocated among the Sellers as set forth on Exhibit B annexed to this Agreement, by wire transfer in immediately available funds to the respective accounts set forth on Exhibit B annexed to this Agreement.
Section 5. Distributions. All distributions and other rights or benefits made in respect of the Purchased Securities, or that became attributable thereto, having a record date on or after December 19, 2011 (collectively, the “Distributions”), are for the account of the Purchaser. If the Sellers receive any such Distributions, the Seller shall as promptly as practicable deliver the Distributions to the Purchaser and shall have no equitable or beneficial interest in the Distributions.
Section 6. Sellers’ Representations, Warranties and Acknowledgements. Each of the Sellers hereby represents, warrants and acknowledges to the Purchaser as follows:
(a) Each Seller has full power and authority to execute and deliver this Agreement and to perform its respective obligations hereunder, all of which have been duly authorized by all requisite action. This Agreement has been duly authorized, executed and delivered by each Seller and constitutes a valid and binding agreement of each Seller, enforceable against such Seller in accordance with its terms.
(b) Except for any applicable provisions of the Investor Rights Agreement, no Seller is subject to any provision of their respective constituent documents, operating agreement or any other agreement, instrument, law, rule, regulation, order, decree or judgment of any governmental authority or other restriction that would prevent the consummation of the Transactions.
(c) No notice to, filing with, or authorization, registration, consent or approval of any governmental authority or other person is necessary for the execution, delivery or performance of this Agreement or the consummation of the Transactions contemplated hereby by the Sellers.
(d) Each Seller is the sole record and the beneficial owner of, and has good and valid title to, the Purchased Securities being sold by it pursuant to this Agreement free and clear of any claims, liens or encumbrances of any kind.
(e) No broker or intermediary has been retained by the Sellers, or otherwise shall be entitled to compensation from the Sellers, in connection with the Transactions.
(f) Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, (i) the Purchased Securities were not offered by the Sellers’ actions to the Purchaser by any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act of 1933, as amended (the “Act”), (ii) neither the Sellers nor anyone acting on the Sellers’ behalf and at the Sellers’ direction has taken any action which would subject the sale of the Purchased Securities sold to the Purchaser pursuant to this Agreement to the registration provisions of Section 5 of the Act, (iii) the sale of the Purchased Securities sold to the Purchaser pursuant to this Agreement does not require registration under the Act and (iv) the Sellers are not selling the Purchased Securities to the Purchaser pursuant to this Agreement in connection with any distribution thereof in violations of the Act.
(g) The Purchaser has informed each of the Sellers that the Purchaser may be in possession of information concerning the Company which may be material and/or nonpublic (collectively, the “Information”) which, if publicly disclosed, could foreseeably affect the value of the Purchased Securities, including Information that may be indicative that the value of such securities is substantially greater than the purchase price being paid for such securities by the Purchaser as set forth herein. Notwithstanding the Purchaser’s possession of the Information which is not being disclosed to the Sellers, each of the Sellers wishes to enter into the Transactions at this time for their own respective business purposes. The Sellers acknowledge that the Purchaser would not enter into the Transactions with the Sellers in the absence of the protections afforded the Purchaser by the provisions set forth in this Agreement, including without limitation, the provisions set forth in this Section 6, and that the Sellers are providing these protections, and the waiver set forth in Section 9 of this Agreement, as an inducement to the Purchaser to consummate the Transactions.
(h) The Sellers are experienced, sophisticated and knowledgeable in the trading of the Company’s securities and other instruments of private and public companies and understand the disadvantage to which they may be subject on account of the disparity of the access to, and possession of, the Information between the Sellers and the Purchaser. The Sellers has conducted an independent evaluation of the Company’s securities to determine whether to engage in the Transactions and, notwithstanding the absence of access by the Sellers to the Information, the Sellers are desirous of consummating the Transactions.
(i) The Sellers, by reason of, among other things, their business and financial experience, are capable of evaluating the merits and risks of the Transactions and of protecting their own respective interests in connection with the Transactions.
Section 7. Purchaser’s Representations, Warranties and Acknowledgements. The Purchaser hereby represents, warrants and acknowledges to the Sellers as follows:
(a) The Purchaser has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, all of which have been duly authorized by all requisite action. This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes a valid and binding agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms.
(b) The Purchaser is not subject to any provision of its constituent documents, trust agreement or any other agreement, instrument, law, rule, regulation, order, decree or judgment of any governmental authority or other restriction that would prevent the consummation of the Transactions.
(c) No notice to, filing with, or authorization, registration, consent or approval of any governmental authority or other person is necessary for the execution, delivery or performance of this Agreement or the consummation of the Transactions contemplated hereby by the Purchaser.
(d) No broker or intermediary has been retained by the Purchaser, or otherwise shall be entitled to compensation from the Purchaser, in connection with the Transactions contemplated by this Agreement.
(e) The Purchased Securities purchased by the Purchaser pursuant to this Agreement are being acquired by the Purchaser for its own account for investment only and not with a view to any public distribution thereof, and the Purchaser shall not offer to sell or otherwise dispose of the Purchased Securities so acquired by it in violation of any of the registration requirements or other provisions of applicable law. The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Act.
(f) The Sellers have informed the Purchaser that the Sellers may be in possession of the Information which, if publicly disclosed, could foreseeably affect the value of the Purchased Securities, including Information that may be indicative that the value of such securities is substantially less than the purchase price being paid for the securities by the Purchaser as set forth herein. Notwithstanding the Sellers’ possession of the Information which is not being disclosed to the Purchaser, the Purchaser wishes to enter into the Transactions at this time for its own business purposes. The Purchaser acknowledges that the Sellers would not enter into the Transactions with the Purchaser in the absence of the protections afforded the Sellers by the provisions set forth in this Agreement, including without limitation, the provisions set forth in this Section 7, and that the Purchaser is providing these protections, and the waiver set forth in Section 10 of this Agreement, as an inducement to the Sellers to consummate the Transactions.
(g) The Purchaser is experienced, sophisticated and knowledgeable in the trading of the Company’s securities and other instruments of private and public companies and understands the disadvantage to which it may be subject on account of the disparity of the access to, and possession of, the Information between the Sellers and the Purchaser. The Purchaser has conducted an independent evaluation of the Company’s securities to determine whether to engage in the Transactions and, notwithstanding the absence of access by the Purchaser to the Information, the Purchaser is desirous of consummating the Transactions.
(h) The Purchaser understands that (i) the Purchased Securities have not been registered under the Act or under any state securities laws, and are being offered and sold in reliance under federal and state exemptions for transactions not involving a public offering and (ii) the Purchased Securities may not be reoffered, transferred or resold, except pursuant to an effective registration statement or pursuant to an available exemption from the registration requirements of the Act.
(i) The Purchaser is acquiring the Purchased Securities in a private transaction separate from any public offering in a manner that would not constitute a public offering or distribution or the sale or distribution thereof in violation of the Act and would not violate or require registration under the Act or any other applicable securities laws.
(j) The Purchaser, by reason of, among other things, its business and financial experience, is capable of evaluating the merits and risks of the Transactions and of protecting its own interests in connection with the Transactions.
Section 8. Survival of Representations and Warranties. All representations and warranties provided for in this Agreement shall survive the Closing and remain in full force and effect until the first anniversary of the Closing for the benefit of the parties hereto and their successors and permitted assigns.
Section 9. Waiver by the Sellers. The Sellers hereby irrevocably waive any and all actions, causes or actions, rights or claims, whether known or unknown, contingent or matured, and whether currently existing or hereafter arising, that they may have or hereafter acquire against the Purchaser and/or each of its respective officers, directors, shareholders, partners, members, employees, trustees, agents, representatives, managers and affiliates (collectively, the “Purchaser’s Released Persons”) in any way, directly or indirectly, arising out of, relating to or resulting from the Purchaser’s or such persons’ failure to disclose the Information to the Sellers, including, without limitation, claims the Sellers may have or hereafter acquire under applicable federal and/or state securities laws and common-law fraud doctrines. The Sellers also agree that they shall not institute or maintain any cause of action, suit, complaint or other proceeding against any of the Purchaser’s Released Persons as a result of the Purchaser’s or such persons’ failure to disclose the Information to the Sellers. The Sellers intend to effect a complete and knowing waiver of their respective rights as set forth herein; provided, that, nothing contained herein shall limit the Purchaser’s representations, warranties, covenants and agreements set forth in this Agreement or the Sellers’ respective remedies or abilities to enforce their respective rights relating thereto.
Section 10. Waiver by the Purchaser. The Purchaser hereby irrevocably waives any and all actions, causes or actions, rights or claims, whether known or unknown, contingent or matured, and whether currently existing or hereafter arising, that it may have or hereafter acquire against the Sellers and/or their respective officers, directors, shareholders, partners, members, employees, trustees, agents, representatives, managers and affiliates (collectively, the “Sellers’ Released Persons”) in any way, directly or indirectly, arising out of, relating to or resulting from the Sellers’ or such persons’ failure to disclose the Information to the Purchaser, including, without limitation, claims the Purchaser may have or hereafter acquire under applicable federal and/or state securities laws and common-law fraud doctrines. The Purchaser also agrees that it shall not institute or maintain any cause of action, suit, complaint or other proceeding against any of the Sellers’ Released Persons as a result of the Sellers’ or such persons’ failure to disclose the Information to the Purchaser. The Purchaser intends to effect a complete and knowing waiver of its rights as set forth herein; provided, that, nothing contained herein shall limit the Sellers’ respective representations, warranties, covenants and agreements set forth in this Agreement or the Purchaser’s remedies or ability to enforce its rights relating thereto.
Section 11. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be delivered personally or sent prepaid by nationally recognized overnight courier, and shall be deemed given when so delivered personally, or if sent by overnight courier, when noted as received by such addressee party by such overnight courier, as follows:
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If to the Sellers:
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TCV IV, L.P.
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TCV IV Strategic Partners, L.P.
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TCV III (GP)
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TCV III, L.P.
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TCV III (Q), L.P.
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TCV Strategic Partners, L.P.
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528 Ramona Street
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Palo Alto, California 94301
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Attention: Ric Fenton
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