EXHIBIT 2.1
ACQUISITION AGREEMENT
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THIS AGREEMENT is made and entered into as of the 5th day of February, 1998
by and between SQL Financials International, Inc., a Delaware corporation (the
"Company"), and Technology Ventures, L.L.C., a Georgia limited liability company
("TV"), having a principal place of business located at Xxx Xxxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000.
WHEREAS, the Company desires to acquire TV's membership interest in SQL
Financials Services, L.L.C. ("SQL Services"), a Georgia limited liability
company (the "Membership Interest"), in consideration for (i) 150,000 shares of
the common stock of the Company, par value $.0001 per share (the "Shares"); (ii)
a non-negotiable subordinated promissory note from the Company in the principal
amount of $1,100,000.00 in the form attached to this Agreement as Exhibit A (the
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"Note"); and (iii) a warrant to purchase 200,000 shares of the common stock of
the Company, par value $.0001 per share, at an exercise price of $5.50 per share
in the form attached to this Agreement as Exhibit B (the "Warrant"); and
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WHEREAS, as further consideration for the acquisition of the Membership
Interest, TV desires to receive cash equivalent to the Net Profits (as
hereinafter defined) for the Membership Interest until such time as the earlier
of (i) the closing of the Company's initial public offering of its common stock
registered pursuant to the Securities Act of 1933 (the "IPO") or (ii) a Sale of
the Company (as hereinafter defined).
WHEREAS, the Members of SQL Services (the "Members"), the Managers of SQL
Services (the "Managers") and Xxxxxx X. XxXxxx ("XxXxxx") desire that the
transactions contemplated by this Agreement occur.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties agree as follows:
1. Acquisition of Membership Interest.
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Subject to the terms and conditions of this Agreement and in reliance on
the representations, warranties and covenants contained herein, the Company
hereby agrees to issue and deliver to TV, and TV hereby agrees to acquire from
the Company, (i) the Shares, (ii) the Note, and (iii) the Warrant, all in
exchange for the transfer by TV to the Company of all of its right, title and
interest in the Membership Interest to the Company. The issuance and delivery
of the Shares, the Note and the Warrant, and the assignment of the Membership
Interest, shall be made at the Closing (as defined in Section 2 below).
2. The Closing.
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The closing of the acquisition of the Membership Interest for the Shares,
the Note and the Warrant hereunder (the "Closing") shall be held at the offices
of the Company at 2:00 p.m. , on the date first above stated, or at such other
time and place to which the Company and TV may agree (the "Closing Date"). At
the Closing, and subject to the terms, conditions, representations, warranties
and covenants set forth in this Agreement, the Company will (i) issue to TV a
certificate for the Shares, (ii) make and deliver in favor of TV the Note, and
(iii) execute and deliver to TV the Warrant, in each case simultaneously with
the assignment of the Membership Interest by TV to the Company as provided
herein.
3. Representations and Warranties of the Company. The Company hereby
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represents and warrants to TV as follows:
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3.1 Corporate Power and Authority. The Company has now, and will
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have at the Closing Date, all requisite legal and corporate power to enter into
this Agreement, to issue the Shares hereunder, to make and deliver the Note
hereunder, to execute and deliver the Warrant hereunder and to carry out and
perform its obligations under the terms of this Agreement and the Note and the
Warrant. All corporate action on the part of the Company, its officers, board
of directors (the "Board") and shareholders necessary for the sale and issuance
of the Shares, the Note and the Warrant pursuant hereto and the performance of
the Company's obligations hereunder has been taken. This Agreement shall
constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, reorganization, insolvency or moratorium laws or other similar laws
affecting creditors' rights generally.
3.2 The Shares. The Shares, when issued in compliance with the
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provisions of this Agreement, will be validly issued and outstanding, fully paid
and non-assessable, free and clear of any security interests, pledges, liens,
charges, claims or other encumbrances or restrictions, except for the transfer
restrictions and rights of co-sale contained in a certain Restated Shareholders'
Agreement, dated as of September 1, 1995, as amended as of January 1, 1997, (the
"Shareholders' Agreement"), between the Company and its holders of common stock
(including TV), the voting restrictions contained in a certain Amended and
Restated Shareholders' Voting Agreement, dated as of September 1, 1995 (the
"Shareholders' Voting Agreement"), between the Company and its holders of common
stock (including TV), and, to the extent not waived, the transfer restrictions
and rights of co-sale contained in Section 11.3 of a certain Series F
Convertible Preferred Stock Purchase
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Agreement dated September 26, 1997 ("Series F Agreement"), to which the Company
and TV are parties.
3.3 The Note. The Note that is being made and delivered to TV
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hereunder, when made and delivered in accordance with the terms of this
Agreement, will be duly and validly made, free and clear of any security
interests, pledges, liens, charges, claims or other encumbrances or restrictions
except as set forth in the Note.
3.4 The Warrant. The Warrant that is being made and issued to TV
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hereunder, when executed and delivered in accordance with the terms of this
Agreement, will be duly and validly issued, free and clear of any security
interests, pledges, liens, charges, claims or other encumbrances or restrictions
except as set forth in the Warrant. The 200,000 shares of the Company's common
stock issuable upon exercise of the Warrant have been duly and validly reserved
for issuance and, when issued in compliance with the provisions of the Warrant,
will be duly and validly issued, fully paid, and nonassessable and will be free
and clear of any security interests, pledges, liens, charges, claims or other
encumbrances or restrictions on transfer other than (i) transfer restrictions
under applicable state and federal securities laws, (ii) transfer restrictions
as specifically set forth in the Warrant, and (iii) any security interests,
pledges, liens, charges, claims or other encumbrances or restrictions on
transfer created by TV or other parties other than the Company.
4. Representations and Warranties of TV. TV hereby represents and
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warrants to the Company as follows:
4.1 Authority. TV is a limited liability company duly organized,
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validly existing and in good standing under the laws of Georgia. TV has full
legal power and authority to execute,
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deliver and perform its obligations hereunder, and such execution, delivery and
performance will not violate any agreement, contract, law, rule, decree or other
legal restriction by which TV is bound. Any corporate, partnership or similar
action on the part of TV's members or managers necessary under applicable law
and the organizational documents of TV for the purchase of the Shares and the
performance of TV's obligations hereunder has been taken. This Agreement, when
executed and delivered by TV, will constitute a valid and legally binding
obligation of TV, enforceable in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency
or moratorium laws or other similar laws affecting creditors' rights generally.
4.2 The Membership Interest. The Membership Interest to be assigned
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to the Company on the Closing Date consists of TV's entire twenty percent (20%)
membership interest in SQL Services, including TV's proportionate rights in all
distributions (liquidating or otherwise), except for such distribution as will
be made pursuant to Section 7.2 of this Agreement, and allocations of the
profits, losses, gains, deductions, and credits of SQL Services. TV has not
previously sold, assigned, transferred, encumbered or conveyed the Membership
Interest; such interest constitutes all of TV's right, title, and interest in
SQL Services; and the Membership Interest is free and clear of any security
interests, pledges, liens, charges, claims or other encumbrances or
restrictions, except for the transfer restrictions set forth in Article 12 of
the Operating Agreement of SQL Services, as amended in Section 6.3 of this
Agreement.
4.3 Investment Representations. This Agreement is made with TV upon
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the understanding as a specific representation to the Company by TV that:
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(a) the Shares and Warrant (including the shares received upon
exercise of the Warrant) acquired hereunder will be acquired for TV's own
account and not with a view to the distribution of any part thereof, and TV has
no present intention of selling, granting participation in, or otherwise
distributing the same;
(b) TV acknowledges that TV has the knowledge and experience in
financial and business matters so as to be capable of evaluating the merit and
risk of and protecting TV's own interests in connection with TV's acquisition of
the Shares and the Warrant, has had the opportunity to ask such questions of the
Company and to review such documents as TV deemed necessary in connection with
its acquisition of the Shares and the Warrant, is able to fend for itself in the
transactions contemplated by this Agreement and has the ability to bear the
economic risk of the investment pursuant to this Agreement; and
(c) TV understands that the Shares and the Warrant are characterized
as "restricted securities" under the federal securities laws and certain state
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 the Shares and the Warrant may be resold without
registration under the Securities Act and those state securities laws only in
certain limited circumstances. In this connection, TV represents that it is
familiar with Rule 144 promulgated by the Securities and Exchange Commission, as
presently in effect, understands the resale limitations imposed thereby and by
the Securities Act, and is aware that the Company is under no obligation to
create a public market for its securities. (The "Securities Act" means the
Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission issued under such Act, as they each may,
from time to time, be in effect.)
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4.4 Shareholders' Agreement. Upon issuance to TV, the Shares will be
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subject to all of the terms, conditions and limitations of the Shareholders'
Agreement. In the event that the Warrant is exercised at any time prior to the
Company's initial public offering under the Securities Act, the shares issued to
TV upon exercise of the Warrant shall also be subject to all of the terms,
conditions and limitations of the Shareholders' Agreement.
5. Transfer of Shares.
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5.1 Transfer Restrictions. Upon issuance to TV, the Shares will be
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subject to all of the transfer restrictions contained in the Shareholders'
Agreement and the Series F Agreement, to the extent such restrictions are not
waived by the parties to the Series F Agreement, and shall only be transferred
or become transferable as provided therein. TV acknowledges that Section 11.3
of the Series F Agreement (rights of co-sale) continues to apply, as set forth
in the Series F Agreement, with respect to any sale of the Registrable
Securities (as hereinafter defined in Section 8.1) not made pursuant to or
following a Registration Statement (as hereinafter defined in Section 8.1) filed
in connection with an underwritten initial public offering of the Company's
Common Stock as set forth in Section 8.2 of this Agreement. TV and XxXxxx
covenant that they will not agree to amend, modify or terminate Sections 1, 4,
5, 7, 8, 9 and 10 of the Shareholders' Agreement without the prior written
consent of the Company.
5.2 Restrictive Legends. The following legends, or words of similar
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effect, shall be stamped or otherwise imprinted on the certificate or
certificates evidencing the Shares:
TRANSFER RESTRICTED
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE FEDERAL AND STATE SECURITIES LAWS AND ARE BEING
OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE FEDERAL AND
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STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT IN A TRANSACTION WHICH
IS REGISTERED UNDER, EXEMPT FROM, OR OTHERWISE IN COMPLIANCE WITH THE
FEDERAL AND STATE SECURITIES LAWS, AS TO WHICH THE ISSUER HAS RECEIVED
SUCH ASSURANCES AS THE ISSUER MAY REQUEST, WHICH MAY INCLUDE A
SATISFACTORY OPINION OF ITS COUNSEL.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER CONTAINED IN (1) AN AGREEMENT DATED AS OF SEPTEMBER 1,
1995 (THE "SHAREHOLDERS' AGREEMENT") AMONG THE COMPANY AND THE
SHAREHOLDERS (AS DEFINED THEREIN), AS AMENDED, AND (2) A STOCK
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 26, 1997 (THE "SERIES F
AGREEMENT"), AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE SHAREHOLDERS'
AGREEMENT AND THE SERIES F AGREEMENT. A COPY OF THESE AGREEMENTS IS ON
FILE AT THE OFFICES OF THE COMPANY AND MAY BE OBTAINED WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE PRESIDENT OF THE COMPANY.
6. SQL Services. The Members and Managers of SQL Services hereby agree
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and warrant as follows:
6.1 Members. Prior to the Closing, the Members of SQL Services are
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the Company and TV. The Company and TV hereby execute this Agreement in their
own capacities and in their capacities as Members of SQL Services.
6.2 Written Consent. This Agreement, when signed by the Company, TV
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and the Managers, shall constitute a written consent of the Members and Managers
in accordance with Articles 8.2 and 8.6 of the Operating Agreement of SQL
Services, as amended by Section 6.3 of this Agreement. An original copy of
this Agreement, duly executed by the Members and Managers of SQL Services, shall
be delivered to SQL Services for inclusion in the company records of SQL
Services.
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6.3 Amendment to Operating Agreement. Pursuant to Article 16.2 of
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the Operating Agreement of SQL Services, the Members and Managers hereby agree
to amend the Operating Agreement of SQL Services in the manner set forth in the
Amendment to Operating Agreement attached hereto as Exhibit C.
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6.4 Substitute Member. Pursuant to Article 14 of the Operating
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Agreement of SQL Services, as herein amended (the "Amended Operating
Agreement"), effective upon the assignment of the Membership Interest at the
Closing, the Company shall be admitted as a Substitute Member of SQL Services
with respect to the Membership Interest and shall be entitled to all of the
membership rights of TV with respect to the Membership Interest. Pursuant to
Article 13.1(a) of the Amended Operating Agreement, TV hereby withdraws as a
Member of SQL Services effective upon the admission of the Company as a
Substitute Member with respect to the Membership Interest assigned by TV.
6.5 Opinion of Counsel. In accordance with Article 12.1(b) of the
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Amended Operating Agreement, the Managers hereby waive the requirement for an
opinion of counsel on applicable state and federal securities laws concerning
the assignment of the Membership Interest from TV to the Company.
6.6 Management Services Agreement. The Management Services Agreement
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dated March 9, 1995 between SQL Services and TV, attached hereto as Exhibit D,
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is hereby terminated. In full satisfaction of its obligations under the
Management Services Agreement, SQL Services shall pay $33,621.99 to TV at the
Closing.
6.7 TV's Promissory Note. TV is presently indebted to SQL Services
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under a promissory note, a copy of which is attached hereto as Exhibit E, dated
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March 9, 1995 in the
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principal amount of $75,000 (the "TV Note") for its Initial Capital Contribution
for the Membership Interest. As of February 5, 1998, the outstanding principal
and accrued interest owed under the TV Note is $33,621.99. TV shall satisfy its
obligations under the TV Note at the Closing by payment to SQL Services of all
outstanding principal and accrued interest due as of the Closing Date.
7. Distributions of Net Profits.
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7.1 Payments by the Company. Notwithstanding anything in this
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Agreement to the contrary, as further consideration for the assignment of the
Membership Interest, the Company agrees to pay to TV on a monthly basis cash
equivalent to twenty percent (20%) of the Net Profits (as defined in the Amended
Operating Agreement) allocable to the Membership Interest from January 1, 1998
until the earlier of (a) the closing of the Company's IPO or (b) a Sale of the
Company (as defined herein). As used herein, the term "Sale of the Company"
shall mean (a) any sale of all or substantially all of the assets or shares of
outstanding capital stock of the Company to one or more third parties that are
not affiliated with the Company prior to such sale; (b) any liquidation of the
Company; or (c) any merger, consolidation or similar transaction to which the
Company is a party and following which the persons who were shareholders of the
Company immediately prior to the transaction hold less than a majority of the
outstanding shares of voting capital stock of the surviving or resulting
corporation or other entity. Any payments to be made under this Section 7.1 are
wholly contingent upon the existence of Net Profits for SQL Services (determined
on a monthly basis) in accordance with the relevant provisions of the Amended
Operating Agreement and hereof and are otherwise subject to all of the terms,
conditions and limitations contained in the Amended Operating Agreement. The
Company, TV and the Managers agree that the process and accounting procedures
presently in use for allocating costs, expenses and
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revenues in determining Net Profits for SQL Services shall continue in effect
unmodified until the earlier of the closing of the Company's IPO or the Sale of
the Company. The payments due under this paragraph shall be made on the tenth
(10th) business day following the end of each month for which the Net Profits
are determined. Until the earlier of the closing of the Company's IPO or a Sale
of the Company, the Company hereby agrees to maintain SQL Services as a separate
limited liability company or as a distinct business unit of the Company, in
either case for the express purpose of maintaining the process and accounting
procedures presently in use for allocating costs, expenses and revenues in
determining Net Profits for SQL Services.
7.2 Reconciliation of Capital Account. The Company, TV and SQL
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Services hereby acknowledge that as of December 31, 1997, (a) TV's Capital
Account (as defined in the Amended Operating Agreement) contained accumulated
Net Profits allocable to the Membership Interest in the amount of $753,613.80
(the "Accumulated Net Profits") and (b) TV has received to date a total of
$638,600.00 in Distributions of Available Cash (as defined in the Amended
Operating Agreement) for the Membership Interest from its Capital Account (the
"Total Cash Distributions"). At the Closing, SQL Services shall distribute to TV
the difference between the Accumulated Net Profits and the Total Cash
Distributions, which amount equals $115,013.80.
8. Registration Rights.
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8.1 Certain Definitions. As used in this Section 8 and elsewhere in
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this Agreement, the following terms shall have the following respective
meanings:
"Affiliate" shall mean an officer or director of the Company or ten
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percent (10%) holder of the Company's outstanding shares of Common Stock;
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"Commission" shall mean the Securities and Exchange Commission or any
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other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any similar federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registrable Securities" shall mean (i) the 181,800 shares of Common
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Stock of the Company presently held by TV; (ii) the 150,000 shares of Common
Stock of the Company to be acquired by TV pursuant to this Agreement; and (iii)
any shares of Common Stock issuable, as stock dividends, subdivisions or
combinations with respect to any of the shares specified in (i)-(ii) of this
sentence.
"Registration Expenses" shall mean all expenses (except for "Selling
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Expenses" as defined below) incurred by the Company in complying with Sections
8.2 of this Agreement, including, without limitation, all registration and
filing fees, printing expenses, reasonable fees and disbursements of counsel for
the Company.
The terms "register", "registered" and "registration" shall refer to a
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registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such Registration Statement.
"Registration Statement" shall mean a registration statement on Form
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S-1 or Form S-3 filed by the Company with the Commission for a public offering
and sale of securities of the Company.
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"Securities Act" shall mean the Securities Act of 1933, as amended, or
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any similar federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Selling Expenses" shall mean all underwriting discounts and selling
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commissions pertaining to the sale of the Registrable Securities pursuant to
Section 8.2 and all fees and disbursements of counsel for TV.
8.2 Registration Right.
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(a) If the Company shall determine to file a Registration
Statement in connection with an underwritten initial public offering of its
Common Stock (the "Initial Public Offering"), the Company shall include in such
registration, pursuant to Commission Rule 415 of the Securities Act (if
applicable), and either as a part of the Registration Statement for the Initial
Public Offering or pursuant to a separate Registration Statement filed
concurrently therewith, all of the Registrable Securities, subject to the
requirements and limitations set forth below. The Company shall use its best
efforts to cause the registration of the Registrable Securities registered
pursuant to this Section 8 to become effective.
(b) As a condition to TV's right to participate in the Company's
underwritten Initial Public Offering, TV must enter an underwriting agreement in
customary form with the underwriter or underwriters selected for such Initial
Public Offering by the Company. The rights of TV under this Section 8.2 shall
expire following completion of the first registered public offering of shares by
the Company in which TV shall have been permitted to include (giving effect to
any prior sales or transfers other than pursuant to a registration statement)
one hundred percent (100%) of the Registrable Securities.
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(c) The Company may at any time withdraw or abandon any
Registration Statement which triggers the provisions of this Section 8.2 without
any liability to TV.
8.3 Expenses of Registration. All Registration Expenses incurred in
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connection with any registration, qualification and compliance pursuant to
subsection 8.2 shall be borne by the Company. All Selling Expenses with respect
to Registrable Securities sold to underwriters pursuant to any such registration
shall be borne by TV. If, notwithstanding this Agreement, applicable
authorities in any state wherein Registrable Securities are to be sold require
an allocation of Registration Expenses, TV agrees to pay its apportioned share
thereof.
8.4 Registration Procedures. In the case of the registration,
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qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep TV advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities, and use its best efforts
in good faith to cause such Registration Statement to become and remain
effective as provided herein;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus included in such
Registration Statement as may be necessary or advisable to comply in all
material respects with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement or as may
be necessary to keep such Registration Statement effective and current, but for
no longer than two years subsequent to the effective date of the Registration
Statement;
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(c) furnish to TV such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such Registration Statement
(including each preliminary prospectus), and such other documents as TV may
reasonably request in order to facilitate the disposition of the Registrable
Securities held by TV;
(d) enter into such customary agreements and take all such other
action in connection therewith as TV may reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities; and
(e) use its best efforts in good faith to register and qualify
the Registrable Securities covered by such Registration Statement under such
securities or Blue Sky laws of such jurisdictions as TV shall reasonably request
and do any and all such other acts and things as may be reasonably necessary or
advisable to enable TV to consummate the disposition in such jurisdictions of
the Registrable Securities held by TV; provided, however, that the Company
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shall not be required in connection therewith to qualify to do business or file
a general consent to service of process in any such jurisdiction.
Notwithstanding the foregoing provisions of this Section 8.4, (1) TV will
not (until further notice) effect sales thereof after receipt of ten (10) days
prior written notice from the Company to suspend sales for a reasonable period
of up to 60 days to permit the Company to correct, update or supplement such
Registration Statement or prospectus; but the obligations of the Company with
respect to maintaining any Registration Statement current and effective shall be
extended by a period of days equal to the period such suspension is in effect;
and (2) at the end of any period during which the Company is obligated to keep
any Registration Statement current and effective as
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provided by this Section 8.4 (and any extensions thereof required by the
preceding paragraph (1) of this Section 8.4), TV shall discontinue sales of
shares pursuant to such Registration Statement upon notice from the Company of
its intention to remove from registration the shares covered by such
Registration Statement which remain unsold, and TV shall notify the Company of
the number of shares registered which remain unsold promptly after receipt of
such notice from the Company.
8.5 Indemnification.
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(a) The Company will indemnify TV, its officers, managers and
members, and each person controlling TV, if Registrable Securities held by TV
are included in the securities with respect to which registration, qualification
or compliance has been effected pursuant to this Agreement, and each underwriter
of such Registrable Securities, if any, and each person who controls such
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other similar document (including any related Registration
Statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, or (ii) any violation by the Company of any federal, state
or common law rule or regulation applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse TV, each of its
officers, managers and members, and each person controlling TV, such underwriter
and each person who controls such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss,
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damage, liability or action, provided that the Company will not be liable to TV
or underwriter in any such case to the extent that such claim, loss, damage,
liability or expense arises out of or is based on (i) any untrue statement or
omission made in reliance upon and in conformance with written information
furnished to the Company by or on behalf of TV or underwriter and which was
furnished specifically for the purpose of being used therein or (ii) a failure
by TV to deliver a final prospectus to its transferee if any material change has
been made to the preliminary prospectus.
(b) TV will, if Registrable Securities held by TV are included
in the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such registration,
qualification or compliance, each person who controls the Company or such
underwriter within the meaning of the Securities Act, and each "Holder" as
defined in Section 8 of the Series F Convertible Preferred Stock Purchase
Agreement dated September 26, 1987, each of the officers, directors and partners
of each such Holder and each person controlling such Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any Registration Statement, prospectus, offering circular or
other similar document filed with respect to or relating to the Registrable
Securities, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made, and
will reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the
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extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by or on behalf of TV and which was
furnished specifically for the purpose of being used therein.
(c) Each party entitled to indemnification under this Section
8.5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party, at such party's expense, to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense (except for the payment of fees, costs and
expenses provided for below), and provided further that the failure of any
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Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the extent
that such failure to give notice shall adversely affect the Indemnifying Party
in the defense of any such claim or any such litigation. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Notwithstanding the election
of the Indemnifying Party to assume the defense of any such claim or litigation,
the Indemnified Party shall have the right to employ separate counsel and to
participate
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in the defense of such claim or litigation, and the Indemnifying Party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of the counsel chosen by the Indemnifying Party to represent the Indemnified
Party would present such counsel with a conflict of interest; (ii) the
defendants in, or targets of, any such claim or litigation include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it or to
other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of the
Indemnified Party); (iii) in the exercise of the Indemnified Party's reasonable
judgment, the Indemnifying Party shall not have employed satisfactory counsel to
represent the Indemnified Party within a reasonable time after notice of the
institution of such claim or litigation; or (iv) the Indemnifying Party shall
authorize the Indemnified Party to employ separate counsel at the expense of the
Indemnifying Party. The Indemnified Party shall not settle any such claim or
litigation without the consent of the Indemnifying Party.
8.6 Information by TV. TV shall furnish to the Company in writing
-----------------
such information regarding TV and the distribution proposed by TV for the
Registrable Securities as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
8.7 Market "Stand-off" Agreement. TV, if requested by the Company
-----------------------------
and an underwriter of the Company's securities, shall agree not to sell or
otherwise transfer or dispose of the Registrable Securities in connection with
the Company's initial public offering during the 180-day period following the
effective date of the Company's first Registration Statement. The
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Company may impose stop-transfer instructions with respect to the shares (or
securities) subject to the foregoing restriction until the end of such 180-day
period.
9. Mutual Release.
--------------
Except as otherwise expressly provided herein and in any other written
agreements, as the same may have been amended or modified, between the Company
and SQL Services, on the one hand, and TV and XxXxxx Consulting Group, Inc, on
the other hand, which have not been expressly terminated by this Agreement (the
"Surviving Agreements"), and except for any claims which arise because of breach
of this Agreement or the Surviving Agreements, the Company, SQL Services and TV
(for itself and its wholly-owned subsidiary, XxXxxx Consulting Group, Inc.)
hereby waive, release and promise never to assert any and all claims that they
have or might have against each other or their subsidiaries (including without
limitation SQL Services, SQL Financials Europe, Inc. and XxXxxx Consulting
Group, Inc.), affiliated persons or entities, officers, directors, stockholders,
agents, attorneys, employees, successors or assigns, from the beginning of the
world to the date of this Agreement. The foregoing release as it applies to
officers, directors and other individuals is intended to release such persons in
all capacities, including individual and official.
10. Miscellaneous.
-------------
10.1 Costs and Expenses. In connection with this Agreement and the
------------------
transactions described herein, the Company and TV agree to pay their own
expenses, costs and fees.
10.2 Successors and Assigns. This Agreement may not be assigned by
----------------------
either the Company or TV without the prior written consent of the other.
Subject to the foregoing, all covenants and agreements contained in this
Agreement made by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of such parties.
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10.3 Governing Law. The internal laws of the State of Delaware
-------------
(regardless of conflict of laws principles) shall govern all issues concerning
the construction, validity and interpretation of this Agreement.
10.4 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties and covenants of the Company and TV contained in
Sections 3 and 4 of this Agreement shall survive the Closing for a period of two
years, and thereafter no action, suit or claim shall be brought alleging any
misrepresentation or untruthfulness based upon the subject matter of such
representations or warranties, and any such action, suit or claim shall be
forever barred; provided, however, that any action based upon fraud shall not be
-------- -------
barred and may be brought notwithstanding the provisions of this Section. The
covenants of XxXxxx and TV contained in Section 5.1 shall continue until the
closing of the Company's IPO. Nothing contained herein, nor the Closing of
hereof, shall be construed to limit or otherwise restrict the parties'
respective obligations under this Agreement, the Note or the Warrant.
10.5 Entire Agreement; Amendment. This Agreement and the other
---------------------------
documents delivered pursuant hereto or contemplated hereby constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated except by a written instrument signed
by TV and the Company. Failure to comply with the terms of the Note or the
Warrant shall be deemed to be a breach of this Agreement.
10.6 Notices, etc.. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested),
telecopier, or overnight air courier guaranteeing next day
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delivery, addressed as follows: (a) if to the Company, at SQL Financials
International, Inc., 0000 Xxxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000, Attention:
President, with a copy to Xxxxxx X. Xxxxx, Esq., Hill & Xxxxxx, a Professional
Corporation, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, (b) if to TV,
at Technology Ventures, L.L.C., Xxx Xxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000, with a copy to Xxx X. Xxxxx, Esq. Cushing, Morris, Xxxxxxxxxx & Xxxxx,
2100 Peachtree Center, Xxxx Tower, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000, or to such other address as the party receiving such notice shall have
properly designated to the other party hereto in writing. Each such notice shall
be deemed given at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
10.7 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to TV or the Company upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of TV
or the Company, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. All remedies, either under this Agreement, or by law or otherwise
afforded to TV or the Company, shall be cumulative and not alternative.
10.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, some of which may have signature pages differing as to form, each
of which shall be
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enforceable against the parties actually executing such counterparts and all of
which together shall constitute one instrument.
10.9 Severability. If any provision of this Agreement, or its
------------
application to any person or circumstances, is invalid or unenforceable, then
the remainder of this Agreement or the application of such provision to other
persons or circumstances, shall not be affected thereby. Further, if any
provision or application hereof is invalid or unenforceable then a suitable and
equitable provision shall be substituted therefor in order to carry out so far
as may be valid or enforceable the intent and purposes of the invalid and
unenforceable provision.
10.10 Captions. Captions and headings used herein are for
--------
convenience of reference only and shall not limit or control the meaning of any
provisions hereof.
The foregoing Acquisition Agreement is hereby executed under seal as of the
date first above written.
SQL FINANCIALS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
XXXXXXX X. XXXXXXX, President
TECHNOLOGY VENTURES, L.L.C.
By: /s/ Xxxxxx X. XxXxxx
------------------------------------
XXXXXX X. XxXXXX, Sole Manager
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The undersigned Managers of SQL Financials Services, L.L.C. hereby join in
the foregoing Acquisition Agreement for the purposes of Sections 6, 7 and 9:
/s/ Xxxxxx X. XxXxxx
------------------------------------
Xxxxxx X. XxXxxx
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
The undersigned common stockholder of SQL Financials International, Inc.
hereby joins in the foregoing Acquisition Agreement for the purposes of Section
5.1.
/s/ Xxxxxx X. XxXxxx
------------------------------------
Xxxxxx X. XxXxxx
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