EXHIBIT 10.59
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is made as of the 6th
day of April, 2001, by and between BREAKAWAY SOLUTIONS, INC., a Delaware
corporation (the "Company"), SCP PRIVATE EQUITY PARTNERS II, L.P., a Delaware
limited partnership ("SCP"), and ICG HOLDINGS, INC., a Delaware corporation
("ICG"). (the "Investor"). (SCP and ICG are sometimes individually referred to
as an "Investor" and collectively as the "Investors.")
RECITALS
WHEREAS, the Company and the Investors are parties to that certain
Series A Preferred Stock Purchase Agreement, dated as of February 16, 2001 (the
"Series A Agreement"), pursuant to which the Company has agreed to sell to the
Investors, and the Investors have agreed to purchase from the Company, (a) an
aggregate of 357,143 shares (the "Initial Preferred Stock") of the Company's
Series A Preferred Stock, $0.0001 par value ("Series A Preferred Stock"),
initially convertible into 35,714,300 shares of its Common Stock, $0.000125 par
value ("Common Stock"), at an aggregate purchase price of $25,000,010 ($70.00
per share of Series A Preferred Stock), and (b) warrants (the "Warrants") to
purchase up to 42,857,149 shares of Common Stock at an exercise price of $0.70
per share;
WHEREAS, pursuant to the Series A Agreement, SCP proposes to commit to
purchase an additional 71,429 shares of Series A Preferred Stock (the "Option
Preferred Stock") at the aggregate purchase price of $5,000,030 ($70.00 per
share of Series A Preferred Stock) on the terms and conditions hereinafter set
forth; and
WHEREAS, in order to induce the Investors to enter into the Series A
Agreement, the Company has agreed to grant to the Investors certain rights to
register, under the Securities Act of 1933, as amended, the offer and sale of
the Common Stock which the Investors might acquire upon conversion of the Series
A Preferred Stock (the "Conversion Stock") or exercise of the Warrants ("Warrant
Stock"); and
WHEREAS, Investors' and the Company's respective obligations under the
Series A Agreement are conditioned upon the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
REGISTRATION RIGHTS
The Company covenants and agrees as follows:
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1.1. Definitions.
For purposes of the Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Holder" means any person owning Registrable
Securities or securities convertible into or exercisable for Registrable
Securities or any assignee thereof pursuant to Section 1.6 herein.
(c) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(d) The term "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means (i) the Conversion
Stock, (ii) the Warrant Stock, and (iii) any Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of the shares referenced in (i) above,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which his rights under this Article 1 are not assigned.
(f) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
(h) The term "Shelf Registration Period" shall have the meaning
set forth in Section 1.2 hereof.
(i) The term "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 1.2
hereof which covers any of the Registrable Securities on Form S-3 or on another
appropriate form for an offering to be made on a delayed or continuous basis
pursuant to Rule 415 under the Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case, including the prospectus
contained therein, all exhibits thereto and all documents incorporated or deemed
to be incorporated by reference therein.
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1.2. OBLIGATIONS OF THE COMPANY. The Company shall:
(a) prepare and file with the SEC, within 30 days after the
Closing Date (as defined in the Series A Agreement), a Shelf Registration
Statement to enable the resale of the Registrable Securities by each Holder from
time to time in accordance with the methods of distribution elected by such
Holder of the Registrable Securities and set forth in such Shelf Registration
Statement and shall use its best efforts to cause such Shelf Registration
Statement to be declared effective under the Act prior to 60 days following the
filing of such Shelf Registration Statement with the SEC;
(b) prepare and file with the SEC, within 30 days after receipt of
a written request from a Holder of Registrable Securities, a Shelf Registration
Statement to enable the resale by the Holder of any Registrable Securities which
were not included in the Shelf Registration Statement filed pursuant to
paragraph (a), from time to time in accordance with the methods of distribution
elected by any Holder of the Registrable Securities and set forth in such Shelf
Registration Statement and shall use its best efforts to cause such Shelf
Registration Statement to be declared effective under the Act prior to 30 days
following the filing of such Shelf Registration Statement with the SEC;
(c) prepare and file with the SEC such amendments and supplements
to any Shelf Registration Statement as may be necessary to comply with the
provisions of the Act, the 1934 Act or the SEC;
(d) keep each Shelf Registration Statement continuously effective
under the Act in order to permit the prospectus related thereof to be usable by
the Holders until, as to a particular Shelf Registration Statement, the earlier
of (i) the date as of which all Registrable Securities covered by such Shelf
Registration Statement may be transferred pursuant to Rule 144(k) of the Act (or
any similar provision then in force), or (ii) such date as of which all
Registrable Securities have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called a "Shelf Registration
Period");
(e) prepare and file with the SEC such amendments and
post-effective amendments to any Shelf Registration Statement as may be
necessary to keep any such Shelf Registration Statement continuously effective
for the applicable Shelf Registration Period;
(f) cause the prospectus related to any Shelf Registration
Statement to be supplemented by any required supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Act;
(g) comply in all material respects with the provisions of the Act
with respect to the disposition of securities covered by each Shelf Registration
Statement during the applicable period in accordance with the intended methods
of disposition by each Holder set forth in the relevant Shelf Registration
Statement as so amended or as such prospectus is so supplemented;
(h) furnish to each Holder such numbers of copies of the
prospectuses, including preliminary prospectuses, in conformity with the
requirements of the Act, and such
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other documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(i) use its best efforts to register and qualify the securities
covered by each Shelf Registration Statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by a Holder;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act;
(j) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;
(k) advise each Holder, promptly after it shall receive notice or
obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of any Shelf Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued;
(l) notify each Holder of the happening of any event as a result
of which a prospectus included in any Shelf Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading in the light of the circumstances then existing and,
following such notification, promptly deliver to each Holder copies of all
amendments or supplements referred to in paragraphs (c), (e) and (f) of this
Section 1.2;
(m) cause all Registrable Securities registered pursuant to
Article 1 hereunder to be listed on the Automated Quotation System of the
National Association of Securities Dealers and on any securities exchange on
which similar securities issued by the Company are then listed;
(n) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to Article 1 hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration; and
(o) furnish, at the request of any Holder, on the date that any
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Article 1, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the Shelf Registration Statement with respect to
such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders.
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1.3. EXPENSES OF REGISTRATION. All expenses, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company, and fees and
disbursements for counsel for the Investors shall be borne by the Company, but
excluding underwriting discounts and selling commissions.
1.4. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, each of its partners, officers and directors, and any
underwriter (as defined in the Act) for a Holder and each person, if any, who
controls a Holder or underwriter within the meaning of the Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Act, or the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in any Shelf
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act or any
state securities law or any rule or regulation promulgated under the Act, or the
1934 Act or any state securities law; and the Company will pay to such Holder,
partner, officer, director, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection with
investigating or defendant any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.4(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling person.
(b) To the extent permitted by law, each Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed a Shelf Registration Statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, and any controlling
person of any such underwriter, each other Holder, each of its partners,
officers and directors and any controlling person of any such Holder, against
any losses, claims, damages, or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Act, or the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such Shelf
Registration Statement; and the Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 1.4(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.4(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
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liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 1.4(b) exceed the gross proceeds
from the offering related to such Shelf Registration Statement received by the
Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.4 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.4, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.4 but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.4.
(d) If the indemnification provided for in this Section 1.4 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this Section
1.4 shall survive the completion of any offering of Registrable Securities
relating to the Shelf Registration Statement covering such securities, and
otherwise.
1.5. REPORTS UNDER THE SECURITIES EXCHANGE ACT OF 1934. The Company
shall cause its Common Stock to continue to be registered under Sections 12(b)
or 12(g) of the 1934 Act, shall comply in all respects with its reporting and
filing obligations under the 1934 Act, and shall not take any action or file any
document (whether or not permitted by the 1934 Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
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and filing obligations under the 1934 Act. The Company shall use its best
efforts to continue the listing of its Common Stock on the Automated Quotation
System of the National Association of Securities Dealers, and shall comply in
all material respects with its reporting, filing and other obligations under the
bylaws or rules of such exchange or association.
1.6. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Article 1 may be assigned
(but only with all related obligations) by a Holder to one or more transferees
of the Registrable Securities; provided: (i) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (ii) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement; and (iii) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
1.7. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders representing in the aggregate at least 50% of the then
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder to interfere with or otherwise limit a Holder's
registration rights under this Agreement.
1.8. INVESTOR INFORMATION. Each Holder who includes Registrable
Securities in any registration pursuant to this Article I shall promptly furnish
to the Company such information regarding such Holder and the distribution
proposed by such Holder as the Company may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
ARTICLE II
COVENANTS OF THE COMPANY.
2.1. INFORMATION AVAILABLE. So long as any Shelf Registration Statement
is in effect, the Company shall deliver to the Investors:
(a) (i) as soon as practicable, but in any event within 45 days
after the end of each fiscal year of the Company, one copy of (A) its Annual
Report to Stockholders (which Annual Report shall contain financial statements
audited in accordance with generally accepted accounting principles by a
national firm of certified public accountants) and (B) its Annual Report on Form
10-K; and (ii) as soon as practicable, but in any event within 45 days after the
end of each fiscal quarter of the Company, one copy of its Quarterly Reports on
Form 10-Q (the foregoing, in each case, excluding exhibits);
(b) upon the request of any Investor, all exhibits excluded by the
parenthetical to paragraph (a) of this Section 2.1 as filed with the SEC and all
other information that is made available to stockholders;
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(c) upon the request of any Investor, an adequate number of copies
of the prospectus related to any Shelf Registration Statement to supply to any
other party requiring such prospectus; and the Company, upon the reasonable
request of an Investor, will meet with the Investor or a representative thereof
at the Company's headquarters to discuss all information relevant for disclosure
in any Shelf Registration Statement and will otherwise cooperate with the
Investor in conducting an investigation for the purpose of reducing or
eliminating such Investor's exposure to liability under the Act, including the
reasonable production of information at the Company's headquarters; provided,
that the Company shall not be required to disclose any confidential information
to or meet at its headquarters with any Investor until and unless the Investor
shall have entered into a confidentiality agreement in form and substance
reasonably satisfactory to the Company with the Company with respect thereto;
and
(d) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as an Investor may from
time to time request, provided, however, that the Company shall not be obligated
under this subsection (d) to provide information which it deems in good faith to
be a trade secret or similar confidential information until and unless the
Investor shall have entered into a confidentiality agreement in form and
substance reasonably satisfactory to the Company with the Company with respect
thereto.
2.2. INSPECTION. So long as any Shelf Registration Statement is
effective, the Company shall permit each Investor, at such Investor's expense,
to visit and inspect the Company's properties, to examine its books of account
and records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information until and unless the
Investor shall have entered into a confidentiality agreement in form and
substance reasonably satisfactory to the Company with the Company with respect
thereto.
ARTICLE III
BOARD OF DIRECTORS.
3.1. ELECTION OF DIRECTORS. For so long as SCP shall hold at least
fifty percent of the shares of the Series A Preferred Stock originally issued to
SCP pursuant to the Series A Agreement, the board of directors shall consist of
7 members and the Company shall use its best efforts to (a) maintain a seven
member Board of Directors, (b) reserve two seats on the Board of Directors for
members selected by SCP (in separate classes), (c) reserve one seat on each
committee of the Board of Directors for one of the directors selected by SCP and
identified to the Company in writing, to the extent consistent with applicable
director independence requirements, and (d) reserve one seat on the Board of
Directors for a member selected by ICG and SCP (in a class different from the
classes containing the two directors selected by SCP pursuant to clause (b)) and
identified to the Company in writing.
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ARTICLE IV
COVENANTS BY ICG.
4.1. LOCKUP AGREEMENT. So long as SCP holds at least 10% of its
aggregate ownership of the Series A Preferred Stock, any Warrants, any shares of
Conversion Stock, or any Warrant Stock (based, in the case of the Series A
Preferred Stock, on the number of shares of Common Stock into which the Series A
Preferred Stock shall be convertible), ICG shall not sell or otherwise dispose
of any shares of Common Stock either owned by it on the date of this Agreement
or which it is entitled to purchase pursuant to outstanding securities it owns
on the date of this Agreement, which ICG represents to be a total of 18,521,908
shares ("ICG Common Stock"). In addition, ICG agrees that it shall not sell any
securities purchased pursuant to this Agreement (or obtained by the exercise or
conversion of any securities purchased pursuant to this Agreement) (the "ICG
Agreement Holdings"); provided that if SCP sells Common Stock after the date of
this Agreement, ICG shall be permitted to sell, at the time of such sale, up to
a number of shares that represents the same percentage of the ICG Agreement
Holdings as the percentage SCP's sale represents of the securities it purchased
pursuant to this Agreement (or obtained by the exercise or conversion of any
securities purchased pursuant to this Agreement). For purposes of this Section
4.1, if SCP shall sell shares of Series A Preferred Stock or Warrants, it shall
be deemed to have sold that number of shares of Common Stock into which the
shares of Series A Preferred Stock were convertible or the number of shares of
Common Stock issuable upon exercise of the Warrants, calculated on the date the
shares of Series A Preferred Stock or the Warrants, as the case may be, were
sold.
ARTICLE V
MISCELLANEOUS.
5.1. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
5.2. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Pennsylvania as applied to agreements
among Pennsylvania residents entered into and to be performed entirely within
Pennsylvania.
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5.3. RULE 144. The Company covenants that it will (a) file in a timely
manner all reports and other documents required to be filed by it under the Act
and the 1934 Act and the rules and regulations adopted by the SEC thereunder,
(b) make and keep public information available, as those terms are understood
and defined in Rule 144 under the Act, at all times, and (c) take such further
action as the Investors may reasonably request, all to the extent required from
time to time to enable the Investors to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of an Investor, the Company will deliver to such
holder a written statement as to whether it has complied with such information
and requirements.
5.4. LEGEND. Each stock certificate representing (a) the Registrable
Securities, or (b) any other securities issued in respect of the Registrable
Securities upon any stock split, stock dividend, recapitalization, merger,
consolidation, or similar event, shall (unless otherwise permitted by the
provisions of this Agreement) be stamped or otherwise imprinted with legends in
substantially the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SHARES
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
5.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.6. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.7. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by telefacsimile, or otherwise delivered
by hand or by a nationally-recognized overnight courier, addressed (a) if to an
Investor, at such Investor's address or telefacsimile number set forth on the
signature page hereto, or at such other address or telefacsimile number as such
Investor shall have furnished to the Company in writing, or (b) if to the
Company, one copy should be sent to its address or telefacsimile number set
forth on the signature page hereto and addressed
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to the attention of the Corporate Secretary, or at such other address or
telefacsimile number as the Company shall have furnished to the Investors.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given (i) in the case of
personal delivery or delivery by telefacsimile, on the date of such delivery,
(ii) in the case of a nationally-recognized overnight courier, on the next
business day after the date when sent and (iii) in the case of mailing, on the
third business day following that on which the piece of mail containing such
communication has been deposited in a regularly maintained receptacle for the
deposit of the United States mail, addressed and mailed as aforesaid.
5.8. EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
5.9. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Holders representing in the
aggregate at least 50% of the then-outstanding Registrable Securities. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
5.10. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
5.11. AGGREGATION OF STOCK. All shares of Registrable Securities held
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
5.12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
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IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first above written.
COMPANY
BREAKAWAY SOLUTIONS, INC.
By: /s/ William Loftus
---------------------------------------
William Loftus
President and Chief Executive Officer
Address: Breakaway Solutions, Inc.
1000 River Road, Suite 400
4th Floor
Conshohocken, PA 19428
Attn: Corporate Secretary
Telephone: 610-828-5800
Telefacsimile: 610-828-4245
INVESTORS:
SCP PRIVATE EQUITY PARTNERS II, L.P.
By: SCP Private Equity II General Partner, L.P.,
its General Partner
By: SCP Private Equity II, LLC, its Manager
By: /s/ Wayne B. Weisman
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Name: Wayne B. Weisman
Title: Manager
Address: Building 300
435 Devon Park Drive
Wayne, PA 19087-1993
Attn: Wayne Weisman
Telephone: 610 254-4124
Facsimile: 610 975-9546
ICG HOLDINGS, INC.
By: /s/ Henry Nassau
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Name: Henry N. Nassau
Title: Vice President and Secretary
Address: Pencador Corporate Center
100 Lake Drive, Suite 4
Newark, DE 19742
Attn: Henry Nassau
Telephone: 302 292-3971
Facsimile: 302 292-3972
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