Exhibit 10.13
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of May 26, 2000 (this
"AGREEMENT") is made by and among Breakaway Solutions, Inc., a Delaware
corporation (the "COMPANY"), and The Xxxxxx OTC and Emerging Growth Fund, Xxxxxx
Funds Trust - Xxxxxx New Century Growth Fund, Xxxxxx Voyager Fund II, Xxxxxx
Investment Funds - Xxxxxx Worldwide Equity Fund and Xxxxxx Emerging Information
Services Trust, each a Massachusetts business trust, together with their
respective permitted transferees (collectively, the "INVESTORS").
RECITALS:
WHEREAS, contemporaneously with the execution and delivery of this
Agreement the Company and the Investors have executed and delivered a Securities
Purchase Agreement dated as of May 26, 2000 (the "PURCHASE AGREEMENT") pursuant
to which the Company has this date issued and sold to the Investors an aggregate
of 1,500,000 shares (the "SHARES") of the Company's common stock, par value
$0.000125 per share (the "COMMON Stock"), for a purchase price of $26.00 per
share, and the Investors have purchased such shares of Common Stock for such
purchase price;
WHEREAS, the parties' execution and delivery of this Agreement was a
condition of their respective obligations to close under the Purchase Agreement;
and
WHEREAS, the definitions of capitalized terms used herein without being
defined are set forth or referred to in Article IV of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:
ARTICLE I
REGISTRATION
1.1 MANDATORY REGISTRATION. The Company shall use its best efforts to
file with the SEC no later than June 26, 2000 a Registration Statement on Form
S-1 registering the Registrable Securities for resale (the "REGISTRATION
STATEMENT").
1.1.1 EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company
shall use its best efforts to cause the Registration Statement to become or to
be declared effective by the SEC as soon as practicable after filing, and in any
event no later than July 26, 2000 (the "REQUIRED EFFECTIVE DATE"). The Company's
best efforts shall include, but will not be limited to, promptly responding to
all comments received from the staff of the SEC. If the SEC notifies the Company
that the Registration Statement will receive no action or review from the SEC,
the Company
shall cause the Registration Statement to become effective within five business
days after receipt of such SEC notification. Once the Registration Statement is
declared effective by the SEC, the Company will cause the Registration Statement
to remain effective throughout the Registration Period, except as permitted in
accordance with Section 1.4.13 and Section 1.5 hereof.
1.1.2 DELAYED REGISTRATION. If the Registration Statement has not
been filed on or prior to June 26, 2000 or has not become or been declared
effective prior to August 15, 2000, the Company shall pay to each Investor, as
stipulated damages intended by the parties to compensate such Investor in part
for the incremental costs and investment risks associated with holding any of
the Registrable Securities as restricted securities, a fee (the "LATE
REGISTRATION FEE") for each day of such delay equal to 0.0333% of the purchase
price paid by such Investor for all Shares held by such Investor on such day.
The Company shall pay to such Investor the Late Registration Fee in cash on the
earlier of either (a) the end of each 30-day period of such delay, or (b) the
effective date of the Registration Statement. Nothing herein shall limit any
Investor's right to pursue actual damages for the Company's failure to file the
Registration Statement or to have such Registration Statement become or be
declared effective by the SEC on or prior to the Required Effective Date in
accordance with the terms of this Agreement.
1.1.3 RESALE RESTRICTED AFTER EFFECTIVENESS. If at any time after
the effectiveness of the Registration Statement either (a) any Investor cannot,
for reasons other than suspension of the effectiveness of the Registration
Statement as described in Section 1.4.12 hereof, the suspension of the
effectiveness of the Registration Statement as described in Section 1.4.13
hereof (but only to the extent that the length of such suspension does not
exceed 10 trading days), or during a permitted Black-out Period as described in
Section 1.5.1 hereof, resell the Registrable Securities into the public market
for any period of more than 10 consecutive trading days or for any 30 trading
days in the aggregate during any period of 12 consecutive months, or (b) the
shares are not listed or included for quotation on the Nasdaq National Market
("NASDAQ"), the New York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX") for any period of more than 10 consecutive trading days,
the Company shall pay to such Investor, as stipulated damages intended by the
parties to compensate such Investor in part for the incremental costs and
investment risks associated with holding the Registrable Securities as
Restricted securities, a fee (the "RESALE RESTRICTION FEE") for each day of such
period equal to 0.0333% of the purchase price paid by such Investor for all
Shares held by such Investor on such day. The Resale Restriction Fee shall be
payable in respect of each such 10 consecutive trading day period or such 30 day
period, as the case may be, immediately following the conclusion of any such 10
day or 30 day period. Nothing herein shall limit such Investor's right to pursue
actual damages for such Investor's inability to sell any of the Registrable
Securities into the public market for any reason described in this Section
1.1.3.
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1.2 PIGGYBACK REGISTRATIONS.
1.2.1 RIGHT TO PIGGYBACK. If at any time prior to the expiration
of the Registration Period a Registration Statement is not effective with
respect to all of the Registrable Securities and the Company proposes to
register any of its equity securities, the Investors shall be entitled to an
unlimited number of Piggyback Registrations for their Registrable Securities.
1.2.2 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in the registration
exceeds the number that can be sold without adversely affecting the
marketability of the offering, the Company shall include in the registration
FIRST, the securities that the Company proposes to sell,
SECOND, the Registrable Securities requested to be included in
the registration and any other shares of Common Stock
requested to be included in such registration by the holders
thereof that have prior to the date hereof been granted rights
by the Company to participate in a Piggyback Registration pari
passu with the holders of Registrable Securities, pro rata
among the holders of the Registrable Securities and the
holders of such other shares of Common Stock on the basis of
the number of Registrable Securities and other shares of
Common Stock requested to be included owned by each such
holder, and
THIRD, any other securities requested to be included in the
registration.
1.2.1 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in the registration exceeds the number that can be sold without adversely
affecting the marketability of the offering, the Company shall include in the
registration
FIRST, the securities requested to be included therein by the
holders requesting such registration and the Registrable
Securities requested to be included in the registration, pro
rata among the holders thereof on the basis of the number of
such securities and Registrable Securities owned by each such
holder, and
SECOND, any other securities requested to be included in the
registration.
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1.2.2 OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities, and if the
previous registration has not been withdrawn or abandoned, the Company shall not
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Securities Act (except on Form S-4 or Form S-8 or
any successor or similar forms), whether on its own behalf or at the request of
any holder or holders of its securities, until a period of at least 180 days has
elapsed from the effective date of the previous registration or, if shorter, a
period of at least 60 days has elapsed from the date all securities covered by
such registration have been disposed of.
1.3 HOLDBACK AGREEMENTS.
1.3.1 HOLDERS OF REGISTRABLE SECURITIES. No Investor shall effect
any public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for equity securities
of the Company, during the seven days prior to and the 120-day period beginning
on the effective date of any underwritten Piggyback Registration in which
Registrable Securities are included (except as part of such underwritten
offering), unless the underwriters managing the registered public offering
otherwise agree.
1.3.2 COMPANY. The Company shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during such seven-day period
prior to and 120-day period following the effective date of any underwritten
Registration Statement covering Registrable Securities as the Company and the
underwriters managing the offering may agree.
1.4 REGISTRATION PROCEDURES.
With respect to any Registration Statement covering any Registrable
Securities:
1.4.1 NOTICE OF EFFECTIVENESS. The Company shall notify the
Investors of the effectiveness of each Registration Statement filed under this
Agreement and prepare and file with the SEC any amendments and supplements to
the Registration Statement and the prospectus that may be necessary to keep the
Registration Statement effective for the duration of the Registration Period,
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Registration Statement.
1.4.2 FURNISH COPIES. The Company shall furnish to the Investors,
or to their legal counsel, the number of copies of the Registration Statement,
each amendment and supplement, the prospectus included in the Registration
Statement (including each preliminary prospectus) and any other documents that
the Investors may reasonably request in order to facilitate the disposition of
the Investors' Registrable Securities.
1.4.3 BLUE SKY. The Company shall use its best efforts to register
or qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions as any
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Investor reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable the Investors to consummate the
disposition in those jurisdictions of the Registrable Securities owned by the
Investors (but the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction).
1.4.4 PROSPECTUS SUPPLEMENT. The Company shall notify the
Investors, at any time when a prospectus relating to the Registrable Securities
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in the Registration Statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements in the prospectus not misleading; and, at the request of any
Investor, the Company shall prepare a supplement or amendment to the prospectus
so that, when delivered to purchasers of the Registrable Securities, the
prospectus, as supplemented or amended, does not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements in
the prospectus not misleading.
1.4.5 EXCHANGE LISTING. The Company shall cause all such
Registrable Securities to be quoted on Nasdaq and listed on any other exchange
on which the Company's shares of Common Stock are listed.
1.4.6 REGISTRATION OF TRANSFERS. The Company shall provide a
transfer agent (the "TRANSFER AGENT") and registrar for all such Registrable
Securities not later than the effective date of the Registration Statement.
1.4.7 FACILITATION OF RESALE. The Company shall enter into such
customary agreements, including underwriting agreements in customary form, and
take all other actions that any Investor reasonably requests in order to
expedite or facilitate the disposition of the Registrable Securities, including
without limitation, effecting a stock split or a combination of shares if
requested by the underwriter and using its best efforts to cause members of the
management of the Company to participate on a reasonable basis in customary
"road show" activities to the extent required by the underwriters with a view to
maximizing the price of the Common Stock sold in such offering.
1.4.8 COLD COMFORT LETTER; OPINION. The Company shall at the
request of any Investor and on the date that Registrable Securities are
delivered to an underwriter for sale in connection with the Registration
Statement, furnish to such Investor and the underwriters (i) a letter, dated
such date, from the Company's independent certified public accountants, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters; and (ii) an opinion, dated such date, from counsel representing
the Company for purposes of the Registration Statement, in form and substance as
is customarily given in an underwritten public offering, addressed to the
underwriters and such Investor.
1.4.9 ACCESS TO INFORMATION. The Company shall make available for
inspection by each Investor, any underwriter participating in any disposition
pursuant to the Registration
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Statement and any attorney, accountant or other agent retained by any Investor
or any such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
employees and independent accountants to supply all information reasonably
requested by any Investor or any such underwriter, attorney, accountant or agent
in connection with the Registration Statement.
1.4.10 INVESTORS' REVIEW. The Company shall permit Ropes & Xxxx,
counsel to the Investors, to review the Registration Statement and all
amendments and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and not file any document in a form to which such counsel reasonably
objects, unless otherwise required by law in the opinion of the Company's
counsel. The sections of any such Registration Statement including information
with respect to the Investors, the Investors' beneficial ownership of securities
of the Company or the Investors' intended method of disposition of Registrable
Securities must conform to the information provided to the Company by the
Investors.
1.4.11 EARNINGS STATEMENT. The Company shall otherwise use its
best efforts to comply with all applicable rules and regulations of the SEC, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158.
1.4.12 WITHDRAWAL OF STOP ORDER. The Company shall, in the event
of the issuance of any stop order suspending the effectiveness of a Registration
Statement, or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any securities included in the
Registration Statement for sale in any jurisdiction, use its reasonable best
efforts promptly to obtain the withdrawal of such order.
1.4.13 POST-EFFECTIVE AMENDMENT. In the event that the Company is
required to file a post-effective amendment to the Registration Statement, the
Company shall use its reasonable best efforts to have the Registration Statement
declared effective as soon as possible after such filing.
1.5 PERMITTED SUSPENSION
1.5.1 BLACK-OUT PERIOD. Notwithstanding the Company's obligations
under this Agreement, if in the good faith judgment of the Company, following
consultation with legal counsel, it would be detrimental to the Company and its
stockholders for resales of Registrable Securities to be made pursuant to the
Registration Statement due to (i) the existence of a material development or
potential material development involving the Company which the Company would be
obligated to disclose in the Registration Statement, which disclosure would be
premature or otherwise inadvisable at such time or would have a Material Adverse
Effect upon the Company and its stockholders, or (ii) in the good faith judgment
of the Company's Board of Directors, it would adversely affect or require
premature disclosure of the filing of a Company-initiated registration of any
class of its equity securities, the Company shall have the right to
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suspend the use of the Registration Statement (the "BLACK-OUT PERIOD");
PROVIDED, HOWEVER, that the Company may so defer or suspend the use of the
Registration Statement for no more than a total of 75 days in any twelve-month
period and no Black-out Period may begin within 30 days of the end of any prior
Black-out Period.
1.5.2 SUSPENSION. Notwithstanding anything to the contrary
contained herein or in the Purchase Agreement, if the use of the Registration
Statement is suspended by the Company, the Company shall promptly give notice of
the suspension to the Investors and shall promptly notify the Investors as soon
as the use of the Registration Statement may be resumed. Notwithstanding
anything to the contrary contained herein or in the Purchase Agreement, the
Company shall cause the Transfer Agent to deliver unlegended shares of Common
Stock to a transferee of any Investor in accordance with the terms of the
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which such Investor has entered into a contract for sale prior to
receipt of notice of such suspension and for which such Investor has not yet
settled.
1.6 EXPENSES. The Company shall bear (i) all Registration Expenses,
(ii) all expenses incurred in connection with the negotiation, preparation,
execution and delivery of the Purchase Agreement and this Agreement, and (iii)
the reasonable fees and disbursements of Ropes & Xxxx, counsel to the Investors,
in connection with any Registration Statement covering any Registrable
Securities. Notwithstanding the foregoing, the aggregate fees, expenses and
disbursements described in the foregoing clauses (ii) and (iii) to be borne by
the Company shall not exceed $50,000.
1.7 COOPERATION WITH UNDERWRITERS. No Person (within the meaning of the
Securities Act) may participate in any underwritten registration pursuant to
this Agreement unless that Person (i) agrees to sell securities on the basis
provided in the underwriting arrangements and (ii) completes and executes all
questionnaires, underwriting agreements and other documents required under the
terms of the underwriting arrangements; PROVIDED HOWEVER, that no Investor shall
be required to enter into any custody agreement or any power of attorney if it
has made arrangements for delivery of the Registrable Securities to the
underwriters and shall itself have executed the underwriting agreement. No
Investor shall in any event be required to make any representations or
warranties to the Company or the underwriters (other than representations and
warranties regarding such Investor and such Investor's intended method of
distribution) or to undertake any indemnification obligations to the Company or
the underwriters except as otherwise provided in Article II.
1.8 DISCONTINUANCE OF DISPOSITIONS. Upon receipt of notice from the
Company of the happening of any event of the kind described in Section 1.5.2
hereof, the Investors shall discontinue the disposition of their Registrable
Securities pursuant to the registration statement until the Investors receive
copies of a supplemented or amended prospectus as contemplated by such Section
1.4.4.
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ARTICLE II
INDEMNIFICATION
2.1 INDEMNIFICATION BY COMPANY. The Company agrees to indemnify, to the
extent permitted by law, each Investor, each Person who controls an Investor
(within the meaning of the Securities Act), and their respective partners,
shareholders, trustees, members, officers and directors against all losses,
claims, damages, liabilities and expenses caused by any Violation, except
insofar as the Violation is caused by or contained in any information furnished
in writing to the Company by the Investors expressly for use in a Registration
Statement, prospectus, amendment, supplement or related document. In connection
with an underwritten offering, the Company shall indemnify such underwriters,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent provided in this
Section 2.1 with respect to the indemnification of the Investors. The indemnity
agreement contained in this Section 2.1 shall not apply to any amounts paid in
settlement of any losses, claims, damages, liabilities and expenses resulting
from any Violation if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld.
2.2 INDEMNIFICATION BY INVESTORS. In connection with any Registration
Statement pursuant to which an Investor is selling Registrable Securities, such
Investor shall furnish to the Company in writing such information and affidavits
as the Company reasonably requests for use in connection with the Registration
Statement or prospectus and, to the extent permitted by law, shall indemnify the
Company, its directors and any of its officers who signs such Registration
Statement and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any violation to the extent that the violation is caused by or
contained in any information furnished in writing to the Company by such
Investor expressly for use in such Registration Statement, prospectus,
amendment, supplement or related document. This obligation to indemnify shall be
individual, not joint and several, and shall be limited to the net amount of
proceeds received by such Investor from the sale of Registrable Securities
pursuant to the Registration Statement. The indemnity agreement contained in
this Section 2.2 shall not apply to amounts paid in settlement of any losses,
claims, damages, liabilities and expenses resulting from any violation if such
settlement is effected without the consent of such Investor, which consent shall
not be unreasonably withheld.
2.3 PROCEDURES. Any Person entitled to indemnification under this
Article II shall, promptly after the receipt of notice of the commencement of
any action, investigation, claim or other proceeding against such indemnified
party in respect of which indemnity may be sought from an indemnifying party
under this Article II, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party so to notify an
indemnifying party of any such action shall not relieve the indemnifying party
from any liability which it may have to such indemnified party under this
Article II unless, and only to the extent that, such omission results in the
indemnifying party's forfeiture of substantive rights or defenses or the
indemnifying party is otherwise irrevocably prejudiced in defending such
proceeding. In case any such action, claim or other proceeding shall be brought
against any indemnified party for which indemnification is claimed pursuant to
Section 2.1, and it shall notify the Company of the
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commencement thereof, the Company shall be entitled to assume the defense
thereof at its own expense, with counsel satisfactory to the Company; PROVIDED,
that any such indemnified party may, at its own expense, retain separate counsel
to participate in such defense. Notwithstanding the foregoing, in any action,
claim or proceeding in which both the Company, on the one hand, and an
indemnified party, on the other hand, is, or is reasonably likely to become, a
party, such indemnified party shall have the right to employ separate counsel at
the Company's expense and to control its own defense of such action, claim or
proceeding if, (a) the Company has failed to assume the defense and employ
counsel as provided herein, (b) the Company has agreed in writing to pay such
fees and expenses of separate counsel or (c) in the reasonable opinion of
counsel to such indemnified party, a conflict or likely conflict exists between
the Company, on the one hand, and such indemnified party, on the other hand,
that would make such separate representation advisable; PROVIDED, HOWEVER, that
the Company shall not in any event be required to pay the fees and expenses of
more than one separate counsel (and if deemed necessary by such separate
counsel, appropriate local counsel who shall report to such separate counsel).
The Company shall not, without the prior written consent of an indemnified
party, settle, compromise or consent to the entry of any judgment in any pending
or threatened claim, action or proceeding relating to the matters contemplated
hereby (if such indemnified party is a party thereto or has been actually
threatened to be made a party thereto) unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability arising or that may arise out of such claim, action or proceeding. The
rights accorded to indemnified parties hereunder shall be in addition to any
rights that any indemnified party may have at common law, by separate agreement
or otherwise.
2.4 SURVIVAL. The indemnification under this Article II shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of the
indemnified party (within the meaning of the Securities Act) and shall survive
the transfer of securities.
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2.5 CONTRIBUTION. In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to this Article II is made
but it is found in a final judgment of a court of competent jurisdiction (not
subject to further appeal) that such indemnification may not be enforced in such
case, even though the express provisions hereof provided for indemnification in
such case, then the Company, on the one hand, and the Investors, on the other
hand, shall contribute to the losses, claims, damages, liabilities or costs to
which the indemnified persons may be subject in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified parties in connection with the actions which resulted in any such
losses, claims, liabilities or costs, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined with reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities or
costs referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceedings.
ARTICLE III
COVENANTS
3.1 CURRENT PUBLIC INFORMATION. The Company shall timely file all
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, and will take such
further action as any Investor may reasonably request, all to the extent
required to enable the Investors to sell Registrable Securities pursuant to Rule
144 adopted by the SEC under the Securities Act (as such rule may be amended
from time to time) or any similar rule or regulation hereafter adopted by the
SEC and pursuant to Form S-3 or any similar short form registration statement.
Upon written request, the Company shall deliver to the Investors a written
statement as to whether it has complied with such requirements.
3.2 LISTING. On or before the tenth trading day after the date of this
Agreement, the Company shall secure the listing of the Shares upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and, so
long as any Investor owns any of the Shares, will maintain such listing of the
Shares. The Company shall use its best efforts to obtain and, so long as any
Investor owns any of the Shares, maintain the listing and trading of its Common
Stock on Nasdaq and shall comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers, Inc. and such exchanges, as applicable. Until
an Investor transfers, assigns or sells all of the Shares owned by it, the
Company will promptly provide to such Investor copies of any notices it receives
regarding the continued eligibility of the Common Stock for listing on Nasdaq or
other principal exchange or quotation system on which the Common Stock is listed
or traded.
3.3 NO INTEGRATION. The Company shall not make any offers or sales of
any security (other than the Shares) under circumstances that would cause the
offering of the Shares to be
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integrated with any other offering of securities by the Company (i) for the
purpose of any stockholder approval provision applicable to the Company or its
securities or (ii) for purposes of any registration requirement under the
Securities Act.
ARTICLE IV
DEFINITIONS
Capitalized terms which are used in this Agreement without being
defined have the same meanings that they are given in the Purchase Agreement. In
addition, the following terms have these meanings:
4.1 "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, assets or financial condition of the Company or (b)
the ability of the Company to perform its obligations pursuant to the
transactions contemplated by this Agreement or under the agreements or
instruments to be entered into or filed in connection herewith.
4.2 "REGISTRABLE SECURITIES" means the Shares sold pursuant to the
Purchase Agreement and any shares of capital stock issued or issuable from time
to time (with any adjustments) in exchange for or otherwise with respect to the
Shares.
4.3 "REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding discounts, commissions and underwriters' counsel fees) and other
Persons (with the meaning of the Securities Act) retained by the Company.
4.4 "REGISTRATION PERIOD" means the period between the date of this
Agreement and the date on which all of the Registrable Securities have been sold
by the Investors and no further Registrable Securities may be issued in the
future.
4.5 "REGISTRATION STATEMENT" means a registration statement of the
Company filed under the Securities Act.
4.6 "VIOLATION" means any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a material
fact contained or incorporated by reference in a Registration Statement pursuant
to this Agreement, including any related preliminary or final prospectus, any
amendment or supplement, or any document filed under state securities or "blue
sky" laws, (ii) the omission or alleged omission to state a material fact
required to be stated in any such registration statement, prospectus, amendment,
supplement or document or necessary to make the statements in any such
registration statement, prospectus, amendment, supplement or document not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law.
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ARTICLE V
MISCELLANEOUS
5.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of The Commonwealth of Massachusetts
without giving effect to any conflict or choice of law provisions that would
make applicable the domestic substantive law of any other jurisdiction. Each of
the Company and each Investor hereby consents to the personal jurisdiction of
the federal courts (or, if any such federal court is without jurisdiction, a
state court) located in Boston, Massachusetts in connection with any controversy
related to this Agreement and waives any argument that venue in any such forum
is inconvenient.
5.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts which together shall constitute one instrument.
5.3 HEADINGS. The headings in this Agreement have been inserted for
convenience of reference only and shall not alter or affect the meaning thereof.
5.4 SEVERABILITY. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof.
5.5 SURVIVAL OF COVENANTS. All covenants, agreements, representations
and warranties made herein or in the Purchase Agreement or in the certificates
delivered pursuant hereto or thereto shall be deemed to have been material and
relied upon by the Investors, notwithstanding any investigation made by the
Investors or on the Investors' behalf, and shall survive the execution and
delivery to the Investors hereof and thereof.
5.6 ENTIRE AGREEMENT. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
5.7 AMENDMENTS. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investors.
5.8 NOTICES. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (including facsimile
transmission) addressed as provided below and if either (a) actually delivered
at said address, (b) delivered by telephonic facsimile transmission, with
evidence of receipt thereof, or (c) in the case of a letter, three business days
shall have elapsed after the same shall have been deposited in the United States
mails, first-class postage prepaid and registered or certified:
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If to the Company: Breakaway Solutions, Inc.
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: President
With a copy to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
If to an Investor: To such Investor,
c/x Xxxxxx Investment Management, Inc.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Law Department
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxx, Esq.
or in each case to such other address as either party shall specify in writing
to the other party.
5.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Investor, and no Investor may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, any Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company, so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) or a qualified institutional buyer
(within the meaning of Rule 144A) and agrees in writing to be bound by this
Agreement. This provision does not limit any Investor's right to transfer the
Shares pursuant to the terms of this Agreement or the Purchase Agreement or to
assign such Investor's rights hereunder to any such transferee pursuant to the
terms of this Agreement and the Purchase Agreement.
5.10 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
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5.11 FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the Purchase Agreement and the
consummation of the transactions contemplated hereby and thereby.
5.12 EQUITABLE RELIEF. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement or the Purchase
Agreement, any remedy at law may prove to be inadequate relief to the Investors.
The Company therefore agrees that the Investors are entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
5.13 AGREEMENT AND DECLARATION OF TRUST. Copies of the Agreement and
Declaration of Trust of each Investor are on file with the Secretary of State of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed by the Trustees of the Investors as Trustees and not
individually, and that the obligations of this instrument are not binding upon
any of the Trustees, offices or shareholders of the Investors individually but
are binding only upon the assets and property of the Investors.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
BREAKAWAY SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------
Name: Xxxxx Xxxxxxxxx
Title: VP - CFO
INVESTORS:
THE XXXXXX OTC AND EMERGING
GROWTH FUND
XXXXXX FUNDS TRUST - XXXXXX NEW
CENTURY GROWTH FUND
XXXXXX VOYAGER FUND II
XXXXXX INVESTMENT FUNDS - XXXXXX
WORLDWIDE EQUITY FUND
By Xxxxxx Investment Management, Inc.
By: /s/ Xxxxxxx X. Xxxx xx Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxx xx Xxxxx
Title: Senior Vice President
XXXXXX EMERGING INFORMATION
SERVICES TRUST
By The Xxxxxx Advisory Company, Inc.
By: /s/ Xxxxxxx X. Xxxx xx Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxx xx Xxxxx
Title: Senior Vice President
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