Exhibit 10.2
Dated October 24, 2000
SHAREHOLDERS AGREEMENT
between
ICG ASIAWORKS LIMITED
BREAKAWAY SOLUTIONS, INC.
AND
BREAKAWAY SOLUTIONS ASIA PACIFIC LIMITED
TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................1
2. PURPOSE OF THE COMPANY...................................................4
3. ESTABLISHMENT AND CAPITALIZATION OF THE COMPANY..........................4
3.1 ESTABLISHMENT.......................................................4
3.2 CAPITALIZATION......................................................4
3.3 ADDITIONAL SHAREHOLDERS.............................................5
3.4 LEGENDS.............................................................6
3.5 PREFERENCE UPON LIQUIDATION.........................................6
4. OPERATION AND MANAGEMENT OF THE COMPANY..................................6
4.1 OPERATION OF THE COMPANY............................................6
4.2 BOARD OF DIRECTORS..................................................6
4.3 MANAGEMENT..........................................................7
4.4 BOARD QUORUM; RESOLUTIONS...........................................7
4.5 ANNUAL PLAN.........................................................7
4.6 FINANCIAL STATEMENTS AND ACCOUNTING RECORDS.........................7
4.7 RIGHT OF INSPECTION.................................................7
5. ADDITIONAL COVENANTS.....................................................8
5.1 COOPERATION, ADVISORY COMMITTEE, OPERATIONS COMMITTEE AND
SERVICES............................................................8
5.2 EXCLUSIVITY.........................................................9
5.3 CONFIDENTIALITY.....................................................9
5.4 CONFIDENTIALITY OF AGREEMENT; PUBLICITY............................10
5.5 INITIAL PUBLIC OFFERING............................................10
5.6 ANTI-DILUTION RIGHTS...............................................11
5.7 PREEMPTIVE RIGHTS..................................................11
5.8 TRANSFER RESTRICTIONS..............................................12
5.9 RIGHT OF FIRST REFUSAL.............................................12
5.10 CONSIDERATION......................................................13
6. WARRANTIES OF THE PARTIES...............................................13
6.1 WARRANTIES OF ICGA.................................................13
6.2 WARRANTIES OF BREAKAWAY............................................14
7. TERM AND TERMINATION....................................................15
7.1 TERM...............................................................15
7.2 TERMINATION........................................................15
7.3 EFFECT OF TERMINATION..............................................16
7.4 CONTINUING LIABILITY...............................................17
8. GENERAL PROVISIONS......................................................17
8.1 GOVERNING LAW; DISPUTE RESOLUTION..................................17
8.2 NOTICES AND OTHER COMMUNICATIONS...................................17
8.3 LANGUAGE...........................................................19
8.4 SEVERABILITY.......................................................19
8.5 REFERENCES; SUBJECT HEADINGS.......................................19
8.6 FURTHER ASSURANCES.................................................19
8.7 EXPENSES...........................................................19
8.8 NO WAIVER..........................................................20
8.9 ENTIRE AGREEMENT; AMENDMENTS.......................................20
8.10 ASSIGNMENT.........................................................20
8.11 NO AGENCY..........................................................20
8.12 NO BENEFICIARIES...................................................20
8.13 EFFECTIVE DATE OF LICENSE AGREEMENT................................20
8.14 COUNTERPARTS.......................................................20
8.15 INCIDENTAL AND CONSEQUENTIAL DAMAGES...............................20
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT ("Agreement") is made as of October 24, 2000,
by and between ICG AsiaWorks Limited ("ICGA"), Breakaway Solutions, Inc.,
("Breakaway") and Breakaway Solutions Asia Pacific Limited (the "Company").
RECITALS
WHEREAS, ICGA and Breakaway (collectively referred to hereinafter as the
"Shareholders") desire to form a company to address business opportunities for
the provision of strategy consulting, systems integration and application
hosting services and any product or service ancillary or incidental thereto in
the Territory (as such term is herein defined) and as otherwise set forth in the
Articles from time to time (the "Business");
WHEREAS, the Shareholders intend that the Business will be addressed
through the Company and the parties hereto desire to regulate the relationship
of the Shareholders inter se and with the Company; and
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company wishes to issue to ICGA and Breakaway, and ICGA and Breakaway wish
to subscribe for shares of the Company.
NOW THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as follows:
AGREEMENT
1. Definitions
"Additional Shareholders" means such Persons, other than ICGA and
Breakaway, as may purchase shares of the Company pursuant to Section 3.3.
"Affiliate" means any Person: (a) that is controlled by, controls, or is
under common control with a Party (collectively, a "Controlled Person"); or (b)
that is controlled by, controls, or is under common control with any such
Controlled Person, in each case for so long as such control continues. For
purposes of this definition, "control" shall mean the possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or other ownership interests, by
contract or otherwise).
"Agreement" is defined in the Preamble.
"Applicable Law" means, as to any Person, any statute, law, rule,
regulation, directive, treaty, judgment, order, decree or injunction of any
Governmental Authority that is applicable to or binding upon such Person or any
of its properties, or with which that Person is accustomed to comply.
"Articles" means the memorandum of association and bye-laws of the Company
in the form of attached Exhibit A, as amended from time to time.
"Board" means the board of directors of the Company.
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"Breakaway" is defined in the Preamble.
"Business Day" means a day on which commercial banks in Singapore, Hong
Kong and New York are generally open to conduct their regular banking business.
"Business" is defined in the Recitals.
"Closing Date" is defined in Section 3.2(b).
"Company Interest" means, as to any Person, the percentage interest
represented by the Securities then held by such Person divided by all then
outstanding Securities (on an as-converted to Ordinary Shares basis and, to the
extent warrants or options to purchase shares have been issued, on an as
exercised for Ordinary Shares basis).
"Company" is defined in Section 3.1.
"Competitor" means (a) any of the parties identified on the attached
Schedule 1 or (b) any other Person engaged in providing services that are
substantially similar to the services then being provided by the Company.
"Confidential Information" is defined in Section 5.3(a).
"Controlled Person" is defined in Section 1.
"Director" means a member of the Board.
"Disclosing Party" is defined in Section 5.3(a).
"Effective Date" means the date of this Agreement.
"Establishment Date" is defined in Section 3.1.
"Governmental Authority" means, in the applicable jurisdiction, any
government, governmental authority, court, tribunal, agency or other regulatory,
administrative or judicial agency, commission or organization, and any
subdivision, branch or department of any of the foregoing. "Governmental
Authority" includes The Stock Exchange of Hong Kong Limited and any other
non-governmental authority or regulatory body with jurisdiction over any Person
if the exercise of that jurisdiction might have a material adverse effect on
that Person.
"ICGA" is defined in the Preamble.
"License Agreement" means the License Agreement to be entered into between
Breakaway and the Company, the form of which is attached in Exhibit B, as
amended from time to time in accordance with the terms thereof.
"Liquidation Event" means any winding up, consolidation or merger of the
Company or sale of all or substantially all of its assets (other than solely for
the purpose of changing the jurisdiction of incorporation of the Company), or
series of such related transactions, in which the shareholders of the Company
immediately prior to the transaction(s) jointly control less that 50% of the
voting power of the surviving entity or its parent, if any, immediately
following the transaction(s).
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"Market Value" is defined in Section 5.10.
"Non-Purchasing Shareholder" is defined in Section 5.9(a).
"Non-Selling Shareholder" is defined in Section 5.8(b).
"Operations Committee" is defined in Section 5.1(c).
"Ordinary Shares" means ordinary shares of the Company, par value
US$0.0001 per share, as authorized by the Articles.
"Party" and "Parties" means ICGA, Breakaway and the Company, together with
such other Persons as may from time to time become parties to this Agreement.
"Permitted Transferee" is defined in Section 5.8(b).
"Person" means a natural individual, Governmental Authority, partnership,
firm, corporation, or other business association.
"Preference Shares" means the voting convertible preference shares to be
acquired by ICGA pursuant to the terms of this Agreement, convertible into
Ordinary Shares and with the preferences as stated in this Agreement and as
stated from time to time in the Articles.
"Pro Rata Share" is defined in Section 5.7.
"Qualified IPO" means an initial public offering of shares in the Company
listed for trading on a recognized securities exchange in the United States,
Hong Kong or Singapore where the product of the initial public offering price
per share multiplied by the total shares outstanding or issuable upon exercise
of all outstanding options, warrants or convertible Securities of the Company is
at least US$150,000,000.
"Qualified New Securities" means any Securities of the Company, whether
now authorized or not, and rights, options or warrants to purchase such
Securities, or instruments that are, or may become, exercisable for or
convertible or exchangeable into Securities; provided, however, that the term
Qualified New Securities shall not include (a) any Ordinary Shares (or options,
warrants or rights therefor) granted or issued hereafter to employees, officers,
directors, contractors, consultants or advisers to the Company or any subsidiary
pursuant to incentive agreements, share purchase or share option plans, share
bonuses or awards, warrants, contracts or other arrangements that are approved
by the Board; (b) any Securities of the Company issued in connection with any
share split or share dividend; (c) any Securities offered by the Company to the
public pursuant to a registration statement under the U.S. Securities Act of
1933 for purposes of effecting a public offering of securities of the Company or
pursuant to a listing on an internationally recognized stock exchange in Hong
Kong or Singapore; (d) any Securities issued in connection with an acquisition
transaction approved by the Board; and (e) any Ordinary Shares issued to
Breakaway pursuant to its anti-dilution rights under Section 5.6 hereof.
"Receiving Party" is defined in Section 5.3(a).
"Sale Notice" is defined in Section 5.8(b).
"Secondary Funding" is defined in Section 3.2(b)(i).
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"Securities" means all outstanding Ordinary Shares and Preference Shares,
and any other equity securities of the Company or instruments exercisable for or
convertible into Ordinary Shares or Preference Shares.
"Selling Shareholder" is defined in Section 5.8(b).
"Shareholders" means ICGA and Breakaway.
"Shareholder's Common Shares" is defined in Section 5.10.
"Shares" means the shares of the Company.
"Term" is defined in Section 7.1.
"Territory" means Asia (excluding Japan), including, without limitation,
India and Australia.
"Transaction Documents" means this Agreement, the Articles and the License
Agreement.
2. Purpose of the Company
The Shareholders hereby associate themselves in a joint venture
relationship which shall have as its principal purpose the establishment and
development of the Business.
3. Establishment and Capitalization of the Company
3.1 Establishment. The joint venture contemplated by this Agreement shall
be carried out exclusively through Breakaway Solutions Asia Pacific Limited, a
newly-formed Bermuda company (the "Company"). The Shareholders shall use
commercially reasonable efforts to cause the Establishment Date to occur on or
before October 31, 2000. For the purposes of this Agreement, "Establishment
Date" means the date on which the Articles have been amended in accordance with
the terms of this Agreement.
3.2 Capitalization.
(a) Initial Capitalization. The Company shall, as of the
Establishment Date, have authorized capital consisting of two classes of shares
designated as Ordinary Shares and Preference Shares with the rights set forth in
the Articles. The Articles shall on the Establishment Date provide for
249,500,000 authorized shares of Ordinary Shares and 400,500,000 authorized
shares of Preference Shares with par value of US$0.0001 per share.
(b) Closing Date. On the date agreed by Breakaway and ICGA, but no
later than the Establishment Date (the "Closing Date"), the Shareholders shall
subscribe to Shares in the Company as follows:
(i) ICGA Subscription. ICGA agrees to subscribe for
400,500,000 Preference Shares, representing 120,000,000 Ordinary Shares
previously issued and credited as fully paid and which will be converted into
Preference Shares on a share-for-share basis on the Closing Date, and
280,500,000 Preference Shares to be issued on the Closing Date, representing an
80.1% Company Interest, in consideration of the payment of cash in the amount of
US$10,000,000 payable on the Closing Date. As a separate and independent
obligation under
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this Agreement, ICGA agrees to pay up to an additional US$15,000,000 as
requested by the Board (the "Secondary Funding"), which shall be treated as a
donation to the contributed surplus account of the Company. To the extent
permitted by Applicable Law, ICGA may elect, in its sole discretion, to provide
the Secondary Funding, in whole or in part, in the form of freely saleable,
unrestricted shares in ICGA, valued as set forth in Section 5.10. ICGA's
obligation to fund any unfunded portion of the Secondary Funding shall terminate
upon:
(A) the closing of a Qualified IPO; provided, however,
that at least 8% of the Company's total revenues at such
time are derived from application hosting services
provided to non-Affiliates of the Company;
(B) an acquisition of the Company by another corporation
or entity by consolidation, merger or other
reorganization in which the holders of the Company's
outstanding voting shares immediately prior to such
transaction hold, immediately after such transaction,
securities representing less than fifty percent (50%) of
the voting power of the corporation or other entity
surviving such transaction, and in which the
pre-transaction valuation of the Company is at least
US$150 million; or
(C) the liquidation or winding up of the Company.
(ii) Breakaway Subscription. Breakaway shall subscribe to
99,500,000 Ordinary Shares, representing an initial 19.9% Company Interest, in
consideration for Breakaway's execution of this Agreement and the License
Agreement.
(c) Acknowledgment of Agreement; Delivery of Share Certificates.
Promptly after the Closing Date, each Party shall receive one fully executed
original of this Agreement and the License Agreement, and ICGA shall cause the
Company (i) to deliver to each Party its written acknowledgment of, and
agreement to abide by, the terms of this Agreement, and (ii) to promptly issue
and deliver to ICGA and Breakaway share certificates representing the Shares
purchased pursuant to Section 3.2(b).
3.3 Additional Shareholders.
(a) The Shareholders acknowledge that, subject to the preemptive
rights set forth in Section 5.7, to the extent that the Company requires
additional funding (as determined by the Board in its sole discretion), the
Company may seek such additional funding from third parties, either in addition
or in lieu of the Secondary Funding. Any such sale or issuance of shares to an
Additional Shareholder shall be subject to the terms and conditions of a written
shareholders agreement to be entered between the Shareholders and the Additional
Shareholder(s).
(b) The Company and the Shareholders will make available up to a
16.67% ownership interest in the Company available for grant to employees and
others selected by the Board on terms and conditions established by the Board.
This ownership interest will be represented by Ordinary Shares and will be
established either (i) by converting up to 83,333,333 Preference Shares held by
ICGA to Ordinary Shares and transferring these Ordinary Shares to grantees on
terms and conditions approved by the Board, or (ii) by issuing up to 100,000,000
newly issued Ordinary Shares to grantees on terms and conditions approved
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by the Board. To the extent newly-issued Ordinary Shares are issued to grantees
pursuant to the preceding clause (ii), Ordinary Shares will also be issued to
Breakaway to preserve its ownership interest pursuant to Section 5.6(a).
(c) The grant of pursuant to the preceding paragraph will not be
subject to the transfer restrictions contained herein, but each grantee will be
required to enter into an agreement pursuant to which he assumes obligations
substantially similar to those in Sections 5.8 and 5.9, together with any other
matters required by the Board.
3.4 Legends. Each share certificate of the Company shall bear a legend,
consistent with Applicable Law, providing that any transfer of the Securities
evidenced by such certificate is subject to the terms of this Agreement.
3.5 Preference Upon Liquidation. On a return of capital on a Liquidation
Event (other than on conversion, redemption or a purchase of shares), the
holders of Preference Shares shall be entitled to receive, prior to and in
preference to the holders of any other class of shares, an amount equal to the
original purchase price for their respective Preference Shares, adjusted for any
share dividend, subdivision, combination, consolidation, or the like, plus the
amount of all declared but unpaid dividends relating to such Preference Shares
(the "Subscription Amount"). In the event that the proceeds available for
distribution in any liquidation or winding up are insufficient to satisfy the
full amount of the Subscription Amount, the holders of Preference Shares shall
share the available distributable proceeds ratably. After payment of the
Subscription Amount to all holders of Preferred Stock, the holders of all
classes of shares other than Preference Shares shall participate ratably (on an
as-converted basis) in any distribution of remaining assets.
4. Operation and Management of the Company
4.1 Operation of the Company. Each Shareholder agrees to take all actions
necessary to ensure that the Company shall be operated in accordance with the
terms of this Agreement and the other Transaction Documents, including, without
limitation, to vote all Securities held by it (and to cause all Securities held
by its permitted transferees under Section 5.8 to be voted) and to cause the
Directors nominated by it to vote to effect the terms hereof.
4.2 Board of Directors. Each Shareholder shall vote all of its Shares at
any regular or special meeting of the shareholders called for the purpose of
filling positions on the Board, and shall take all actions necessary and within
its control to ensure the election of directors to the Board such that (i) ICGA
shall have the right to appoint three Directors as long as ICGA and its
Affiliates continue to own at least 200,250,000 Shares, (ii) Breakaway shall
have the right to appoint one Director as long as it continues to own at least a
10% Company Interest, and (iii) the Company's Chief Executive Officer shall be
appointed as a Director.
(a) Any Director may be removed for cause in accordance with
Applicable Law. In addition, each Party having the right to appoint a Director
pursuant to this Section 4.1 shall also have the right, in its sole discretion,
to remove such Director at any time, effective upon delivery of written notice
to the Company and the other Party. In the case of a vacancy in the office of a
Director for any reason (including removal pursuant to the preceding sentence),
the vacancy shall be filled by the Party that appointed the Director to which
such vacancy relates.
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(b) ICGA hereby agrees that, without the prior written consent of
Breakaway, it shall not: (i) appoint as a Director any officer, director or
employee of any Competitor; or (ii) transfer any of its Shares to a Competitor.
4.3 Management. The Shareholders hereby agree that the officers of the
Company shall be selected by the Board. The consent of Breakaway's appointed
director shall be required to appoint or remove the Chief Executive Officer of
the Company, which consent shall not be unreasonably withheld.
4.4 Board Quorum; Resolutions. A quorum shall be deemed to exist for
purposes of Board actions so long as at least three (3) Directors are present.
Any action, determination or resolution of the Board shall require the
affirmative vote of a majority of Directors present at a meeting at which a
valid quorum pursuant to this Section 4.4 is present.
4.5 Annual Plan. The Company shall prepare, and the Board shall approve,
an Annual Plan with respect to each fiscal year of the Company no later than
sixty (60) days prior to the commencement of the fiscal year; provided, however,
that the initial Annual Plan shall be approved promptly following the Effective
Date and shall cover the period from the Establishment Date until the December
31, 2000. Each Annual Plan shall set forth in reasonable detail certain
investment, operational and financial targets of the Company for the applicable
period, including, without limitation, with respect to revenues, profits, return
on net assets and return on equity for the applicable period.
4.6 Financial Statements and Accounting Records. Financial statements for
the Company, including, without limitation, a balance sheet, income statement,
statement of cash flows and statement of shareholders' equity, shall be
submitted by the Company to each of the Parties (a) within thirty (30) days
after the end of each fiscal quarter for such quarter, and (b) within ninety
(90) days after the end of each fiscal year for such year. Each of the annual
financial statements shall be audited and certified by KPMG or another
internationally recognized accounting firm, selected by ICGA and retained by the
Company. All financial statements shall be prepared at the cost of the Company,
shall be complete and correct in all material respects, shall be prepared in
reasonable detail and in accordance with U.S. Generally Accepted Accounting
Principles, and shall contain such financial data as the Parties may reasonably
request in order to keep the Parties advised of the Company's financial status
(although interim statements need not include footnotes and may be subject to
year-end adjustments). The Company shall provide Breakaway with such financial
information as Breakaway may reasonably request for purposes of complying with
its periodic reporting obligations under U.S. securities laws and shall
cooperate with Breakaway in connection with complying with such obligations,
including, without limitation, in preparing additional financial statements and
reconciling the Company's financial statements with U.S. Generally Accepted
Accounting Principles for such purposes.
4.7 Right of Inspection. During the regular office hours of the Company,
and upon reasonable notice to the Company, each Party that maintains at least a
ten percent (10%) Company Interest shall have (a) full access to all properties,
books of account, and records of the Company, and (b) the right to make copies
from such books and records at its own expense. Any information obtained by the
Parties through exercise of rights granted under this Section 4.7 shall, to the
extent constituting Confidential Information hereunder, be subject to the
confidentiality provisions set forth in Section 5.3. Notwithstanding the
foregoing, each Party will be entitled to any inspection rights granted under
Applicable Law.
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5. Additional Covenants
5.1 Cooperation, Advisory Committee, Operations Committee and Services.
The Parties shall in good faith cooperate with each other and use all
commercially reasonable efforts to enable the Company to become a premier
provider of strategy consulting, systems integration and application hosting
solutions services in the Territory and to develop the Business at a growth rate
and with profit objectives commensurate with the market opportunity throughout
the Territory.
(a) ICGA shall provide consulting services to the Company regarding
strategic business opportunities relating to the Business and market research,
the staffing, management and operation of the Company, and shall provide the
Company with accounting and other administrative support. In consideration of
such services, ICGA shall be entitled to receive an annual consulting fee from
the Company of US$30,000, to be paid quarterly. The Company shall reimburse ICGA
for reasonable out-of-pocket expenses incurred by it in connection with the
provision of services and support by it pursuant to this Section 5.1(a).
(b) In order to assist the company in establishing the Business and
in making full utilization of the intellectual property licensed to the Company
pursuant to the License Agreement, Breakaway shall establish and maintain, for
the period from the Effective Date until April 30, 2002, or such later time as
the Parties may agree, a Breakaway Asia Pacific Advisory Committee (the
"Advisory Committee"). The Advisory Committee shall consist of at least nine
full-time employees of Breakaway with appropriate experience in the following
areas of the Breakaway organization, or in substantially similar areas as
Breakaway may establish from time to time: Strategy, E-solutions, Application
Service Provider, Field Operations, Corporate Marketing, Finance, Information
Technology and Human Resources. The members of the Advisory Committee as of the
Effective Date shall be as set forth below, provided that the Parties
acknowledge and agree that Breakaway may change one or more such members from
time to time if the new member is an individual having experience in the
applicable area that is similar to or greater than the experience of the
individual being replaced. The initial members of the Advisory Committee are:
Area Member
Strategy Xxxx Xxxxxxxx
E-solutions Xxx Bastia
Application Service Provider Xxxx Xxxxx
Field Operations Xxx Xxxxx
Corporate Marketing Xxxxx Xxxxxx
Finance Xxxxx Xxxxx
Information Technology Xxxxxx Xxxxxx
Human Resources Xxx Xxxxxxx
Other Xxx Xxxxxxx
Representatives of the Company and of ICGA may contact any member of the
Advisory Committee directly with respect to any aspect of the Business or the
services that Breakaway is providing to the Company.
(c) Promptly after the Establishment Date, each of Breakaway and the
Company will designate one of its senior management employees to be a member of
an Operations Committee with responsibility for management of Breakaway's
performance of services for the Company. These responsibilities shall include
the preparation, within thirty (30) days
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of the Establishment Date, of a detailed schedule of services to be provided by
Breakaway for the period ending eighteen (18) months after the Effective Date.
The Operations Committee may modify this schedule from time to time to reflect
changed circumstances. If the members of the Operations Committee are unable to
agree on any matter, any member may refer the matter for resolution to the
Board, whose determination will be final.
(d) Breakaway shall provide all services requested by the Company
that are necessary or appropriate to enable the Company to become a premier
provider of strategy consulting, systems integration and application hosting
solutions services in the Territory and to develop the Business at a growth rate
and with profit objectives commensurate with the market opportunity throughout
the Territory. Breakaway shall provide such services pursuant to services
agreement(s) to be agreed upon by Breakaway and the Company. The Company shall
pay for such services as set forth in the services agreement(s), provided that
for the period from the Effective Date through April 30, 2002 Breakaway shall
apply a 15% discount to its standard rates with respect to all services provided
to the Company.
5.2 Exclusivity.
(a) During the term of this Agreement, neither ICGA nor Breakaway
will provide services within the Territory, either independently or in
conjunction with another party, that compete directly with the Business in the
Territory; provided, that the foregoing shall not exclude any such party or its
Affiliates from acquiring an equity interest not exceeding two percent (2%) of
the outstanding shares of a publicly traded company, solely for investment
purpose. Without prior written approval of ICGA, Breakaway shall not directly or
through an Affiliate establish, maintain or invest in, or agree to establish,
maintain or invest in, a company which the Board of Directors has reasonably
concluded competes directly with the Company in the Territory.
(b) If the Company becomes aware of a business opportunity outside
the Territory, it shall refer such opportunity to Breakaway; and if Breakaway
becomes aware of a business opportunity within the Territory, it shall refer
such opportunity to the Company. If the Party to whom an opportunity is referred
refuses or fails to pursue the opportunity within thirty (30) days of the
referral, the referring Party shall have the right to pursue the opportunity
without regard to any provisions of this Agreement or the License Agreement.
(c) In the event this Agreement is terminated pursuant to Section
7.2(b) due to Breakaway's breach of a material provision of this Agreement,
Breakaway's obligations pursuant to Sections 5.2(a) and 5.2(b) shall remain in
effect for a period of twenty-four (24) months following such termination. In
the event this Agreement is terminated pursuant to Section 7.2(b) due to ICGA's
breach of a material provision of this Agreement, Breakaway shall be allowed to
conduct business activities in competition with the Business in the Territory
immediately upon termination, but shall not use the Licensed Marks (as defined
in the License Agreement) in connection with any such business activities until
three months after the date of termination.
5.3 Confidentiality.
(a) The Parties acknowledge and agree that proprietary or nonpublic
information disclosed by one Party (the "Disclosing Party") to the other Party
(the "Receiving Party") directly or indirectly, which information either (i) is
marked as "proprietary" or "confidential" or, if disclosed orally, is designated
as confidential or proprietary at the time of disclosure or
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reduced to writing or other tangible (including electronic) form that includes a
prominent confidentiality notice delivered to the Receiving Party within 30 days
of disclosure, or (ii) is any other information related to the Business that is
reasonably identifiable as proprietary or nonpublic information, constitutes the
confidential and proprietary information ("Confidential Information") of the
Disclosing Party. The Receiving Party agrees (x) not to use any such
Confidential Information for any purpose other than in the performance of its
obligations under this Agreement or any Transaction Document and (y) not to
disclose any such Confidential Information, except (1) to its employees who are
reasonably required to have the Confidential Information in connection herewith
or with any of the other Transaction Documents, (2) to its agent,
representatives, lawyers and other advisers that have a need to know such
Confidential Information and (3) pursuant to, and to the extent of, a request or
order by a Governmental Authority. Without limiting the foregoing, each Party
shall use at lease the same procedures and degree of care which it uses to
protect its own Confidential Information of like importance, and in no event
less than reasonable care.
(b) Notwithstanding the foregoing, Confidential Information shall
not include information that: (A) was known to the Receiving Party other than
under an obligation of confidentiality to the Disclosing Party; (B) has become
publicly known through no wrongful act of the Receiving Party; (C) has
rightfully been received by the Receiving Party from a third party; or (D) has
been independently developed by the Receiving Party.
(c) Each Party acknowledges and agrees that (i) its obligations
under this Section 5.3 are necessary and reasonable to protect the other Party
and its business, (ii) any violation of these provisions could cause irreparable
injury to the other Party for which money damages would be inadequate, and (iii)
as a result, the other Party shall be entitled to obtain injunctive relief
against the threatened breach of the provisions of this Section 5.3 without the
necessity of proving actual damages. The Parties agree that the remedies set
forth in this Section 5.3 are in addition to and in no way preclude any other
remedies or actions that may be available at law or under this Agreement.
5.4 Confidentiality of Agreement; Publicity. Each Party agrees that the
terms and conditions of this Agreement and the Transaction Documents shall be
treated as confidential information and that no reference thereto shall be made
thereto without the prior written consent of the other Party (which consent
shall not be unreasonably withheld) except (a) as required by Applicable Law
including, without limitation, by the U.S. Securities and Exchange Commission or
The Stock Exchange of Hong Kong and Governmental Authorities in the United
States, Singapore or Hong Kong, (b) to its accountants, banks, financing
sources, lawyers and other professional advisors, provided that such parties
undertake in writing (or are otherwise bound by rules of professional conduct)
to keep such information strictly confidential, (c) in connection with the
enforcement of this Agreement, (d) in connection with a merger, acquisition or
proposed merger or acquisition, or (e) pursuant to joint press releases prepared
in good faith. The Parties will use reasonable efforts to consult with each
other, in advance, with regard to the terms of all press releases, public
announcements, advertisements and other public statements made in connection
with the transactions contemplated hereby pursuant to the rules of The Stock
Exchange of Hong Kong or the Hong Kong Securities and Futures Commission. The
Parties will consult with each other, in advance, with regard to the terms of
all other such statements in connection with the transactions contemplated
hereby.
5.5 Initial Public Offering. Each Shareholder confirms its intent to
promptly pursue an initial public offering of the Ordinary Shares, subject to
the satisfaction of all requirements of Applicable Laws, the performance of the
Company and market conditions.
10
5.6 Anti-dilution Rights.
(a) Until such time as the Company has obtained US$15,000,000 in
additional funding from ICGA or any other third party (including, but not
limited to, the Secondary Funding), ICGA shall, upon any issuance of new Shares
by the Company (including up to 100,000,000 Ordinary Shares issued pursuant to
any Company share option plan or compensation scheme), cause the Company to
issue additional Ordinary Shares (or rights to receive Ordinary Shares) to
Breakaway in order to maintain Breakaway's Company Interest at 19.9%. Breakaway
shall not receive additional Ordinary Shares upon the issuance of new shares in
connection with any acquisition by the Company. The anti-dilution rights set
forth in this Section 5.6 shall terminate upon a Qualified IPO.
(b) In connection with any issuance of new Shares by the Company
which would result in ICGA's Company Interest being less than 50.1%, ICGA shall
concurrently with such issuance be granted a warrant to purchase additional
Ordinary Shares of the Company within six months after the closing of such
issuance at a per-share price based on the valuation of the Company as of such
issuance in the following amounts:
(i) in connection with the initial issuance of new Shares
which would result in ICGA's Company Interest dropping below 50.1%, the number
of Ordinary Shares that would be necessary for ICGA to maintain a Company
Interest equal to 50.1%; and
(ii) in connection with any subsequent issuance of new Shares,
the number of Ordinary Shares that would be necessary for ICGA to maintain a
Company Interest equal to the Company Interest it owned immediately prior to the
issuance of the new Shares.
5.7 Preemptive Rights. The Company hereby grants to each Shareholder the
preemptive right to purchase its Pro Rata Share of Qualified New Securities
which the Company may, from time to time, propose to sell and issue. A
Shareholder's "Pro Rata Share," for purposes of this preemptive right, is the
ratio of the number of Ordinary Shares, on an as-converted basis, owned by such
Shareholder immediately prior to the issuance of Qualified New Securities, to
the total number of Ordinary Shares, on an as-converted basis, outstanding
immediately prior to the issuance of Qualified New Securities. Each Shareholder
shall have a right of over-allotment such that if any Shareholder fails to
exercise its right hereunder to purchase its Pro Rata Share of Qualified New
Securities, the other Shareholders may purchase the non-purchasing Shareholder's
portion on a pro rata basis within 10 days from the date such non-purchasing
Shareholder fails to exercise its right hereunder to purchase its Pro Rata Share
of Qualified New Securities. This preemptive right shall be subject to the
following provisions:
(a) In the event the Company proposes to undertake an issuance of
Qualified New Securities, it shall give each Shareholder written notice of its
intention, describing the type of Qualified New Securities, and their price and
the general terms upon which the Company proposes to issue the same. Each
Shareholder shall have 20 days after any such notice is mailed or delivered to
agree to purchase such Shareholder's Pro Rata Share of such Qualified New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of Qualified New
Securities to be purchased.
11
(b) In the event the Shareholders fail to exercise fully the
preemptive right within said 20 day period and after the expiration of the
10-day period for the exercise of the over-allotment provisions of this Section
5.7, the Company shall have 60 days thereafter to sell or enter into an
agreement (pursuant to which the sale of Qualified New Securities covered
thereby shall be closed, if at all, within 60 days from the date of said
agreement) to sell the Qualified New Securities with respect to which the
Shareholders' preemptive right option set forth in this Section 5.7 was not
exercised, at a price and upon terms no more favorable to the purchasers thereof
than specified in the Company's notice to Shareholders pursuant to Section
5.7(a). In the event the Company has not sold within such 60 day period or
entered into an agreement to sell the Qualified New Securities in accordance
with the foregoing within 120 days from the date of said agreement, the Company
shall not thereafter issue or sell any Qualified New Securities, without first
again offering such securities to the Shareholders in the manner provided in
Section 5.7(a) above.
(c) The preemptive right set forth in this Section 5.7 shall expire
upon, and shall not be applicable to, a Qualified IPO.
5.8 Transfer Restrictions.
(a) Subject to Section 5.8(b), each Shareholder agrees to hold its
Securities during the Term and, except as otherwise specifically provided in
this Agreement or agreed to in writing by all other Shareholders, not to sell,
transfer, assign, hypothecate or in any way alienate any of such Shareholder's
Securities or any right or interest therein.
(b) Notwithstanding the provisions of Section 5.8(a), upon written
notice to the Company and the other Shareholder(s), each Shareholder shall have
the right to transfer all or any portion of its Securities to any Affiliate of
such Shareholder or to any other Shareholder (each of the foregoing, a
"Permitted Transferee"). In addition, any Shareholder shall have the right to
transfer all or any portion of its Securities to a third party that is not a
Permitted Transferee subject to the right of first refusal described in Section
5.9. In the case of any proposed transfer permitted under this Section 5.8, the
Shareholder proposing such transfer (the "Selling Shareholder") shall deliver to
the Company and the other Shareholder(s) (the "Non-Selling Shareholder(s)") (i)
at least 30 days prior to such transfer, a written notice (the "Sale Notice")
stating its intention to transfer the Securities to be transferred, the name of
the transferee, whether such transferee is a Permitted Transferee, the number of
Securities to be transferred, and the price and other material terms and
conditions of the transfer, and (ii) except as otherwise specifically provided
herein, on or prior to the effective date of the transfer and in a form
reasonably acceptable to the Non-Transferring Shareholder(s) and their
respective counsel, the transferee's written acknowledgment of and agreement to
be bound by, and to vote the transferred Securities at all times in accordance
with, the terms of this Agreement.
(c) No Shareholder may transfer any of its Securities to any Person
who is a Competitor.
5.9 Right of First Refusal. Each Non-Selling Shareholder has the right of
first refusal to purchase such Shareholder's Pro Rata Share of all (or any part)
of any Shares that a Selling Shareholder may from time to time offer to sell
after the date of this Agreement.
(a) Each Shareholder shall have twenty (20) days from the date of
mailing of any Sale Notice to agree in writing to purchase such Shareholder's
Pro Rata Share of such
12
Shares for the price and upon the general terms specified in the Sale Notice by
giving written notice to the Selling Shareholder and stating therein the
quantity of Shares to be purchased (not to exceed such Shareholder's Pro Rata
Share). If any Shareholder fails to so agree in writing within such 20 day
period to purchase such Shareholder's full Pro Rata Share of an offering of
Shares (a "Non-Purchasing Shareholder"), then such Non-Purchasing Shareholder
shall forfeit the right hereunder to purchase that part of his Pro Rata Share of
such Shares that he did not so agree to purchase.
(b) In the event that the Shareholders fail to exercise in full the
right of first refusal within such 20 day period, then the Selling Shareholder
shall have 90 days after the expiration of the 20 day period to sell the Shares
with respect to which the Shareholders' rights of first refusal hereunder were
not exercised, at a price and upon terms not materially more favorable to the
purchasers thereof than specified in the Sale Notice. In the event that the
Selling Shareholder has not sold the Shares within such 90 day period, then the
Selling Shareholder shall not thereafter sell or sell any Shares without again
first offering such Shares to the Shareholders pursuant to this Section 5.9.
(c) This right of first refusal shall terminate upon the
consummation of a Qualified IPO.
5.10 Consideration. Each of the Shareholders may elect, in its sole
discretion, to pay the purchase price for (i) any issuance of new Shares
pursuant to Section 5.6 above, or (ii) Qualified New Securities purchased
pursuant to Section 5.7 above, in the form of freely saleable, unrestricted
shares in such Shareholder, or in the form of restricted shares, subject to the
provisions of this Section 5.10. If any shares of the class of shares used as
consideration for the purchase of Company Securities are then publicly traded in
a recognized market in the United States of America, the Shareholder shall
register any restricted shares on a registration statement on Form S-3 (or any
equivalent or similar form) within 30 days. Such Shareholder shall issue to the
Company a number of such Shareholder's common shares ("Shareholder's Common
Shares") equal to the aggregate purchase price of the Securities being purchased
by such Shareholder divided by the Market Value of the Shareholder's Common
Shares, rounded to the nearest whole share. For the purposes hereof, the term
"Market Value" shall mean the average closing price of one share of the
Shareholder's Common Shares as reported on the applicable stock exchange on
which such shares are traded for the ten (10) trading days ending on the trading
day that is immediately prior to the closing of the purchase of the Qualified
New Shares. The value of ICGA's shares shall be converted to United States
Dollars by multiplying the Market Value by the mean of the bid and offer spot
Hong Kong Dollar/United States Dollar exchange rate quoted by The Hongkong and
Shanghai Banking Corporation on the trading day immediately prior to the Closing
or by such other internationally recognized exchange rate as from time to time
may be selected by the Board.
6. Warranties of the Parties
6.1 Warranties of ICGA. ICGA hereby represents and warrants to Breakaway
that, as of the Effective Date and as of the Establishment Date, the following
statements are and shall be true and correct:
(a) Organization. ICGA is a corporation duly organized and validly
existing under the laws of Bermuda, and is qualified to do business in Hong Kong
and each other jurisdiction where the failure to do so would have a material
adverse effect on its business or
13
operations. ICGA has the corporate power and authority to enter into and perform
this Agreement.
(b) Authorization. All corporate action on the part of ICGA
necessary for the authorization, execution and delivery of this Agreement and
for the performance of all of its obligations hereunder has been taken, and this
Agreement, when fully executed and delivered, shall constitute a valid, legally
binding and enforceable obligation of ICGA.
(c) Government and Other Consents. Other than any licenses, permits
or authorizations which may be required in connection with the Business, as to
which ICGA makes no representation, no consent, authorization, license, permit,
registration or approval of, or exemption or other action by, any Governmental
Authority, or any other Person, is required in connection with ICGA's execution,
delivery and performance of this Agreement, or if any such consent is required,
ICGA has satisfied any applicable requirements.
(d) Effect of Agreement. ICGA's execution, delivery and performance
of this Agreement will not (i) violate the memorandum and articles of
association of ICGA or any provision of Applicable Law, (ii) violate any
judgment, order, writ, injunction or decree of any court applicable to ICGA,
(iii) have any effect on the compliance of ICGA with any applicable licenses,
permits or authorizations which would materially and adversely affect ICGA, (iv)
result in the breach of, give rise to a right of termination, cancellation or
acceleration of any obligation with respect to (presently or with the passage of
time), or otherwise be in conflict with, any term of, or affect the validity or
enforceability of any agreement or other commitment to which ICGA is a party and
which would materially and adversely affect ICGA, or (v) result in the creation
of any lien, pledge, mortgage, claim, charge or encumbrance upon any assets of
ICGA; provided, however, that regulatory approvals may be required in connection
with conducting the Business and ICGA makes no representation with respect to
any such approvals.
(e) Litigation. There are no actions, suits or proceedings pending
or, to ICGA's knowledge, threatened, against ICGA before any Governmental
Authority which question ICGA's right to enter into or perform this Agreement,
or which question the validity of this Agreement or any of the other Transaction
Documents.
6.2 Warranties of Breakaway. Breakaway hereby represents and warrants to
ICGA that, as of the Effective Date and as of the Closing Date, the following
statements are and shall be true and correct:
(a) Organization. Breakaway is a corporation duly organized and
validly existing under the laws of Delaware, and is qualified to business in
each jurisdiction where the failure to do so would have a material adverse
effect on its business or operations. Breakaway has the corporate power and
authority to enter into and perform this Agreement and the License Agreement.
(b) Authorization. All corporate action on the part of Breakaway
necessary for the authorization, execution and delivery of this Agreement and
the License Agreement and for the performance of all of its obligations
hereunder and thereunder has been taken, and this Agreement and the License
Agreement when fully executed and delivered, shall each constitute a valid,
legally binding and enforceable obligation of Breakaway.
14
(c) Government and Other Consents. Other than any licenses, permits,
certifications or authorizations which may be required in connection with the
Business, as to which Breakaway makes no representation, no consent,
authorization, license, permit, registration or approval of, or exemption or
other action by, any Governmental Authority, or any other Person, is required in
connection with Breakaway's execution, delivery and performance of this
Agreement and the License Agreement, or if any such consent is required,
Breakaway has satisfied the applicable requirements.
(d) Effect of Agreement. Breakaway's execution, delivery and
performance of this Agreement and the License Agreement will not (i) violate the
articles of incorporation of Breakaway or any provision of Applicable Law, (ii)
violate any judgment, order, writ, injunction or decree of any court applicable
to Breakaway, (iii) have any effect on the compliance of Breakaway with any
applicable licenses, permits or authorizations which would materially and
adversely affect Breakaway, (iv) result in the breach of, give rise to a right
of termination, cancellation or acceleration of any obligation with respect to
(presently or with the passage of time), or otherwise be in conflict with any
term of, or affect the validity or enforceability of, any agreement or other
commitment to which Breakaway is a party and which would materially and
adversely effect Breakaway, or (v) result in the creation of any lien, pledge,
mortgage, claim, charge or encumbrance upon any assets of Breakaway; provided,
however, that regulatory approval may be required in connection with conducting
the Business and Breakaway makes no representation with respect to any such
approvals.
(e) Litigation. There are no actions, suits or proceedings pending
or, to Breakaway's knowledge, threatened, against Breakaway before any
Governmental Authority which question Breakaway's right to enter into or perform
this Agreement and the License Agreement, or which question the validity of this
Agreement or any of the other Transaction Documents.
7. Term and Termination
7.1 Term. This Agreement shall be effective as of the Effective Date, and
shall continue in effect until terminated pursuant to Section 7.2 (the "Term").
7.2 Termination. This Agreement may be terminated as follows:
(a) Upon the mutual written agreement of ICGA and Breakaway.
(b) By either ICGA and Breakaway effective immediately upon written
notice by one such Party to the other Parties, if the other Party breaches any
material provision of this Agreement or of any of the other Transaction
Documents and such breach continues uncured for a period of 60 days after the
delivery of written notice of the default, describing the default in reasonable
detail.
(c) By either ICGA or Breakaway, effective immediately upon written
notice by one such Party to the other Parties, in the event that the other Party
is dissolved, liquidated or declared bankrupt or a voluntary or involuntary
bankruptcy filing is made by such other Party.
(d) By ICGA, effective immediately upon written notice to Breakaway,
in the event that the Company has elected to terminate the License Agreement in
accordance with its terms.
15
7.3 Effect of Termination.
(a) Upon termination of this Agreement pursuant to Section 7.2(b),
due to a breach of a material provision of this Agreement by ICGA, Breakaway
shall have the option, exercisable by written notice within 14 days of the
termination, to require ICGA to purchase at fair market value all of the
Company's outstanding Securities. Upon termination of this Agreement pursuant to
Section 7.2(b) due to a breach of a material provision of this Agreement by
Breakaway, ICGA shall have the option, exercisable by written notice within 14
days of the termination, to purchase all of the Company's outstanding Securities
at fair market value. The fair market value of the Company's outstanding
Securities shall be determined by mutual agreement of Breakaway and ICGA. If a
mutual agreement cannot be reached within 30 days of the written notice of
exercise, the fair market value shall be determined by a mutually acceptable
third-party auditor, who shall be instructed to complete its appraisal as
promptly as possible and, in any event, within 30 days after its appointment,
and whose fees and expenses shall be shared equally between Breakaway and ICGA.
The fair market value of the Company's outstanding Securities will be determined
based on the price per share that an unrelated third party would pay if it were
to acquire such Securities, in an arm's length transaction, based upon the value
of the Company as an ongoing, operational business entity. In calculating such
fair market value, the Securities shall be valued without regard to any premium
or discount for control or the absence of control. Any purchase of Securities
pursuant to this Section 7.3(a) shall be consummated as soon as reasonably
practicable, and in any event within 60 days, following the date of the
determination of the fair market value of the Securities. ICGA and Breakaway
agree to cooperate in good faith with respect to all actions necessary and
appropriate to effect such consummation, including, without limitation,
cooperation in the appraisal of the Company, the execution of all reasonably
requested documentation and the acquisition of all required approvals and
consents from, and the making of all required applications, notifications or
filings to or with, Governmental Authorities. The purchase price for the
Securities under this Section 7.3(a) shall be paid in cash in U.S. dollars on
the closing of the acquisition.
(b) If the options in Section 7.3(a) are not available or not
exercised, the Shareholders shall negotiate in good faith a possible purchase by
one or more Shareholders of all outstanding Securities held by the other
Shareholders or the sale of the Company to a third party. In the event that,
notwithstanding their good faith negotiations, the Shareholders are unable to
agree upon such a purchase or sale within 30 days of the notice of termination,
the Shareholders shall cooperate to cause the Company to be liquidated as
promptly as practicable in accordance with Applicable Law. The rights and
obligations of the Shareholders under Sections 5.2(c) (Exclusivity), 5.3
(Confidentiality), 5.4 (Confidentiality of Agreement; Publicity), this Section
7.3 (Effect of Termination), and Sections 7.4 (Continuing Liability) and Article
8 (General Provisions) shall survive any termination of this Agreement.
7.4 Continuing Liability. Termination of this Agreement for any reason
shall not release any Party from any liability or obligation which has already
accrued as of the effective date of such termination, and shall not constitute a
waiver or release of, or otherwise be deemed to prejudice or adversely affect,
any rights, remedies or claims, whether for damages or otherwise, which a Party
may have hereunder, at law, equity or otherwise or which may arise out of or in
connection with such termination.
16
8. General Provisions
8.1 Governing Law; Dispute Resolution. Except to the extent that the laws
of another jurisdiction must govern any aspect of the transactions contemplated
hereby, the validity, construction and enforceability of this Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York (as permitted by Section 5-1401 of the General Obligations Law) without
giving effect to any choice of law rule that would cause the application of laws
of any jurisdiction other than the internal laws of the State of New York to the
rights and duties of the parties. All disputes between the Parties arising out
of this Agreement shall be settled by the Parties amicably through good faith
discussions upon the written request of any Party. In the event that any such
dispute cannot be resolved thereby within a period of 60 days after such notice
has been given, such dispute shall be finally settled by arbitration
administered by the American Arbitration Association in New York, New York,
using the English language, and under its International Arbitration Rules. The
arbitration panel may grant specific performance, and to allocate between the
Parties the costs of arbitration in such equitable manner as the panel may
determine. The prevailing Party in the arbitration shall be entitled to receive
reimbursement of its reasonable expenses incurred in connection therewith.
Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance of
any award and an order of enforcement, as the case may be. Notwithstanding the
foregoing, any Party shall have the right to institute a legal action in a court
of proper jurisdiction for injunctive relief or a decree for specific
performance pending final settlement by arbitration. Subject to the foregoing
the Parties hereto consent to the non-exclusive jurisdiction of any New York
State or Federal Court of competent jurisdiction in the Borough of Manhattan,
New York City, and any court having jurisdiction of any appeal therefrom in any
action or proceeding arising out of or relating to this Agreement.
8.2 Notices and Other Communications. Any and all notices, requests,
demands and other communications required or otherwise contemplated to be made
under this Agreement shall be in writing and in English and shall be provided by
one or more of the following means and shall be deemed to have been duly given
(a) if delivered personally, when received, (b) if transmitted by facsimile
originating in Singapore or Hong Kong, on the date of transmission with receipt
of a transmittal confirmation, (c) if transmitted by facsimile originating in
the United States, on the first (1st) Business Day following receipt of a
transmittal confirmation, or (d) if by international courier service, on the
fourth (4th) Business Day following the date of deposit with such courier
service, or such earlier delivery date as may be confirmed in writing to the
sender by such courier service. All such notices, requests, demands and other
communications shall be addressed as follows:
17
If to ICGA:
ICGA AsiaWorks Limited
00/X Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Attention: Mr. Xxxxxxx Xxx/Mr. Xxxx Xxxx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
with a copy (which copy shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx XXX
Xxxxxxxxxxxxx Xxxxxxxx, 00/X and 23/F.
00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx.
Attention: Xx. Xxxxxxxx Xxxxxxx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
If to Breakaway:
Before November 15, 2000:
Breakaway Solutions, Inc.
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: President
Telephone: x0-000-000-0000
Facsimile: x0-000-000-0000
After November 15, 2000:
Breakaway Solutions, Inc.
World Trade Center Xxxx
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: President
Telephone: x0-000-000-0000
Facsimile: x0-000-000-0000
with a copy (which copy shall not constitute notice) to:
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Telephone: x0-000-000-0000
Facsimile: x0-000-000-0000
18
If to the Company:
Breakaway Asia Pacific Limited
00/X Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Attention: Mr. Xxxxxxx Xxx/Mr. Xxxx Xxxx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
with a copy (which copy shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx XXX
Xxxxxxxxxxxxx Xxxxxxxx, 00/X and 23/F.
00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx.
Attention: Xx. Xxxxxxxx Xxxxxxx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
or to such other address or facsimile number as a Party may have specified to
the other Party in writing delivered in accordance with this Section 8.2.
8.3 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall be for accommodation only and shall not be binding upon the
Parties. All communications and notices to be made or given pursuant to this
Agreement shall be in the English language.
8.4 Severability. If any provision in this Agreement shall be found or be
held to be invalid or unenforceable, then the meaning of said provision shall be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be severed
from the remainder of this Agreement which shall remain in full force and effect
unless the severed provision is essential and material to the rights or benefits
received by any Party. In such event, the Parties shall use best efforts to
negotiate, in good faith, a substitute, valid and enforceable provision or
agreement which most nearly affects the Parties' intent in entering into this
Agreement.
8.5 References; Subject Headings. Unless otherwise indicated, references
to Sections and Exhibits herein are to Sections of, and Exhibits to, this
Agreement. The subject headings of the Sections of this Agreement are included
for the purpose of convenience of reference only, and shall not affect the
construction or interpretation of any of its provisions.
8.6 Further Assurances. The Parties shall each perform such acts, execute
and deliver such instruments and documents, and do all such other things as may
be reasonably necessary to accomplish the transactions contemplated in this
Agreement.
8.7 Expenses. Prior to the Establishment Date, each party shall bear its
respective costs and expenses, including, without limitation, fees and expenses
of legal counsel, accountants, brokers, consultants and other representatives
used or hired in connection with the negotiation and preparation of this
Agreement or the License Agreement and consummation of the transactions
contemplated thereby, subject to the reimbursement by the Company of such costs
and expenses. After the Establishment Date, the Company shall reimburse each
19
Shareholder for reasonable costs and expenses incurred by such Shareholder on
behalf of the Company, including, without limitation, costs and expenses
incurred by the Shareholders in connection with the formation of the Company.
The Operating Committee of the Company shall have the right to approve all such
reimbursable costs and expenses incurred, such approval not to be unreasonably
withheld.
8.8 No Waiver. No waiver of any term or condition of this Agreement shall
be valid or binding on a Party unless the same shall have been set forth in a
written document, specifically referring to this Agreement and duly signed by
the waiving Party. The failure of a Party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by one or both of the other Parties of any of the provisions of this Agreement,
shall in no way be construed to be a present or future waiver of such
provisions, nor in any way affect the ability of a Party to enforce each and
every such provision thereafter.
8.9 Entire Agreement; Amendments. The terms and conditions contained in
this Agreement (including the Exhibits hereto) and the Transaction Documents
constitute the entire agreement between the Parties and supersede all previous
agreements and understandings, whether oral or written, between the Parties with
respect to the subject matter hereof. No agreement or understanding amending
this Agreement shall be binding upon any Party unless set forth in a written
document which expressly refers to this Agreement and which is signed and
delivered by duly authorized representatives of each Party.
8.10 Assignment. No Party shall have the right to assign its rights or
obligations under this Agreement except in connection with a transfer of all of
such Party's Securities in a manner permitted hereunder, under terms reasonably
acceptable to the non-assigning Party and providing for the assignee to be bound
by the terms hereof, and for the assigning Party to remain liable for the
assignee's performance of its obligations hereunder. This Agreement shall inure
to the benefit of, and shall be binding upon, the Parties and their respective
successors and permitted assigns.
8.11 No Agency. The Parties are independent contractors. Nothing contained
herein or done in pursuance of this Agreement shall constitute any Party being
the agent of any other Party for any purpose or in any sense whatsoever.
8.12 No Beneficiaries. Nothing herein express or implied, is intended to
or shall be construed to confer upon or give to any Person, other than the
Parties and their Affiliates who hold Securities, any interests, rights,
remedies or other benefits with respect to or in connection with any agreement
or provision contained herein or contemplated hereby.
8.13 Effective Date of License Agreement. The License Agreement shall
become effective concurrently with consummation, on the Establishment Date, of
the transactions described in Section 3.2(a).
8.14 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute only one and the same
instrument.
8.15 Incidental and Consequential Damages. No Party or its Affiliates will
be liable to the other Party(ies) under any contract, negligence, strict
liability or other theory for any indirect, incidental or consequential damages
(including without limitation lost profits) with respect to a breach of this
Agreement or any Transaction Document.
20
IN WITNESS WHEREOF, the Parties have caused their respective duly
authorized representatives to execute this Agreement as of the Effective Date.
ICG AsiaWorks Limited
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx, Chief Executive Officer
Breakaway Solutions, Inc.
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxx, President and
Chief Executive Director
Breakaway Solutions Asia Pacific Limited
By: /s/ Xxxx Xxxx Xxx
------------------------------------------
Xxxx Xxxx Loh, Chairman
Schedule 1
Schedule of Competitors
x Xxxxxxxx Consulting
o Appnet
o Cambridge Technology Partners
o Cayenta
o Corio
o Cosine
o Digex
o FutureLink
o IBM Global Services
o IXL
o Lante
o Loudcloud
o MarchFIRST
o Navisite
o NerveWire
o Oracle eBusiness Services
o Proxicom
o Razorfish
o Sapient
o Scient
o USI
o Viant
o Xcelerate
o Xpedior
o Xuma
o Xevo
o Zefer
EXHIBIT A
Company Articles
(see attached)
EXHIBIT B
License Agreement
(see attached)
