EXHIBIT 10.37
THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN
A TRANSACTION WHICH QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER.
DATE: MAY 13, 1999 WARRANT TO PURCHASE
SHARES OF COMMON STOCK
BREAKAWAY SOLUTIONS, INC.
STOCK PURCHASE WARRANT
BREAKAWAY SOLUTIONS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, INTERNET CAPITAL GROUP, INC. (the "holder"),
or assigns, is entitled, subject to the terms set forth below, to purchase from
the Company, at any time and from time to time during the period beginning on
the earlier of (a) the closing date of the next round of equity financing
raising not less than $3,000,000 from third party investors other than holder
(the "Next Round Financing") or (b) September 30, 1999 and ending on September
30, 2006, in whole or in part, the following:
(x) if the closing date of the Next Round Financing occurs on or before
September 30, 1999, the number of shares of common stock, par value $0.0001 per
share, of the Company determined by dividing $600,000 by the average price per
share paid by third party investors other than the holder in the Next Round
Financing (the "Next Round Price Per Share"), at a purchase price per share
equal to the Next Round Price Per Share; or
(y) if the closing of the Next Round Financing has not occurred on or
before September 30, 1999, 252,101 shares of common stock, par value $0.0001 per
share, of the Company, at a purchase price of $2.38 per share.
"Purchase Price" shall mean the purchase price per share of common stock of the
Company payable hereunder as provided in paragraph (x) or (y) above, as
applicable, and the term "Common Stock" shall mean, unless the context otherwise
requires, the stock or other securities or property at the time deliverable upon
the exercise of this Warrant. Notwithstanding the foregoing, the Purchase Price
and the number and character of shares issuable under this Warrant are subject
to adjustment as set forth in Paragraph 3. This Warrant is herein called the
"Warrant."
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant
shall be exercised by the holder hereof surrendering this Warrant, with the form
of subscription at the end hereof duly executed by such holder, to the Company
at its office at 00 Xxxxx Xxxxx, or such other address as the Company may
specify by written notice to the registered holder hereof, accompanied by
payment, in cash, by certified or official bank check or by wire transfer of an
amount equal to the Purchase Price multiplied by the number of shares being
purchased pursuant to such exercise of the Warrant.
1.1 PARTIAL EXERCISE. This Warrant may be exercised for less than
the full number of shares of Common Stock, in which case the number of shares
receivable upon the exercise of this Warrant as a whole, and the sum payable
upon the exercise of this Warrant as a whole, shall be proportionately reduced.
Upon any such partial exercise, the Company at its expense will forthwith issue
to the holder hereof a new Warrant or Warrants of like tenor calling for the
number of shares of Common Stock as to which rights have not been exercised,
such Warrant or Warrants to be issued in the name of the holder hereof or his
nominee (upon payment by such holder of any applicable transfer taxes).
1.2 NET ISSUE EXERCISE.
(1) In lieu of exercising this Warrant, holder may elect to
receive shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
holder that number of shares of the Company's Common Stock computed using the
following formula:
X = Y(A-B)
-----
A
Where
X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under this
Warrant
A = the fair market value of one share of the Company's Common
Stock.
B = the Purchase Price (as adjusted to the date of such
calculations).
(2) For purposes of this Section, the fair market value of
one share of the Company's Common Stock shall be based on the average of the
closing
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bid and asked prices of the Summary or the closing price quoted in the
Over-The-Counter Market Summary or the closing price quoted on any exchange on
which the Common Stock is listed, whichever is applicable, as published in the
Eastern Edition of The Wall Street Journal for the ten trading days prior to the
date of determination of fair market value. If the Common Stock is not traded
Over-The-Counter or on an exchange, the fair market value of the Company's
Common Stock shall be the price per share which the Company could obtain from a
willing buyer for shares sold by the Company from authorized but unissued
shares, as such price shall be agreed by the Company and the holder.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and payment of the Purchase Price, and in any
event within ten (10) days thereafter, the Company, at its expense, will cause
to be issued in the name of and delivered to the holder hereof a certificate or
certificates for the number of fully paid and non-assessable shares or other
securities or property to which such holder shall be entitled upon such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash in an amount determined in accordance with Paragraph
3.9 hereof. The Company agrees that the shares so purchased shall be deemed to
be issued to the holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such shares as aforesaid.
3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order to prevent
dilution of the right granted hereunder, the Purchase Price shall be subject to
adjustment from time to time in accordance with this Paragraph 3. Upon each
adjustment of the Purchase Price pursuant to this Paragraph 3, the registered
Holder of this Warrant shall thereafter be entitled to acquire upon exercise, at
the Purchase Price resulting from such adjustment, the number of shares of the
Company's Common Stock obtainable by multiplying the Purchase Price in effect
immediately prior to such adjustment by the number of shares of the Company's
Common Stock acquirable immediately prior to such adjustment and dividing the
product thereof by the Purchase Price resulting from such adjustment.
3.1 ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN
PURCHASE PRICE. Except as provided in Paragraph 3.2 or 3.5 below, if and
whenever on or after the date of issuance hereof the Company shall issue or
sell, or shall in accordance with subparagraphs 3.1(1) to (9), inclusive, be
deemed to have issued or sold, any shares of its Common Stock for a
consideration per share less than the Purchase Price in effect immediately prior
to the time of such issue or sale, then forthwith upon such issue or sale (the
"Triggering Transaction"), the Purchase Price shall, subject to subparagraphs
(1) to (9) of this Paragraph 3.1, be reduced to the Purchase Price (calculated
to the nearest tenth of a cent) determined by dividing:
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(i) an amount equal to the sum of (x) the product derived by
multiplying the Number of Common Shares Deemed Outstanding immediately prior to
such Triggering Transaction by the Purchase Price then in effect, plus (y) the
consideration, if any, received by the Company upon consummation of such
Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common
Shares Deemed Outstanding immediately prior to such Triggering Transaction plus
(y) the number of shares of Common Stock issued (or deemed to be issued in
accordance with subparagraphs 3.1(1) to (9)) in connection with the Triggering
Transaction.
For purposes of this Paragraph 3, the term "Number of Common Shares Deemed
Outstanding" at any given time shall mean the sum of (i) the number of shares of
the Company's Common Stock outstanding at such time, and (ii) the number of
shares of the Company's Common Stock deemed to be outstanding under
subparagraphs 3.1(1) to (9), inclusive, at such time.
For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:
(1) In case the Company at any time shall in any manner
grant (whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Options or the right to convert or exchange
any such Convertible Securities are immediately exercisable and the price per
share for which the Common Stock is issuable upon exercise, conversion or
exchange (determined by dividing (x) the total amount, if any, received or
receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus, in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (y) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or the conversion or exchange of such Convertible Securities) shall
be less than the Purchase Price in effect immediately prior to the time of the
granting of such Option, then the total maximum amount of Common Stock issuable
upon the exercise of such Options, or, in the case of Options for Convertible
Securities, upon the conversion or exchange of such Convertible Securities,
shall (as of the date of granting of such Options) be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. No
adjustment of the Purchase Price
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shall be made upon the actual issue of such shares of Common Stock or such
Convertible Securities upon the exercise of such Options, except as otherwise
provided in subparagraph (3) below.
(2) In case the Company at any time shall in any manner
issue (whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by dividing (x)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (y) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Purchase Price in effect immediately prior to the time of
such issue or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall
(as of the date of the issue or sale of such Convertible Securities) be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. No adjustment of the Purchase Price shall be made upon the actual
issue of such Common Stock upon exercise of the rights to exchange or convert
under such Convertible Securities, except as otherwise provided in subparagraph
(3) below.
(3) If the purchase price provided for in any Options
referred to in subparagraph (1), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred to in
subparagraphs (1) or (2), or the rate at which any Convertible Securities
referred to in subparagraph (1) or (2) are convertible into or exchangeable for
Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution of the type set forth in
Paragraph 3.1 or 3.3), the Purchase Price in effect at the time of such change
shall forthwith be readjusted to the Purchase Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold. If the
purchase price provided for in any Option referred to in subparagraph (1) or the
rate at which any Convertible Securities referred to in subparagraphs (1) or (2)
are convertible into or exchangeable for Common Stock, shall be reduced at any
time under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon the exercise
of any such Option or upon conversion or exchange of any such Convertible
Security, the Purchase Price then in effect hereunder shall forthwith be
adjusted to such respective amount as would have been obtained had such Option
or Convertible Security never been issued as to such Common Stock and had
adjustments been made upon the
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issuance of the shares of Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Purchase Price then in effect hereunder is hereby
reduced.
(4) On the expiration of any Option or the termination of
any right to convert or exchange any Convertible Securities, the Purchase Price
then in effect hereunder shall forthwith be increased to the Purchase Price
which would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
(5) In case any Options shall be issued in connection with
the issue or sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration.
(6) In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration as determined in good
faith by the Board of Directors of the Company. In case any shares of Common
Stock, Options or Convertible Securities shall be issued in connection with any
merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving corporation as shall be
attributed by the Board of Directors of the Company in good faith to such Common
Stock, Options or Convertible Securities, as the case may be.
(7) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any shares so owned or held shall be considered
an issue or sale of Common Stock for the purpose of this Paragraph 3.1.
(8) In case the Company shall declare a dividend or make any
other distribution upon the stock of the Company payable in Common Stock,
Options, or Convertible Securities, then in such case any Common Stock, Options
or Convertible Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or sold without
consideration.
(9) For purposes of this Paragraph 3.1, in case the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution payable in Common
Stock,
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Options or in Convertible Securities, or (y) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to have
been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right or subscription or
purchase, as the case may be.
3.2 DIVIDENDS NOT PAID OUT OF EARNINGS OR EARNED SURPLUS. In the
event the Company shall declare a dividend upon the Common Stock (other than a
dividend payable in Common Stock covered by subparagraph 3.1(8)) payable
otherwise than out of earnings or earned surplus, determined in accordance with
generally accepted accounting principles, including the making of appropriate
deductions for minority interests, if any, in subsidiaries (herein referred to
as "Liquidating Dividends"), then, as soon as possible after the exercise of
this Warrant, the Company shall pay to the person exercising such Warrant an
amount equal to the aggregate value at the time of such exercise of all
Liquidating Dividends (including but not limited to the Common Stock which would
have been issued at the time of such earlier exercise and all other securities
which would have been issued with respect to such Common Stock by reason of
stock splits, stock dividends, mergers or reorganizations, or for any other
reason). For the purposes of this Paragraph 3.2, a dividend other than in cash
shall be considered payable out of earnings or earned surplus only to the extent
that such earnings or earned surplus are charged an amount equal to the fair
value of such dividend as determined in good faith by the Board of Directors of
the Company.
3.3 SUBDIVISIONS AND COMBINATIONS. In case the Company shall at
any time subdivide (other than by means of a dividend payable in Common Stock
covered by subparagraph 3.1(8)), its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased.
3.4 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE OF ASSETS. If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or other property with respect to
or m exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder of this Warrant shall have the right to acquire
and receive upon exercise of this Warrant such shares of stock, securities, cash
or other property issuable or payable (as part of
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the reorganization, reclassification, consolidation, merger or sale) with
respect to or in exchange for such number of outstanding shares of the Company's
Common Stock as would have been received upon exercise of this Warrant at the
Purchase Price then in effect. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument mailed or delivered to the holder of this Warrant at the
last address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be entitled to
purchase. If a purchase, tender or exchange offer is made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock of the
Company, the Company shall not effect any consolidation, merger or sale with the
person having made such offer or with any Affiliate of such person, unless prior
to the consummation of such consolidation, merger or sale the holder of this
Warrant shall have been given a reasonable opportunity to then elect to receive
upon the exercise of this Warrant either the stock, securities or assets then
issuable with respect to the Common Stock of the Company or the stock,
securities or assets, or the equivalent, issued to previous holders of the
Common Stock in accordance with such offer. For purposes hereof the term
"Affiliate" with respect to any given person shall mean any person controlling,
controlled by or under common control with the given person.
3.5 NO ADJUSTMENT FOR EXERCISE OF CERTAIN OPTIONS, WARRANTS, ETC.
The provisions of this Section 3 shall not apply to any Common Stock issued,
issuable or deemed outstanding under subparagraphs 3.1(1) to (9) inclusive: (i)
to any person pursuant to any stock option, stock purchase or similar plan or
arrangement for the benefit of employees, consultants or directors of the
Company or its subsidiaries or (ii) pursuant to options, warrants and conversion
rights in existence on the date of issuance hereof.
3.6 NOTICES OF RECORD DATE, ETC. In the event that:
(1) the Company shall declare any cash dividend upon its
Common Stock, or
(2) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other distribution
to the holders of its Common Stock, or
(3) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights, or
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(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company, including any subdivision
or combination of its outstanding shares of Common Stock, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder of
this Warrant:
(i) at least ten (10) days' prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or for determining rights to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least ten (10) days' prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing clause (i)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be. Each such
written notice shall be given by first class mail, postage prepaid, addressed to
the holder of this Warrant at the address of such holder as shown on the books
of the Company.
3.7 GRANT, ISSUE OR SALE OF OPTIONS, CONVERTIBLE SECURITIES, OR
RIGHTS. If at any tune or from time to time on or after the date of issuance
hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Stock of the Company and such grants,
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof, then the holder of this Warrant shall be entitled to
acquire (within thirty (30) days after the later to occur of the initial
exercise date of such Purchase Rights or receipt by such holder of the notice
concerning Purchase Rights to which such holder shall be entitled under
Paragraph 3.6) and upon the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could
have acquired if it had held the number of shares of Common Stock acquirable
upon exercise of this Warrant immediately before the grant, issuance or sale of
such
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Purchase Rights; provided that if any Purchase Rights were distributed to
holders of Common Stock without the payment of additional consideration by such
holders, corresponding Purchase Rights shall be distributed to the exercising
holder of this Warrant as soon as possible after such exercise and it shall not
be necessary for the exercising holder of this Warrant specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30) day period, the
number of shares of Common Stock or the amount of property which such holder
could have acquired upon such exercise at the time or times at which the Company
granted, issued or sold such expired Purchase Rights.
3.8 ADJUSTMENT BY BOARD OF DIRECTORS. If any event occurs as to
which, in the opinion of the Board of Directors of the Company, the provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holder of this Warrant in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the Purchase Price as otherwise determined pursuant to any of the
provisions of this Section 3 except in the case of a combination of shares of a
type contemplated in Paragraph 3.3 and then in no event to an amount larger than
the Purchase Price as adjusted pursuant to Paragraph 3.3.
3.9 FRACTIONAL SHARES. The Company shall not issue fractions of
shares of Common Stock upon exercise of this Warrant or scrip in lieu thereof.
If any fraction of a share of Common Stock would, except for the provisions of
this Paragraph 3.9, be issuable upon exercise of this Warrant, the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed (i) if the Common Stock is listed on any
national securities exchange on the basis of the last sales price of the Common
Stock on such exchange (or the quoted closing bid price if there shall have been
no sales) on the date of conversion, or (ii) if the Common Stock shall not be
listed, on the basis of the mean between the closing bid and asked prices for
the Common Stock on the date of conversion as reported by Nasdaq, or its
successor, and if there are not such closing bid and asked prices, on the basis
of the fair market value per share as determined by the Board of Directors of
the Company.
3.10 OFFICERS' STATEMENT AS TO ADJUSTMENTS. Whenever the Purchase
Price shall be adjusted as provided in Section 3 hereof, the Company shall
forthwith file at each office designated for the exercise of this Warrant, a
statement, signed by the Chairman of the Board, the President, any Vice
President or Treasurer of the Company, showing in reasonable detail the facts
requiring such adjustment and the
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Purchase Price that will be effective after such adjustment. The Company shall
also cause a notice setting forth any such adjustments to be sent by mail, first
class, postage prepaid, to the record holder of this Warrant at its address
appearing on the stock register. If such notice relates to an adjustment
resulting from an event referred to in Paragraph 3.6, such notice shall be
included as part of the notice required to be mailed and published under the
provisions of Paragraph 3.6 hereof.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
5. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANTS. The Company
shall at all times reserve and keep available out of its authorized but unissued
stock, solely for the issuance and delivery upon the exercise of this Warrant
and other similar Warrants, such number of its duly authorized shares of Common
Stock as from time to time shall be issuable upon the exercise of this Warrant
and all other similar Warrants at the time outstanding. All of the shares of
Common Stock issuable upon exercise of this Warrant, when issued and delivered
in accordance with the terms hereof, will be duly authorized, validly issued,
fully-paid and non-assessable.
6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (m the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of
like tenor.
7. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
8. REGISTRATION RIGHTS. All of the provisions of Section 3 of the
Investor Rights Agreement dated as of December 23, 1998 between the Company and
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the Purchaser (the "Investor Rights Agreement") shall apply equally to the
shares issuable upon exercise of this Warrant and any similar Warrants and each
reference in the Investor Rights Agreement to "Registrable Shares" shall mean
the Registrable Shares as defined in that agreement and the shares issuable upon
exercise of this Warrant and any similar Warrants, collectively as a single
class.
9. NEGOTIABILITY. This Warrant is issued upon the following terms, to
all of which each taker or owner hereof consents and agrees:
(a) Subject to the legend appearing on the first page hereof,
title to this Warrant may be transferred by endorsement (by the holder hereof
executing the form of assignment at the end hereof including guaranty of
signature) and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery. Absent an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the disposition of this Warrant or the shares of Common Stock issued or
issuable upon exercise hereof, the holder will not sell or transfer any or all
of such Warrant or shares, as the case may be, without first providing the
Company with an opinion of counsel (which may be counsel for the Company) to the
effect that such sale or transfer will be exempt from the registration and
prospectus delivery requirements of the Act. Each certificate representing
shares of Common Stock issued pursuant to this Warrant, unless at the same time
of exercise such Warrant Shares are registered under the Act, shall bear a
legend in substantially the following form on the face thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES
LAWS AND MAY BE TRANSFERRED OR RESOLD ONLY IN COMPLIANCE
WITH SUCH SECURITIES LAWS.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a certificate issued upon completion of
a distribution under a registration statement covering the securities
represented shall also bear such legend unless, in the opinion of counsel to the
Company, the securities represented thereby may be transferred as contemplated
by such holder without violation of the registration requirements of the Act.
(b) Any person in possession of this Warrant properly endorsed
is authorized to represent itself as absolute owner hereof and is granted
power to transfer absolute title hereto by endorsement and delivery hereof to
a bona fide purchaser hereof for value; each prior taker or owner waives and
renounces all of its equities or rights in this Warrant in favor of every
such bona fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
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(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as the absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(d) Prior to the exercise of this Warrant, the holder hereof shall
not be entitled to any rights of a shareholder of the Company with respect to
shares for which this Warrant shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
(e) The Company shall not be required to pay any Federal or state
transfer tax or charge that may be payable in respect of any transfer involved
in the transfer or delivery of this Warrant or the issuance or conversion or
delivery of certificates for Common Stock in a name other than that of the
registered holder of this Warrant or to issue or deliver any certificates for
Common Stock upon the exercise of this Warrant until any and all such taxes and
charges shall have been paid by the holder of this Warrant or until it has been
established to the Company's satisfaction that no such tax or charge is due.
10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. This Warrant is
issued and delivered by the Company on the basis of the following:
(a) AUTHORIZATION AND DELIVERY. This Warrant has been duly
authorized and executed by the Company and when delivered will be the valid and
binding obligation of the Company enforceable in accordance with its terms;
(b) WARRANT SHARES. The shares of Common Stock to be issued
pursuant to this Warrant have been duly authorized and reserved for issuance by
the Company and, when issued and paid for in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) RIGHTS AND PRIVILEGES. The rights, preferences, privileges and
restrictions granted to or imposed upon such shares of Common Stock and the
holders thereof are as set forth herein and in the Company's Articles of
Incorporation, and in the Common Stock and Warrant Purchase Agreement, true and
complete copies of which have been delivered to the original warrant holder; and
(d) NO INCONSISTENCY. The execution and delivery of this Warrant
are not, and the issuance of the shares of Common Stock upon exercise of this
Warrant in accordance with the terms hereof will not be, inconsistent with the
Company's Articles of Incorporation or by-laws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to the
Company, and do not and will not contravene any provision of, or constitute a
default under, any
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indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration with the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person.
11. REPRESENTATIONS AND WARRANTIES OF HOLDER.
(a) The holder hereby represents and warrants to the Company that
it has substantial knowledge, skill and experience in making investment
decisions of the type represented by this Warrant and the shares issuable upon
exercise of this Warrant, that it is capable of evaluating the risk of its
investment in this Warrant and the shares issuable upon exercise of this Warrant
and is able to bear the economic risk of such investment, including the risk of
losing the entire investment, that it is acquiring this Warrant and the shares
issuable upon exercise of this Warrant for its own account, and that this
Warrant and the shares issuable upon exercise of this Warrant are being acquired
by it for investment and not with a present view to any distribution thereof in
violation of applicable securities law. If the holder should in the future
decide to dispose of any of this Warrant and the shares issuable upon exercise
of this Warrant, it is understood that it may so do only in compliance with the
Act and applicable state securities laws. The holder represents and warrants
that it is an "Accredited Investor" as defined in Rule 501(a) under the Act.
(b) The holder understands that (i) this Warrant and the shares
issuable upon exercise of this Warrant have not been registered under the Act by
reason of their issuance in a transaction exempt from the registration
requirements of the Act, (ii) this Warrant and the shares issuable upon exercise
of this Warrant must be held indefinitely unless a subsequent disposition
thereof is registered under the Act and applicable state securities laws or is
exempt from such registration (and, upon request, evidence satisfactory to the
Company is provided by such holder of the availability of such exemptions,
including, upon request, the delivery to the Company of opinions of counsel to
such holder, which opinions and counsel are satisfactory to the Company), and
(iii) this Warrant and the shares issuable upon exercise of this Warrant may
bear a legend to such effect.
12. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company that may be subscribed for and purchased hereunder.
13. MAILING OF NOTICES. All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first class certified
mail, postage prepaid, to the address furnished to the Company in writing by the
last
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holder of this Warrant who shall have furnished an address to the Company in
writing.
14. HEADINGS. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect the meaning hereof.
15. CHANGE, WAIVER. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
16. GOVERNING LAW. This warrant shall be construed and enforced in
accordance with the laws of the State of Delaware.
BREAKAWAY SOLUTIONS, INC.
By:/s/ XXXXX XXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxx
title: CFO
Dated: May 13, 1999
Attest:
/s/ XXXX X. XXXXXXXX
-----------------------------
ACCEPTED AS OF THE DATE HEREOF:
INTERNET CAPITAL GROUP, INC.
By:/s/ XXXXX X. GAITHMAN
--------------------------
Name: Xxxxx X. Gaithman
Title: CFO
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[To be signed only upon exercise of Warrant]
To :
----------------------
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ____ shares of Common Stock of _____ and herewith makes
payment of $____ therefor, and requests that the certificates for such shares
be issued in the name of, and be delivered to __________, whose address
is ___________.
Dated:
-----------------------
By
----------------------------- -----------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
Address:
-------------------------------------------
-------------------------------------------
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[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________ the right represented by the within Warrant to purchased the
shares of the Common Stock of _______________ to which the within Warrant
relates, and appoints _______________ attorney to transfer said right on the
books of ________________ with full power of substitution in the premises.
Dated:
-----------------------
By
-----------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
Address:
-------------------------------------------
-------------------------------------------
In the presence of
-----------------------------
Signature Guarantee
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