Bradley M. Mindich Boston, MA 02115 April 2, 2008
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Boston,
MA 02115
April
2,
2008
PERSONAL
AND CONFIDENTIAL
Board
of
Directors
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Boston,
MA 02115
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Re:
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g8wave,
Inc. (the “Company”)
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Gentlemen:
This
letter confirms your and our mutual intention to enter into good faith
negotiations with a view to entering into an agreement for the acquisition
by
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from
g8wave Holdings, Inc. (the “Seller”)
of all
of the capital stock of the Company (as well as all options, warrants and any
other rights to receive capital stock of the Company) (the “Stock”).
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1.
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Terms.
We envision that the principal terms of the proposed transaction
would be
substantially as follows:
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(a)
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Acquisition.
The Buyer would acquire the Stock free and clear of any claims, security
interests, liens, encumbrances, defenses, liabilities and setoffs,
other
than restrictions on transfer under applicable federal and state
securities laws. The actual structure of the transaction will be
mutually
determined by the Buyer and the Seller, after consultation with their
respective tax, legal and financial advisors, and may include a reverse
merger.
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(b)
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Consideration.
At the closing of the acquisition of the Stock and in consideration
therefor, the Buyer would (i) surrender to the Seller all right,
title,
and interest in and to all of the capital stock of the Seller currently
owned by the Buyer and all rights associated with such stock, in
each case
free and clear of any claims, security interests, liens, encumbrances,
defenses, liabilities and setoffs, other than restrictions on transfer
under applicable federal and state securities laws, (ii) assume all
known
liabilities of the Seller (other than those related to its outstanding
securities, e.g.,
obligations under outstanding warrants, option plans, etc., which
shall
remain the liability of the Seller) and indemnify the Seller for
the same,
it being agreed that the Seller will use commercially reasonable
efforts
to negotiate and/or settle such liabilities prior to closing (subject
to
the Buyer’s reasonable approval), (iii) pay to Seller $30,000,
which amount the parties estimate to be the amount necessary for
the
Seller to continue its existence and remain in compliance with applicable
laws and the rules and regulations of the SEC and state securities
regulators (“Maintenance
Costs”)
for a period of 3 months after the closing, (iv) agree to pay or
cause a
mutually agreeable, credit worthy affiliate to pay, no later than
5
business days after the submission of invoices therefor, all Maintenance
Costs for a period of 12 months after the closing, provided that
such
Maintenance Costs shall not exceed $125,000, and (iv) continue the
Seller’s D&O policy coverage for a period of 3 years after the closing
as to possible claims arising from the existing business of the Seller,
but not any future undertakings of the
Seller.
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PERSONAL
AND CONFIDENTIAL
Board
of
Directors
Page
2
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(c)
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Third-party
Consents and Approvals; Conditions to Closing.
The Seller will obtain all third-party consents necessary for the
transfer
of the Stock to the Buyer without giving any such third-party default
or
termination rights, all in form and substance satisfactory to the
Buyer.
The Buyer will be responsible for obtaining all third-party consents
and
approvals with respect to agreements and obligations of the Company
and
its subsidiaries and the Seller will have no responsibility or liability
therefor. In addition, the Buyer will be responsible for obtaining
all
necessary third party consents and waivers required to surrender
the
Buyer’s shares of capital stock to the Seller, including any and all
waivers under lock-up agreements governing those shares. The closing
of
the transaction would be contingent on the approval of the holders
of a
majority of the outstanding shares of the Seller, excluding the Buyer
(the
“disinterested stockholders”). The closing would not occur earlier than
ten (10) days following the filing of a Form 8-K with the Securities
and Exchange Commission disclosing the transaction contemplated
hereby.
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(d)
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Conduct
in Ordinary Course.
The Company will conduct its business in the ordinary course during
the
period between the date of this letter of intent and the closing
date.
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2.
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Definitive
Purchase Agreement.
All of the terms and conditions of the proposed transaction would
be
stated in a definitive written agreement (the “Stock
Purchase Agreement”)
containing terms customary for transactions of this type, including
without limitation, customary representations and warranties by the
parties concerning the securities to be sold or surrendered, as
applicable, and their authority to enter into the Stock Purchase
Agreement
(but would not contain representations or warranties about the
Company’s business), all to be negotiated, agreed to and signed by the
Seller and the Buyer.
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PERSONAL
AND CONFIDENTIAL
Board
of
Directors
Page
3
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3.
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Exclusive
Negotiating Rights.
In order to induce the Buyer to commit the resources, forego other
potential opportunities, and incur the legal, accounting and incidental
expenses necessary to properly evaluate the possibility of acquiring
the
Stock, and to negotiate the terms of, and consummate, the transaction
contemplated hereby, the Seller agrees that, subject to the last
paragraph
of this Section 3, for a period of twenty (20) days after the date
of your
acceptance of this letter of intent (a) neither the Seller, nor any
of its
representatives, will, directly or indirectly, negotiate or offer
to
negotiate or discuss with, solicit or initiate, or entertain or encourage
submission of inquiries, proposals or offers from any third party
with
respect to the disposition of the Stock, the Company’s business or any
portion thereof, whether by the sale of the Stock, sale of assets,
or some
other means that results in a change of control of the Company, its
business or its assets (an “Acquisition Proposal”) and (b) the Seller will
promptly notify the Buyer of the terms of any inquiry or proposal
that the
Seller may receive with respect to any Acquisition Proposal and of
the
Seller’s response thereto. The parties hereto will use their commercially
reasonable efforts to negotiate and agree upon the terms of the Purchase
Agreement within twenty (20) days and to close the acquisition as
soon
thereafter as is possible.
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The
Seller represents that it is not currently bound by any contract or
understanding with any other third party concerning an Acquisition Proposal
and
that the execution and delivery of this letter of intent by it does not violate
any other obligations or commitments currently binding on it.
In
consideration of the foregoing, the Buyer shall not sell, encumber, transfer,
or
otherwise dispose of, or grant any rights of any kind or nature in or to, any
of
the shares of capital stock of the Seller during the period that the above
exclusive negotiation rights are in effect.
Notwithstanding
the foregoing, if at any time prior to the approval of the transaction by the
disinterested stockholders of the Seller, the Seller’s board of directors
obtains a bona fide Acquisition Proposal or financing proposal from a third
party, and such board determines in good faith that such proposal is superior
to
the proposal set forth herein, the board of directors may cause the Seller
to
terminate this agreement as necessary in order for the board of directors,
in
its reasonable discretion, to properly exercise its fiduciary duties. In the
event the Seller exercises it right to terminate this agreement pursuant to
the
provisions of this paragraph, or if the closing does not occur thereafter for
any reason other than the Buyer’s default, the Seller shall pay to the Buyer,
promptly upon the Buyer’s written request, an amount equal to 120% of (i) any
funds advanced by the Buyer or an affiliate of the Buyer to the Company from
the
date hereof to the date of termination or the scheduled closing date, as the
case may be, for the operation of the Company’s business, and (ii) any expenses
incurred by the Buyer in connection with the transaction contemplated by this
agreement (the “Break-Up
Fee”).
In
addition, the Seller shall grant to the Buyer for a period of twenty months
following such date, without the payment of further consideration by the Buyer,
a non-exclusive right and license (or, where applicable, a sublicense) to use
or
have used for the benefit of the Buyer in the business of the Buyer or the
business of any affiliate of the Buyer, the technology and other assets of
Seller necessary to permit the Buyer to fulfill the Buyer’s and its affiliates’
customers mobile technology campaigns (the “Technology
License”).
For
avoidance of doubt, an Acquisition Proposal or financing proposal shall not
be
deemed to be superior if, among other things, it does not provide sufficient
funds to permit the Seller to pay the Break-Up Fee or prevents the Seller from
granting the Technology License.
PERSONAL
AND CONFIDENTIAL
Board
of
Directors
Page
4
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4.
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Expenses.
The Buyer and the Seller (and not the Company) will each pay their
respective expenses incident to this letter of intent, the Purchase
Agreement and the transaction contemplated hereby and thereby; it
being
understood that such expenses incurred by the Seller shall be assumed
by
the Buyer at the closing pursuant to Section
1(b)(ii)
hereof.
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5.
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Broker’s
Fees.
The Seller and the Buyer have represented to each other that no brokers
or
finders have been employed who would be entitled to a fee by reason
of the transaction contemplated by this letter of
intent.
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6.
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No
Binding Obligation.
Except for the Section 3 (Exclusive Negotiating Rights), Section
4
(Expenses), Section 5 (Broker’s Fees), and Section 6 (No Binding
Obligation), this letter of intent does not constitute or create,
and
shall not be deemed to constitute or create, any legally binding
or
enforceable obligation on the part of any party to this letter of
intent.
No such obligation shall be created, except by the execution and
delivery
of the Purchase Agreement containing such terms and conditions of
the
proposed transaction as shall be agreed upon by the parties, and
then only
in accordance with the terms and conditions of such Purchase
Agreement.
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7.
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Assignment.
The Buyer may assign its rights hereunder to an
affiliate.
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This
letter will automatically expire and be of no further force or effect at
5:00 p.m. E.S.T. on April 2, 2008 if not accepted by the Seller prior to
that time.
If
the
foregoing terms and conditions are acceptable to you, please so indicate by
signing the enclosed copy of this letter and returning it to the attention
of
the undersigned.
PERSONAL
AND CONFIDENTIAL
Board
of
Directors
Page
5
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Very
truly yours,
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/s/
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ACCEPTED
AND AGREED ON April 2, 2008
By:
/s/
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Name:
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Title:
Chief Executive Officer and Director